From the Vancouver Resource Conference
TSX Venture Exchange and Gold
The CDNX posted its fifth consecutive weekly gain, climbing another 35 points to close Friday at 1571. The Index, which is rising out of an inverted head and shoulders bottom, is up 12% since December’s low of 1399 (December 15) and 20% since the 2011 low of 1306 in early October. In our view, the wind has been sucked out of the sails of the bear market that began in March, 2011, and a bullish new phase is underway. John provided ample technical evidence of this in a chart we posted yesterday. This morning, John has an eye-popping long-term chart showing the Wave 3 channel that we believe the CDNX is now in. Notice the bullish “W” formation on the RSI (circled) in this 11-year monthly chart.
Don’t be alarmed if there is some minor consolidation in the days ahead. In this current situation with the CDNX, the 10 and 20-day moving averages (SMA’s) can be expected to provide support on any pullbacks. A reversal to the upside in the 50-day SMA appears likely within the next couple of weeks which will further strengthen the bullish case.
What all of this tells us is that the ECB, the Federal Reserve, China and others are going to be incredibly accommodating with monetary policy in the year ahead in order to avoid a global economic meltdown. Money is going to be printed faster than rabbits can make bunnies which of course is bullish for commodities and the markets in general.
Gold
Gold continues to look strong and an assault on the $1,700 area appears imminent as John’s charts have shown. The yellow metal closed Friday at $1,667 an ounce, a gain of $27 for the week after advancing $75 over the previous two weeks to begin the New Year.
Silver has broken out and jumped $2.43 an ounce for the week to close at $32.20. Copper gained another dime to $3.73 (very encouraging). Crude Oil fell 37 cents to $98.33 while the U.S. Dollar Index fell by more than a point to 80.16.
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.
Welcome back BMR to being a bull market representative. No one enjoyed our little venture with the bear and its good to be finally looking forward to some decent returns from our investments. What are `bmr’s opinions on the previous companies they have covered such as VGN, VGD, GQC etc. This is not in any means a criticism just a request for a brief look at some old favorites who seem to be showing some signs of life from a technical point of view and still have some great assets and hopefully great futures.
Comment by Patrick — January 22, 2012 @ 12:23 pm
John, BMR – If you have the opportunity I’m sure many of us would appreciate any feedback you can acquire from CJC at the Resource Conference. My guess is the assays received to date have nothing significant and they are relying on holes 8 – 12 for something (these are the ones being tested for base and precious metals, PGEs and REEs); out of desperation? Thanks and enjoy the afternoon and evening. 🙂
Comment by Andrew — January 22, 2012 @ 12:53 pm
Jon – In order to have exposure to explorers at various stages of development and mines etc. in the ongoing bull silver and gold market and reduce risk of juniors losing touch with silver and gold prices (as they have done for a year) can you suggest any ETFs. HZU, HBU, HGU etc. What would be the criteria for picking HBU over HGU? Thanks! 🙂 (today’s Ivan Lo’s Equedia Weekly Newsletter is interesting as always – talking about gold and silver as usual but also mentions opportunity for Uranium)
Comment by Andrew — January 22, 2012 @ 1:00 pm
Hi Andrew
Jon is at the Show and tells me he intends to visit the CJC booth.
Comment by John - BMR — January 22, 2012 @ 1:19 pm
Thanks, John – I’ll look forward to any comments.
Comment by Andrew — January 22, 2012 @ 1:44 pm
BMR
VGd very disappointing to say the least, are you guys going to comment on this fiasco? or just ignore it and move on?
Comment by GREG H — January 22, 2012 @ 8:04 pm
BER plays within a small group of people and if you are not sure about it. Do not follow the trend. This is a one day shine stock. It can surprise you if you can buy it at low price. It may go back to 5.5 cents level but I will not be surprised to see it to jump to 9 cents either. GBB has a lot of selling pressure at 16.5 cents but it will go higher to 19-20 cents mark. I am waiting for NAR to go back to an acceptable level – 17 cents. There are all my sixth sense…
Comment by Theodore — January 22, 2012 @ 8:20 pm
@Greg H
BMR dont comment on their bad picks, they just brush them under the carpet and apparently if you mention this fact, you are just “insulting”
Comment by Hugh — January 23, 2012 @ 3:25 am
Be careful,folks! Bullish sentiment is nosebleed high right now and you know what that means!
Comment by mike — January 23, 2012 @ 3:30 am