BullMarketRun.com

Gold, coming off a $44 advance last week, has traded between $1,313 and $1,326 so far today…as of 7:00 am Pacific, bullion is up $2 an ounce at $1,319…Silver has jumped 34 cents to $22.30…Copper is up a penny at 3.27…Crude Oil is 73 cents lower at $100.08 while the U.S. Dollar Index is up slightly at 79.77…for much of this year, analysts were expecting the Fed to embark on the 1st step of reigning in 5 years of ultra-loose monetary policy by starting the process of scaling back quantitative easing by September…but expectations for tapering have now been pushed out considerably given recent political events in Washington, the virtual guarantee of more wrangling over the debt ceiling in the coming months and the affect all of that may have on employment growth and the economy as a whole…this will likely keep the greenback under continued pressure…recently, it broke below a 2.5-year uptrend on the weekly chart…

Gold’s challenge over the short-term will be to overcome resistance at $1,320 and in the $1,360’s…critical support held last week, on a closing basis, at $1,270…Deutsche Bank expects weakness in the greenback, and a cap on U.S. yields, to be supportive of Gold as this quarter continues…“Precious metals have been the best-performing sector over the past week on an excess returns basis. In our view, this rebound is linked to the U.S. debt ceiling deal and expectations that QE tapering will be delayed until the 1st quarter of next year. We expect these developments will help to cap the rise in long-term U.S. real yields and help to sustain dollar weakness, both of which should be supportive to Gold returns.”

Deutsche bank has revised upward its Q4 average Gold forecast by 3.8% to $1,350 an ounce…their Silver forecast has also been revised upward, by 4.9% to $22 an ounce…

Some interesting comments from Frank Holmes in his weekly Investor Alert (www.usfunds.com) over the weekend…“Over the past 20 years, Gold bullion is down 2 standard deviations (sigma) year-over-year as of October 11, 2013. A reading of 2 sigma or lower is an extremely rare occurrence, happening only 21 times over the last 20 years, or 0.04% of the time. The most curious fact is that these 21 occurrences all happened within the last 4 months. This analysis leads us to believe that Gold is in extremely oversold territory and mathematically due for a reversal toward the mean. Often, when Gold prices plummet, fear takes over and investors forget our recommendation to own 5 to 10% Gold in a portfolio. Gold is a diversifier for almost every portfolio, and should be held as a store of value. We argue Gold should not be considered as a way to get rich quick because the inherent volatility is too high.”

Venture At Critical Juncture

For the 5th time since August, the Venture is threatening to bust through important resistance at 955, while a stiff resistance band exists all the way up to about 975 going back to late April…what we can also see on this 3-year weekly chart from John is that the Venture is now once again up against a downtrend line in place since early 2011…on several occasions the Index has tried but failed to push above this downtrend line – will now be any different?…what is different now is an RSI(14) that is trending higher…in addition, the Venture has built solid support since its late June low of 859, and its out-performance relative to Gold over the past couple of months has been unusual…both factors point to some fresh underlying strength in this market that we haven’t seen since the bear market began in early 2011…the Venture’s 50-day moving average (SMA) has been rising since late August, while the 100-day has flattened out and appears ready to reverse to the upside after being in decline since the beginning of the year…the chance of an imminent breakout (by month-end), therefore, has to be considered greater now that at any point over the last couple of years…

CDNX 3-Year Weekly Chart

Today’s Markets

Asian markets were strong overnight…China’s Shanghai Composite surged 35 points to close at 2229…CNBC reported that Premier Li Keqiang stressed the importance of maintaining reform implementation at a State Council meeting yesterday…Japan’s Nikkei average hit a 3-week high, climbing 132 points to close at 14694…stocks were mixed in Europe today…

In New York, the Dow is off 5 points as of 7:00 am Pacific…this week brings a deluge of U.S. data following delays due to the partial government shutdown, with the closely-watched non-farm payrolls report slated for tomorrow…

The TSX, which closed above 13000 last week for the 1st time since July 2011, has gained another 46 points to 13182 through the first 30 minutes of trading…the Venture, meanwhile, is up 4 points at the magical 955 level…Doubleview Capital Corp. (DBV, TSX-V) is 1 of the early volume leaders, up a penny at 8.5 cents as drilling begins today at its Hat Property contiguous to the eastern borders of both the Sheslay and the Grizzly properties…more on Prosper Gold (PGX, TSX-V) and Garibaldi Resources (GGI, TSX-V) tomorrow…

Danny Deadlock’s basket of 45 junior mining stocks trading on the TSX and the Venture with a minimum of 1 million ounces of NI-43-101 Gold resources are trading at an all-time low of $17 an ounce, down from $24 an ounce in March and $46 an ounce in late 2011…28 of those 45 companies are trading below the current $17 average, and what’s hurting them is low grade (companies such as BAT, SWD, VIT, and VTR for example)…

B.C. Securities Commission Capital Ideas Conference – The Real Story

The mainstream media has reported about last Thursday’s B.C. Securities Commission Capital Ideas Conference in Vancouver…now the REAL story from a BMR reader, a seasoned and accredited investor, who attended the event (for $260) and sent us this email…

BCSC Capital Ideas 2013

Attended last Thursday, Oct. 17

The theme of the seminar was “B.C.’s Venture Market: Junior Mining at a Crossroads”

The seminar had 3 representatives from the BCSC: Brenda Leong, Chair & CEO basically opened and closed the seminar; Paul C. Bourque, Q.C., was the moderator for the panel portion; Peter Brady, Director, Corp. Finance, was one of the speakers. Peter presented a Power Point of some statistics but I don’t recall much of what he said – I doubt anyone who attended got much from his talk. W. Paul Levelton, KPMG, was hired by the BCSC to do a presentation on the state of the industry.  Turned out KPMG interviewed executives from 15 Venture listed companies. His conclusion was that, yes, the market is in turmoil but sometime over the next 3 years it will turn around again. Questions after Paul’s presentation basically made fun of the fact they only surveyed 15 companies to represent a consensus about an industry that involves over 1800 junior resource companies on the Venture alone. One other attendee suggested that due to the fact the biggest problem in the industry today is that the investors have almost all but totally left the scene, that maybe someone should have taken the time to survey a few investors.

