Gold has traded between $1,192 and $1,205 so far today…as of 7:35 am Pacific, bullion is down $2 an ounce at $1,200…Silver is unchanged at $16.45 (interesting technical developments with Silver, see updated charts at bottom of today’s Morning Musings)…Copper is flat at $3.06…Crude Oil is down 11 cents at $76.40 while the U.S. Dollar Index has retreated one-quarter of a point to 88.12…
A big event for the financial markets this week will be the OPEC meeting on U.S. Thanksgiving (Thursday)…with the current discord in OPEC, don’t count on a production cut – or at least one that would have a meaningful impact to give prices a boost…OPEC delegates expect a difficult meeting…a further decline in Crude Oil prices – especially if they were to fall below key support at $70 for an extended period – could have far-reaching implications including in the euro zone where the ECB is fighting an increasingly difficult battle against deflationary forces…
Outflows from Gold exchange-traded products are closing in on 30 metric tons so far in November, with the year-to-date total now exceeding 150, according to Barclays. “As we have argued previously, current ETP holdings are not vulnerable, but if the Gold price were to fall to $1,000/oz, an additional 100 tons would become cash negative,” the bank stated. “On a gross basis, almost 900 tons of Gold were accumulated between $900-1,000/oz, or almost 700 tons on a net basis, and this represents the early money in Gold.”
The U.S. Mint has sold 2,570,500 ounces of Silver coins so far in November…this projects to total monthly sales of approximately 4.3 million ounces which would be a whopping 250% increase from a year earlier…
Excellent piece on Silver over the weekend by Frank Holmes, CEO & Chief Investment Officer for U.S. Global Investors, in his weekly Investor Alert (“Solar Energy Powers Record Silver Demand” at www.usfunds.com)…Holmes wrote how Silver demand in the fabrication of solar panels is set to outpace photography, if it hasn’t already done so (every solar panel contains between 15 and 20 grams, or about half an ounce, of Silver)…in 2016, close to 1.5 million metric tons of Silver are expected to be needed to meet solar demand in the United States alone…of course other industrial uses of Silver can be found in cell phones, computers, automobiles and water-purification systems….because the metal also has remarkable antibacterial properties, it’s increasingly being used in the manufacturing of surgical instruments, stethoscopes and other health care tools…
Markit Survey Raises New Global Growth Concerns
Worldwide business confidence has slumped to a 5-year low, with company hiring and investment intentions at or near their weakest levels in the post-global financial crisis era, according to a new survey released this morning by Markit…the tri-annual survey looked at expectations for the year ahead across 6,100 manufacturing and services companies worldwide…what’s most interesting is Markit’s conclusions regarding U.S. growth…
“Clouds are gathering over the global economic outlook, presenting the darkest picture seen since the global financial crisis,” said Chris Williamson, chief economist at Markit. “Of greatest concern is the slide in business optimism and expansion plans in the U.S. to the weakest seen over the past 5 years. U.S. growth therefore looks likely to have peaked over the summer months, with a slowing trend signaled for coming months,” he said.
Today’s Equity Markets
Asia
China’s Shanghai Composite soared 47 points or nearly 2% overnight to close at 2534…this was follow-through from Friday’s surprise rate cut by the People’s Bank of China, while Reuters reported over the weekend that China’s leadership and central bank are ready to cut interest rates again and also loosen lending restrictions…they’re concerned that falling property prices could trigger a surge in debt defaults, business failures and job losses, according to Reuters’ sources involved in policy-making…
Friday’s rate cut, the first in more than 2 years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilize the world’s second-largest economy…the commodities space will clearly benefit if Chinese growth is reinvigorated…however, the fact that these actions are being taken suggests that downside risks in the Chinese economy may have increased – sluggishness in Japan and the euro zone are not helping…
Japan’s Nikkei average climbed slightly overnight…
Europe
European markets are mixed in late trading overseas…some economic data out of Germany – an Ifo business climate index – came in better than expected…
North America
The Dow is up nearly 30 points through the first hour of trading…on Friday, the Dow and S&P 500 closed at record levels for the 45th and 28th times this year, respectively…
U.S. economic date this week includes a second look tomorrow at Q3 GDP, expected to fall to 3.3% from the first reading of 3.5%…consumer confidence numbers are due tomorrow as well…a slew of data will be released Wednesday, before Thanksgiving, including durable goods, and personal income and spending…U.S. markets are closed Thursday with a shortened session on Friday…
U.S. Dollar Index Updated Chart
With global central banks looking increasingly desperate, the greenback by default is the best house in a raunchy neighborhood…the ramping up of stimulus in both the euro zone and Japan, while the Fed (at least for now) slowly but surely continues to move in the other direction, is driving investors away from the euro and the yen – the result being that the U.S. Dollar Index is now at a 4+ year high…
It’s hard to say what may stop the greenback’s momentum, but the near-vertical rise in the Dollar Index 50-day moving average (SMA) is simply not sustainable…resistance in the high 80‘s is very strong, so it’ll be very interesting to see how the Index behaves this week…it has momentum in its favor as long as it can hold above 88…
