Gold dipped as low as $1,142 this morning but is trying to claw its way back…as of 8:50 am Pacific, bullion is down $4 an ounce at $1,150…Silver is off 6 cents at $15.57…Copper has slid 4 cents to $2.62…Crude Oil has fallen 81 cents a barrel to $43.07 while the U.S. Dollar Index is off its lows and now down just slightly at 99.54..
According to the latest COT report for the week ending March 10, money-managed speculative long positions of Comex Gold futures dropped by 8,247 contracts to 107,032…this is the 6th consecutive decline in gross longs, reportedly the longest slump since 2010…but the track record of this particular group is such that their positioning should be viewed from a contrarian perspective…they are typically the most bullish when prices peak, and the most bearish when prices are at or near a bottom…hopefully they’ll become a little more negative – then Gold will be ready for a turnaround…bullion over the near-term may still have to test the bottom of a downsloping channel around $1,100, but the $1,130-$1,150 support zone is holding for the moment…the rest of this week obviously could be volatile given tomorrow’s Fed policy announcement followed by Janet Yellen’s briefing…
Platinum, the worst performing precious metal of the year, tumbled to a 5.5-year low today as a stronger dollar, weaker Gold prices and growing supplies continue to take a toll on prices…Platinum is down 8% this year…
Will The Crowd Be Right?
Almost 90% of economists surveyed by Bloomberg predict that Fed officials will drop the “patient” pledge from their statement released at the conclusion tomorrow of their 2-day meeting…some 45% saw this as a step toward a June increase in rates, which have been held near zero since December 2008, according to the poll of 49 respondents conducted March 12 and 13…37% saw rate liftoff in September…
While investors broadly expect the Fed this year to raise its federal-funds overnight bank-lending target rate for the first time since 2006, the timing of that move has been clouded by a surge by the U.S. dollar, concerns about economic growth around the globe and fresh signs that the U.S. expansion is slowing…just yesterday, new data showed that U.S. industrial production inched up just 0.1% in February on a seasonally adjusted basis, missing expectations…
“The Fed has to move slowly or it runs the risk of destabilizing global financial markets with a surging dollar,’’ said Ward McCarthy, chief financial economist in the fixed-income group at Jefferies LLC, in a Wall Street Journal report…
Yes, that surging dollar…what the Fed does or doesn’t say about the greenback tomorrow will be more important in our view than whether or not they remove the word “patient” from their language…
Deflationary Pressures In Japan
The Bank of Japan stood firm today, leaving its QE program unchanged even as it acknowledged for the 1st time that prices might start falling in coming months…Gov. Haruhiko Kuroda expressed confidence in the nation’s economy, reiterating that dramatically lower Oil prices which have driven the inflation rate to a 16-month low will later this year fuel a rebound in private consumption, returning inflation on a path toward the central bank’s goal of 2%…
“A dip into negative territory (for the core CPI) can’t be ruled out”, he stated during a news conference, but the longer-term price trend remains intact…
Why is it that central banks around the globe continue to insist that inflation is going to return to more normal levels over the next year?…do they really have a handle on what’s going on, or are they just engaging in wishful thinking?…it’ll be interesting to get Fed Chair Yellen’s latest take on inflation-deflation tomorrow…
Today’s Markets
Asia
China’s Shanghai Composite eclipsed the 3500 level overnight to finish at a new 5-year high, fueled by expectations for further stimulus in the world’s second-largest economy…the Shanghai surged another 54 points or 1.6%…
Japan’s Nikkei continued its march higher as well, adding 191 points to close at 19437…
Europe
Bullishness toward European stocks, which were mixed today, has reached unchartered territory according to Bank of America Merrill Lynch’s regular fund manager survey taken between March 6–12, 2015…a total of 207 panelists with $565 billion of assets under management participated in the survey…they have trimmed their exposure to U.S. stocks to the lowest levels since 2008, while a net 63% of respondents said Europe was the region they would most like to overweight in over the coming 12 months – a record since the bank first asked the question in 2001…interestingly, the reading has spiked from a net 18% preferring Europe in January…
North America
Volatility across North American markets continues ahead of tomorrow’s Fed decision…the Dow is off 171 points as of 8:50 am Pacific…U.S. housing starts fell 17% in February to the lowest level in a year as harsh winter weather took its toll…more encouragingly, building permits rose 3% and January housing starts were revised slightly higher to 1.08 million…
The TSX is down 112 points while the Venture has slipped 5 points to 659…
TSX Updated Chart
