Gold has traded between $1,329 and $1,347 so far today…as of 8:00 am Pacific, bullion has retreated $13 an ounce to $1,334 as it remains within the resistance band ($1,320 to $1,350) identified in our most recent Gold chart (see Sunday’s Week In Review And A Look Ahead)…a close above $1,350 on a closing basis would certainly be significant with the next resistance at $1,400…Silver is 21 cents lower at $20.28…Copper is up 2 cents to $3.19…Crude Oil is down nearly 50 cents at $106.75 while the U.S. Dollar Index is up slightly at 82.05…
Gold supply from recycled materials may fall by as much as 25% this year as lower prices deter holders from selling the metal at a time when physical demand is strengthening, according to the World Gold Council…scrap bullion supply may fall by 300 to 400 metric tons in 2013 from about 1,600 tons last year, according to Marcus Grubb, managing director of investment research at the WGC…recycling accounted for 37% of total supply last year, according to Barclays Plc which forecasts recycled sales of the metal to fall by 174 tons this year…
“Business in Vancouver” tallies the salaries, bonuses and stock options earned by British Columbia’s top CEO’s every year and Gold miners again dominate the rich list released this yesterday…the province’s top 100 executives were paid a collective $360 million in 2012 with nearly half of that going into the pockets of the 25 highest earners…top honors go to Paul Wright, the CEO of Eldorado Gold (ELD, TSX) who received an inflation-busting 64% pay hike to bring his total pay package for the year to $18.7 million or $75,000 a day…Wright’s $4 million in share-based compensation and $3 million bonus could certainly be in jeopardy this year, given the state of the industry, but his total pay could still easily top $10 million…last week, Eldorado trimmed its 2013 capital budget by $240 million, delaying certain projects, and also cut is exploration budget from $98.5 million to $51 million…
Today’s Markets
Asian markets were mixed overnight…China’s Shanghai Composite fell points to close at 2033 after HSBC’s key survey of Chinese manufacturing activity fell to an 11-month low in July, confirming signs of a further slowdown in the world’s second-largest economy…Japan’s Nikkei average was down slightly, losing 47 points to finish at 14731…European shares are modestly higher after PMI data for the euro zone came in better than expected…in New York, the Dow is down 22 points as of 8:00 am Pacific…the TSX is off 17 points through the first 90 minutes of trading while the Venture has lost 2 points to 928…
TSX Gold Index Chart Update
The TSX Gold Index has climbed 13.5% so far this month (through yesterday) vs. a 5.6% jump in the Venture Exchange and an 8.6% increase in the price of Gold…this is the first time the Gold Index has led both the metal and the Venture since the 3rd quarter of 2012 which was strong for all 3…so a positive summer appears to be shaping up for Gold and Gold stocks – not unusual given historical patterns…we see a high likelihood, therefore, of the Venture ultimately busting through important resistance at 970 this quarter…technically, one possibility with the Venture at the moment is a bullish inverted head-and-shoulders bottom…you can see this type of pattern developing right now…it’ll be interesting to see how this plays out in the coming weeks…
Back to the TSX Gold Index which closed yesterday at 193 and has clearly taken on a bullish posture according to a variety of technical indicators…it has also pushed decidedly above its 50-day moving average (SMA) for the first time in 9 months…the next major resistance is at 210…the possibility of a move significantly beyond 210 during the 2nd half of this year now has to be considered very real…the Gold Index is off slightly in early trading today to 190, but any weakness at this point (the last 3 trading days have been very strong) should be viewed as a normal but temporary pullback…the 10-day SMA, currently just below 180, should provide good support…the trend is pointing higher in the weeks ahead…
GoldQuest Mining Corp. (GQC, TSX-V) Update
The moment of “decision” is quickly approaching for GoldQuest Mining (GQC, TSX-V) which is still trading within a resistance band between 40 cents and 48.5 cents…what’s interesting is that the stock price is being squeezed by a recent sharp narrowing in the gap between the 100 and 200-day SMA’s as you can see in John’s 2.5-year weekly chart (the 100-day on this weekly chart is the MA-10 in blue, currently at 42 cents, while the 200-day is the MA-40 in red, currently at 51 cents)…there are 2 possible near-term scenarios – a major breakout above the 200-day, or a breakdown below the 100-day…we favor the former scenario given the overall technical picture…everything, of course, will hinge on results from the company’s drilling along the promising Guama trend immediately west of last year’s Romero discovery…one can take a chance by jumping into GQC now ahead of those results, or wait until they come out before making a decision…the latter approach is safer and will still offer investors an opportunity to make substantial gains even if it means acquiring GQC (or adding to a current position) above 50 cents…if and when a breakout occurs, next major resistance is at 80 cents…GQC has a history of making huge runs over a short period of time, so watch this one closely in the days ahead…as of 8:00 am Pacific, GQC is down a penny at 43.5 cents on light volume…
