What a difference a year can make.  The intensity of the U.S. dollar’s surge at this time last year caught many investors off guard, and contributed to a brutal sell-off across the commodity sector (though Gold held up reasonably well).

The situation with the greenback as the final quarter of 2015 unfolds is very different.  As you can see on John’s 2-year weekly chart, a bearish descending triangle has formed in the U.S. Dollar Index which has met stiff resistance as expected between 96 and 97 over the last 2 months.  Quite simply, the greenback continues to lose momentum and could easily correct more significantly over the next few months – particularly if there’s a collapse below the highlighted primary support band.  RSI(14), which remained in overbought conditions for 7 months, has formed a bearish “M” and will likely test lower support levels in the weeks ahead.  In addition, the 200-day moving average (SMA) will reverse to the downside prior to year-end if the Dollar Index can’t overcome the 96–97 resistance band and the descending triangle.

Dollar bulls were aided last year and early this year by the repeated promises of Fed officials to finally start an interest rate tightening cycle.  However, weakening global growth led by problems in China, deflationary concerns, and a U.S. economy that just can’t seem to gain traction (hurt, ironically, by the dollar’s record-setting rise) are all combining to make the Fed look confused and foolish.  Friday’s much weaker than expected jobs report did not help.  Astute traders are not betting on a rate hike now until March 2016 at the earliest, based on fed funds futures.

In short, the still-crowded dollar trade has the potential to turn into a rush for the exits which would have positive implications for Gold, Oil and the Venture.

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Friday’s intra-day turnaround by the broader equity markets was impressive to say the least, while Gold finished the week in sparkling fashion thanks to shifting U.S. interest rate expectations.

Equally noteworthy Friday was the powerful intra-day move by Equitas Resources (EQT, TSX-V) which tested superb chart and Fib. support at 15 cents, and then immediately reversed and charged like a raging bull in the final few hours of trading to close at 20.5 cents on total volume (all CDN exchanges) of 4.4 million shares.  What ignited the rebound may have been a combination of factors.  Keep in mind that once a company is drilling a very prospective project – in this case a grassroots property that has the potential to deliver an important fresh discovery – an extraordinary surge can come at almost any moment.  A quality Canadian exploration play, if it’s being managed by the right people as it is in the case of Equitas, still carries considerable risk but also offers incredible potential leverage that’s simply very hard to find with any other financial instrument.  History has shown us the truth of that.

Technically, the significance of the end-of-the-week move by Equitas cannot be understated.  Below are several key “takeaways” from John’s updated 3-month daily chart:

1.  As we pointed out during the last half of September, EQT started forming a “pennant” that was similar to the one in August that lasted 13 sessions and ultimately led to an important breakout (pennants are generally expected to last 15 trading days or less).  Interestingly, EQT staged a breakout above this 2nd pennant also on the 13th session Friday (who said “13” is an unlucky number?).  Technicians will look for “confirmation” Monday;

2.  Not only was EQT trading in a bullish pennant pattern the past couple of weeks, but note also the broad upsloping channel with support at 15 cents which also includes the previous Fib. 15-cent resistance (additional new support).  Nervous nellies who were dumping in the mid-teens Friday simply may not believe in (or understand) technical analysis.  TA is as much of an art as it is a science, but an investor’s toolkit must include the very important TA component;

3.  RSI(14) found support around 50% just it like it did when the stock consolidated in July and August.  RSI(14) is now at 61% with plenty of room to head higher;

4.  Even during the recent healthy pullback from the high of 21.5 cents September 15, buy pressure (CMF) in EQT remained steady and in fact started to increase at the end of September;

5.  The ADX indicator shows a very bullish trend with no extremes yet.

It’s not unusual for speculation to build while the drill keeps turning.  To use a baseball analogy, EQT is swinging hard in just the very first inning of what could turn out to be an incredibly exciting game.

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

Gold has traded between $1,104 and $1,143 so far today after a big “miss” in the U.S. jobs report…as of 8:45 am Pacific, bullion is up $26 an ounce at $1,139…Silver has surged 70 cents to $15.22…Copper is flat at $2.32…Crude Oil is off 42 cents at $44.32 while the U.S. Dollar Index has tumbled more than half a point to 95.54…

The U.S. economy posted another month of weak job growth in September, suggesting a high dollar and global economic struggles are sapping momentum from the U.S. expansion…non-farm payrolls increased a seasonally adjusted 142,000 in September (private sector payrolls grew by just 118,000), far below the consensus forecast and the trend over the past 18 months, according to this morning’s report from the Labor Department…

Wages also dipped slightly last month while the labor force participation rate, already hovering near the lowest level since the 1970’s under the Obama administration, fell to 62.4% from 62.6%…

Earlier this week it was reported that the manufacturing sector, hit by the strong dollar and weak global demand, expanded at the weakest pace in more than 2 years last month…many economists now estimate that economic growth slowed to an annual pace of between 1% and 2% in the 3rd quarter…

