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TSX Venture Exchange and Gold

The Venture managed to outperform the broader markets last week with a 1.7% or 20-point gain to close at 1211, but the Index nonetheless still retreated from important resistance at its EMA-20 – a technical hurdle it has not been able to clear for several months. A sustained uptrend will not develop until the Index can overcome this resistance.  That could occur this coming week, or the Venture could decide to test the June low of 1154.  We’ll see what happens.  On the positive side, the 10-day moving average (SMA) is reversing to the upside and provides some support around 1200.  The 20-day SMA continues to decline, however.

There are a lot of spooked, nervous and jumpy investors at the moment, and that’s actually a good sign.  That’s what one always sees at important market bottoms or during the bottoming process.  The opposite of course is true when the market is taking off to the upside – investors get excited, over-exuberant and greedy.  The Venture is down 50% from its early 2011 high of 2465.  Interestingly, many investors who made the mistake of buying at or near the high are not interested in jumping in now for the Great 50% Off Sale (some individual stocks are down much more than 50% from their 2011 highs). This market will turn to the upside, and when it turns it will be quick and intense.

The coming week features the start of the second quarter earning season while a fresh batch of Chinese economic data will be hitting the markets (inflation and exports tomorrow and GDP, retail sales and industrial output Friday).  European finance ministers will also be getting together.

The markets disappointingly sagged at the end of last week despite rate cuts from the ECB, the Bank of China, and more quantitative easing from the Bank of England.  In the U.S., a weaker-than-expected employment report Friday and signs of a slowdown in the manufacturing sector were greeted negatively by traders and investors.

Below is John’s updated chart for the Venture Exchange.  Notice how rallies since April are hitting a “wall” at the EMA-20.  When this resistance is overcome, a sustained move to the upside has a very good chance of forming.

Gold

Gold met resistance at $1,625 last week and fell $21 an ounce Friday to finish down $17 for the week at $1,584, much to the frustration of Gold bugs who are wondering what it will take for the yellow metal to really start taking off again.  Gold has had a habit recently of teasing us but not being able to follow-thr0ugh with a significant breakout.

Patience is the key.  Seasonally, the third quarter is when Gold often gains strength due in part to physical buying in Asian markets.  We’re also encouraged by the COT structure for Gold which has a bullish tone, while commerical traders are showing a record low short position in Silver.  It is never wise to bet against the commercial traders.  They’re also strongly bullish on Copper which is a very good sign.

Below is John’s updated Gold chart (2.5-year weekly) which shows support and resistance levels, and what to watch for.

Silver fell 39 cents last week to $27.49.  Copper was off a dime to $3.42.  Crude Oil (WTIC) plunged $2.77 Friday to close the week down 51 cents at $84.96 (after a 9% gain the week before) while the U.S. Dollar Index surged to 83.28, a gain of nearly 2 points.  The possibility of a second impulse wave in the Dollar Index can’t be ruled out but it will have to overcome some stiff resistance.  We’ll examine this Index tomorrow morning.

Gold Deposit Accounts In Turkey

Turkish banks are shoring up their reserve base by pouring their technical expertise and marketing resources into offering their customers Gold deposit accounts. For cultural reasons, Gold is big business in Turkey which has had experience with bouts of high inflation over the past century.  Customers can deposit their Gold in the bank and can make withdrawals from their accounts in Gold bars or the lira currency.  In addition, Gold accumulation accounts can be set up where the customer makes monthly purchases of Gold. In September 2011, the central bank increased the ration of lira reserves that could be held in the form of Gold from 0 to 10%, raising it further to 20% in March 2012 and 25% last month.  This had the effect of significantly increasing the banks’ desire for taking in Gold deposits.

Turkey has the world’s fastest-growing economy after China and Argentina.

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.  Massive central bank intervention appears increasingly likely 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.

Welcome to our site, or at least the initial version of it!  BMR has been online for nearly three 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 a great deal on the Gold and Silver markets 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 and Silver 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. 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. 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.

