Gold has traded in a tight range between $1,275 and $1,280, around a 4-month high, on this U.S. holiday to begin the new week…as of 7:00 am Pacific, bullion is down $4 an ounce at $1,276…Silver has retreated 7 cents to $17.71 (updated Silver charts are at the bottom of today’s Morning Musings)…Copper is off a nickel at $2.66…Crude Oil has slid 85 cents to $47.85 while the U.S. Dollar Index is down one-quarter of a point at 92.42…
Gold bulls have put the bears on the defensive after last week’s surge through critical $1,240 resistance, sparked by the Swiss central bank Thursday and its abandonment of a cap on the franc…there are more near-term potential developments that could keep a firm bid under bullion, though the metal does face technical hurdles at $1,300…
The euro zone will be in focus this week…expectations are high that the ECB will unveil a bond-buying stimulus package at its policy meeting Thursday…central bank credibility took a hit with the Swiss decision, so the ECB can’t afford to disappoint…meanwhile, the anti-bailout and far-left Syriza Party maintains a lead in the polls going into Greece’s general elections on Sunday…the euro zone appears to be on shaky ground, and this view is supported by a major change in the relative performance of Gold vs. the battered euro (see chart below) over the last 3 months…
Holdings of the world’s largest Gold-backed exchange-traded fund, SPDR Gold Trust, climbed 13.7 tonnes to 730.89 tonnes on Friday, its biggest 1-day inflow in nearly 3-1/2 years…
LBMA’s top Gold forecaster over the years, Sharps Pixley’s Ross Norman, is bucking the analyst consensus with a $1,321 average Gold price forecast for 2015…Norman cites strong physical demand for the metal as well as the potential for investors to seek protection from currency debasement…
Oil Update
Iraq has announced record Oil production…Iraqi’s Oil Minister said yesterday that the country pumped 4 million barrels per day in December, its highest ever thanks to increased output from its southern terminals and a surge in supply from the north…
Gold 5-Year Weekly Chart
Expect Gold to test the top of a flag formation just above $1,300 in the very near future, a technical scenario that John first presented in November when bullion successfully tested the bottom of that downsloping flag at $1,130…
The breakout above the RSI(14) downtrend line suggests Gold is headed higher…
Gold vs. Euro
Gold is accelerating significantly against the euro and is up nearly 20% in euro terms since early November when it appears as if bullion indeed hit an important low…the October-early November plunge may have been a “head fake” and a final capitulation prior to the start of a new bull phase in the metal – time will tell…
Today’s Equity Markets
Asia
A rough start to the week for China’s Shanghai Composite which suffered its worst day in more than 6 years, tumbling 260 points or nearly 8%…the financial and property sectors were hit the hardest as Chinese regulators dealt investors a double whammy with a clampdown on margin trading and a tightening up in the country’s shadow-banking industry…
The rapid growth in the use of debt to purchase securities is the latest manifestation of China’s ongoing debt binge – a trend that started in the aftermath of the financial crisis…Bank of America Merrill Lynch says margin-trading levels in China are now at one of the highest levels in the world…
Today’s Shanghai sell-off came a day before the release of China’s fourth quarter GDP…tomorrow’s report is expected to show the economy grew 7.2% on year, according to a Reuters poll, down from 7.3% in the third quarter…
Japan’s Nikkei ignored the market turmoil in China and climbed 150 points overnight, recouping Friday’s 1% loss…the Nikkei is now back above 17000 after 3 straight weekly declines…
Europe
European markets are up strongly in late trading overseas…
