TSX Venture Exchange and Gold
Despite a major surge (2.3%) in the U.S. Dollar Index, a 4.5% plunge in Crude Oil, a 5% drop in the Gold price, and a 9% decline in the TSX Gold Index, the Venture managed to escape that storm last week with only limited damage as it shed just 8 points or 1.5% to 534. That still puts the Index below support at 540 on a closing basis for the first time in over a month. We’ll see if it can quickly recapture that level or if a triple bottom is in the works.
Venture 4-Month Daily “Awareness” Chart
The key to making money on the Venture at the moment is to focus on very select opportunities (resource and non-resource) that have the right dynamics to push higher. The Venture has been holding together well enough over the last 2-and-a-half months in order to allow for some profitable short-term trades, as we’ve frequently seen including last week. More broadly speaking, we believe there’s a basket of plentiful stocks that can be accumulated now, and over the next several weeks, for exceptional upside potential from late December through the end of Q1 2016. We’ll conduct a review of some of those immediate and short-to-medium term situations in our Sunday Sizzler Report later today.
Venture RSI(14) support at 30% on this 4-month daily chart is very strong as it served as resistance throughout July and August. The early October low of 521 came around the time the RSI(14) bounced off 30%.
U.S. Dollar Index 2-Year Weekly Chart
The Dollar Index has regained technical strength which is surprising and probably not a good thing since this will work against the Fed’s mandate to kick-start inflation, American manufacturers will have a tougher time selling their goods abroad, while U.S. companies with international operations will suffer bottom line hits to earnings. The Dollar Index had broken above a descending triangle just prior to Friday’s jobs report, and jumped by more than a full point Friday to close the week about only 1-and-a-half points below its March high of 100.71.
Was that jobs strength (way above estimates, but largely attributable to the services sector) just an anomaly after a series of disappointing monthly reports? We’ll find out in early December when the Labor Department issues the November numbers. President Obama bragged about the October jobs surprise, of course, during his sickening Keystone XL pipeline speech from the White House Friday when he once again delighted in tarnishing the image of the Canadian Oil industry (his liberal friends at CNN introduced his address by twice referring to the “tar sands”) and also lectured Americans about the best way to create jobs (Keystone “is not the way to create jobs“, he actually stated). What planet is this President from? By rejecting Keystone, he has also defied the will of the American people and their elected representatives in Congress. How so many Canadians can sit back and accept how this President has consistently bashed their Oil industry with lies and half truths is beyond us.
It’s important to keep in mind that U.S. manufacturing generated no gains in October. Largely as a result, the sector’s absolute employment levels are now lower than in January, a 10-month stretch that qualifies as a recession. So behind the mainstream media’s “headline numbers”, and CNN’s cheerleading, there are inherent weaknesses in the U.S. economy.
The Venture performs best when the greenback is in neutral or retreat. The amazing strength of the dollar since the summer of last year has driven down the price of commodities and has been the key factor in the Venture’s nearly 50% decline during that time.
On this 2-year weekly chart, RSI(14) on the Dollar Index should meet resistance at the 70% level which was support from September 2014 through the end of March this year.
Gold
Gold started losing momentum during the week of October 19 when buy pressure began decelerating rapidly as shown by the CMF in our 6-month daily chart. This continued into the following week, which is when we decided (Oct. 27) to recommend buying the DUST (3x Gold Miners Bear ETF) as a hedge against a drop to $1,100 or below in bullion. We closed out that position Friday (Nov. 6) for a gain of 60% over just 9 trading sessions. That’s not to say the DUST won’t head higher, but what we’re watching for now are signs of a bounce in the TSX Gold Index after a steep decline of 19% over just 8 trading sessions.
Technical weakness has been pushing Gold lower. Physical buyers need to step up to the plate to turn this market around, and they will probably be looking to do so in the coming days with Gold less than $20 from its July multi-year low.
For the week, bullion was off a whopping $53 an ounce or 5%. Markets are forward-looking – the current price must have almost completely factored in a U.S. rate hike by now. We’re not sure if we’ll see this, but it might actually be healthy if Gold were to have a sudden wash-out to $1,000 an ounce with an intra-day hammer reversal.
Gold 2.5-Year Weekly Chart
Gold has traded within well-defined parameters over the last 2-and-a-half years as shown in this long-term weekly chart, with repeated moves between the bottom and the top of the downsloping flag. However, the high in May ($1,232) fell short of the top of the flag, as did the recent run that peaked at $1,192 in early October. At some point, Gold will make a decisive move either above or below the flag – that will be a critical turning point.
Gold is currently closing in on the bottom of this flag which does open up the possibility of a brief fling with $1,000 an ounce.
Silver tumbled in tandem with Gold last week, falling 5.1% to close at $14.74. Copper lost a nickel to $2.27. Crude Oil was off $2.10 a barrel to $44.29 while the U.S. Dollar Index added more than 2 points to finish at 99.15.
