Gold has traded between $1,216 and $1,227 so far today…as of 7:15 am Pacific, bullion is down $3 an ounce at $1,220…Silver is off a dime at $17.68…Copper is flat at $3.07…Crude Oil is 37 cents lower at $91.18 while the U.S. Dollar Index has surged more than one-third of a point to 85.03 as it tests important resistance around the 85 level…
Interesting observation by Mark Hulbert this morning: There’s “only one time in the past 30 years when the HGNSI (Hulbert Gold Newsletter Sentiment Index) got any lower than it is today. That came in June 2013, when the HGNSI fell to minus 56.7%. As you can see from the accompanying chart, Gold soon – within a matter of a couple weeks – began a rally that, by late August, had tacked more than $200 on to the price of an ounce of Gold.”
Gold may experience a short-covering bounce in the near-term, prompting UBS to keep its 1-month price forecast at $1,250 an ounce, but with the expectations that rallies will be sold, the Swiss bank said today that it’s lowering its 3-month forecast by $100 to $1,200. “Expectations of a stronger U.S. dollar, increasing focus on Fed (Federal Reserve monetary policy) normalization and its exit path, the absence of inflation risks, as well as rising (U.S.) Treasury yields all conspire to drag Gold lower,” said Edel Tully, strategist, and Joni Teves, analyst at UBS…
Investor and writer Dennis Gartman claimed this morning that India may challenge China to reclaim the spot as the world’s #1 Gold consumer, assuming that a report in the Hindustan Times is correct…the newspaper carried a report yesterday estimating that 50 metric tons of Gold was smuggled into the country in the previous 10 days amid a surge for demand during the festival season…the smuggling is to avoid the government’s import restrictions, including a 10% duty and so-called 80-20 rule that require 20% of all imports to be re-exported as a finished product…the smuggling supposedly occurred on land routes due to tightened airport security. “If this report is even nearly true rather than wholly true, it shall mean that India is putting China to test once again as the world’s largest consumer of Gold,” Gartman stated…
Today’s Equity Markets
Asia
China’s Shanghai Index rallied to more than a 1-year high overnight, surging 35 points to close at 2344…sentiment rose after the International Monetary Fund said it expects growth to be well above 7% in 2015…
Europe
European markets are mixed in late trading overseas…traders are hopeful for a more accommodative stance by the ECB after weak business data from Germany…
North America
The Dow is down 13 points as of 7:15 am Pacific…sales of new U.S. single-family homes surged in August and hit their highest level in more than 6 years, offering confirmation that the housing recovery remains on course…the Commerce Department reported this morning that sales jumped 18% to a seasonally adjusted annual rate of 504,000 units…that’s the highest level since May 2008 and marks the second straight month of gains…
The TSX is off 69 points while the Venture has slid 3 points to 922 as of 7:15 am Pacific…
Venture Chart Update
This 1-year weekly Venture chart shows RSI(2) has hit an extreme low of 2.72%, a level not seen since December’s bottom of 884 which was immediately followed by a powerful move to the upside…the ADX indicator shows -DI at a previous high, so an imminent turnaround appears to be in the works here – especially with strong support between 915 and 920 (an area to watch carefully)…
Columbus Gold Corp. (CGT, TSX-V) Update
Columbus Gold (CGT, TSX-V) is showing technical strength as well as progress on the ground with 3 drill rigs now pounding away at the Montagne d’Or Gold deposit (Paul Isnard Project) in French Guiana…as reported by the company last week, there are approximately 10,500 m in 46 holes remaining in the current phase II program which is scheduled to be completed by the end of October/early November…
The Montagne d’Or deposit hosts an inferred resource of 140.1 million tonnes grading 1 g/t Au for a total of 4.3 million contained ounces (an updated estimate is expected by year-end)…the current drilling is being financed by Nord Gold NV as part of a minimum $30-million (U.S.) exploration and development program pursuant to which it can earn a 50.01% interest in Montagne d’Or and the Paul Isnard mineral claims by completing a bankable feasibility study no later than March, 2017…recent results from hole MO-14-167 (38.6 m grading 4.48 g/t Au) were highly impressive and demonstrate the potential for exceptional grades and widths in the principal UFZ zone…
Meanwhile, the company reported Monday that a “prominent” U.S. investor has agreed to acquire approximately 9.9% of Columbus Gold, representing the entire private placement ($5.36 million at 40 cents per share) on amended terms from those announced a few weeks ago (this includes a reduction in the size and price of the offering, and no warrant component)…proceeds will be used in part to fund an extensive drill program at the company’s Eastside Gold discovery in Nevada…
