TSX Venture Exchange and Gold
The Venture Exchange is showing increasing strength and while a test of the 1500 level can be expected, we’re beginning to see signs that the bear market that started last March is winding down. We base that statement on a close examination of various charts and careful consideration of fundamental factors. We’ll present more of our case as the week progresses. This market still faces some headwinds but we believe that within a month or so, a lot more investors will have turned bullish. First, let’s take a look at the latest chart for the Venture Exchange which closed up 10 points last week at 1536.
As John’s chart shows, a test of the neckline support just below 1500 is very possible. The rising 20-day moving average (SMA) currently sits at 1488, so that is certainly a strong support area. There is significant resistance around 1575. When the Index pushes through that level, as we expect it will sometime this quarter, that’s when things should really start to heat up. It makes sense, therefore, to start accumulating some beaten-down juniors that have good prospects over the next 12 months. We’ll soon be coming out with a list of “strong plays” and stocks to watch.
Trading on the Venture will be light tomorrow as U.S. markets are closed for Martin Luther King Day.
Gold
Gold continues to move as expected with the next major resistance at $1,700 as John’s most recent chart detailed. Gold closed Friday at $1,640 an ounce, a gain of $23 for the week after advancing $52 the week before. Gold has had a nice run the last couple of weeks – a modest pullback should be expected and that should open up some good buying opportunities in the Gold stock sector.
Silver jumped $1.02 for the week to $29.77, Copper gained 20 cents to $3.63, Crude Oil fell $2.66 a barrel to $98.70, while the surging U.S. Dollar advanced another one-fifth of a point to 81.46.
The “Big Picture” View Of Gold
As Frank Holmes so effectively illustrates at www.usfunds.com, Gold is being 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, is having a huge impact on Gold.
The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, governments and world leaders in general, an environment of historically low interest rates and negative real interest rates that won’t end anytime soon (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on. It’s hard to imagine Gold not performing well in this environment. The Middle East is being turned on its head and that could ultimately have major positive consequences for Gold.