This is an abbreviated version of Morning Musings due to travel…Gold initially rose following release of a weaker than expected U.S. jobs report this morning, but has since turned lower…as of 7:05 am Pacific, bullion is down $16 an ounce at $1,588…it has fallen as low as $1,581…Silver is 67 cents lower at $27.03…Copper is off 7 pennies at $3.42…Crude Oil has declined $2.74 a barrel to $84.48 while the U.S. Dollar Index is up one-third of a point at 83.12 on further weakness in the euro…

U.S. Jobs Report Keeps Fed In Play

The U.S. economy created just 80,000 jobs in June and the unemployment rate held steady at 8.2%, reflecting continued slow growth in the economy with the elections just four months away…the Bureau of Labor Statistics said private payrolls increased 84,000, while the government lost 4,000 jobs…economists expected job growth of about 100,000 and the unemployment rate to be unchanged, though many had increased their forecasts based on some recent indicators…with yet another month of weak employment growth, the second quarter marks the weakest three-month period in two years and may encourage the Fed to further consider additional stimulus measures…

IMF to Trim Global Growth Forecast

The International Monetary Fund will trim its forecast for global growth this year, managing director Christine Lagarde said today…without disclosing the size of the planned adjustment, Lagarde said that the IMF’s current growth forecast of 3.5%t, due to be updated in the middle of this month, would be “tilted to the downside”…however, she expressed hope that the European Central Bank’s action on deposit rates in particular – cutting the interest rate on its overnight facility to zero – could help to “stimulate interbank lending, which has not been as active as it should be”…

Euro Zone Finance Ministers Meet Monday

Euro zone officials are cautioning against expecting any quick action from the currency bloc’s finance ministers when they meet Monday to sort out the tangle of loose ends and disagreements left by last month’s European Union debt-crisis summit…banking supervision, the use of EU bailout money, aid to Spain and Cyprus and how to deal with Greece – together it could take months to finalize, despite pressure from financial markets for clarity on the details…

Today’s Markets

Markets are weak across the board today…as of 7:05 am Pacific, the Dow is off 125 points…the Venture Exchange, which rallied nearly 8% over 4 trading sessions, is off 17 points at 1209 and will be looking for support at its 10-day moving average (SMA) just under 1200…the EMA(20) continues to provide resistance as John’s chart shows below…

GoldQuest Mining (GQC, TSX-V)

GoldQuest has rallied strongly over the last four trading sessions after finding support, as expected, just below 50 cents…the stock gained 8 cents yesterday to close at 68 cents…drilling at the company’s Romero discovery in the DR resumed early last month and the market appears to be looking forward to more potential good news…below is an updated GQC chart from John that shows the stock’s challenge now is to break above the downsloping channel (flag)…as of 7:05 am Pacific, GQC is down 2 pennies at 66 cents…

Probe Mines (PRB, TSX-V) Chart Update

Gold has been bouncing around this morning but moved decidedly lower after better than expected U.S. employment numbers…Gold moved as high as $1,625 following news of another interest rate cut in China…the yellow metal then retreated slightly after the ECB decision, then moved lower after the ADP private sector report showed renewed strength in the U.S. jobs market…U.S. weekly jobless claims then came in lower than expected (the biggest decline since April) as reported by the Labor Department…as of 6:15 am Pacific, Gold is down $12 an ounce at $1,604 but has stabilized after falling as low as $1,596…Silver has fallen 61 cents to $27.68…Copper is off 2 cents at $3.48…Crude Oil is 32 cents lower at $87.34 while the U.S. Dollar Index has surged two-thirds of a point to 82.85…

China Puts The Pedal To The Metal

China is moving aggressively to kick-start economic growth, and that has to be considered bullish for the commodity sector as well as stocks…the People’s Bank of China cut its benchmark lending and deposit rates this morning, its second rate cut in less than a month…the Chinese central bank lowered its one-year yuan deposit rate 25 basis points and its one-year lending rate by 31 basis points…it also announced more relaxed rules on lending, allowing bank lending rates to fall to 70% of the benchmark rate, down from 80% currently…

The central bank cut interest rates in China for the first time in three years June 8, just days before Beijing released data showing a continued decline in growth indicators…the government is set to publicly release a raft of data next week, including GDP figures for the second quarter…

China’s economy probably slowed further in the second quarter to grow 7.6% (the median forecast of a survey of 21 analysts), its worst performance since the 2008/09 financial crisis, as investment, factory output and retail sales weakened across the board…but analysts are hopeful the world’s second-largest economy would have seen the worst between April and June, and that growth would pick up in the third quarter as Beijing further loosens monetary policy and fast-forwards infrastructure spending…

The Shanghai Composite Index fell 26 points overnight (prior to the interest rate cut) to 2021, leaving it just above its early January low…steelmakers and coal miners led declines on the Shanghai amid weakening demand and falling prices…indicative of the concerns about slowing growth in the world’s second-largest economy, shares in Sany Heavy Industrry extended losses for a fourth day as the company, China’s biggest machinery maker by sales, cut jobs – something almost unheard of over the last decade…

