Gold has traded in a range between $1,404 and $1,430 so far today…as of 7:40 am Pacific, the yellow metal is down $18 an ounce at $1,409…Silver is off 57 cents at $22.84…Copper is off its lows but still down 3 cents to $3.11 on weaker-than-expected PMI numbers out of China…Crude Oil is 64 cents lower at $88.55 while the U.S. Dollar Index has gained one-fifth of a point to 82.85…
The U.S. Mint’s website says it has sold 167,500 ounces in Gold coins so far this month, more than eight times year ago levels (the most since May, 2010) and up from 54,000 for all of last month…this is an example of the physical buying, at the consumer level, that has come into Gold after its recent spectacular drop of more than $200 an ounce…but Gold has nonetheless suffered some major technical damage, as our charts have shown, and reclaiming the $1,500 level anytime soon is going to require some incredible heavy lifting…Fibonacci resistance levels are at $1,453 and $1,484, and it’s hard to imagine the shorts aren’t already lining up…
While Mint sales are up dramatically this month, this has also been the weakest month on record for Gold-backed ETP’s around the world…outflows year-to-date are reported to be 277 tons, nearly equivalent to the total (279 tons) for all of last year…”This highlights the dichotomy that has developed between retail and institutional investors”, stated Barclays Capital…
Goldman Sachs said this morning it closed out its short Gold trade initiated earlier this month and is shifting its short-term position in commodities to neutral from overweight, based on a weakening global economic outlook…“We have closed our recommendation to short Comex Gold, as prices moved above the stop at $1,400 an ounce…we have exited the trade significantly below our original target of $1,450 an ounce for a potential gain of 10.4%”, the firm said…
The TSX Gold Index – In Reverse
It’s often useful, and sometimes very profitable, to take a close look at the HGD which is the Horizons Bear Plus ETF for the S&P/TSX Global Gold Index…it climbed from $15 to $25, a gain of 67%, over just 7 sessions between April 9 and April 17…John’s 6-month chart shows that the bullish trend (for the short-term) has started to weaken, despite this morning’s strength, and a further drop to the 38.2% Fib. level just below $19 is very possible to help unwind overbought conditions…this supports the view that Gold has a good chance of pushing a little higher in the coming days to challenge the resistance levels John has outlined ($1,453 and $1,484)…speculative traders may therefore wish to consider the HGU (the Horizons Bull Plus ETF) to play this potential short-term opportunity while keeping in mind that the “big picture” trend for the HGD remains very bullish…as always, perform your own due diligence…the HGD is up $1.19 to $23.15 through the 80 minutes of trading today while the HGU is down 14 cents at $2.87 which likely presents a strategic entry point…
TSX – S&P 500 Comparison
Below is a long-term chart from John that serves as a very good “visual” of an important change in trend that actually began early last year between the performance of the TSX Composite and the S&P 500…going back over the last decade, you’ll notice the TSX has a history of experiencing periods (usually several years in duration) of under-performance or over-performance vs. the S&P…these periods coincide with strength or weakness in commodities…unfortunately, the TSX has returned to a period of under-performance vs. the S&P 500 and this is a strong sign that many commodities are likely going to struggle for the foreseeable future…adding to those problems, of course, are governments in at least a couple of important jurisdictions (Quebec, and soon British Columbia where the NDP is expected to gain power in next month’s elections) that are not resource-friendly…meanwhile, as the Globe and Mail reported yesterday, Standard & Poor’s is adding to the gloom with a study arguing that Canada’s economy will struggle not only with weak commodity prices but also with restrained consumer spending…“After being a growth leader among advanced economies in 2010 and 2011, Standard & Poor’s Ratings Services now sees the country taking a back seat in the global recovery”, stated Robert Palombi, a fixed-income analyst at Standard & Poor’s…between 2007 and 2011, Canada’s gross domestic product outperformed U.S. GDP, either through bigger growth or smaller declines…that marked the longest stretch of outperformance in at least 30 years, according to S&P…a noticeable part of the problem now is that commodities are no longer providing much support to either the Canadian economy or the stock market, where they represent about half of the TSX Composite in terms of their weighting…S&P believes that U.S. and Chinese growth won’t be strong enough to lift the global economy and drive commodity prices higher…
Today’s Markets
Some better-than-expected earnings reports, and rising new home sales, have lifted the Dow this morning…as of 7:40 am Pacific, it’s up 131 points at 14698…the TSX is off 29 points while the Venture is flat at 944…in Asia, China’s Shanghai Composite plunged 2.6% overnight after a preliminary reading of HSBC and Market Economics’ purchasing managers’ index fell from 51.6 in March to 50.5 in April…the survey was the first peek at economic data from China for April, giving investors an opportunity to assess the health of Asia’s largest economy after first quarter growth came in short of expectations…meanwhile, a sharp drop in German business activity overshadowed an easing downturn in France in April, surveys showed today, raising concerns over a further economic contraction in the euro zone…Markit’s flash euro zone services PMI, an early gauge of business activity each month, rose to 46.6 in April from 46.4 in March, below the 50 line that divides growth from contraction…the overall number was in line with expectations, but the extent of the decline in Germany was an unpleasant surprise…European shares, however, are up strongly in late trading as traders/investors have reacted enthusiastically to a positive Spanish bond auction…
OECD Wars Against Growth In Japanese Debt
The Organization for Economic Cooperation and Development (OECD) has warned Japan that taming its vast debt remains the country’s “paramount policy challenge”, as prime minister Shinzo Abe goes all out to reflate the sluggish economy via aggressive fiscal and monetary stimulus…in its annual survey of Japan, presented in Tokyo today, the OECD noted that government debt has risen faster than the economy has grown for more than 20 years, “almost without interruption”…
Fission Energy Corp. (FIS, TSX-V) Update
Fission Energy (FIS, TSX-V) and Alpha Minerals Inc. (AMW, TSX-V) reported excellent drill results yesterday from their Patterson lake uranium discovery including 53 metres grading 6.57% U3O8 in PLS13-051…that interval included 10.5 metres at 29.26% U3O8…this was a vertical hole completed to a depth of 282.5 metres, and it was collared 405 metres east of discovery hole PLS12-022 (8.5 metres at 1.07% U3O8…FIS climbed as high as 94 cents in early trading this morning after it closed up 6 cents yesterday on 2.8 million shares (all exchanges)…importantly, the stock was able to hold above its opening price yesterday as there was a gap-up following the halt…technically, FIS is starting to look stronger, as shown in John’s updated chart below, and a close above the 10-day moving average (SMA) at 92 cents today would be another encouraging sign…as of 7:40 am Pacific, FIS is up a penny at 91 cents…
Note: John, Jon and Terry do not hold share positions in FIS.
