Gold has traded between $1,088 and $1,106 so far today…as of 10:30 am Pacific, bullion is down $2 an ounce at $1,098…Silver is off 9 cents at $14.69…Copper has slid a nickel to $2.34…Crude Oil is 59 cents lower at $47.55 (significantly, it has broken below important Fib. support at $49) while the U.S. Dollar Index has fallen nearly a full point to 96.41…
Exactly 1 week ago, Gold experienced a suspicious “mini flash crash” in a matter of seconds as large sell orders were dumped into markets in Shanghai and New York, taking the metal down nearly $50 an ounce to $1,080 – its lowest price in 5.5 years – before it began to recover…the selling came during thin market conditions and on a day when Japanese markets were closed for a holiday…we encourage readers to check out Frank Holmes’ latest “Investor Weekly” at www.usfunds.com, a feature that we would consider a “must-read” for every resource investor each week, for his interesting thoughts on what occurred…
“The last time the metal descended this quickly was 18 months ago, on January 6, 2014, when someone brought a massive Gold sell order on the market before retracting it in a high-frequency trading tactic called “quote stuffing.” Last month I shared with you that we now know who might have been responsible for the action – and many others that preceded it – and pointed out that the accused party’s penalty of $200,000 was grossly inadequate,” Holmes declared. “On Monday I told Daniela Cambone during this week’s Gold Game Film that such downward price manipulation seems to result in little more than a slap on the wrist. But if manipulation is done on the upside, traders could get into serious trouble.”
If you think your favorite junior got hit hard last week, the “big boys” got slammed even worse in some cases as the TSX Gold Index tumbled 8.8% for the week vs. a 5.9% decline in the Venture Exchange…for the month to date through Friday, the Gold Index has slid 17.2% while the Venture is off 11.8%…they have each lost about three-quarters of their value since the highs of 2011…
The world’s largest Gold producer, Barrick Gold Corp. (ABX, TSX), lost $2.2 billion, or 17%, of its market value last week…$3.7 billion or 23% was shaved off the value of U.S. Copper-mining company Freeport-McMorRan Inc. (FCX, NYSE)…
Fed Meeting Starts Tomorrow
This week’s key event is the FOMC decision on Wednesday…while almost no one expects the Fed to raise interest rates at this meeting which begins tomorrow, traders and investors will be closely examining the Fed statement and what the central bank has to say about the outlook for the economy and inflation…economic reports Thursday (first look at Q2 GDP) and Friday (the employment cost index) following the Fed meeting will be critical…
The Fed can’t ignore events in China and the fact that growth across the developed world has lagged behind expectations this year…countries continue to struggle to rebound from the 2008 financial crisis…global growth has averaged 3.3% in the years since the financial crisis, compared with 4.7% in the 6 years prior to 2008, according to International Monetary Fund data…the IMF expects growth of 3.3% for this year but watch for another downward revision…
Gold 2.5-Year Weekly Chart
John’s 2.5-year weekly Gold chart has proven to be an exceptionally reliable guide for the direction of bullion prices…it was this chart that suggested a major rally was in store for Gold after it touched a low of $1,130 last November…indeed, the yellow metal rallied nearly $200 an ounce in less than 3 months…
Since early 2013, Gold has been meandering within a downsloping flag, occasionally but consistently testing the bottom and top of the flag…
What does this chart tell us about the current situation?…
Last week, you can see that Gold once again touched the bottom of the flag…simultaneously, Gold’s RSI(14) on this 2.5-year weekly chart also hit previous support…
What this suggests is that if history once again repeats itself, a rally in Gold at the moment (closest resistance is $1,150) is more likely before any test of the psychologically and technically important $1,000 level…
Any move above or below the boundaries of the downsloping flag is going to be critical…in other words, there’s little doubt Gold will test $1,000 IF last week’s low doesn’t hold…
Hedge funds and money managers currently have record net short positions in Gold – that’s probably a good sign as extreme positions by those groups in the past have been reliable contrarian indicators…
Today’s Equity Markets
Asia
