Gold is pushing higher today as fresh fighting erupts in Ukraine between Russian and Ukrainian forces…as of 8:15 am Pacific, bullion is up $7 an ounce at $1,290 after trading as high as $1,298…Silver has climbed 14 cents to $19.57…Copper is off 4 pennies to $3.15…Crude Oil has added 59 cents to $94.47 while the U.S. Dollar Index (see updated chart below) is up slightly at 82.53…in an analysis published yesterday, Scotiabank economist Patricia Mohr gave a very upbeat assessment with regard to Zinc. “Commodity funds and investors have bid up Zinc prices, anticipating tightening supplies over the next three-four years – with mine supplies not keeping the pace with demand growth. In our view, Zinc prices will climb to U.S. $1.25 in 2015 and a very lucrative U.S. $1.60-1.70 in 2016, benefiting Teck, Lundin & Hudbay Minerals in Canada,” she forecast…
Ukraine’s President Petro Poroshenko accused Russia of invading the country today, apparently dashing hopes of a diplomatic response to the crisis and challenging the West to respond…Kiev said Russian forces have seized the coastal town of Novoazovsk and several villages near the border with Russia, part of a wider assault on a new front…Poroshenko called for an emergency meeting of the United Nations Security Council and the European Council to respond to what said was “the introduction of Russian forces into Ukraine.”
Poroshenko canceled a planned trip to Turkey and set an emergency meeting with his security chiefs for later in the day…U.S. officials also said Russian troops were directly involved in the latest fighting…
The ISIS Threat
Gold could be impacted significantly over the short-term and long-term by rising geopolitical tensions – not just by a belligerent Russia but by the growing threat of ISIS…below is a link to an excellent report on ISIS just released by the West Point counterterrorism center which also challenges the notion that the Islamic State only recently became a major terror threat…they describe the network’s gains in Iraq as a crisis four years in the making…
U.S. Dollar Index Update
The U.S. Dollar Index has been on fire recently which has been a “restraining” factor on Gold, though bullion has held up remarkably well despite the surge to a 1+year high in the greenback…based on this 2.5-year weekly chart, the Dollar Index will either stall around current levels (Fib. 61.8% resistance) and consolidate, or take a near-term run at the major resistance around 84.50 – in which case extreme overbought conditions would emerge…
Today’s Equity Markets
Asia
China’s Shanghai Composite fell 14 points overnight to close at 2196…the Chinese government launched a “fresh round of mini-stimulus” to counter growth headwinds, according to a Bank of America Merrill Lynch (BofA-ML) report published yesterday…the measures aim to support the agricultural sector, boost investment in public facilities and improve environmental protection…
Japan’s Nikkei slipped 75 points to finish at 15460…
Europe
European markets were down moderately today…the euro fell against its major rivals in European deals today as euro zone economic confidence weakened more than expected in August, raising concerns over the region’s recovery…the economic confidence index fell to 100.6 in August from 102.1 in July, the European Commission said…worsened sentiment resulted from deterioration in retail trade, consumer, industry and services confidence, it said…adding to woes, Germany’s unemployment increased unexpectedly in August…
Expectations are running high that the central bank could act at its September 4 meeting after President Mario Draghi sounded a dovish note at his Jackson Hole speech last Friday…some form of asset purchase plan has been touted or even a further cut to interest rates…Reuters reported, citing sources at the bank, that any move next week will be tied to any weak inflation figures that are due tomorrow…
North America
The Dow is down 59 points as of 8:15 am Pacific…U.S. GDP rose by a seasonally adjusted annual rate of 4.2% in the second quarter, the Commerce Department said this morning…this was revised up from the advance second-quarter estimate of 4% released late last month…the figure was also above consensus estimates of news organizations, which called for GDP to rise by 3.9% to 4%…the data show the economy turning around from an abysmal first quarter when the broad measure of goods and services produced in the U.S. economy fell by 2.1%…
The TSX is off 40 points while the Venture, looking exceptionally strong from a technical perspective at the moment, has added 1 points to 1020 as of 8:15 am Pacific…
Updated Venture Chart
We called a Venture turnaround at the 990 level, and indeed the Index has confirmed a breakout above two Fib. resistance levels and is threatening to overcome 1020 resistance as well…the recent breakout through the the short-term downtrend line in place since early July was significant as you can see in this 6-month daily chart…there appears to be little doubt the Venture is gearing up for a significant September move…we’ll explore the highly encouraging technical condition of this market in much more detail in our Week In Review…
