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TSX Venture Exchange and Gold

The Venture held critical support this month despite the combined pressures of tax-loss selling and weakness in Gold.  Importantly, all indications are that a legitimate and sustainable turnaround is indeed underway and about to kick into higher gear. Technically, this view is confirmed by the Venture’s 3-year weekly chart that provides invaluable insight into this beaten-down Index.  Fundamentally, there is now simultaneous positive and accelerating growth in the U.S., Europe, Japan and emerging markets.  That’s good for commodities, and what’s good for commodities will also be beneficial for the Venture.  The Federal Reserve, though it has started to “taper”, remains committed to an overall accommodative policy and is unlikely to raise interest rates in 2014.

The CDNX climbed 31 points last week to close at 919, above the first of a few key resistance levels.  Below is a 3-month daily chart from John.  Up momentum is surging.  Expect another strong week.

 

CDNX 3-Year Weekly Chart

The Venture‘s 3-year weekly chart gives us a very positive “big picture” view of where this market is headed.  Investors are notoriously the most bearish and the most bullish at precisely the wrong times (remember back to the 2008 post-Crash period and late 2010/early 2011 on the Venture ).  Extreme bearish sentiment over the last number of months has coincided, in our view, with an important bottom in the Venture Index which has been in a healthy basing/consolidation phase since mid-April.

In late October, the Venture finally broke above its downtrend line in place since 2011.  Though this technical event did not lead to a significant immediate advance in the Index, it was nonetheless an intriguing and encouraging sign.  This downtrend line became potential new support, but it needed to be tested.  Indeed, that’s exactly what would take place over the next two months.  Between late October and late December, the Venture repeatedly and successfully tested this support.  Any market will take the path of least resistance, and the turning point for the Venture in this regard came last week.    The path of least resistance for the Venture is now north, not south – quite simply, the bears are exhausted and have lost control over this market.

The Venture’s RSI(14) on this long-term chart has been in a firm uptrend since July, and this has been accompanied by strong accumulation as shown by the Chaiken Money Flow (CMF) indicator.  Also, for the first time since 2011, the Venture is out-performing Gold – an important pattern change.  The key question at the moment is how soon the Venture will clear critical resistance in the 970’s – once this does occur, expect a major increase in volume as the new uptrend gets an injection of fresh fuel.

Copper 2.5-Year Weekly Chart

The action in Copper at the moment is highly encouraging and supports our bullishness regarding the Venture.  Copper’s 2.5-year weekly chart is pointing toward renewed strength in the metal, consistent with improving global PMI’s.

Mason Graphite Inc. (LLG, TSX-V) Updated Chart

Mason Graphite (LLG, TSX-V) was one of last week’s best performers on the Venture.  New support around the 50-cent level held, and LLG powered 30% higher to close the week at 69 cents.  John’s charts on LLG have been very accurate, so expect the current uptrend to continue but the mid-80’s will be a major resistance area.

The Seeds Have Been Planted (And Continue To Be Planted) For The Next Big Run In Gold Stocks

There’s no better cure for low prices than low prices.  The great benefit of the collapse in Gold prices this year is that it forced producers (at least most of them) to start to become much more lean in terms of their cost structures. Producers, big and small, have started to make hard decisions in terms of costs, projects, and rationalizing their their overall operations.  Exploration budgets among both producers and juniors have also been cut sharply.  In addition, government policies across much of the globe are making it more difficult (sometimes impossible) for mining companies to put Gold (or other) deposits into production, thanks to the ignorance of many politicians and the impact of radical and vocal environmentalists.  Ultimately, all these factors are going to create a supply problem – think about it, where are the next major Gold deposits going to come from? On top of that, grades have fallen significantly just over the past decade.

It doesn’t take a rocket scientist to figure out that the next huge bull market in Gold stocks is just around the corner due to demand-supply dynamics, much leaner producers who will suddenly become earnings machines, and a junior market that will be healthier simply because a lot of the “lifestyle” companies sucking money out of investors will simply disappear or get taken over by individuals or groups who are actually competent and serious about building shareholder value.   A healthy “cleansing” in the market has been taking place.  As this continues, more and more seeds are being planted for an incredible future move in well-managed Gold producers and explorers that could make the dotcom bubble look like a tea party.  As for the juniors, focus on the small universe of companies that have the ability to execute both on the ground and in the market.  Companies that are strong financially, have superior exploration prospects, competent management and clean share structures.

