TSX Venture Exchange and Gold
The 2nd half of 2015 continues to play out much differently for the Venture than last year’s 2nd half. In fact, the Index enjoyed its best October in 4 years, albeit the gain was a modest 3.2%. Still, this compares very favorably with last year’s 15.3% plunge in October.
Broader equity markets, especially on the U.S. side, enjoyed more spectacular returns in October with the Dow up 8.5% (1379 points) while the NASDAQ roared ahead 9.4%. The TSX sputtered along, rising only 1.7%, Gold enjoyed a respectable month by finishing 2.4% higher, while Crude Oil rose 2.9%.
A strong support area for the Venture is around 540 and that was evident again this past week as the Index slipped as low as 538 intra-day Friday but closed the session up 2 points at 542. For the week, the Venture was off 9 points as Gold came under some pressure after falling below $1,160.
Venture 4-Month Daily “Awareness” Chart
How November plays out for the Venture will prove to be very interesting. Entering this new month the Index has a few technical factors in its favor including a potential reversal in the RSI-14 (bullish “W”) while the %K (SS indicator) is reversing to the upside from a low “W”. In addition, though it’s not shown on this particular 4-month daily chart, the Venture’s 20-day moving average (SMA) is trending higher while the 50-day has flattened out and could be ready to turn north this coming week. Resistance at 560 is strong. We’re confident that wall will come down by year-end – the only question is timing.
The key to making money near-term will be to focus on very select opportunities (resource and non-resource) that have the right dynamics to push higher. The Venture is holding together well enough in order to allow for some profitable short-term trades. More broadly speaking, we believe there are numerous situations that present exceptional opportunities looking out over the next several months. The best time to accumulate is during the early stages of a trend reversal, and we believe that reversal started August 24.
We have reason to believe the Sheslay district will soon provide much-needed exploration excitement for the Venture. We’ll elaborate on that in our BMR Pro subscriber Sunday Sizzler Report.
The Seeds Have Been Planted (And Continue To Be Planted) For The Next Big Run In Gold Stocks
There’s no better cure for low prices than low prices. The great benefit of the collapse in Gold prices in 2013, and this summer’s weakness with the drop below $1,100, is that it has forced producers to become much more lean in terms of their cost structures. Producers, big and small, continue to make hard decisions in terms of costs, projects, and rationalizing their overall operations. Exploration budgets among both producers and juniors have also been cut sharply. In addition, government policies across much of the globe are making it more difficult (sometimes impossible) for mining companies to carry out exploration or put Gold (or other) deposits into production, thanks to the ignorance of many politicians and the impact of radical and vocal environmentalists (technology has made it easier for groups opposing mining projects to organize and disseminate information, even in remote areas around the globe). Ultimately, all of these factors are going to eventually create a supply problem and therefore historic opportunities in Gold and quality Gold stocks. Think about it, where are the next major Gold deposits going to come from? On top of that, grades have fallen significantly just over the past decade.
Keep in mind, as well, that in currencies other than the U.S. dollar, Gold has been performing exceedingly well. So don’t get fooled by the widespread negativity in the American media toward Gold at the moment. Bullion in Canadian dollars, for example, is in a major bull phase (above $1,500 CDN), and certain high-quality Canadian Gold producers have given investors tremendous returns over the past year or two – and still represent great value.
U.S. Dollar Index 9-Month Daily Chart
The Dollar Index staged a sudden reversal the week of October 19 when the euro took a beating following comments by ECB President Mario Draghi that strongly suggested the central bank would expand or extend its QE program by December. While a weak currency helps the euro zone, a strong greenback is a problem for both the U.S. economy and the Fed. Ironically, the higher the dollar goes on euro weakness or speculation of possible Fed tightening, the less the chance becomes of a near-term rate U.S. rate hike as the high value of the dollar is hurting corporate earnings and adding to deflationary pressures throughout the American economy.
