Gold fell as low as $1,328 overnight but has recovered strongly…as of 8:30 am Pacific, bullion is up $4 an ounce at $1,343…Silver slipped slightly below $20.60 overnight but has erased all of those losses and is now up 4 pennies at $20.92 (John has updated Silver charts at the bottom of today’s Morning Musings)…Copper is weak again today, off 4 pennies at $3.05…Crude Oil has lost $1.48 a barrel to $101.10…non-commercial speculative positions in the Oil market now stand at the highest level on record, which certainly increases the odds of a near-term pullback…the U.S. Dollar Index is up more than one-tenth of a point at 79.82…

Gold prices in China were trading at a discount of $5-6 an ounce to spot prices today, a sign of sluggish demand which could be just temporary…prices were at a premium of over $20 at the beginning of the year…

SPDR Gold Trust, the world’s largest Gold-backed ETF, said its holdings rose 1.5 tonnes to 805.2 tonnes on Friday…a lot of Gold supply has come off the market with a drying up of ETF selling, and that’s providing price support…

According to data released Friday by the Commodity Futures Trading Commission, hedge funds and money managers raised their bullish bets in Gold futures and options for a fourth consecutive week as geopolitical tensions boosted speculative interest to the highest in more than a year…

The China Gold Association says demand in the Asian nation is on pace for a strong 2014 but may decline 17% this quarter from a year earlier after an early 2013 surge in purchases of bars and jewelry…demand this quarter may drop to 250 metric tons from 300 tons, according to Zhang Yongtao, vice chairman of the Beijing-based group (source: Bloomberg)…last month, the China Gold Association reported that total 2013 demand surged 41% to 1,176 tons from the year before…buyers who snapped up bullion in 2013, during the biggest price slump in more than three decades, may be somewhat deterred by this year’s rebound in prices which are off to the best start since 2008…the drop in sales may be brief as prices stabilize and buyers return for holiday purchases, according to Yongtao…

The World Gold Council’s managing director for the Far East, Albert Cheng, stated last month that given wealth accumulation among China’s growing middle class, “China’s Gold consumption this year will probably be sustained above 1,000 tons as long as the economy here will grow at 7%”.

While Gold is off to its best start in six years after topping $1,350 an ounce, Goldman’s Jeffrey Currie says chances are increasing that prices will slump to $1,000 for the first time since 2009…such a dramatic fall in Gold is simply not in the cards in our view, based on a variety of factors including how the Venture is trading…the CDNX is often a very reliable leading indicator of future bullion prices like it was in 2011 when it topped out six months ahead of Gold…the Venture has in fact broken out technically, suggesting that higher, not lower, Gold prices are in store later in the year…

Another factor favoring Gold at the moment is the weak greenback…if the Dollar Index can’t hold critical support at 79 in the coming months, then bullion could really take off…a test of that support appears to be in the cards in the near future based on this updated 2.5-year weekly chart from John…

U.S. Dollar Index Updated Chart

Copper Update Including Chart

Copper prices recorded their biggest drop in more than two years Friday, after a Chinese company’s bond default highlighted concerns about slowing growth in the world’s biggest consumer of the industrial metal…more weakness in Copper was triggered this morning after an industry report showing China’s manufacturing sector activity fell to a seven-month low, potentially damping demand for the metal used in everything from household plumbing to smartphones…

Adding to the worries are concerns that many Chinese companies that have been struggling to raise cash have instead turned to a risky type of funding which involves importing Copper and using it as collateral for bank loans…if the price of Copper falls, then borrowers could be forced to dump the metal to help cover losses, adding more selling pressure to the market…

Copper 13-Year Monthly Chart

Copper has a strong base at $3 a pound, and RSI(14) is very close to a support area that has held since the beginning of 2010…so this 5% drop in prices since Friday should not spook investors…some “loose apples” are being shaken off the tree, quite often a healthy event…it’s possible that this could be one last test of support before Copper begins a move to the upside that can be sustained…sudden, sharp drops like the one we’ve just seen have been followed previously by strong advances…