Gold

Gold’s 12-year rally, prompted by rock bottom interest rates and rapidly expanding central bank balance sheets, has come to an end this year with a nearly 30% correction entering the final two trading days of 2013.  Money managers are the least bullish they’ve been on Gold since 2007 – a sure sign that there is greater opportunity than risk at the moment.  Quite simply, too many investors are now parked in Gold’s bearish camp.  Surprises in 2014 will therefore likely be to the upside, not the downside.

For now, Gold appears to be in a trading range between just below $1,200 and just beneath $1,300.  Bullion appears to be gearing up for a near-term test of resistance at the upper end of that range.

 

Gold climbed $11 for the week to finish at $1,214.  Silver jumped 66 cents to close at $19.42.  Copper added 7 pennies, closing at $3.35.  Crude Oil gained $1 a barrel to close above $100 ($100.32) for the first time since October 21 as U.S. oil inventories fell for a fourth straight week.  The U.S. Dollar Index continues to look vulnerable, and closed down one-fifth of a point at 80.34.

U.S. Dollar Index Chart Update

Continued weakness in the U.S. Dollar Index entering 2014 should be supportive of Gold.  Analysts have been so focused on the booming U.S. stock market, they’ve ignored the deteriorating condition of the greenback.  Interestingly, the Dollar Index broke below a 2+ year uptrend line at around the same time as the Venture broke above its 2+ year downtrend line (the two often move in opposite directions).

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been 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, has had a huge impact on bullion.  Despite this year’s drop, the fundamental long-term 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, a Fed balance sheet now at $4 trillion and still expanding, money supply growth around the globe, massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand (especially from China), emerging market growth, geopolitical unrest and conflicts…the list goes on.  However, deflationary concerns around the globe and the prospect of Fed tapering had a lot to do with Gold’s plunge during the spring below the technically and psychologically important $1,500 level, along with the strong performance of equities which drew money away from bullion.  June’s low of $1,179 may have been the bottom for bullion – only  time will tell.  Given the high level of bearishness that exists in this market at the moment, it’s probably safe to say that if Gold hasn’t seen its low yet, it’s at least very close to a bottom (within 10%).   We do, however, expect new all-time highs as the decade progresses and inflationary pressures finally kick in around the globe after years of ultra-loose monetary policy.  There are many reasons to believe that Gold’s long-term bull market is still intact despite this major correction from the 2011 all-time high of just above $1,900 an ounce.

Welcome to our site, or at least the initial version of it!  BMR has been online for more than four years and strictly through word-of-mouth we have built a loyal following.  We encourage reader feedback and the exchange of helpful opinions and ideas among investors in our forum. 

We’re continuing with our plans to ultimately construct a very unique investment and money-management resource site that goes considerably beyond what we have now.  We focus a great deal on the Gold, Silver and Copper markets as well as trends in the global economy, in addition of course to the technical health of the TSX Venture Exchange (CDNX).  An important component of this site, as well, will always be original research on high quality junior exploration companies or small producers 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, and we are being more selective than ever in the current market environment.  We look for companies with the ability to execute both on the ground and in the market, who are determined to build shareholder value, which actually excludes most Venture stocks.  However, investors must understand that the companies we do put forward for our readers’ due diligence are still highly speculative situations and entail considerable risk, volatility and unpredictability.

Our intent is to provide you with information that you can use as part of your own due diligence.  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.  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 perspective (His money that we have been given stewardship of), He will bless you.  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.

The Venture Exchange posted its 4th straight daily gain today, surging 16 points to close at 919.  This market is inching closer to a major technical breakout, though it still has a few hurdles to cross.  More in our Week In Review And A Look Ahead on Sunday.

In John’s updated 3-year weekly chart below, notice how the Venture is now beginning to accelerate to the upside after repeatedly and successfully testing new support at the all-important downtrend line that it finally broke above in late October.  RSI(14) remains firmly in an uptrend.  Overall, this is a very bullish scenario.  The June low has held, and the Venture continues to out-perform Gold which is a good sign.  Quite simply, the bears are losing their control over this market. Reserve a prime seat for what could be an amazing show just ahead.

Every December, we celebrate the coming of God to Earth in the form of a baby named Jesus.  In His coming, God’s kingdom came to earth.  This is a season when gifts are wrapped and given out to friends and loved ones as a blessing from the giver to the receiver.  God gave His one and only Son to the world as a gift, that whoever shall receive Him shall have eternal life.  The gift has been given to all but one must receive Him.  My hope and prayer is that this Christmas is a restful, peaceful time when all can spend time resting in the love of Jesus.  Jesus came as a personal gift for each of us.  We just have to receive Him.