Not surprisingly, China’s Shanghai Composite turned south again overnight, demonstrating that the recent rally was merely a dead-cat bounce that met resistance around 4050 as John’s charts predicted…what’s worse, it was a government-manipulated rally…so the question is, what do Chinese authorities do now?…how big of a fire hose can they come up with?…when a government takes actions that don’t work, panic can often set in…
The Shanghai plunged 345 points or a whopping 8.5% overnight, closing at 3726…key support is 3400…a drop below 3400 could create absolute panic in this market…fresh official data showed the country’s industrial profits declined 0.3% year on year in June, compared with a 0.6% rise in May and a 2.6% gain in April…
Losses were much more muted in Japan where the Nikkei fell just 1%…
However, according to a top forecaster as reported by Bloomberg, the Japanese economy likely contracted last quarter, dragged down by weak consumer spending and a slump in exports…the world’s 3rd-biggest economy may have shrank as much as an annualized 2.5%, according to Yoshiki Shinke (Dai-ichi Life Research Institute)…the median estimate of 25 economists surveyed July 9-22 by Bloomberg is for 0.8% growth after the 3.9% expansion in the 1st quarter, so a Q2 reversal would shock a lot of investors…
“There is no doubt Japan’s economy is in a soft patch,” said Shinke, the only economist to make the Japan Center for Economic Research’s top-5 list of forecasters for the past 6 years. “The question isn’t whether the economy contracted but how deep the contraction was.”
Europe
European markets were down significantly today (roughly 1% to 2.5%), thanks to the sell-off in China and weakness in North America…
North America
The Dow is off 140 points as of 10:30 am Pacific…
Just a few companies are driving the gains in major U.S. stock indexes this year, raising fresh concerns about the health of the market’s advance…6 companies – Amazon.com Inc., Google Inc., Apple Inc., Facebook Inc., Netflix Inc. and Gilead Sciences Inc. – now account for more than half of the $664 billion in value added this year to the NASDAQ, according to data compiled by brokerage firm JonesTrading…
Amazon, Google, Apple, Facebook, Gilead and Walt Disney Co. account for more than all of the $199 billion in market capitalization gains in the S&P 500…
On the bright side, Q2 earnings season has gotten off to a reasonably good start…about 74% of the 1st 186 S&P 500 companies to report so far have beaten earnings expectations, according to Thomson Reuters – slightly above historical norms…the revenue picture is a bit murkier, with only 52% of companies beating sales estimates, well below the historical average of 61%…keep in mind that share buybacks have allowed many companies to “artificially” inflate their earnings per share…
Canadian Markets
In Toronto, the TSX is down 167 points through the first 4 hours of trading while the Venture has slid 8 points to 585…closest estimated support levels are 576 and 547…
Venture 16-Year Monthly Chart
By historical standards, the Venture is in the midst of extreme oversold conditions that could possibly become even more extreme in the coming weeks, but a final capitulation or “flushing out” is probably what this market needs…incredible opportunities emerged in late 2008, and one can argue we’re in a similar situation now…the key is to focus on high-quality juniors who can survive anything that is thrown at them…
Check out the extreme “DI” levels (ADX indicator) on this 16-year monthly chart…if conditions were reversed, if this chart were turned upside down, this would be a dangerous time to be chasing stocks higher…
Sheslay District Controversy: Fiction & Facts, Continued…
Below is a link to our exclusive weekend report with detailed information on northwest British Columbia’s Sheslay district controversy, including a fascinating government video from 2011 featuring Premier Christy Clark championing the historic Atlin Taku Land Use Plan agreement signed between B.C. and the Taku River Tlingit First Nation…the Land Use Plan was a major achievement and allows for exploration and potential resource development in the Sheslay district…
Premier Clark Video – B.C. Exploration-Mining-Sheslay
This morning, we once again examine fiction and facts – this time, a statement that gave uninformed readers a wrong impression of the realities on the ground at Doubleview Capital Corp.’s (DBV, TSX-V) Hat Project…
“CREEKS” AND “TIMBER”
STATEMENT:
“They have completely damaged the creeks and filled them up with timber so they can cross the creeks.” (Chad Day, Terrace Standard, July 15, 2015)