According to analysts, markets have priced in a very high chance that ECB President Draghi will announce an expanded quantitative easing program later this week that includes the purchase of sovereign bonds…the market has high expectations that the ECB will deliver a robust package, so “Super Mario” faces the challenge of trying to either meet or exceed those expectations…
North America
Trading volumes will be a little lighter in Canada today due to the U.S. holiday…as of 7:00 am Pacific, the TSX is off 30 points while the Venture has added 5 points to 672…nice intersection reported this morning by Castle Mountain Mining (CMM, TSX-V) which cut 33 m grading 30.31 g/t Au in CMM–054 from Phase 2 drilling at its Castle Mountain mine…the hole was drilled in a previously untested area of the project…CMM is up 2 cents at 38 cents as of 7:00 am Pacific…
Goldcorp Inc. (G, TSX) Takes Over Probe Mines Ltd. (PRB, TSX-V)
One of our favorite exploration plays over the last couple of years is being taken over by Goldcorp (G, TSX)…Probe Mines (PRB, TSX-V), which has been developing the multi-million ounce Borden Gold deposit in northern Ontario, has entered into a definitive agreement with Goldcorp whereby Probe will be bought out in an all-share transaction valued at $5 per Probe share ($526 million)…in addition, Probe investors will receive shares in a newly-formed company…PRB closed Friday at $3.36 and is trading slightly above $5.00 minutes into this morning’s session…
Goldcorp views Borden as a highly strategic addition to its asset portfolio due to the deposit’s proximity to its Porcupine operation, which includes the large milling facility at the Dome complex…transporting ore to Porcupine would significantly reduce capital costs and permitting requirements compared to a stand-alone development while delivering higher-grade Gold production to Porcupine within a relatively short development period…
Probe shareholders may have preferred a takeover by Agnico-Eagle (AEM, TSX) which took a sizable position in PRB a couple of years ago…Goldcorp slid from nearly $60 a share in 2011 to a low of just under $19 late last year…hopefully their troubles are behind them…
Doubleview Capital Corp. (DBV, TSX-V) Update
As we had speculated, based on the unusual depth of the hole, the high number of core samples and some impressive core photos on the company web site, Doubleview Capital (DBV, TSX-V) has drilled into what certainly seems to be its best hole yet at the Hat Copper-Gold Porphyry Project in the Sheslay district…ironically, this comes exactly 1 year following the announcement of the original 2 discovery holes – HAT-08 and HAT-23 – that set DBV and the region on fire…
Partial assay results were just released this morning for HAT-23…this has the potential to turn out to be a stellar hole given that it is the deepest ever drilled in the entire district (650 meters) and in fact may not even be complete yet…DBV had to halt the hole in order to allow crews to leave for Christmas…
What’s different about HAT-23 is the Gold content…given some differences in this part of the Sheslay district, for months we’ve been speculating that the Hat is more likely a Gold-Copper porphyry as opposed to a Copper-Gold porphyry…importantly, each round of drilling at the Hat has produced better results, leading us to believe that they have yet to drill into the juiciest part of this large system…
Assays released by DBV this morning are for only the first 220.2 meters of HAT-23…according to visuals, as DBV stated this morning, mineralization appears to be even better further down…this 220.2 meter section of the hole has hit a Gold-enriched area beginning at 190.6 meters and carrying right through to 220.2 meters…this 29.6 meter interval graded 0.63 g/t Au and 0.36% Cu (0.82% CuEq)…that’s the highest Gold grade at the Hat for any intercept beyond 25 meters…
Just one of about 2 dozen impressive core photos from HAT-23.
