Gold has traded between $1,236 and $1,260 so far today…as of 7:00 am Pacific, the yellow metal is up $6 an ounce at $1,249…Silver is 21 cents higher at $19.60…Copper is up 2 pennies at $3.16…Crude Oil has jumped to a 14-month high, surging another $1.97 a barrel to $101.57, while the U.S. Dollar Index is off one-fifth of a point to 83.40…
JPMorgan Turns Bullish On Commodities
For the first time in almost 2, years, analysts at JPMorgan have turned bullish on commodities and are now overweight the entire complex, though it’s the energy sector they are most excited about…“In a number of commodities, prices have fallen far enough for long enough to force involuntary cuts in production and to spur fresh demand,” the bank said in the report released Sunday…“Risk is now skewed toward demand growth surprise and production disappointment…“Our analysis concludes that it is in the best interests of most commodity index investors to buy immediately,” they said…“We would rather be premature in our pretend portfolio than you be late in your real portfolio”…the firm is slightly more bullish on energy commodities, particularly Oil, than it is in precious and base metals – the analysts said in the report that their “overweight” view is based on the energy sector “that dominates most indices”…JPMorgan also pointed out that while the U.S. Dollar Index has been gaining strength, which has obviously hurt Gold, the Chinese yuan continues to appreciate in value…“Though the rate of appreciation has slowed following the June summit of Presidents Xi and Obama, the move has provided the world’s largest metals consumer with greater purchasing power to restock in commodities where it is import dependent, such as Copper,” they stated…
Meanwhile, Commerzbank stated yesterday that “negative news should now be largely discounted in (base metal) prices and we do not anticipate further significant falls…On the contrary, if metal prices remain below the production costs for any length of time, production is is likely to be cut substantially, thereby supporting prices…the current low prices appear to present attractive buying opportunities on a long-term view”….
Today’s Markets
Asian markets reversed early gains today after China’s official service sector PMI (Purchasing Managers’ Index) declined to its weakest level in 9 months in June…the report followed 2 manufacturing surveys out earlier this week, which also showed growth at multi-month lows…the Shanghai Composite fell 12 points overnight to close at 1994…Japan’s Nikkei average was off slightly at 14056…
Concerns about political instability in Portugal (the Portuguese stock exchange fell by 6% today) and debt refinancing in Greece have weakened key European indexes today…meanwhile, it’s a shortened trading day in New York due to tomorrow’s Independence Day holiday…private U.S. companies hired 188,000 new workers in June, considerably better than expectations, indicating the job market continues to heal slowly, according to a report this morning from ADP…the number combined with a steadying of weekly jobless claims at 343,000, which was below estimates of 350,000 and consistent with recent weeks…as of 7:00 am Pacific, the Dow is down 20 points while the TSX is off 42 points…the Venture has added 3 points to 880…Pacific Potash (PP, TSX-V), one of our favorites, is strong this morning, up 2.5 cents at 17 cents…it’s the Venture’s volume leader through the first 30 minutes (648,000 shares)…
Updated Crude Oil Chart
Recently, based on some excellent chart work by John, we came to the conclusion that Crude Oil (WTIC) was rapidly approaching an important “moment of decision” with an upside breakout clearly possible…indeed, WTIC has now broken above a 4-year symmetrical triangle which is certainly significant and also supportive for Gold…a sharp decline in crude stockpiles in the U.S. and political instability in Egypt have combined to put upward pressure on prices…the likelihood of a move to the $110 resistance level has grown significantly with this week’s action…John’s 10-year monthly chart below tells the story…
Zenyatta Ventures Ltd. (ZEN, TSX-V)
Zenyatta Ventures (ZEN, TSX-V) continues to execute exceedingly well, both on the ground and in the market…many companies on the Venture have that opportunity but fail miserably when it comes to execution, which is one important reason why confidence in this market has eroded so much over the past couple of years…ZEN hit a new all-time high yesterday as it surged another 24 cents to close at $3.19 following the release of more encouraging assay results (5 holes in total) from its Albany hydrothermal graphite deposit in northern Ontario…drill hole 11, the deepest to date, yielded 84.9 metres of 5.2% graphitic carbon (Cg) from 460.6 to 545.5 metres within a broader intersection of 203 metres of graphite mineralization averaging 3% Cg from 393 to 596 metres…hole 14 returned a 426-metre intersection grading 3% Cg…the East pipe is showing good vertical continuity and remains open at depth…results from 10 more holes from the East pipe are pending, all of which intersected broad intervals of graphite mineralization based on visual observations…drilling has commenced on the West pipe, and this will be followed by an initial NI-43-101 resource estimate…
Technically, ZEN broke above John’s Fibonacci target of $3.13 yesterday – a breakout that must be verified today…at some point the “overbought” condition will have to unwind, but it could persist for a while yet – there’s not a lot to choose from in this market, and ZEN clearly has momentum on its side and very positive investor perception thanks, in part, to extremely effective branding…below is a 6-month daily chart from John…ZEN is up 6 cents in early trading at $3.25…
Macro Enterprises Inc. (MCR, TSX-V) Update
Like Zenyatta, Macro Enterprises (MCR, TSX-V) has been strongly out-performing the market, though what makes MCR so unique in the context of the Venture market is that this company is actually making money…back in late May, we pointed out how earnings momentum could drive Macro significantly higher after it reported EPS of 40 cents in Q1…MCR is headquartered in Fort St. John, B.C., and provides construction and maintenance services to the energy and resource industries…MCR has just under 30 million shares outstanding and has climbed from around the $3 level following the release of Q1 results post-market May 22 to an all-time high of $4.18 June 18…it closed yesterday at $4.04…while we continue to be bullish regarding this play, some volatility is clearly possible given current overbought conditions…any retracement, however, should find very strong support around $3…as always, perform your own due diligence…MCR is up a penny at $4.05 as of 7:00 am Pacific…
Note: John, Jon and Terry do not hold share positions in ZEN or MCR.
