BullMarketRun.com

Updated at 8:00 am Pacific

Gold has bounced between $1,392 and $1,402 to begin a new trading week following Friday’s surge to a 9-week high, thanks to a combination of weak U.S. economic data and rising geopolitical tensions in the Middle East…as of 8:00 am Pacific, bullion is down $2 an ounce at $1,395 as it continues to flirt with technical and psychological resistance at $1,400…Silver has jumped another 15 cents to $24.23 (see John’s updated Silver charts below along with a link to an award-winning short video on Silver)…Copper is unchanged at $3.32…Crude Oil is off 26 cents at $106.16 while the U.S. Dollar Index is up slightly at 81.41…

Gold-backed EFT liquidation appears to have ended, just one of several factors favoring the yellow metal at the moment…Gold holdings in the world’s largest Gold ETF rose 4.2 tons last week, marking a strong trend reversal from the 1st half of the year…in a research note, Standard Bank stated, “It’s perhaps worth highlighting that part of Gold’s relative strength of late, and indeed its recent stability, has been a lack of activity in ETF holdings.  The wave of ETF liquidation seen throughout Q1 and Q2 has come to a halt since mid-August, taking an important source of selling pressure out of the market, while participants have yet to pile back in either as they wait to see how the issue of Fed tapering and indeed the general economic picture unfolds.”

Jewelry demand in Indonesia, the world’s 4th most populous nation, is set to expand to a 4-year high…Bloomberg reports that the consumption of necklaces, bracelets and rings in that country will likely climb to 40 metric tons this year, a 30% increase over last year…meanwhile, total Gold available for delivery at COMEX is holding at record low levels, according to Dundee Capital…since August 1, the registered Gold in the COMEX warehouse has declined by nearly 150,000 ounces to a new low of 791,000 ounces…deliverable Gold is now down 65% year-to-date…over the past 3 months, 1,000 tons of physical Gold are believed to have shifted from the West to Asia…that has to be considered a bullish dynamic for the market…

A report from the Commodity Futures Trading Commission on Friday showed that hedge funds and money managers had boosted bullish bets in Gold futures and options to their highest level since early February (good sign or bad sign?) as of last Tuesday…

This will be an interesting prediction to look back on later…Barclays says it believes the risks for the Gold market are skewed to the downside under its base-case scenario for how it expects events in the 2nd half of the year to play out. “Our model projects that the price will post a small uptick by the end of Q3 but face downward pressure in Q4, reaching an average of $1,294/oz for Q4 ($31/oz below our forecast),” the bank stated. “Our model stresses 3 alternative scenarios, and in line with our expectations finds that should the likelihood of a federal funds rate hike increase, further downside risk for prices is likely, declining to $1,229/oz in December 2013.  But if Fed tapering is delayed into say December, the model sees prices rising to $1,482/oz as soon as October.”

U.S. Dollar Index – Ready For A Breakdown?

Keep a close eye on the U.S. Dollar Index…below is an interesting chart from John that shows how the Dollar Index is at a critical juncture…will it hold support at the long-term trendline, or collapse below it which would allow Gold to soar?…RSI(14) on this 3-year weekly chart was in an uptrend from September of last year until the middle of May…in June, there was an importance divergence between RSI(14) and price (a bearish development) as the Dollar Index hit a multi-year high…

Today’s Markets

China’s Shanghai Composite shot up 39 points or 1.9% overnight to close at 2096…sentiment rose after the nation’s statistics bureau said the economy is showing clear signs of stabilization and is on track to meet the government’s 7.5% growth target…check out www.usfunds.com (Weekly Investor Alert posted late Friday) for 5 interesting charts that look bullish for China and commodities…Japan’s Nikkei average was off slightly overnight, closing down 24 points to 13636, while European shares were mixed today…

