Gold has traded between $1,149 and $1,167 so far today…as of 10:00 am Pacific, bullion is up $7 an ounce at $1,160 as it attempts to finish a strong week above $1,150 resistance…bullion accelerated to the upside yesterday after pushing through its 40 and 50-day moving averages (SMA) around $1,130 and $1,140, respectively…that area should provide fresh support on any near-term pullback…Silver has retreated 26 cents to $15.32…Copper is off 2 pennies to $2.29…Crude Oil has slipped more than $1 a barrel to $40.16 while the U.S. Dollar Index has tanked nearly a full point to 94.91…
Assets in bullion-backed exchange-traded products expanded this week as equities tumbled, with the S&P 500 sinking by the most in 18 months yesterday…ETP holdings rose 0.2% yesterday to 1,518.33 metric tons, the highest level since Aug. 4, according to data compiled by Bloomberg…
Silver is attempting to post its 4th consecutive weekly gain (it closed last Friday at $15.24)…it climbed as high as nearly $15.70 overnight before retracing…as we showed in Monday’s regular Silver chart update, a major challenge for the metal over the coming weeks will be to overcome a band of Fib. resistance between $15.30 and $16.60…
Other Views
Yesterday, our separate post on Gold (“Gold’s Revenge“) featured John’s updated 2.5-year weekly chart for bullion which shows a real possibility for a climb up to around $1,250 within the next couple of months…this particular and popular chart has been extremely reliable over the last couple of years, and it’s looking very bullish once again while the U.S. Dollar Index is doing just the opposite – its technical internals continue to deteriorate…
Below are 2 other views on Gold that don’t jive with ours…1 of our assumptions is that the Fed won’t have the courage to raise interest rates next month and quite likely not until sometime next year…
Singapore’s OCBC (Oversea-Chinese Baking Corp.) was the most accurate official precious metals forecaster over the past 3 quarters, according to rankings complied by Bloomberg, and their the top-ranked forecaster (Barnabas Gan) says the Federal Reserve will still raise U.S. interest rates this year…that will hurt Gold, Gan claims, and he’s standing by his outlook even as bullion surged this week amid a global rout in stocks and commodities…
“The Fed rate hike story is the key reason as to why we are holding our bearish view for Gold at $1,050 an ounce at the end of the year,” stated Gan, an economist at OCBC. “The Fed rate hike, if it happens either in September or December, will really be the factor that market watchers are actually looking for.”
Another group that expects a Fed rate hike this year – next month actually – is Capital Economics…Simona Gambarini, the research firm’s commodity economist, commented in a note: “While we acknowledge that the Gold price could fall as low as $850 per ounce in a worst case scenario, our base case is that prices should find good support only a little below current levels (our end-Q3 forecast is $1,050) and will actually end the year higher, at $1,200. We believe that demand and supply fundamentals remain solid and expect prices to recover further.”
China Update – Huge Fire Hose Needed In A Hurry
An early gauge of China’s factory activity fell to a 6-and-a-half year low in August despite China’s efforts to reinvigorate slowing economic growth…the reading released today suggests Beijing will likely need to “double down” on stimulus to reach its goal for the year of 7% economic growth over 2014…it’s reasonable, given how the communist government is behaving, to expect some sort of a move by Beijing as early as this weekend before markets re-open Monday – 1 quick step would be to further cut the amount of money Chinese banks are required to hold in reserve, a move that essentially frees up funds to lend out…
Rest assured, China’s “rescue team” will attempt to pull out all the stops to prevent the Shanghai Composite from collapsing below critical technical support at 3400…however, the more desperate they seem, the more their actions are spooking sophisticated investors…below is an updated chart from John based as yesterday’s close (today, the Shanghai fell another 4%, losing another 154 points to finish the week at 3510)…
TIMBER!!! Look out below – the Shanghai is in a “Wave C” phase that has the potential to get ugly on a close below 3400…Beijing needs to pull out 1 huge fire hose in a real hurry to prevent this fire from getting out of control…
Oil Update
U.S. Oil prices are headed for their 8th consecutive week of declines, the longest losing streak since 1986, after the sharp drop in Chinese manufacturing increased worries over the health of the world’s biggest energy consumer…this has added to concerns about lower consumption of Crude by the world’s 2nd-biggest Oil user…
Today’s Equity Markets
Asia
