BullMarketRun.com

Gold is enjoying a strong day, thanks to short-covering, weakness in the greenback and equity markets, and other factors…as of 9:00 am Pacific, bullion is up $26 an ounce at $1,156…it has traded between a low of $1,133 and a high of $1,158 (resistance at $1,160)…Silver has added 38 cents to $15.16…Copper is off a penny at $2.30…Crude Oil is up slightly at $44.73 while the U.S. Dollar Index, continuing to meet stiff resistance around the 96 level, has fallen half a point to 95.72…

Some UBS analysts are starting to cozy up to Gold again.  “The prospect of Fed normalizing policy has been the main driver for Gold’s correction over the past few years,” they wrote in a note…but they believe the market has gone too far, punishing Gold ahead of presumed (and now delayed) rate hikes…in this, UBS sees a new – and lower – world order of interest rates which could be seen as bullish for bullion…

Holdings in SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, rose for a 2nd straight session yesterday, providing some support for prices…the fund added a modest 0.60 tonnes, bringing total holdings to 676.40 tonnes…some fresh accumulation here is long overdue, and that’s one factor that could give Gold prices a further lift going into year-end…

Meanwhile, Gold purchases in India are predicted to climb in the final quarter to the highest level since 2012, adding to signs that lower prices are spurring a resurgence of buying in Asia…demand may jump as much as 15% from a year earlier, according to Bachhraj Bamalwa, a director with the All India Gems and Jewellery Trade Federation…that would boost consumption to about 230 tons, the highest for the quarter since 261.9 tons in 2012, World Gold Council data show…demand usually peaks in the final quarter in India with gifting during festivals which begin at the end of this month and culminates with the start of the wedding season in November…

Analysts at Capital Economics confirm the above – they expect the metal to get solid support from improving physical demand out of Asia.  “We expect total imports by China and India to pick up substantially in the remainder of the year as low prices and a lack of attractive investment alternatives prompt additional buying,” they said in a research note today…

Asia

Japan’s Nikkei average tumbled 500 points or nearly 3% overnight after a 3-day holiday…the Markit/Nikkei Japan flash manufacturing PMI was released this morning and came in at 50.9 in September from a final 51.7 in August…the index remained above the 50 threshold that separates expansion from contraction for the 5th straight month, but fell for the 1st time in 3 months…

China’s Shanghai Composite added 28 points to close at 3144…

Europe

European markets were down sharply today…on a positive note, German business sentiment rose in September…the business climate index came in at 108.5, a slight tick up from August’s revised figure of 108.4…

North America

The Dow is under pressure for the 3rd straight session, off 201 points as of 9:00 am Pacific…investors are positioning ahead of a speech later today, after the market closes, by Fed Chair Janet Yellen…she’ll be speaking on inflation before an audience at the University of Massachusetts (no questions allowed)…

Caterpillar Inc. (CAT, NYSE), a major Dow component, projected further revenue declines this morning and announced plans to cut more than 10,000 jobs over the next 3 years as the maker of engines and heavy equipment continues to feel the impact from weakness in the energy and construction markets…the company also reduced its 2015 revenue view by $1 billion to about $48 billion, marking the 3rd straight year that its revenue has fallen…Caterpillar sees its 2016 revenue dropping another 5% from 2015, which would be the first time in its 90-year history that revenue has decreased 4 years in a row…

The U.S. manufacturing industry lost momentum in August, though the headline number was in line with expectations…according to the latest data from the Department of Commerce, new orders for long-lasting manufactured goods fell by $4.8 billion, or 2%, to $236.3 billion in August, snapping 2 consecutive months of strong gains…stripping out the volatile transportation sector, demand for manufactured goods was unchanged at $158 billion in August from July (vs. expectations of a 2% rise)…

In Toronto, the TSX is getting some help from a strong Gold Index today and is down just 108 points as of 9:00 am Pacific…two producers whose bullish charts we examined yesterday are having a solid day…Kirkland Lake Gold (KGI, TSX) has surged 59 cents to $5.98, while Klondex Mines (KDX, TSX) is up 14 cents to $3.38…

The Venture is off 2 points at 543 as of 9:00 am Pacific…drilling has commenced at Equitas Resources’ (EQT, TSX-V) Garland Nickel Property near the Voisey Bay’s mine (refer to our piece last night)…EQT is off a penny at 18 cents as of 9:00 am Pacific after trading as high as 19.5 cents…EQT is looking very healthy, trading within both a broad upsloping channel and a pennant formation similar to the one in August…

Venture 4-Month Daily Chart

The Venture’s key hurdle remains its EMA(20) which the Index has repeatedly and unsuccessfully tried to overcome the last few weeks…above the EMA(20) is also chart resistance at 560…so that’s the area that needs to be cleared in order for the Venture to gain traction…RSI(14) on this 4-month daily chart has worked its way out of oversold conditions but has fluctuated in a narrow range throughout September so far…a break above 50% would be significant…

Pure Energy Minerals (PE, TSX-V) Update

Pure Energy Minerals (PE, TSX-V) has been under technical pressure since a pivotal trading day September 16 when it gapped up and hit a new multi-year high of $1.03 before going into reverse…some “exhaustion” had set in, as John’s charts pointed out, with temporarily very overbought RSI(14) conditions that simply needed to unwind (PE quadrupled in just 2 months, and the 75-cent Fib. resistance level is where we got a little nervous)…