Panelist

John McCoach –  President, TSX Venture Exchange

Patricia M. Mohr – VP Economics and Commodity Market Specialist, Scotiabank, Toronto

William ( Bill ) Whitehead – Senior Investment Advisor, PI Financial, Vancouver

D. Bruce McLeod, P. Eng. – President, CEO & Director, Mercator Minerals Ltd., Vancouver

Randee Pavalow – Chief Compliance Officer and Legal, Aequitas Exchange, Toronto

As usual, everyone came with their own agenda. Randee Pavalow to create awareness of the Aequitas Exchange and John McCoach holding his own to defend the TSX and its services. Patricia Mohr presented some statistics about the general markets and how large of an effect China has had and will continue to have on the world demand for commodities.

Bruce McLeod and Bill Whitehead Vancouver both brought up issues they felt were hurting the general markets.  Three of their main concerns were:

1. Commission fees on maker/taker orders. Maker orders are liquidity orders that sit in the bids and offers. They used to get preferential pricing while Taker orders that hit bids and took out offers were charged an extra fee per share.  John McCoach then notified that the Venture has just implemented a proposal to eliminate all maker/taker fees.

2. High Frequency Trading (HFT) was another concern. HFT is program trading that takes advantage of very high speed trading platforms that are able to use split second trading info to try and front-run any type of market momentum in a particular stock. No one from the BCSC or the TSX was willing to suggest any forthcoming changes to HFT in the near future. Suspect they all know that the big banks in Canada are the main players behind the HFT and no one in this country has the power to tell the big banks what they can or can’t do, even if it is illegal.

3. Level of bureaucratic regulations to run a public mining company. Gave a quick but good description of the many levels of expensive and time consuming bureaucratic regulations they contend with these days. Every year it just keeps getting worse.

As far as I was concerned there was not enough discussion about investors. Everyone who was there was either just worried about their own agenda or, as for the 3 BCSC representatives and Paul from KPMG, it was all about saying as little as possible and covering their ass.

Was hoping by now anyone even remotely involved had figured out that the investors are by far the most important thing in this business. Unfortunately only two of the panelists at the seminar had any regular direct dealings with retail and institutional investors.  By the looks of this seminar, most of the speakers and presenters haven’t the slightest idea how to fix the problem and I’m not sure they’d recognize the solution if it was presented to them on a silver platter.

For anyone not able to make it to Capital Ideas 2013 or couldn’t be bothered, you didn’t miss much. It was somewhat of a disappointment.

Submitted by: BMR reader (anonymous).

Madalena Energy Inc. (MVN, TSX-V)

Madelana Energy (MVN, TSX-V) continues to look strong, technically and fundamentally…aside from existing and expanding production from the Paddle River area of west-central Alberta, Madalena is focused on multi-billion barrel potential on 3 blocks within Argentina’s Neuquen basin…the government in Argentina appears to have softened its stance toward the energy industry in recent months…

Below is a 2.5-year weekly chart from John…Fib. levels beyond 56 cents (not shown on this chart) are 67 cents, 81 cents and 95 cents…the stock has been under accumulation much of this year, and buy pressure has been increasing gradually since August…MVN is unchanged at 48 cents through the first 30 minutes of trading today…

Brigus Gold Corp. (BRD, TSX)

Keep an eye on Brigus Gold (BRD, TSX) which reported an important drill result last week – the deepest intersection to date at its Black Fox Mine in Timmins…Hole GF454-01-W returned an interval of 40.71 g/t Au over 26.75 m including 103.2 g/t Au over 8.35 m…this test hole was drilled from underground and intersected Black Fox mineralization at approximately 700 m vertical from surface, extending the west zone by an additional 300 m at depth…this indicates continuity of the deposit both downdip and along strike, and next year the company will focus on infill and expansion drilling from underground in an effort to expand resources and the life of the mine…BRD recently reported record quarterly production of 27,000 ounces from Black Fox…Q3 financial results will be released November 12…

Below is a 3-year weekly chart from John…the stock faces strong resistance from both the down trendline and the “gap” around 70 cents…very strong support in the mid-50’s…BRD closed Friday at 67 cents and is showing some strength in early trading today, up a nickel at 72 cents as of 7:00 am Pacific…the key for BRD will be to close above that resistance for a couple of consecutive sessions – similar pattern to what we saw recently with Gold Standard Ventures (GSV, TSX-V)…

Updated Silver Charts

Mineweb reports that India has imported over 4,000 tons of Silver year to date…this would mean the country is on track to import over 6,000 tons in 2013, or over 3 times last year’s imports…

Below are updated Silver charts from John – the outlook is positive…

Silver 6-Month Daily Chart

Silver Long-Term Chart

Note: John, Terry and Jon do not hold share positions in MVN or BRD.  John and Jon both hold share positions in GGI and Jon also holds a share position in PGX.