BullMarketRun.ca

Gold fell as low as $1,211 this morning, a new five-month low, before bouncing back…as of 7:30 am Pacific, bullion is up $4 an ounce at $1,228…Silver is 20 cents higher at $19.37…Copper is up a penny at $3.16…Crude Oil is enjoying another strong day, up 91 cents a barrel to $96.95, thanks to shrinking stockpiles, while the U.S. Dollar Index has jumped one-quarter of a point to 80.86…

Indian Gold smugglers are adopting the methods of drug couriers to sidestep a government crackdown on imports of the precious metal, stashing Gold in imported vehicles and even using mules who swallow nuggets to try to get them past airport security, according to a report today from Reuters…stung by rules imposed this year to cut a high trade deficit and a record duty on imports, dealers and individual customers are fanning out across Asia to buy Gold and sneak it back into the country…Sri Lanka, Thailand and Singapore are the latest hotspots as authorities crack down on travellers from Dubai, the traditional source of smuggled Gold…in a sign of the times, whistleblowers who help bust illegal Gold shipments can get a bigger reward in India than those who help catch cocaine and heroin smugglers – it’s not so bad if you bring drugs into India, but Gold – well, that’s a whole different story…don’t get caught by the government committing such a sin…

Mining’s Contribution To Canadian Federal And Provincial Governments

A report published by the Mining Association of Canada (MAC) has found that from 2003 to 2012, the total payments originating from mining activities made to federal and provincial government coffers totaled about $71-billion…released yesterday, the yearly report quantified the total mining taxes and royalties, corporate income taxes and personal income taxes paid by mining sector employees on a national an regional scale…

“The royalties, taxes and other payments made to governments by the industry ultimately go towards supporting critical government services like health care, education and the building of infrastructure,” MAC president and CEO Pierre Gratton said in a statement…he added that this impressive amount of more than $70-billion over the past decade also underscored the importance of mining in Canada as both a significant employer across the country and major contributor to the Canadian economy…that’s a message that needs to resonate a lot more throughout this country…

“This report helps demonstrate that a strong and growing mining industry is good news for Canadians through the significant payments that flow from the industry to governments, as well as in jobs, business development and community investments. For the Canadian mining industry to continue its contributory role, however, it must have access to a regulatory and economic environment that allows it to stay competitive, especially when there is still uncertainty in the global economy,” Gratton added.

According to a report from Natural Resources Canada, the Canadian mining industry employed more than 418,000 workers across the country in 2012, which translated to 1 in every 41 Canadian jobs…further, that report found that mining workers earned the highest wages and salaries of all industrial sectors in Canada…the average weekly pay for a mining worker in 2012 was $1,599, which was more than that of workers in forestry, manufacturing, finance and construction…

Today’s Markets

Asia

Asian markets were mixed overnight but China’s Shanghai Composite enjoyed a strong session, gaining 29 points to close at 2252…investors cheered news that financial liberalization reforms in the Shanghai free trade zone (FTZ) will be implemented by early next year…the People’s Bank of China chief said the policies will serve as models for other free trade zones in Chinese regions…

The Shanghai appears headed for a strong finish to 2013, and that has to be considered bullish for equities in general…a key level to watch on the Shanghai is 2270…a confirmed breakout above this resistance would signal a high probability of a major year-end rally…the Shanghai bottomed in late June, the same time as Gold and the Venture each hit their lows…

Europe

European shares were down slightly today…the second estimate for the euro zone’s third quarter GDP confirmed the economy had grown just 0.1% quarter-on-quarter…tomorrow’s European Central Bank (ECB) meeting is in focus, with analysts awaiting the central bank’s economic forecasts…if the ECB indicates inflation will remain below its target into 2015, new liquidity measures  could be introduced next year…right now, the threat of deflation has to be a major concern for the ECB…

North America

The Dow has reversed opening losses and is now up 31 points as of 7:30 am Pacific…

