BullMarketRun.com

4:00 am Pacific Early Edition (updated version at approximately 8:00 am Pacific)

Gold has bounced between $1,393 and $1,402 overnight to begin a new trading week following Friday’s surge to a 9-week high…as of 4:00 am Pacific, bullion is down $3 an ounce at $1,394 as it continues to flirt with technical and psychological resistance at $1,400…Silver is down 7 cents at $24.02 (see John’s updated Silver charts below along with a link to an award-winning short video on Silver)…Copper is unchanged at $3.32…Crude Oil is up 9 cents to $106.51 while the U.S. Dollar Index has strengthened one-tenth of a point to 81.43…

Gold-backed EFT liquidation appears to have ended, just one of several factors favoring the yellow metal at the moment…Gold holdings in the world’s largest Gold ETF rose 4.2 tons last week, marking a strong trend reversal from the 1st half of the year…in a research note, Standard Bank stated, “It’s perhaps worth highlighting that part of Gold’s relative strength of late, and indeed its recent stability, has been a lack of activity in ETF holdings.  The wave of ETF liquidation seen throughout Q1 and Q2 has come to a halt since mid-August, taking an important source of selling pressure out of the market, while participants have yet to pile back in either as they wait to see how the issue of Fed tapering and indeed the general economic picture unfolds.”

Jewelry demand in Indonesia, the world’s 4th most populous nation, is set to expand to a 4-year high…Bloomberg reports that the consumption of necklaces, bracelets and rings in that country will likely climb to 40 metric tons this year, a 30% increase over last year…meanwhile, total Gold available for delivery at COMEX is holding at record low levels, according to Dundee Capital…since August 1, the registered Gold in the COMEX warehouse has declined by nearly 150,000 ounces to a new low of 791,000 ounces…deliverable Gold is now down 65% year-to-date…over the past 3 months, 1,000 tons of physical Gold are believed to have shifted from the West to Asia…that has to be considered a bullish dynamic for the market…

Updated Gold Chart

As we enter the final week of the month, John’s 3-year weekly Gold chart is quite revealing…the CMF(20) indicator shows that buy pressure has just replaced sell pressure, dominant since the beginning of the year…in addition, it appears a bullish +DI/-DI crossover in the ADX indicator is about to occur…there are numerous technical and fundamental clues that suggest Gold did hit an important bottom in late June at $1,180 an ounce…did “Big Money” engineer a “shakedown” in the Gold market in the spring?…we seldom engage in conspiracy theories at BMR, but there are a lot of reasons in our view to believe that’s exactly what took place…as Gold attempts to work its way higher, key resistance levels beyond $1,400 will be $1,475 and the previous support band between $1,550 and $1,600…

This will be an interesting prediction to look back on later…Barclays says it believes the risks for the Gold market are skewed to the downside under its base-case scenario for how it expects events in the 2nd half of the year to play out. “Our model projects that the price will post a small uptick by the end of Q3 but face downward pressure in Q4, reaching an average of $1,294/oz for Q4 ($31/oz below our forecast),” the bank stated. “Our model stresses 3 alternative scenarios, and in line with our expectations finds that should the likelihood of a federal funds rate hike increase, further downside risk for prices is likely, declining to $1,229/oz in December 2013.  But if Fed tapering is delayed into say December, the model sees prices rising to $1,482/oz as soon as October.”

The “Venture Model” – What Is It Saying About Gold?

The Venture Exchange is a reliable leading indicator of Gold and metal prices in general…so far, the CDNX has not been leading bullion higher (the TSX Gold Index has, however) but that could change in the coming days and weeks…Friday’s action was very positive as the Venture closed above its 100-day moving average (SMA) for the 1st time since November of last year on the strongest volume in 4 months…the Venture is ready to test significant resistance at 970…a breakout above that critical technical level would confirm to us that this move in Gold has some serious power behind it…

U.S. Dollar Index – Ready For A Breakdown?