Exceptional support exists around 50 cents, and this morning PE touched a low of 51 cents before turning higher…as of 9:00 am Pacific, it’s now up 7 cents at 62 cents on perhaps another “pivotal” session…John’s updated 2.5-year weekly chart shows how the RSI(14) unwound to 61% yesterday…bargain-hunters stepped in this morning on PE in the low 50’s…it’s possible that area could be tested again, but clearly that’s where superb support does exist…the long-term trend remains very positive here, and the pullback was a healthy development…

Kaminak Gold Corp. (KAM, TSX-V) Updated Chart

Yesterday, we reported how Kaminak Gold (KAM, TSX-V) has been able to “sweeten up” its Coffee Project in the Yukon with an updated resource estimate showing increases in both grade and tonnage…meanwhile, the company’s feasibility study, initiated in the summer of last year, is on track for completion during the 1st quarter of next year…capital costs, operating costs and production metrics are tracking in line with estimates in the PEA, Kaminak confirmed yesterday…the PEA outlined a high-margin, 11-year, open-pit Gold-mining opportunity using a Gold price of $1,250 (U.S.) and a Canadian/U.S. exchange rate of 95 cents, generating a pretax net present value of $522 million and an internal rate of return of 33%…the much lower Canadian dollar – if it remains around current levels – could turn out to be very helpful for the economics of this project – just as Pretium Resources (PVG, TSX) is experiencing at Brucejack where mine construction is starting…

KAM is up 3 cents at 85 cents as of 9:00 am Pacific…lots of value here fundamentally, and what’s encouraging about this 2.5-year weekly chart is the head-and-shoulders bottom…KAM is also now pushing above its 200-day SMA (not shown on this chart) which is rising gently…

NexGen Energy Ltd. (NXE, TSX-V) Update

As reported Tuesday, NexGen Energy (NXE, TSX-V) continues to hit high-grade uranium mineralization as a major drill program continues at its Rook 1 Project in the Athabasca Basin…the Arrow zone now comprises 4 high-grade shear zones – A1, A2, A3 and A4 – that are subparallel to each other in sequential order from northwest to southeast…

Technically, NXE is fighting some resistance at its declining 50-day SMA (69 cents) but RSI(14) has unwound to support at the 50% level and has also formed a bullish “W”…excellent chart support at 60 cents…with continued strong results, and the potential for an improved overall market, NXE could be poised for another “leg up” beginning in October…

NXE is off a penny at 68 cents as of 9:00 am Pacific…

Note:  John and Jon both hold share positions in EQT.  Jon also holds a share position in PE.

8:00 pm Pacific

A new chapter has started in an exciting exploration story that has captured the market’s attention in recent weeks in particular as the drill is now turning at Equitas Resources’ (EQT, TSX-V) Garland Nickel Property 20 miles southeast of the Voisey’s Bay mine, as announced by the company following today’s close.

This is an area that has intrigued top Nickel specialists for many years as highly prospective for another Voisey’s Bay-type deposit, but for a variety of factors it has been vastly under-explored until now.  So the Equitas group deserves credit, and is being rewarded by the market, for doing exactly what a junior exploration company is supposed to do (but few are doing or are able to do right now) – search hard, albeit cost effectively, with a talented, proven team using cutting-edge techniques to find the next important Canadian discovery.  This is grassroots exploration at its finest.  Yes, it’s a risky “swing for the fences”, as we’ve repeatedly stated, but the potential pay-off is huge.  The market is starving for a new discovery (it’s in dire need of something big) and Equitas has a chance to feed that appetite and restore investor confidence in the struggling junior resource sector.  The stakes are high.  This company is cashed-up and heavily armed for battle.

John’s latest chart, which we’ll get to in a moment, shows continued strong momentum in EQT with a possible breakout looming above a new pennant formation, similar to the pattern that emerged in August.  First, though, a quick review of today’s news which shed some fresh light on key areas of interest that are emerging on this large land package that has now grown by another 15% to over 280 sq. km with an extension to the west.  Two targets have been dropped – we would have been shocked if at least a couple weren’t following additional mapping and geophysics – while three have been added.

Drilling is starting at anomaly “D”, part of a 2 km trend of variable conductivity featuring a Nickel-Copper-Cobalt lake sediment anomaly and resident in an east-west structure of the Gardar-Voisey’s Bay fault set. Coincident with a magnetic low (interesting, as the western extension that was added today covers a very broad and intense mag low according to government data), the nearest geochemical anomalies of this type in the Nain province occur in a chain of lakes 4 km to 7 km east (an interpreted down-ice direction of glaciation) of the Voisey’s Bay mineralization.

Garland Property geology with VTEM anomaly traces (red), outline of the Southern Response Trend (SRT, yellow), and newly-acquired extension to the west. Anomalies O, P and Q recently interpreted from B-field Tau component.

An important paragraph in today’s news:

“At Anomaly C, surveying with Crone PEM resulted in the definition of a good-quality east-west-trending conductor, flat lying with minimum core dimensions of 15 m by 300 m, occurring 70 m below surface. Definition of this response helps to validate the interpreted southern response trend, a multi-km east-west-trending area of conductivity, magnetic and structural features, straddling a large east-west offset of the Archean-Proterozoic suture, analogous in scale, morphology and setting to the Voisey’s Bay intrusive complex, and related mineralization. This sparked the recent staking of licence 023365M, consisting of a 132-claim block comprising 3,311 hectares, designed to cover the western extension of the SRT.”

