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Gold is bouncing back today after finding support in the $1,665-$1,680 area…as of 8:30 am Pacific, the yellow metal is up $22 an ounce at $1,699…Silver is up 69 cents at $32.33…Copper has gained 3 pennies to $3.33…Crude Oil has strengthened to $97.52 while the U.S. Dollar Index is off slightly at 78.29…

The U.S. economy grew at a slightly slower pace than previously estimated in the third quarter, but weak inventory accumulation amid sturdy consumer spending strengthened views output would pick up in the current quarter…gross domestic product grew at a 2% annual rate in the third quarter, the Commerce Department said in its second estimate this morning, down from the previously estimated 2.5%…while the revision was below economists’ expectations for a 2.5% growth pace, the composition of the GDP report, especially still-firm consumer spending and the first drop in businesses inventories since the fourth quarter of 2009 set the platform for a stronger economic performance this quarter…some economists believe that numbers and trends so far suggest that fourth quarter growth could exceed 3% which would be the fastest in 18 months…the first quarter next year could be a different story, however, depending on the euro zone situation and if China’s economy doesn’t have such a gentle soft landing…

Investors remain jittery about Spain despite a landslide election victory by the centre-right People’s Party on Sunday…Madrid was forced to pay the highest interest in 14 years today on a sale of government debt…the average yield on a three-month bill more than doubled to just over 5% from almost 2.3% a month earlier…the interest paid on a 6-month bill also soared to over 5% from over 3.3% paid in October…there’s no quick-fix to the euro zone fiscal debt and growth deficit woes and the other major problem is that these countries don’t have the luxury of time to address many complex issues…this doesn’t have a good “feel” to it as we’ve been stating for weeks…what the final outcome is going to be is anyone’s guess but we have little faith in the politicians…markets don’t like uncertainty and they have more than they bargained for right now…

Interesting news from the Financial Times this morning…the number of property transactions in China’s largest cities has fallen to dangerously low levels, according to regulatory documents obtained by the Financial Times (property construction accounted for more than 13% of China’s economy last year)…in October, property transactions fell 39% year-on-year in China’s biggest 15 cities, according to government data…nationwide, transactions dropped 11.6%, accelerating from a 7% fall in September…the fall-off in transactions has affected developers’ cash flows and, in some cases, their ability to repay bank loans…rising defaults after a lending surge in 2009 and 2010, much of which ended up in the property sector, were cited by the International Monetary Fund this month as one of the Chinese financial sector’s biggest risks…

The CDNX fell through an important support zone between 1575 and 1600 yesterday…markets will take the path of least resistance, and the resistance band between 1600 and 1700 was simply too strong for the Index to overcome (immediately above 1700 is also a declining 100-day moving average)…the CDNX is currently up 1 point at 1556…the 300-day SMA is now beginning to decline and that’s a very troubling sign…at the minimum, a re-test of the October 4 low of 1306 could easily occur during the first quarter of next year…while there’s of course no guarantee of that happening, the downside risks in this market do outweigh the upside potential when one takes into account all technical and fundamental factors…yes, Gold can surge past $2,000 an ounce (which will be most helpful to those companies actually producing Gold) but we may not like the world we live in at that point…in otherwords, a scenario could unfold where we have significantly higher Gold prices and even more risk aversion as it pertains to the speculative juniors who are exploring for Gold…

Gold Bullion Development (GBB, TSX-V) has generally been a reliable “bellwether” for the CDNX this year and it certainly doesn’t appear ready to bust out to the upside at the moment…for now, GBB is trading in a horizontal trend channel between 17.5 cents and 21 cents…there are obviously risks to the downside (below 17.5 cents) if indeed the CDNX turns significantly lower over the next few months…it’s critical for GBB to complete its NI-43-101 resource estimate for the LONG Bars Zone as soon as possible but that may not occur until late winter/early spring…John examines the GBB chart below to see what it’s telling us right now…

GBB is up half a penny at 19 cents as of 8:30 am Pacific…on the producer side, John has an interesting chart this morning on Kinross Gold (K, TSX) which is up 39 cents to $13.26 after declining in 9 out of the last 10 sessions…this is a 10-year monthly chart, and look where the RSI is positioned – its lowest level since 2002, right before a dramatic jump in the share price…also note the trendline…Kinross is just above very strong support…there are different ways of interpreting a chart but this gives us a lot of encouragement that Gold’s next HUGE move will be up, not down…that’s the “big picture” view which is consistent with John’s Gold charts throughout the year…

Gold got hammered again today, losing $48 an ounce to close at $1,677, but we see no reason to panic.  The focus now is on a band of support between $1,665 and $1,680.  Should that fail, a test of the trendline (around $1,625) is likely, and what an opportunity that could present.  Some buying came into the producers today after the TSX Gold Index touched 391.  It finished at 397, down 4 points.  When one looks at the oversold conditions in such situations as Kinross (K, TSX), which has fallen in 9 out of the last 10 sessions, and New Gold Inc. (NGD, TSX), just to name two, a reversal in Gold itself can’t be far off.  It’s worth noting that the HGD reverse ETF (Gold Index) came very close to its declining 100-day moving average (SMA) today where it has encountered resistance since late July.

