Happy Independence Day to our American friends…due to the U.S. holiday, this is an abbreviated edition of Morning Musings as Canadian markets will be quiet today…
Today’s Markets & Tidbits
Gold has traded in a tight range so far today, between $1,244 and $1,257…as of 7:00 am Pacific, bullion is down $1 an ounce at $1,251…Silver is off 16 cents at $19.56…Copper has shed 2 pennies to $3.15…Crude Oil is off slightly at $101.08 while the U.S. Dollar Index has surged nearly two-thirds of a point higher to 83.74, thanks to weakness in the euro…
Tomorrow’s U.S. non-farm payrolls report will be critical in shaping the near-term direction of Gold and the equity markets…the report is expected to show the economy created 165,000 jobs last month…the data could influence when the Federal Reserve will begin scaling back its $85 billion monthly bond buying stimulus program…
The European Central Bank maintained its accommodative stance today, keeping its main refinancing rate at a record low of 0.5% and leaving deposit rates unchanged…the bank held off on further rate cuts, amid turmoil in Portugal which has led to volatility in stocks and a jump in bond yields…it follows a cut in the interest rates from 0.75% in May – the first reduction in 10 months…in a news conference following the rate decision, Mario Draghi said the ECB’s key rates would remain at current or lower levels for an “extended period of time” which is well into the future…when pressed for a time frame, Draghi stated, “An extended period of time is an extended period of time, it is not 6 months, or 12 months…our exit is very distant”…he added that he was open to all rate options, including a negative deposit rate…
Bank of England officials kept their stimulus program on hold today as Mark Carney’s first policy meeting as governor coincided with data pointing to an improving economy…the 9-member Monetary Policy Committee held quantitative easing at 375 billion pounds ($572 billion), as expected…Carney of course replaced Mervyn King on July 1, becoming the first foreigner to run the 319 year-old central bank…reports this week on manufacturing, services and the housing market signaled that the U.K. economy is strengthening…
The Financial Times reported this morning that China’s cash crunch appears to have drawn to a close with money rates falling back to normal levels after the central bank steadied the market with a pledge to backstop ailing lenders and provide liquidity injections to support the financial system…the 7-day bond repurchase rate, a key gauge of short-term liquidity in China, fell to 3.98% today…it marked the 7th consecutive daily decline since rates hit double digits 2 weeks ago…it was also the first time since late May that the repo rate fell below 4%, a level that usually marks the high end of its trading range…
The Financial Times also reported this morning that China is considering a dramatic relaxation of its capital controls over the next few years as part of an accelerated push to make its currency freely tradable, despite international advisers warning against hasty implementation of reform…this would allow businesses, investors and individuals to trade the renminbi across China’s borders with no significant barriers, a liberalization necessary for the Chinese currency to emerge as a global rival to the dollar…
China should increase its Gold holdings in its large foreign-exchange reserves to help make the yuan a truly global currency, the president of the nation’s largest Gold producer stated recently (according to a Wall Street Journal report June 28)…”Look at the dollar and the euro,” Sun Zhaoxue of China National Gold Group Corp., the country’s largest Gold producer by output, said on the sidelines of a financial forum in Shanghai…”Neither became a global currency without Gold reserves”…China’s foreign-exchange reserves, the world’s largest, rose to $3.44 trillion at the end of the first quarter, according to central-bank data released in April…Beijing has been trying to step up diversification of its huge portfolio away from U.S. government debt, in part by increasing its Gold holdings…but China is still widely regarded by analysts as holding too little Gold in its reserves, particularly relative to the issuers of the two dominant global currencies – the U.S. dollar and the euro…according to data from the World Gold Council, it’s believed that China holds just under 2% of its official reserves in bullion…that compares with 70% to 75% in the U.S., Germany and France…
Asian markets were mostly higher overnight, though Japan’s Nikkei average bucked the trend by falling 37 points to 14019…China’s Shanghai Composite gained 12 points to 2006…European shares are up strongly in late trading overseas…the TSX, meanwhile, is up 64 points to 12210 while the Venture is 2 points higher at 883 as of 7:00 am Pacific…it’ll be a light volume day in Canada…
Venture-Canadian Dollar Comparative Chart
The Venture performs best when the Canadian dollar is in an uptrend, so the recent weakness in the dollar has not been helpful and has coincided with the Venture breaking below support in the 920’s June 20th…current support for the Venture is at 860 which was successfully tested last week…the loonie, trading slightly below 95 cents this morning, appears to be in a good position for a near-term rally out of oversold conditions, but the concern is that the primary trend has a negative bias…a 90-cent dollar can’t be ruled out, as we’ve mentioned previously…based on historical patterns, perhaps only when the dollar bottoms will the Venture finally bottom…below is Dollar-CDNX 12-year monthly chart from John…
Colorado Resources (CXO, TSX-V) Updated Chart
Colorado Resources (CXO, TSX-V) came back to life yesterday…it gapped up slightly at the open to 72 cents and held above that price throughout the day, closing a nickel higher at 74 cents on the strongest volume (702,000) in 9 sessions…after 30 minutes of trading today, CXO is up another 4 cents to 78 cents but volume is light…the current drill program at North ROK started in mid-June, so it’s realistic not to expect assay results from the next batch of holes until sometime in August…there’s a good chance that speculation will build in the meantime, given that the current holes are taking direct aim at a very strong mag high feature…strong technical support in the stock has held in the 60’s after a rather normal retracement from the May 21 intra-day high of $1.74…the next Fibonacci resistance is at 85 cents, a key level to watch…we’re bullish on how things are coming together on the ground…
West Cirque Resources (WCQ, TSX-V) Set To Drill Castle Property
As we’ve mentioned, West Cirque Resources (WCQ, TSX-V) is an emerging potential star in the Iskut area with its 3 properties – most notably, the Castle Property which is 15 km west of the North ROK discovery…yesterday, WCQ announced that a Phase 2 drill program will begin during the second half of this month at Castle…it will test a 400-metre-by-1,500-metre-long coincident magnetic and chargeability high outlined in September, 2012, following phase 1 drilling…the central core of the anomaly underlies an outcropping zone of quartz-magnetite-chalcopyrite stockwork mineralization in monzodiorite porphyry, discovered in late August, 2012…in addition to the drill program, mapping and sampling will be carried out in order to better define geological controls and to outline additional targets within the 5.5-km-long Castle porphyry system…WCQ is operator of the program which is being funded by Freeport McMoRan Corp. of Canada as part of its JV agreement with WCQ…at the same time, West Cirque is busy with its promising Aspen Grove Project between Merritt and Princeton…
Pacific Potash Corp. (PP, TSX-V) Update
Aggressive buying came in right at the open yesterday on Pacific Potash (PP, TSX-V) and it held at or above its opening price (17 cents) throughout the day, closing up 2.5 cents at 17 cents on the best volume (3.3 million shares) since May 22…as of 7:00 am Pacific today, PP is up another penny at 18 cents…PP’s Amazonas Potash Property in Brazil holds excellent potential, and the company’s hope is that Amazonas can develop into a domestic source of fertilizer products for the growing Brazilian market, and serve China as well…Brazil imported 7.5 million tonnes of potash in 2012, accounting for over 90% of consumption…
Below is an updated PP chart from John (2.5-year weekly) which shows a bullish cup-with-handle pattern…
Note: John and Terry do not hold share positions in PP. John holds a share position in CXO while Jon holds share positions in CXO and PP.