FACTS:
As part of its extensive Sheslay district research and due diligence, BMR completed a Hat site visit in the 2nd quarter of 2014 – the only media to do so…Chad Day’s 1st-ever visit to the Hat was July 7, 2015, and he came with a declaration to halt all exploration and drilling before even checking out the property on the ground – in fact, based on witnesses we’ve spoken to, we’re not even sure he actually toured the property on foot other than a 1 km journey from the camp to the drill site and back…
We’ve seen the Hat Property for ourselves, in detail, on the ground and from the air…we have extensive video footage…there are no major creeks running through it, just one significant stream that’s long and very narrow – only about a meter wide, even less in places…Hat terrain is mostly gently sloping…in that sense, very similar to North Vancouver…we saw a few “swampy” areas, normal in a setting like this, some with minor ATV disturbance…
For those who are intimately familiar with the mining industry and exploration, drill rigs require water…it’s in no company’s interest to “completely damage the creeks” and “fill them up with timber” so workers can “cross the creeks”…Doubleview has used this stream as its critical water source at all times of the year, even during the coldest of winter days…any company with any common sense will protect its water source like a mother and father protect their new-born baby…
To actually protect that stream, Tahltan workers in 2 locations at the Hat placed logs over a width of about 3 meters, about half a meter above the stream, to allow for crossing by ATV’s to deliver supplies…the stream runs all year long, thanks to the natural heat and energy in the water (and some sulphides)…but “Hatwater” is clean and delicious…it’s what prospectors and geologists have drank going back to the mid-19th century…
Picture from Anomaly “A” area at the Hat (rehabilitated drill site). Excellent example of the terrain of the Hat area.
Equitas Resources Corp. (EQT, TSX-V) Update
We have a lot of respect for freelance writer Mike Kachanovsky, and he just put together an excellent piece on Equitas Resources (EQT, TSX-V) for Investor’s Digest that we suggest readers check out…
There are “diamonds in the rough” in the speculative resource-related space during this turbulent market period, and Equitas has to be considered another example of that in our view as we’ve been pointing out in recent months…the company has benefited significantly from a major restructuring late last year…
Since the discovery of the Voisey’s Bay deposit in the early 1990’s, small parcels of EQT’s Garland Project have been owned by 9 separate companies…this is the 1st time that this large property has been consolidated under 1 owner…
On June 24, EQT announced the appointment of Raymond Goldie to its board of directors…Goldie is currently a vice-president and senior mining analyst with Salman Partners…2 days later, the company announced it had arranged a non-brokered private placement of 6 million units at 8.5 cents per unit for total gross proceeds of $510,000, and the closing of that financing ($521,000) was announced July 16…
EQT has been in a gradual uptrend since its restructuring late last year as you can see on this 2+ year weekly chart…the uptrend line and the rising 200-day SMA at 8 cents have been providing strong support…
EQT is up half a penny at 9 cents as of 10:30 am Pacific…
Deveron Resources Ltd. (DVR, TSX-V) Update
We believe we’ve uncovered something quite intriguing here, and we have mentioned it before at lower prices…now it’s looking even more interesting…Deveron (DVR, TSX-V) is one of the few companies on the Venture that hasn’t obliterated its share structure over the last 2+ years, and it has been a top-performing stock over the last few months despite no news…the chart tells us there are expectations for some developments here – Deveron only has 11.8 million shares outstanding, and out of that the public float is only around 3 million shares…so this is a “tight” deal trading above its late 2012 IPO price (25 cents) with strong financial backing – an attractive vehicle, we’re speculating, for a smart entrepreneur to make something happen either within or outside of the resource sector…
Ask yourself this – how many Venture stocks are actually trading above where they were in late 2012, and also haven’t diluted their share structure since then?…