Quite simply, the Fed appears to have missed its window to hike interest rates for the first time in a decade…it now faces a real danger of losing credibility with the market given its “guidance” over the past year…Fed funds futures are now pricing the first rate hike will come no earlier than March 2016…

It appears long-time Fed foe Peter Schiff, CEO of Euro Capital, may have been bang-on when he stated recently in an interview on CNBC that the likelihood of another round of easing is actually greater than a rate hike:  “The whole world has been fooled by this Fed con,” said the Euro Pacific Capital CEO.  “Most people believe the Fed. They believe the Fed is going to raise rates.  I don’t think she (Fed Chair Janet Yellen) ever intended to hike rates.  They are in a monetary roach hotel, and they will never be able to raise rates back up.”

An Increasingly Bearish U.S. Dollar Index

We’ve maintained since the spring that the Dollar Index is in trouble, and the technical and the fundamentals are both backing that up…if the Dollar Index were to plunge to base support around 88 in the coming months, this would likely give Gold a strong lift while taking some pressure off the beaten-down commodity sector as a whole…

This chart shows a Dollar Index clearly in a downtrend that should accelerate during this 4th quarter, especially with the unlikely prospect now of a Fed rate hike until sometime in 2016 (maybe?)…the Dollar bulls, who were stampeding from last summer to the spring of this year, were betting on the Fed beginning a tightening cycle by now which just isn’t happening…

Dollar Index-Venture Comparative

The historically extreme relative strength of the greenback vs. the Venture should begin to weaken during this 4th quarter as right now we’re likely at the point where the big gap you see in this chart between the Dollar Index (black line) and the Venture (red line) should begin to narrow…this increases the likelihood of some improvement in the Venture over the next 6 months, giving investors a better overall climate within which to operate than the one we’ve been hampered with over the past year…the Venture typically struggles during a period of U.S. dollar strength, and the dollar’s technical posture will be much weaker entering 2016 than it was coming into 2015…

Mining The Moon

Moon Express, a start-up that plans to mine the lunar surface for rare and precious metals, took one step closer to making its moonshot a reality yesterday, signing a deal with Los Angeles-based Rocket Lab for 3 robotic lunar craft launches starting in 2017…among the moon’s mineral riches: Gold, Cobalt, Iron, Palladium, Platinum, Tungsten and Helium-3, a gas that can be used in future fusion reactors to provide nuclear power without radioactive waste…

Moon Express has won more than $500,000 under NASA’s Innovative Lunar Demonstration Data Program and $1.25 million as a part of Google’s Lunar XPRIZE competition, which will award $30 million to the first company that lands a commercial spacecraft on the moon, travels 500 meters across its surface and sends high-definition images and video back to Earth…

Mining Voisey’s Bay

Equitas Mining (EQT, TSX-V) is on the rebound after weakness at the open this morning as it briefly traded as low as 14.5 cents…Fib. support at 15 cents is superb (this level also represents the bottom of the broad upsloping channel), and the pennant formation is still intact despite the weakness of the last few days…buy pressure (CMF) has remained steady during this bout of profit-taking…

EQT is unchanged at 16 cents as of 8:45 am Pacific…

This is still very much the “first inning” of drilling at Equitas‘ Garland Nickel Project 20 miles southeast of the Voisey’s Bay mine…EQT’s technical team, led by Everett Makela (pictured below at the Garland camp) is blessed with intimate knowledge of the Voisey’s Bay discovery and the potential of the surrounding area, so the drilling of this project could not be in better hands…if there are massive sulphides and a deposit to be found at Garland, this group is as capable as any to deliver a discovery hole…

Today’s Equity Markets

Asia

Japan’s Nikkei was relatively unchanged overnight, closing the week at 17725…on the data front, Japanese household spending increased 2.9% in August from a year earlier, beating Reuters‘ estimates for a 0.4% rise…

China’s Shanghai Composite remains closed for the week-long National Holiday…

Europe

European markets were up modestly today…producer prices in the euro zone, however, were down 0.8% in August from July and down 2.6%, year-on-year…the declines were more than forecasters expected and added to the mounting fears of price deflation gripping the European Union…this latest news adds pressure on the ECB to implement further monetary policy easing measures…

North America

The Dow was down sharply earlier this morning but has since recovered most of its losses…it’s down 92 points as of 8:45 am Pacific…

In Toronto, the TSX is off just 64 points, buoyed by a strong move in the TSX Gold Index…meanwhile, the Venture has shed 3 points to 523 as of 8:45 am Pacific…