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 weakness this past summer, 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.
New Core!!!!! High sulphide stuff!
Comment by Martin — November 8, 2015 @ 10:55 am
The Fed is expected to raise interest rates ( again ) this is putting downward pressure on gold.
http://bloom.bg/1NTL1zZ
Comment by Les — November 8, 2015 @ 11:49 am
Quartz veining, sulfides in strongly altered magnetic unit. What kind of system are they into? What ever it is, looks like it is going to attract the attention of the market soon!
garibaldiresources.com/s/Photo_Gallery.asp?ReportID=604184
Comment by Dan1 — November 8, 2015 @ 12:13 pm
The keystone pipeline could ship 800,000 barrels per day , the railways presently ship 200,000 bpd between the same points. Environmentalists are dancing with glee because they think by blocking the pipelines they are stopping the use of petroleum. In the future there will be a huge increase in the shipment of oil by rail and more accidents with catastrophic fires.
bloomberg.com/news/articles/2015-11-06/obama-keystone-rejection-stings-oil-producers-less-after-crash
Comment by Les — November 8, 2015 @ 12:28 pm
Wow, could there be a multi millions ounces gold deposit at grizzly central, could get out of control at some point!! Everything is big at the grizzly :-).
Comment by Sylvain — November 8, 2015 @ 12:53 pm
Fascinating, Dan. This is dark (reddish) core, flooded by quartz veining with sulfides at a depth of only about 100 m…the red color is certainly striking…very altered…nice silicification….lots of magnetite, probably pyrite as well…speculating, but this could certainly be epithermal…gold could be disseminated in this anywhere…a high sulfidation gold deposit can overly a copper-gold porphyry system, quite common…a low sulfidation deposit would more likely be on the flanks of a porphyry system…
You ask a good question, Dan, what kind of system are they into? Based on all the evidence we’ve seen so far, especially last week’s news and the core photos, I would say that GGI is clearly into a porphyry environment with a district twist…call it Kaketsa Stock if you wish…a witch’s brew has been cooked up here – they may have found a gold system in association with a copper-gold porphyry…some exciting possibilities here…this is definitely looking very good and after seeing this today, I think the odds of Regoci coming out swinging hard in the coming week are very high.
Comment by Jon - BMR — November 8, 2015 @ 12:55 pm
Jon, this is hole 4, what make you think it’s at about 100M.
Comment by Martin — November 8, 2015 @ 1:08 pm
Posting this on a sunday morning tell’s alot, what do you think Regoci will do?
Comment by Martin — November 8, 2015 @ 1:11 pm
Martin, it’s a little hard to spot but if you closely in the top left corner, below the word Grizzly, I see writing in yellow that looks to me like 101.45….
Comment by Jon - BMR — November 8, 2015 @ 1:11 pm
Like I mentioned in the previous post, Martin, I suspect the gloves are off with this – I doubt it’s for a little show ‘n tell. Get ready for some heavy action as this smacks of confidence. If I’m right, more news imminent for sure.
Comment by Jon - BMR — November 8, 2015 @ 1:15 pm
your right 101.45, Jon i suspect that they will find the same kind of mineralisation area 2 and 3, and under kaketsa at comparative depth, this will be a monster!
Comment by Martin — November 8, 2015 @ 1:17 pm
One area at a time, Martin. A very valid theory, as we mentioned a few days ago, is that “Area 3”, as we call it (Grizzly Central West), was actually originally attached with Kaketsa, and split off and shifted to the east by a couple km. The kind of geological forces that would have been generated through that process may have been dramatic, and therefore could have produced something very intriguing over at least this portion of Grizzly Central – perhaps further to the east and south as well. Just a theory but I believe it’s a valid one being postulated by some geologists.
However it has occurred, Kaketsa has unquestionably impacted this area being drilled. If you look around the globe, including British Columbia, it’s a geological fact that some world class deposits have formed immediately adjacent (within a few km) to fertile plutons. Other plutons exist in the Sheslay district, driving the Hat and Star systems, it’s just that Kaketsa has risen to the surface, is very large (6 km x 6 km) and topographically dominant.
Comment by Jon - BMR — November 8, 2015 @ 1:23 pm
Ok Jon, one area at a time :-), The last time i as seen nicer core was Tomagold!
Comment by Martin — November 8, 2015 @ 1:28 pm
Excellent point, Les. A lot safer to move Oil by pipeline than rail, but try to convince an environmentalist of that. The problem is, they just hate Oil, period. They have a very strange and warped world view. On top of that, the “climate change” movement is now driven by some deep pockets who are less interested in the environment than they are in milking this “trend” for all they can get financially (Al Gore has been a great example) and gaining political leverage to advance other interests.
