BullMarketRun.com

Gold has traded between $1,208 and $1,222 so far today as it continues to firm up modestly after Friday’s closing yearly low…as of 8:15 am Pacific, bullion is off its highs of the day but still up $2 an ounce at $1,210…Silver is down 3 pennies at $17.16…it needs to overcome resistance in the $17.50’s-$17.60’s in order to give the bears a strong push-back…Copper is unchanged at $3.03…Crude Oil is $1.65 a barrel lower at $87.20 while the U.S. Dollar Index is flat at 85.66…the Dollar Index was up almost 8% in the third quarter…a “slowing down” of the greenback’s move is likely during Q4, especially after a record 12-week run, though a test of strong resistance between 88 and 89 appears very possible…historically, only twice since the 1970’s has the Dollar Index posted back-to-back quarters of gains of 5% or better…

Some interesting comments this morning from respected precious metals analyst Larry Edelson (moneyandmarkets.com)…while he’s bearish short-term on metals, Edelson stated:  “All the underlying fundamental, cyclical and technical conditions for Gold and Silver’s long-term bull markets remain in place. The most important one: The rising tide of the war cycles and geo-political stress.  On that note, let me assure you, if you think the state of chaos in the world now is bad, you haven’t seen anything yet. The war cycles are still in the very early stages, with nearly six more years of ramping up to go.  In the months and years ahead, you are going to see domestic and international unrest that will make the current environment look like a walk in the park. This force, geo-political unrest, while also temporarily bearish, will invert and become the number one reason Gold and Silver soar.”

Leon Panetta, President Obama’s former Defense Secretary, told Fox News’ Bill O’Reilly yesterday that there’s no question the Obama administration’s decision to not maintain a presence in Iraq was a mistake, and the President needs to “develop the will to get into the ring and fight” against ISIS.  “Frankly it’s not going to work to do air attacks without people on the ground who know where the targets are and what’s going on,” he said. “Now if we have people we can trust on the ground that’s fine, but if the military thinks that we ought to have the special forces, boots on the ground to do what’s right I think that the President ought to be open to that kind of recommendation.”

Chicago Federal Reserve Bank President Charles Evans today again urged the U.S. central bank to be “exceptionally patient” on raising rates, noting downside risks to both growth and inflation…with longer-term inflation expectations falling near post-crisis lows, Evans said he was “concerned about the possibility that inflation will not return to our 2% target within a reasonable period of time.”

Today’s Equity Markets

Asia

Trading resumed overnight in China’s Shanghai Composite following the week-long National Day holiday break…the Index climbed 18 points, hitting a new 18-month peak…real-estate developers rallied significantly after Beijing last week announced new stimulus measures to boost property demand…other Asian markets were in the red overnight…

Europe

European markets continued their slide this morning to 6-week lows…the Organization for Economic Cooperation and Development (OECD) didn’t help matters when it said it expected the euro zone’s economy to slow over the coming months…

North America

The Dow is off 21 points as of 8:15 am Pacific…the Dow clearly appears to be in “correction mode” (the extent of that correction remains to be seen) after slightly overshooting the 17150 measured Fib. resistance level last month…at a minimum, it appears the Dow may once again test a strong support zone between 16300 and 16400 which would mean a slight drop (approximately 200 points) below the still-rising 200-day SMA currently at 16586…

This 6-month daily chart shows that near-term risks are skewed more to the downside…what we’re seeing could be the early stages of a potentially more significant correction…

The TSX has fallen 111 points as of 8:15 am Pacific while the Venture is down another 13 points to 842…

Venture Updated Chart

The ease with which the Venture has sliced through solid support levels around 970, 920 and 860 – like a knife through butter – does not bode well for either commodities and/or equity markets in general…the Venture has proven to be reliable leading indicator and the message it has been delivering since the beginning of September has been a rather ominous one…this doesn’t mean it’s time to panic and throw stocks overboard – it just means investors must exercise even more caution than ever, while also watching for unusual opportunities that may open up in the coming days and weeks…volatility is clearly on the upswing…in 16 trading sessions since mid-September, for example, the Dow has had 10 triple-digit moves on a closing basis after NO triple-digit moves in the previous 19 sessions…

This 10-year Venture monthly chart outlines the next 3 major support levels for the Index – 800, 760 and 680…in terms of how this market looked technically at the end of August, with rising 200 and 300-day moving averages (SMA’s) and very strong layers of support in the high and low 900’s, the suddenness and intensity of this reversal is almost without precedent…we remind readers, however, that it was in the depths – and in the aftermath – of the 2008 Crash when fortunes were made by many investors, and the same will hold true during this slide…so this is no time to be discouraged…it’s rather a time to really get to work and find special situations that have been knocked down – and may get knocked down even further – before their turn comes to soar…

TSX Gold Index Update

The TSX Gold Index didn’t respond yesterday to a rise in Gold and is now flat at 159 after reaching 163 in early trading today…the 10-day SMA, currently at 166, has been resistance since nearly the beginning of September…

While the Gold Index is certainly due for a rally out of short-term oversold conditions, the risk of an eventual test of base support at 150 remains very high in our view especially considering the Venture’s drop to a fresh multi-year low…

This 15-year monthly Gold Index chart shows RSI(14) breaking below a trendline while the Index has also fallen below an ascending triangle…these are warning signs that while a bounce higher could be in the works, we may not have seen a yearly low yet in this Index which has plunged about 20% in just over 5 weeks…

Goldcorp Inc. (G, TSX) Update

Goldcorp (G, TSX) needs to hold critical support at the $25 level, and the 1-year daily chart provides evidence that a rally from that level could be under way…

Goldcorp moved higher over the summer after forming a head-and-shoulders pattern on this 2.5-year weekly chart…however, a concern with this chart is that RSI(14) has broken below a trendline in place since last year which just isn’t a healthy sign…buy pressure was weak during the 30% summer jump…major resistance around $30…

Eldorado Gold Corp. (ELD, TSX-V)

Eldorado broke above a downtrend line in June and soared nearly 50% before retracing recently to support at the rising 200-day SMA…like with Goldcorp, however, downside risks are evident on this 2+ year weekly chart…

Eldorado’s cash operating costs for Q2 averaged $489 per ounce (in the bottom quartile of the industry) and all-in sustaining cash costs averaged $829 per ounce…the company reported net profit of 5 cents per share in Q2 and expects to produce 790,000 ounces of Gold this year, slightly higher than original estimates…

Richmont Mines (RIC, TSX) Update 

Small producer Richmont Mines (RIC, TSX-V) is clearly on the rebound, fundamentally, after going through a very challenging 2012 and 2013 with the share price tumbling by more than 90%…Richmont returned to profitably earlier this year and has also outlined a significant high-grade resource beneath existing workings at its operating Island Gold Mine in Ontario…

Any further sell-off in Gold stocks may open up a tremendous opportunity in Richmont between the rising 300-day SMA around $1.65 and Fib. support at $1.95…RIC is unchanged at $2.14 as of 8:15 am Pacific…

Note:  John, Terry and Jon do not hold share positions in G, ELD and RIC.