John updates the Gold chart below.  We expect the long-term trendline support to hold.

Markets are down across the board…stocks plunged at the open this morning with worries over a congressional debt-reduction impasse (the Super Committee, not surprisingly, has become a Super Flop), adding to escalation in the European debt crisis…so cash is King again today…as of 8:30 am Pacific, Gold is off $35 an ounce at $1,690 (strong support at $1,675)…Silver is down $1.34 to $31.07…Copper has declined 12 cents to $3.28…Crude Oil has lost $2.26 a barrel to $95.41 while the U.S. Dollar Index is up a quarter of a point at 78.25…the Dow and TSX are each down more than 200 points…the HIX and HXD short ETF’s, which we’ve been writing about in recent weeks, are both up significantly today, of course, but taking a look at their overbought Stochastics suggests now could be a good time for traders to lock in some profits with a view to re-entering on a pullback…the TSX has corrected about half of its gains since the October 4 low…

Some stark comments out of China…Wang Qishan, the Chinese vice-premier responsible for overseeing the financial sector, has predicted the global economy will slump into long-term recession and warned that China will need to deepen financial reforms to cope with the fallout…“Right now the global economic situation is extremely serious and in a time of uncertainty the only thing we can be certain of is that the world economic recession caused by the international crisis will last a long time,” state media reported Mr Wang as saying over the weekend…

The CDNX has fallen below critical support at 1575…it’s down 47 points at 1560…of course there could be an intra-day reversal and the Index could close above 1575 today, but we’ve been warning for weeks that there is trouble ahead for the CDNX (and the markets in general)…the writing is on the wall…the CDNX bear market could very easily intensify during the first quarter of 2012, so now is not the time in our view to be jumping into the speculative juniors in particular…pressure from tax-loss selling over the next few weeks will not be helpful for this market either…of important note is that the CDNX 300-day moving average (SMA) is in the process of reversing to the downside, and that’s very bearish in terms of the “big picture” outlook…yes, there could be a rally but any rallies will be sold into with the expectation of better buying opportunities during the first quarter of next year…

We do see opportunities at the moment in some of the producers…New Gold Inc. (NGD, TSX), for example, which we featured in a chart yesterday, is heavily oversold which suggests a near-term bottom of some sort (in Gold and/or the equity market) could be close at hand…NGD is currently off 30 cents at $10.23 after touching a low of $10.08…it’s down from a high of $12.25 just a week ago…it has strong fundamentals and is one of the lowest cost producers in the industry…another situation worth watching closely is Richmont Mines (RIC, TSX) which is approaching its rising 100-day moving average (SMA) where it has had rock-solid support all year…in addition, RSI(14) has declined almost to the June and October lows while the Slow Stochastic oscillator shows significantly oversold conditions…at $10 per share, RIC’s market cap would be just $330 million and the stock would be trading at only about 12 times anticipated 2011 earnings…below is an updated chart from John on RIC which fell as low as $10.43 this morning and is currently at $10.65, off 49 cents…the “sweet spot” on RIC appears to be between $10 and $10.50 per share…

TSX Venture Exchange and Gold

To use a boxing analogy, the CDNX took a couple of hard blows last week but managed to stay on its feet.  No knockout punch has yet been delivered but this “boxer” is getting tired and is vulnerable.

The CDNX held support between 1575 and 1600 and closed the week at 1608 for a loss of 33 points or 2%.  That performance was actually quite impressive considering other markets suffered larger declines – Gold (3.6%), the Dow (2.94%), the S&P (3.81%), the Nasdaq (3.03%) and the TSX (3.1%) all finished even more in the red last week.