ECB Cuts Rates

The European Central Bank has cut its main interest rate to an historic low, responding to increasing gloom over the prospects for the euro zone economy with a move that also offers relief to the region’s struggling banks…in a decision widely anticipated by financial markets, the ECB today reduced its main policy rate by a quarter of a percentage point to 0.75%, the first time it has pushed the rate under 1%…the ECB also cut the interest rate on its deposit facility to zero, marking a dramatic step in attempts by the central bank to reduce general market interest rates and stimulate inter-bank lending…however, the ECB is not prepared at this point to re-start its bond-buying program which has been dormant for four months now…

Bank Of England Launches New Round Of QE

The Bank of England launched a third round of monetary stimulus today, announcing it would restart its printing presses and buy 50 billion pounds ($78 billion) of asset purchases with newly created money to help the economy out of recession…the move was widely expected after BoE Governor Mervyn King said last month the economic outlook had deteriorated since the BoE called a halt to its second round of asset purchases (QE) in May…the BoE has bought 325 billion pounds of government bonds to date, and the purchases announced today take this total to 375 billion…

Central Banks Doing The Heavy Lifting

Across the world, national factory and service sector surveys released over the past several days have been disappointing…and with many developed country governments reluctant to worsen budget positions by taking fiscal measures to boost activity, it is central banks that are doing the heavy lifting…

The stimulus measures from China and Europe will likely increase the anticipation in the market that the U.S. Federal Reserve may also introduce further supportive measures when it concludes its next monetary policy meeting at the start of August…

Today’s Markets

Asian markets were mixed overnight…European shares are generally slightly lower this morning while Dow futures as of 6:15 am Pacific are pointing toward a 45-point opening loss…

It’s an important day for the Venture Exchange from a technical standpoint as John’s chart that we posted last night points out…he’s looking for technical confirmation that the move over the last four days (7.6% off last Thursday’s intra-day low of 1154) can be sustained, so a higher close today would be an encouraging sign…

One of the “bellwether” Venture stocks is ATAC Resources (ATC, TSX-V) which has been crawling along the bottom in recent months, though it did make a nice move off its May 16 low of $1.90 to an early June high of $3.50…ATC, which is in the midst of completing a $12 million financing, closed yesterday at $2.78 and is looking generally healthy from a technical standpoint…John updates the chart below…

John has two additional charts this morning – Focus Graphite (FMS, TSX-V) and Great Panther Silver (GPR, TSX)…

Focus Graphite (FMS, TSX-V)

Great Panther Silver (GPR, TSX)

If and when Silver is about to break out, this is a stock that should give us an advance warning…

Note: John, Jon and Terry do not hold positions in ATC, FMS or GPR.

The Venture Exchange has climbed 88 points or 7.6% from its three-year intra-day low of 1154 last Thursday (June 28), but a major test for this market – whether this could be merely another dead-cat bounce or a serious upside move with some power behind it – will come tomorrow and Friday.

The European Central Bank will be the market’s focus tomorrow.  Traders and investors will be disappointed with anything less than a rate cut AND additional measures from the ECB to help ease the euro zone debt crisis.  Meanwhile, a slew of economic data is due out of the U.S. Friday.  So “outside forces” will definitely be influencing the Venture Exchange over the next couple of days.

Additional easing measures from China are possible and would help markets.

Below is John’s updated CDNX chart.  The Index jumped another 16 points today to 1242, albeit on light volume due to the American holiday, and it’s now at an important point where it could either quickly reverse to the downside again or gain some real traction and push higher.  There are some bullish indicators but they require confirmation tomorrow (Thursday).

A Happy 4th of July and “Independence Day” to our American friends…Gold is quiet today, trading between $1,611 and $1,621 an ounce…as of 7:30 am Pacific, the yellow metal is down $3 an ounce at $1,614 after yesterday’s nice jump…Silver is off 13 cents at $28.16…Copper is 3 cents lower at $3.50…Crude Oil is down 41 cents at $87.25 while the U.S. Dollar Index is up one-quarter of a point to 82.05…

U.S. Stock markets are of course closed today for the Independence Day holiday which will affect volumes on the Canadian markets…Asian markets were mixed overnight while European shares are relatively unchanged this morning…

The Venture Exchange enjoyed its second consecutive strong day yesterday, climbing 34 points to 1225…a good argument can be made that this market has put in a bottom but we’d like to see more follow-through as the month progresses…at the very least, the Venture appears to be in the midst of a substantial rally which may have caught some investors off guard…when the Venture turns, it can do so very abruptly as we’ve all seen on several occasions over the last couple of years…as of 7:30 am Pacific, the Venture is up another 8 points at 1233 but on very light volume given the American holiday…