The surge in Canadian home prices in the 2nd quarter of 2015 ranked among the biggest gains in global real estate markets, according to a Scotiabank study released yesterday…with an 8.2% rise year over year, Canada registered the fourth highest pace of growth in the world…Ireland, with a 13.3% gain in prices, topped the list in the bank’s Global Real Estate Trends…Sweden saw a 10.5% gain while Australia was next at 8.3%…

Gold Stocks

One reason we’re bullish on the TSX Gold Index is the current technical posture of the DUST, the triple-short bear Gold Miners ETF on the NYSE…the DUST has been in a downsloping channel since hitting a high of $83 in the summer of 2013, so momentum on the short side has been waning…the pattern is such that the DUST has been a smart sell when it’s near the top of the downsloping channel (like it has been recently) and a smart buy when it has traded near the bottom of that channel…at some point, it’ll either break above the channel or collapse below it…the latter is the more likely outcome, in our view…

We expect the TSX Gold Index to finish the year on a bullish note – the pummeling of Gold stocks has simply reached the exhaustion point…

Pure Energy Minerals (PE, TSX-V) Update

This fresh 6-month daily chart for Pure Energy Minerals (PE, TSX-V) from John underscores the strong technical support for the stock in a band between between 50 and 55 cents, underpinned by a rising 50-day moving average (SMA) and the previous Fib. resistance level which was 47 cents…

Yesterday, PE announced that it will be holding an investor conference call next Thursday (Oct. 8) at 9:00 am Pacific…during this call, CEO Robert Mintak and other personnel will be commenting on the company’s upcoming fully financed exploration program and discussing recent corporate developments….their last conference call (August 18) was very worthwhile to listen to…

Pure Energy emphasized yesterday that it’s in a strong financial position for the remainder of 2015 and beyond, and is not actively pursuing any equity financing at this point in time…they’re obviously concerned about the fact the stock price dropped in half in just 7 trading sessions, between Sept. 16 and 24, but much of that can be attributed to technical factors as temporarily extreme overbought conditions simply needed to be “cleansed”, and that is what has occurred…

PE is up 4 cents at 55 cents as of 8:45 am Pacific…

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

Gold, trying to snap a 4-session losing skid ahead of tomorrow’s key U.S. jobs report, is relatively flat at $1,115 as of 11:00 am Pacific…Silver is up a penny at $14.52…Copper is off 4 cents at $2.30…Crude Oil has been volatile today due to geopolitical events and a hurricane watch on the U.S. east coast…it’s currently off 11 cents at $44.98 a barrel, as the hurricane fears have subdued, while the U.S. Dollar Index has slipped more than one-tenth of a point to 96.12…

A risk premium could build in Crude over the situation in Syria which may also potentially impact Gold as well…Russia’s launch of airstrikes in Syria yesterday marks its biggest Middle East intervention in decades, thanks to a weak administration in Washington, and reports are that these airstrikes are actually targeting U.S.-backed rebels in an effort to aid the Assad regime…the goal of Putin’s operation appears to be to recapture territory the Syrian government lost to rebels, not specifically to target ISIS, with Reuters reporting that the Russian airstrikes will soon be accompanied by Iranian and Lebanese Hezbollah ground forces…Obama’s “strategy” of defeating ISIS in Syria and promoting the Free Syrian Army has spectacularly failed to bring about its stated aims, and now Putin has jumped in…how this is all going to play out is anyone’s guess, but a world without effective American leadership – and Vladimir Putin allowed to do whatever he wishes – is not a safer place…

Silver Coin Market In Supply Squeeze

Reuters reported this morning that the global Silver coin market is in the grips of an unprecedented supply squeeze, forcing some mints to ration sales and step up overtime while sending U.S. buyers racing abroad to fulfill a sudden surge in demand…the U.S. Mint began setting weekly sales quotas for its flagship American Eagle Silver coins in July because it can’t meet demand, and the Canadian mint followed suit after record monthly sales in July…in Australia, the Perth Mint sold a record of more than 2.5 million ounces of Silver this month, nearly 4 times more than in August, and has begun rationing supply of a new line of coins this month, a mint official said…

“Silver (coin) demand is absolutely through the roof,” said Neil Vance, wholesale manager at the Perth Mint.  “There seems to be a bit of frenzy as people think there is a shortage of silver. But in fact it is a (crunch in) manufacturing capacity.”

