It’s Independence Day in the United States and U.S. markets of course are closed – happy Fourth of July to our American friends…we hope you enjoy a safe and relaxing long weekend…
Though he’s no fan of the Obama administration, the highly regarded Frank Holmes penned an excellent piece on the United States last night (“I’m Grateful To Live In America – Here’s Why” at www.usfunds.com – click on Investor Alert)…Holmes, CEO and chief investment officer for U.S. Global Investors, Inc., is a native of Toronto and bought a controlling interest in U.S. Global Investors in 1989 after an accomplished career in Canada’s capital markets…the first two words of Holmes’ headline – “I’m grateful” – bring up an important point in terms of how we should approach our daily lives: We need to have an attitude of gratitude for the many blessings that we do enjoy, despite the occasional and often inconsequential troubles this world can bring…
Gold has hovered between $1,318 and $1,324 in electronic trade so far today (floor trading on the New York Mercantile Exchange is closed today)…as of 7:45 am Pacific, bullion is flat at $1,320…Silver is off a nickel at $21.07…Copper is down a penny at $3.24…Copper prices are up nearly 15% from three-year intra-day lows hit in March as investors grow more optimistic about a rebound in China’s manufacturing sector…China accounts for 40% of global Copper demand…Crude Oil is down 27 cents to $103.79 while the U.S. Dollar Index is up slightly at 80.28…
As Americans drive to barbecues and the beach, they’ll be paying more for gas than on any Independence Day weekend since the record highs of 2008…a gallon of unleaded gasoline cost an average of $3.67 Wednesday, almost 20 cents above last year’s price, according to automobile club AAA…in California, drivers have been paying well over $4 a gallon for weeks…prices at the pump are tracking a significant rise in Oil prices over the past month after Islamist militants took control of several cities in Iraq…
Today’s Equity Markets
Asia
Asian markets were mixed overnight…Japan’s Nikkei average hit a five-month high as it climbed 89 points to finish the week at 15437…China’s Shanghai Composite slipped 4 points to close at 2059…
Europe
European markets are mixed in late trading overseas…
North America
Trading volumes are lighter than usual in Canada due to the U.S. holiday…the TSX is up 26 points while the Venture is off a point at 1037…the Dow and S&P 500 both hit fresh record highs yesterday…
Updated Dow Chart
Since an important bottom around 10400 in the early fall of 2011, the Dow has gained a whopping 6664 points or 64% as it closed above 17000 yesterday for the first time (during the same period, of course, Gold has fallen significantly, so it’s a fair assumption that bullion could shoot higher on any major correction in U.S. equity markets)…
The trend is your friend, but at some point this party will probably end badly – but when (three months from now, six months from now, a year from now, two years from now?) and why, no one can predict…
Below is a 6-year monthly Dow chart from John…note how the RSI(14) continues to climb an uptrend…strangely, there has been a significant decline in volume over the last couple of years despite the big run-up in the Dow…according to Elliott Wave theory, the Dow is currently trading in Wave #3 of Motive Phase 2 with a near-term target of 17150…Wave #4 would be a step back while (potentially) Wave #5 could take the Dow significantly higher, though that’s premature to get into at this point…
Keep in mind, since the beginning of 2012 the Dow has found incredible support at its rising 200-day SMA (not shown on this chart) which is presently at 16147…there’s also strong support not far beneath that around 15550 which is the top of Wave #1…
Given the Dow’s current technical posture, the possibility of a major correction (in excess of 10%) during the balance of this year seems highly remote…in addition, the very bullish tone of the Venture suggests equity markets are more likely to see a “melt-up” before a “melt-down”…
Nasdaq Updated Chart
The Nasdaq closed at 4486 yesterday, and this 20-year monthly chart shows two main resistance levels – 4728 and 5133…strong support exists at 4250 in the event of a near-term pullback…RSI(14) is overbought at 79% but remains above its trendline…
Condor Resources Inc. (CN, TSX-V)
Condor Resources (CN, TSX-V) is another example of a company getting rewarded for very good drill results…CN nearly doubled yesterday to close at 13 cents on total volume (all exchanges) of 6.4 million shares after the first deep hole (SDH-009) at the company’s Soledad Project in Peru (optioned to Mariana Resources Ltd.) returned 174 m of mineralized breccia (from 92 metres to 266 metres) that averaged 4.4 g/t Au Eq (0.74 g/t Au, 114 g/t Ag and 1.2% Cu)…as of 7:45 am Pacific, CN is up another penny at 14 cents where there is technical resistance…
The market has plenty to speculate about with regard to CN as results for another deep hole (SDH-012) are pending…this was a near-vertical hole, drilled to 437-m depth in breccia No. 5, to also test for possible higher-grade feeder zones and indications of underlying mineralized porphyry associated with the cluster of mineralized breccias expressed at surface within the roughly 1 km diameter area of interest…the results of this hole will be critical…