Led by small companies, U.S. businesses added jobs at a robust pace last month, according to a tally of hiring released this morning…private sector jobs in the U.S. increased by 215,000 in November according to the national employment report compiled by ADP and forecasting firm Moody’s Analytics…November’s increase was the strongest gain in a year…economists surveyed by Dow Jones Newswires expected ADP to report a smaller November increase of 178,000 jobs…in addition, October’s ADP employment increase was revised to 184,000 from 130,000 reported a month ago…the ADP estimate is released ahead of the Bureau of Labor Statistics’ employment situation report which is due tomorrow…November’s non-farm payrolls number is expected to show a gain of 180,000, on top of the 204,000 slots added in October…

In Toronto, the TSX is down 16 points through the first hour of trading while the Venture is up 3 points at 918…

Corvus Gold (KOR, TSX) Updated Chart

The first part of December is typically a great time to search for bargains – even short-term trading opportunities – in the Gold stock space, and Corvus Gold (KOR, TSX) is definitely worthy of our readers’ attention as we’ve mentioned previously…KOR continues to advance its North Bullfrog Project in Nevada and recently completed a $5.2 million financing at $1 a share, no small feat given the current overall market environment…Corvus intends to focus on continued drilling and expansion of its newly discovered Yellowjacket high-grade Gold-Silver system at North Bullfrog, and the company expects to deliver an update resource estimate for the project and a PEA during the first quarter of next year…

Below is an updated 2.5-year weekly KOR chart from John…key resistance is around $1.27…KOR is off 6 cents at $1.14 as of 7:30 am Pacific…

Gold Standard Ventures Corp. (GSV, TSX-V)

Another company with a strong exploration project that bargain hunters should keep an eye on over the next couple of weeks is Gold Standard Ventures (GSV, TSX-V) which reported encouraging new drill results last month from its Railroad Project in Nevada…GSV broke above a long-term downtrend line in October which now serves as excellent support…in fact, a very strong support band exists from 58 cents to 70 cents – the “sweet spot”, to to speak, for accumulation in the event of any additional weakness…GSV has gained strength after opening at 74 cents this morning…it’s up 7 cents at 82 cents as of 7:30 am Pacific…as always, perform your own due diligence…

Zenyatta Ventures Ltd. (ZEN, TSX-V)

Zenyatta Ventures‘ (ZEN, TSX-V) seems to have succumbed to the “buy on mystery, sell on history” approach by many investors…the company released an initial resource estimate Monday for its Albany graphite deposit in northeastern Ontario…indicated mineral resources delineated to date total 25.1 million tonnes at an average grade of 3.89% graphitic carbon, containing 977,000 tonnes of Cg…in addition, inferred mineral resources are estimated to total 20.1 million tonnes at an average grade of 2.2% Cg, containing 441,000 tonnes of Cg…

Zenyatta and its technical advisers believe that hydrothermal graphite from Albany will command higher prices than flake graphite products, based on process testwork completed earlier this year…according to Zenyatta, results suggest that high-purity graphitic material can be produced, suitable for competing in the $13-billion (1.5 million tonnes annually) synthetic graphite market…

Below is 6-month daily ZEN chart from John…critical support is at $2…of concern is a now declining 100-day moving average (SMA) – the first time we’ve seen this in ZEN since its big run started in the summer of 2012…that’s a warning sign, along with a 200-day SMA, currently around $2.80, which is now flat and in danger of turning down as well…ZEN is off 3 cents at $2.27 through the first hour of trading…

Note: John, Jon and Terry do not hold share positions in KOR, GSV or ZEN.