Luke 2:25-35

Now there was a man in Jerusalem called Simeon, who was righteous and devout. He was waiting for the consolation of Israel, and the Holy Spirit was on him.  It had been revealed to him by the Holy Spirit that he would not die before he had seen the Lord’s Messiah.  Moved by the Spirit, he went into the temple courts. When the parents brought in the child Jesus to do for him what the custom of the Law required, Simeon took Him in his arms and praised God, saying:  “Sovereign Lord, as you have promised, you may now dismiss your servant in peace. For my eyes have seen your salvation, which you have prepared in the sight of all nations:  a light for revelation to the Gentiles, and the glory of your people Israel.”

The child’s father and mother marveled at what was said about him.  Then Simeon blessed them and said to Mary, His mother:: “This child is destined to cause the falling and rising of many in Israel, and to be a sign that will be spoken against, so that the thoughts of many hearts will be revealed. And a sword will pierce your own soul, too.”

From my home to yours, my wife and I wish all a very Merry Christmas.  May you be surrounded by the love of Jesus this Christmas season.

Terry Dyer, Owner

www.BullMarketRun.com

6:15 am Pacific

The Venture has come through tax-loss selling season in excellent shape with its downtrend line from 2011 on the 3-year weekly chart acting as rock-solid support as expected.  Since late October, after finally breaking above the downtrend line, this previous stiff resistance has given the Venture impressive support through the pressures of a significant drop in the Gold price combined with December’s typical tax-loss selling in a down year.

Now the fun begins.  As John’s 5-day chart shows, the Venture’s turnaround started late in the trading session last Thursday and accelerated with yesterday’s 9-point gain (refer to Sunday’s charts for the bigger picture view and the important levels the Index needs to cross to confirm the strong upside move we believe is brewing).

20 Venture Plays That Could Excel In 2014

This is by no means a complete list of the most exciting opportunities we currently see on the Venture, but it should be a useful guide for our readers as they carry out their own due diligence over the holidays.  A common denominator with each of these companies is a healthy balance sheet.  These are all companies we have been tracking in recent weeks/months, and they are listed in alphabetical order.

Arianne Phosphate Inc. (DAN, TSX-V) – $1.34

We see a good possibility of a bigger fish swallowing Arianne sometime in 2014 given the highly encouraging feasibility study it released just recently on its Lac à Paul Phosphate Project in Quebec.  The economics are strong with an IRR of 20.7% and an initial payback period of 4.4 years (26-year mine life) before taxes and mining duties.  Average annual phosphate concentrate production is estimated at 3 million tonnes with a grade of 38.6% P₂O₅ and an average mill recovery of 90%.  This high-quality phosphate rock can be recovered from conventional processing of Lac à Paul ore. The company has added about $6 million in cash to its treasury this month through the exercise of warrants and a flow-through private placement at $1.80 per share.

Azincourt Uranium Inc. (AAZ, TSX-V) – 28 cents

One can’t ignore the uranium sector, especially the prolific Patterson Lake South discovery and surrounding plays.  Since April, AAZ has been trading in a horizontal channel between 20 cents and the mid-30’s with its rising 200-day moving average (SMA) – currently at 23.5 cents – providing tremendous support.  Drilling over the winter at the Patterson Lake North Property (50-50 JV between AAZ and Fission Uranium) could be a significant catalyst for Azincourt, while the company also just recently acquired the advanced-stage Macusani Uranium Property in southeastern Peru along with some nearby early-stage opportunities.

Barisan Gold Corp. (BG, TSX-V) – 29.5 cents

We don’t care for Barisan’s jurisdiction (Indonesia) but the company reported a world class Gold-Copper porphyry drill hole result November 5 (904 m grading 0.41 g/t Au and 0.25% Cu) with follow-up drilling in progress.  Results from hole UTD-004 (fully mineralized from 6.6 m to 964 m as of December 11 as stated in the company’s MD&A) could still be several weeks away, providing ample opportunity for more speculators to jump on board.  The objective of the current hole is to identify the depth and general location of the potassic zone and associated bornite mineralization (potential higher grades) at Upper Tengkering.  Technically, the stock has been gradually unwinding an overbought condition that emerged last month when BG quadrupled in value over just a few trading sessions.  Just over 40 million shares outstanding, so the current market cap is modest in our view given the geological and speculative possibilities.

Contact Exploration Inc. (CEX, TSX-V) – 30.5 cents

Contact is a quality Alberta energy play with a confirmed technical breakout as John has indicated.  Contact continues to accelerate its Kakwa Montney play, and is poised for further increases in production as East Kakwa pushes westward.  Stock has broken out of a horizontal channel in place since late last year between 18 and 28 cents.