Discovery Ventures Inc. (DVN, TSX-V) Update
Yet another exciting B.C. story that we’ve been following closely is Discovery Ventures (DVN, TSX-V) which announced this morning that it has commenced a surface exploration program at its Willa deposit north of Castlegar…the work includes geological mapping and sampling of bedrock exposures not previously mapped in detail…the company will be focusing on an 800 m by 600 m area to the south and west of the known Willa high-grade Gold-Copper resource…historic drilling in the vicinity suggests that the mineralization is open in that direction and the work is intended to assess that possibility…DVN’s acquisition of the Max mine and mill facilities 135 km north of the Willa represents a game-changer for this deposit which has been explored going back to the 19th century…what the Willa has lacked is a cost-effective mill solution and that problem has now been addressed with the Max…DVN is pushing hard with all the steps necessary to finally bring the Willa into production…DVN is up 1.5 cents at 36.5 cents as of 8:15 am Pacific on strong volume…
Blackbird Energy Inc. (BBI, TSX-V) Update
Blackbird Energy (BBI, TSX-V) continues to look very promising from a technical standpoint, especially with the formation of a bullish “W” in the RSI(14)…BBI has found strong support at its rising 100-day moving average since early this year with that SMA now at 24 cents (just above strong Fib. support) as you can see in this weekly chart going back to the summer of 2012…BBI has a balanced and growing asset base with producing oil and gas production and exploration and development projects in Saskatchewan and Alberta…as always, perform your own due diligence…BBI is off a penny at 28.5 cents as of 8:15 am Pacific…
Pure Gold Mining Inc. (PGM, TSX-V) Update
We initially brought Pure Gold Mining (PGM, TSX-V) to our readers’ attention early last month when it trading at 41 cents…since then, PGM has climbed gradually and appears poised for a strong second half of 2014…
Pure Gold, formerly Laurentian Goldfields, recently consolidated its position in the prolific Red Lake district with the acquisitions of the Madsen Property and the adjacent Newman-Madsen Property…together, these properties make up a 50 sq. km land package of contiguous, primarily patented ground, collectively known as the Madsen Gold Project…Pure Gold now holds the third largest land package in the Red Lake region which includes two past-producing mines, existing mine infrastructure, current mineral resources, and multiple highly prospective exploration targets in a geological setting analogous to other modern high-grade discoveries in the Red Lake region…
PGM, which has just over 100 million shares outstanding, is well-funded and recently commenced a 9,000-m drill program at Madsen (check out the August 22 news)…drilling is designed to test and expand the current mineral resource, while concurrently testing high-grade, 8 zone-style mineralization targets developed through continuing consolidation and evaluation of the large historic database…
Technically, as shown in this weekly chart, the trend is clearly bullish which points to the strong possibility of a sustained breakout above resistance as shown below…PGM is off half a penny at 48 cents as of 8:15 am Pacific…
Kiska Metals Corp. (KSK, TSX-V) Update
Further to our information yesterday regarding Lorraine Copper Corp. (LLC, TSX-V) and its JV with Teck Resources Ltd. (TCK.B, TSX), we suggest readers perform their due diligence on Kiska Metals Corp. (KSK, TSX-V) which looks interesting from both a technical standpoint (see John’s chart below) and fundamentally as the company has a large portfolio of Gold and Copper projects (advanced and early-stage) in Canada, the U.S. and Australia (check their news yesterday)…after climbing as high as nearly $2 a share in late 2010, KSK appears to have finally bottomed out below a dime (it hit a low of 3 cents last December) and last traded at 8 cents…
About 60 km to the northeast of the Lorraine Copper-Gold Porphyry Property is Kiska’s very intriguing Kliyul Property which was optioned late last year by Teck…we’ll have more on this property in the near future – it’s definitely an area to watch…
Technically, what we find exciting about KSK is the fact it broke above a long-term downtrend line very late last year, surged as high as 15 cents and then retraced an area of strong Fib. support where it has formed a very nice base just slightly below the rising 200-day SMA…this is a very bullish pattern and patient investors could be rewarded handsomely with this one as the year progresses…
Note: Jon holds a share position in DVN.
