Gold has traded between $1,252 and $1,273 so far today…as of 8:30 am Pacific, bullion is down $14 an ounce at $1,254, a 3-month low…Silver is off 20 cents at $18.99…Copper is up 3 pennies at $3.20…Crude Oil is off $1.24 a barrel to $92.05 while the U.S. Dollar Index has added another one-tenth of a point to 83.99…
Gold has Fib. support at $1,259 and chart support at $1,240…it’ll be interesting to see if physical demand picks up this week, especially if prices weaken further…geopolitical tensions potentially could give bullion a lift or at least keep it from falling further in the face of a strong U.S. Dollar Index that seems to want to move higher and test resistance levels…the greenback and buoyant equity markets are the biggest factors pressuring the yellow metal at the moment…
A positive contrarian indicator – hedge funds and money managers decreased their bullish futures and option bets in Gold for a third consecutive week to the lowest since June, according to the latest statistics from the Commodity Futures Trading Commission…
The ECB’s easing efforts late last week are widely seen as a mixed blessing…while Gold can benefit from greater investment demand as traders often seek hard assets as a hedge against excessive monetary stimulus, the policy shift can also weaken the euro and strengthen the dollar, making bullion more expensive for buyers who use other currencies…
Close to 20% of Chile’s largest Copper mines will be closed or reconverted by 2025, as the country faces a challenging scenario, marked primarily by falling ore grades and rising costs at its aging mines…while the country produced 5.8 million tons of Copper last year, 20% of that figure (1.2 million tons) came from operations that are facing closure or conversion in the next 10 years…according to local paper El Mercurio (in Spanish), while the country produced 5.8 million tons of Copper last year, 20% of that figure (1.2 million tons) came from operations that are facing closure or conversion in the next 10 years…
Today’s Equity Markets
Asia
Trading volumes were light in Asia overnight with markets in China, South Korea and Taiwan shut for the mid-Autumn Festival…
August trade numbers released today show China’s export engine continues to steal market share in global trade…China’s goods sold abroad rose 9.4% from a year earlier, slower than July but well above the pace of global trade, which the International Monetary Fund estimates will expand 4% this year…China’s imports, however, fell an annual 2.4%, missing estimates for a 1.7% increase…still, the country’s trade surplus rose to $49.8 billion, well above forecasts for $40 billion…
Japan’s Nikkei average snapped a 2-session losing skid with a gain of 36 points despite disappointing revised GDP data…Japan’s economy contracted in the second quarter at the fastest pace since 2009, dealing a blow to Prime Minister Shinzo Abe’s efforts to re-energize the economy with pro-growth steps…revised data showed that the country’s GDP contracted an annualized 7.1% in the April to June quarter from the previous three-month period as businesses as well as consumers retrenched after the government raised the sales tax…preliminary figures showed a 6.8% decline…
Updated Shanghai Composite Chart
The clear breakout in China’s Shanghai Composite has to be considered bullish for global stocks generally and the outlook for the Chinese economy…based on this weekly chart going back to the spring of last year, it appears the Shanghai is on its way to the 2500 level – another 7.5% jump from current levels…John correctly called the breakout in late July when the Shanghai completed an inverted head and shoulders pattern and closed above the neckline…
Europe
European markets were mixed today…upbeat trade data for July from Germany – a 4.7% surge in exports which beat expectations and was the biggest rise since May 2012…
North America
The Dow is down 10 points as of 8:30 am Pacific…
After warning about the risk of a temporary sell-off in stocks back in July, Goldman Sachs today upgraded its outlook on equities to “overweight, expecting a push higher for stocks in both the near and medium-term…”We upgrade equities to overweight over three months…we expect earnings growth, dividends, and high risk premia to support returns,” Goldman’s global investment team, which includes Peter Oppenheimer and Anders Nielsen, said in a research note released this morning…on July 25, the investment bank downgraded equities to “neutral” for the three months ahead…in 10 sessions from July 25 to August 7, the Dow fell more than 700 points or 4.4% before rebounding after touching its rising 200-day moving average (SMA)…
The Financial Times (Robin Harding) reported today that the Federal Reserve’s “forward guidance on future interest rates has come up for debate after a stream of central bank officials declared the current wording needs to change. In the past few days, officials from every part of the rate-setting Federal Open Market Committee – hawks and doves, regional presidents and Washington governors – have called for new language. Their remarks could mean a move at the September FOMC meeting in 10 days, although there is little consensus yet on new wording, so a shift might have to wait until next month.”
