You’d have to believe in the Tooth Fairy, the Easter Bunny and Santa Claus to think that politicians anytime soon (in the next year or so) are going to be able to solve the euro zone debt crisis, the American growth and fiscal deficits, or a host of similar and other problems that are plaguing many nations including Canada.
Today’s 330-point jump in the Dow, a continuation of a 1,000-point rally that began last Tuesday, may have impressed some but not us. The Dow could very easily climb higher – near-term technicals have turned bullish – and undoubtedly the CDNX will show strength tomorrow when Canadian markets resume trading, but major storm clouds are still on the horizon and the primary trend of the markets (other than Gold) is down. The CDNX is firmly in the grips of a nasty bear market, confirmed last month when it suffered some severe technical damage. The CDNX, even if it rallies another 200 points, is telling us there is big trouble ahead for the broader markets over the next several months. There are numerous potential catalysts for that – everything from debt issues to an economically incompetent Obama administration in Washington to a possible slowdown in China. And of course there are those unpredictable Black Swan events.
Our cautious stance regarding the markets continues and we won’t be chasing anything to the upside in the days ahead, though we’re always on the lookout for a potential spectacular discovery somewhere. As John’s Gold chart showed last Thursday (“Encouraging Signs in Updated Gold Chart”), the yellow metal has been looking stronger recently and enjoyed a very positive day today. Gold producers in general will continue to be favored over exploration companies. The TSX Gold Index is up 10% since mid-June while the CDNX has fallen by more than 20% since that time.
It is extraordinarily difficult to make money during a CDNX bear market if you have a short-term time horizon. Potential fortunes are born during a bear market, however, for patient investors who wait for a new bull phase to begin. We will continue to focus on companies that have superior long-term potential as well as the financial strength to battle through a downturn.
In my view view, I think you are wrong to blame america’s problems on the “economically incompetent administration in Washington”. First off, Obama inherited a mess that was decades on the making. Decades of overspending and living beyond ones needs have finally come to roost. Obama and his administration might not be able to fix this mess but they are certainly not to blame. If anything, I believe that all the political games being played in washington is underscored by racial motivation plain and simple. Personally I think that Obama is doing to best that can be done given the hand he has been dealt. Question for ya, if it was Obama, name me one person who could have done a better job navigating through this mountain of bu1!$hit
Comment by seamus — October 10, 2011 @ 10:44 pm
I think the CDNX could be near a turning point simply becuase everyone is now so bearish. Just my very humble opinion.
Comment by Hugh — October 11, 2011 @ 3:58 am
A rally but not a “turning point”, Hugh…there are too many technical hurdles for the CDNX to overcome at the moment…high-water mark is 1700 IMHO. This is now a bear market – we have to recognize that and somehow deal with it.
Comment by Jon - BMR — October 11, 2011 @ 4:40 am
I find booze helps! 🙂
Comment by Hugh — October 11, 2011 @ 5:35 am
Well its either let the banks collapse or print the money. Money printing will be good for commodities and the CDNX in general, bad for the rest of the world. But I agree that we are not out of the woods yet. Lets see what the next month brings but I would be suprised of if ware not heading much higher on PMs by year end and we will probably look back at this time as a good buying opp. We are near the lows on the CDNX when priced in gold http://news.goldseek.com/GoldSeek/1316758080.php
Comment by Hugh — October 11, 2011 @ 5:42 am
This is in responce to Jeremys’ comment Oct.8 ’11 and some info for BMR on what information I obtained on SD.
5.I don’t think my question was rude to him, maybe offended him, however the basis of the question was … have they ceased operations in that area, due to lousy core samples (because none have been released) in a email back in May 2011 he stated that they had applied for a mining permit 2mths prior and were waiting for results on 4 of the remaining holes and that shareholders would be updated as soon as they either recieved the permit or results on the 4 holes were available. Well that was 5 mths ago, meaning the permit was applied for 7 mths ago……and still Nothing? No Update to Shareholders….. Ya…that would make some wonder if they Packed it in !! Certainly makes me wonder.
Comment by nikolay — October 8, 2011 @ 9:24 am
Comment by nikolay — October 11, 2011 @ 7:41 am
Hi Jon – taking into account the overall bearish outlook for the CNDX what are your thoughts on CUI if they actually release some solid results from Mabale and more importantly of course, Sekenke? I understand that it’s a tough call and it’ll depend on the assays, but is it reasonable to see CUI taking off on strong results given the sentiment in the markets or do you think any good news will be muted?
Also, any comments on today’s news release at Jubilee Reef project?
Alex
Comment by Alex — October 11, 2011 @ 7:49 am
I do like the Currie Rose situation Alex…this is a well-run company (it has been around for 40 years) with an established presence in Tanzania…in August, if you recall, I did an interview with the company’s senior geological consultant, Mike Griffiths…very knowledgeable guy and he has put together a solid team on the ground in Tanzania for CUI…Jubilee Reef results are very solid…there’s a decent chance, based on visuals, that CUI could deliver some similar results from Sisu River and Dhahabu (assays are pending from those properties, while drilling started in late August or so at Sekenke)…it’s dangerous to put too much emphasis on visuals, but the Jubilee Reef results definitely show the potential of CUI’s overall land package…technically at the moment, CUI looks good as I’m sure John would concur…however there is resistance around 16 cents…
Comment by Jon - BMR — October 11, 2011 @ 8:12 am
Thanks Jon – my contention here is that we’re talking about a mere market cap of about $10 million assigned to CUI with their existing land package. I would guess this can move up a lot higher from here if positive drill results steam in, good market or bad. We’re at rock bottom valuations here, so I’m not entirely convinced that even a cautious market will keep this at these levels if they can prove the existence of gold.
I’d be much less optimistic if CUI was trading at at $25-$30 million market cap, but this shed 50% in a matter of 2 weeks on not such spectacular volume, so it makes me think the bounce may well be just as hasty.
Correct me if I am wrong in my train of thought.
Comment by Alex — October 11, 2011 @ 8:27 am