An important part of the Fed’s mandate is to get inflation back to a 2% target level, and the surge in the greenback since the summer of last year has greatly complicated that task for the Fed. In addition, according to the Fed’s own research, the greatest impact of the higher greenback has yet to be felt (the “lag” effect). We doubt the Fed has the courage to hike rates until at least well into next year – perhaps even not until after the November 2016 elections.
The Dollar Index cooled off slightly last week despite the Fed’s policy statement that indicated a rate hike was still a possibility before year-end. Fresh economic data confirmed the U.S. economy is still in slow-motion.
Technically, despite strength in October, we still see problems ahead for the dollar as we’ve been stating for several months since the March high of 100.71 and the spring double top. Two uptrend support lines were broken, and resistance at 98 has been relentless since late May.
The Dollar bulls have been stampeding on a false promise by the Fed to hike rates. To add insult the injury, the U.S. is losing prestige on the international stage. We still hold the view that the greenback will be pressured in the coming months, and that would certainly be supportive for Gold, Crude Oil, and the Venture.
Gold 6-Month Daily Chart
Gold posted a modest gain for October, though bulls were disappointed the yellow metal couldn’t hold support at $1,160. For bullion to avoid another test of $1,100, the $1,130 area (previous Fib. resistance) does need to hold. For the week, Gold was off $22 at $1,142.
On John’s 6-month daily chart, you’ll note that RSI(14) hit resistance recently at 70%, which is why we expected a modest pullback. Interestingly, the sudden change in the CMF (buy pressure to significant sell pressure) with RSI(14) plunging below 50% is a sign that Gold has a little further to go on the downside before turning higher again.
Gold 2.5-Year Weekly Chart
Gold has traded within well-defined parameters over the last 2-and-a-half years as shown in this long-term weekly chart, with repeated moves between the bottom and the top of the downsloping flag. However, the last move higher in May (above $1,200) fell short of the top of the flag, as did the run to $1,192 in early October. At some point, Gold will make a decisive move either above or below the flag – that will be a critical turning point.
Demand from China is robust and that’s a major fundamental factor underpinning Gold which we believe is the Ultimate Currency.
Silver lost 27 cents last week to finish at $15.54 (updated Silver charts Monday). Copper fell 3 pennies to $2.32. Crude Oil held critical support and added $1.66 a barrel to close at $46.39 while the U.S. Dollar Index eased off slightly to 96.92.
The “Big Picture” View Of Gold
As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been driven by both the Fear Trade and the Love Trade. The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, has had a huge impact on bullion and will continue to support prices. Despite Gold’s largest annual drop in 3 decades in 2013, and weakness this past summer, the fundamental long-term case for the metal remains solidly intact based on the following factors (not necessarily in order of importance):
- Growing geopolitical tensions, fueled in part by the ISIS and al Qaeda, and a highly dangerous and expansionist Russia under Vladimir Putin, have put world security in the most precarious state since World War II;
- Weak leadership in the United States and Europe is emboldening enemies of the West;
- Currency instability and an overall lack of confidence in fiat currencies;
- Historically low interest rates/highly accommodating central banks around the world;
- Continued solid accumulation of Gold by China which intends to back up its currency with bullion;
- Massive government debt from the United States to Europe – a “day of reckoning” will come;
- Continued net buying of Gold by central banks around the world;
- Mine closings, a sharp reduction in exploration and a lack of major new discoveries – these factors should contribute to a noticeable tightening of supply over the next couple of years.
The sheslay Game.
As of today DBV and GGI as alot for them going foward. Both stock as about the same share structure, market cap, area but diferent gameplay.
Let’s say the name of the game is; December 31 of this year, the stock with the greatest market cap going foward” GGI VS DBV or could be favorite stock as well!
Answer i already know!
DBV: D4, Les, Guy, ……
GGI: Martin, Tom uk, Jeff i think?
Just a game for fun and knowing BMR’s favorite stock and why:-)
Those that usually don’t post are invited to!