Fission Uranium Inc. (FCU, TSX-V) – $1.00

An obvious selection given how the Patterson Lake South discovery is shaping up (grades are stunning).  With Fission now holding 100% of that project, the company is clearly a potential takeover target in 2014.  Analysts believe that PLS could host one of the lowest cash cost uranium operations in the world.  Technically, FCU’s 50-day moving average has been in decline since October which has been putting some downward pressure on the stock.  Some additional weakness is certainly possible early in the New Year, just based on technical considerations, but overall this play should deliver next year.

Garibaldi Resources Corp. (GGI, TSX-V) – 11 cents

Investors must always pay close attention to share structure, and Garibaldi has a huge advantage over most of its peers in that department as it hasn’t had to carry out a major financing since early 2009.  In Mexico, GGI has several interesting scenarios brewing and even if just one of them connects – look out.  Current drilling at La Patilla is taking direct aim at a known mineralized system that returned high-grade Gold values over significant widths from recent channel sampling. A long-term agreement with the local community is in place for potential future metal extraction from La Patilla where artisanal miners have been active for many decades.  Meanwhile, in B.C., GGI’s Grizzly Property has all the makings of a hot exploration play in 2014.  Expect GGI to come out swinging in January as this very active company reports on developments at various properties.  One of few juniors with some cash flow and a management team focused 100% on just one company.

GoldQuest Mining Inc. (GQC, TSX-V) – 23 cents

GoldQuest disappointed investors on the discovery front in 2013 as more was expected from its exploration efforts in the Dominican Republic, especially along the newly discovered Guama trend.  But they have yet to test the best targets there (drilling is expected to commence during the upcoming first quarter).  GoldQuest, however, did produce a maiden NI-43-101 resource estimate for its Romero and Romero South deposits (just over 2 million ounces in total in the indicated and inferred categories), and a PEA for the project is expected to be completed by the middle of next year.  Trading in the low 20’s and still armed with more than $10 million in its treasury, GQC is well-positioned to take advantage of a better overall market in 2014.  This stock has a history of sudden and sharp moves to the upside – the key is to buy low and remain patient.

Macro Enterprises Inc. (MCR, TSX-V) – $6.00

We first alerted our readers to Macro in late May when it was trading around $3 a share.  The current chart is showing some weakness, so a further pullback to important support (such as the 200-day SMA) – if that should occur – would represent another outstanding investor opportunity with this situation in our view.  The Macro story is very simple – it’s a construction and maintenance service provider to the energy and resource industries in B.C. and Alberta.  Through the first nine months of its fiscal year ending September 30, Macro recorded net income of nearly $25 million or 91 cents per share.  It’s particularly busy at the moment in the Fort McMurray area.  Pipeline and facility construction, and pipeline repair work, can be quite profitable and there appears to be no shortage of potential contracts for MCR at the moment.

Madalena Energy Inc. (MVN, TSX-V) – 65 cents

Madalena has performed exceedingly well in recent months and also just raised an additional $12 million, mostly through a bought-deal financing at 47 cents.  The company is very active with a large land base of over 150 net sections (100,000+ net acres) in the Paddle River area of west-central Alberta with increasing production and reserves on three horizontal plays.  MVN also has very attractive assets in Argentina where it’s focused on the multi-billion barrel potential of three large blocks within the “sweet spot” of that country’s prolific Neuquen basin.  MVN has enjoyed a nice run-up since late November and could retreat a little more after hitting a nearly 2-year high of 73 cents last week.  Look for the 20-day SMA, currently in the upper 50’s, to provide strong support.

Magor Corp. (MCC, TSX-V) – 37 cents

A tech play we like for the long-term – 2014 could be Magor’s breakout year after the company first started trading on the Venture last spring.  Magor is a “visual collaboration” company led by an all-star management team that includes some of the same senior personnel that guided Newbridge Networks.  Yesterday, Magor reported “solid growth” in its existing software transaction business, and the company is also in the process of rolling out its key Aerus cloud-based services.  We expect Magor’s business model to really start to kick into gear during the second half of next year.  The market is a forward-looking machine, so some share price strength should start to materialize during Q1 if investors conclude that MCC is on the right track.  No guarantees but superb potential here as we’ve seen their impressive technology in action.

North American Nickel Inc. (NAN, TSX-V) – 23 cents

North American Nickel generated some excitement over the summer with high-grade drill results from its Maniitsoq Project in Greenland, specificially the Imiak Hill Conduit Complex.  When drilling resumes in 2014, expect this play to heat up again.  Importantly, the company is developing a growing list of targets throughout the large Maniitsoq package which it believes has the potential to host the world’s next sulphide Nickel-Copper-Cobalt camp.