This morning’s weakness in the TSX could be a “head fake”…Fib. support just below 14700 has been strong this month, and the market is staying within the margins of an upsloping channel in place since mid-December…there are downside risks, of course, but the current correction (so far) is very similar to the one in January that was followed by a 10.5% advance…
TSX Gold Index Update
The TSX Gold Index continues to hover around key support and has stabilized around current levels, as expected…the balance of the week will be critical in determining if this support can hold and a new uptrend can commence…certain indicators are flashing positive signals, but the weekly close has got to be positive for this Index to start to gain traction and emerge out of its recent pullback including 8 down sessions out of the last 11…
The Gold Index shot up by just over 50% from early November to early February, a very robust move, and about half of those gains have been given up which can be described as a normal and healthy retracement…
The Gold Index is off 2 points at 156 as of 8:50 am Pacific…
Visible Gold Mines (VGD, TSX-V) Update
Visible Gold Mines (VGD, TSX-V) has generated a lot of interest, and deservedly so, for its astute strategy in assembling its 167 Project land package (600 sq. km) in Quebec’s Plan Nord territory and using a road building program to identify the potential existence of Gold deposits over this vast virgin ground…an extensive drill program that started at the end of January, just off new Provincial Road 167, is attempting to locate the source of impressive mineralized boulders, some of which returned exceptionally high grades…
Instant drilling discoveries in a grassroots situation such as this are relatively rare, so who knows at what point VGD may hit something big, but anything is possible and 1 thing is probable in our view – the rocks are “cooked up” in this district and that tells us there are some exciting discoveries to be made…aggressive drilling is the only way to go at this, and the odds get better with each hole…VGD is attacking this the right way and has an exceptional geological team that includes Robert Sansfacon, 1 of the best in the business in Quebec…
Keep in mind, the last major discoveries in the James Bay area, Goldcorp’s (G, TSX) Eleonore mine and Stornoway’s (SWY, TSX) Renard diamond project, were both found by boulder tracing in glaciated terrain…
Initial drill results are pending from VGD which announced on February 25 that 10 holes in the program had been completed up to that time over a broad area…
Technically, VGD has remained within an upsloping channel since December…support has been strong at the bottom of this channel which also coincides with some Fib. levels…results, of course, will dictate whether VGD breaks out of this current pattern to the upside or the downside…nothing would be better for the junior exploration market than a major grassroots drilling discovery in Canada, so all investors should be rooting for VGD’s success…
VGD is up half a penny at 19 cents as of 8:50 am Pacific…
Takara Resources Inc. (TKK, TSX-V)
Juniors aren’t the only ones who follow “boulder trains”…Globe and Mail mining reporter Rachelle Younglai, in an online story Sunday night, commented: “Agnico Eagle Mines Ltd. is expanding its exploration team in Nunavut after it found Gold on boulders near its mine in the territory. ‘We have a lot of evidence that there is Gold in the area,’ said Sean Boyd, Agnico’s chief executive. The company is moving 8 drill rigs and about 80 miners to its arctic camp, in order to locate the source of the Golden boulders.”
Agnico’s strategy in Nunavut is interesting because this is exactly what’s motivating Takara Resources (TKK, TSX-V) with regard to (ironically) a past producing Agnico Eagle property in northern Ontario…last week, Takara and Gold Bullion Development (GBB, TSX-V) announced the signing of an LOI whereby GBB in the coming weeks can elect to “spin out” its Castle Silver Mines Inc. asset into TKK in an all-share transaction…GBB, of course, is focusing on taking its Granada Gold Property to the production stage…spinning out the Castle asset has certain advantages, including the potential near-term ability of Takara to immediately follow up on a boulder train discovery late last year that provided evidence that a Gold-Copper system may exist at Castle which historically produced over 20 million ounces of Silver…
Following boulder trains, as mentioned earlier, has led to some major discoveries, and VGD soared from a penny into the 20‘s and is now in the drilling process…the Castle Property is a substantial past producer with a lot of under-explored ground, so this is a situation to watch closely in our view as events could unfold quickly…
TKK 9-Year Monthly Chart
Technically, what’s critical about this chart is TKK’s breakout (could be confirmed today) above a long-term downsloping channel…we’ve observed this extremely reliable and bullish pattern in numerous situations over the past couple of years…
TKK is up half a penny at 3 cents as of 8:50 am Pacific…
Note: John and Jon both hold share positions in GBB. Jon also holds a share position in TKK.
