TSX Venture Exchange and Gold
The Venture continues to battle resistance at short-term moving averages (EMA-8 and EMA-20), and once these are overcome the path will be clear for a significant move to the upside. For the week, the Venture was off 8 points, closing at 541.50, in line with a 2% pullback in the TSX while the NASDAQ fell 2.9% last week.
For the month of September, with 3 trading sessions remaining, the Venture has declined 3.2% after a 5.9% drop in August and an 11.5% rout in July. Selling pressure has diminished substantially. The Index could certainly provide some positive surprises in October, particularly in the event of some exciting exploration news or a rebound in commodity prices. Gold is looking stronger than it has in a while and could challenge its August high ($1,170) in the near future.
Venture “Awareness” Chart
As soon as the Venture can break loose from its EMA(8) and EMA(20), currently 545 and 550, respectively, that’s when this market will gain fresh momentum and traction, taking it through chart resistance at 560. The Venture would then be expected to test the next Fib. resistance on John’s 4-month daily chart which is 586.
Other key takeaways from this updated “awareness” chart:
1. RSI(14) has climbed out of oversold conditions which it had been trapped in since the beginning of July. It’s currently at 39% – near-term resistance at 50%, new support at 30%;
2. The recent bearish trend (ADX indicator) has weakened dramatically since the August 24 low – what to watch for here is a potential +DI bullish cross over the near to short-term;
3. Fib. support at 515 has held; on a monthly basis, Fib. support around 560 also held in August (we’ll see if there’s an immediate rally and it holds for September). One cannot rule out the possibility of a double bottom at the 515 Fib. level, but this continues to be an ideal time to search aggressively for high-quality, undervalued plays.
More than ever, the Venture and the junior resource market in general urgently need a fresh grassroots discovery in Canada. Two of the best near-term possibilities in our view are in Labrador and northwest British Columbia – Equitas Resources‘ (EQT, TSX-V) Garland Nickel Project south of the Voisey Bay’s mine, and Garibaldi Resources‘ (GGI, TSX-V) Grizzly Central target in a district where a second deposit has already been found and more appear to be a virtual certainty. First-ever drilling at Garland is now underway, while GGI is proceeding aggressively toward initial drilling at the Grizzly.
The Seeds Have Been Planted (And Continue To Be Planted) For The Next Big Run In Gold Stocks
There’s no better cure for low prices than low prices. The great benefit of the collapse in Gold prices in 2013, and recent weakness with the drop below $1,100, is that it has forced producers to become much more lean in terms of their cost structures. Producers, big and small, continue to make hard decisions in terms of costs, projects, and rationalizing their overall operations. Exploration budgets among both producers and juniors have also been cut sharply. In addition, government policies across much of the globe are making it more difficult (sometimes impossible) for mining companies to carry out exploration or put Gold (or other) deposits into production, thanks to the ignorance of many politicians and the impact of radical and vocal environmentalists (technology has made it easier for groups opposing mining projects to organize and disseminate information, even in remote areas around the globe). Ultimately, all of these factors are going to eventually create a supply problem and therefore great opportunities in Gold and quality Gold stocks. Think about it, where are the next major Gold deposits going to come from? On top of that, grades have fallen significantly just over the past decade.
U.S. Dollar Index Update
The greenback remains a crowded trade, though the technical picture has deteriorated significantly since the spring.
The consistent position we’ve maintained over the last several months is that the Dollar Index hit its 2015 high during March-April based on what has proven to be, so far at least, a very reliable 9-month daily chart. Fundamentally, a runaway dollar would not be healthy for the U.S. or global economies, and such a scenario has certainly played into the decision making of the Fed at its recent meetings.
Dollar Index support has been strong around the 93 level as expected up to this point. Stiff resistance exists between 96 and 97. The potential for a serious unwinding of the greenback over the next few months is very real after the record run that started in the summer of last year. This could mean a drop to about 88 (base support) on the Dollar Index which would be very supportive of commodities.
Gold Update
September is traditionally Gold’s best month of the year, and after a slow start to this September the yellow metal finally kicked into gear around mid-month and climbed another $6 an ounce last week to close at $1,146.