CGT is off 4 pennies at 45 cents through the first 45 minutes of trading…note the bullish “W” in the RSI(14) and the unconfirmed breakout above the recent downtrend line with a rising 200-day moving average (SMA)…
Prosper Gold Corp. (PGX, TSX-V) Update
The most disappointing aspect of Prosper Gold Corp.’s (PGX, TSX-V) news on its Star Project yesterday was not so much the drill results but the weak way in which they were presented…there was an obvious lack of any market strategy/support or effort to positively influence investors’ understanding/perception of how this very large and promising project is progressing (it simply did not do justice to the work on the ground)…six dry, short sentences preceded a table of drill results that were recklessly thrown into the market less than 30 minutes before the opening bell…after just 15 minutes, the stock was down 8 cents or 32% on volume of less than 200,000 shares before most shareholders even had a chance to see the news, let alone properly digest it…with the stock immediately off sharply, most investors just assumed the results must have been poor…end of story…
The first sales yesterday were from Canaccord which again dictated the stock’s direction and has been allowed to heavily influence the Prosper market since mid-July…was this the best the company could do after 4 months of silence?…did Prosper really put its best foot forward and “go to bat” for its shareholders yesterday?…the answer to each of those questions is a resounding “no”, and certain investors responded to the company’s perceived apathy by sending the stock to a new all-time low…displayed prominently on the homepage of the Prosper web site are the words “Exploration”, “Discovery” and “Wealth”…in this business, in the competitive arena of the public markets during very challenging times in this particular industry, if you’re not able to communicate well – if you can’t “sell” your story with enthusiasm to investors – you’re on the path to wealth destruction, not wealth creation…in addition, the cost you will pay in terms of dilution to your stock to raise more capital (at lower prices) will be severe…there is no questioning the talent of Prosper’s technical team – Dr. Dirk Templeman-Kluit is recognized as one of the very best in his field – but yesterday demonstrated the company’s inherent weaknesses on the market and communications side of the equation, and that’s a key pillar in our view that’s clearly missing with PGX (and many other companies for that matter)…
Yesterday’s results nearly doubled the north-south extent of the Star deposit as defined previously by Firesteel Resources Inc. (FTR, TSX-V), and also revealed the discovery of an area of near-surface higher-grade material (holes S040, S045 and S048) as the system expands to the northwest, north and northeast…you don’t get intercepts reported yesterday like 288 m grading 0.33% Cu and 0.15 g/t Au, 257 m grading 0.31% Cu and 0.17 g/t Au, 198 m grading 0.38% Cu and 0.19 g/t Au, and 661 m grading 0.22% Cu and 0.11 g/t Au without the very strong prospect of a mine in this part of northwest British Columbia…yes, no “glory hole” yesterday, but investors witnessed an unnecessary steep plunge in PGX…
The emergence of a possible higher-grade starter pit area that requires follow-up was demonstrated in holes S048 (77 m @ 0.78% Cu and 0.55 g/t Au from 2 m to 79 m), S045 (107 m @ 0.77% Cu and 0.41 g/t Au from 12 m to 119 m) and S040 (42 m @ 0.81% Cu and 0.17 g/t Au from 4 to 46 m)…the lateral distance between S040 and S048 is approximately 125 m, north-northwest of S024 last year that returned 312 m grading 0.37% Cu and 0.24 g/t Au…
Between Firesteel and Prosper, nearly 40 holes have now been drilled into a central mineralized zone at the Star porphyry measuring 550 m north-south and 350 m east-west…geologists we spoke to yesterday gave “back-of-the-envelope” estimates of approximately 200 million tonnes at this point, though we caution that no NI-43-101 resource estimate has been carried out yet at the Star…
Keep in mind, the Star is just one of several large porphyry targets on this property…does the Star Project have world class billion-tonne potential with the prospect for a high-grade starter pit? – absolutely, which is why Prosper’s $5 million market cap is so absurd…
Continuity to the north is implied by a wide range of data collected by Prosper…in terms of drill results, all we’ve seen so far (historically and over the last year) is from the Star porphyry…below is a map that puts just part of the Star Project into perspective (Star North is nearly 1 km from the Star)…one important area you don’t see on this map is Pyrrhotite Creek, a distinct multiple target system 4.5 km to the southwest of the Star target…based on yesterday’s news, which lacked clarity in terms of a “road map” for investors for the immediate future, more drill results appear to be on the way – how many, and from where, is a mystery…
This map is taken from the Star Project presentation on Prosper’s web site.
