Gold has traded between $1,117 and $1,141 so far today…as of 10:30 am Pacific, bullion is down $15 an ounce at $1,125, falling – at least temporarily – below the $1,130 support that bulls are hoping to be able to defend…we’re dealing with volatile markets at the moment, and the key will be where Gold settles for the week…Silver has hit a 6-year low, dropping 63 cents to $14.07…Copper is down 6 cents at $2.24…Crude Oil is off 28 cents a barrel to $39.03 while the U.S. Dollar Index responded favorably to U.S. durable goods numbers this morning (Gold the opposite) and has jumped more than a full point to 94.95…
China’s Gold demand might be slightly below the last 2 years but nevertheless remains around historically elevated levels, UBS has pointed out. “Looking at monthly average shipments of Gold into China from Hong Kong and Switzerland over the past 5 years reveals that current volumes are actually reasonably robust – certainly not as impressive in terms of magnitude and consistency as what was seen in 2013, but not too shabby either. Combined inflows from HK and Switzerland to July are only down by a modest 3% versus the same period last year. This suggests that underlying demand fundamentals are broadly intact, which supports our view that seasonal demand should pick up in Q4.”
Dudley Throws Cold Water On Fed Rate Hike Next Month
A September rate hike is looking less compelling, according to William Dudley, president of the New York Federal Reserve…a voting member of the FOMC, Dudley addressed the Fed’s potential tightening – especially considering the recent plunge in U.S. equities and international financial turmoil – in a press briefing this morning…
“From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago,” he said…as for inflation, Dudley said the headline rate remains low because of the drop in Oil prices, and the core rate remains flat…but weak Oil and a strong dollar will not last “indefinitely”, so the he said he expects inflation to rise (the Fed has kept saying inflation will rise but that just hasn’t been happening as deflationary forces appear to be in control)…
Jackson Hole Conference Beings Tomorrow
Given recent events in China and global market volatility not seen in years, the start of tomorrow’s Jackson Hole Conference in Wyoming takes on greater significance even though neither Fed Chair Janet Yellen or ECB President Mario Draghi will be in attendance…however, Fed Vice Chairman Stanley Fischer is scheduled to deliver remarks Saturday on inflation (that should prove interesting)…financial markets will be closely examining Fischer’s comments for any hints about whether the Fed is still likely to boost interest rates at its Sept. 16–17 meeting…among other issues, including China’s devaluation of its currency, the Fed has to be increasingly worried about the weakness and direction of Oil prices…markets may have overlooked the fact that in the minutes from the FOMC’s July meeting released last week, officials removed the Oil-stability paragraph from their statement…
Emerging markets will be a hot topic of conversation at Jackson Hole…another problem on the Fed’s radar screen in that regard is the fact that total corporate bonds outstanding in emerging markets have almost doubled since 2008 to $6.8 trillion, according to Institute of International Finance estimates…the share of this debt issued in U.S. dollars rose from less than 15% in 2008 to more than 40% in the first 5 months of 2015…the debts become harder to pay off as the dollar appreciates…
Updated Gold Chart
A retracement by Gold to its 50-day moving average (SMA) at $1,133 was not surprising, but this morning’s drop below that level is disappointing as it threatens to take away some of the bulls’ recent momentum and reinforces the chart resistance at $1,150…however, we’ll see how Gold closes today, tomorrow and Friday – the weekly close in particular is critical, and we’re dealing with very volatile conditions across all markets…
Overall, Gold continues to look positive at the moment as it works its way back up (2 steps forward, 1 step back) within a long-term downsloping channel with well-defined support and resistance…the RSI(14) 50% level must be overcome on this 2.5-year weekly chart in order for the metal to gain traction above $1,150 and take a run at the next major target area which is $1,200…
Major rallies have followed the 3 previous occasions since late 2013 when the Gold price touched the bottom of the downsloping channel on this chart…
Euro 1.5-Year Weekly Chart
Traders who went long on the greenback and/or short against the euro in March and April bought high and sold low – they got caught up in the hoopla surrounding the dollar which likely peaked for the year in March after a record run…
The euro was as deeply oversold in the early spring as the greenback was overbought – ideal conditions for a change in dynamics which are increasingly more obvious to investors today…
The euro now has momentum (this is supportive of Gold as well) and has broken out above both its 200-day SMA and Fib. resistance just below 113…it closed at 115 yesterday…it has backed off a point to 114 this morning…Fib. resistance exists at 115 and 117…wouldn’t be surprising if the euro were to take a run at chart resistance at 125 before the year is out, and that’s bad news for the many dollar bulls who are still out there (remains a crowded trade)…
Note the RSI(14) trendline and the move above the important 50% level…
Today’s Equity Markets
Asia
Along with shorting curbs now in place, China will also now restrict trading in stock index futures, a statement from the China Financial Futures Exchange said, as regulators step up their efforts on curbing “speculation”…of course they had no problem with the kind of speculation that drove the market up to 5000 earlier this year…how can investors have confidence in a system like this?…
Europe
European markets were down more than 1% today on fresh concerns regarding China…
North America
The roller coaster ride continues for U.S. stocks…the Dow and S&P 500 both closed about 1.3% lower yesterday after rallying nearly 3% earlier, their biggest reversal to the downside since October 29, 2008…that created the Dow’s worst 3-point decline in history…this morning, markets gapped up strongly but have swung wildly in both directions…as of 10:30 am Pacific, the Dow is ahead 287 points…
Orders for durable goods for July rose 2.2%, above the expected 0.1% increase, but down from the 3.4% gain last month…
