Gold has traded between $1,204 and $1,214 so far today…as of 9:00 am Pacific, bullion is off $1 an ounce at $1,211…Silver is up 4 cents at $16.64…Copper has added 2 pennies to $2.78…Crude Oil has surged more than $1.50 a barrel to $58.70 after weekly data from the EIA showed U.S. Crude stocks rose less than expected last week as inventories at the Oil hub at Cushing declined for the first time since November…meanwhile, the U.S. Dollar Index has tumbled more than a full point to 94.82 (see updated chart below)…
Investors will be closely scrutinizing the Fed’s monetary policy statement later today for clues on how the central bank views the U.S. economic recovery, after a spate of unfavorable data in recent weeks including this morning’s initial report on Q1 GDP…most market participants expect the Fed to keep rates low into the summer, as it waits for the economy to bounce back from its recent soft patch…it’ll be interesting to see if the Fed attributes the weakness in the economy as backward looking, in which case the central bank could come across as a little more hawkish than generally expected…a detailed review earlier this month by CNBC of 30 years of government’s GDP data suggests a longstanding trend of lackluster 1st quarter growth…
In a note to investors, analysts at TD Securities stated, “On balance, we’d expect that Gold and the precious metals should receive some lift this week based on…more dovish (economic) expectations.”
U.S. Q1 GDP At A Snail’s Pace
The U.S. economy slowed sharply at the start of the year as businesses slashed investment, exports tumbled and consumers showed signs of caution, marking a return to the uneven growth that has been a hallmark of the nearly 6-year economic expansion…gross domestic product, the broadest measure of goods and services produced across the economy, expanded at a meager 0.2% seasonally adjusted annual rate in Q1, the Commerce Department reported this morning (well below expectations of a 1% increase)…this Q1 disappointment is a repeat of a common pattern in recent years: 1 or 2 strong readings followed by a big slowdown…the economy advanced at a 5% clip in the 3rd quarter last year and a 2.2% pace in the 4th quarter…
U.S. Dollar Index Updated Chart
The correction in the U.S. Dollar Index has deepened, as expected, with the uptrend line from last summer now being tested (note how the right shoulder of the H&S has fallen below the neckline in John’s 9-month daily chart)…today’s close will be important…a cluster of Fib. support exists between 92 and 95…
Continued weakness/consolidation in the Dollar Index would likely allow the Venture to finally push above critical resistance at 707 given the strong inverse relationship between the two…
$6 Million Trade Says Gold Breaks To Upside
An interesting trade today in options on the SPDR ETF (GLD) tracking Gold, a bet that bullion may suddenly spike to the upside…specifically, as reported by CNBC, a trader purchased 50,000 contracts (an amount that would normally trade in GLD call contracts in an entire day) of the 120-strike calls expiring in June for $1.18 each…as each contract controls 100 shares, the trader is wagering $5.9 million that the GLD will close above $121.18, or at least 4% higher from yesterday’s close by mid-June…John has a bullish-looking Gold chart this morning, but that wasn’t his $5.9 million wager (he hasn’t unloaded his Apple shares yet)…
El Salvador Dumps Its Gold
Analysts are not sure what to make of El Salvador’s recent move that saw its central bank sell about 80% of its Gold reserves in March, according to figures published by the International Monetary Fund (IMF)…the small Central American nation’s reserve bank sold 5.4 tonnes of Gold for $206 million, depleting its Gold reserves from its previous holdings of 6.8 tonnes, IMF data shows…an official from the bank told Reuters that the sale aimed to help diversify its risk and take advantage of appreciating Gold prices, which seems rather odd as the country’s official currency is the U.S. dollar and Gold is less than $100 U.S. off its November multi-year low…the impoverished nation made headlines recently with the fact that it could be forced to pay OceanaGold (OGC, TSX) $300 million in damages over the rejection of a mining lease application in 2013…the government of El Salvador, the most water-stressed nation in Central America, stopped granting mining licenses back in 2008 in an attempt to preserve its limited clean water supplies and safeguard the environment…
Gold Chart Update
El Salvador’s central bank would have been wise to be a little more patient in selling its Gold…this 6-month daily chart has a bullish near-term bias to it which could get confirmation later today following the Fed statement…