Comment by Martin — November 1, 2015 @ 9:31 am
whe can add prospergold as well lol
Comment by Martin — November 1, 2015 @ 9:37 am
Any thoughts on Metanor (MTO) who have recently drilled 38 metres of 6.7g/tonne Au near surface (starting at 7 metres depth). The earlier discovery hole hit 26 metres of 10 g/tonne (beginning at 6 metres depth), and was 6 metres away from the second hit in this area.
Comment by Terry — November 1, 2015 @ 9:56 am
I own a good 6 diend!! position in both GGI & DBV, my pick is GGI by year end
Comment by Jeff — November 1, 2015 @ 10:18 am
Reason I picked GGI to out perform DBV is
M E X I C O !!!
Comment by Jeff — November 1, 2015 @ 10:26 am
There will be time for Farshad to deliver the goods and stop giving news which are only promising
Comment by Guy Delisle — November 1, 2015 @ 11:35 am
Nobody in the market cares about Mexico.Nobody cared before drilling began at Sheslay,and nobody cares now.It’ll mean something if they can sell a Mexican property to fill the coffers for more drilling at Sheslay.Other than that,the Mexican properties have no bearing on the stock price.I said it two years ago,and the same applies today.
Imo,once DBV re-starts work on their property and both companies are releasing core results,the constant PRs each will be releasing will work to corroborate the entire area and each other’s plays,which in turn will drive each company’s share price up,potentially into the dollars.
These two companies are in an excellent position working beside each other,strictly speaking from a PR position..Just a matter of time until all hell breaks loose.The whole area play needed two companies going at it at the same time,and now it will have that.
Promotion moves stocks like nothing else in the market,and the ability to have PR after PR coming from two directions on basically the same play is what every company dreams of.We will have that soon,with core results front and center.
Comment by robinandthe7hoods — November 1, 2015 @ 3:03 pm
Don’t underestimate their Mexico projects. There are a few analysts that wonder why they bother with BC with the grades they are hitting in Mexico. There was a good article on them in Investors Business Daily strictly speaking of their Mexico property’s. I’ll try to dig it up and paste it.
Comment by weatheritout — November 1, 2015 @ 3:42 pm
I’ve heard the same rumblings regarding Mexico vs BC grades.
Comment by Treb — November 1, 2015 @ 3:55 pm
Was that a recent article weatheritout?
Comment by Martin — November 1, 2015 @ 4:23 pm
I guess nobody here needs me to say who I think will have a higher market cap on 31 Dec….lol.
Comment by DDD4 — November 1, 2015 @ 4:41 pm
Don’t get me wrong though…I’m happy they are drilling Grizzly…just saying what I’ve read through DD
Comment by weatheritout — November 1, 2015 @ 5:23 pm
I will take DBV in the Sheslay game. They already have drill results to speak of, core that still needs to be sent in, and Dr. Razique came aboard for a reason and he is world-class when it comes to porphyry style deposits. Once they start drilling again the share price should move up steadily based on the size of what they have and the speculation of a major moving in.
MTO I would not touch. They are expanding the resource and are hitting some nice grades, but; super diluted at 357,000,000 shares and just ripe for a roll back, placement after placement which never seems to end even though they are producing gold, and a deal with Sandstorm which got them 20,000,000 in return for 20% of their production for $500 US an ounce over LIFE OF MINE the last time I checked. Just my opinion.
Comment by DBReese — November 1, 2015 @ 5:39 pm
WOW…. has EQT ever disappeared… yep we are waiting but holy crap… like no banter at all….
Comment by Jeremy — November 1, 2015 @ 5:53 pm
AltaGas and Tahltan agreement on hydroelectric project 2011-
The agreements also outline a partnership between the Tahltan and AltaGas that provides for revenue sharing, profit sharing, and ownership in the projects with the option to purchase additional ownership.