Jon – I would be interested in knowing your thoughts about the “clarification” news release issued today by v.VVN?
Comment by Steven — July 4, 2013 @ 7:19 am
Again, this is not a confidence builder IMHO, and it further confuses the picture. Two things bother me: 1) The introduction of the Fortuna Property Tuesday, which I’ve already alluded to; and (2); In this business, and in these markets, it’s critical to drill your #1 target right off the bat. What we know now, based on this week’s news, is that they drilled a secondary target first, because it was the easiest and cheapest target to drill (right along the roadside). To me that doesn’t make sense. A hole (or series of holes) needs to be drilled right into the heart of that magnetic anomaly (which now they say they’re going to do with helicopter support in August). It’s a syenite intrusive controlled by the 2 regional faults that intersect the property. That’s a promising structure/target, with the distinct possibility of mineralization within it. The anomaly is at least 800 metres long and up to 300 metres wide, but within those parameters it must also have a core. So that’s what you go after FIRST, just like CXO is doing at North ROK. It’s not rocket science. All of this is very frustrating because of the tremendous opportunity VVN has had following the CXO discovery, the money they raised, and the drill permits in hand. Which is why we drew this to the attention of our readers. But the execution of this opportunity on VVN’s part, following their PP’s, has been disappointing so far. I am really hoping they can get this train back on the right track. There’s an historic opportunity for them in this area.
Comment by Jon - BMR — July 4, 2013 @ 7:41 am
My watch list on Colorado area plays down 19 percent from june 15th vvn the stock promoted most highly on this site is down the most 63 percent
Comment by gil — July 4, 2013 @ 10:07 am
It’s unbelievable! First rbw… Now vvn. I’m starting to believe someone is trying to tell me something. Like don’t keep investing in this business. Can’t believe what I’m seeing.
Comment by Kalkan - Sweden — July 4, 2013 @ 10:43 am
Amorphous Graphite is a form of natural graphite with poorly educated and the crystal structure is also called kryptokrystalicznym graphite or black. Just as coal …
vvn might as well forget Amorphous Graphite pretty much garbage
Comment by bob — July 4, 2013 @ 7:02 pm
This has obviously been a bad week for VVN but it has been brought on entirely by their own doing with 2 news releases that were very poorly thought out and sent confusing signals. I am stunned and disappointed, as I’m sure many investors are. They were in such an incredibly advantageous situation. The best situation, really, of any company besides Colorado, after the CXO discovery and the completion of their two PP’s. But they managed to snatch defeat from the jaws of Victory. Not to say they can’t bounce back – that’s entirely possible – but they have some major repair work to do here to restore investor confidence. The junior exploration business is about not only exploring for minerals but communicating a consistent and strong message to investors. The fact they missed on a hole is not the major problem here – CXO missed on a hole too. It’s how they have explained things, and damaged the brand in the process. This all started with the announcement of the Fortuna Property, a major blunder. Copau does hold very good potential and they haven’t even drilled close to the main target yet.
Comment by Jon - BMR — July 5, 2013 @ 1:56 am
We have heard it over & over, when investing, look to management,
good management is the key. In the case of VVN, management have
failed us & the stock price is telling us just that. Take Garibaldi,
as another example, excitement surrounds us & it appears it’s not
because of their management, but because it’s in the same area of
another play, which supposedly has good management. This is gambling
at it’s best. Show me the nearest lotto booth please ! R !
Comment by Bert — July 5, 2013 @ 5:49 am
Bert, you make some good points in terms of how critical management is. You bring up Garibaldi – they are recognized for having a very capable team, and we also know that the group attacking the property contiguous to the Grizzly is one of the best there is (and they may take a run at acquiring some or all of the Grizzly because of how the two properties are connected geologically). In all of these Venture situations, however, there are an assortment of risks, external and internal, that investors have to weigh, and sometimes there are things that come completely out of the blue that surprise – either positive or negative…there could be positive surprises yet from VVN, who knows…that’s why it’s such a highly speculative market and not for the faint of heart.
Comment by Jon - BMR — July 5, 2013 @ 6:20 am