While China tumbled 4%, Japan’s Nikkei average lost 600 points or 3% overnight to close at 19436…Japanese Finance Minister Taro Aso said today that recent moves by China to allow its currency to depreciate are a concern and could pose problems for Tokyo. “Chinese factors are a big part of this, without a doubt,” Aso said at a regular news briefing, referencing the drop in the Nikkei…a further devaluation of the Chinese yuan could put Japan in a “tough spot”, he was quoted as saying by media outlets…the currency wars are heating up…
Europe
European markets were down sharply today, generally near 3%…
North America
The Dow has plunged another 355 points as of 10:00 am Pacific, taking losses over the last 4 sessions including so far today to 910 points or 5.2%…the U.S. manufacturing sector is once again under pressure as it continues to hover just above contraction level, according to the latest flash PMI data…private research firm Markit said its August PMI estimate fell to a level of 52.9 (the lowest reading since October 2013)compared to July’s final reading of 53.8….according to consensus reports, economists were expecting to see a reading at 53.9…
In Toronto, the TSX is off 214 points while the Venture has slipped 9 points to 540 as of 10:00 am Pacific…
Venture Updated Chart
Venture support around 550 is now under threat, though we caution that any close below 550 today would require confirmation Monday when it’s quite possible the market could suddenly reverse higher out of deeply oversold conditions…in any event, the next Fib. support level below 550 is approximately 515…
Encouragingly, the latest sell-off on the Venture has come on low volume and has been related of course to weakness in the broader markets and Oil…overall sell pressure on the Venture has been in decline since late July, as the chart below shows, and keep in mind that the 39-week Venture “cycle” points to a turnaround at the end of August/early September…the highest quality Gold stocks on the Venture, and other top exploration plays, are holding up well…we’ll update some of those situations by Monday…
Three TSX Gold Plays To Watch
Richmont Mines Inc. (RIC, TSX) Update
Richmont Mines (RIC, TSX) has earned 14 cents per share through the 1st half of 2015 and recently increased its production guidance to as much as 95,000 ounces for 2015 from as much as 88,000 previously…the substantial high-grade resource beneath existing workings at the company’s Island Gold Mine will be a game-changer for RIC as mining and development continue there…Richmont reported a cash balance of $78 million as of June 30, or $1.34 per share, and working capital of $73 million…RIC has long-term debt of only $6.2 million, and just 58 million shares outstanding…this Canadian-only producer is benefiting significantly from the low loonie and declining Oil prices…
Technically, there is superb support at the rising 200-day moving SMA (currently $3.87) and a major breakout could now be brewing above the downsloping flag shown on John’s 4-year weekly chart…
RIC is up 11 cents at $4.03 as of 10:00 am Pacific…
Klondex Mines Ltd. (KDX, TSX) Update
Klondex Mines (KDX, TSX) retreated almost exactly to Fib. support at $2.73 recently, where it was a very attractive opportunity technically as John pointed out…KDX then proceeded to march nearly 40% higher to Fib. resistance yesterday at $3.78 just before the company’s announcement that it has arranged a $26 million bought deal financing at $3.55 per share…the offering is expected to close on or about September 10…
KDX is off 21 cents at $3.51 as of 10:00 am Pacific…the 50-day SMA, at $3.30, has reversed to the upside and should provide excellent support moving forward…Klondex‘ high-grade Fire Creek Project and Midas mine in Nevada allowed the company to generate net income of $5 million or 4 cents per share in Q2…
Pilot Gold Inc. (PLG, TSX) Update
Pilot Gold (PLG, TSX) is beginning to recover out of deeply oversold conditions and could quickly accelerate if Gold takes off to $1,200 or higher…really looks like a bottom was put in here recently at 33 cents…sell pressure is declining significantly…
PLG’s immediate challenge will be to overcome resistance at its 50-day SMA, currently 49 cents…the stock is off 3 cents at 42 cents as of 10:00 am Pacific…
Note: John, Terry and Jon do not hold share positions in RIC, KDX or PLG.
Jon what do you think of Timmins gold TMM-V?
Comment by Martin — August 21, 2015 @ 9:35 am
Looks like the buying has started a little on EQT in anticipation of the closing.
Comment by dave — August 21, 2015 @ 9:44 am
Liked their acquisition of Newstrike, Martin, very favorable price IMHO. TMM needs to continue to work on reducing mining costs…technically, to my eye, may have found a bottom in the low 30’s…we’ll get John’s expert take on that by Monday…
Comment by Jon - BMR — August 21, 2015 @ 9:44 am
EQT is looking very strong, Dave…likely an oversubscribed PP, coming into drilling, will do very well…
Comment by Jon - BMR — August 21, 2015 @ 9:48 am
GGI setting up so nicely. Lots of news flow about to start. I think we push .10 by Wednesday.
