Gold has traded between $1,283 and $1,293 so far today…as of 8:15 am Pacific, bullion is down $2 an ounce at $1,287…Silver is up a nickel to $19.54 after enjoying its biggest one-day percentage gain in more than a month yesterday…Copper is up 3 pennies to $3.18, rebounding from its worst daily performance in four months yesterday…Crude Oil is 58 cents higher at $95.13 while the U.S. Dollar Index is up one-tenth of a point at 82.58…
The UK government has just raised its terror threat level from “substantial” to “severe”, the fourth highest of five levels, in response to events in Iraq and Syria, where ISIS militants have seized a swath of territory. “That means that a terrorist attack is highly likely, but there is no intelligence to suggest that an attack is imminent,” Home Secretary Theresa May said.
British Prime Minister David Cameron said the “root cause” of the terrorist threat in the United Kingdom is “Islamist extremism”.
President Obama, meanwhile, apparently has “no strategy” at the moment in dealing with ISIS as he shockingly admitted yesterday…
Gold continues to be underpinned by geopolitical tensions but upside moves have been restrained by a robust U.S. Dollar Index and the strong performance of equities…we’ll look at Gold in more detail in our Week In Review…the performance of the Venture certainly suggests that bullion is more likely to surprise to the upside than the downside in the coming weeks…
U.S. and European powers joined Ukraine in condemning what they said were incursions by Russia as the government in Kiev sought to counter an offensive by separatist rebels…President Obama said Russia faces “more costs and consequences” and the European Union has called for threats of further sanctions on Russian President Vladimir Putin…NATO said at least 1,000 Russian troops are in Ukraine and later released what it said were satellite photos of Russian self-propelled artillery units moving last week…of course the Russians are in denial…Foreign Minister Sergey Lavrov dismissed the accusations of an invasion in a televised news conference today, saying that Moscow “has not been presented with any facts” proving that it had happened…
Today’s Equity Markets
Asia
China’s Shanghai Composite rebounded overnight with a 21-point gain after closing at a 3-week low the previous season…Japan’s Nikkei average, meanwhile, fell 35 points, hitting a 2-week low, as investors digested a mixed bag of data…July’s core consumer price index rose an annual 3.3%, in line with forecasts, while household spending came in much worse than expected…
Europe
European markets are mixed in late trading overseas…inflation in the 18 countries that use the euro sank to 0.3% on an annualized basis in August, a worrying sign of economic weakness that is putting pressure on the ECB to take drastic steps to save a stalling recovery…the figure was down from 0.4% in July, statistics agency Eurostat said today, and is the lowest since October 2009…back then the euro zone was deep in recession…
The low inflation figure comes amid increasing worry about the health of the modest recovery in Europe’s currency union, a major pillar of the global economy with some 17% of world annual output…the euro zone showed no growth at all in the second quarter as fears about the Ukrainian crisis weighed on consumers and investment decisions…unemployment remained high at 11.5% in July, unchanged from the month before…
North America
The Dow is down 2 points as of 8:15 am Pacific…U.S. consumer spending unexpectedly fell in July as savings rose to their highest level in more than a year-and-a-half, a sign that households remain cautious despite an acceleration in economic and jobs growth…the Commerce Department said this morning that consumer spending dipped 0.1% last month, the first decline since January, after an unrevised 0.4% gain in June…
The Thomson Reuters/University of Michigan’s final August reading on the overall index on consumer sentiment came in this morning at 82.5, up from 81.8 the month before…it was above the the median forecast of 80.1 among economists polled by Reuters…
The Congressional Budget Office yesterday forecast that the U.S. economy will grow by just 1.5% in 2014, undermined by a poor performance during the first three months of the year…the new assessment was considerably more pessimistic than the Obama administration’s, which predicted last month that the economy would expand by 2.6% this year even though it contracted by an annual rate of 2.1% in the first quarter…the economy did grow by 0.9% during the first half of 2014…
The TSX is up 24 points as of 8:15 am Pacific while the Venture has retreated 2 points to 1020 (see updated chart further down in today’s Morning Musings)…
Canadian Economy Accelerates In Q2
The Canadian economy accelerated more than expected during the second quarter, hitting the fastest pace in almost three years…growth was driven by a long-awaited rebound in exports and a jump in household spending…GDP grew by an annualized 3.1% between April and June, which was the strongest performance since a 6.2% jump in the first quarter of 2012, Statistics Canada reported this morning…most economists had forecast GDP to increase 2.7% in the second quarter of this year…the federal agency also revised Q1 economic growth to 0.9% from an original estimate of 0.4%…
What To Look For In The TSX Gold Index
Below is a 10-year monthly chart for the TSX Gold Index which has edged back up just above 200 in early trading today…what’s highly encouraging here is the rising RSI(14) trend line in place since late last year…it’s safe to assume that this important indicator will continue to gradually move higher…
Key chart resistance is around 210…a confirmed breakout through this level could lead to a dramatic short-term move…the ADX indicator shows the potential in the final four months of this year for the first bullish +DI/-DI crossover since the beginning of 2009…
Venture 6-Month Daily Chart