North Arrow Minerals Inc. (NAR, TSX-V) – 67 cents

Investors looking for opportunities and action in the diamond exploration sphere should find North Arrow quite enticing.  They are well-financed and active on several fronts, and the stock responded well to news in early November of a discovery at the company’s early-stage Pikoo Project in Saskatchewan.  Should get more attention in 2014.

Prosper Gold Corp. (PGX, TSX-V) – 35 cents

Prosper delivered stellar drill results from its Star target at the Sheslay Copper-Gold Porphyry Project over the summer, but the prospect of no activity over the winter months drove the stock lower after the last assays were announced at the end of October.  Prosper’s results and historical numbers from the Star show remarkable consistency of mineralization – in stark contrast to Colorado Resources’ North ROK Property.  What’s shaping up at the Sheslay is a potentially very large tonnage system (multiple targets) with grades that so far are superior to those at the Schaft Creek deposit to the south.  Prosper will attack the Sheslay aggressively beginning in the second quarter of next year, so investors with some patience (a 6-9 month window) should be rewarded handsomely.  A first-rate management and geological team should give investors comfort that this play has a great chance of becoming a huge success.

Probe Mines Ltd. (PRB, TSX-V) – $2.12

A declining Gold price won’t stop a legitimate discovery play from moving forward, and that has been the case with Probe in 2013.   Probe’s Borden Lake Gold Project in northeastern Ontario has been one of the top plays this year in the exploration space with the company identifying a higher-grade system contiguous to the original bulk tonnage deposit.  How Borden Lake continues to develop in 2014, with winter drilling planned, will be interesting to watch.  An updated resource estimate is expected in the near future.  Meanwhile, preliminary metallurgical results for the potential underground high-grade mineralization extending southeast from the proposed open-pit show excellent extraction of Gold using standard processing techniques.  Agnico Eagle took a piece of Probe last spring through a financing which was a very positive sign.  The rising 200-day SMA around $1.85 provides excellent support.

Radius Gold Inc. (RDU, TSX-V) – 9.5 cents

Radius bottomed in late June at 6 cents and has retraced a little more than 50% of its move to 15 cents in August.  The company had $12 million in working capital as of the end of September, and is continuing a review of precious metal exploration projects and/or distressed juniors that may be available for acquisition or joint venture.  At some point, expect Simon Ridgway to pull the trigger on a sensible deal.  There are more exciting situations in the market at the moment, but RDU has to be considered attractive around current levels where it climbed 10-fold between early 2009 and late 2010.

Reservoir Minerals Inc. (RMC, TSX-V) – $5.32

Speaking of discoveries, Reservoir appears to have a big one on its hands at its Timok Project (a JV with Freeport McMorRan) in eastern Serbia (RMC also holds a 100% interest in other areas within the highly prospective Timok Magmatic Complex).  A recent drill result from a known high-grade zone at the Cukaru Peki target (part of the Freeport JV) returned a 166-metre interval grading a spectacular 7.75 g/t Au and 6.65% Cu (11.29% CuEq).  Reservoir hit an all-time high of $5.75 December 11.  Again, Gold can do what it wants – a discovery play like this will march to its own drumbeat.

Ryan Gold Corp. (RYG, TSX-V) – 13.5 cents

The downtrend appears to be over for Ryan Gold, ironically after it pulls out of an area (the Yukon) that allowed this company to raise more than $50 million in the spring of 2011.  Ryan Gold still has more than $20 million in working capital and is searching for new opportunities at a time when some tremendous property bargains are available.  Patient investors should do well at current levels.  The stock has been in a healthy basing/consolidation pattern since last April.

Terrax Minerals Inc. (TXR, TSX-V) – 50 cents

Terrax could make some noise in 2014 as it ramps up exploration at its Northbelt Gold Property which covers approximately 13 km of strike along the prolific Yellowknife Gold Belt on the northern extension of the geology that contained the Giant (7.6-million-ounce) and Con (5.5-million-ounce) Gold mines.  The company has received some interesting results from the re-logging and re-sampling of old drill core in preparation for its own drill program.  Virginia Mines Inc., a current shareholder of Terrax, participated in the first tranche of a private placement at 45 cents that closed last Friday.

True Gold Mining Inc. (TGM, TSX-V) – 40 cents

A wall of resistance at 40 cents with True Gold appears to be crumbling.  Last week, the company announced a very positive feasibility study for its Karma Project in Burkina Faso, West Africa, and this was immediately followed by receipt of an exploitation permit from the Burkina Faso Council of Ministers.  Operating and capital requirements for this project are modest, and the margins are high based on the results of the feasibility study.