The RSI(14) divergence with price is a clue, however, that the Dollar Index is in the process of forming a temporary top, though it may also draw some fresh fuel from a potential confirmed breakout above the Fib. 88 level…concerned more about the threat of deflation as opposed to inflation, the Fed likely isn’t too keen on seeing the Dollar Index soar a whole lot higher…for now, though, the dollar is King…
The TSX is down 30 points as of 7:35 am Pacific while the Venture has added 2 points to 791…
Amarc Resources (AHR, TSX-V) is up 3 pennies in early trading to 11 cents on drill results from its IKE Project in the Cariboo region of British Columbia (about 120 km southwest of 100 Mile House)…9 drill holes intersected chalcopyrite and molybdenite mineralization from surface and over a broad area, measuring 1,200 m east-west by 600 m north-south and to depths of approximately 500 m…hole IK-14-006 returned 450 m grading 0.37% CuEq (0.24% Cu, 0.028% Mo and 1.7 g/t Ag)…this is an interesting discovery for AHR to follow-up on…
Venture Long-Term Chart
Investor risk climbed sharply in September when the Venture’s RSI(14) broke below an uptrend line in place for more than a year…the situation now is much different with RSI(14) in a similar oversold situation as it was during the second quarter of 2013…
The recent bearish trend peaked around the middle of last month, and the improving technicals suggest the Index should hold above its 745 November 6 low even through the traditional tax-loss selling period in December…at the very least, there’s plenty of room for a strong rally into the first part of next year…
Slyce Inc. (SLC, TSX-V) Update
Slyce (SLC, TSX-V) is enjoying another strong month and is attempting to slice through an important resistance area…this interesting tech play has essentially ignored the weakness in the Venture since the beginning of September, more than doubling during that time after finishing August at 52 cents…
Slyce, formerly Oculus Ventures, is trying to position itself as a pivotal player in the emerging visual web by providing its technology to retailers, brands, app developers and digital publishers, enabling their apps to recognize products for instant purchase…Slyce will provide its technology in exchange for integration, licensing and per search fees, percentage sales splits and big data provision and analysis…the company is currently working with a growing list of Fortune 1000 brands and companies as well as multiple innovative developers…
John’s updated 6-month daily chart shows the potential for a confirmed breakout today above Fib. resistance at $1.14…a healthy unwinding of overbought RSI(14) conditions occurred following the Nov. 10 “spinning top” candle…this has strong momentum with well-defined support and resistance levels…
SLC is off 6 cents at $1.11 as of 7:35 am Pacific…
Balmoral Resources (BAR, TSX) Update
Balmoral Resources (BAR, TSX) has been one of the few bright stars on the exploration front this year, in particular due to its Grasset early-stage Ni-Cu-PGE discovery in Quebec at the eastern end of its Detour Trend Project …however, it was just a matter of time before an extended overbought RSI(14) condition started to unwind which is what began in August…too many players were on the same side of the fence with this one…
The September-October-early November dive in the resource sector pushed Balmoral all the way down to its rising 300-day SMA at 90 cents (also a key breakout level in May)…BAR has since recovered some of its losses and climbed 11 cents Friday to finish at $1.26…significant resistance exists around current levels as you can see on John’s 1-year weekly chart…
BAR completed a $10 million financing a few weeks ago with the issuance of 6 million flow-through shares at $1.70, but be careful when that stock becomes free trading late next quarter…more assay results are pending from the summer/fall drill program at Grasset…winter drilling is planned…
BAR is off 2 pennies at $1.24 as of 7:35 am Pacific…
Silver Short-Term Chart
Some interesting technical developments in the past week combine to suggest that Silver has an excellent chance of gaining some near-term traction:
1) Silver has climbed once again to the top of a downtrend line in place since the summer on this daily chart – a confirmed breakout through this resistance would be very bullish;
2) Buy pressure, albeit weak at the moment, has replaced sell pressure which has been dominant since late July;
3) +DI bullish crossover.
Silver managed to hold critical support at $15 and also recently powered above RSI(14) resistance going back to early August…
Silver Long-Term Chart
This 34-year monthly chart gives hope that Silver could be preparing for a powerful “Wave 5” move to the upside, though we caution that this could take some time to play out (if indeed this theory is correct)…
RSI(14) is at previous long-term support and this will need to hold along with key support in the immediate vicinity of $15…
Fundamentally, Silver has been hurt by a slowdown in global economic growth – if economies in the euro zone, China and Japan can quickly emerge out of a collective slump, the Silver price could accelerate rapidly…
Note: John, Terry and Jon do not hold share positions in AHR, SLC or BAR.
Jon, nothing from GGI since the announcement of the PP on Nov 7th. With a project like Rodadero with so much potential given the results so far I thought the PP would close in 2 days max. Anybody hear anything?
Comment by Dan — November 24, 2014 @ 3:57 pm
All I’ve heard with GGI, Dan, is that things are going according to plan, so I take that as good news.
Comment by Jon - BMR — November 24, 2014 @ 4:31 pm
Hey all: Re: GGI
Check out their new location map at Garibaldi Resources website
Projects -> Mexico -> Rodadero -> Project Maps -> GGI Rodadero Location Map
Some big players around Yamana and Agnico Eagle not far away with mining camps…..perhaps one of these companies has paid a visit?? Interesting indeed
Cheers
Comment by Frank — November 24, 2014 @ 4:56 pm