TSX Venture Exchange and Gold
The Venture Exchange held important support last week and posted gains in 4 out of 5 sessions, closing Friday at 1259 – its 100-day moving average (SMA), 6 points above the top of a support band and a 24-point gain over the previous Friday. Volumes were very modest, in part because of U.S. Thanksgiving Thursday followed by Friday’s shortened American trading session.
With Gold breaking out Friday above resistance at $1,740, the Venture may have the help it needs to finish the month on a strong note. The first hurdle the Index must clear convincingly is its 100-day SMA to show that this is not new resistance. Importantly, the 100-day continues to rise which is bullish.
Below is an updated chart from John that points toward the potential for a positive week ahead.
Amazingly, approximately one-quarter of all Venture-listed companies at the moment are trading under a nickel and 60% are trading at 15 cents or less. This is a beaten-down market that has been on the slow road to recovery over the last several months. We expect a sharp acceleration to the upside during the first quarter of next year, based on numerous factors including technical patterns. Now, we believe, is the ideal time to be searching for bargains but investors must be selective and patient.
Gold
Gold jumped higher Friday, thanks in part to a weaker U.S. Dollar Index which appears to have put in a head-and-shoulders top (more on that Monday). Bullion cut through resistance at $1,740 (the 50-day SMA) Friday like a knife through butter and closed up $22 for the day, finishing at $1,752 for a $38 gain for the week. The $1,740 area is now support while the next significant resistance is $1,760. Major resistance, of course, remains at $1,800. Once Gold breaks above that level (we’re convinced it will, just a matter of when, not if), the party’s on and a re-test of the 2011 all-time high just above $1,900 won’t be far behind. We see this scenario unfolding during Q1 2013.
Below is an updated 6-month daily chart from John. Bulls are firmly in control.
Brazil raised its Gold reserves for a second month to the highest level in more than 11 years. The country’s Gold holdings expanded 17.2 tonnes last month, followed by the purchase of 1.7 tonnes in September. This brings total Brazil Gold reserves to 52.52 tonnes.
Holdings in Gold-backed exchange-traded products rose to a record 2,605.3 metric tonnes this past week. Data from the U.S. Mint also showed sales of 1 ounce Gold Eagles were at 67,000 ounces so far for November, exceeding October’s sales of 59,000 ounces.
Concerns over the loose monetary policy, further quantitative easing and a weak U.S. dollar should support the upward trade in Gold and Silver. Jim Rogers, billionaire and co-founder of the Soros’ Quantum Fund, says that he plans to sell federal debt and purchase more Gold and Silver. Rob McEwen, CEO of McEwen Mining (MAQ, TSX) and founder of Goldcorp (G, TSX), said he expects Gold and Silver prices to reach $2,000 and $50 per ounce in 2013, respectively. Longer term, he sees $5,000 Gold and $200 Silver prices.
Silver had a strong week, outpacing Gold and climbing $1.82 or 5.6% to $34.13. Copper gained 6 pennies to $3.51. Crude Oil added $2.27 to close at $88.28 while the U.S. Dollar Index fell by a full point to finish on a bearish note at 80.22. Significantly, the Dollar Index could not – as we expected – overcome a very stiff resistance band between 81 and 81.50.
The “Big Picture” View Of Gold
As Frank Holmes so effectively illustrates at www.usfunds.com, Gold is being driven by both the Fear Trade and the Love Trade. The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, is having a huge impact on Gold.
The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, governments and world leaders in general, an environment of historically low interest rates and negative real interest rates that won’t end anytime soon (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), money supply growth, massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on. QE3 has arrived, and massive central bank intervention is now taking place to prevent a breakup of the euro zone and to kick-start the global economy. It’s hard to imagine Gold not performing well in this environment.
@jon. Prob a dumb question but I was hoping you could shed some light on what the logic is in the market pushing up a companies sp based off of twinned holes. Specifically referring the the couple RBw are twinning. If assays from old holes are already known which they are then if RBw gets similar grades its not a new discovery, the market ready new these grades existed so why then do they get excited and start jumping on board
Comment by Heath stockford — November 25, 2012 @ 4:51 pm
Emphasis was on “Major” when the presenter talked about RBW on Thursday’s presentation. He said Major exploration update coming next week. Could it be a Major getting involved/backing RBW? If not, it has to be Assay results. What else could it be? Any thoughts Jon?
Comment by Dan — November 25, 2012 @ 5:57 pm
Heath, I will try to answer your question and Dan’s at the same time. First, there’s never such a thing as a dumb question. Second, the market works in mysterious ways and in the case of RBW at the moment, I think there’s more going on with Jewel Ridge than just the twinning of a couple holes. They’re drilling deeper than previous operators and perhaps differently in other respects as well as they aim for long intersections of economic grade. Fresh geological eyes are looking at Jewel Ridge, and that’s a very positive thing. Rainbow says it has brought together a massive amount of historical data which is being analyzed in its entirety for the first time ever. This is usually how discoveries are made. So I believe the market is sensing that, and beginning to react positively. Also, to elaborate on your point, Heath, I think some investors are anticipating the good possibility of one or two stellar holes out of Jewel Ridge, knowing what the historical numbers are, as sure enough, if RBW were to report 2.1 grams per tonne gold over 40 metres, this would be a headline grabber and the market would likely react very positively. Remember back in February when Cadillac ran from 8 cents to 50 cents in one day on essentially replicating an historical result from Utah? (ironically, it was from the Hamburg Pit). Dan, I doubt Rainbow is getting a major involved in any of its projects at this point in time. Still too early for that IMHO. But an important exploration update is probably what is being suggested. If they’re getting the samples (keep in mind this is RC drilling) analyzed right there in Nevada (I don’t know if they are), then perhaps we could see some early results from Jewel Ridge? Should be an interesting week.
Comment by Jon - BMR — November 25, 2012 @ 8:40 pm
Thanks jon. Appreciated
Comment by Heath stockford — November 25, 2012 @ 9:07 pm
GBB forum on website. Answer and comments by CEO Frank Basa
goldbulliondevelopmentcorp.com/en/forum/login.aspx
Comment by Arjan — November 26, 2012 @ 2:53 am