Happy Memorial Day to our American friends, as the United States honors the men and women who gave their lives in service to enable this great nation to live freely and fully…this special observance began in the years following the Civil War and was originally known as Decoration Day…it gradually came to be known as Memorial Day over the years…
On this important American holiday, which also marks the unofficial start of summer, U.S. stock markets of course are closed after the S&P 500 finished above 1900 Friday for the first time ever…we have a slightly shortened version of Morning Musings as Canadian markets are open but volume is much lighter than normal…
Gold has traded between $1,290 and $1,295 so far today…as of 8:30 am Pacific, bullion is unchanged at $1,293…Silver is off a nickel at $19.42…Crude Oil is down 16 cents at $104.19 while the U.S. Dollar Index is down more than one-tenth of a point to 80.25…
Billionaire Petro Poroshenko has won Ukraine’s presidential election, handing him the task of stemming deadly separatist violence that’s threatened to rip the former Soviet republic apart…speaking today in Kiev, he said the government’s operation to rein in the separatists should be more effective…that sets him on a collision course with Russia after Foreign Minister Sergei Lavrov said in Moscow today that any escalation would be a “colossal mistake.” Poroshenko stated, “The efficiency of the anti-terrorist operation will be sharply increased.”
The European elections over the weekend have left the majority parties unchanged…while those parties have retained power, the parties objecting to austerity or who want out of the E.U. made very strong gains, especially in the U.K., France, Greece and Denmark…Narendra Modi has been sworn in as India’s new prime minister…Modi’s BJP won the biggest victory by any party in India for 30 years, gaining a majority in parliament and trouncing the outgoing Congress Party…
Easing restrictions of Gold imports into India might not have the effect on the Gold market as some might expect, according to analysts from Morgan Stanley…last week, the Indian central bank announced a partial reversal of its restrictions and allowed two premium trading houses to import Gold. “However, we do not think this necessarily means that real demand for Gold will see a sudden surge,” the analysts say. “Although the move could see official import numbers rise, we think a significant share of the ‘lost’ demand was already being met by unofficial imports, meaning the effective rise in Gold imports will be much lower on a net basis, in our view.”
What’s particularly significant in our view about the recent elections in India is that Modi has a pro-business agenda and a strong BJP majority to implement his agenda…this creates a major opportunity for much-needed economic reforms in the country which should translate into stronger growth and the creation of new wealth…this in turn has bullish implications for bullion over the longer-term in a country that of course has such a cultural affinity to Gold…
There were no sales or purchases of Gold from the SPDR Gold ETF Friday…its holdings stand at 776.893 tonnes, very close to the lowest level ever seen since December 2008…
Today’s Equity Markets
Asia
China’s Shanghai Composite gained 7 points overnight while Japan’s Nikkei climbed 140 points…
Europe
European markets were mostly higher today…on the data front, a June consumer confidence survey for Germany continues to show some promising improvement…the forward-looking indicator from the GfK market research group gave a reading of 8.5, the same figure seen in the last four months and the highest since January 2007…
Canada
Trading is muted in Canada due to the U.S. holiday…the TSX has gained 13 points while the Venture is up 4 points to 992 through the first two hours of trading…Contact Exploration Inc. (CEX, TSX-V), one of our favorite energy plays, is among the volume leaders this morning on the Venture…CEX is up 2 pennies at 40 cents after announcing a $10 million non-brokered private placement at 39 cents (non-FT) and 44.5 cents (FT)…
Venture 3-Year Weekly Chart
John’s updated Venture 3-year weekly chart shows RSI(14) finding support around the 50% level, as expected, slightly above an uptrend line…other notable features on this chart include last year’s double bottom reversal pattern, the breakout in October above the long-term downtrend line, the testing of that downtrend line as new support, the breakout that began at the end of December, and the current consolidation testing a powerful support band…buy pressure remains strong – a good sign…watch for near-term reversals to the upside in the 20 and 50-day moving averages (SMA’s)…
CRB Index 4-Year Weekly Chart
There has clearly been an important breakout in the CRB Index which lends additional credence to our bullish stance regarding the Venture…while it’s certainly possible there could be some near-term consolidation in the CRB, something very different has been happening in the CRB since late January/February – unlike anything seen during Venture rallies in 2011 or 2012…of particular significance, the CRB has staged a bullish breakout from a long-term downsloping wedge as you can see in this 4-year weekly chart…
Edge Resources Inc. (EDE, TSX-V) Update
An Alberta energy play to keep an eye on is Edge Resources (EDE, TSX-V) which recently broke out of a basing channel between 10 and 16 cents, thanks to a turnaround in the company’s performance including its first million-dollar revenue month in February…so improving fundamentals (production increases, much stronger revenue and cash flow) are at work here along with bullish overall technicals…this company is becoming self-funding on the basis of a successful multi-well drilling program…earlier this month, Edge also reported a sharp increase in its year-end reserves…a long-term downtrend line currently intersects with Fib. resistance at 25 cents…this looks very promising for both the near-term and the second half of 2014…EDE is off half a penny at 19 cents as of 8:30 am Pacific…as always, perform your own due diligence…
Silver Short-Term Chart Update
Importantly, Silver continues to find support just below $19 at or just above the top of a downtrend line…this is similar to the Venture pattern during the fourth quarter of last year when it, too, found support at the top of a downtrend line…RSI(2) on this 3-year weekly chart hit extreme oversold levels recently and has recovered to 63%, while SS appears to be forming a bottoming pattern…buy pressure, albeit low, has replaced sell pressure which has been mostly dominant since early 2013…these are encouraging signs…the support band between $17.50 and $19.50 should therefore hold while the next major chart resistance is $22…
Silver Long-Term Chart Update
This 11-year monthly chart confirms that the metal has exceptional support just below $20…note that Silver has two downtrend lines it needs to break above…if and when Silver clears stiff resistance at $26, watch out – you’ll want to back up the truck and load up…
Note: John has a share position in EDE.
RBW had some dumping today at 2.5 cents after the announcement of private placement at 3 cents… two cents lower than previous placement. It means… bad news if you are waiting for something to happen. In short term, it will be challenged at 2 – 2.5 cents. Put this one under the carpet if you still want to keep it….
Comment by Theodore — May 26, 2014 @ 5:17 pm