Magor Corp. (MCC, TSX-V)
Only rarely do we feature technology plays, but we’ve seen this company’s product in action first-hand through a live investor/broker video conference with President and CEO Mike Pascoe…Magor Corp. (MCC, TSX-V), which started trading on the Venture just 4 months ago after raising $6 million, is a truly unique opportunity given the credibility and track records of the individuals involved (Pascoe, for example, is the former President of Newbridge Networks which was sold to Alcatel for $10 billion) and the company’s proprietary software…Magor is 1 of just 2 companies in the world that is changing the landscape of video conferencing and collaboration where there’s a “big pie” to draw from in terms of revenue in the years ahead…MCC also has high margins which is why they expect to turn profitable as early as next year…what they’ve done through their fully patented software is to eliminate the expensive infrastructure that is currently used by many of their competitors…MCC has invested approximately $20 million in the R&D necessary to achieve this disruptive software, and they’ve already secured some important clients across various industries including technology, oil and gas, government agencies, law enforcement, finance, electrical power, aerospace, manufacturing and retail to name a few…to us, this technology also makes incredible sense for the mining sector…
MCC’s software allows companies to communicate using High Definition video while collaborating with one another by sharing, editing, viewing documents and other related materials from group meeting rooms and desktops, laptops, tablets, smartphone applications, whiteboards and other devices…and they do all of that for a fraction of the cost of other competitive products in the market…their revenue growth is gaining momentum and the company is also in the middle of transitioning into a recurring revenue model through its cloud-based services called AerusTM, which will drive both a growing and recurring revenue stream…
Lately, there has been an uptick in volume in MCC with Citigroup in particular accumulating a position…the latest financials should be coming out shortly, accompanied we suspect by a general corporate update which should give investors some valuable insight into how the company is progressing…so watch for that…technically, the stock is developing a bullish tone after just over 4 months of trading…an ascending triangle has formed this month with resistance around 44-45 cents…look for a close above that level as a signal MCC could be ready to make an important move…as of 8:00 am Pacific, MCC is up 2.5 cents at 43.5 cents…as always, perform your own due diligence…this opportunity truly has 10-bagger potential if the company can penetrate the market the way they believe they can…
Two Graphite Updates – Zenyatta Ventures (ZEN, TSX-V) and Canada Carbon (CCB, TSX-V)
Zenyatta Ventures (ZEN, TSX-V), which is being rewarded by investors for doing such an excellent job in terms of execution both on the ground and in the market, continues to march higher and has broken above the upsloping wedge resistance around $4.20 that John pointed out last week…in situations like this, extremely overbought conditions can ensue, and this morning ZEN has even pushed through the Fib. set #2 target of $4.50 as you can see in the 6-month daily chart below…
Canada Carbon Inc. (CCB, TSX-V)
With the success of Zenyatta, investors are also keeping a close eye on other graphite plays including Canada Carbon (CCB, TSX-V) which came out news after being halted early yesterday…it resumed trading and finished the day up 2.5 cents to 16 cents on total volume (all exchanges) of 2.6 million shares…important support, as shown on this 3-year weekly chart, is at 15 cents which is where there are some strong bids this morning…resistance is at 19 cents…CCB appears to have formed a double bottom pattern, so this will be interesting to watch going forward…as of 8:00 am Pacific, CCB is off half a penny at 16 cents…
Note: John and Terry do not hold share positions in GQC, MCC, ZEN or CCB. Jon holds share positions in GQC and MCC.