8.Zen continues to look great, Bob. In terms of execution, both in the market and on the ground, they have performed exceedingly well.
Comment by Jon – BMR — July 3, 2013 @ 2:22 am
Zen will surprise many looking for many multi bags from even at these prices GUYS
1 of a kind deposit in the world its getting bigger and biggers
Carbon from the mantle of the Earth
Sells for 10,000 per ton to 35,000 dollars per ton
crunch the numbers
Comment by bob — July 3, 2013 @ 6:07 am
v.cxo is on the move again……suspect Eric Coffin has picked a huge multi-bag winner once again. Good for bmr finding this story early!!! glta
Comment by natalie — July 3, 2013 @ 6:12 am
YIKES, VVN??? 6 CENTS? WHATS HAPPENING? ANY THOUGHTS?
Comment by STEVEN — July 3, 2013 @ 7:00 am
ZEN-University Proof coming soon
Jan 16/13 nr
To complement its exploration and development work, Zenyatta will be supporting a Lakehead University MSc research program to be supervised by Dr. Andrew Conly, PhD, of Lakehead University Mineralogy and Experimental Laboratory (LUMINX) in Thunder Bay, Ont. The research will be using various global publications on vein-type (or hydrothermal) graphite deposits to serve as a basis to provide a comprehensive assessment of the Albany graphite deposit. The research will focus on the overall genesis of the Albany deposit. Specific questions that will be addressed: a) age of mineralization; b) source and chemical nature of the graphite-forming fluids; and c) unique mineralogical and geochemical characteristics of the hydrothermal graphite.
PS nobody going to stop this frieght train
Comment by bob — July 3, 2013 @ 7:02 am
Technically, it is oversold at the moment, it is at support and does have rising 50, 100 and 200-day moving averages. The area they’re in is hot and drilling into that large anomaly, you’d think, should be as easy as shooting into an open net. But yesterday’s news was not a confidence builder. Let’s hope they get back on course after hitting this bump in the road.
Comment by Jon - BMR — July 3, 2013 @ 7:07 am
VVN- Always invest in the intial discovery, not the area plays….rarely works out.
Comment by db — July 3, 2013 @ 7:27 am
VVN from yesterday NR—-Following completion of one diamond drill hole on its Iskut area Copau property, the company is currently planning for more diamond drilling to test the prominent magnetic anomaly situated on the west side of the property. Drill hole VC13-01 was drilled to a depth of 472 metres, but was located too far south to test the magnetic anomaly. Proposed drill holes, requiring helicopter support, are planned to test the strong northwest magnetic anomaly, which measures at least 800 metres long with indicated widths of 200 metres to 300 metres wide. The testing of the magnetic anomaly is scheduled to be carried out by early August of this year.
Comment by bob — July 3, 2013 @ 7:40 am
“But yesterday’s news was not a confidence builder. Let’s hope they get back on course after hitting this bump in the road.”
Editor’s note: Above comment was in reference to VVN, not ZEN.
Comment by Jon – BMR — July 3, 2013 @ 7:07 am
Jon, I would argue that yesterday’s announced results were exactly what management was expecting when they chose those holes. To wit, the ground loop geophysics they did 2-3 months ago provided them with a more accurate, 3-D “map” of the 2 pipes and the drilling results ytd are tracking that map very well. The map, in turn, also indicates that the west pipe is > 3x the size of the east pipe so ZEN is simply proceeding on plan to prove up the resource (100mm tons of ore at 4%???). The fact that yesterday’s NR confirmed that “the East pipe is showing good vertical continuity and remains open at depth” indicates that there could well be a kilometer or more of resource (see oobject.com/9-mine-diagrams/model-of-giant-kidd-creek-mine-in-ontario/7826/).