Euro Zone – France Hikes Taxes

In typical socialist fashion, France is imposing $8.7 billion in new taxes this year including large one-off levies on wealthy households and big corporations to plug a revenue shortfall left by slowing economic growth, according to a revised 2012 budget…it seems Europeans (even an American President for that matter) haven’t figured out yet that besides the fact taxes (and regulatory uncertainty) kill jobs and investment, the problem with most governments is that they consistently spend more than they take in…they are addicted to spending…giving a wasteful government more tax dollars is insane…the root of the problem is what needs to be addressed and that’s spending, plus fixing policies that don’t encourage growth or investment…

France,  by the way, is also imposing a “one-off” tax on its oil sector to raise some $600 billion, but all that will do is hurt its already struggling refining industry…

European Central Bank Watch

All eyes will be on the ECB Thursday which is widely expected to lower interest rates and possibly take steps, through an asset purchase program, to bring down bond yields for Spain and Italy…

RJK Explorations (RJX.A)

Last Saturday, we had a good chat with RJK Explorations (RJX.A, TSX-V) President Glenn Kasner who’s more optimistic than ever about his company’s chances for success in the Blackwater District of central British Columbia…at BMR, we were very early to the Blackwater story when it first broke in late 2009 after Richfield Ventures reported initial impressive drill results…we followed Richfield over the next year-and-a-half as it surged from under a dollar to $10 a share and was ultimately bought out by New Gold Inc. (NGD, TSX) in a deal valued at $550 million…New Gold continues to drill Blackwater like Swiss cheese and at last report the deposit contains indicated/inferred resources of 6.5 million ounces of Gold and 36 million ounces of Silver…
the company also tightened its control over the area by acquiring two companies last fall (SilverQuest and Geo Minerals) and recently cutting a deal with Gold Reach Ventures (GRV, TSX-V) for $6 million…

RJK holds a large land package in the heart of the Blackwater camp, and no doubt New Gold is keeping a close watch on any exploration results from RJK’s Blackwater East/Northeast, Blackwater West and Dave 2 claims…

What we find particularly interesting (we’re sure New Gold does too) is the June 13 news from RJK that investors missed the significance of…the stock actually took a beating that day, falling from an opening price of 22 cents to an intra-day low of 8.5 cents…it closed that day at 9.5 cents before rebounding the next two trading sessions back into the mid-teens where it sits now…

At Blackwater East/Northeast, RJK hit a 3.3-metre intersection at a depth of 79 metres grading a whopping 79.04 ounces per ton Silver (2,710 g/t)….perhaps the market was looking for Gold which is why it sold off, but that’s a stunning, encouraging and important result worthy of follow-up…a second intersection nearly 7 metres farther down the hole graded 1.13 ounces per ton (38.9 g/t)…core recovery was poor which is why the company is going to follow-up with some RC drilling (reverse circulation) in the coming weeks after additional geological/structural interpretation, geophysical and geochemical work…Kasner is sending out a crew from Quebec to help in that process, so the company is taking the significance of those Silver intersections very seriously and they’re smartly getting some fresh eyes on this discovery…the key is to follow this trail of high-grade mineralization and see where it may lead to…

RJK has really only scratched the surface of Blackwater land package and drilling will also start later this summer on the Blackwater West and Dave 2 claims…

We’ll be following RJK closely over the summer given the possibility of another significant discovery in the Blackwater camp…it wouldn’t take much, in our view, for New Gold to pounce on this one as they are being aggressive in their approach to this area…

RJK is also looking very attractive from a technical standpoint, despite the recent pullback…below is a 10-year monthly chart from John – note how the 500 and 1,000-day moving averages are continuing to rise which suggests the stock remains in a long-term uptrend…accumulation has also been occurring…the stock is up 2.5 cents to 14.5 cents on light volume this morning, just a few pennies above the supporting 1,000-day SMA…

John has two additional charts this morning – Gold Reach Ventures (GRV, TSX-V), as mentioned above, and Impact Silver Corp. (IPT, TSX-V)…these are two interesting plays but, as always, perform your own due diligence…

Gold Reach Ventures (GRV, TSX-V)

Impact Silver Corp. (IPT, TSX-V)

Note: John., Jon and Terry do not hold positions in RJK Explorations, Gold Reach Ventures or Impact Silver Corp.

