Gold has traded $1,283 and $1,298 so far today…as of 7:30 am Pacific, bullion is down $9 an ounce at $1,285…it came under pressure yesterday as the U.S. Dollar Index rallied to a six-month high following a stronger-than-expected U.S. Q2 GDP report…Silver is off 14 cents at $20.47…Copper is off a penny at $3.23…Crude Oil is 90 cents lower at $99.37 while the Dollar Index is up slightly at 81.45…
The Federal Reserve’s monetary policy statement yesterday turned out to be in line with investors’ expectations…the Fed will wait a “considerable time” after bond purchases end before raising rates, the central bank said, reaffirming a position it has had since late 2012…the Fed also noted that even though unemployment is down, “there remains significant under-utilization of labor resources,” by which it means slack that should keep inflation and interest rates low…economists from J.P. Morgan Chase and forecasting firm Macroeconomic Advisers project the U.S. economy to maintain a growth rate of at least 3% for the rest of the year…the economy hasn’t posted three straight quarters above that mark in nearly a decade…
Investors’ attention is now focused on tomorrow’s U.S. jobs report from the Labor Department…the consensus estimate is for non-farm payrolls to increase by 225,000, down significantly from June’s figure but in line with earlier months…
Barclays says commodity investor flows finally showed signs of improvement in June after outflows most of this year so far. The bank says the health of commodities as an asset class “has improved markedly” this year. “However, the big surprise this year is that investors have continued to withdraw assets from commodity investments on a quarterly basis despite this improvement,” the bank says. “In our view, one reason for this lack of response is the relatively slow pace at which institutional investors are able to take and implement the kind of long-term investment decisions necessary in order to make allocations to commodities. However, recent data indicate that the situation is improving, albeit gradually.”
Today’s Equity Markets
Asia
China’s Shanghai Composite resumed its strong upward climb overnight, gaining 20 points to close at 2202 as it posted its best monthly performance since 2012…John has pointed out the very bullish tone in the Shanghai with measured Fib. resistance at 2500 following this month’s breakout above the neckline in place since 2013…China’s markets have been undermined by slowing economic growth as well as concerns over bad debts, shadow banking and property sectors…but economic data has been improving in recent months, pointing to stabilization in the world’s second largest economy…Q2 growth came in at 7.5% year on year, better than expectations, and the broad consensus is that outlook for the second half is upbeat thanks in part to a series of “mini stimulus” measures from Beijing…
Japan’s Nikkei average erased gains after hitting a new six-month high earlier in the session, snapping its four-day winning streak…the Nikkei closed down 25 points at 15621…
Europe
European markets are down significantly in late trading overseas…the annual rate of inflation in the euro zone fell further below the ECB’s target in July, and to its lowest level since October 2009…the decline is a setback to the ECB which in June launched a series of measures designed to boost growth and start to move the inflation rate back toward its goal of just below 2%…Eurostat said consumer prices were just 0.4% higher than in July 2013, as the inflation rate slowed from 0.5% in June…the inflation rate has now been below 1% for 10 straight months, and that has markets concerned…
North America
The Dow is suffering again this morning, down 148 points through the first hour of trading…the TSX has declined 109 points to 15416 while the Venture is off 6 points to 1005…
Goldcorp Inc. (G, TSX) Update
Goldcorp Inc. (G, TSX) is up slightly this morning after reporting net earnings of $183 million (U.S.) or 22 cents per share in Q2, a more than 50% increase over the same period last year…all-in-sustaining costs were $852 per ounce in Q2 as continued solid production and cost performance across the portfolio contributed to improved financial results…Goldcorp sees this as the start of a prolonged period of increased production, decreasing costs and reduced capital spending, resulting in significant expected free cash flow generation in 2015 and beyond…
Technically, Goldcorp – and this bodes well for the sector – has broken out above the neckline of an inverted head and shoulders bottom that formed over the past year…near-term Fib. resistance levels range from $30.28 to $35.42…
TSX Gold Index Long-Term Chart
The TSX Gold Index has nudged right up against a long-term downtrend line that formed in the months following the all-time high of 455.38 in September, 2011, when Gold briefly topped $1,900 an ounce…the bearish trend peaked in the first half of last year and a reversal is clearly well under way as evidenced by this 15-year monthly chart…
For a burst of fresh momentum, the Gold Index must break out above the downtrend line and major chart resistance at 210…it has climbed as high as 203.5 this week and closed yesterday at 200.4…what’s interesting is that we’re now in a period when Gold stocks are likely to out-perform the metal (check the TSX Gold Index relative to Gold on this chart)…
GoldQuest Mining Corp. (GQC, TSX-V) Update
Disappointing results from GoldQuest Mining (GQC, TSX-V) this morning (but no need to panic) as the company reported assays from initial holes of its extensive 2014 drill program at the San Juan concession group in the DR which includes the Romero Cu-Au deposit…LTP-158, LTP-160 and LTP-161 were drilled between the Romero and Romero South deposit, and all three holes terminated above or adjacent to the target zone, and LTP-159 was drilled to the east of Romero South…no significant intersections from any of those holes…the drill program is now focusing on shallower targets to the north and west of Romero including an interesting porphyry target at La Guama North…GQC has a strong treasury and is drilling into very prospective ground, so four “misses” brings them closer to a hit in our view as the company aims for a potential new discovery to build on the existing Romero resource…GQC is down 3.5 cents at 22.5 cents as of 7:30 am Pacific…
Mason Graphite Inc. (LLG, TSX-V) Update
After releasing positive drill results Tuesday from the northeast extension of its Lac Gueret Project, Mason Graphite (LLG, TSX-V) added a couple of pennies yesterday on increased volume to close at 80 cents…results confirmed mineralization near surface with excellent widths and mineral continuity beyond the current mineral resource boundary…more assays are pending from other areas…
Technically, LLG is strongly supported by a rising 200-day moving average (SMA) at 65 cents while a near-term resistance level is 85 cents as shown on this 26-month weekly chart…last December’s breakout above Fib. resistance at 52 cents was hugely important and that area has held as support ever since…the overall primary uptrend suggests the possibility for a strong second half of 2014 for LLG…
LLG is down 3 pennies to 77 cents through the first hour of trading…
Discovery Ventures Inc. (DVN, TSX-V) Update
Discovery Ventures (DVN, TSX-V) continues to look very healthy technically and fundamentally with a just-completed financing for nearly $2.5 million as the company pushes ahead with its promising Willa-MAX project in southeastern British Columbia…the anticipated near-term closing of a $12 million Gold facility with a financing firm in New York would be a major milestone for DVN, giving it the synergistic advantage of a high-grade Gold-Copper deposit in close proximity (85 miles) to its own modern mill facilities…
Below is an updated 2.5-year weekly chart from John…DVN staged a significant breakout last month above 23 cents which has been holding as new support…it closed yesterday at 26 cents…
Fission Uranium (FCU, TSX-V) Update
With a series of additional drill results over the last couple of weeks, Fission Uranium (FCU, TSX-V) continues to expand its Patterson Lake South discovery prior to a NI-43-101 resource estimate at the end of the year…
Technically, the recent reversal to the upside in FCU’s 50-day SMA is highly encouraging and this moving average, currently at $1.20, should now act as support as it did earlier this year…near-term Fib. resistance exists between $1.32 and $1.46…
As of 7:30 am Pacific, FCU is unchanged at $1.27…
Note: Jon holds a share position in DVN.
