TSX Venture Exchange and Gold & Silver
The Venture Exchange posted its 6th weekly advance out of 7, climbing another 28 points as it closed Friday at 1346. Given the current Perfect Storm environment (no end in sight to QE3 and a weak U.S. Dollar), a powerful uptrend is firmly in place that should allow the Index to get back into positive territory for the year during the fourth quarter. However, minor pullbacks will occur along the way to test the supporting 10 and 20-day moving averages.
Investor patience with this new bullish cycle is critical. Just like in early 2009, and again at certain periods in 2010, there are still many nervous nellies roaming around who don’t get the big picture of what’s unfolding. So as soon as the market has a couple of bad days, which is guaranteed to happen but is both normal and healthy, these folks will quickly lose faith in the uptrend and will sell to lock in minor profits. Seasoned investors who can visualize where things are headed will jump in at important support levels and will ultimately ride the wave and make bucket loads of money.
Below is an updated 6-month CDNX chart from John that shows temporarily overbought conditions, increasing the likelihood of a minor pullback over the next 5-10 trading sessions. The Index is facing a resistance band between 1350 and 1365 with supporting 10 and 20-day moving averages currently at 1312 and 1278, respectively. A move down to one or both of these SMA’s would be a healthy development that would lay the groundwork for the next surge. Meanwhile, the 1,000-day SMA has flattened out at 1500 and is getting ready to head north during the 4th quarter – that’s a hugely significant technical event and has us convinced that we’re about to see a bull market move that could surprise even the most optimistic investors.
For the past couple of months the Venture has out-performed the major equity markets which underscores the point that we’re now in a new risk-on environment that’s likely to last for a while given the unlimited duration of QE3 and the grim outlook for the greenback. The Venture has broken out relative to the U.S. Dollar, ending a downtrend that started well over a year ago, and that means we can have a high level of confidence that the primary trend with the Venture has reversed to the upside (the Venture and the greenback have a strong inverse relationship). Volume, importantly, is picking up in this market and should continue to gradually increase during the fourth quarter. A lot of cash is still sitting on the sidelines.
Gold
While the big picture outlook for Gold is incredibly bullish, against a backdrop of monetary easing by the Fed, the ECB and most recently the Bank of Japan, bullion is approaching resistance at $1,800 at a time when it is also clearly technically overbought on a short-term basis. So we view the likelihood of a minor pullback in the immediate future to be greater than a breakout through $1,800, though we do expect Gold to easily blast through $1,800 during Q4. Gold is up 12% since mid-August and hit a 6-month high Friday at $1,790. For the week, the yellow metal was up $2 an ounce at $1,773. Below is an updated 6-month daily chart from John. The $1,730 level can be expected to provide strong support.
Silver was down 16 cents for the week at $34.52. Copper fell 4 pennies to $3.76. Crude Oil tumbled $6 a barrel on supply concerns while the U.S. Dollar Index rallied half a point to 79.39, a “dead-cat” bounce that has quite limited remaining upside potential.
John will update his long-term Silver chart, with a Fibonacci target level of $78, on Monday morning.
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), money supply growth, 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. QE3 has arrived, and massive central bank intervention is now taking place to prevent a breakup of the euro zone and to kick-start the global economy. It’s hard to imagine Gold not performing well in this environment.
Personally I think we are closer to assays than some think. The first set of cores were sent in by Spet 4th at the latest and most likely a few days before the Sept 4th Fact Sheet. That means next week we will be pushing 3 weeks since theyve been sent to lab. Now if you want to be over the rainbow optimistic, we may see something before the Sept 27th conference. I will go out on a limb and say we will have something to be thankful for by October 8th…this is just the opinion of a retail investor so please dont hold me to it!
Comment by db — September 22, 2012 @ 4:12 pm
My sixth sense forecast for this week:
RBW.. Low 21 cents High 37 cents, Close at 31 cents **
GQC.. Low $1.78 High $1.99, Close at $1.85
GBB.. Low 11.5 cents, High 14.5 cents, Close at 13.5 cents **
EVR.. Low 10 cents, High 11.5 cents, Close at 10 cents
SFF.. Low 14 cents, High 17 cents, Close at 15.5 cents **
SF .. Low 2.5 cents, High 3 cents, Close at 3 cents **
TYP.. Low 22 cents, High 29 cents, Close at 29 cents **
NAR.. Low 3.5 cents, High 5 cents, Close at 5 cents **
** holding a portfolio
Comment by Theodore — September 22, 2012 @ 5:49 pm
anybody know which lab the assays for rbw went too?
Comment by BRIAN — September 22, 2012 @ 6:01 pm
sorry assays results coming from?
Comment by BRIAN — September 22, 2012 @ 6:23 pm
No doubt, high volume is important, but we should not dismiss a
lower than normal volume day, as being that negative. I noticed
when RBW was at it’s high, we had much lower than normal volume
days, dotted in between the higher volume days, which tells me,
there’s exceptions to every rule. The lower than normal volume
on Friday, was an up day & tells me, the big seller(s) could be
gone, moved back or could have taken a day off & that there were
more buyers picking away at our stock, than there were sellers.
There is much written about the different stock moves, everyone
with a different opinion & then there are charts, which show
yesterday’s behavior & not always a true indication of today’s
trading. Being steadfast in one’s beliefs’, may leave one
disappointed at times & there’s no way to be sure, when there are
so many people involved & there’s so many after market hours, for
something positive or negative to happen. The truth of the matter
is, you put forward your cash & take your chances. As already
mentioned, it was a low volume day, but being an up day, could be
a precursor to better days ahead, in particular, since we don’t
know who the buyers were & why they bought, that is the unknown.
I noticed a recent BMR comment regarding PPP, this is not verbatim,
but they were suggesting it could be prudent to buy now or chase it
later. How do we know if New Gold will buy them out ? how do we know
if they will have success with the drills ? how do we know ? how do
we know ? the truth of the matter is, we don’t & thus an element of
doubt, that’s why i maintain, we are gambling.. I can type all day
long, but it won’t change tomorrow’s trading, the truth of the matter
is, we just don’t know with certainty what tomorrow will bring. Enjoy
your day. R !
Comment by Bert — September 23, 2012 @ 5:55 am
Bert, that’s a good point about the lower volume Friday. The character of trading in RBW changed this past week – there was some aggressive accumulation at times, and the selling seems to have dried up, or is very close to drying up. Sellers could have sold into some nice bids Friday but didn’t. These things go in steps, we must be patient. And some pro traders have definitely entered the picture. That one-day move down to .175 (pro traders I suspect) was intended to scare the retail crowd and shake a few loose apples out of the tree. Most everyone stayed quite calm. I believe we’re closer than ever to a breakout thru .25 – perhaps by the end of the coming week. And then things should get really interesting.
Comment by Jon - BMR — September 23, 2012 @ 7:20 am
If you want low risk and a good chance of 5 to 10 baggers look at azx and mgp both selling at less than 10 dollars per ounce in the ground and azx finding gold at the cost of 8 dollars per ounce backed by big investors in a good location what else could you ask for
Comment by gil — September 23, 2012 @ 2:27 pm
The week ahead: Keep an eye on Alexandria Minerals. Their Annual Meeting is Wednesday, September 26th and they should be releasing follow-up assays on their new Akasaba west zone discovery any day now. They already have 1.4 million 43-101 gold ounces and they will probably be adding enough to bring the total to around 2 million gold ounces (not to mention the copper).
Comment by Leo — September 23, 2012 @ 4:41 pm