This 2.5-year weekly chart shows a confirmed breakout above 25 cents with 2 measured Fib. resistance levels…this obviously isn’t a big volume play given the small float, but the share structure gives it very explosive upside potential in the event there is the right news to drive it…
DVR closed last week at 30 cents, just 2 pennies below its more than 2-year high set May 21…
Klondex Mines Ltd. (KDX, TSX) Update
Klondex Mines (KDX, TSX) last week reported record AuEq ounces sold in Q2 (primarily due to higher mill throughput and considerably higher Gold grades) and management also raised its production guidance for 2015 for its high-grade project in Nevada…Canaccord Genuity views Klondex as one of the highest quality intermediate Gold producers in the sector…
Technically, KDX was due for a pullback as John’s most recent chart indicated…the overall uptrend from 2013 is very well established, however, with the nearest strong support (Fib.) at $2.73…
KDX is off 6 cents at $2.98 as of 10:30 am Pacific…
Richmont Mines Inc. (RIC, TSX) Update
Given the weakness in the loonie, Gold is looking a lot better in Canadian dollars than it is in U.S. dollars, and that’s an important point for investors to remember – especially when looking at Canadian-only producers…one of those, of course, is Richmont Mines (RIC, TSX) which has a superb balance sheet and set quarterly production and revenue records in Q2 (the company’s full financial results for Q2 will be released on August 6)…
Richmont was trading within a downsloping flag for most of this year until just recently when it briefly broke out of that formation to the upside, though that did come on decreasing buy pressure…last week’s wipe-out in the Gold sector immediately took Richmont in the other direction, and it traded as low as $3.22 – a similar situation to the sudden, overdone drop that occurred last fall…
The long-term outlook for Richmont is particularly favorable considering the company’s impressive high-grade resource that’s being prepared to be mined beneath existing workings at its Island Gold mine…given volatile markets, watch for any unusual opportunities in RIC that could emerge over the next couple of weeks ahead of the company’s August 6 earnings report which should be strong…
RIC is up 2 cents to $3.37 as of 10:30 am Pacific…exceptional support around the $3 level which was previous resistance…
Silver 9-Month Daily Chart
Silver’s immediate challenge is to get back above the $15 level which was previous support…interestingly, through last week’s turmoil, Silver was able to hold slightly above its $14.15 low late last year…the bullish “W” in the RSI(14) on this 9-month daily chart suggests a rally could be in the works from current levels…
Silver Long-Term Chart
An explosive push higher (eventually) – is this actually a scenario that could unfold in Silver over the next couple of years?…quite possibly, given the look of this 34-year monthly chart, though at the moment it’s hard to understand all the factors that could come into play to generate the kind of “Wave 5” move that could develop…
It seems possible that the bottom of “Wave 4” came late last year when Silver briefly plunged to just above $14 an ounce, though that could be challenged again shortly with the possibility of a new low…RSI(14) has managed to hold support which goes back to 2001…
Sell pressure continues to remain very strong, however, as shown by the CMF – amazingly, at levels not seen in nearly 25 years since the low of $3.51…this intense sell pressure at the moment, which could continue for a while yet, should therefore be viewed in a larger context as a bullish contrarian indicator…this doesn’t necessarily mean that Silver has hit rock bottom yet, however…
Note: John and Jon both hold share positions in DVR and DBV.
Dan – I also forgot that the Sprott-Stansberry conference starts tomorrow in Vancouver. Eric Sprott and Robert Friedland will be speakers. whether they say anything about EQT to the audience remains to be seen, but I think on the side with some whispers, they may be telling some select people about it. Just a guess. Possibly news tomorrow.
Comment by dave — July 27, 2015 @ 10:36 am
Pure Energy (PE, TSX-V) halted at 11:37 am Pacific, pending news…
Comment by Jon - BMR — July 27, 2015 @ 11:05 am
Lets see what PE comes up with here.
Comment by dave — July 27, 2015 @ 11:05 am
pure energy just got halted tsx..PE is the symbol watch for this news mabe the 43-101 finally after one year waiting..could be a monster in the lithium field not far from tesla plant…
Comment by tony roma — July 27, 2015 @ 11:10 am
TSX.V looks like a roller coaster coming down the hill.