Updated Equitas Chart

Temporarily overbought RSI(10) conditions on this 3-month daily chart have been “cleansed” with RSI(10) bouncing off support at the 50% level.  As we indicated recently, EQT remains firmly within an upsloping channel.   New support at 15 cents has held, while nearest Fib. resistance is 23 cents.  Importantly, as John also pointed out, a new “pennant” has formed, similar to the one in August.  Watch for a potential breakout above that pennant.  Buy pressure (CMF) continues to gradually increase while the overall bullish trend (ADX indicator) remains strong.

EQT closed up 2.5 cents at 19 cents today, posting its 19th straight session of daily volume greater than 1 million shares.

Note:  Both John and Jon hold share positions in EQT.

Today’s Equity Markets

Asia

China”s Shanghai Composite tumbled 69 points or nearly 2% overnight to close at 3117…Japan’s Nikkei re-opens tomorrow after an extended holiday in that country…

When Chinese President Xi Jinping addresses some of the top names in Chinese and American business today in Seattle, they may be most interested in what he says about progress toward a treaty that would provide a framework for broader investment in each nation’s economy…Apple Chief Executive Tim Cook, Microsoft CEO Satya Nadella, Amazon founder Jeff Bezos, billionaire investor Warren Buffett and Jack Ma of Chinese e-commerce giant Alibaba are among the 30 executives attending a closed-door discussion moderated by former U.S. Treasury Secretary Henry Paulson, who has advocated for such a treaty…all of the American CEO’s participating signed a letter to Xi and U.S. President Barack Obama urging them to support an agreement…

Yesterday, Paulson said the U.S. and China need to collaborate to expedite reforms and combat slowing growth in China.  “They have an economic model that has run out of steam,” Paulson told CNBC.  “They need to place much more reliance on domestic-led growth, domestic consumption.”  Paulson also added, “The most troublesome economic issue is corporate and commercial cybertheft. I think it’s the biggest risk when you look at U.S.-China relations. Ultimately, it’s very important for our two countries to come together.”

Meanwhile, the Asian Development Bank yesterday cut its estimate for China’s growth to 6.8% for 2015, down from its previous forecast of 7.2% and below 2014’s 7.3% growth rate…it expects the growth rate of the world’s 2nd largest economy will fall to 6.7% in 2016…separately, Barclays also slashed its growth outlook for China yesterday to 6.6% and 6% for 2015 and 2016, from 6.8% and 6.6% previously…

The slowdown has also prompted market calls for bolder stimulus measures from Beijing and the country’s central bank…economists are hoping for greater clarity about the economy and policy in the context of President Xi Jinping’s U.S. visit…

Europe

European markets were up modestly today…

North America

The Dow climbed as high as 16355 in early trading today but has since backed off…as of 10:00 am Pacific, the Dow is down 88 points…

Below is a 35-year Dow weekly chart that shows how the index has so far been unable to break above a trendline that’s currently cutting through the low-to-mid 18000’s…what’s critical to watch here is the RSI(14), currently 48%…previous significant corrections (even crashes) have occurred when the RSI(14) has fallen below 45% support…in the Dow’s favor is a still-rising 1000-day moving average (SMA), currently 15105…the index came within less than 300 points of that level during the August 24 “Flash Crash”…that long-term SMA represents very important support, and could be re-tested…

Volatility Index (VIX) Update

The VIX has settled down, for now at least, and that’s positive for stocks – the key will be for the VIX to remain below 25…it closed yesterday at 22.62…

TSX Updated Chart

Like the Dow, the TSX also has strong support at and near its still-rising 1000-day SMA (blue line on this 6-year monthly chart)…RSI(14) is at oversold levels not seen since late 2011, so that makes this a “safer” time than the summer of last year when extreme overbought RSI(14) conditions had persisted for an extended period and needed to be cleansed…hence, a more than 2000-point drop in the index since then…strong band of support between the Fib. 50% retracement level (12831) and where the TSX is now…

As of 10:00 am Pacific, the TSX is off 73 points while the Venture is up 3 points at 544…

B.C. LNG Delays Will Hurt, Says Fraser Institute

Delays in approving and building liquefied natural gas export projects will cost British Columbia $20 billion a year in lost revenue from 2020 onwards, according to a study by the Fraser Institute.  “As a result, British Columbians will invariably forgo higher levels of job growth and billions of dollars in tax revenues which could pay for things like health care or public education,” said Ken Green, co-author of the report and senior director of natural resource studies at the Fraser Institute…

Delays in approval from the federal government, provincial authorities and First Nations would likely see the B.C. lose 9.5% of its current GDP, the report said…it argues that “the cost of regulatory de­lay imposed upon LNG investments in B.C., de­fined as export revenues forgone. That cost is substantial: $22.5 billion in 2020, rising to $24.8 billion in 2025.”