Based on the core photos, which show an abundance of pyrite and chalcopyrite, it’s reasonable to believe that HAT-23 could indeed be a game-changer for DBV…this hole has extended the northern boundary of the Lisle zone by 110 meters, so the volume of this deposit is increasing significantly along with the potential for this system to include a Gold-enriched zone…historically, prospectors in this area of the Sheslay found some high Gold grades (many grams per tonne) at surface, which obviously may have been the projection of something quite significant at depth…astonishingly, no drilling ever occurred to “connect the dots” until Doubleview’s initial program in 2013…
Mineralization in HAT-23 started at a depth of 63 m…a 152.28 m interval to the end of this first section graded 0.24 g/t Au and 0.25% Cu…assay results for the next section down to 400 meters are expected in the near future, so the market has plenty to speculate about in the coming days – especially since the core looks even better deeper down…
Gold Bullion Development (GBB, TSX-V) Update
Gold Bullion Development Corp. (GBB, TSX-V) is another step closer to the production stage at the Granada Gold Project near Rouyn-Noranda, Quebec, following Iamgold Corp.’s (IMG, TSX) receipt of an amendment to its Certificate of Authorization which allows for the processing of Granada ore at IMG’s Westwood mill…the news was reported late in the trading session Friday…
Gold Bullion’s proposed “rolling start” at Granada features robust economics with an average Gold grade in excess of 4 g/t as revealed in a Preliminary Feasibility Study last summer…the 3-year rolling start, with annual production around 25,000 ounces, is designed to lead into much higher production with the bulk of the LONG Bars Zone resource expected to be mined on site beginning in Year 4…
Timing couldn’t be better for GBB with anticipated production this year coinciding with an improving Gold market, sharply lower fuel costs and a very weak Canadian dollar…these facts have turned us bullish on GBB for the first time since 2011…
What also has us excited, though, is the incredible exploration upside that we believe is still attached to the east-west trending LONG Bars Zone…less than 20% of this area has been systematically drilled, and clues at surface and from historical drill holes suggest the potential for higher grades and many more ounces…
Technically, GBB has aggressively broken out this month above a downtrend line in place for several months as you can see on this 6-month daily chart…the overall trend has taken on a bullish tone, so over the coming weeks we expect to see additional strength…
Fairmont Resources (FMR, TSX-V) Update
Like Gold Bullion, Fairmont Resources (FMR, TSX-V) is an emerging producer in Quebec and will benefit from potential near-term cash flow and lower fuel costs…FMR is in the aggregate space, and just recently the company received its Certificate of Authorization allowing for the extraction of up to 300,000 tonnes of titano-magnetite aggregate from the Buttercup Property near Chicoutimi…
With just under 18 million shares outstanding, and a coveted “CA” in hand, this is the type of junior that has the potential to deliver sensational value to shareholders through a simple business model…we expect they will be aggressive in assembling a portfolio of producing opportunities in Quebec over the next couple of years, as evidenced by the company’s recent acquisition of the Lac Bouchette Property…Lac Bouchette is a former silica producer with high grades from quartz…
Technically, FMR is in the “sweet spot” as it has retraced to its rising 300-day moving average (SMA)…this 3-year weekly chart confirms a bullish overall trend (ADX indicator)…FMR doubled in 2014, so it has been sharply out-performing the Index as a whole…
Silver Short-Term Chart
Silver in December finally staged a definitive breakout above a downtrend line that was in place since the summer on this 9-month daily chart…the December 1 dramatic move from an intra-day low of $14.15 to a close above $16 was technically highly significant…as expected, superb support was demonstrated around $15…
Last week, the metal pushed above resistance at $17.50…this breakout requires confirmation…Fib. levels to watch are $17.89 and $18.57…
Note how the downtrend line became new support in early December…RSI(14) continues to climb and appears headed above 70%…the immediate trend is bullish…
Silver Long-Term Chart
This 34-year monthly chart continues to give 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)…the reasons for such a move are also not clear…for now, Silver is going along for the ride with Gold…
RSI(14) has bounced off previous long-term support which will need to hold along with key price support in the immediate vicinity of $15…
One note of concern on this chart is the sell pressure that has prevailed since the beginning of 2013, after a decade-long period of buy pressure…based on historical patterns, sell pressure could persist for a considerable time yet…
Note: John and Jon both hold share positions in DBV. Jon and Terry both hold share positions in GBB. Jon holds a share position in CMM.
Good looking hole from DBV. Although the market hasn’t reacted as of yet, I am expecting a good week and month ahead. A lot is riding on this hole (not only for DBV but the whole area) and it looks like we are going to be rewarded. Now the name of the game is patience.
