Gold is shooting higher this morning, which shouldn’t be surprising given how U.S. politicians – by votes of 82-18 in the Senate and 285-144 (congratulations to the 162 in Congress who stood up for change) have once again, at the 11th hour, kicked the debt can down the road and have pushed off difficult and long-term decisions about the country’s fiscal health for another day…this is completely fine with the President whose train wreck of a health care plan, a proven jobs-killer, remains fully intact and will continue to inflict economic damage on the country…what last night’s deal almost ensures is that the Federal Reserve will keep the printing presses running overtime well into next year, especially with Janet Yellen at the helm beginning at the end of January…U.S. job growth will remain tepid amid continuing political, fiscal and regulatory uncertainty in the nation, and the near guarantee of another fight on Capitol Hill when the next debt ceiling deadline arrives in just a few months…as one Senator said, this deal is just another promise to work on the problem tomorrow…Obama, a strong believer in Big Government, has no serious interest in tackling the U.S. debt problem and overall dysfunctional fiscal policy, and neither do most U.S. Senators…enough Republicans gave up on their fight last night to allow the legislation from the Senate to pass the House…they will try and re-group for another battle down the road…
Last night’s agreement extends U.S. borrowing authority until February 7, although the Treasury Department would have tools to temporarily lengthen its borrowing capacity beyond that date if Congress failed to act…the deal will also fund government agencies until January 15, ending a partial government shutdown that began with the fiscal year on October 1…
Oh, and in case you missed it, politicians of course couldn’t help but throw some pork into last night’s deal (with just about no chance for public review)…one section of the bill hikes funding for projects along the Ohio River, portions of which flow through Illinois and Kentucky, states represented by Sen. Dick Durbin, D-Ill., and Senate Minority Leader Mitch McConnell, R-Ky…the bill boosts money for the projects by $2.1 billion, from an original $775 million…Arizona Senator John McCain called this “disgraceful” but still voted for the deal…what’s a couple of billion dollars, anyway, when you’re already running a deficit close to $1 trillion?…Washington is just not serious about dealing with its spending problem…at some point, there WILL be a default and at that point the nation will finally wake up…
The greenback is getting hammered this morning and deservedly so…Macroeconomic Advisors reckons that lower discretionary spending caused by fiscal policy uncertainty has reduced U.S. output growth at about 0.7 points a year since 2010 – a painful amount when total growth is in the range of 2.5%…“It feels like this is just kicking the can down the road,” Larry Fink, CEO of BlackRock, one of the world’s largest investment firms, told CNBC…“It’s going to have a lasting damage to consumer confidence, a lasting damage to CEO behavior in terms of job creation and, importantly, it’s going to create a marginal change in foreign investors’ behavior in investing in U.S. Treasurys.” In turn, Fink said, he expects a “pretty weak fourth quarter” and a slow start to the 1st half of next year…he also suspects that another budget fight will prompt the Federal Reserve to continue its quantitative easing program…
There is no shortage of polls showing that Americans are fed up with their elected officials…a recent recent CNN/Opinion Research Corp. poll showed that 63% of respondents were angry at Republicans for their handling of the shutdown, 57% were mad at Democrats and 53% expressed disappointment with Obama…a more light-hearted poll from Public Policy Polling last week may be even more telling, as pollsters pitted Congress against everything from Wall Street to witches…among the things that bested Congress, according to respondents: dog poop (47%-40%), hemorrhoids (53%-31%), jury duty (73%-18%), toenail fungus (44%-41%), cockroaches (44%-42%), the IRS (42%-33%), the respondents’ mothers-in-law (64%-20%), potholes (47%-36%) and zombies (43%-37%)…
Anyway, the good news is, Gold may finally be getting its legs back…for now it seems, the U.S. dollar’s leading role as the pre-eminent international reserve asset and settlement currency for much of world trade and investment has been tarnished…as of 7:30 am Pacific, bullion is up $30 an ounce at $1,313…Silver is 45 cents higher at $21.87…Copper is off 3 pennies to $3.25…Crude Oil is down 53 cents to $101.76 while the U.S. Dollar Index has fallen two-thirds of a point to 79.88…
The U.S. Dollar is ready for the garbage heap…we noted a few weeks ago how it had broken an uptrend in place since 2011…below is a 6-year U.S. Dollar Index monthly chart from John…expect a test of the support band between 78 and 79 – this should mean higher Gold prices…
Today’s Markets
Asian markets were mixed overnight…Japan’s Nikkei average finished 119 points higher at 14587…China’s Shanghai Composite slid 5 points to 2189…European shares, meanwhile, were down modestly today…