Gold is starting a new month on a positive note after putting in its worst quarterly performance since 2008…it’s within less than $30 of its June high this morning following bullish developments out of the recent euro zone summit and as speculation mounts that central banks will take action to spur growth…as of 6:10 am Pacific, the yellow metal is up another $19 an ounce at $1,616…Silver is 52 cents higher at $28.04…Copper is 7 cents higher at $3.54…Crude Oil has gained $2.77 a barrel to $86.52 while the U.S. Dollar Index is up slightly at 81.98…

The latest COT report shows the commercial traders’ short position in Silver is at an all-time low…this is extremely bullish and gives us great confidence that Silver has bottomed out and could explode higher at some point during this third quarter…

CRB Index Chart Turns Bullish

It has been a rough few months for commodities, but the latest CRB chart provides a lot of encouragement moving forward as John details below…

Copper Chart Update

Despite the problems that do exist on the global economic stage, and all the doom and gloom fed to us by the mainstream media, Copper has been holding up quite well…John’s latest chart (10-year monthly) shows Copper has strong support in a long-term upsloping trend channel with buying pressure increasing in June…

Crude Oil (WTIC) Chart Update

John’s 6-month daily chart shows how Crude Oil became oversold in May and June and likely hit an important low…it’s now trying to fight its way back but this will take time…there’s resistance in the mid-$80’s, where it’s trading at now, and then around $92…

Action From ECB Expected This Week

U.S. manufacturing shrank in June for the first time in nearly three years, following a string of data from Europe and Asia that suggested the euro zone debt crisis was reverberating throughout the global economy…the European Central Bank (ECB) will likely lead the way on the monetary front this week as it is widely expected to cut rates to a record low Thursday…the bank has a track record of action following political progress, including bond purchases that followed bailout programs and unlimited three-year loans on the heels of pledges supporting fiscal discipline…

There’s no “magic bullet” to solve the euro zone debt crisis, but EU leaders took an encouraging step forward at the end of last week after agreeing to loosen bailout rules, lay the foundations for a banking union and break the link between sovereign and banking debt through the direct recapitalization of lenders…EU leaders will try to maintain the muscle-flexing by seeking to convince investors that the euro area will do everything it can to end the three-year crisis…

The region is now suffering from its highest unemployment rate since (11.1%) in at least half a century the 1960s (11.1%)…Spain and France were the main drags on May’s figures, as 80,000 more people lost their jobs in Spain while France suffered its biggest monthly rise in joblessness this year…

Today’s Markets

Asian markets were up overnight, though China posted only a 3-point gain to 2229…European shares are higher this morning while stock index futures in New York are pointing toward a slightly positive open on Wall Street…markets in the U.S. close early today in advance of tomorrow’s July 4 holiday…the Venture Exchange put in a strong performance Friday, gaining 27 points to 1191, and will now likely attempt to climb back above the 1200 level…

Yukon Exploration Spending Remains High

Despite a rocky junior market, exploration expenditures in the Yukon this year will almost match last year’s record of $307 million…Natural Resources Canada recently estimated nearly C$300 million would go into mineral exploration in the Yukon during 2012…exploration companies with the most cash to invest in the Yukon are ATAC Resources (ATC, TSX-V), Ethos Capital (ECC, TSX-V), Golden Predator (GPD, TSX), Kaminak Gold (KAM, TSX-V), Monster Mining (MAN, TSX-V), Northern Freegold (NFR, TSX), Northern Tiger (NTR, TSX-V), Ryan Gold (RYG, TSX-V) and Victoria Gold (VIT, TSX-V)…

The Stupid Things Governments Do

Government greed and stupidity never ceases to amaze us…Pan American Silver (PAA, TSX) said yesterday the company will suspend further investment in the Navidad Silver Project in the event that a new law in a province of Argentina is approved…the law would regulate all future oil and gas and mining projects in the province of Chubut…according to Pan American, the results would render the Navidad project uneconomic, based on any reasonable estimate of long-term Silver prices…

Pan American has been working to advance Navidad into the development stage over the past two-and-a half-years with hopes of turning the project into an open-pit mine…the draft legislation introduced a series of new regulations that will greatly increase royalties on, and impose economic participation by the province in all mining projects, including Navidad…the proposed regulations include a new 5% NSR in favor of the province, a new requirement for a resource company owned by Chubut province to receive no less than 4% of total sales and to receive a 7% direct carried net pre-tax profit interest…

These increased royalties and the net carried interest are in addition to the 10% export duty payable on the sale of concentrates and the 35% income tax rate, which are payable to the federal government…

There are many more examples of governments around the world who are making it more difficult for companies to extract resources and to do so profitably, and at the end of the day this foolishness will hurt consumers by driving up prices…the world needs metals more than ever but governments are making it harder to explore for them and extract them…