To Bert, my cyber buddy. In regards to your post on yesterdays musings.
I strongly believe in the land package that WRR holds. I still hold my .02 and .03 shares, but I did sell my .035.
I believe they are going to have a big story in a quick amount of time.
BUT, they have to get those drills turning or it will sit there like dust.
Comment by dave — March 17, 2015 @ 8:45 am
If VGD hits big enough, even though WRR property is 30km away, it may spark an area play.
Comment by Dan — March 17, 2015 @ 10:18 am
Dave
It’s like this my buddy, when i get turned off by a company, for whatever
reason, out it goes, no turning back, it can go up without me. There’s
hundreds of stocks sitting in the dust out there in the naked city.
Comment by Bert — March 17, 2015 @ 10:47 am
ELO is a better area play to VGD as its so close to the discovery boulders that it probably has some of the high grade ones on its property!
Awaiting VGD results…
Comment by d4 — March 17, 2015 @ 11:12 am
Have to disagree,d4.Both are at the same price,and one is in the midst of a drill program.No comparison.And I would be looking at some of the cheaper alternatives than ELO.But,to each our own.
Comment by Jim Niles — March 17, 2015 @ 1:04 pm
Jim Niles- for a VGD area play…..ELO is a better than WRR due to its closer proximity. Cheaper alternative? I use market cap to determine if a play is cheap and at 2.2 million there are not too many cheaper alternatives.
Comment by d4 — March 17, 2015 @ 3:41 pm
d4 – have to disagree with you again. WRR m/c is a1 mil. Cheers
Comment by dave — March 17, 2015 @ 6:01 pm
To Bert – WRR – I agree with you 100%. Thats why I am only holding my .02 and .03 shares. And now I’m even on the .03.
I agree with your philosophy 100%. This is why I sold all mining stocks except WRR. I even sold Nar.
I sold half my shares in YFI (100k) at .25 as I felt it was correction day. I guessed right and will look to by those 100k back at a lower price. I’m still riding 100k at .13
All that I am trying to express is that the mining stocks are not doing well on the venture and the non mining are doing very well. I don’t have a lot of shares at .02 and .03 in WRR, so I’m not tying up a lot of my money. As for the 3 day gain in YFI, well, squirrel is out, so what’s the most expensive food to eat. I’m going for it. Cheers
Comment by dave — March 17, 2015 @ 6:09 pm
correction – typpo – BUY, and not by
Comment by dave — March 17, 2015 @ 6:11 pm
Jim- area plays- the closer the better and the bigger the effect. VGD’s boulders were found on route 167 at the 147 and 150 km markers. ELO’s property starts immediately after the northern boulder from the 150 – 153 km markers. How far is WRR from the discovery? There is a reason why ELO is considerably up since VGD’s discovery and WRR isn’t. I sold my WRR shares. In the end it all relies on VGD results or we don’t have an area play even the closest plays to the farthest area plays won’t piggy back off another company’s results.
Comment by d4 — March 18, 2015 @ 3:33 am
d4 – looking forward to hearing about your DD on DBV…I have a call in to Farshad today, can’t stop thinking about the potential here; and how things are going to shake out over the next 6-8 months.
Comment by Steve A. — March 18, 2015 @ 6:58 am
Dave – I sold half my shares in YFI (100k) at .25 as I felt it was correction day.
Bert – I write this in a joking manner, you certainly didn’t feel 100% that there
would be a correction, otherwise, you would have sold the works & bought it
back lower. By the way, support at 0.16, too late says Buddy Dave, i bought
some back at 0.20.. As for selling your mining stocks, let it be known that
i will not be selling GGI, step right up folks ! we may have a winner.
Comment by Bert — March 18, 2015 @ 7:10 am
VGD – she is trading in a descending triangle. This is a bearish pattern. I sold out last week – whew. GLTA
Comment by dave — March 18, 2015 @ 7:20 am
To Bert- nope, don’t want to give up my core position at .13 – .18 first level of support. Te he
Comment by dave — March 18, 2015 @ 7:38 am