It’s nice to see some stocks bucking the trend though.
Comment by dave — July 27, 2015 @ 11:42 am
Great day for EQT.V. I think we could easily see .11-13 by Friday. Keep an eye on CRS.V as well here. They are due for more news on land lease and drill update. I think we could see .18-20 in the next few sessions.
Comment by BigRig — July 27, 2015 @ 12:47 pm
Excellent session for EQT, especially on a bad overall market day. Further to Saturday’s comment, and Dave’s appropriate roller coaster analogy, technicals across a broad spectrum aren’t looking good at the moment—-this week could be a roller coaster coming down the hill for not just the Venture…the TSX broke some important support today at 14150…CRB is on the edge of a cliff…Crude continues to weaken…China is in trouble…the list goes on. On the positive side, this is what we may need for a final bottom…fasten seat belts…
Comment by Jon - BMR — July 27, 2015 @ 12:55 pm
And don’t forget Jon, yellen the puppet speaks this week as well.
Comment by Tombc — July 27, 2015 @ 1:13 pm
CRS is one to watch. EQT good day hopefully more to come. Robert Friedland is speculation on any involvement on EQT of coarse. Time will tell. Interested to see news on PE.
Jon, the end has to be close, I think we entered that capitulation stage.
Comment by dave — July 27, 2015 @ 1:15 pm
The advanced technology Pure Energy has (through Trevoli Bateman) to bring lithium to market takes about 36 hours vs 1 year conventional settling ponds evaporation method at the Clayton Valley neighboring Silver Peak mine. 99.9% pure lithium available for electric vehicle batteries. Looking for a huge resource here, then more drilling to expand resource.
Comment by vepper — July 27, 2015 @ 1:23 pm
What is the name of the company with CRS symbol?
Thanks
Comment by Greg — July 27, 2015 @ 2:36 pm
Good work BMR in picking apart Chad’s accusations of destroying land he has no claim too. I hope the Globe and Mail is being made aware of the DBV side of this situation. Keep up the good work.
Comment by Les — July 27, 2015 @ 2:45 pm
Les, there are some in the mainstream media who will eat up any claim that the “big, bad mining company” is bring environmentally irresponsible. That was the picture that was intended to be painted in people’s minds by Chad Day, but the facts don’t match the claim here. Been there, seen it. That water source from the stream is precious to DBV, and would be to any company. The fact the 2 little bridges were built by Tahltan workers is particulary ironic.
Comment by Jon - BMR — July 27, 2015 @ 2:58 pm
Jon, you guys have done a phenomenal job reporting on this. I hope GGI and DBV appreciate the job you are doing. They are pretty quiet while you seem to be doing most of the work, that’s what it appears anyway. Do you know if there are ongoing discussions between the Tahltan and DBV/GGI? I would expect the government to be pretty quiet, not ruffle any feathers (as governments tend to do) and hope the parties sort it out.
Comment by Danny — July 27, 2015 @ 3:27 pm
Jon, do you know what is currently happening up at the DBV site? Are the workers still there waiting for this to hopefully get resolved? Just curious to know what’s happening up there….might give us an indication as to how long this is going to take.
Comment by Steve A. — July 27, 2015 @ 3:31 pm
So the venture drops down another 10 pts today. A few on here state that this is capitulation, and I can appreciate that but what has my a little nervous is that nothing in the future seems like its going to turn this around. China isn’t doing well, USA doing ok, Canada is in recession. So my question to you all is; what is going to turn this venture around?
Thanks for your time and I will enjoy your replies. (if any)
Comment by tony T — July 27, 2015 @ 3:43 pm
I believe a major discovery will turn it around. Who will it be!
Comment by dave — July 27, 2015 @ 4:06 pm
What we probably need to see, Tony, is a wash-out, and that’s looking increasingly likely given how a broad spectrum of markets are behaving at the moment. This is not just a Venture problem. The question is, what will the central banks do in the event of a potential equity panic in China, and the destabilizing affects of a further drop in commodities which demonstrates the global economic landscape is deteriorating? China as the locomotive of global growth isn’t ringing quite as true anymore. This rest of this week is going to be very interesting. Looks like the CRB will break key support at 200. 180 would be the next stop which is a minimum 10% decline from current levels.