Biorem Inc. (BRM, TSX-V) Update

Very few companies on the Venture are making money or have attractive share structures…Biormen Inc. (BRM, TSX-V) scores on both those counts…we’ve been very excited about this company for several months given its revenue and earnings momentum, and we first introduced BRM to our readers when it was trading around 30 cents…it more than doubled in value at the end of August/early September after its Q2 financial results were released…that created temporarily overbought conditions with the anticipated pullback showing strong support in the 40’s…

With only about 13.5 million shares currently outstanding, Guelph-based BRM is an environmental biotechnology/engineering company that designs, manufactures and distributes a comprehensive line of high-efficiency air emissions control systems used to eliminate odors, volatile organic compounds and hazardous air pollutants…may not sound glamorous but these guys are making money and that’s what counts…they’re also benefiting from a lower Canadian dollar…much more on this undiscovered gem in the days and weeks ahead as it is clearly a Venture success story…

BRM is up a penny-and-a-half at 43.5 cents as of 10:00 am Pacific…

Kaminak Gold Corp. (KAM, TSX-V) Update

Kaminak Gold (KAM, TSX-V) released an updated mineral resource estimate for its Coffee Project in the Yukon this morning…Coffee now has 52.4 million tonnes at an average grade of 1.68 g/t Au for 2,824,000 oz of contained Gold in the indicated category, and 42.7 million tonnes at a grade of 1.52 g/t Au for 2,088,000 oz of contained Gold in the inferred category…those estimates are based on a cut-off grade of 0.5 g/t Au for Oxide, Upper and Middle Transitional facies mineralization and a 1 g/t Au cut-off for Lower Transitional and Sulphide material….

This new estimate represents an 8% increase in the grade for indicated resources and a 12% increase in grade for inferred resources…indicated resources have increased almost 4-fold to over 52 million tonnes compared to the 2014 estimate…

Additional drilling has provided much better control on the distribution of mineralization in the Coffee deposit…Eira Thomas, CEO, stated, “Resource and conversion drilling has gone very well and most of the assumptions used in the PEA remain relevant and defensible. Coffee remains a strong project and one of the few development track Gold projects located in Canada that can deliver sizeable, high margin production in excess of 160,000 ounce per annum in the current Gold price environment.”

KAM is unchanged at 83 cents as of 10:00 am Pacific…

Updated Charts On Two Profitable High-Grade Producers

Klondex Mines Ltd. (KDX, TSX)

Klondex Mines (KDX, TSX) continues to look very strong, fundamentally and technically…note on this 5-year weekly chart how the RSI(14) is now very close to the 50% support level while the rising 200-day SMA is at $2.95…the 200-day has provided excellent support since it reversed to the upside in the summer of 2013…

KDX is a nickel higher at $3.25 as of 10:00 am Pacific…

Kirkland Lake Gold Inc. (KGI, TSX) Update

Kirkland Lake Gold (KGI, TSX) bounced off the $5 level recently, as expected, as that is exceptional support defined by Fib. analysis and a rising 200-day SMA…Kirkland Lake began to “turn the corner” in late 2013 with its Macassa operation, one of the world’s richest Gold mines by any measure…KGI recently reported net income of 5 cents per share in the first 3 months of its 2015 “stub year” which began May 1…that was the company’s 5th consecutive quarter of positive earnings and free cash flow generation…

KGI is up 2 pennies at $5.46 as of 10:00 am Pacific…next major chart resistance at $6.32…

Note:  John, Terry and Jon do not hold share positions in BRM, KAM, KDX or KGI.

Gold has traded between $1,121 and $1,138 so far today…as of 8:45 am Pacific, bullion is down $7 an ounce at $1,126…Silver is off 40 cents to $14.81…Copper has slid 8 cents to $2.30 on Asian growth fears…Crude Oil is down $1.33 a barrel to $45.35 while the U.S. Dollar Index has climbed nearly one-quarter of a point to 96.21 (strong resistance around 96 )…Credit Suisse today heavily cut China demand assumptions, commodity prices and earnings estimates, battering commodities and the mining sector…

The expected actions from central banks could keep a lid on Gold prices, according to Commerzbank. “In recent days, a number of Fed members have expressed the belief that the U.S. Federal Reserve will hike interest rates before this year is out,” the bank noted…based on the fed fund futures, a nearly 50% probability of an interest-rate hike in December is now priced into the market…meanwhile, European Central Bank representatives appear to be going in the opposite direction, claiming that the ECB “would forcefully react” if its inflation target were at risk…this, according to Commerzbank, will lead to increased speculation about an expansion of the ECB’s program of quantitative easing, and help to give the U.S. dollar a lift…

Meanwhile, Mike McGlone of ETF Securities has a different view, which we tend to agree more with, and brings up an interesting comparison between Gold and the S&P 500:

“Many of the bearish drivers for Gold appear to have shifted or reached extremes including: the record setting stock market rally, overly optimistic Fed tightening expectations, the strong U.S. dollar and the substantial decline in Crude Oil prices,” he said yesterday in an interview with Kitco News…McGlone added that he was not surprised the Fed didn’t hike rates last week (as many observers expected) since the economy is not ready to withstand tightening. “The primary reason for the Fed to raise rates is to suppress inflation and inflation expectations but the greater risks remain towards disinflation or deflation. Declining commodities, declining stock prices and the strong U.S. dollar are deflationary forces,” he added… 