In Toronto, the TSX is 26 points higher as of 10:30 am Pacific…the Canadian dollar is trading just slightly above 75 cents after ending the day yesterday below that level for the 1st time since 2004…the Venture is flat at 527 as of 10:30 am Pacific…
Equitas Resources Corp. (EQT, TSX-V) Update
A pennant formation on this 2-month daily chart for Equitas Resources (EQT, TSX-V)…pennant formations are typically bullish…given the strong underlying support in EQT, and the upcoming drill program, the odds of a breakout here have to be considered unusually good…
EQT is unchanged at 12 cents as of 10:30 am Pacific…
Pure Energy Minerals (PE, TSX-V) Update
It’s hard not to be excited about the prospects for Pure Energy Minerals (PE, TSX-V) as it continues with exploration and development of its Clayton Valley South Lithium Brine Project in Nevada…there’s also a tech angle to this – Tenova Bateman Technologies’ Lithium extraction technology which gives this project the potential to be a low-cost producer of battery-grade Lithium materials…
The recent breakout above the ascending triangle was a bullish chart development and allowed PE to reach Fib. resistance bang-on at 47 cents…a gap was also filled with a retrace to support in the mid-30‘s as expected, followed by another test of the high 40’s…
PE is trading at a nearly 4-year high in a challenging overall market – that speaks volumes for the potential here…if buy pressure picks up, and PE can overcome the Fib. resistance, it could accelerate again very rapidly…as always, perform your own due diligence…
PE is up 3 cents at 42 cents as of 10:30 am Pacific…
Kirkland Lake Gold Corp. (KGI, TSX) Update
Kirkland Lake Gold (KGI, TSX) has been on a steady rebound since late 2013 and any dips below the rising 200 moving average (SMA), currently $5.00, have proven to be good accumulation opportunities…
A prudent approach, aided by a weak loonie, has allowed Kirkland Lake to remain profitable and generate free cash flow over the past 12 months…next full financials will be released September 14…the company operates Canada’s highest-grade Gold mine and expects production to ramp up to 160,000 to 180,000 ounces per year…
Technically, strong support was demonstrated last month at the $4.50 Fib. level…
After touching an intra-day high of $5.99 last Thursday, KGI has retreated just below $5 today…expect very strong support between $4.50 and this morning’s low of $4.90…
KGI is off 16 cents at $4.91 through the 1st 4 hours of trading today…
KGI 9-Month Daily Chart
Note: John and Jon both hold share positions in EQT.
Will the EQT PP close tomorrow? Dave didn’t you say there would be news after the PP is announced?
Comment by Dan — August 26, 2015 @ 1:17 pm
EQT – I am not aware of to many companies who prepare to drill the winter months prior to hitting anything with the drill bit. That is what I keep asking myself. Why would the EQT team spend the money to set up a camp capable of winter drilling, even before a sniff of nickel. I believe it speaks volumes of the confidence of Equitas geologist and what they expect when that drill bit hits the ground at the other depth slice.
Comment by Dan — August 26, 2015 @ 4:43 pm
I would agree, Dan. They’ve gone about this very methodically and have thought it through well, geologically, logistically, in every way. 12-14 holes gives them a really good shot – if the system is there, they have an excellent chance of at least hitting part of it initially, enough to give the stock a strong lift, raise more money and expand the drilling.
Comment by Jon - BMR — August 26, 2015 @ 7:07 pm
Dan, In response to your post #1 and #2. The PP must close by Monday. No ifs, ands, or butts. More than likely tomorrow or Friday. Reading between the lines is fine.
Now, this is a last call on the cheap shares. Something that probably many have not picked up on is that the real Voisey could very well be the Garland project. Voisey was a lucky hit, but it is very possible that the main deposit is deeper and sitting right there on Garland. We won’t know until the drill talks. But keep in mind you heard it here from me first. Now, I don’t play the big lotteries that have such astronomical high odds such as the power ball. But I do play the fantasy 5 where you only need 5 out of 39 right. The odds of winning the fantasy 5 are 1 in 588,000. EQT is the purest lottery ticket I have come across in years. I am betting 80% in my favor this is a big hit. It took a lot of DD for me to be able to say this statement. If I were able to by a fantasy 5 ticket with the odds of an 80% chance of winning, I would never leave that counter and tell the clerk to keep spitting out the tickets.
Comment by dave — August 26, 2015 @ 7:34 pm
if pure energy gets a 3rd party report and gets lucky with posco or a deal with tesla any one of thes senerios will take the stock to two dollars or bring big money to a buy out ,,,my opinion only …
Comment by tony roma — August 26, 2015 @ 7:41 pm
BRM (Biorem) financials out this morning, pre-market…earnings of 11 cents per share thru the first 6 months, $1.3 million….stock closed at 30 cents yesterday, has just 13 million outstanding, we’ve mentioned this one a few times recently…definitely worth a serious look with numbers like that…should have a good day…
Comment by Jon - BMR — August 27, 2015 @ 5:02 am
Tony – I agree on PE, great story, great stock
Comment by dave — August 27, 2015 @ 5:18 am
good day out there for the Venture too!!!
Comment by STEVEN1 — August 27, 2015 @ 5:52 am
Looking better, Steven…again, we’re getting very close to the end of that 39-week cycle (early September) when typically there is a shift…Monday’s action with the 509 intra-day low and the recovery at the end of the day, above the Fib. 515 support, may have been quite significant…we’ve seen some follow-through…volume needs to increase…EMA(8) needs to be overcome as well – watch for that as a sign as John’s charts have shown…
Comment by Jon - BMR — August 27, 2015 @ 5:58 am
Dave I am assuming that much of the sell volume in the last week on EQT may have been by insiders liquidating to participate in the PP. This is usually the case on most venture stocks I have been involved in. My point is that once the PP is closed, I am expecting to see this part of the selling to diminish which may further help with upward momentum.
Comment by Jamie — August 27, 2015 @ 7:02 am