The TSX is down 41 points as of 8:30 am Pacific…the TSX Gold Index has touched its rising 200-day SMA for the first time since climbing above it in mid-June…the Gold Index, down 4 points in early trading today, is off 8.9% in just the first five trading sessions of September…
The Venture is off 8 points at 987…RSI(2) on the Venture’s 1-year daily chart has fallen to extreme oversold levels seen only a couple of other times this year at other important lows…
Doubleview Capital Corp. (DBV, TSX-V) Update
John is seeing signs of encouragement in the chart for Doubleview Capital (DBV, TSX-V), and there are good reasons to expect the Sheslay District to heat up again very soon with news pending on several fronts…critical support appears to have held around the 15-cent level and the 300-day SMA…RSI(14) is showing increasing momentum with an uptick in volume last week as well…DBV is off a penny at 17 cents as of 8:30 am Pacific…
Contact Exploration Inc. (CEX, TSX-V) Update
Contact Exploration (CEX, TSX-V) has been one of our favorite oil and gas plays since 2013, and this morning hit a new multi-year high of 56 cents – a couple of pennies above a Fib. resistance level but within the impressive upsloping channel…
Recently, the company reported net income of nearly $1.1 million for the quarter ended June 30, more than double net income for the same period last year…recently, Contact successfully completed drilling at three new Kakwa (Alberta Montney) wells, and these look promising…it’ll be interesting to see the initial 30-day production volumes (CEX holds a 25% working interest)…CEX remains very active on other fronts in the Montney and elsewhere…
Keep in mind that stock from a $10 million financing (39 cents non-flow-through, 44.5 cents flow-through) a few months ago becomes free trading in early October – just something to be aware of, but good news from the Montney could drive enough volume in the stock to clean up any paper that comes into the market from the PP…
Below is an updated 2.5-year weekly CEX chart…resistance and support areas are clearly identifiable…as of 8:30 am Pacific, CEX is off 2 cents at 53 cents…
Silver Short-Term Chart Update
This 6-month daily chart shows how extreme RSI(2) conditions in Silver persisted for most of June as the metal made a rapid move to the upside…a necessary unwinding of that overbought situation has since occurred with the metal actually surrendering almost all of its gains since its low of $18.61 near the end of May…support around $19 is expected to hold…
Silver Long-Term Chart
This 11-year monthly chart better illustrates the strong support Silver has at and just slightly below $19…the metal broke out above one important downtrend line in the second quarter, and that’s also what’s providing support around current levels…RSI(2) closed last week at 23% – note the higher lows in this indicator over the past year…
Also note how the SS may have bottomed with a low bullish “W”…Silver is sluggish but continues to look highly attractive from a long-term perspective around current levels…
Note: John and Jon both hold share positions in DBV.
Wow, what a Monday, players in the sheslay should be laying their cards down very soon, hopefully ggi in Mexico as well,Jon, is the us buck the main reason for the terrible start to sept.
Comment by Tombc — September 8, 2014 @ 1:08 pm
I’m surprised and disappointed that Garibaldi have not yet announced a drill program for the Grizzly. DBV and PGX must surely be reporting in the next week or so. It’s been a long summer waiting for the results, I hope they are worth waiting for.