Wanted Technologies Corp. (WAN, TSX-V) – $1.50

A second tech play on our Venture list, and one that’s currently making money. Headquartered in Quebec City with subsidiary offices in New York, Wanted provides real-time business intelligence for the talent marketplace.  It’s also the exclusive data provider for the Conference Board’s Help-Wanted OnLine Data Series™, the monthly economic indicator of hiring demand in the United States. Technically, WAN clearly has momentum on its side at the moment but at some point over the short to medium term, likely during the upcoming first quarter, the stock will need to unwind an overbought condition.

As we rest and celebrate the Christmas and holiday season with our families, please be advised of the following BMR posting schedule:

Tuesday, Dec. 24 – Special Venture Situations Entering 2014

The beaten-down Venture market is poised to recover in 2014, and this brief overview will highlight 20 special opportunities for our readers’ due diligence.  These are active companies with strong balance sheets, very capable management teams and properties (or products) that could deliver near-term and longer-term extraordinary results for shareholders.

Tuesday, Dec. 24 – Terry’s Christmas Message

Sunday, Dec. 29 – The Week In Review And A Look Ahead (Expanded Version)

Wednesday, Jan. 1 – New Year’s Message And Market Update

Sunday, Jan. 5 – The Week In Review And A Look Ahead (Expanded Version)

Monday, Jan. 6 – BMR Morning Market Musings (regular daily feature resumes)

Our comments section will of course remain open throughout the Christmas and holiday period.  Special postings beyond the above are possible in the event of any major market or company developments.

At BMR, we are blessed with many wonderful and astute readers.  Everyone can learn from everyone at this site, and we encourage your continued feedback and ideas.  We wish all of our readers a very special Christmas.

TSX Venture Exchange and Gold

Year-end tax-loss selling started to ease last week with the Venture losing just 6 points to finish the week at 888.  With only five trading days left in 2013, the Venture is down 5% for the month but we expect the Index to rebound sharply in the final few sessions of the year which should set the tone for a more promising 2014.  Technically, it’s important to keep in mind that the Venture continues to find support at its long-term downtrend line which it finally broke above in October.  For the first time since 2011, the Venture is also outperforming Gold.  Despite the downward pressure on the Index this month, buying pressure remains strong as you can see in John’s updated 3-year weekly chart.  Bargain hunters have been accumulating, and that’s a positive sign.

Notice in this chart how the RSI(14), at 33%. is almost at trend line support – another clue that a reversal is imminent.

CDNX 3-Year Weekly Chart

CDNX 3-Month Daily Chart

Below is a 3-month daily Venture chart that pinpoints the first two resistance levels that the Venture must overcome – 915 and 925 – in order to set the stage for a potential major rally or new uptrend.  Other conditions necessary will be reversals in the 50 and 100-day moving averages (currently at 930 and 934, respectively).  They will provide additional resistance along with the still-declining 200-day SMA, currently just below 950.  Ultimately, a push through major resistance in the 970’s would trigger an acceleration in a rally or even mark the beginning of a new longer-term bull phase.  This is the closest the Venture has been to a critical reversal and an uptrend that can actually be sustained over a period of many months, not weeks, since the bear market began in early 2011.  The 8-month consolidation since the spring has laid the foundation for a lasting recovery as long as support holds at the June low of 859.

The Seeds Have Been Planted (And Continue To Be Planted) For The Next Big Run In Gold Stocks

There’s no better cure for low prices than low prices.  The great benefit of the collapse in Gold prices this year is that it forced producers (at least most of them) to start to become much more lean in terms of their cost structures. Producers, big and small, have started to make hard decisions in terms of costs, projects, and rationalizing their their overall operations.  Exploration budgets among both producers and juniors have also been cut sharply.  In addition, government policies across much of the globe are making it more difficult (sometimes impossible) for mining companies to put Gold (or other) deposits into production, thanks to the ignorance of many politicians and the impact of radical and vocal environmentalists.  Ultimately, all these factors are going to create a supply problem – think about it, where are the next major Gold deposits going to come from? On top of that, grades have fallen significantly just over the past decade.