Not blaming anyone but myself. RBW is the worst investment I’ve ever done in my whole life. Some are going to say “I told you so”. And you did. I was aiming for the the stars but hit the ground big time! I own 68k stocks at 0,2. (-77%). And I realize I wont see my money again, in a veeery long time, or if ever again. I’m done here.
Comment by Kalkan - Sweden — April 23, 2013 @ 1:04 pm
The last bull has turned bearish! This is the buy signal I’ve been waitning for. Thank you BMR!
Comment by Don — April 23, 2013 @ 10:49 pm
At RBW, Mr. Murray acquired 140,000 shares, and Johnston 75,000 shares, both in the public market.
Comment by Alexandre — April 24, 2013 @ 5:38 am
John McCoach said he can guarantee that 500 issuers won’t disappear from the exchange this year.
The President of the TSX Venture Exchange has put the kibosh on speculation that hundreds of small-cap issuers will soon have their shares delisted.
“I can guarantee that 500 companies are not going to disappear,” said John McCoach.
Rather, he said it’s likely that only 38 companies will be delisted this year, an increase from 27 in 2012, but down from 34 in 2011.
McCoach made the pledge while he was moderating a TSX Venture Exchange townhall meeting in Vancouver Monday that was set up to promote discussion about issues that are contributing to a bear market for risky small cap stocks.
Issues contributing to the bear market include lack of significant new mineral discoveries and a flight to safety as investors react to global uncertainty and declining commodity prices, particularly gold.
As junior companies struggle to raise money for mineral exploration, an over emphasis on regulation is driving up to cost of doing business in the sector, the well-attended meeting was told.
It is a scenario that prompted investment newsletter publishers, such as John Kaiser, to predict that hundreds of small cap companies will soon disappear from public markets in Canada.
In a recent interview, Kaiser said that of the 1,800 junior resource companies that he covers, as many as 524 have less than $200,000 in working capital. “These are companies that typically trade in Canada on the TSX and TSX Venture Exchange,’’ he said.
But McCoach said he is confident that the actual number will be 38 in 2013. This because 90% of the exchange’s 2,245 issuers have already paid their sustaining fees, he said.
Speaking from an investor’s point of view, Sprott Global founder Rick Rule said mineral exploration is a capital intensive, cyclical business and the market is starved for results.
However, he said the recent success of companies such as GoldQuest Mining Corp. (TSX: V.GQC, Stock Forum), Reservoir Minerals Inc. (TSX: V.RMC,Stock Forum) and Africa Oil Corp. (TSX: V.AOI, Stock Forum), means that the situation is far from hopeless.
“Give us a reason to fund something and we will fund it,’’ he said.
Rule was one of three panelists who participated in Monday’s townhall meeting. The others were Kevan Cowan, President of TSX Markets and Group Equities, and Fiore Financial Corp. executive vice-president Gordon Keep. Also participating was Paul Bourque, Executive Director of the British Columbia Securities Commission.
There was general agreement Monday that the TSX Venture is perhaps unique and remains a top vehicle for resource companies who are going out into the world and raising new capital.
“This exchange doesn’t really have any competition,’’ Rule said.
ABOUT THE AUTHOR
Peter Kennedy
Comment by STEVEN — April 24, 2013 @ 5:42 am
321gold.com/editorials/handwerger/handwerger042413.html
A LITTLE MORE OPTIMISTIC JON/JOHN?
Comment by STEVEN — April 24, 2013 @ 5:43 am
Hello Jon,
What would you say about RBW. I know some time back you were very optimistic when this stock price was $18/= plus. Don’t you want to pump the price now?????.
Please comments…Tkx
Comment by Eric Benson — April 24, 2013 @ 6:25 am