The Venture has been making excellent progress working through a resistance band between 1000 and 1020…yesterday, the Index closed at 1022 but has backed off slightly in early trading today…however, the Venture is finishing the month of August on a very solid technical foundation, setting the stage for a potential major breakout through 1050 resistance in September…the possibility of a 10% move to the upside next month can’t be ruled out, and in such an environment there would be some stellar individual performers…
Below is an updated 6-month daily chart…looking for a confirmed breakout – possibly today – above Fib. resistance at 1020…
Contact Exploration Inc. (CEX, TSX-V) Update
Contact Exploration (CEX, TSX-V) has been one of our favorite oil and gas plays since 2013, and this week climbed as high as 55 cents as it hit John’s measured Fib. resistance…some consolidation within the upsloping channel can be expected before CEX gathers fresh energy to attempt to successfully push through this resistance…yesterday, the company reported net income of nearly $1.1 million for the quarter ended June 30, more than double net income for the same period last year…recently, Contact successfully completed drilling at three new Kakwa (Alberta Montney) wells, and these look promising…it’ll be interesting to see the initial 30-day production volumes (CEX holds a 25% working interest)…CEX remains very active on other fronts in the Montney and elsewhere…as always, perform your own due diligence…
Below is an updated 2.5-year weekly CEX chart…traders should look for support near the bottom of the upsloping channel…CEX is off a penny at 50 cents as of 8:15 am Pacific…
Mason Graphite (LLG, TSX-V) Update
Mason Graphite (LLG, TSX-V) continues to look strong and has had exceptional support from its rising 200-day moving average (SMA) this year, currently just under 70 cents…near-term resistance is 85 cents as shown on this 2+year weekly chart…last December’s breakout above Fib. resistance at 52 cents was hugely important and that area has held as support ever since…the overall primary uptrend suggests the possibility for a solid final 4 months of the year for LLG…
A 100-ton bulk sample was collected at the Lac Gueret property in early July for the coming pilot plant test program which is scheduled to commence this fall in conjunction with a feasibility study…
LLG is up 2 pennies at 81 cents as of 8:15 am Pacific…
Note: John, Terry and Jon do not hold share positions in CEX or LLG.
jon; monthly closing of the books creating a little pressure on the venture?
Comment by tont t — August 29, 2014 @ 9:22 am
Watch the Venture close higher today, Tony.
Comment by Jon - BMR — August 29, 2014 @ 9:35 am
All,
I hear BMR’s message about the TSX Venture breaking out, BUT I also remember August 2008 VERY WELL! I was euphoric back then, then September came.
Well, Danielle Park’s message is tempering my complete “buying in” for your view of the Venture, this go around. Any comments on her views especially her take on QE?
May ALL have a great long weekend.
Comment by Bgr — August 29, 2014 @ 10:13 am
Bgr, I remember August 2008 well, too….and the Venture signal was overwhelmingly bearish. The Venture in fact started breaking down severely in July and foreshadowed an overall market meltdown. Thanks for the reminder – we may demonstrate this in some charts by Tuesday.
Comment by Jon - BMR — August 29, 2014 @ 11:06 am
Jon, do you see a market crash happening this year?
Comment by chris — August 29, 2014 @ 11:52 am
Great call Jon on the ventures close. im Happy Sept is here. Let’s hope the nr are just a flying in the next couple weeks
Comment by Tony t — August 29, 2014 @ 1:24 pm
anyone have any insight to Argonaut gold… ????
Comment by Jeremy — August 29, 2014 @ 3:54 pm
Look likely SFF is going to zero…. another stock disappearing
Comment by Theodore — August 29, 2014 @ 6:54 pm
GeoMega, announced after the close on Friday of a new gold discovery up to 10g/t on grab samples on their ANIK property. Discovery is Sercite Schist and the possibility of a major discovery here is very likely given the geology of the area and the existing gold mines in the proximity. But the real news investors have been waiting for is slated for the week of September 8th. A major upgrade to it’s 43-101 REE deposit which will probably be the biggest in North America with a potential 100 billion dollars worth of rock. The major catalyst that will move the stock is the separation technology that GMA has which will change the REE industry world wide. The stock has propelled higher last week on heavy volume. This is the link to the new gold discovery. Thoughts Jon or anyone?
Comment by Dan — August 31, 2014 @ 4:58 am
Thanks, Dan, good info.
Comment by Jon - BMR — August 31, 2014 @ 8:15 am
Chris, a market crash this year? Not in the cards IMHO. A substantial correction later in the year (November perhaps?), definitely a possibility. The reason I say no on a crash this year is that this fear simply doesn’t jive with the current dynamics of the Venture. We truly are seeing a major reversal here, important long-term moving averages having just turned to the upside plus other indicators – technically and historically, this doesn’t fit with an impending crash scenario. The more likely scenario is actually a “melt-up” followed by a substantial correction and then a resumption of the overall uptrend, and that probably applies to the major indices as well. I’m concerned about the markets further out, especially toward the end of the Obama presidency which I believe is going to end on a horribly bad note (it has gradually been falling down a very slippery slope). Apart from domestic policy disasters (Obamacare being one of them), this is the weakest president on foreign policy I can ever recall (worse than Jimmy Carter, I never thought that would be possible) at a moment in history when the world in our lifetimes has never been more dangerous. Great for Gold, scary for the security of the United States, Canada and our allies.
Comment by Jon - BMR — August 31, 2014 @ 8:25 am