John – Who made the comment about selling ZEN.
Bert = I did ! My exact words were, “if i owned ZEN, during the next couple of days, i would
sell some of my position. On the third day, it was down 0.20 & that my friend, would have been
a trade in itself, out & in, in particular, in this type of market. You gotta grab a dollar when
you can. By the way, it’s difficult to be perfect all the time. R !
Comment by Bert — July 24, 2013 @ 7:15 am
MAGOR…. did a tech article on them a few weeks ago… realtime collaboration without having to schedule anything.. various tools and technologies.. very impressive.. and they are purely enterprise so big money TV bingo:)
Comment by JeremY — July 24, 2013 @ 7:30 am
Appreciate the input, Jeremy. I saw their technology in action back in January with Mike doing a presentation to a group of investors/analysts including myself, prior to their raise. Has huge potential IMHO.
Comment by Jon - BMR — July 24, 2013 @ 7:48 am
John, speaking of tech, if u have time could you analyze NCI.V for me. Its got me on the edge of my seat,lol. Very interesting fundamentals,btw.
Comment by greg — July 24, 2013 @ 8:28 am
Thanks for the tip, Greg. We’ll take a look at it.
Comment by Jon - BMR — July 24, 2013 @ 8:29 am
Any thoughts about Seafield Resources, v.sff. They are about to release the third and final drill hole from Tesorito. Any day now.
Comment by Magnus — July 24, 2013 @ 9:23 am
I’ve always liked the Seafield project in Colombia but the drop in the Gold price has clearly hurt them. Their PEA in June was based on a Gold price between $1,400 and $1,600 and much higher Silver prices than we currently see, so the market sees some vulnerabilities at the moment with SFF. And they don’t have a lot of financial strength. So I’m not sure how this is all going to play out. Perhaps they get taken out, who knows. The first 2 holes at Tesorito were very good in the context of a porphyry system, quite promising, so it will be interesting to see what develops there. That target is less than 1 km from Miraflores.
Comment by Jon - BMR — July 24, 2013 @ 11:08 am
Another stock to look into is AAZ.V it has a deal with FCU and will be drilling in winter freezup. A promising uranium property. Richard l.
Comment by richard l — July 24, 2013 @ 11:13 am
You’re right, Richard, we’ve been watching this one for a while and getting ready to do a chart on it. It has backed off from its high which is nice.
Comment by Jon - BMR — July 24, 2013 @ 11:16 am
Jon
any word on the permit for GMZ? it has been a while now?
thanks
Comment by Greg — July 24, 2013 @ 5:41 pm
Jon/John: Can you comment about VVN at 4 cents? it should be bought or averaged down here? Also, your thoughts when RBW might move again?
Comment by STEVEN — July 24, 2013 @ 7:24 pm
Greg, rumor has it there’s only minor hurdle left prior to approval from the state government. So that’s encouraging to hear, but we’re still waiting to connect with George for a direct update with GMZ. Will keep you posted. I’m planning to visit their office Friday.