Comment by Jon - BMR — November 8, 2015 @ 1:43 pm
They are not wasting time at delivering, CDNX need a story, they have one now!
Comment by Martin — November 8, 2015 @ 1:49 pm
This is all looking very nice, this and another update should get the sp
Moving up shortly, fact on pipelines- key xl is approximately 875 miles, since 2010 the U.S. Has build almost 12000 miles of pipelines, Obama is simpley a pawn to the big company’s in the U.S.
Comment by Tombc — November 8, 2015 @ 2:06 pm
Obama kiboshing the Keystone pipeline has nothing to do with environmental issues– it’s all about protecting Buffet’s railroad business. Follow the money… the environmental concern is just a smokescreen. The environmentalist are just useful idiots for the government and the big-money people.
Comment by chris — November 8, 2015 @ 2:10 pm
That’s what I see as well. 101.45. What does that mean – hole 4?
Comment by Dan1 — November 8, 2015 @ 2:58 pm
Dan, 101.45m, is written where the quartz become dominant, so my guess is that it is not just few meters of this at depht, thing are looking very good!! a new path to follow!
Comment by Martin — November 8, 2015 @ 3:08 pm
One thing it means, Dan, for sure, when you see stuff like this, they are indeed onto something. I would expect Regoci to back it up quickly with the facts.
Comment by Jon - BMR — November 8, 2015 @ 3:15 pm
Another piece to the puzzle….this is really looking better and better as this goes on. I feel comfortable holding this one regardless what the market does in the next little while. It’s hard not to be excited for this one…..so many companies try to get to where we are watching Garibaldi go. Congrats to the Garibaldi crew!
Comment by weatheritout — November 8, 2015 @ 3:23 pm
Notice how there are hardly any posts under GGI with Stockhouse. Love it….we are riding on a sleeper right now but at some point that won’t last.
Comment by weatheritout — November 8, 2015 @ 3:28 pm
you can issue GGI congrats once assays have returned
Comment by Tony T — November 8, 2015 @ 4:11 pm
Well either way Hat’s off to them, they are doing everything right. But I agree, assays are next.
Comment by weatheritout — November 8, 2015 @ 4:24 pm
Com’on Kaketsa….show us a little visible gold somewhere in there….we know you brewed up something good in there.
Comment by weatheritout — November 8, 2015 @ 4:35 pm
I wonder if we’ll go another week w/o DBV news…
Comment by Steve A. — November 8, 2015 @ 4:47 pm
Anyone who wants some interesting reading into the Aurelian story check out this link. Interesting reading while we wait for results. I’m not comparing GGI to Aurelian, just interesting reading as to what goes on behind the scenes.
miningmarkets.ca/features/effin-anderson/
Comment by weatheritout — November 8, 2015 @ 4:53 pm
Did I tell you it was interesting reading? All right, signing off for the night
Comment by weatheritout — November 8, 2015 @ 4:54 pm
Hi Jon…just wondering when you will post the other part of Mr. Regoci’s interview
Comment by Sylvain — November 8, 2015 @ 5:00 pm
Hopefully (Part 2 of 3) within the next 30 minutes, Sylvain. Worth staying up for a Sunday night if you’re back east.
Comment by Jon - BMR — November 8, 2015 @ 5:02 pm
Lol….yes for sure I will stay tuned even if it’s a Sunday night down here in the east, (Montréal Qc to be more specific) 😉 Thank you!
Comment by Sylvain — November 8, 2015 @ 5:30 pm
Thoughts on EQT? Given the general silence perhaps reward part of the risk/reward has disappeared? I know that their story remains the same (ie- lottery play, excellent team, etc) but it’s awfully quiet to the point it feels dead. Anyone with any insight?
Comment by johnz — November 9, 2015 @ 6:37 am
johnz – it is obvious that the selling has stopped, just look at the volume. I have seen many times a stock take off shortly after a period like this, so I would watch for volume. That would be key whether it means up or down in share price.
Comment by dave — November 9, 2015 @ 7:01 am
keystone – Canada is still largest importer of oil to US I think, a pipeline would have made it cleaner + safer transportation. Duh. Canada has way more GHG rules when compared to other US import sources, Venezuala, Iran, Saudis, Mexico.
And lets not even start on the oops outa China saying they under reported their coal use by 17% , an extra BILLION tonnes, oops
Comment by david — November 9, 2015 @ 7:06 am
Forgot to mention. – .09 is very strong support for EQT.
Comment by dave — November 9, 2015 @ 7:11 am
GGI – I cant understand why people are selling at these levels or why we cant get past this 0.14 resistance level with all the positive vibes surrounding this story.
Comment by 02charoc — November 9, 2015 @ 7:23 am
Patience, 02charoc…a little more hard news and confirmation of how the drilling is proceeding would help a lot…technically, the stock is behaving very normally…
Comment by Jon - BMR — November 9, 2015 @ 7:26 am