According to the research director, it may also be good for gold investors to look closely at the U.S. stock markets’ next moves because, based on historical data, the metal may be poised for some gains. “When Gold peaked in 2011, it was near $1,900 an ounce while at the same time the S&P 500 bottomed near 1,200. Now in 2015, Gold is near $1,200 and the S&P 500 is near 1,900. The levels basically transposed since 2011. The risk is that these markets continue to revert – potentially back to near 1,600,” he noted…

Mexico Beefs Up Infrastructure With Canadian Help

Quebec’s pension fund manager plans to invest $1.4 billion on infrastructure projects in Mexico after teaming up with a consortium of Mexican institutional investors, the Globe and Mail has reported…the co-investors plan to spend $2.8 billion over 5 years in what the Caisse de dépôt et placement du Québec says is a first partnership in North America between Mexican financial institutions and a large international pension fund manager…

The Mexican government plans to spend a whopping $614 billion over 4 years on infrastructure investments, targeting energy and transportation projects…the new investment vehicle will focus on energy generation, including renewable energy, transmission and distribution, as well as transportation and public transit projects…

Today’s Equity Markets

Asia

China’s Shanghai Composite gained 30 points or about 1% overnight to close at 3186…Japanese markets, meanwhile, were closed for a holiday…

Despite the Shanghai’s advance, investors remain nervous about a flash PMI for September due tomorrow…according to a Reuters poll, the preliminary reading of China’s massive manufacturing sector likely edged up to 47.5 from August’s 47.1…however, it’s expected to remain near a 6-and-a-half-year low, pointing to a 7th straight contraction in activity on a monthly basis…

Attention has also turned to Chinese President Xi Jinping’s state visit to the U.S. which begins this morning in Everett, Washington…Xi’s anticipated schedule has him in the Seattle area until Thursday morning when he then departs for the “other” Washington back east…

Europe

European markets were down sharply today, generally more than 3%…a new report from the Asian Development Bank (ADB) gave a more negative view of the region’s growth outlook after slowdowns in China and India, and the soft recovery in developed markets…

North America

The Dow is off 270 points as of 8:45 am Pacific, pressured by continued anxiety over slowing global growth following the Federal Reserve’s decision to keep rates unchanged…in Toronto, the TSX has plunged 306 points while the Venture is off 6 points at 544…

Equitas Resources Corp. (EQT, TSX-V) & Garland Camp Update

Equitas Resources (EQT, TSX-V) has backed off slightly again this morning but as John pointed out in a chart over the weekend, EQT remains firmly within an upsloping channel as drilling draws near at its Garland Nickel Project 20 miles southeast of the Voisey’s Bay mine…

That neighborhood is becoming more crowded – certainly an endorsement of the exploration potential of this grassroots region…Athabasca Nuclear (ASC, TSX-V), through its CEO Ryan Kalt, announced yesterday that it is “pleased to become the largest mineral tenure holder in the Garland exploration camp. In addition to its exploration potential, advances in technology are another compelling reason to examine this area, a sentiment which is exemplified by the recent staking rush seen in the region.”

Athabasca, playing the “closeology” game for now, has surrounded Equitas‘ holdings on all sides…such a strategy will certainly payoff big-time in the event EQT makes a drilling discovery…

Athabasca Long-Term Chart

Athabasca is worthy of our readers’ due diligence not only for the above, but a confirmed breakout above a long-term downtrend on this 2.5-year weekly chart is a strong clue that some strength could come into this play in the coming weeks…near-term resistance is 4.5 cents…with a modest $1.5 million market cap, a clean balance sheet and some other properties that are being worked, ASC certainly has some upside potential entering the final quarter of the year…

Pretium Resources Corp. (PVG, TSX) Update

Interesting results from Pretium Resources (PVG, TSX) yesterday from a grassroots exploration drill program…Pretium intersected high-grade Gold at depth up to 1 km east of the rich Valley of the Kings…hole SU-657 returned 21.87 g/t Au over 9 meters (932 m to 941 m depth) including 203 g/t Au over 0.5 m, 41.2 g/t Au over 0.5 m, and 33.5 g/t Au over 0.6 m…those results were 650 m east of the Valley of the Kings…a further few hundred meters to the east, SU-654 intersected 16.9 g/t Au over 1.5 m while SU-658 returned 6.2 g/t Au over 2.3 m, including 10.7 g/t Au over 1.2 m…additional drilling is planned to determine if this mineralization is a continuation of the Valley of the Kings or a new stockwork zone…

Brucejack is a world class project with construction commencing and commercial production targeted for 2017…

As we pointed out last Thursday, Charlie Grieg, M.Sc. P.Geo., one of Pretium’s senior geologists, is also playing a key role in helping Garibaldi Resources (GGI, TSX-V) make a new discovery in the prolific Sheslay district approximately 120 miles to the northwest…Greig is highly respected in the B.C. geological community, and his team’s data compilation and insight will be instrumental in pinpointing a potential discovery hole in upcoming drilling at Grizzly Central…

Veteran geologist Charlie Greig (C.J. Greig & Associates Ltd.) at Pretrium’s high-grade Brucejack Project.