Technically, what’s important to point out is that CN has broken above a long-term downtrend line, so CN appears to be in a bullish new phase with chart resistance as indicated (14 cents and 20 cents)…as always, perform your own due diligence and expect volatility with this type of a situation…
New Gold Inc. (NGD, TSX) Updated Chart
Wow…this chart really speaks volumes about how the market in Gold stocks has turned…look at the classic double bottom formation in New Gold Inc. (TSX, NGD) and the cup-with-handle pattern…
NGD has a superb band of support between $6.08 and $6.51…what this chart is telling us is that NGD is poised for a major run during the second half of the year that could take it to the measured resistance that John has pointed out…this bodes well for all stocks in this sector in our view…
NGD is unchanged at $6.68 as of 7:45 am Pacific…
Critical Elements Corp. (CRE, TSX-V) Update
We started looking at Critical Elements (CRE, TSX-V) again recently when it was in the upper teens, given some bullish chart patterns…the company reported in mid-May that it had started shipping samples of lithium concentrate to a number of users for analysis and validation of the product specifications…the concentrate samples have a low iron content, which is specifically required by certain users…validation of the Rose project material by some of the largest consumers of lithium concentrate with low iron content is part of the process of setting up potential long-term off-take contracts…
Technically, CRE formed a bullish ascending triangle, as we previously pointed out, and appears well-positioned for an encouraging second half of 2014…a confirmed breakout above resistance at 23 cents has occurred…that level should constitute new support, and it coincides with the rising 20-day SMA…
CRE is unchanged at 25 cents as of 7:45 am Pacific…
Note: John, Terry and Jon do not hold share positions in CN, NGD or CRE.
Can someone help me out. Not sure what to make of this NR. Thanks for your help
Fancamp to buy back up to 10.31 million shares
Read at Stockwatch (July 04, 2014)
Comment by Tony T — July 4, 2014 @ 12:53 pm
Tony T: They are basically buying shares back but will not be buying anything over 7 cents. How they expect to create shareholder value with that strategy, I don’t know, since they will not be pushing the price higher. The only winners short term will be those who will manage to snatch some shares at lower prices. But at least the shares will be going to strong hands (management). I may be reading it wrong, and if so, somebody is free to correct me.
Comment by chris — July 4, 2014 @ 2:41 pm
Shares would normally be cancelled to reduce float ….Company profits by being able to replace the same amount of money by issuing less shares after the price rises down the road …
Comment by Fred — July 4, 2014 @ 5:16 pm
Thanks for the reply Chris and Fred. I guess the fact they’re buying shares back is encouraging but would have been nice buying them at a higher price. At least,should they buy the full 10 million shares, will be in strong hands. Thanks again guys much appreciated 🙂
Comment by tony t — July 5, 2014 @ 5:07 am
Noticed DBV,etc starting to get stronger throughout the quiet week overall with Canada Day and 4th of July…..
Comment by STEVEN1 — July 5, 2014 @ 8:00 am
Noticed some funky looking new core from Silver Eagle on the GGI web site this morning. Another bonanza hit maybe? Any thoughts?
Comment by Bucky — July 5, 2014 @ 8:48 am
Yes Steve. I am guessing that they are close to the end of their drill program. Results probably out within 3 weeks of last drill day. Maybe the sellers are drying up in anticipation of positive drill results. I feel the market has overlooked the drill results so far, or maybe management has failed to press home what they have discovered. Lisle anomaly (target B) has decent results spread over a reasonable distance. IMO this is not reflected in the current share price.
If they can get better grades and also enlarge the size of the deposit then I’m sure the share price will go northwards. It would be useful if someone could put some tonnage estimates when the next set of results come out. Some up to date presentations for the market would be very useful.
Comment by Tom — July 5, 2014 @ 10:31 am
Interesting core photos, Bucky, especially the top one which is amazing and appears to contain massive galena (darker portions) which could translate into exceptionally high Silver grades. This is the best looking stuff they’ve shown to date, IMHO, so let’s hope it runs. Looks like some Gold in this core, as well, which is also interesting. The evidence is mounting that GGI is putting together something quite significant at Silver Eagle – the first hole was obviously not a lucky hit based on the last news and the collection of these core photos which have to be from more than one hole. This appears to have legs to it – near surface, high-grade, and potential scale. No wonder the stock is firming up. We’ll take a look at the chart over the weekend for Monday as GGI has the look and feel of getting ready to break out.
Comment by Jon - BMR — July 5, 2014 @ 12:00 pm