In New York, the Dow is off 71 points through first 60 minutes of trading…the TSX is up 10 points – on the edge of an important breakout – while the Venture has encouragingly jumped 18 points to 944 after successfully testing critical support…the next couple of trading sessions for the Venture are going to be extremely important for confirmation that this sudden fresh momentum is for real…we believe it might be…
Probe Mines Ltd. (PRB, TSX-V) Update
Probe Mines (PRB, TSX-V) came out with more solid results this week from its Borden Lake Gold deposit in northern Ontario…as we’ve been explaining in recent months, what’s exciting about Borden Lake is how Probe is developing a high-grade zone to the southeast of the original lower-grade deposit…Probe’s priority continues to be to delineate and define this high-grade area in order to incorporate those results into an updated overall resource calculation…Borden Lake has been re-classified by the company as a more traditional high-grade, Archean lode Gold system, amenable to underground recovery, which is also bounded by significant ancillary lower-grade mineralization, the latter ideally suited to potential open-pit mining techniques…this week’s results have extended the high-grade zone further to the southeast between sections 1550 m SE and 2000 m SE…highlights included 31.3 m @ 4 g/t Au (BL13-477), 12.4 m @ 10.9 g/t Au (478), 15.7 m @ 5.2 g/t Au (479), 24.2 m @ 4.1 g/t Au (485), 42 m @ 3.1 g/t Au (488), 30.4 m @ 3.3 g/t Au (490), 15.3 m @ 3.5 g/t Au (493), 17.9 m @ 3.7 g/t Au (498) and 13.9 m @ 5.6 g/t Au (507)…drilling in the high-grade zone continues…
Technically, Probe has shown some slight weakness recently but has very strong support around the $2 level with a nicely rising 100-day moving average (SMA) at about $1.90…PRB has significantly outperformed Gold since May, right around the time Agnico-Eagle Mines Ltd. (AEM, TSX) took a position in the company…
Contact Exploration Inc. (CEX, TSX-V)
Contact Exploration Inc. (CEX, TSX-V) is an emerging energy play with strong potential as we’ve pointed out in recent weeks…it had a powerful day yesterday with a gap-up to 26 cents, a level it held throughout the day, with a close at 27 cents (up 3 pennies) on total volume (all exchanges) of 1.7 million shares – it’s busiest day of the year…Contact announced the successful completion and testing of its 4th Montney well in Alberta…the total drill depth was approximately 70 to 100 metres vertically deeper and 2 miles farther west than any other Contact-operated Kakwa well, extending the scope and magnitude of the company’s East Kakwa Project…
Below is a 2.5-year weekly chart from John…since October of last year, CEX has traded in a horizontal channel between 18 and 28 cents…watch for a potential breakout above this 28-cent resistance area which obviously would be an extremely bullish development…RSI(14) is in a nice uptrend and can support a healthy move higher in the near future…CEX is off half a penny at 26.5 cents on light volume as of 7:30 am Pacific…
Zenyatta Ventures Ltd. (ZEN, TSX-V)
How the mighty can fall so quickly…Zenyatta Ventures‘ (ZEN, TSX-V) consistent, powerful uptrend since last year showed clear signs of breaking down in late September, and now the stock is going to have to fight very hard to prevent a near-term reversal to the downside in the 100-day SMA…support around the $2 level really needs to hold – if it doesn’t, and the odds right now don’t look great given the downside momentum, then the next major support level is in the $1.60’s as shown in John’s 6-month daily chart..ZEN is holding critical support so far this morning, rebounding from a low of $2.06, which is positive…again, the $2 level is key support…
Run of River Power Inc. (ROR, TSX-V)
There are some companies on the Venture actually making money…we pointed out Macro Enterprises Inc. (MCR, TSX-V) to our readers in May when it was trading around $3 a share and it has more than doubled since then thanks to continued earnings momentum…another emerging “earnings” play worthy of our readers’ due diligence is Run of River Power (ROR, TSX-V)…we’ll have more on this one next week…in the meantime, below is a 5-year weekly chart from John…ROR has doubled since early September and is currently over-bought technically with strong support at 7 cents…it closed up 2 cents yesterday at 10.5 cents…expect some near-term consolidation which may provide a better entry point…definitely worth keeping on the radar screen…
Note: John, Jon and Terry do not hold share positions in PRB, CEX, ROR or ZEN.
Brigus Gold (BRD) reported high grade intercepts on both their producing mine (Black Fox) and development mine (Grey Fox). The intercept on Black Fox was actually spectacular. I like the growth pipeline BRD has, safe jurisdiction, and if they keep hitting high grade at Black Fox could be a really profitable mine once gold goes back up.
Comment by Justin — October 17, 2013 @ 6:38 am
BRD and SHVLF are my two plays
Comment by Mike C — October 17, 2013 @ 8:58 am
PGX site still down, my feeling is something big is coming!