In New York, the Dow is up 33 points after the first 90 minutes of trading…durable goods orders slumped 7.3% in July, according to the Commerce Department this morning, recording their biggest drop in nearly a year and snapping 3 straight months of gains…economists polled by Reuters had expected durable goods orders to fall 4%…later in the week, the Case-Shiller home-price index and pending home sales data will provide more insight into the health of the housing market after Friday’s surprisingly weak new home sales data…traders this week are also eagerly anticipating the Conference Board’s consumer confidence index report and the University of Michigan’s consumer sentiment data…

The TSX has gained 37 points as of 8:00 am Pacific while the Venture continues its march toward the important 970 area…it’s 5 points higher at 952 after 90 minutes of trading on good volume again after Friday’s very strong performance…

Fission Uranium (FCU, TSX-V) Makes Offer to Buy Alpha Minerals

Things are really heating up with the PLS uranium play in Saskatchewan which took an interesting twist this morning…Fission Uranium (FCU, TSX-V) has made an all-share offer to acquire 100% of its JV partner, Alpha Minerals (AMW, TSX-V)…an Alpha shareholder would receive, in exchange for each of their Alpha shares, 5.3 common shares of Fission, representing a price of $7.26 per Alpha share based on Fission’s closing price Friday of $1.37…Alpha would have the opportunity to appoint 2 members to the Board of Directors of Fission…expect Alpha to say thanks but no thanks…a bigger fish may end up swallowing them both…

Azincourt Uranium Inc. (AAZ, TSX-V)

As regular readers know, we’ve been keeping a close eye on Azincourt Uranium (AAZ, TSX-V) which can earn up to a 50% interest in Fission’s Patterson Lake North Project which comprises 27,000 hectares…a VTEM max airborne geophysical survey was just completed at PLN as part of an initial planned exploration program before drilling begins this winter…the VTEM max survey was designed to provide higher resolution over anomalous conductive areas of interest identified from previous airborne magnetic-electromagnetic surveys…AAZ is up 2 cents at 33 cents as of 8:00 am Pacific, threatening to push through resistance…looking very good…

North American Nickel Inc. (NAN, TSX-V)

North American Nickel (NAN, TSX-V) held technical support in early trading today and is off to a great start this week, up a nickel at 32 cents as of 8:00 am Pacific…NAN raised some eyebrows (and its share price) Friday with news from its very prospective Imiak Hill Nickel-Copper-Cobalt zone at its Maniitsoq Project in Greenland…traders and speculators live for this sort of thing as NAN reported visual intersections with high levels of sulphide mineralization (up to 85%)…actual assay results to come…drilling continues…

MQ-13-026, the best-looking hole so far, intersected an 18.62 metre core length (156.7 m to 175.32 m) of sulphide mineralization averaging approximately 40 to 45% total sulphides, including numerous sections containing 65% to 80% sulphides, within noritic host rocks…the intensity of sulphide mineralization at Imiak Hill is increasing with depth, typical for nickel sulphide deposits as the strongest mineralization is usually at the bottom of the intrusive…the zones at Imiak Hill appear to be steeply dipping lenses or tubes and remain open at depth…if they have the grade, which appears quite possible given these sulphide percentages, the big question is – do they have the tonnage?…that obviously remains to be seen but this is going to be an interesting story to follow…historically, Imiak Hill was previously tested only by shallow and “inaccurately oriented drilling based on geophysical interpretation”, according to NAN…

NAN opened at 21 cents Friday, climbed as high as 38 cents, and then retraced to close at 27 cents (up 8.5 cents or 46%)…total volume (all exchanges) was 5.1 million shares…below is 2.5-year chart from John (through Friday’s trading)…expect continued volatility…Fibonacci analysis shows very strong support at 25 cents…NAN held above that level in early trading today and also powered through resistance at 30 cents…the test, however, will be if it can close above that 30-cent level today or as the week progresses…

Teuton Resources Corp. (TUO, TSX-V)