EQT new highs shortly.
HMK.c check out the bids on level 2.
CRS.v getting closer to results
UMB.c big cross today 3.5M @.04 was interesting..
Anyone follow CMB.V .03-.035 bottomed. Lots saying over due for news?
Have a great weekend.
Comment by BigRig — August 21, 2015 @ 1:53 pm
BRig- I owned a lot of CMB-v.. 4or 5 years ago?Havn’t followed it since. You like it?? TIA!!
Comment by Greg J. — August 21, 2015 @ 3:49 pm
BigRig, seems a little optimistic on GGI, think it will take a little longer but I would love to come back here and say you were dead on.
Comment by Danny — August 21, 2015 @ 4:38 pm
Not only is GGI now on the ground at the Grizzly, Danny, but the technicals on GGI are looking better than they have in many months…lots of indicators showing that, but one that’s as clear as a bell is the breakout above the 50-day, the flattening out of the 50-day, and the imminent reversal of the 50-day to the upside….next major resistance is .10…..a triple from here by the time drilling starts? Very possible.
Comment by Jon - BMR — August 21, 2015 @ 5:25 pm
Jon, make no mistake, I am very optimistic on GGI, loaded up at .05 after the news. Who the heck was selling at .05 after the news came out?? I am just trying to manage my time expectations, think it will take a little longer but I am a patient guy.
Comment by Danny — August 21, 2015 @ 5:47 pm
a triple from here by the time drilling starts? Oufff Jon you think that we take lots a time before we drill in Sheslay !
Comment by Guy Delisle — August 21, 2015 @ 6:07 pm
Danny, relax. Both GGI and EQT going to do fine whether they hit price projections when some say or later in time. Look how long some have been in GGI and DBV waiting and waiting .GGI and EQT will come together faster at this time now. EQT drilling will probably start first week of Sept. It is one stock that can surge to a buck with any kind of decent hit. GGI probably can to for that matter. I know you have seemed somewhat nervous or concerned the last couple days cause the way the TSX.V is falling. What you don’t understand is the money fixin to come into EQT shortly doesn’t give a rats ars where the Venture chart is trading.
Comment by dave — August 21, 2015 @ 6:29 pm
You are right dave, I am a little concerned about general market conditions, not nervous just a little concerned as it can affect the money flowing into these juniors. A question for you if you don’t mind. Why would a lot of money be waiting for the PP to close before coming in? It would seem there is a lot of money soaking up the selling now as investors who are part of the PP perhaps take some off the table so they have funds for the PP but why would others wait for the PP to close before coming in? Do they need to know for sure that EQT will have funds for drilling before jumping in? As always, thanks for your input!
Comment by Danny — August 21, 2015 @ 6:59 pm
No, Guy, that’s a prediction for THIS quarter, not the next one…
Comment by Jon - BMR — August 21, 2015 @ 7:22 pm
Any updates on wrr or gbb?
Comment by Mack — August 22, 2015 @ 4:20 am
Drilling (an initial 1,000 meters) is expected to begin on or about Sept. 20, according to WRR’s latest news, Mack, as they’ve worked out a JV with a private Nevada company that initially still gives WRR a 75% interest. This is a very interesting property as we’ve pointed out since February, albeit the company’s delays in getting to the drill stage have been frustrating for everyone to say the least. Any additional gains in the price of Gold over the next month or 2 should prove helpful here, so it may work out better if they’re drilling by late September.
The same applies for GBB (frustrating delays), which continues to wait for final regulatory approval for the start of production from Quebec authorities for the Granada Project. They must get that CA, the receipt of which has taken much longer than the company publicly stated it would. In the meantime, they’ve entered into shareholder loan agreements totaling $800.000. There’s no questioning the value of the Granada Project, and the rising price of Gold in Canadian dollars, and the continued slide in Oil prices which isn’t over yet, are both a big potential boost to this multi-million ounce Gold project.
Comment by Jon - BMR — August 22, 2015 @ 7:09 am
JON: Any thoughts on the bigger markets crashing/correcting? What was the %’age drop this week for the big boards?