Historically, what has turned the Venture around from deep bear markets has been a wash-out, a sharp turnaround in Gold-commodities and/or a major discovery. All the more reason we need those drills turning in the Sheslay district.
Comment by Jon - BMR — July 27, 2015 @ 4:08 pm
Tony, what will turn the venture around? A massive hit similar to Voisey Bay or Noront Resources. Maybe EQT will turn the venture around – maybe. Or if DBV can get back to drilling and make a major find on the hat.
Comment by Dan — July 27, 2015 @ 4:11 pm
Steve A nothing is perfect in making market analysts of forecasts but have a look at elliottwave.com ( Robert Prector )
Elliott wave theory says news is after the fact . They have a pretty good batting average on long term cycles and a lot of free stuff on their website.
Comment by Les — July 27, 2015 @ 4:14 pm
Sorry Steve , my comment was for post #16 Tony
Comment by Les — July 27, 2015 @ 4:18 pm
Thbaks for the replies guys. Much Appreciated!
Comment by tony t — July 27, 2015 @ 4:42 pm
Tony T … survey says …. confidence… which there is none from CEO’s, company NR’s as such, and government ‘brashness’ (see Sheslay) I believe that most ‘investors’ see nothing to live for, nothing to look forward to, and no reason to leave their money in any company that cares nothing for them.. like most venture companies..
RBW, GBB, GNH, Unigold, SFF, CUI, and the list goes on… we have been fodder for the management of most venture companies so they can extract salaries that dwarf our yearly earnings for a good days work, but not them..
and then the FN’s walk in and take away the candy.. and no one does anything (present perception)…
So what do you think is going to happen… exactly what is…. and yes Tony … it can go to zero… one company’s HIT wont change a damn thing… a rising tide will only lift the boats that are still in the water… most aren’t.. sad but true..
The Venture is will be an afterthought in 5 years… the hucksters of old will have found another landfill.. called the CSE!!!!!:) and you will tell your kids about a phenomenon called a newsletter … they wont exist!!
Hows that for a doomsday Marc Faber approach.. I said in 2012 that the trajectory of the venture would lead to 700… check the archives.. guess I was wrong.. and I got railed for it..
I truly believe that the junior market is toast… too much Bo Polny!!! and too much tree hugging…
Come on DBV prove me wrong….. or dont drink the koolaid!!
Comment by Jeremy — July 27, 2015 @ 6:51 pm
Jeremy
I love it we need to hear more remarks like yours, even Porter Stansberry said this “I’ve been getting phone calls from leading precious-metals investors. They’re looking to sell assets and asking me for terms. They’re getting desperate to raise money. These were some of the richest men in the world five years ago… and now a few of them are virtually broke. That’s what happens when an industry declines by 80% or more. And that’s what a bottom “feels” like.
Porter went on to say that “average gains in excess of 250% are likely” in gold stocks.
he thinks the bottom is getting close
Comment by GREG — July 27, 2015 @ 9:48 pm
Jeremy. My thoughts exactly!
Comment by tony t — July 28, 2015 @ 3:14 am
news on pure energy tsx.PE 818,000 TONS at 6500 us dollars a ton.. the insiders say the brine puriry is 15,500 us dollars a ton at 6500 dollars it is 5,317,000,000 BILLION US DOLLARS worth…
Comment by tony roma — July 28, 2015 @ 5:35 am
wow, venture up 1 pt today…..
Comment by STEVEN1 — July 28, 2015 @ 5:47 am
42.Great article guys! A lot here at stake and the natives just want as much easy money as they can get there hands on. I’m much more heavily invested in PGX and was wondering if anyone has any info on what’s happening with there drilling plans for this year?
Comment by Sunny G — July 28, 2015 @ 10:35 am