Gold has traded between $1,217 and $1,227 so far today, just above a support band that runs from $1,215 down to $1,200…as of 7:00 am Pacific, bullion is flat at $1,219…Silver is off 11 cents at $19.09…Copper is down slightly at $3.15…Crude Oil is up 77 cents at $94.59 while the U.S. Dollar Index is down one-fifth of a point at 80.69…

Interesting comments from Markus Craton, CEO of Craton Capital, at the Money and Mines Conference in London, England, as reported by Mineweb’s Geoff Candy in an article this morning (www.mineweb.com)…Craton pointed out in a speech that in the Gold sector over the last 10 years, while shareholders have seen a 158% return, governments over the same period have seen a 1,488% increase in their share, while the direct packages of executives have risen 1,032% over the same 10-year period…“There is a huge disconnect between the shareholders and the executives,” Bachmann said, “there is too much fat cat behavior, too much free-riding,” though he acknowledged that things have begun to change and that 2013 could well be a watershed year for the sector…

This has long-term implications for Gold, in our view – the Chinese currency is gaining broader usage, and China’s plan it appears is to back its currency with bullion…the renminbi has surpassed the euro as the second most used currency for trade finance by value, according to a study released by banking services group SWIFT…highlighting how the Chinese currency has increasingly internationalised, SWIFT said that its own recent data showed renminbi usage for international trade finance grew from an activity share of 1.89% in January 2012 to 8.66% in October 2013…SWIFT defines trade finance as the use of letters of credit and collections…the euro’s share of international trade finance is now 6.64% as of October, according to SWIFT…the U.S. dollar remains far and away the most used trade finance currency, with an 81.08% share…the top five countries using the renminbi for trade finance in October 2013 were China, Hong Kong, Singapore, Germany and Australia…

Today’s Markets

Asia

Japan’s Nikkei Index gained 95 points overnight to finish at a 6-year closing high of 15750…Japan reportedly will craft an economic stimulus package this week worth about $53 billion to bolster the economy ahead of an increase in the national sales tax in April – Japan’s biggest step in decades toward curbing its enormous debt…

China’s Shanghai Composite jumped 15 points to close at 2223…

Europe

European shares are down significantly in late trading, thanks to some negative economic data…prices of goods leaving the euro zone’s factory gates fell at the fastest annual rate in almost four years in October, a development likely to reignite fears that too little inflation, rather than too much, could threaten the fragile recovery in Europe and the world…the European Union’s statistics agency said today that producer prices fell by 0.5% from September, and were 1.4% lower than in October 2012…that was the largest drop over a 12-month period since December 2009…the decline in prices over the month and year was larger than expected…

North America

The Dow is down for the third consecutive trading session, off 44 points through the first 30 minutes of trading…as you can see in this chart from John, minor pullbacks in the Dow over the last six months (and good buying opportunities) have occurred each time the Index has fallen below its RSI EMA(25) as it did with yesterday’s close…

The TSX is down 57 points as of 7:00 am Pacific while the Venture is off a point at 922…Venture support in the low 900’s is very strong as we emphasized yesterday…while choppy seas in this market can often occur during the first couple of weeks of December, the last month of the year historically is the Venture’s strongest…below is a very interesting “seasonality” chart from John for the Venture Exchange going back to 1999…December, January and February are traditionally the strongest months…

Reservoir Minerals Inc. (RMC, TSX-V)

Not a new discovery – this hole targeted a known high-sulphidation epithermal zone – but a spectacular and significant result nonetheless from Reservoir Minerals’ (RMC, TSX-V) Tumok Project in Serbia (a joint-venture with Freeport-McMoRan)…drill hole FMTC 1341 returned an interval of 166 metres, from 557 to 723 metres, that graded a stunning 6.65% Cu and 7.75 g/t Au (11.29% CuEq) at the CuKaru Peki target…the company has reported results from 17 holes from this particular target – assays are pending from a further 19 holes…Dr. Simon Ingram, Reservoir President and CEO, commented:  “Drilling at Cukaru Peki continues to return spectacular high-grade Copper and Gold values from high-sulphidation mineralization. We are optimistic that the high-grade mineralization may be of sufficient volume and grade to support an underground mining operation while further exploration is carried out on the underlying larger porphyry-style mineralization. We believe that the discovery at Cukaru Peki demonstrates the potential for additional blind discoveries within the Timok magmatic complex and may lead to a renaissance in Copper and Gold production in Serbia.”