Comment by Martin — October 17, 2013 @ 9:30 am
Martin, something big is coming is my gut feeling, too – not sure it has anything to do with the PGX site, but let’s wait and see (imminent I suspect – Monday/Tuesday?). 598 metres of mineralization from top to bottom. This could be the glory hole the Venture needs right now. And GGI has been busy doing its thing, so you can be sure they have been loading up on ammunition. DBV starts drilling Monday – just a coincidence? I believe they feel, too, there are some very good numbers coming from PGX. Love how the Venture and Gold are performing today.
Comment by Jon - BMR — October 17, 2013 @ 9:43 am
Jon i an loaded up with GGI, have some FTR as well. Remember how i use to love GQC, sold all my share 1 mounth before the did their romeo discovery, this time i am in and long.
Best of luck!
Comment by Martin — October 17, 2013 @ 9:59 am
Jon – does GGI still hold its PZG shares? I still need to do some more DD on that one but I’m thinking about acquiring some.
Comment by Justin — October 17, 2013 @ 10:07 am
With gold up big today, I betcha 100 bucks it will be down at least 20 bucks or more tomorrow, (I hope I am wrong) there is no way that the US Gov’t is going to let gold rise as long as they continue QE, they cannot risk the general public losing all confidence in the dollar and putting their money into gold, they are desperate to keep interest rates and gold down along with the Big Banks and their crooked arm that controls the gold and silver markets at will, JPMorgan. Can you imagine what would happen to equities if the general public starting pulling money out of them and putting it into gold? So in the meantime we have to hope we can make a little money on the exploration plays by getting in and out with whatever profits we can in my opinion.
Comment by Greg — October 17, 2013 @ 10:27 am
I believe SHVLF is SAM.to fwiw
Comment by ChartTrader — October 17, 2013 @ 10:37 am
Justin, they still have a bucketload of PZG (a couple million in the bucket).
Comment by Jon - BMR — October 17, 2013 @ 10:54 am
This is a VERY significant day in the markets and John will have an updated Venture chart tomorrow morning (and a TSX chart). I think this is the move we’ve been waiting for that will ultimately push the Index through key resistance. One great drill hole from somewhere and the Venture will fly.
Comment by Jon - BMR — October 17, 2013 @ 10:56 am
So if you buy GGI.V you essentially get all their properties for free right? They have 4 million in cash and at least a few more million in shares of PZG? Obviously they will burn through the cash eventually but right now the market places no premium on their properties. Amazing how optimistic or pessimistic markets can get.
Comment by Justin — October 17, 2013 @ 11:25 am
My gest is 0.135$ at the close
Comment by Martin — October 17, 2013 @ 11:34 am
Plus they are generating revenue each mounth (56 000$) Justin!
Comment by Martin — October 17, 2013 @ 11:39 am
Get ready for GGI lift-off, I suspect…Sheslay area is about to heat up. Plus Mexico, of course, for GGI.
Comment by Jon - BMR — October 17, 2013 @ 11:42 am
Is that a exiting play 🙂
Comment by Martin — October 17, 2013 @ 11:46 am
Jon, can you please clarify what you meant in this quote “Poor share structure can severely limit the upside potential of any discovery play…Prosper Gold has just 25 million shares outstanding, and more than 6 million of those shares are in the hands of Bernier and Tempelman-Kluit…in the event of a “glory hole” in the immediate future, investors will be scrambling as most of those 25 million shares can’t even be traded right now due to the 4-month hold on the financing, completed at the end of August, and the CPC 36-month staged release escrow…”
Would this not mean that should PGX hit the “Glory Hole” a(theoretically) higher share price target could be achieved since there are such few shares to go around i.e. Supply vs. Demand? In other words, many investors would most likely put heavy buying pressure on the stock (in that situation) but with a limited amount of shares to be sold that should “gap up” big time (as opposed to a heavily diluted share structure). Is this not correct or have I got it wrong?
Comment by Steven — October 17, 2013 @ 11:55 am
Steven, Justin…with regard to your 2 questions…..first, yes, share structure especially these days is so critical to look at…with regard to PGX, Steven, definitely there’s a special dynamic that could come into play here based simply on supply and demand as most of what is currently outstanding, which isn’t much to begin with (25 million), can’t even be sold due to the financing which has tied up 10 million shares, plus the escrow shares that are tied up (6 million, Bernier and Tempelman-Kluit who combined hold 26% of the total O/S which includes their participation in the August financing). So 65% of the O/S can’t even be sold now. In terms of the balance, about 9 million, my understanding is that 75% of those are in very tight hands – in other words, individuals who are in for the long haul knowing what Pete and Dirk did with Richfield. So, doing the math, as PGX started trading again at the beginning of September, there were about just 2 million “loose” shares in the market. 1.6 million PGX shares have traded since Sept. 1. So at this point, I would say PGX is down to maybe 500,000 “loose shares”. Some of those are obviously in the hands of Macquarie which was selling today again at 50 cents. They’re quickly running out of paper. So the set-up here is potentially very explosive. If there’s a stellar drill hole, and I think that’s what’s shaping up based on the geology and the descriptions PGX has provided, then you have the recipe for a dramatic price increase based on supply and demand with 65% of the OS that CANNOT be sold, and another 25% to 30% in very tight, friendly hands that really just want to hold on until next summer when they believe this will be trading many times higher than where it is now.
