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Gold has traded between $1,210 and $1,218 so far today…as of 7:20 am Pacific, bullion is down $1 an ounce at $1,215…Silver is off its lows but down 5 cents at $17.74 (we have three Silver charts this morning)…Copper has slid a nickel to $3.08, a 3-month low ahead of manufacturing data tomorrow from top consumer China that is expected to show stalling factory growth in the world’s second-largest economy…Crude Oil is down 35 cents to $92.06 while the U.S. Dollar Index, on a record run and shooting for its 11th straight weekly advance, is flat at 84.69…strong resistance exists around 85…

Barclays’ analysis shows that 10% of global Gold production is cash-negative when using all-in sustaining costs…of those companies that were tracked, average cash costs in the second quarter were $717 an ounce, while “marginal” – or 90th percentile – cash costs were $988, Barclays says…the average all-in sustaining costs were $941, while marginal all-in sustaining costs were $1,285. “The main highlight of the recent data is that costs per ounce have not fallen with prices,” the bank says. “Much of the improvement we saw in costs over 2013 and in the beginning of 2014 was in head office costs, where there is declining room for improvement. At current Gold prices (which were around $1,220 to $1,230 as Barclays prepared its research note), we estimate that more than 10% of global production is under water – not an insignificant number.”

There were sales of 7.777 tonnes from the SPDR Gold ETF Friday, bringing holdings down to 776.440 tonnes…

Last week, we noted the launch of the Shanghai Gold Exchange’s international bourse with yuan-denominated contracts…Mineweb’s Lawrence Williams observed in an article this morning (www.mineweb.com), “It may make a slow start but aims to become the world’s biggest physical Gold exchange and is thus in itself a move towards reducing the influence of COMEX and the LBMA on global Gold trade and pricing and move the centre of gravity for this eastwards. Similar moves to set up new international Gold contracts in Singapore and Hong Kong will further accelerate the move in Gold trade to east Asia.”

Frank Holmes at www.usfunds.com points out that the ratio between Gold prices and global equities, as measured by the MSCI ACWI, has declined to its lowest level since September 2008…the low point is due to the unusual headwinds for Gold as of late (notably the surging U.S. Dollar Index) and the continued strength of equities…

This is a good sign – Gold traders have become the most bearish in three months, according to a survey from Bloomberg…

Today’s Equity Markets

Asia

China’s Shanghai Composite was off sharply overnight, declining 39 points to 2291…China’s finance minister, Lou Jiwei, said yesterday the country would not dramatically alter its economic policy because of any one economic indicator…the remarks came days after many economists lowered growth forecasts, having seen the latest set of weak data.  “The reality is people are not taking much comfort from China’s efforts to really stimulate the economy,” Dominic Schnider, an analyst at UBS Wealth Management in Singapore, said.  “The macro numbers have not been great for China, Europe and Japan. There’s disappointment in terms of growth momentum, in terms of the leading indicators, and obviously that’s weighing right now on the asset class.”

Japan’s Nikkei average, which touched a 7-year closing high Friday, fell 115 points overnight to close at 16206…

Europe

European markets are down slightly in late trading overseas…

North America

The Dow has declined 36 points as of 7:20 am Pacific…the TSX is off 52 points after a 200-point plunge Friday while the Venture has given up another 8 points to 947…as per John’s Saturday chart, a Venture band of support stretches from 918…this has all the makings of a “reversal week” with the emergence of very oversold conditions, so this is no time to push the panic button…

Geopolitics

In an audio recording distributed widely on social media yesterday, Islamic extremist group ISIS urged Muslims globally to launch attacks on civilians in member countries of a U.S.-led coalition opposed to their violent spread through areas of Syria and Iraq…in the nearly 42-minute long meandering propaganda speech uploaded to Twitter, ISIS spokesman Abu Muhammad al-Adnani encourages Muslims to kill “disbelievers” in countries supporting military action against the group in Iraq.  “If you can kill a disbelieving American or European – especially the spiteful and filthy French – or an Australian, or a Canadian, or any other disbeliever from the disbelievers waging war, including the citizens of the countries that entered into a coalition against the Islamic State…kill him in any manner or way however it may be,” said Adnani…