The CDNX’s 10-day moving average (SMA) has reversed to the downside but the 20-day is still advancing.  The declining 50-day SMA, currently at 1590, has provided strong support this month in a pattern, however, that is very similar to the one witnessed in July.  Of particular concern is that the critical 300-day SMA, which has flattened out after rising since late 2009, is in imminent danger of reversing.  It will likely start declining aggressively by January at the latest.  Ignore this bearish technical signal at your peril.  The resistance band between 1600 and 1700 also has a declining 100-day SMA just above the top of it, and tax-loss selling pressure will also be a factor over the coming few weeks.  The risk-reward ratio is simply not attractive with the CDNX right now.  The likelihood of a plunge below 1575 appears significantly greater than a breakout to the upside above 1700.

Gold

The European bond market was a major factor in last week’s market weakness, driving many traders/investors into cash which also affected Gold.  The yellow metal fell through some support at $1,750 and closed the week down $64 an ounce at $1,725. For November, Gold has been range-bound between $1,700 and $1,800 and that trend could very easily continue.  Below $1,700 there is strong support at $1,675 and huge support around $1,625 which is the bottom of an important trendline as shown by John’s chart.

Central banks continue to be major buyers of Gold.  Official net purchases of Gold exploded in the third quarter, totaling 148.8 tonnes, more than double the entire amount of government buying in 2010 according to the World Gold Council in a report issued Thursday.  Asian and Latin American nations, which for years have plowed their excess cash into U.S. Treasuries, are suddenly looking to diversify.  The result is net Gold purchases of about 350 tonnes over the first nine months of the year, compared with 76 tonnes in 2010.  In 1988, the last year governments bought more Gold than they sold, net purchases were 180 tonnes.

There was a burst of official purchases in the final weeks of the third quarter, suggesting reserve managers jumped on a sudden drop in Gold prices.  This has be viewed as very bullish for Gold.

Silver was off $2.25 for the week, closing at $32.41.  Copper fell 6 pennies to $3.41.  Crude Oil finally pulled back.  It briefly topped $100 a barrel last week but closed Friday at $97.41, a decline of $1.41 for the week.  The U.S. Dollar Index, meanwhile, gained over a point to close at 76.91.

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 (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.

What’s also driving Gold is the weakness of the United States, brought on in no small part by one of the most ineffectual Presidents the nation has ever been saddled with.  America has lost its way and the recent S&P downgrade is both a real and a symbolic reflection of that.  Since the summer of 2009, the U.S. economy has produced a net total of just two million jobs while federal spending has gone through the roof.  Throughout its incredible history, the United States has demonstrated an amazing resiliency and the ability to bounce back from major economic, social and political troubles.  It will do so again but this will take time and a real Commander-in-Chief in the White House by November, 2012.  By then Gold will have climbed another 50% or more.

New Gold Inc. (NGD, TSX) is one of our favorite Gold producers and completed an astute transaction earlier this year when it bought out Richfield Ventures and its Blackwater deposit in central British Columbia.

John’s latest NGD chart (2.5-year weekly) is highly interesting.  While there are no guarantees in this business, a review of the current NGD chart gives a strong buy signal.  These are the kind of technical conditions one should look for in a stock to make money in the market.

As the saying goes, buy into weakness and sell into strength.  NGD fell $1.57 for the week, or 13%, to close Friday at $10.53.  The 100, 200, 300, 500 and 1,000-day moving averages all continue to rise.  Overall, this is a beautiful chart and suggests Gold’s bull market continues.

Gold has been bouncing around today but the yellow metal is holding above $1,700…as of 8:50 am Pacific, Gold is up $7 an ounce at $1,727 after touching a low of $1,715…as we mentioned last night, Gold has been range-bound this month between $1,700 and $1,800 and that trend could very easily continue…if Gold were to dip below $1,700, there is very strong support at $1,675…the bottom of Gold’s important trendline support, which has been so incredibly reliable over the long-term, is about $1,625…Silver (see new chart below) is 48 cents higher at $32.18…Copper has climbed 3 pennies to $3.40…Crude Oil is down 53 cents at $98.29 while the U.S. Dollar Index is down one-third of a point to 78.05…

The CDNX closed at 1599 yesterday and is currently up 7 points at 1606…so far, the Index is holding critical support between 1575 and 1600…breach of that support would kill the rally since October 4 and usher in a declining 300-day moving average (SMA) which will almost certainly reverse to the downside anyway by early January at the latest…the big picture outlook remains bearish, so we continue our cautious stance…