Garibaldi Updated Chart

Significant about this 2.5-year weekly GGI chart are the price and RSI(14) breakouts above downtrend lines, the increasing buy pressure (CMF), and a dramatic weakening of the bearish trend since late July (ADX indicator)…in fact, a bullish +DI/-DI cross appears to be in the works in the near future, coinciding perhaps with the start of drilling at Grizzly Central…this is not the kind of chart you bet against…

Cardiff Resources (CRS, TSX-V) Update

On September 9, John pointed out how Cardiff Resources (CRS, TSX-V) appeared to have bottomed around the 10-cent level and was posed for a potential near-term comeback…indeed, it has bounced back and yesterday closed at 16.5 cents on volume of nearly 2 million shares (all CDN exchanges)…on September 8, the company announced that after changing drilling contractors, the company was confident it would complete the Clayton No. 1H well in Texas over the near-term…

Technically, the current CRS pattern is defined by Fib. support at 14 cents and resistance at 22 cents, so a further advance is certainly possible here…CRS is off half a penny at 16 cents as of 8:45 am Pacific…

 Cannabix Technologies Inc. (BLO, CSE, BLOZF, OTC) Update

Quietly, Cannabix Technologies (BLO, CSE) has been forming a solid base in recent months and needs to be watched closely for the possibility of another explosive move to the upside by year-end…as readers know, this has been a very volatile play, but volatility provides opportunities…

Critical support in the mid-teens (CDN) held over the summer and BLO is now up against its still-declining 100-day SMA on the CSE, with a gently rising 50-day SMA directly beneath it…it’s seems quite possible the 100-day could reverse to the upside by the end of October, so that’s something to watch for…

Below is the Cannabix chart based on its OTC trading (Stockcharts.com charts not available yet for CSE listings)…a double bottom appears to have formed, so this could get interesting again in the near future…volume has been relatively light on the CSE since the beginning of August, especially…

BLO is up a penny at 22.5 cents on the CSE as of 8:45 am Pacific…

Note:  John and Jon both hold share positions in EQT and GGI.  Jon also holds a share position in BLO.

Gold has traded between $1,129 and $1,141 so far today…as of 8:00 am Pacific, bullion is down $8 an ounce at $1,132…Silver is up a nickel at $15.23…Copper has added 2 pennies to $2.39…Crude Oil has jumped $1.24 a barrel to $45.92 while the U.S. Dollar Index has gained two-thirds of a point to 95.90…

China remains an aggressive buyer of bullion as Gold deliveries from the Shanghai Gold Exchange continue to set record highs…SGE volumes were up 14.2% in August vs. the same month in 2014, and are on pace to reach almost 2,600 metric tons this year…the planned establishment of a yuan-based Gold fix by the SGE by the end of December further demonstrates that China wants to have its say in the global pricing of the metal…

U.S. Commodity Futures Trading Commission data showed on Friday that hedge funds and money managers slashed their net long positions in COMEX Gold to a 5-week low in the week ended September 15, just before the Fed policy meeting, while increasing their short positions (these groups are usually reliable contrarian indicators)…

New research from JP Morgan shows an uptick in confidence in bullion and Gold equities based on investors polled in its latest Gold and Precious Metals Survey…JP Morgan itself has turned more bullish on the sector…

Silver is clearly finding support from China again, Commerzbank stated in a note today, adding that last month’s imports of 353 tonnes “constituted the highest imports since February 2014“…

China’s imports of refined Nickel dropped to the lowest level in 4 months in August, underscoring flagging demand as the stainless-steel industry slowed…Nickel is one of China’s most important metals with that country comprising just over 50% of global demand according to a report today from Credit Suisse…

BNP Paribas believes the U.S. dollar will have especially strong sensitivity to upcoming comments from Federal Reserve officials after the central bank left interest rates unchanged last week…over the weekend, 3 regional Fed presidents reiterated their expectation to raise rates this year, including San Francisco Fed President John Williams (2015 voter), Richmond Fed President Jeffrey Lacker (2015 voter) and St. Louis Fed President James Bullard (2016 voter)…focus will now shift to the other Fed speakers this week, starting with Atlanta Fed President Dennis Lockhart (2015 voter) later today and leading up to Chair Janet Yellen on Thursday…

Oil Update

Asia

China’s Shanghai Composite gained 59 points or 2% overnight to close at 3157…Japan’s Nikkei went in the opposite direction, however, losing 2% to finish near support at 18070…

China’s top economic planner has announced the implementation of mixed ownership reforms in electricity, Oil, rail and airlines sectors as part of Beijing’s overhaul of its inefficient state-owned enterprises, Reuters cited state media reports today…meanwhile, current market perceptions of China are “thoroughly divorced” from the reality on the ground, according to the latest China Beige Book (CCB) Survey, which has found that while the economy slowed in Q3, there are no signs of an impending growth collapse…

Europe

European markets are up moderately in late trading overseas…Alexis Tsipras is once again Greek prime minister after a decisive victory in yesterday’s snap election in that country…he’ll return to power in a coalition government…speaking to cheering crowds in a central Athens square, Tspiras promised a period of stability and said he “felt vindicated” after quitting in August to start on a clean slate with voters…if Tsipras and Ontario’s Kathleen Wynne can get their respective shaky governments re-elected, Stephen Harper more than deserves another majority in October…

North America

The Dow is up 174 points as of 8:00 am Pacific…after 3 consecutive months of positive gains, the U.S. housing market cooled last month, with sales of existing homes falling more than expected, according to latest data from the National Association of Realtors…