It doesn’t take a rocket scientist to figure out that the next huge bull market in Gold stocks is just around the corner due to demand-supply dynamics, much leaner producers who will suddenly become earnings machines, and a junior market that will be healthier simply because a lot of the “lifestyle” companies sucking money out of investors will simply disappear or get taken over by individuals or groups who are actually competent and serious about building shareholder value.   A healthy “cleansing” in the market has been taking place.  As this continues, more and more seeds are being planted for an incredible future move in well-managed Gold producers and explorers that could make the dotcom bubble look like a tea party.  As for the juniors, focus on the small universe of companies that have the ability to execute both on the ground and in the market.  Companies that are strong financially, have superior exploration prospects, competent management and clean share structures.

20 Venture Plays To Watch In 2014

Tomorrow, we’ll be highlighting 20 strong Venture plays – some of which will surely be market leaders in 2014 – for our readers’ due diligence.  By no means will this constitute a complete list of what we view as special opportunities near the end of a bear market cycle, and we’ll be reviewing others in the coming weeks.

Below are updated charts on two companies we’ve been following closely (part of the 20 list) that could come out swinging as the New Year begins – Barisan Gold Corp. (BG, TSX-V) and Garibaldi Resources Corp. (GGI, TSX-V).

Barisan Gold Corp. (BG, TSX-V)

Barisan Gold (BG, TSX-V) has been very volatile since reporting a stellar Cu-Au porphyry drill result in early November from its Upper Tengkereng Project in Indonesia.  That country is certainly not one of our favorite jurisdictions, but 904 metres of 0.41 g/t Au and 0.25% Cu (0.50% CuEq) in hole UTD-003 can’t be ignored.  As CEO Alex Granger stated in a news release, “We have validated one of the highest-grade porphyry discoveries anywhere in the world of the past decade. There are very few new porphyry discoveries that have returned intercepts of 1% Copper equivalent over more than 250 metres. This is even more impressive by the fact that we have not yet drilled down to the potassic zone and associated bornite mineralization of the Upper Tengkereng porphyry system where higher grades are usually intersected. The grades we are intersecting higher up in this system are higher than those that other recent discoveries have found in bornite-rich mineralization within potassic zones.”

The drill rig is the truth machine and it’ll be interesting to see if this system Barisan has hit can return even richer grades of mineralization.  As BG announced November 5, UTD-004 is planned to a depth of 1,400 metres and, should it reach that depth, is likely to be completed by the end of this month with assays available early in the New Year.  As of Nov. 5, this hole had reached a length of 192 metres and is fully mineralized starting at 6.6 metres from surface to 192 metres.

Below is a 2+ year weekly chart from John.  BG has been unwinding a technically overbought condition that emerged in November, with strong support now in the low 20’s.  It closed Friday at 27 cents.  As always, perform your own due diligence (Fib. targets aren’t price targets, just theoretical levels based on Fib. and technical analysis).  Speculation in advance of results could easily drive BG higher, in which case it would be smart in our view to take some profits off the table and ride some low cost or “free” stock.

Garibaldi Resources Corp. (GGI, TSX-V)

Garibaldi Resources (GGI, TSX-V) is one of the few companies on the Venture that hasn’t had to carry out a major financing in nearly five years.  That fact alone makes this very active company highly interesting as share price appreciation has maximum potential given GGI’s healthy share structure (no warrants, no PP shares to come into the market, just 58 million O/S in total with nearly 20% in management’s hands).  Technically, there are also few companies with this kind of a chart – GGI’s major moving averages are in bullish alignment, and a flag has formed on the 3.5-year weekly chart that clearly suggests GGI is gearing up for a major breakout.

We expect the Grizzly Property in northwest B.C. to be a “game-changer” for Garibaldi in 2014 as the Sheslay Valley region matures as an exploration hotspot, and the Grizzly is diamond drilled for the first time ever.  Several years of work have gone into identifying highly prospective targets over a 15-km long corridor from the northwest to central portions of the property.  News from the company’s summer/fall program is expected very soon.

Immediately, however, it’s Garibaldi’s extensive landholdings in Mexico that could deliver some early New Year joy for shareholders.  Recently, Garibaldi reported high-grade Gold channel samples (up to 28.4 g/t) over significant widths at its La Patilla Property in an established mining district near El Rosario in Sinaloa State.   These channel samples were taken across structure (true width) and therefore demonstrate that La Patilla has some robustness to it.  Drilling is now attempting to confirm the consistency of mineralization and if it extends to depth.     Near-surface mineralization has been outlined (through channel sampling) over a strike length of 225 metres between the Murcielago breccia and the La Patilla vein system, and remains open in all directions.  The area is highly faulted, and hydrothermal activity appears to have cooked up an interesting volcanic rock package of rhyolite and andesite.  We know that artisanal miners have been extracting Gold mineralization near-surface at La Patilla for many decades.  What’s also revealing is that Garibaldi has already negotiated a long-term agreement with the local community for potential modest mining at the property – no minor accomplishment, and it shows the locals are on board with GGI’s exploration and overall plans for La Patilla.  The property has never been previously diamond drilled, so the possibility of some early-stage excitement here is very real.