Meanwhile, former Secretary of Defense Leon Panetta said yesterday that he believes ISIS was able to flourish in part because the U.S. entered the conflict in Syria too late, saying the Obama administration should have armed the country’s moderate rebels earlier…Panetta, who served in the Obama administration from July 2011 to February 2013, said in an interview on CBS News’ “60 Minutes” that he was in support of arming the moderate Syrian rebels in 2012, along with several other members of the administration.  “I think that would’ve helped,” Panetta said. “And I think in part, we pay the price for not doing that in what we see happening with ISIS.”  According to CBS News, Panetta writes in his new book (“Worthy Fights”) that he, then-Secretary of State Hillary Clinton, the director of the CIA and the joint chiefs chairman all urged the President Obama to arm the rebels at a 2012 meeting…however, the President decided against it…

Gold Fever Continues In B.C. 

Yes, despite Gold’s recent setback, “Gold Fever” continues unabated in British Columbia where the recent Fraser River Gold Panning Championships were a huge success – in fact, the number of panners jumped by more than 20% to 158…

This major annual event, spearheaded of course by our friend Dan Moore (“Yukon Dan”) with the help of nearly three dozen volunteers and numerous corporate sponsors including BMR, draws participants of all ages and levels of experience from B.C. and elsewhere, and we’re elated that the 2014 version was such a big success…BMR sponsored two events – the “Grudge Match” (winner was Sam Tomelin who found all five Gold flakes in a time of just over five-and-a-half minutes – he had to pan out two ice cream buckets full of pay dirt) – and the “Hand in Hand” (winners were Dan Hadash and Alexandra Wasilewski)…congratulations to all participants in the many events!…

Meanwhile, the work that Yukon Dan has been doing over the years in the classrooms of British Columbia (we’re grateful the teachers’ strike there is now over, kids are back in school today), and elsewhere across the country, has drawn the much-deserved support of the likes of New Gold Inc. (NGD, TSX), Teck Resources Ltd. (TCK.B, TSX) and AME BC (Association for Mineral Exploration British Columbia), while BMR will be contributing everything it can to bring attention to this very worthwhile project to help it grow even more…what Yukon Dan is doing from the elementary to high school levels is hugely beneficial to the younger generation’s understanding and perception of the importance of mining, at a time when this sector needs all the support it can get…

A Set-Up For A New Wave To The Upside In Silver?

Below is a 10-year monthly Silver chart that puts the current action into clear perspective and shows where the metal can be expected to find strong support…

Silver has been in a “Wave 4” correction since hitting a high of nearly $50 an ounce in early 2011…according to Elliott Wave Theory, Wave #4 should not fall below the top of Wave#1…however, the reality is there is often a small overlap due to momentum…therefore, it’s expected that Wave #4 will find support within a band between $16 and $18.60…expect more consolidation before the start of Wave #5 to the upside which is typically a very powerful move and normally returns to the top of Wave #3…

TSX Updated Chart

The TSX Composite continues to trade within an upsloping channel, though RSI(14) at 59% has broken below a trendline in place since last summer and that certainly raises some concerns…strong support at the bottom of the channel (just over 15000) and the rising 200-day moving average (SMA) directly below it…

Doubleview Capital Corp. (DBV, TSX-V) Update

Above is a picture of Pat McAndless, P.Geo., from an issue of the Journal of Association of Professional Engineers and Geoscientists of B.C. (May/June 2007)…the highly respected and award-winning McAndless has been involved in mineral exploration for more than four decades, accumulating extensive knowledge and expertise in the evaluation of mineral properties…he has been a valuable mentor to many in his field over the years and has been directly responsible for significant discoveries leading to producing mines…so one cannot underestimate the significance of McAndless joining Doubleview Capital Corp. (DBV, TSX-V) recently as a senior adviser to the company’s board of directors…he’s a very important addition to an already strong technical team…