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 last month hit a new multi-year high of 56 cents – a couple of pennies above a Fib. resistance level but within an impressive upsloping channel…
In late August, 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 also 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 early next month – just something to be aware of, as we mentioned previously, 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, and the stock remains in an upsloping channel since the summer of last year (currently near the bottom of that channel)…as of 7:15 am Pacific, CEX is unchanged at 47 cents…
Note: John, Terry and Jon do not hold share positions in CGT, PGX or CEX.
Unfortunately you have to release monster holes these days to grab the market’s attention. Where PGX’s results terrible yesterday? NO. There were some good holes in there, and the property continues to show that it has value. That being said, I wouldn’t be surprised if the stock slowly creeps higher from here. Now it’s Farshad’s turn to show his cards. The PP not being closed yet makes me a little nervous. But the appointment of McAndless gives me hope that they have found something great with these latest results. My thinking is, why would McAndless elect to join penny stock hell if the company didn’t have something worthwhile? Time will tell.
Comment by chris — September 24, 2014 @ 7:15 am
Chris, Dbv is trading well above the pp, if Farshad wanted to have the pp filled it would have happened by now, perhaps he’s see something that has made him change his mind not to do the pp at a discount and instead wait for the results that are due out any now and will allow him to do the financing at a much higher price.
Comment by Paul — September 24, 2014 @ 7:35 am
No doubt about it, the PR from PGX was very poorly thought out. We don’t even know what they are currently doing from here to the end of the year. The holes that were 1% CuEq were lost in amongst all the other holes. The stock certainly looks cheap given the potential but management have lost investor confidence regarding the way they communicate with the market.
I too am getting concerned with DBV not closing the financing yet. I’m not expecting all results to be good as I was surprised that they did a financing without releasing the initial few holes in July. However hopefully the latter holes have more of the black rock deposit and will have higher grades. Maybe Patrick and his team are re-analysing the previous core samples and will be making a statement when they are ready. I hope Farshad learns from PGX’s mistake and puts together a much better PR.
Comment by Tom UK — September 24, 2014 @ 7:36 am
Paul, you could be right. But to terminate a PP and redo it at a higher price is very rare. The results must be exceptional for that to happen. And especially in a tough market like now. You would have to convince people that it’s a safe bet. But as of now the stock is in no man’s land. Let’s see if buying picks up later in the week.
Comment by chris — September 24, 2014 @ 8:41 am
Paul, are you suggesting that Farshad is refusing to accept applications for the PP? Can he do this as it is a non-brokered offering? If so, should they not have announced that the PP has been closed early? The stock has been trading above the offer price for a while now.
Comment by Tom UK — September 24, 2014 @ 8:57 am
Let’s see what happens Chris.
Comment by Paul — September 24, 2014 @ 9:04 am
Farshad can cancel the pp at any time, it makes no sense that we have been trading for the past few weeks at 40 percent above the pp and it remains open, I would assume there are other things going on, as far as what Farshad is doing that remains a mystery, guess we’ll know soon enough.
Comment by Paul — September 24, 2014 @ 9:07 am
Tom, by the way where did you hear about black rock, the past news release only mentioned red, typo? And is it just an assumption on your part that they’re re- analyzing cores, or is there more to it, thanks
Comment by Paul — September 24, 2014 @ 9:21 am
Sheslay not looking good at the moment. Hopefully that will change soon. If not maybe GGI will pull another barnburner at Rodadero. Been a while since last results so should be hearing something soon from Mexico.
Comment by Dan — September 24, 2014 @ 10:09 am
Paul, the comment about the black rock comes from a reliable source but the exact details are not known to me. My understanding is that Patrick has adopted a hands on approach and might even have brought in a couple of his own geologists to look back at drilling results. An official press release would be very welcome.