Elsewhere in Mexico, GGI has a few things happening at its Tonichi Project in Sonora State (drill results are pending from the last hole completed at the Locust target), including royalty income from a pilot coal program, and the company’s Iris Project immediately adjacent to two operating mines in Chihuahua State has drill-ready targets.

Gold

The Fed surprised most pundits in September by not beginning the “tapering” process, and did so again last week by announcing the start of tapering – a modest $10 billion reduction in its monthly bond buying program.  Even though Gold had already “baked in” a Fed announcement regarding tapering, immediate knee-jerk selling tested the June low before bullion bounced back on Friday to close the week slightly above $1,200.  Liquidity issues at this time of year, on top of year-end portfolio “window dressing”, can create extra volatility, so how Gold behaves through the end of the month is hard to predict and will be interesting to watch.

Commerzbank, in a note to investors, commented that “If the Gold price should succeed in forming a stable and long-term bottom at above $1,220 per troy ounce, investor interest is likely to pick up again – after all, the considerable uncertainty over QE3 is gone, meaning that the spectre of ‘tapering’ has lost its ability to scare the Gold market.”

Below is a 9-month daily chart from John.  Gold does have strong support around $1,200, and RSI(14) is bouncing off previous support.  History shows us that when money managers are so pessimistic regarding Gold as they are now, it’s the time to buy.  Yes, the potential for another spike downward in Gold clearly exists, but too many investors are parked in the bearish camp right now and that means a major turnaround in bullion is either imminent or within months of occurring.

For the week, Gold was down $36 an ounce after finishing at $1,203.  Silver was off 26 cents at $19.42.  Copper was down a penny to $3.28.  Crude Oil jumped $2.72 a barrel to $99.32 while the U.S. Dollar Index added one-third of a point to close at 80.55.

U.S. Dollar Index Updated Chart

All things considered, the Dollar Index put in a rather unimpressive performance last week by climbing just one-third of a point on the Fed news.  The Fed plans to gradually trim back QE, but interest rates are going to remain low for an extended period even after unemployment levels hit the Fed target.  Given that kind of an environment, combined with a declining 200-day SMA and a major resistance band between 81 and 82, we don’t see how the Dollar Index is going to be able to gain much traction during the first half of 2014.  Weakness in the greenback should be supportive of Gold.

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been 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, has had a huge impact on bullion.  Despite this year’s drop, the fundamental long-term 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, a Fed balance sheet now at $4 trillion and still expanding, money supply growth around the globe, massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand (especially from China), emerging market growth, geopolitical unrest and conflicts…the list goes on.  However, deflationary concerns around the globe and the prospect of Fed tapering had a lot to do with Gold’s plunge during the spring below the technically and psychologically important $1,500 level, along with the strong performance of equities which drew money away from bullion.  June’s low of $1,179 may have been the bottom for bullion – only  time will tell.  Bullion tested that low this past week.  Given the high level of bearishness that exists in this market at the moment, it’s probably safe to say that if Gold hasn’t seen its low yet, it’s at least very close to a bottom (within 10%).   We do, however, expect new all-time highs as the decade progresses.  There are many reasons to believe that Gold’s long-term bull market is still intact despite this major correction from the 2011 all-time high of just above $1,900 an ounce.

Note: John and Jon both hold share positions in BG and GGI.

Welcome to our site, or at least the initial version of it!  BMR has been online for more than four years and strictly through word-of-mouth we have built a loyal following.  We encourage reader feedback and the exchange of helpful opinions and ideas among investors in our forum. 

We’re continuing with our plans to ultimately construct a very unique investment and money-management resource site that goes considerably beyond what we have now.  We focus a great deal on the Gold, Silver and Copper markets as well as trends in the global economy, in addition of course to the technical health of the TSX Venture Exchange (CDNX).  An important component of this site, as well, will always be original research on high quality junior exploration companies or small producers 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, and we are being more selective than ever in the current market environment.  We look for companies with the ability to execute both on the ground and in the market, who are determined to build shareholder value, which actually excludes most Venture stocks.  However, investors must understand that the companies we do put forward for our readers’ due diligence are still highly speculative situations and entail considerable risk, volatility and unpredictability.

Our intent is to provide you with information that you can use as part of your own due diligence.  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.  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 perspective (His money that we have been given stewardship of), He will bless you.  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.

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