Comment by Tom UK — September 8, 2014 @ 2:54 pm
The Dollar Index, Tom, has been running hard and is rapidly closing in on John’s short-term target level. Once the greenback cools off, this should certainly help Gold and the Venture. Tremendous support underpins the Venture between 970 and 990 as all charts have shown, so this is no time to be intimidated by weakness. The smart money is embracing it. Keep in mind the consistent pattern we’ve seen this year —- how a month starts is not how it ends…
Comment by Jon - BMR — September 8, 2014 @ 3:03 pm
Tom, my disappointment would have been if GGI starting drilling the Grizzly before they were ready to. This is a very smart group and they’ve demonstrated that with their hit ratio in Mexico and the discovery at Rodadero. How can you argue with success? They have worked intensely on the Grizzly in recent months to narrow down the most prospective area for a discovery. My bet is that because of that extra diligence, they’ve got an unusually high chance for a discovery and won’t waste any holes. And they’ve also got the benefit of data from both DBV and PGX, so they know the “signatures” to drill. You saw the interview we did with Regoci. GGI is moving quickly to the drill stage at the Grizzly, and I’m sure they’ve got lots to say about this property.
Comment by Jon - BMR — September 8, 2014 @ 3:11 pm
Yes Jon, it was in your interview that Steve said they would be updating investors ”soon” with news of their next steps at the Grizzly. I was hoping that ”soon” would have arrived by now, but I hear what you say about them being more effective with drilling when it does happen due to them having done so much groundwork and preparation. In your interview Steve also said that one of the guys was coming down from the Grizzly with hundreds of rock samples, so it must take them some time to work their way through those. One thing that struck me was how very bullish Steve was regarding their chances of hitting something big and good at the Grizzly. Patience is required by me.
Comment by Tom UK — September 8, 2014 @ 3:19 pm
Thx Jon,not discouraged on the venture thus far, we should also keep in mind that there a hand full of company’s in Beautiful British Columbia alone that should help the venture move up on release of results very soon.
Comment by Tombc — September 8, 2014 @ 3:24 pm
Tom, I think GGI has been building up an ammo supply at the Grizzly large enough to blow up all of Mount Kaketsa. In general, I suspect we’re in for a real rock ‘n roll show up in the Sheslay district starting imminently – by that I mean likely any day now or within a matter of days. We know GGI’s strengths and the shear magnitude of the Grizzly, which is also why it has taken time to precisely determine where to drill first. Prosper has an outstanding and underrated property with the Star Project. And Farshad is a bulldog and will keep pounding away at the Hat where they have a very legitimate early discovery. We went through 2014 Round 1 up at the Sheslay January-May. Round 2 is about to start. Round 1 was just the warm-up act because this area is just too prospective not to yield some world class results.
Comment by Jon - BMR — September 8, 2014 @ 3:30 pm
Jon, the best part of that interview with regoci was, I’m sure he said, quote we’re going to drill rite into the heart of this thing, unquote, that’s telling me, like you said Jon, their not going to waste any holes, that’s good enough for me ( aggressive ).
Comment by Tombc — September 8, 2014 @ 3:44 pm
Tom, it’s about conducting cost-effective exploration – GGI has perfected this art in Mexico, and they’re replicating that at the Grizzly. It’s easy to blow a bunch of money drilling into a Cu-Au porphyry target that hasn’t been properly defined. I think that after accumulating so much of their own data since 2006, and comparing their data with drill results from PGX and DBV, and other data from those properties, GGI is in a unique position to not waste any holes and drill right into the heart of a mineralized structure. They hit a whopper on the very first hole at Rodadero. So they know what they’re doing. By the way, in this discussion about the Sheslay district, do keep BXX on the radar screen. They’re a “wild card” in all of this with the DOK Property 30 miles due south of Grizzly. More on that tomorrow.
Comment by Jon - BMR — September 8, 2014 @ 4:01 pm
Yes Jon I have been watching bxx, look forward to that.thx.
Comment by Tombc — September 8, 2014 @ 4:12 pm
Two buyouts announced after close today, so obviously some majors are seeing some great opportunities…Agnico-Eagle acquires Cayden Resources (CYD, TSX-V) for $200 million (mostly stock), good news for Mexican explorers…Taseko tonight announces all-share buy-out of Curis Resources (Copper deposit, Arizona)…
Comment by Jon - BMR — September 8, 2014 @ 5:32 pm