Comment by chris — January 19, 2015 @ 7:14 am
Looks very interesting, Chris, I believe the significance will catch on over the next couple of days. This section that was reported bottomed in some of the best mineralization DBV has reported to date, including the best Gold grades…what offers considerable hope is that visually, the core looks even better below 220 meters as DBV itself reported this morning…what I believe is going to emerge here is a Gold-Copper porphyry, as opposed to a Copper-Gold porphyry…the argument for hitting some impressive Gold grades in the Sheslay red stock is strong, and this morning’s news is fresh evidence of that…
Comment by Jon - BMR — January 19, 2015 @ 7:22 am
CMM – That is a lot of gold and with decent meters. Wish I would have been in that one.
Comment by dave — January 19, 2015 @ 8:16 am
In the other hole when we announced 0.32% eq. we probably had between 0.10% to 0.15% eq. in the first 200 meters. (every body knows that the first 200 meters of the majority of the hole is not rich) The hole 23 with a grade of 0.0% eq. in the first 63 meters we had 0.30% eq. for the 220 meters, for me it is sure that for the first 220 meters we increase the grade of 100% . Add 0.15%eq in the first 63 meters and we had a grade of 0.377%eq for the 220 meters and don’t forget it’s richer deeper. This is a very nice augmentation for the first 220 meters.If we add a grade 0.65 for the rest of the hole we have a news of 587 meters at 0.60%eq.Today we had the best news since the discovery. My opinion only !
Comment by Guy Delisle — January 19, 2015 @ 9:01 am
Jon – dont know if I am blind but no trades in DBV.. and no halt NR.. am I missing something???
TIA
Comment by Jeremy — January 19, 2015 @ 9:33 am
Too good to pass up, Dave, I jumped in at 40 in the first half hour. This could go for a nice run.
Comment by Jon - BMR — January 19, 2015 @ 9:50 am
Let the market digest the news, Guy, because this will be the best hole DBV has drilled to date. This is the type of market where investors are slow to respond to news. CMM is another example – I was surprised more volume didn’t come into it right away, but it’s finding its legs now. DBV should start to inch up just based on speculation regarding the next set of assays.
Comment by Jon - BMR — January 19, 2015 @ 9:56 am
I agree Jon !
Comment by Guy Delisle — January 19, 2015 @ 10:19 am
theres a trade:) in DBV… guess the news rattled a few cages:) …. fickle market for sure
Comment by Jeremy — January 19, 2015 @ 11:17 am
Jon you said “Keep an eye on GGI this week, my gut tells me there are things afoot there” You wouldn’t say judging by the volume or SP. But, we all know that can change in an instant. GGI keeping things very quiet lately.
Comment by Dan — January 19, 2015 @ 11:49 am
Jon, is it possible to have an updated DBV chart tomorrow? Investors finally woke up at the end of the trading day. Plenty of room to run, imo.
Comment by chris — January 19, 2015 @ 1:43 pm
Hi Chris, yes we’re looking at a chart update tomorrow…I really believe the significance of this hole is going to begin to resonate over the next couple of days…
Comment by Jon - BMR — January 19, 2015 @ 2:09 pm
Anyone else here think that the Probe deal might the venture catalyst Jon has been writing about for the last little while? With the creation of the “New Probe” exploration company, it seems that the ROF may get some much needed love from a big player.
Read at Edmonton Journal Website…
“Probe shareholders will also receive shares of a new publicly listed company focused on the Ring of Fire area in Ontario.
The new company will hold Probe’s Black Creek deposit, the Tamarack-McFauld’s Lake property, the Victory property as well as $15 million in cash and a $4 million receivable related to the previous sale of a royalty on the Goldex mine.”
Comment by Tony T — January 20, 2015 @ 4:28 am
It certainly helps give the market a sentiment boost when you get a takeover situation like that, Tony. What also helps is drill results. CMM reported a superb hole yesterday; DBV’s hole 23 reported yesterday has a chance to spark renewed interest, and there are other exciting exploration programs that could deliver as well.
Comment by Jon - BMR — January 20, 2015 @ 4:34 am