Gold is now comfortably above its 50-day SMA which is preparing to reverse to the upside. The $1,150, $1,160 and $1,170 levels all represent resistance, but it’s certainly not inconceivable that Gold could rip through $1,170 in the coming weeks and take a run at $1,200 again based on fresh technical strength, short-covering, increased Asian demand and any weakness in the U.S. Dollar.
As John’s 2.5-year weekly chart shows, Gold has been trading within a downsloping channel since 2013. Each time it has touched the bottom of that channel, bullion has rebounded back to the top of the channel within 2-3 months. So a Q4 move up to about $1,225 could certainly be in the works. What will be hugely significant is when Gold either breaks out above this channel or collapses below it.
After a nearly 4% jump the previous week, Silver pulled back modestly by a nickel to $15.13. Copper fell 9 cents to $2.29 on renewed global growth concerns. Crude Oil added 36 cents to $44.98 while the U.S. Dollar Index gained more than a full point to finish the week at 96.25.
The “Big Picture” View Of Gold
As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been driven by both the Fear Trade and the Love Trade. The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, has had a huge impact on bullion and will continue to support prices. Despite Gold’s largest annual drop in 3 decades in 2013, and fresh weakness now, the fundamental long-term case for the metal remains solidly intact based on the following factors (not necessarily in order of importance).
- Growing geopolitical tensions, fueled in part by the ISIS and al Qaeda, and a highly dangerous and expansionist Russia under Vladimir Putin, have put world security in the most precarious state since World War II;
- Weak leadership in the United States and Europe is emboldening enemies of the West;
- Currency instability and an overall lack of confidence in fiat currencies;
- Historically low interest rates/highly accommodating central banks around the world;
- Continued solid accumulation of Gold by China which intends to back up its currency with bullion;
- Massive government debt from the United States to Europe – a “day of reckoning” will come;
- Continued net buying of Gold by central banks around the world;
- Mine closings, a sharp reduction in exploration and a lack of major new discoveries – these factors should contribute to a noticeable tightening of supply over the next couple of years.
Note: John and Jon both hold share positions in EQT and GGI.
jon watch for big gold play ready to unfold they will anounce drilling this week and they are in wawa ontario..stock rpx..this has been rolled back 5 to 1 and is ready for one full year of drilling it is funded …money in bank and sherman the billionaire is involved..watch this one big moves coming
Comment by tony roma — September 27, 2015 @ 6:47 am
Hi Jon,
I went through the 2009 GGI assessment this morning and I found something I have completely overlook.
google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CB8QFjAAahUKEwjXkM2U-YvIAhVMGT4KHTw6DaY&url=http%3A%2F%2Faris.empr.gov.bc.ca%2FArisReports%2F31145.PDF&usg=AFQjCNH0MktYN6csrHK99Laibvu2SnYZOw&bvm=bv.103388427,d.eXY
Page 57, 58 and 59. They did a 3D magnetic inversion that take form as a block model for the inferred Grizzly central. You can clearly see the northern block that occur as a mushroom head witch is the most prospective area (area 1 as you referred).
Nice hey!
My questions is, Why do some geologist believe this could host higher grade mineralization?
Comment by Martin — September 27, 2015 @ 10:47 am
“Exit polls in the Spanish region of Catalonia suggest pro-independence parties have won Sunday’s elections.”
Spanish crisis in 18 months? Separatists in Belgium, Great Britain hawkeyeing this
Comment by ConcernedCitizen — September 27, 2015 @ 11:17 am
Martin, the 3D magnetic inversion of Grizzly Central is really cool (north body, central body, south body) and this was done in 2009. Think how much further they are along now, in 2015, 6 years later, in terms of their understanding of this. The market will discover just how incredible this Grizzly Central target is in very short order.