To be fair, a lot hinges on the upcoming metallurgical report. This report should, at least preliminarily, determine whether ZEN’s natural graphite compete in the established $13B synthetic graphite market and satisfy the exacting industrial requirements for the applications the company is targeting, e.g., graphite electrodes for making steel. I believe, as many informed folks do, that the properties (electrical and other) of ZEN’s natural graphite will actually be clearly superior to those of synthetic graphite (Bear in mind that the inventors of graphene used natural, not synthetic, graphite).
ZEN knows what it has and many of us, who have been closely following the company’s slow steady progress the last year, know that the fun is just beginning. GLTA
Comment by Durango Slim — July 3, 2013 @ 8:57 am
Hi BMR,
How about Global Met Coal, how are things going there? Would like a follow up from you on that one.
Regards,
Tony
Comment by Tony — July 3, 2013 @ 9:18 am
My comments were not referring to ZEN…..they were referring to VVN.
Comment by Jon - BMR — July 3, 2013 @ 9:41 am
We are following up on GMZ, and I’m still waiting to get into contact with President and CEO George Heard who has been traveling again. If there is any sense on our part that GMZ’s plans are not coming together as management has previously laid out, then we will obviously let our readers know. As it stands now, everything appears to be fine but appearances and reality with any Venture company can be 2 different things as we have too often seen.
Comment by Jon - BMR — July 3, 2013 @ 10:02 am
My comments were not referring to ZEN…..they were referring to VVN.
Comment by Jon – BMR — July 3, 2013 @ 9:41 am
Oops, sorry, my bad. But good ZEN info for other readers anyway. 😉
Comment by Durango Slim — July 3, 2013 @ 10:58 am
In terms of v.VVN, I don’t think the news release was bad at all. They key part of the release I think people should focus on is the following: “Proposed drill holes, requiring helicopter support, are planned to test the strong northwest magnetic anomaly, which measures at least 800 meters long with indicated widths of 200 meters to 300 meters wide.” The key in this quote is “requiring helicopter support”. In other words, the crew didn’t realize up front that they actually need helicopter support to drill this anomaly. That is a great thing! If this area is that loaded up/bursting with mineralization, then they will want to MAKE SURE they “get it right”, so I see this as them correcting themselves. I can’t wait till we see those assay results! Patience will be rewarded.
Comment by Steven — July 3, 2013 @ 11:04 am
Next, let’s talk about v.GMZ. From what I understand, George Heard is a man of high ethics and is a true professional. My interpretation of the delay in announcing the permit for the mine is that he wants to be 100% sure that the company does not miss any detail that could cause problems down the road. In other words, he wants to get it right “the first time”. For that, I cannot fault the man. Better to take extra time to ensure a smooth flow of production and operations than rush in and get burned. I am very anxious to hear Jon’s report on the situation though.
Comment by Steven — July 3, 2013 @ 11:10 am
I am just not understanding how ZEN can possibly be worth $130M market cap and one can expect it to go higher. Certainly not for logical reasons (we know there is no logic sometimes). With a still unproven resource, and what is stated above, a relatively small $13B industry that is very competitive already how could this possibly make any sense. I like graphite and graphene very much, but this one is not going to maintain this kind of value imo.
Comment by Paul — July 3, 2013 @ 11:46 am
KDX- Klondex samples 0.15 m of 22,396 g/t Au at Fire Creek drill results should be coming from here soon
Drill station 1
Seven east-directed holes have been completed, and logging is in progress with assays pending. Drilling from station 1 east of the ramp is testing the extension and continuity of mineralization of the Vonnie and Joyce veins in the 5400 crosscut to the north, and in drill hole FC12-029U, 16.6 g/t (0.48 ounce per ton) Au over 13.0 m (42.8 feet), to the southwest (see April 9, 2013, news release).
Drill station 2
Klondex is now drilling from station 2, where six of nine planned holes have been completed.
keep close tabs on kdx another one that is cheap and on its way to become a mine
Comment by bob — July 3, 2013 @ 2:33 pm
Comment by Paul – I am just not understanding how ZEN can possibly be worth $130M market cap
Paul, the short story is that if ZEN’s purity of graphite can substitute for synthetic graphite (or work better, as many think), the bottom line is that ZEN will be able to produce it for 80-90% less than synthetic. It’s like a disruptive technology in the commodity business.
Comment by Durango Slim — July 4, 2013 @ 4:26 am
@slim. I think what you are trying to say is that it’s like a huge pump that will be shorted hard back to pennies.
Comment by Heath — July 4, 2013 @ 8:42 am