Meanwhile, the American Eagle Gold coin saw total sales of 397,000 ounces last quarter, compared to 127,000 ounces sold in Q2…in addition, the Mint sold 74,000 ounces of its American Buffalo Gold coin in Q3, 82% higher than sales seen from April to June…

Gold Seasonality Chart

Gold did not enjoy its typical September as bullion declined 1.7% last month vs. its average gain of 2.4% going back to 1996…October should prove interesting…while Gold has risen in most Septembers (two-thirds of the time) over the last 2 decades, it has done just the opposite in October…the best 3-month period for bullion has been July-August-September, but November has had some good kicks to the upside as well…

CRB Index 10-Year Monthly Chart

The CRB Index has so far held on to critical support which is the 180 double bottom low (not shown on this chart) that formed between 1999 and 2002…while it’s impossible to say at this point if the index will ultimately hold that support (the overall trend remains bearish), a significant rally could certainly develop given historically extreme oversold RSI(14) conditions…

The CRB, heavily weighted of course by Crude, is flat at 193 as of 11:00 am Pacific…the 200 level is near-term resistance – a push above that could jump-start a rally…

Today’s Equity Markets

Asia

China’s official manufacturing purchasing managers’ index (PMI) ticked up to 49.8 in September, slightly better than expectations, vs. a reading of 49.7 in August…the final Caixin/Markit PMI, however, fell to a fresh 6-and-a-half-year low of 47.2 in September, vs. an earlier flash estimate of 47…Chinese markets are closed for the week-long National Day holiday starting from today…

In Japan, the Nikkei shot up 334 points or 2% overnight to close at 17722…

Europe

European markets were mixed today…

North America

The Dow is off 113 points as of 11:00 am Pacific…the U.S. Manufacturing sector remains in expansion territory but momentum continues to wane, according to data from the Institute for Supply Management…the ISM’s PMI showed a reading of 50.2% last month, down from the August reading of 51.1% and below expectations…the PMI has been showing a relatively steady decline in the manufacturing sector since October 2014 when the index peaked at 57.9…

In Toronto, the TSX is down 111 points while the Venture is bucking the trend, up 1 point to 525…the Canadian economy is performing better than expected, especially considering the weakness in commodities…yesterday, Stats Canada reported that GDP grew 0.3% in July, close to matching the 0.4% gain of the previous month…

Fission Uranium (FCU, TSX-V) Update

Fission Uranium (FCU, TSX) has proven up a world class Uranium asset in Saskatchewan (Patterson Lake South), but the stock steadily headed lower after the early July announcement of a merger between Fission and Denison Mines (DML, TSX)…while FCU’s tumble from an intra-day high of $1.10 July 7 to the low 60’s now is a reflection of overall market conditions the last few months, it’s also true that investors just aren’t too keen on this merger…one has to wonder right now if it’ll even go ahead…

The way to make money in the market is to acquire quality stocks at a discount, not by chasing the flavor of the day…John’s chart is telling us that Fission is trading in an attractive area at the moment, very close to the bottom of a downsloping flag…directly below that, there’s excellent support at 50 cents (a Fib. level)…

October last year was a great time to be accumulating Fission – it more than doubled from a low of 65 cents…this October likely represents another unusual opportunity, especially considering the very oversold technical conditions and the strong support levels…

FCU is off a penny at 61 cents as of 11:00 am Pacific…

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

Heavy volume in NexGen Energy (NXE, TSX-V) this week with some sell pressure, but the stock has reclaimed the 60-cent support level after Monday’s sharp sell-off on no news…Monday was just a bad day across all market sectors, and free-trading NXE stock from its late May financing at 50 cents has come into play…

As reported Sept. 22, NexGen 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…this is shaping up to be a tremendous deposit…

NXE is unchanged at 62 cents as of 11:00 am Pacific on total volume (all CDN exchanges) of 3.3 million shares…definitely some heavy fund involvement here as they’re selling the private placement paper and riding the warrants…

Garibaldi Resources Corp. (GGI, TSX-V) Update

Garibaldi Resources (GGI, TSX-V) has developed a very powerful case for a potential new drilling discovery in the Sheslay district, and keep in mind it was Doubleview’s Hat discovery in early 2014 that sparked a staking rush and helped rekindle interest in the junior exploration sector…

Activity at the Grizzly has recently intensified after crews first arrived on the ground in mid-August to carry out final work in advance of first-ever drilling…Garibaldi has a unique advantage at the moment, given the wealth of knowledge regarding the district that it and its neighbors have accumulated over the past 2 years…as GGI reported September 17, and as President and CEO Steve Regoci discusses in this short interview, it’s becoming increasingly evident that the geological, geochemical and geophysical signatures throughout the Grizzly Central area – never previously drilled – are closely matching those observed at the adjoining Hat and Star porphyries…

Click on the arrow below to listen to this interview excerpt…

Technically, GGI is strongly supported by a rising 50-day moving average (SMA), currently 8 cents, with next important resistance at 10 cents following the breakout above the downtrend line…

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

The Venture has performed better in October than most investors probably realize, historically rising 60% of the time.  The average return for October has been slightly negative (-1%), but this is a month when a trend toward seasonal strength slowly begins (from –1.4% in September to –0.3% in November, +4.5% in December, +4.3% in January and +4.4% in February).

Interestingly, in the two years (2008 and 2002) when the 3rd quarter for the Venture was comparable to the one just completed, a fresh bull market began before the end of December.  Will history repeat itself?