Keep a close eye on the U.S. Dollar Index…below is an interesting chart from John that shows how the Dollar Index is at a critical juncture…will it hold support at the long-term trendline, or collapse below it which would allow Gold to soar?…RSI(14) on this 3-year weekly chart was in an uptrend from September of last year until the middle of May…in June, there was an importance divergence between RSI(14) and price (a bearish development) as the Dollar Index hit a multi-year high…

Updated Silver Charts

Silver continues to out-perform Gold – historically, this has proven to be a bullish trend for precious metals…RSI(2) on this 11-year monthly chart has rapidly moved out of extreme oversold conditions into the overbought area at 77.94…interestingly, this pattern is very similar to what occurred soon after the 2008 Crash and again in the summer of last year, and during both of those occasions RSI(2) pushed well above the 80 level…of course, Silver continued in a strong uptrend following the Crash until it topped out in the spring of 2011, while the metal’s run last summer proved to be short-lived…what will happen this time?…Silver will meet very strong resistance at $26, and then slightly above that at the top of the down trendline in place since 2011…if those key resistance levels are broken, if and when that occurs, then back up the truck and load it up with as much Silver as you can…

By the way, if you haven’t had a chance to view the video, “Silver: The Element of Change”, do yourself a favor and check it out at www.silverinstitute.org…it was released earlier this year by the Silver Institute, and last week the video was named the winner of a 2013 Bronze Telly Award, an honor given each year to the finest videos, film productions, online videos, programs and commercials…the video explores the many ways Silver has changed the course of history to become an indispensable part of modern society…

Silver 11-Year Monthly Chart

Silver 6-Month Daily Chart

Silver impressively battled its way through a resistance band between $22 and $23 as shown on this 6-month daily chart…its next immediate hurdle is the $24.50 area…at some point in the near future, Silver will need to pause and catch its breath to cleanse temporarily overbought conditions (RSI-14 is currently at 78%)…the $23 level should provide strong support…interestingly, $23 was the average all-in cash cost for producers (the ones it follows) during Q2 2013 according to a recent report from Dundee Capital Markets…that’s down from $24.73 per ounce in Q1…

Today’s Markets

China’s Shanghai Composite shot up 39 points or 1.9% overnight to close at 2096…sentiment rose after the nation’s statistics bureau said the economy is showing clear signs of stabilization and is on track to meet the government’s 7.5% growth target...Japan’s Nikkei average was off slightly (24 points)…European shares are mixed as of 4:00 am Pacific while futures in New York are pointing toward a slightly lower open  on Wall Street…the TSX begins the final week of August at 12762 while the Venture closed Friday on a strong note, as we mentioned earlier, at 947…

North American Nickel Inc. (NAN, TSX-V)

Expect a very active (and perhaps volatile) week for North American Nickel Inc. (NAN, TSX-V) which raised some eyebrows (and its share price) Friday with news from its very prospective Imiak Hill Nickel-Copper-Cobalt zone at its Maniitsoq Project in Greenland…traders and speculators live for this sort of thing as NAN reported visual intersections with high levels of sulphide mineralization (up to 85%)…actual assay results to come…drilling continues…

MQ-13-026, the best-looking hole so far, intersected an 18.62 metre core length (156.7 m to 175.32 m) of sulphide mineralization averaging approximately 40 to 45% total sulphides, including numerous sections containing 65% to 80% sulphides, within noritic host rocks…the intensity of sulphide mineralization at Imiak Hill is increasing with depth, typical for nickel sulphide deposits as the strongest mineralization is usually at the bottom of the intrusive…the zones at Imiak Hill appear to be steeply dipping lenses or tubes and remain open at depth…if they have the grade, which appears quite possible given these sulphide percentages, the big question is – do they have the tonnage?…that obviously remains to be seen but this is going to be an interesting story to follow…historically, Imiak Hill was previously tested only by shallow and “inaccurately oriented drilling based on geophysical interpretation”, according to NAN…

NAN opened at 21 cents Friday, climbed as high as 38 cents, and then retraced to close at 27 cents (up 8.5 cents or 46%)…total volume (all exchanges) was 5.1 million shares…we asked John to produce a couple of charts to give us some potential insight into Friday’s trading as well as the bigger overall picture…

Friday (Aug. 23) Intra-Day NAN Chart

There was down momentum most of the day Friday in NAN after the initial spike to 38 cents…perhaps not unusual given the markets we’ve all experienced the last year – certain traders/investors were probably content just to lock in some decent profits…there’s immediate resistance at 29/30 cents based on Friday’s trading…

NAN 2.5-Year Weekly Chart

The longer-term chart shows Fibonacci support for NAN at 25 cents…that will be an important level to watch this morning along with the 30-cent area…there has been consistent sell pressure in NAN since October of last year, but this could be ready to reverse to buy pressure…note the bullish “W” pattern in the RSI(14) which has plenty of room to move higher…

Note: Jon holds a share position in NAN.  John and Terry do not.