In terms of your question about potential high or higher-grade mineralization at Grizzly Central, keep in mind this is a generally low-lying region, and the elevation differences between Grizzly Central and deposits further north could be of significance. The very noticeable cross-cutting structures at Grizzly Central are certainly important (that’s where higher grades can often form). In general, what’s under this thin to variable glacial overburden at Grizzly Central is going to be fascinating to confirm, given all the geological, geophysical and geochemical evidence to date. There are also some boggy areas at Grizzly Central, in the vicinity of which sulphides may have tended to accumulate. I’ve also seen some publicly available historical data that shows some high Gold-in-soils numbers (up to 6 g/t Au) over certain parts of Grizzly Central. In addition, of course, you have the Kaketsa “heat engine” just off to the west – what impact Kaketsa may have had on the plumbing of Grizzly Central will be interesting to know. Fluid through-put is key. Lots of pressure, heat, fluids – what you need for a robust hydrothermal system with good grades. A lot of questions remain to be answered regarding Grizzly Central, but it has all the earmarks of what geologists look for in a “pregnant” system. It was “hidden” from historical prospectors by the extensive overburden. That’s why Blackwater was overlooked until Dirk got his hands on it. Once they really got under that overburden cover, they found the biggest gold deposit in Canadian history west of Ontario.
My assessment, after more than 2 years of researching this district and speaking with countless geologists and others, is this:
1. There is a very high probability that the district hosts not 2 but NUMEROUS Cu-Au porphyry deposits, varying along the continuum of alkalic-style systems;
2. The possibility of 1 or more stand-alone high-grade gold deposits somewhere in the district is very real;
3. At Grizzly Central, there is either the continuation of the type of deposits already discovered in the district, or in fact Grizzly Central – in the very heart of the Sheslay district – may host the “motherlode” deposit, so to speak, with the Hat and Star representing important “satellite” deposits (given how big the Hat is shaping up to be, imagine the monster that could exist at Grizzly Central IF that target area is actually the “heart” of the district).
Comment by Jon - BMR — September 27, 2015 @ 11:37 am
Average Elevation at Grizzly central (north portion) is about 1050M from sea level, same for the HAT, Star is about 115OM.
Can’t wait for action to start, we will probably hear from them this week!
Comment by Martin — September 27, 2015 @ 12:20 pm
Martin, the elevation differences just within the Hat are important – as it slopes down from north to south. Grizzly Central gets below 1000 m.
Comment by Jon - BMR — September 27, 2015 @ 12:28 pm
Due to el nino, they are calling for a milder winter in B.C. also.
Comment by dave — September 27, 2015 @ 12:50 pm
From the Geological & Geophysical Report in 2009. The North, Central and Southern bodies were being investigated with only the southern body been selected because of the snow and easier access at that time. Note: This was not the area they preferred to conduct the IP survey. So, now the northern body is being targeted and very well could be the mother lode and could also host high grade gold.
http://aris.empr.gov.bc.ca/ArisReports/31145.PDF
The northern high could be generated by a steep, NE dipping dyke (possibly originating from
the intrusion adjacent to the Copper Creek prospect) that mushrooms out near surface forming a cap
Page 11
of small pods of high susceptibility materials. The pod to the to the east-northeast of main cluster,
along NE facing slope, appears separated from group although it could be rooted in same intrusion.
The central mag high produces a similar model as above but appears to be plunging steeply to
the south and expanding at depth. The mushroom cap is not as developed.
The small mag high at the south end appears more as an isolated, near surface feature although
it might have a narrowing root that extends to depth
The weak magnetic linear along east side of the Pyrrhotite Creek valley models as series of
small aligned pods. Profile analysis suggests these could be interpreted as the updip edge of layer
that dips to southwest.
In conclusion, the Grizzly property should be considered as having a high potential for alkalic
porphyry copper gold mineralization. The geological and geophysical data suggests the presence of
buried intrusive material and intersecting fault patterns that would provide a suitable geological
environment for this type of deposit. Continued exploration of these properties is strongly
recommended.
The results of
this study concluded that the Grizzly property has a high potential for alkalic porphyry copper gold
mineralization similar to the Copper Creek prospect located immediately north of the study area and
identified several magnetic targets where exploration efforts should be concentrated (memo to Ram
Explorations Ltd., dated March 23, 2009).
A small 3D-IP survey was recommended to test one of the target areas. The southernmost
magnetic anomaly in the south-central section of the study area was selected because of the flat
terrain and readily available helicopter access. Other magnetic targets are more interesting but the
logistical concerns of surveying during the winter were a major factor in this target selection.