Imperial Metals Red Chris Mine agreement 2015-
The Tahltan Nation has approved an agreement with Imperial Metals under which it will share revenue from the $643-million Red Chris gold and copper mine and be involved in environmental oversight of the mine,as well as provisions for training and jobs.
Agreements to provide Tahltan with economic development funds, jobs, training-BC Hydro-2011
VICTORIA – Two agreements signed Monday will provide the Tahltan Nation with economic development funds, jobs, training and skills development during construction of the Northwest Transmission Line (NTL), and a strengthened relationship with the Province of British Columbia that will focus on how decisions are made and future economic opportunities.
Fortune Minerals battle with the Tahltan 2014-
The Fortune Minerals project would be located in a critically important area of Mount Klappan that requires long-term management and protection to preserve cultural and ecological values. The area, also known as the Sacred Headwaters, is a traditional hunting ground and feeds three of the region’s major salmon-bearing rivers – the Skeena, Stikine and Nass.
“Our people have been clear for years that proper management and protection of the Klappan area is needed, and that they will not support the Arctos Anthracite Project. The company’s efforts to lobby our people have only hardened their resolve and opposition,” said Chief Marie Quock of the Iskut Band. “We expect Fortune Minerals to respect this decision of Iskut Band Council and not come on our reserve lands without prior approval from Council.”
FROM THE TAHLTAN BAND COUNCIL WEBSITE OCTOBER 2015-
The planning for IR13 has been in progress for over 20 years, and the time has come to finalize a plan for the new reserve. These maps illustrate where the new Tahltan village will be developed, and where the housing and cultural centre will be placed.
Community input has helped shape the current plans but we need your feedback so the village best serves our community’s needs. Please come to our open house meetings on October 7th and 8th so we can hear your ideas.
—This band has big plans for a new reserve and town,so companies wanting to deal on their land will have to be onside and contribute with jobs,financing and a general partnership with the band.
I expect DBV to come out with an agreement in place soon that will detail that partnership.Chad Day is no dummy.Protection of the environment is a key part of all negotiations the Tahltan have had over the years.A court injunction solves none of these issues,thus the reason I think that DBV decided to negotiate,as it would have had to be done at some future point anyway.
Imo,the court case being put on the backburner is more indicative that DBV feels this project will likely be moving much further along in the future and have decided it is in their best interests to come to an agreement before bad feelings endanger the project.
Comment by robinandthe7hoods — November 1, 2015 @ 7:20 pm
GGI has an interesting mix of investors, weatheritout. They have a lot of Americans who got involved in the stock because of the Mexico success starting in 2009 with the selling of the Temoris option to Paramount, and of course Rodadero came along last year. La Patilla appears to be a growing deposit, though it doesn’t have the scale potential of Rodadero.
However promising their Mexico properties are, the fact is that the Grizzly has a chance to dramatically change this company if a major discovery is made there. And if there’s anywhere in the Sheslay district where I would predict the possibility of a stand-alone high-grade gold deposit, I would say it’s Grizzly Central or Grizzly South, or the far southern/southeastern portion of the Hat. Parts of Grizzly Central would also be the most ideal for a mineral processing plant, as well, so the infrastructure value there is immense if the Sheslay district evolves into a mining camp. Ultimately, I can see the distinct possibility of a take-out of GGI at some point in the future, with either the B.C. assets (more than just the Grizzly) or the Mexican assets being spun out as a separate entity.
Comment by Jon - BMR — November 1, 2015 @ 7:27 pm
DBReese,both GGI and DBV will drive each other much higher on continuous PRs if GGI hits and DBV comes to an agreement with the Tahltan and begin releasing results again.
Back to back to back to back PRs if both are drilling and taking turns releasing news would be a promoter’s dream.Last time I can remember a situation like this was the Ring of Fire,where many different companies were releasing PRs and driving each other’s share prices up.