Comment by STEVEN1 — August 22, 2015 @ 7:18 am
jon watch a stock called red pine resourses it has been rolled back symbol rpx. they have over one million oz.of gold proven already and have bought 9 mines from the 1920s the billionare sherman is involved the one mine surlaga has 1 million oz. but is is there smallest grade they will now drill into the next mine below which has old workings of 13 grams average grade all mines are conected and run for strike length of 6 km. watch this stock they start to drill in early sept.one to own it is near richmond mines…there are big people going to get involved soon…my opinion only..this deal was put together in 1980s
Comment by tony roma — August 22, 2015 @ 7:39 am
I like the drops we’ve seen on the bigger boards in recent days, Steven, as it simply wasn’t healthy to go so long without even a 10% correction. Keep in mind, the last time the Dow dropped more than 500 points in a single day was in August 2011. And what a great buying opportunity that was, despite the panic at the time. The drop we saw this last week was entirely within historical norms. Could drop some more, of course – we’ll see.
It’s interesting to note – and we’ll show this on a chart – the VIX RSI(14) has hit an extreme level (82%) witnessed on only 3 other occasions in the last 7 years – the summer of 2011, the spring of 2010, and the Crash of 2008. Those all proved to be incredible buying opportunities on the bigger boards, and of course on the Venture in ’08 and 2010.
China is definitely a concern, especially if the Shanghai falls below 3400. CRB Index is going a little lower yet, to support at 180 it appears, but that’s not too far off from Friday’s 191 close. Oil should find strong support for now in the mid-$30’s. All in all, the volatility we’re currently seeing is not out of the norm and is opening up some great opportunities for selective investors. Don’t forget the 39 week cycle chart for the Venture – it has been calling for a low around the end of August/early September. I see the Venture behaving quite differently over the final 4 months of this year than it did last year when it plunged 40%.
China certainly has to be of concern, and we’ve been warning about that situation for several months as economic weakness in China translates to commodity issues. 3400 is the key level on the Shanghai.
Comment by Jon - BMR — August 22, 2015 @ 7:50 am
Danny – to your post #12. You got it right on the money flowing in after the PP. The fact they have the money and the announcement of drilling will send EQT soaring. I WOULD BE SURPRISED if we are not in the .30’s before the first assays. Nobody on this board would believe me and this is understandable, but I would not be surprised to see the .50’s before first batch of assays. My opinion on the .50’s is due to many factors that are present.
GGI – .08 to .085 this coming week.
If EQT drops Monday due to market conditions don’t let it get to you. They are washing shares back and forth for the PP. It’s a game that is creating a very bullish chart pattern right now. I am prepared to buy at .11
Comment by dave — August 22, 2015 @ 8:43 am
It’s amazing the opposite directions the Venture has gone vs the big boards since mid 2012. John, can you do an overlay of Dow Jones, TSX and Venture on one chart? When shall they meet or at least get closer together?
Comment by vepper — August 22, 2015 @ 8:44 am
dave, thanks for your reply.
Comment by Danny — August 22, 2015 @ 1:23 pm
Dave, the often talked about 3 million short on EQT. Any truth to the short? If so, we could be in for quite a run with all the EQT has going for it.
Comment by Dan — August 22, 2015 @ 3:43 pm
Dave,jmo,but it will take the words ‘MASSIVE SULPHIDES’ to send the stock into the .30s.At that stage,the waiting for results could send the rumours flying and the stock well over .50.
If Hardy is smart,if they hit massive sulphides,they should let the rumours out as early as they can and let it run without acknowledging them.In this market,we could be looking at a major crash,so they would be wise to take advantage of everything they can as far as the stock price goes.
This will be where Hardy proves he’s capable of driving the company and the stock price.
Friedland,Pezim,Noront CEO at the time Richard Nemis,and ZEN CEO Aubrey Everleigh all proved to be masters at this and helped to drive their stock prices to continuous new highs over a long time period.
It will be interesting to see if Hardy knows how to play the game or he is just another run of the mill CEO who waits strictly for results,watches the stock slowly disintegrate and never figured out why his stock never went anywhere.
Imo,a company’s CEO proves his true worth by what he can do with the stock price.The market is littered with CEOs who were good organizers but worthless with promotion and watched their companies flounder in the end.
This company has a story that can really push the stock price.This is Hardy’s opportunity to make a name for himself.
Comment by jim niles — August 22, 2015 @ 3:44 pm
Dan, not sure if its 3 mil anymore
Niles, I agree. We have talked about Hardy’s background and what he is made of often here in the last month. He is a go getter and at the age of 27, started a business and 2 years later had 400 employees. I talked about the kinesic posture of his photo, it tells a lot. He falls into the class of the Friedland’s among others. Here is hoping to those massive sulphides.
Comment by dave — August 22, 2015 @ 6:37 pm