RMC is up 29 cents at $5.20 as of 7:00 am Pacific…below is a 2.5-year weekly chart – good chance of a confirmed breakout today…

Barisan Gold Corp. (BG, TSX-V) Update

Important discoveries will help revive investor confidence in the junior resource market, which is why it would be great to see additional strong results from Barisan Gold (BG, TSX-V) as it continues to drill its promising Upper Tengkereng Porphyry Project in Indonesia…this certainly isn’t our favorite jurisdiction, but the results of BG’s last hole (262 m of 1% CuEq) were too good to ignore…Barisan is now attempting to target the potassic core of this porphyry prospect at depth, where grades are anticipated to be higher…the fourth hole is planned to a depth of 1,400 metres and could be completed by the end of the month with assays available early in the New Year…

As John noted in some previous charts following BG’s initial run-up to 33 cents, the “sweet zone” for accumulation was between 15 and 20 cents on a Fibonacci retracement…BG dropped as low as 17 cents and then last Friday blasted through resistance in the low 30’s and climbed as high as 44.5 cents before pulling back once again…technically, BG should now find strong support between 27 and 32 cents – the Fib. 50% and 61.7% retracement levels, respectively…BG is off 2.5 cents at 30 cents through the first 30 minutes of trading…expect continued volatility with this play…below is a 2+ year weekly chart with further details…as always, perform your own due diligence…

LX Ventures Inc. (LXV, TSX-V) Updated Chart

Social media darling LX Ventures (LXV, TSX-V) is another great example of the usefulness of Fibonacci analysis as one technical tool…LXV pushed just 7 cents above John’s Fib. target of 89 cents and couldn’t get above that level and resistance on a closing basis last week…the stock has fallen for three consecutive sessions, and was hit particularly hard yesterday when it fell 19 cents to close at 57 cents – just a couple of pennies above its 20-day moving average (SMA) which could provide some important support…other chart support is at 46 cents as shown below in this 2.5-year weekly from John…LXV fell as low as 49 cents during the first few minutes of trading, but is now off just a penny at 56 cents as of 7:00 am Pacific…

Note: John holds a share position in BG.

Gold has traded between $1,233 and $1,249 so far today…as of 5:30 am Pacific, the yellow metal is down $7 an ounce at $1,237…Silver is up a nickel at $19.73…Copper is off 2 pennies at $3.18…Crude Oil has gained 34 cents a barrel to $93.06 while the U.S. Dollar Index is up one-fifth of a point to 80.89…

With a drop of 5.4%, Gold suffered its worst monthly tumble in November in 35 years, continuing the precious metal’s steady decline in 2013…a better month is likely in the works but not after some more nervous nellies likely throw in the towel…what followed after that horrible November 1978, by the way, was an immediate climb that intensified throughout 1979 and eventually resulted in a quadrupling of the Gold price over a period of just 14 months…that’s not to say Gold is headed toward $5,000 an ounce by early 2015 with a repeat performance, but bullion is oversold and in our view has either already found a bottom ($1,180) or is within 10-15% of its ultimate low…the Chinese, who eagerly have been soaking up supply from western investors dumping their bullion holdings and chasing the flavor of the day the last couple of years, are in the position of being able to revalue Gold in the years ahead…the implications of that cannot be understated…

The much touted ETF liquidations that have been instrumental in driving Gold prices lower this year have been absorbed entirely by China as bullion holdings continue to shift from weak western hands into stronger eastern hands…refineries in Switzerland have been busy converting the 400-ounce bullion bars, typically owned by ETFs, into one kilogram bars preferred by Chinese jewelry makers and Gold investors…

A pick-up in Asian physical demand allowed Gold to reverse last week from a low of $1,226…a slew of economic data coming out of the U.S. this week, highlighted by Friday’s non-farm payrolls report, will certainly influence Gold prices in the coming days…economists expect the U.S. economy to have created 185,000 jobs in November, down from 204,000 jobs in October, according to a Reuters’ survey, with the unemployment rate dipping to 7.2% from 7.3%…Barclays’ economists expect payroll gains of 200,000 to help push unemployment lower to a post-crisis low of 7.1%…