Three key levels Gold must overcome to put the bears on the defensive:
1. A band of resistance between $1,200 and $1,210
2. Fib. resistance at $1,217 (yesterday’s intraday high)
3. Resistance in the mid-$1,220’s (the March and April highs)
These final 2 trading days of April should prove exceedingly interesting for bullion…
TSX Gold Index Update
After several attempts since mid-March, the TSX Gold Index is finally through resistance in the mid-160’s which includes its 50-day moving average (SMA)…the bullish “W” formation in the RSI(14) and the position of the SS indicator both support a continued move higher toward the next Fib. resistance which is 175…
The Gold Index is up 2 points at 170 as of 9:00 am Pacific…
Richmont Mines Inc. (RIC, TSX) Update
Whether or not Gold producers are going to take off to the upside, one of the very best plays in this space – it continues to outperform its peers – is Richmont Mines (RIC, TSX)…the company enjoyed slightly better than expected 1st-quarter 2015 Gold production of nearly 26,000 ounces, a 23% year-over-year increase, and Gold sales of 24,791 ounces, a 21% increase over the prior year as reported April…RIC continues to benefit from a low Canadian dollar as its Q1 quarter average realized Gold price was $1,496 CDN per ounce, up 4% over the same period in 2014…
Accelerated development at the producing Island Gold Mine, where Richmont has outlined a substantial high-grade resource below existing workings, is progressing according to plan…
Richmont’s Quebec operations had an excellent 3 months, with Beaufor and Monique delivering significant Gold production increases over last year…
Thanks to a strong 1st quarter and the closing of a $38 million bought deal financing at $4 per share, Richmont’s cash position as of the end of March was approximately $71 million…
Technically, overbought RSI(14) conditions that emerged in RIC last year have unwound, with the stock now threatening to break out of a bullish downsloping flag…superb support held at $3.50 during Gold’s drop to the low $1,140’s last month…
RIC is certainly one to tuck away for the long haul…it’s up 6 cents at $4.05 as of 9:00 am Pacific…
GoldQuest Mining Corp. (GQC, TSX-V) Update
Goldquest Mining (GQC, TSX-V) this morning released an updated Preliminary Economic Assessment for its Romero Project in the Dominican Republic, showing much improved economics including a pre-tax IRR of 46% (vs. 19.7% originally) and an after-tax IRR of 34% (vs. 15.1%)…payback of capital would be within 2.7 production years…the pre-production capital expenditure estimate has been reduced to $143 million, plus $92 million of sustaining and closure capital over LOM totaling $235 million (vs. $374 million earlier)…Romero would be a 9-year underground mine with an average production rate of 912,500 tonnes per year (2,500 tonnes per day), equating to 117,000 recovered AuEq oz per year…
GQC climbed as high as 20 cents in early trading but has since backed off to 18 cents on volume of more than 3 million shares (all exchanges) as of 9:00 am Pacific…
Today’s Equity Markets
Asia
China’s Shanghai Composite was unchanged overnight, closing at 4477…
Europe
European markets were down sharply today as the euro surged against the dollar…
North America
The Dow is off 68 points through the first 2-and-a-half hours of trading…in Toronto, the TSX has lost 42 points while the Venture is up 2 points at 698…
Venture Updated Chart
A healthy minor pullback to just below the rising 20-day SMA has unwound temporarily overbought RSI(14) conditions, with this indicator finding support around the 50% level and rising again…
Depending on today’s Fed announcement, the Venture’s current technical posture is now more supportive for a successful push through 707…
North Arrow Minerals (NAR, TSX-V) Update
The “trend is your friend”, as the saying goes, and the overall uptrend in North Arrow Minerals (NAR, TSX-V) shows no signs of abating, with plenty of room for speculation in the weeks ahead after the company’s news April 21 that its Q1–4 kimberlite contains “unaggregated nitrogen“, a defining characteristic of very rare, natural Type Ib diamonds…a critical moment will come later this spring or early summer when a formal valuation of the Q-1–4 diamond parcel is expected…
According to this 8-year monthly chart, a confirmed breakout in NAR has occurred above Fib. resistance at $1.18 which should now act as new support…
NAR is up a nickel at $1.28 as of 9:00 am Pacific…
Note: John, Terry and Jon do not hold share positions in RIC or NAR.