Comment by Tom UK — September 24, 2014 @ 10:35 am
If i may, i would like to appear for one post only & in particular, to wish my
friends well, especially Jeremy. The market is still trading with much to be
desired. I remember this happening once before & i suggested at the time, that
it should rebound once the children return to school in September, but it wasn’t
meant to be, but it did start to rebound sometime around the first part of October,
let’s hope history repeats itself. Apparently, October is more newsworthy & not only
do we need news, but good news. Remember how i use to fun with John, when he gave
us great chart readings, but the market refused to go along, your day will come John !
As for Prosper’s news, it seems to have been disseminated with very little thought for
shareholders. Although it was marked a NR, it certainly wasn’t received the regular way
by me, it fact, i think it was just sent to my email. Whatever, i feel BMR should take
back the praise previously directed their way, as they have proven, they are far from
perfect. I conclude by stating that although the market has been the pits, i have
profited by $12k since the beginning of the year, but i had to work hard & will admit,
i did have my share of losses, but it did keep my mind occupied. I conclude this post
by stating, where there’s a will, there’s a way.
R !
Bert
Comment by Bert — September 24, 2014 @ 1:41 pm
Jon, have your plans changed regarding the Sheslay visit now that Prosper Gold dissapointed the market? Why do you think GGI’s share price has dropped when they are supposedly on the cusp of drilling the Grizzly and on top of that have a potential district scale Silver/gold, lead and who knows what other minerals project in Mexico? Just don’t make sense to me. I believe GGI’s statement that they were gearing up to drill the Grizzly more than a month ago and nothing yet is slowly causing investors to lose confidence in the area given it is getting late in the season. Yes, i know it is potentially viable to drill in the winter months in this particular area but it makes it more difficult. Management IMO should have provided an approximate drilling date instead of the gearing up to drill statement.
Comment by Dan — September 24, 2014 @ 2:21 pm
Hi Dan, our plans haven’t changed at all…and I think it’s safe to say that both DBV and GGI are highly encouraged by the numbers they’ve seen from the Star, and they’re as excited as ever to press forward…drill results coming from DBV shortly and it’s certainly possible a result from there could light things up…Farshad did it back in January, he could do it again…this district is robust with a lot of room for new discoveries…
Comment by Jon - BMR — September 24, 2014 @ 2:41 pm
You are more even more impatient than me Dan 🙂
DBV will be reporting next, hopefully that will give a shot in the arm to the area. PGX’s results were not bad, just their communication skills. The results will stand and be included in the 43-101. Unfortunately unless the price rises, dilution will be taking place at a lower price than it should have been if PGX had better IR.
Comment by Tom UK — September 24, 2014 @ 2:45 pm
Hi Bert .. all is well and well wishes are returned to the East coast:) thank you for your always thoughtful posts:)
Comment by Jeremy — September 25, 2014 @ 5:57 am
My sentiments as well, Jeremy, it’s good to see Bert contributing again.
Comment by Jon - BMR — September 25, 2014 @ 6:23 am
Ditto, hopefully he will stay awhile!!
Comment by Greg J. — September 25, 2014 @ 6:50 am
I previously stated one post, but what the heck, there’s worst
things i can be doing…At 916.00, we are roughly 1.00 away
from support, failing that, watch out below. Thanks Guys. R !
Comment by Bert — September 25, 2014 @ 7:02 am
Regarding PGX, am i a devil for punishment or what ? I started
yesterday to average down. Not a good idea you say, but let
this travel through one’s mind for awhile, although PGX let
us down, we do believe in DBV & GGI, so if they strike, won’t
that rub off on PGX & bring us closer to getting our cash
back. Not so says you, but i am a gambler says me. R !
Comment by Bert — September 25, 2014 @ 7:11 am
Si… but with the CDNX blowing thru the 918 support zone in the down draft of the other indices, well….. one wonder how many of us will be standing when this is al said and and done.
Bert will be…. 🙂
Comment by Jeremy — September 25, 2014 @ 7:27 am
The support band is 915 to 920, Jeremy, and the weekly close is critical…so the Venture support is holding at the moment and the weekly close is going to be very important (you could have, for example, an intra-day plunge to 900 followed by a hammer reversal, anything is possible)…keep in mind, we also have RSI(14) levels on the daily chart already at a point not seen since the spring of last year when Gold plunged to just below $1,200…so one clear scenario is that this is certainly fertile ground for a near-term reversal…
Comment by Jon - BMR — September 25, 2014 @ 7:38 am