On the flip side, a very bullish-looking chart remains the HIX which is the short ETF for the S&P/TSX 60 (the double-leveraged version is the HXD)…on October 30, we highlighted the HIX (the HXD chart is essentially the same, just different values) which closed Friday, October 28, at $10.99 (the HXD closed at $9.41 that day)…the article was titled, “HIX Chart Points To Market Pullback“…examining the charts of these short ETF’s, they are clearly in bull markets of their own which underlines the unhealthiness of the equity markets and makes one very suspicious of the recent rally…the HIX and HXD staged normal Fibonacci retracements after surging to $12.66 and $12.57, respectively, on October 4…they held important support and shot up impressively again yesterday with the HIX touching $11.59 and the HXD hitting $10.44…below is an updated chart for the HIX…given the way this chart is developing, a new 52-week high seems very possible by early 2012…a reversal to the upside in the 300-day SMA appears inevitable by January…near-term, as John’s chart points out, the HIX can expect to find resistance around $10.70…accumulation on any pullback or weakness seems to make sense…as of 8:50 am Pacific, the HIX is off 6 pennies at $11.51 while the HXD is down 2 cents to $10.35…

An interesting chart to keep an eye on is New Gold Inc. (NGD, TSX) which since late 2009 has found support at or very slightly below its rising 200-day moving average (SMA)…NGD is trading just slightly below its 200-day this morning at $10.68 (down another 17 cents)…it’s oversold based on Stochastics and the Chaikin Money Flow (CMF) indicator, while RSI(14) has almost touched its late September/early October low…

As promised, below is John’s updated Silver chart showing a strong support band between $29.60 and $30.00…

Gold got smacked today, falling below one support level and losing $42 an ounce to close at $1,720 with the euro zone the culprit.  Cash was King today as equities were hit hard as well.  Cracks in the CDNX are getting wider – the move since early October has to be viewed in the context of a bear market rally, and we quite possibly may have seen the climax of that rally November 8 at 1675 – just 25 points below the top (1700) of the resistance band that John has pointed out.  The Index closed today at 1599.  Bulls have to hope and pray that 1575 holds as support on a closing basis – if it doesn’t, the CDNX will be on a very slippery slope, before winter even arrives, with a 300-day moving average (SMA) reversing to the downside for the first time since immediately prior to the ’08 Crash.

As far as Gold is concerned, John’s November 4 chart, which we’re re-posting tonight, should be kept as a reference.  The volatility we’re seeing now is perfectly normal – as long as Gold holds the trendline (the bottom of that trendline now is about 1625), this market remains very healthy and bullish.  The Gold price so far this month has been range-bound between $1,700 and $1,800, and that trend may continue.  Below $1,700, there is strong support at $1,675.

Welcome to our site, or at least the initial version of it!  BMR has been online for two years and strictly through word-of-mouth we have built a loyal following. 

We’re continuing with our plans to ultimately build a very unique investment and money-management resource site that goes considerably beyond what we have now.  While we focus very much on the Gold market and trends in the global economy, and of course the technical health of the TSX Venture Exchange (CDNX), an important component of this site will always be original research on undiscovered junior exploration companies or small producers, mostly in the Gold exploration space, that offer very real and significant upside potential. We are extremely selective in the companies we feature and put forward to investors – we prefer quality over quantity.  However, investors must understand that these are still highly speculative situations and entail considerable risk, volatility and unpredictability.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. Always perform your own due diligence and please read our disclaimer at the bottom.

We use a combination of fundamental and technical factors in determining the value and potential of a stock.  In terms of fundamentals we look for a company with a superb project supported by strong management.  Management must possess integrity, solid ethics and a determination to succeed and build shareholder value.

At BullMarketRun (BMR) we approach the handling of money from a biblical perspective and this is an important topic we will be sharing with our readers (and listeners) as the site continues to develop. The Bible teaches so much about money and how to handle it and invest it –  there are literally thousands of verses on how we should handle the money and possessions that God entrusts us with.  By examining the life of Jesus and reading the Word of God, we can all become fully equipped to be successful investors and handle money wisely.  If it’s the other way around –  if you’re a slave to money by being in debt for instance, or if you don’t respect the value of money and spend it foolishly –  you’re in trouble and you’ll never be blessed financially.  We have a God who thinks big – He created the universe – and He wants us to think big  in every area of our lives.  When we handle money from a Biblical perpective (His money that we have been given stewardship of) He will bless our financial decisions and an increase of tenfold or a hundredfold is always possible.  This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life.  It is the most important decision you’ll ever make.

God Bless,

Terry Dyer

Owner/Publisher, www.BullMarketRun.com

Disclaimer:

BullMarketRun.com (BMR) is completely independent from any companies it covers.  BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site.  We accept no advertising either.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company. We strongly recommend that you consult with a qualified investment adviser, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions. The stocks we cover, by definition, are highly speculative and potentially very volatile. Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks.  We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.  Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.

Forward Looking Statements:

All statements in BMR’s reports, other than statements of historical fact, may be forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.