Comment by Dan1 — September 27, 2015 @ 1:21 pm
Off topic a bit, but being from Vancouver I’m an avid Mariners and Seahawks’ fan. However, it’s hard not to appreciate the miracle unfolding in Toronto right now and rooting for the Blue Jays as they approach the post-season for the first time in over 2 decades…today, a walk-off home run with 2 outs in the bottom of the 9th to sweep Tampa Bay in their final regular season home game…can’t get any better than that. We need some of that magic in the resource sector right now. Hmmm…last time the Jays made the playoffs was when a home run was hit at Voisey’s Bay (1993). If you’re superstitious…
Comment by Jon - BMR — September 27, 2015 @ 1:28 pm
Jon, nice recollection. – Living in Atlanta at the time. Their world series win was against the Braves. I was at that game. Who remembers the last out by the braves. Prime time.
Comment by dave — September 27, 2015 @ 3:52 pm
I believe the last out was by Otis Nixon trying to bunt to get on as the Braves had a runner at third.
Comment by Danny — September 27, 2015 @ 4:31 pm
Any guesses as to what grade and length would either excite or disappoint the market with regards to Eqt?
Comment by Seamus — September 27, 2015 @ 4:45 pm
Dave, the Atlanta series was 1992. I remember it well. Otis Nixon bunted down the first base line and Mike Timlin scoped up the ball and threw it to first baseman Joe Carter.
Comment by Dan1 — September 27, 2015 @ 4:46 pm
1993 series, Joe Carter hit the home run to win it against the Phillies.
Comment by Dan1 — September 27, 2015 @ 5:13 pm
and Mitch Williams the lefty who served up that pitch had death threats against him and his family.. who says there is no passion in baseball!!!!
Comment by Jeremy — September 27, 2015 @ 6:12 pm
Mitch was a wild one, had a wicked fastball if I recall, though occasionally he had a few control issues…
Comment by Jon - BMR — September 27, 2015 @ 7:03 pm
12. Interesting question. I too would like to have a better grip on what hypothetical values would be considered economically viable. Anyone?
Comment by Treb — September 27, 2015 @ 7:25 pm
I thought it was Deon Sanders that bunted, not otis nixon. See what old age does to ya. My favorite football team is Seattle. I have liked them since they came into the league. I guess I am a die hard Cubs fan. I told my buddy to put a flag on my grave from the team they beat in the World series. My buddy is 25 years younger than me. We laugh. Originally from Chicago, the Blackhawks have quenched my thirst for champions.
Comment by dave — September 27, 2015 @ 8:01 pm
Jon, any updates on WRR? Do you know if they have started drilling their high grade gold property in Nevada?
Thanks!!
Comment by Jeff — September 27, 2015 @ 8:20 pm
Don’t know, Jeff, they did announce drilling would start around the 20th. Will be checking into this tomorrow.
Comment by Jon - BMR — September 27, 2015 @ 8:21 pm
Shares in the embattled commodities group Glencore have slumped to another record low as the investment bank Investec warned the value of the company could “evaporate”.
“If major commodity prices remain at current levels, our analysis implies that, in the absence of substantial restructuring, nearly all the equity value of both Glencore and Anglo American could evaporate.”
Apart from selling new shares to cut debts, Glencore has also announced a range of cost-cutting measures, including selling some assets and has suspended production at copper mines in Zambia and the Democratic Republic of Congo. It has axed the full-year dividend payout to shareholders, due in 2016, as well as next year’s interim dividend. The series of measures will find the company an extra $10.2bn, which will be used to cut debts “to the low 20 billions of dollars by the end of 2016”, it said.
Comment by ConcernedCitizen — September 28, 2015 @ 4:15 am
Glencore -27% today
-7% in may, -11% in june, -18% in july, -29% in august, -27% today
Never catch a falling knife?
Comment by ConcernedCitizen — September 28, 2015 @ 4:25 am
Glencore -31% today
If this dude is right then maybe buy?
bloomberg.com/news/videos/2015-09-28/is-more-stimulus-on-the-way-in-china-
Comment by ConcernedCitizen — September 28, 2015 @ 5:01 am