In Toronto, the TSX has added 176 points while the Venture is up 2 points at 552..the Venture is trading above its 20-day moving average (SMA) for the 5th session in a row, the longest such streak since May…

Why Garibaldi Resources’ (GGI, TSX-V) Grizzly Central Could Soon Draw Major Attention

In January 2014, Doubleview Capital (DBV, TSX-V) confirmed a Cu-Au porphyry discovery at its grassroots Hat Project – never previously drilled – on just its 8th drill hole…as low as 4 cents in late December 2013, DBV became a 10-bagger within 4 months…the discovery – critically the second in the district, 10 km southeast and on trend from the Star porphyries – sparked a major staking rush, and helped breathe fresh life into the struggling junior resource sector…each round of subsequent drilling at the Hat has delivered even better results, and now the Association for Mineral Exploration for British Columbia refers to the Sheslay district as “the #1 greenfield project in B.C.”…

This district packs enormous geological punch, and some veteran observers believe it has the potential to literally change the economic landscape of northwest British Columbia…hence, the political gamesmanship we’ve seen from Tahltan Central Government President Chad Day…investors, however, can take comfort in the fact that almost the entire Sheslay district is backstopped by the 2011 Atlin Taku Land Use Plan, a landmark agreement that involved multiple stakeholders and was co-managed by a First Nations group (Taku River Tlingits) and the provincial government…Premier Christy Clark heralded the deal, stating it “will bring certainty for economic development”…

Fast-forward to today, and Garibaldi Resources (GGI, TSX-V) has an even greater opportunity than DBV had in 2013 as first-ever drilling rapidly approaches at Grizzly Central…we say “greater” because the knowledge of the district has literally increased exponentially over the last 2 years after 50 new drill holes – even over the last 6 months given the incredible work that DBV chief geoscientist Dr. Abdul Razique has done to put together the “puzzle” of the Hat…in fact, it wouldn’t be an exaggeration to state that Dr. Razique has written “The Dictionary” for the Sheslay district…

Garibaldi has not only learned from the success and mistakes of others in the district, but they’ve also applied their own impressive expertise to uncover some mysteries surrounding Grizzly Central…led by a team featuring C.J. Greig & Associates (Charlie Greig, M.Sc. P.Geo., is highly regarded in B.C. geological circles and is also a senior geologist for Pretium Resources‘ Brucejack Project (PVG, TSX), Garibaldi has identified a large area of “intense interest” and high geological merit at Grizzly Central that has been “hidden” for decades by a relatively thin but widespread (95%) overburden cover…

Click on the arrow below for the first excerpt of Jon’s interview the other day with GGI President and CEO Steve Regoci:

A view from Grizzly Central, showing a portion of that vast area, with the Kaketsa “heat engine” in the background. Approximately 95% of Grizzly is covered by overburden, masking potential deposits.

Last Thursday’s news from Garibaldi regarding Grizzly Central tells us the following:

1.  It shares similar geological, geophysical and geochemical signatures as those observed at the adjoining Hat and Star properties;

2.  Classic discovery set-up – the drill targets at Grizzly Central are defined by NNE striking signatures producing a series of magnetic highs and geochemical anomalies that run parallel to sizeable magnetic lows…significantly, these features appear to cross-cut the dominant NW-SE striking regional fabric;

3.  Soil samples at Grizzly Central show a strong correlation between copper and other pathfinder elements including Silver.

Two other critical observations on our part:

a)  The drill hole “hit” ratio in the district is remarkable, better than 70% (approximately 90 holes altogether, historically and over the last 2 years);

b)  Once a second discovery is made in a district – the Hat system is nearly 10 km on trend from the Star deposit – this really helps validate the “multiple” deposit theory…some of Canada’s best geologists are looking at the Sheslay district and they’re saying it’s “pregnant” with mineralization from one end to the other…while anything’s possible and there are never any guarantees in this business, it’s almost unimaginable that with deposits on the Hat and the Star, there would be none on the Grizzly which is nearly 3 times the size of those properties combined and has the same rock types, geophysical and geochemical signatures…

The Grizzly is also host to the Kaketsa “heat engine”, a dominant topographical feature that has obviously played some sort of a key role to help form this geological paradise…while each property in the district shares certain common features with its neighbors, no deposits are expected to be exactly the same in terms of character or size…different “domains” appear to exist in the district…new discoveries could be made in this region for many years to come…

This Map Says It All

Below is a map showing airborne magnetic data from the Grizzly and part of the Star (available on the GGI web site)…in consultation with geologists, we’ve added the fault structures around Grizzly Central in dashed white lines, and divided Grizzly Central into 3 major “hot spots” which roughly cover the 25 sq. km Garibaldi defined in its news last Thursday…

The dashed lines represent interpreted fault structures around Grizzly Central…given what’s known about the Sheslay district, the areas bounded by the faults at Grizzly Central are exceptionally high value targets for Cu-Au porphyry deposits…

Our guess is that GGI will drill initially somewhere within “Area 1” (far left corner near cross-cutting fault structures?), just off from a mag high and into a strong geochemical anomaly…

Pure Energy Minerals Ltd. (PE, TSX-V) Update

Pure Energy Minerals (PE, TSX-V) announced this morning that it has initiated the permit applications for fall and winter exploration drill programs on the company’s Clayton Valley South Lithium Brine Project in Nevada…

Robert Mintak, Pure Energy’s CEO, commented: “Priority target areas have been defined for the next phase of drilling that will target expected depths of approximately 500 metres, subject to approval by the BLM. With the recent exercise of warrants, the company is well funded for this next phase of exploration drilling to further delineate and expand upon our recently published inferred resource report, completed in accordance with National Instrument 43-101.”