The Venture Is Flashing Important Signals

Investors who have allowed themselves to fall into the trap of a negative mind-set regarding the junior exploration market right now could be making a huge mistake – the same mistake they made but in reverse in late 2010/early 2011 when virtually everyone was caught up in the euphoria of sharply rising share prices and the talk of even more riches to come…

This is not a time to be “depressed” about current market conditions – just the opposite in fact…so many investors (including company management personnel) are lost in a fog of negativity at the moment, they can’t even see what’s actually unfolding right in front of their eyes…they are about to be caught asleep at the switch and flat-footed…so take a few minutes and examine our latest three-year weekly Venture chart from John…we’ll walk you through it…

Breakout Above The Long-Term Downtrend Line

Something very significant occurred with the Venture from a technical perspective in late October…that’s when this market finally climbed above a long-term downtrend line that had been in place since 2011 following the high of 2465…over the last six weeks, the downtrend line has acted as support which is what one would hope for and expect…the Index got beaten down a little bit when it couldn’t overcome resistance in the 970’s in the final week of October, but powerful technical support in the low 900’s has been built into this market since the early summer…that kind of foundation is what’s required in order to lay the groundwork for a sustained move at a later point…a rising 100-day moving average (SMA) – the first time we’ve seen this all year – is giving additional support to the Venture at the moment…

RSI(14) Rising Trendline, Out-Performance vs. Gold

Look at the rising RSI(14) trendline on John’s three-year weekly CDNX chart…this is unquestionably IMPRESSIVE, and it has occurred despite a $200 drop in Gold from its August high…accumulation has been strong, and the Venture is now even showing out-performance against Gold for the first time since 2011…positive signs?…absolutely…

The next couple of weeks are an ideal time for accumulation of good quality juniors, in our view, that could really start to take off at some point this month – certainly immediately after Christmas…remember December 2008?…virtually everyone had thrown in the towel but it was the best time ever to be scooping up bargains…the Venture soared about 30% over six trading sessions between the end of December and the first few days of January in a move that ushered in a fresh bull market…there could be some choppy seas during the first half of this month, as usual given the time of the year, but expect 2013 to finish on a very encouraging note…

Selectivity is critical as a rising tide will not lift all boats (many companies are on life support right now and some simply won’t survive which will actually be a good thing)…stick with those companies that possess the following attributes…

1. Strong cash positions

2. Active exploration programs (drilling) with solid properties in safe jurisdictions

3. Superior management (avoid “lifestyle” companies like the plague)

4. Attractive share structures

Within this relatively small universe, we see a very exciting market shaping up…investors don’t plan to fail…they just fail to plan…prepare now for what we see as better days ahead, very soon…

U.S. Dollar Index Weekly Chart

With Friday’s job report and an important Fed meeting up in mid-December, the U.S. Dollar Index is fast approaching a critical juncture…keep in mind, the Venture often moves in the opposite direction of the greenback, so we need to keep a close eye on the Dollar Index for additional clues that the Venture could be gearing up for an important breakout by month-end…there are several problems with the Dollar Index just from a technical perspective (forget the Fed’s never-ending money printing and their plan to keep interest rates at rock-bottom for as long as the eye can see)…the Dollar Index broke below a two-year uptrend line in September which now provides resistance along with a 200-day moving average (SMA) that has flattened out at 82 and is threatening to reverse to the downside by January…recently, the Index has been trading between strong support at 79 and resistance at 81…right now, it’s looking weak and vulnerable, and it’s interesting that it appears to have topped out at the end of June when both Gold and the Venture hit multi-year lows…

While there are still many dollar bulls out there, a potential scenario we see unfolding is a break below critical support at 79 during the first quarter of next year (the first 2014 surprise development?)…such an event would be hugely bullish for both Gold and the Venture…we’ll see what happens…we’ll be watching the Dollar Index like a hawk…