Even Steve Regoci,who is probably the worst promoter I’ve seen in many,many years can’t mess that up if the PRs have to be released because the drilling results are there.
Comment by robinandthe7hoods — November 1, 2015 @ 7:30 pm
So true,Jon.Some projects are promotional dreams,some projects never catch the wave.Mexico doesn’t move the needle for GGI,Sheslay does.
Too bad Regoci has no clue how to promote a stock,or GGI would be at .30 by now on Sheslay drilling.
Comment by robinandthe7hoods — November 1, 2015 @ 7:34 pm
I would respectfully disagree with your last statement, robinandthehoods, because I just wouldn’t underestimate Regoci’s market savvy and his ability to understand how and when to “dial it up” or play his hand. Let’s see what may develop this week.
Comment by Jon - BMR — November 1, 2015 @ 8:00 pm
I agree Jon….I am totally excited and optimistic of Grizzly…however Mexico may help with zero share dilution….if they can sell it off once they prove it up….good luck to all!!!
Comment by weatheritout — November 1, 2015 @ 8:10 pm
Yes Martin, I hold a lot more GGI stock than DBV. Mexico is the main difference. La Patilla and Rodadero could be a fall back position if Sheslay come up as a dud, or they could be a source of funding if Grizzly takes off.
GGI also seem to do a lot more field work before they sink the drill in to the ground, which in the long run is the most economical way to operate.
DBV need to hit better grades with their latest round of drilling.
I’m not a fan of Regoci’s lack of NRs over the last 12 months, but hope that this will change in the next few weeks. I think that their efforts will be concentrated in Mexico once this initial round of drilling is completed at Grizzly. Unless the results are stellar and they can raise cash at a much higher price, I don’t see them rushing to set up a winter camp.
I’m not sure what DBV will do in the next couple of months, maybe just release the outstanding results and do a PP ready for drilling in the spring.
I see GGI as a much safer bet, but there again I bought a load of shares when they were around 5.5c (thanks Sprott), so I will be taking profits if the SP moves up on speculation, or on actual good results. I think GGI will outperform DBV in share price.
Comment by Tom UK — November 2, 2015 @ 6:02 am
EQT – quite the picture history of Voisey Bay at the bottom of the Behre Newslettter link, attached, sponsored by EQT
http://us10.campaign-archive2.com/?u=c9ba005bf3505b8d13c10fc36&id=98aa242917&e=782de20b47
Comment by david — November 2, 2015 @ 6:15 am
DBV looking good this morning.
Tom UK- DBV plans to resume drilling ASAP and only stop for Christmas break. They will be doing a PP a higher prices and the drilling should go non-stop (except with Christmas break) until the SVMC is stood up….lol.
Comment by DDD4 — November 2, 2015 @ 6:20 am
robinandthe7hoods I agree that both would feed off the other if that scenario unfolds, and I hope it does as I am a shareholder in both DBV and GGI. I am not doubting GGI, and Regochi knows what he is doing, he just does it quietly. That being said, as per Martins Sheslay game question, I simply think DBV will have a higher share price on Dec 31.
Comment by DBReese — November 2, 2015 @ 6:40 am
Here’s the article….my mistake it was investors digest not IBD. Great article, many have probably seen it but for those that haven’t its a good read.
“Less choice now likely in mining sector”… Read at Investor’s Digest of Canada
Comment by weatheritout — November 2, 2015 @ 7:21 am
I think to really gain momentum they have to update on drill program. Obviously in DBV’s case they have to announce that they are indeed drilling again. As for GGI it would be great to hear that they are going to upgrade their camp to allow for winter drilling and continue drilling right through the winter. Some assays from Mexico, and assays from Grizzly…..that would lead to some serious momentum.
How to lag the stock. Drag on with no update, state that they are going to go over geophysics and such and review drill core to plan a drill program for spring or summer. Private placement.
We will see which direction they take
Comment by weatheritout — November 2, 2015 @ 7:53 am