As DBV reported August 15, McAndless has commenced analysis of the data on the Hat Property and will be involved with management’s geological team in developing an extensive and strategic exploration plan for the Hat…we strongly suspect that an individual with such an impressive track record would step out of “retirement” (he was previously Vice-President, Exploration for Imperial Metals) and attach his name to the Hat Project only if he had an unusual degree of confidence that he could play a pivotal role in proving up an economic resource…he has a keen eye for finding higher grade zones, and we remind our readers that drill hole HAT-12 reported by DBV in mid-May (from a depth of 146 m to 436 m) passed through “the top section of a syeno-gabbro intrusion (Sheslay red stock) that has not previously been recognized in the district.”  That was an important development (could prove to be highly significant) overlooked by many investors, and some more holes have been drilled since then with results pending…the question is, what’s the potential size and shape of this red stock intrusive that could also host higher grades?…McAndless and the rest of the DBV team is attempting to determine that…

The latest DBV chart shows the emergence of a fresh bullish trend after a healthy basing period around strong chart and Fib. support in the mid-teens and the rising 300-day moving average (SMA)…there is evidence of new support at 20 cents, just above the rising 200-day SMA, and DBV could really get interesting with McAndless’s insight and proven ability to find higher grade zones as the company gears up for more drilling…

Garibaldi Resources (GGI, TSX-V) Update

News is certainly due from the Sheslay district, so we’ll be keeping a close eye on potential developments there this week…Prosper Gold Corp. (PGX, TSX-V) has been drilling since May, and updates are also expected soon from Doubleview and Garibaldi Resources Corp. (GGI, TSX-V) which is gearing up for first-ever drilling at the Grizzly…in addition, GGI of course has a “tiger by the tail” in Mexico where Phase 2 drilling is following up on an important high-grade near-surface discovery at the Rodadero Silver-Gold Project in Sonora State…both the Grizzly and Rodadero could be “transformational” for Garibaldi given the scale of these projects, their discovery potential and how they may be able to attract the interest of majors…keep in mind, GGI has already pulled off one big deal in Mexico and they have a wide assortment of strengths and advantages to continue to build shareholder value…

Technically, the long-term GGI chart (10-year monthly), which we updated last Monday, continues to show continued steady accumulation with strong support around current levels and a primary bullish trend gaining strength…

Newstrike Capital Inc. (NES, TSX-V) Update 

Newstrike Capital (NES, TSX-V), with GGI’s Dr. Craig Gibson playing an instrumental role on the ground, has been bucking the overall trend recently and is threatening to break out above a neckline (timing is uncertain) as shown in this 2+ year weekly chart from John…last week, the company released a very robust Preliminary Economic Assessment for its Ana Paula Project in Mexico’s prolific Guerrero Gold belt…we urge readers to check it out as part of their due diligence…we’ll comment more on NES in the near future…

Newstrike is up another 7 cents to $1.18 as of 7:20 am Pacific…

Agnico Eagle Mines Ltd. (AEM, TSX) Update 

The TSX Gold Index is down again this morning for the 7th day in a row and the 12th day out of 15 this month…

If the chart for Agnico Eagle Mines (AEM, TSX) is any guide, the bloodletting on the Gold Index should soon end…just below $34 in early trading today, AEM has declined to its rising 300-day SMA and has touched its Fib. 38.2% retracement level of $33.63…RSI(14) is also at previous support on this 2+ year weekly chart…so while some minor additional weakness is possible – including a drop to Fib. support at $31 – the current weakness should be embraced, in our view, not feared…a turnaround out of these oversold conditions appears close at hand…

Silver Short-Term Chart

Extreme oversold levels (less than 1%) are now showing up in the RSI(2) in this 6-month daily chart after Silver broke previous support around $18.60…the metal has reversed all of its gains recorded in June and early July, and then some…the new trading range for the short-term is expected to be $16 to $18.60…

Silver Long-Term Chart

The next obvious major support for Silver is $16, a level it breached during the 2008 Crash but reclaimed as support in late 2009 as you can see in this 11-year monthly chart…

Note:  John and Jon both hold share positions in GGI and PGX.  Jon also holds a share position in DBV.