BullMarketRun.com

Gold is down for a 6th consecutive day as traders eye a possible re-test of the April 16 intra-day low of $1,321 in the near future…as of 6:45 am Pacific, bullion is off $13 an ounce at $1,379 after dipping as low as $1,369…Silver is also off its lows, down 8 cents at $22.51…Copper has lost 3 pennies to $3.21…Crude Oil has reversed to the upside, now up 32 cents to $94.63, while the U.S. Dollar Index is down slightly at 83.70…

Lower Gold prices in recent days have apparently attracted physical buying in China…the world’s second-largest consumer after India reportedly bought a “large” amount of Gold today…premiums for Gold bars rallied to record highs up to $5 an ounce over spot London prices in Hong Kong, China’s main source for Gold imports…

Large outflows from Gold ETF’s led to a 13% year-on-year decline in global Gold demand during the first quarter to 963 metric tons, the World Gold Council said today…however, most of the other major forms of demand – such as jewelry, bars and coins – increased according to the just-released WGC quarterly report on demand trends…Gold buying in the two key markets of India and China grew by more than 20% and central bank demand remained above 100 metric tons for the 7th straight quarter…again, what we’re seeing is a disconnect between the paper market and the physical market (two very different types of buyers)…

“Despite the retrenchment in the Gold price during the quarter, there was a dramatic increase in demand for jewelry, bars and coins,” said Jason Toussaint, chief executive officer of World Gold Trust Services, a subsidiary of the WGC and sponsor of the SPDR Gold Trust…“That is a testament to the fact that demand for the physical asset is robust”…data for the report was compiled independently by the consultancy Thomson Reuters GFMS…in value terms, total Gold demand in the first quarter was $50.5 billion, down 16% from the year before…total investment demand was 200.8 metric tons in the first quarter, down 49% from the same period a year ago, the WGC said… “The year-on-year decline in investment was solely attributable to the net outflows from the ETF’s, which obscured the strong rise in investment for Gold bars and coins at the retail level,” the WGC stated…

Japanese Q1 GDP Growth Surges

Japan’s economic growth accelerated swiftly at the beginning of this year, the most concrete sign yet that new stimulus policies sparking euphoria in financial markets in that country are starting to lift companies and consumers as well…Japan’s GDP grew at an annualized pace of 3.5% in the first 3 months of the year, as consumers loosened their purse strings and exports to the U.S. picked up, lifted by a weaker yen…the figures reported by the government today marked a sharp improvement from the tepid 1% growth rate at the end of last year, which followed 6 months of contraction…it was also considerably stronger than the 2.8% forecast by economists polled in advance by The Wall Street Journal…

Today’s Markets

Japan’s Nikkei average, which has gained a whopping 44% already this year, gave up 59 points on some mild profit-taking overnight…it closed at 15037…while Japan’s annualized first quarter growth topped forecasts, some analysts noted that a drop in capital expenditure showed the economy is still dogged by deflation…China’s Shanghai Composite put in a strong performance overnight, gaining 27 points to finish at 2252…a strong move past the 2250 level would certainly be bullish for the Shanghai from a technical perspective…European shares are mixed in late trading overseas…some analysts believe that the prolonged recession in the euro zone leaves the ECB with no choice choice but to look into its toolbox to employ additional stimulus measures, ranging from further rate cuts, negative deposit rates and buying asset backed securities…economic news out of the U.S. was mostly mildly negative this morning with housing starts dropping more than expected and jobless claims rising…inflation remained tame…newly issued building permits, however (an excellent gauge of future construction) rose 14.3% from a month earlier to an annual rate of 1.017 million, the highest level since June, 2008…the Dow is off 12 points through the first 15 minutes of trading…the TSX is down 6 points while the Venture has slipped 2 points to 935…

Venture Chart

As we’ve been stating, a key resistance area for the Venture is 970 and the inability of the Index to break above that level in recent days – followed by a drop below the 10 and 20-day moving averages – has not been a positive development…it’s also a clue that there’s likely going to be additional weakness in Gold, though as John’s chart showed yesterday there is Fibonacci support at the $1,385 level which needs to hold on a closing basis…astute traders/investors should view any additional weakness in the Venture or Gold stocks in general as a potential buying opportunity, however, in select quality situations…not many investors are even paying attention to the junior resource market at the moment, and that’s unfortunate for them because they’re missing opportunities like we’re seeing in the Iskut River region with Colorado Resources‘ (CXO, TSX-V) discovery…it’s also a great time to be on the look-out for other discoveries…one huge advantage investors have in a market like this is the generally slow reaction time to really good news, the opposite of course to what occurs during a rip-roaring bull market…let’s just use GoldQuest Mining (GQC, TSX-V) as an example…they could announce a fabulous hole from the DR and because of slow investor reaction times at the moment you’ll have an opportunity to jump in after the news at a great price…in a different market environment, you’d have a huge gap-up and you may miss much of the advance…be patient and look for unique news…history has shown that often in times like this, important discoveries are made, which could be unfolding before our eyes in the Iskut River region…

Below is a long-term CDNX chart from John…as we’ve stated in recent weeks, there is strong support around the 860 level…in fact, the next MAJOR support levels (if the April 17 low of 918 doesn’t hold) are 860, 800 and 675…don’t panic, be patient, and look for opportunities because there WILL be opportunities…

Colorado Resources (CXO, TSX-V)

The overall market may go in one direction, but a discovery play can easily go in the other…that’s what has been happening with Colorado Resources (CXO, TSX-V) and we believe other players in the area will also ignite, including Victory Ventures (VVN, TSX-V) which is drawing close to the start of a drill program at a property within 5 km of Colorado’s discovery…we’re working on some special coverage of this northern B.C.. discovery which has the potential to draw investor interest from far and wide in the coming months…this play in our view was also given a big boost when the NDP’s anti-development platform was given the big boot by wise B.C. voters Tuesday night…this will improve the investment tone, for sure…

Below is an updated 6-month daily chart for CXO after it gained another 6 cents yesterday to close at $1.41…investors are anxiously awaiting more drill results which will obviously guide the stock price…for the short term, the Fib. level John has identified appears to be very realistic, though volatility and profit-taking can be expected along the way…the Fib. level is not meant to be a price target, just a theoretical level based on technical and Fibonacci analysis…

Sunrise Resources Ltd. (SHI, TSX-V)

Colorado is currently drilling the Eldorado Property (very close to Victory Ventures‘ Copau Property by the way) which it optioned from Sunrise Resources (SHI, TSX-V) in early April – interestingly, just a few weeks before the announced discovery at North ROK…Sunrise is certainly worth keeping an eye on and is also in the process of finalizing a 15-cent private placement for $400,000…it currently has only 18 million shares outstanding and closed yesterday at 16 cents…we’re not able to provide a chart just yet as it’s not currently in the StockCharts.com system (readers, please help us with this)…

Firesteel Resources Inc. (FTR, TSX-V)

It’s disappointing to us in a way that Firesteel has elected to joint venture its Iskut River properties, including one of them to an Australian major, but that’s the business strategy they have chosen in this current market environment…it gives them little control over news flow and will make it more difficult for the stock to gain traction in the short term at least, but over the long haul this strategy could prove to be successful…technically, FTR faces a strong resistance band between 15 and 18 cents as shown in John’s chart below…

It’s best to stick with the plays in the Iskut River area that will actually be carrying out drilling between now and the end of the summer, and be very careful with those companies that are just picking up some ground for promotional purposes…stick with the serious players, one of which is also Peter Bernier’s Prosper Gold (PGX.H, TSX-V) which remains halted as the Exchange reviews the company’s qualifying transaction with Firesteel…