Justin, with regard to GGI, I believe they hold around 2 million PZG shares, plus cash, with total working capital of approx. $4 million as per the latest financials. They haven’t had to do a financing in over 4 years (that $50,000 thing recently was just an insider flow-through for tax purposes), and they may not have to do one for another 4 years (no warrants, no PP paper to come flying into the market, makes a huge difference). They’re generating some monthly cash flow at the moment obviously from the coal program, and that has very good upside potential along with the graphite which is separate from the coal program. What also really excites me is the near-term cash flow potential of their La Patilla Property. Dr. Craig Gibson, recognized as a leading geo for Mexico and a GGI director, found this property a few years ago. This was at a time when the markets were struggling, following the Crash, and he was looking for something that relatively easily could be put into production on a small scale to generate revenue and profit. Mineralization is at and very close to surface (tens of metres) and it’s one of those situations where you can almost literally take it out with a Backhoe, dump it into a truck and haul it off for processing. I’ve been on some of these types of properties before and a major would never have any interest in them, of course, but for a junior like GGI, they can be hugely beneficial. Even at 500 or 1,000 ounces a month, that’s anywhere from $650,000 to $1.3 million, less costs of course, but I can’t imagine the costs being more than $800 an ounce which leaves profit of $250,000 to $500,000 per month or $3 million to $6 million per year. So I expect La Patilla will figure very prominently for GGI and we’ll be hearing a lot more about it very soon. They’ve shown they can extract near-surface coal seams very efficiently for profit, so this is not much different in that sense but Gold can bring in a lot more revenue. These are very smart operators which is why we like the company so much. When you have people like Steve Regoci, Barrie Di Castri, and highly capable geologists like Gibson, Megaw, Grieg and Einsiedel, you’ve got a #1 team. You combine that with some great properties, like the Grizzly plus those plays in Mexico, that’s why we believe this has 10-bagger potential over the next 12 months. It’s one of the most solid junior plays I’ve ever come across, all factors considered – working cap, share structure, management, geological team, properties, and the desire to succeed.
Comment by Jon - BMR — October 17, 2013 @ 1:06 pm
Jon,can you,or someone you know,interpret this as it pertains to IP surveys,and what it would mean in a porphyry deposit?
From a past Yukon property report
Can anyone explain what the percentages can possibly correspond to in terms of copper or gold?Any Geos out there?
Plate 2, reveals that approximately 50% of the area surveyed
is underlain by rocks exhibiting chargeabilities in excess of 30.0
milliseconds and ranging up to a peak observation for the 4001
electrode spacings of 72.0 milliseconds. This order of response is
equivalent to a broad dissemination of up to 8% by volume of metal-
lically conducting material.
Also…
The second zone of chargeabilities in excess of 50.0 mill
seconds occurs west of the base line on Lines 5 through 10. The
chargeability,results indicate a large volume of rock containing up
to about 7% by volume of metallically conducting material.
Comment by Jim Niles — October 17, 2013 @ 2:54 pm
Thanks, Jim, will get our consulting GEO on this.
Comment by Jon - BMR — October 17, 2013 @ 2:56 pm
Thanks,Jon.According to DBV,they have gotten some readings in the upper 50’s on the HAT,and these were supposedly the readings that they got at Red Chris that resulted in 1% copper over 1000 metres.Now I’m not saying DBV will have holes of 1000 metres,that has to be determined in the drilling,but it’s the 1% copper on readings of over 50 milliseconds that matter at this point.
Comment by Jim Niles — October 17, 2013 @ 3:25 pm
Jim, there’s no question there’s potential for a discovery at the Hat. Drilling starts Monday – great timing on the part of DBV with results from PGX expected anytime now during this last half of October, and numbers and info from GGI as well. What was particularly interesting about today’s release was the fact they stated they may winterize their camp to facilitate a winter drill program. It’s great to see the Sheslay area heating up like this. You can start to feel the sense of an area play. Just the beginning of something that’s going to grow exponentially IMHO.
Comment by Jon - BMR — October 17, 2013 @ 8:50 pm
offers disappearing on GGI…..
Comment by STEVEN1 — October 18, 2013 @ 4:56 am