Comment by Jon - BMR — July 24, 2013 @ 7:30 pm
We commented yesterday in Morning Musings regarding VVN. A lot of investors are very frustrated with this situation because Victory was truly in a remarkable position at the end of May after completing its financings and being the first company to drill in the area around Colorado’s discovery. The stock of course more than doubled in price from when we first noticed it, going as high as 14.5 cents. They executed extremely well in terms of quickly completing 2 financings at a time when it’s tough to raise money. From what we understand, a couple of VERY heavy hitters went in on the PP, and I’m sure they’re not impressed either at the moment. VVN’s execution since June 1 after the financings has been horrible. They literally tripped over their own feet by not drilling the main anomaly target at Copau, and then with 3 poorly thought out news releases (written entirely by a geologist, always a mistake) in terms of timing and content. I don’t think I’ve ever seen something quite like this in a long time. They literally snatched defeat from the jaws of victory, pardon the pun. If they played their cards right, this stock could be sitting now at 20 cents. But they pulled off a reverse Zenyatta, so to speak. I am personally furious because through our own due diligence, they kept insisting they wanted to use this unique opportunity to build the company and make things happen. Where this goes from here and whether they can pull a rabbit out of a hat instead of a skunk, I’m not sure. Technically, the stock is at or extremely close to strong support so I’m personally not a seller at these levels. If they return to Copau for more drilling in early August as they have promised, then this should firm up. Their announcement yesterday of the acquisition of claims near the Grizzly property was a smart move but the timing was all wrong. They should have waited at least 2 or 3 more weeks until Prosper Gold is trading and investors are more familiar with how prolific this area actually is. A grade 7 student could have figured that out. Others have staked ground in that general area as well but haven’t announced anything yet. VVN had enough wise people in their “circle” giving them good advice, none of these mistakes should have happened. So that’s my interpretation. An incredible opportunity here that, so far, has been botched. Zenyatta could make a fortune giving other companies on the Venture seminars in how to execute, both on the ground and in the market. As a side note to this, there’s no group better at execution than Pete Bernier and his team at Prosper Gold. A phenomenal group and the exact same team that Bernier had with Richfield Ventures that got bought out for half a billion dollars. The Garibaldi team is also solid as a rock. So that’s why we’re so focused at the moment on the Sheslay River area (60 miles west of Colorado’s discovery) as this is going to become the big play in the overall area, given the geological prospects and everyone involved. Based on their track records, you can be 100% certain that Bernier and his people will execute with precision, both on the ground and in the market. And Garilbaldi will follow suit. The key with these Venture companies is not only how good their properties might be, but can management actually execute in other important areas.
Comment by Jon - BMR — July 24, 2013 @ 8:10 pm
Hey Everyone (including BMR), Check out these interviews with INca One’s CEO and COO.This company went from a purely exploration company to a producing one (albeit at a small scale, for now). And they’ll be profitable even with gold below 1000.00 per oz. Check them out on Commodity and Youtube.
Comment by Tony T — July 25, 2013 @ 2:55 am
The above narrative is a good indication of why folks should be very cautious before
investing in those so called Venture companies. VVN is a good example of who is on
first base, what ? no what is on 3rd..
Comment by Bert — July 25, 2013 @ 3:57 am
You’re right, Bert, there are always risks and there’s never a sure thing. Plus a lot of deception in the market. Having said that, there’s no market that offers the kind of leverage the Venture does. A good rule of thumb is to have a basket of stocks, keep your losses to a minimum and if 1 stock out of 10 becomes a huge winner, you’re definitely in the money. Try to stick to those people who have shown they can execute all-around.
Comment by Jon - BMR — July 25, 2013 @ 4:12 am
Jon – keep your losses to a minimum and if 1 stock out of 10 becomes a huge winner,
you’re definitely in the money. Try to stick to those people who have shown they can
execute all-around.
Bert = With all due respect, we are all experts after the fact & it would be
interesting to again read what actually kept us in those losing stocks anyway,
for example, RBW. As for picking stocks with people who can execute all-around,
may i add, good management don’t guarantee minerals beneath their drills, but
it may guarantee losses, when they realize they have to move on. Take
the hype out of the Venture & what we have left is more of VVN.
VVN management sitting on a loc, all puckered up like a great big frog.
I sneaked up close & touched them with a wire & they just went p-s-s-s-s-s-s,
like an old flat tire.
Comment by Bert — July 25, 2013 @ 5:09 am
Jon, I would like to see you interview a senior executive from v.VVN and have that person explain what in the world has happened this past month? On the bright side, I think they have realized they need to focus on shareholder value and not get caught up in secondary targets. Hopefully, August will see a significant turnaround for this company. Drilling in the “hot spot” should start in 1-2 weeks.
Comment by Steven — July 25, 2013 @ 5:15 am
They do have a very good target at Copau in general – the regional setting holds a lot of promise given the fact the property lies at the intersection of 2 major faults…plus they have a strong mag high feature…they need to drill down the throat of that structure and see what happens…the thing about the graphite, who knows…perhaps there’s something else going on there that can surprise to the upside…
Comment by Jon - BMR — July 25, 2013 @ 5:19 am
Jon
heard that George at GMZ is out of the office this week on vacation?
Comment by Greg — July 25, 2013 @ 3:30 pm