Technically, PE remains in a consolidation phase following the rapid run-up to a multi-year high of $1.03 last week which added to already technically overbought conditions in the RSI(14) and other indicators…the rising 20-day SMA, not shown in this 2.5-year weekly chart, provides support in the mid-60’s…even stronger support exists around the 50-cent level which was important previous resistance…

PE is off 2 cents at 68 cents as of 8:00 am Pacific…

Sernova Corp. (SVA, TSX-V) Update

Last month (August 7), we suggested readers take a close look at Sernova Corp. (SVA, TSX-V), a speculative non-resource play in the health sector…SVA is a clinical-stage company developing products for the treatment of chronic diseases using therapeutic cells transplanted into an implanted medical device to replace missing proteins or hormones…last week, the company announced the signing of a licence agreement with the University Health Network (UHN) of Toronto to gain exclusive worldwide rights to certain patent-pending technologies that relate to the development of stem cells into glucose-responsive therapeutic cells for the treatment of patients with insulin-dependent diabetes…

John’s first chart on Sernova August 7 showed a strong Fib. support band between 20 and 23 cents that coincided with rising 200 and 300-day SMA’s, an ideal “entry point”…SVA has made a significant climb since then and is now threatening to break out from chart resistance at 31 cents…it’s up 2 cents at 33 cents as of 8:00 am Pacific after touching a high of 37 cents in early trading…as always, perform your own due diligence…

Silver Short-Term Chart Update

Silver has been quite volatile since the beginning of last month, swinging between strong Fib. resistance just below $16 and solid support around $14…the band of Fib. resistance between $15.30 and $16.60 has proven to be very stubborn since early June, certainly due to the reality of a slowing global economy with Silver having a lot of industrial uses…

Silver’s immediate challenges are to overcome Fib. resistance at $15.29 and $15.79…RSI(14) continues to trend higher which is encouraging…

Silver Long-Term Chart Update

An explosive push higher (eventually) – is this actually a scenario that could unfold in Silver over the next couple of years?…quite possibly, given the look of this 34-year monthly chart, though at the moment it’s hard to understand all the factors that could come into play to generate the kind of “Wave 5” move that could develop…

Have we seen the  bottom of “Wave 4”?…that’s quite possible, but still too early to tell…encouragingly, RSI(14) has so far managed to hold support which goes back to 2001…

Sell pressure continues to remain very strong, however, as shown by the CMF – amazingly, at levels not seen in nearly 25 years since the low of $3.51…this intense sell pressure at the moment, which started modestly in early 2013, could continue for a while yet…this should be viewed in a larger context as a bullish contrarian indicator given historical patterns…it doesn’t necessarily mean, however, that Silver has found a bottom just yet…

Note:  John and Jon both hold share positions in GGI.  Jon also holds a share position in DBV.

Hope As The Venture Enters A Fresh “Cycle”  

John’s 39-week cycle chart going back 15 years has been a very useful guide that prevented us and many of our readers from pushing the “panic button” while the market was taking a beating in July and August.  This chart gave us confidence that relief was on the way around the end of August – perhaps even a final capitulation, or at least a stabilization or the beginning of a strong rally.  August 24 may have been a defining date.

As odd as it may seem, consistently over the last 15 years a Venture pattern change (short-term or longer-term) has occurred around the end of each 39-week period.  Why that is, we can only speculate.  However, facts are facts.  The last 5 cycle periods, including the one just completed (each cycle is indicated by a vertical blue line), have also ended with RSI(14) lows or highs (kind of like magnetic lows and highs – they carry significance).  As well, +DI has turned upward after hitting a low not witnessed since the 2008 Crash.

Yes, interestingly, this latest cycle period ended in similar fashion to the one in 2008.  Also noteworthy is the fact that the Venture this summer experienced its second worst July in 14 years.  Only July 2008, with a tumble of just under 16%, was worse than the July 2015 decline of 11.5% going back to 2002 in this market.

Curiously, following both previous July swoons in 2008 and 2002, the Venture commenced a new bull market within 5 months.  Will history repeat itself?

While stranger things have happened, like anti-Oil radicals and tax-hiking socialists sweeping into power in Alberta, it’s certainly premature at this point to suggest the Venture is about to enter a new bull phase, especially given the economic slowdown and uncertainty in China which consumes so much of the world’s commodities.  However, July and August this year for the Venture were very different than those same months last year, and September is unfolding in a different manner as well.  It’s reasonable to believe – based on all the technical evidence at least – that the final 3-and-a-half months of 2015 for the Venture will give investors some reasons to cheer, unlike the situation from September to mid-December 2014.

One thing to watch for during this new Venture cycle period is a breakout above the RSI(14) downtrend line.  The best 39-week cycles for the Venture tend to correlate with weakness in the U.S. dollar.