I was curious whether you think this new wrinkle with GBB, the proposed conversion of common shares to royalty shares is positive (which I thought at first glance) or suggests the hail mary type move of a company that is running out of tricks as they wait for their last permit.
Comment by mike — April 29, 2015 @ 8:26 am
The lack of news from GGI is frustrating and several investors seem to be selling. The market cap is $7.4m, which to me is very cheap given their portfolio of properties. I’ve just topped up with another 50k shares.
Do BMR know when we are likely to hear from Steve? He did promise that there would be plenty of news flow during this time. Are they waiting for DBV to announce their last bit of result before they get their own drill bit turning at the Grizzly?
Comment by Tom UK — April 29, 2015 @ 12:07 pm
Jon
any concerns with BLO? Management appears to be starting another company and it appears that the stock has broken down as well… what are your thoughts on this?
thanks
Comment by Greg — April 29, 2015 @ 1:40 pm
My guess on the latest GBB move is that organization that committed the funds for the rolling start were always looking for royalty shares. Frank probably thought the share price would be higher and the price of gold where it is today. Frank is savy enough to know that the common shareholders would have a fit if they were faced with converting a number of common shares for a royalty share. By converting all shares and issuing Royalty shares for the rolling start there would be a large dilution but current common shares get a dividend based upon gold production. What will be interesting is how the market values this. I imagine 50% of gold production will be paid out in a dividend and the remainder retained for development and operating costs. Just my guess
Comment by Ted — April 29, 2015 @ 2:46 pm
No concerns whatsoever, Greg. This is just short-term technical related selling that we’ll show in a chart tomorrow. Accumulation opportunity like in any previous pullbacks. This has been a volatile play since day 1, so understanding those swings is important. The key thing is the business model is going according to plan.
Comment by Jon - BMR — April 29, 2015 @ 3:14 pm
Good morning Jon. Could you comment on copper’s move please? As I type this, copper has finally hit $2.80. Thanks.
Comment by tony T — April 30, 2015 @ 3:54 am
We’ll look at doing an updated Copper chart tomorrow, Tony…it’s moving above $2.80 this morning with $3 as the key resistance…Copper supplies are tighter than what many analysts were anticipating due in large part to disruptions on the supply side, production #’s falling short…this is helping form a recovery in the CRB which likely has further to go…good for the Venture along with the weakness in the Dollar Index…the Dollar clearly hit an important top for the short to medium term in mid-March and is prone to further downside pressure…
Comment by Jon - BMR — April 30, 2015 @ 4:04 am
thanks Jon. Much appreciated (as always)
Comment by tony T — April 30, 2015 @ 4:19 am
Another kick in the knee for gold, gezz!
Comment by Tombc — April 30, 2015 @ 5:02 am
Regoci consistently spews on about increasing shareholder value but really it appears the only few that are benefiting from any deals are the insiders. Look at what this company has provided for shareholders since the Paramount deal in 2009…the stock is down and the money is gone. I guess I am just once again embarrassed to say I have been duped by another stock promoter which is Regoci’s background. Jon I was just wondering if you ever admit to your readers that you sometimes feel if you have been strung a line and admit defeat?
Comment by bryan — April 30, 2015 @ 5:14 am
DEC put out news this morning. The gold is high but the meters is not deep. The volume is insane.
Comment by dave — April 30, 2015 @ 6:00 am
DVR, we pointed this out yesterday…new high this morning…the action over the last few weeks definitely suggests something is happening here. Small float, potentially very explosive. We have followed this one closely since the IPO in late 2012, and it finally looks like it could be ready for some serious action…recent trading behavior has caught our eye. One of few companies with an exceptionally clean share structure.
Comment by Jon - BMR — April 30, 2015 @ 7:07 am