Northwest British Columbia is hot, and Teuton Resources – around since the days of Billy The Kid – has nearly doubled in value since we initially brought it to our readers’ attention earlier this month…last Thursday, Teuton announced it has commenced a drill program in the King Tut Zone at its High Property 60 km north of Stewart…they’ll be searching for near-surface mineralization in this zone which is just 150 metres south of the border between the High Property and Pretium Resources’ (PVG, TSX) Brucejack-Snowfield Project featuring the exceptionally high-grade Valley of the Kings…last year’s single hole into the King Tut ran 222 m grading 0.88 g/t Gold , and an assemblage of elements in grab samples assayed this summer were accompanied by elevated values in Copper, Lead and Zinc, suggesting the potential for a different mineralizing event…Teuton is a large landholder in B.C., and a major drill program has also started at its Tennyson Property 40 km north of Stewart…Brigade Resources, a Hunter Dickinson company, has budgeted $4 million there for 2013 as it continues with its option to earn a 50% interest in Tennyson which is porphyry Copper-Gold target…

Below is an updated Teuton chart from John (15-month weekly)…it shows resistance at 15 cents and one certainly can’t rule out a minor pullback to the rising 10 or 20-day moving averages (SMA’s) to unwind temporarily overbought conditions on the short-term daily chart…as of 8:00 am Pacific, TUO is up 1.5 cents to 16.5 cents…as always, perform your own due diligence…

Eagle Hill Exploration Corp. (EAG, TSX-V)

Eagle Hill Exploration (EAG, TSX-V) has perked up recently and appears to be gaining traction with its Windfall Lake Property in Quebec which (importantly) it now holds 100% of after the closing of a deal with Noront Resources (NOT, TSX-V)…Windfall Lake is a high-grade Gold exploration project currently hosting an indicated resource of 538,000 ounces of Gold at 10.1 g/t and 822,000 ounces at 8.8 g/t in the inferred resource category (as announced July 25, 2012)…

EAG doubled in price from 7 cents to 14 cents on strong volume over just 3 sessions between August 15 and 19, and is now consolidating in the 10.5 to 12-cent range…the 100-day SMA has reversed to the upside, ending a long decline, and other indicators have turned positive, so the technical posture of the stock has improved quite significantly…patience, as always, is required, but EAG could have a strong finish to the year – especially if Gold prices were to really take off…EAG is down a penny at 11 cents through the first 90 minutes of trading today…as always, perform your own due diligence…

Updated Silver Charts

Silver continues to out-perform Gold – historically, this has proven to be a bullish trend for precious metals…RSI(2) on this 11-year monthly chart has rapidly moved out of extreme oversold conditions into the overbought area at 77.94…interestingly, this pattern is very similar to what occurred soon after the 2008 Crash and again in the summer of last year, and during both of those occasions RSI(2) pushed well above the 80 level…of course, Silver continued in a strong uptrend following the Crash until it topped out in the spring of 2011, while the metal’s run last summer proved to be short-lived…what will happen this time?…Silver will meet very strong resistance at $26, and then slightly above that at the top of the down trendline in place since 2011…if those key resistance levels are broken, if and when that occurs, then back up the truck and load it up with as much Silver as you can…

By the way, if you haven’t had a chance to view the video, “Silver: The Element of Change”, do yourself a favor and check it out at www.silverinstitute.org…it was released earlier this year by the Silver Institute, and last week the video was named the winner of a 2013 Bronze Telly Award, an honor given each year to the finest videos, film productions, online videos, programs and commercials…the video explores the many ways Silver has changed the course of history to become an indispensable part of modern society…

Silver 11-Year Monthly Chart

Silver 6-Month Daily Chart

Silver impressively battled its way through a resistance band between $22 and $23 as shown on this 6-month daily chart…its next immediate hurdle is the $24.50 area…at some point in the near future, Silver will need to pause and catch its breath to cleanse temporarily overbought conditions (RSI-14 is currently at 78%)…the $23 level should provide strong support…interestingly, $23 was the average all-in cash cost for producers (the ones it follows) during Q2 2013 according to a recent report from Dundee Capital Markets…that’s down from $24.73 per ounce in Q1…

Note: Jon holds share positions NAN and TUO.