Today’s Markets

Asia

China’s Shanghai Composite took a pounding overnight, falling nearly 59 points or nearly 3% to close at 1999…investors in our view have over-reacted to media headlines over the weekend of a collapse in Chinese exports in February…the weaker than expected number had a lot to do with timing of the Lunar New Year holiday and the effect of rampant over-invoicing by exporters in the first months of 2013…to adjust for the distortion, Beijing usually compares figures from the two months combined (the Lunar New Year holiday was in February this year as opposed to January in 2013) and on that basis China’s exports decreased by only 1.6% in the first two months compared with the same period a year earlier…evidence of a minor slowdown, perhaps, but the February headline number being thrown around is misleading…Chinese imports in the first two months, meanwhile, rose by 10% from a year earlier…

Japan’s Nikkei fell 154 points or 1% overnight to close at 15120…

Europe

European markets were down modestly today…

North America

The Dow is down 106 points as of 8:30 am Pacific…the TSX is 17 points lower while the Venture has slipped 2 points to 1041…

Venture Volume Reversal In Advancing Issues – More Evidence Of Major Market Shift

More evidence that the Venture is now in the early stages of a new bull market, albeit investors are being selective at this point…within a few months, we expect the “masses” to really start piling in which is why it’s so important in our view to be accumulating high quality situations now…volume is a key indicator and John’s 10-year monthly chart below shows a critical reversal to the upside in the monthly SMA(20) as it pertains to volume in advancing issues…this chart tells us the Venture will be climbing significantly higher in 2014…

CDNX 3-Year Updated Weekly Chart

Below is John’s updated 3-year weekly Venture chart…it would be reasonable to expect the RSI(14) to push into overbought territory before a period of consolidation sets in…the Index is underpinned by exceptionally strong support from the 970’s and up, so even any sudden near-term pullback would be modest…the turning point for this market came last October when it broke above a long-term downtrend line…next major chart resistance is 1150…

Fission Uranium Corp. (FCU, TSX-V)

Fission Uranium (FCU, TSX-V) has drilled yet another spectacular hole at Patterson Lake South…with 30.08 m of total composite off-scale (greater than 9999 cps) mineralization in 136 m total composite mineralization at shallow depth, PLS14-164 has returned the second strongest off-scale results recorded at PLS to date, placing it amongst the best holes drilled in the Athabasca Basin…PLS14-164 has also widened the R780E zone…

FCU has hit a new high of $1.70 this morning…below is a 9-month weekly chart showing last week’s confirmed breakout and the next Fib. measured resistance level…

Forum Uranium Corp. (FDC, TSX-V)

Forum Uranium (FDC, TSX-V) is another play in the Athabasca Basin to watch with interest in terms of upcoming results…FDC commenced drilling in late February along northern sections of its 100%-owned Clearwater Property, on trend and immediately adjacent to the southwest of Fission’s PLS discovery…Forum is also in the process of completing a financing of approximately $3 million through a combination of flow-through and hard dollars…

FDC has climbed on speculation from the mid-30’s since the beginning of February…we’d prefer to wait for results at this point…technically, FDC is looking strong with the rising 20-day SMA, currently at 44 cents, providing solid support since early December…the stock appears to be completing a cup-with-handle pattern which puts near-term resistance at about 60 cents…FDC is up a penny at 52 cents as of 8:30 am Pacific…

Silver Short-Term Chart

This 4-month daily chart shows Silver with powerful support between Fib. retracement levels $20.28 and $20.64, and in between that is the rising 50-day SMA at $20.36…we see no reason why Silver won’t hold those levels…

Silver Long-Term Chart

The long-term Silver chart confirms that the metal is in an area of exceptional support…sell pressure has been dominant since early last year but is weak…if and when Silver breaks above the main downtrend line, watch out…

TSX Venture Exchange and Gold

After an 8% jump in February, the Venture is off to a flying start in March with an 18-point gain last week – its fifth consecutive weekly advance – to close at 1043.  Friday’s performance was particularly impressive – the Index shrugged off an $11 drop in Gold and a 12-cent tumble in Copper by climbing 3 more points with new 52-week highs exceeding new 52-week lows for the first time this year (for the first time in a long time, in fact).  Just another indication of how this market has turned the corner, yet there are still many investors who are behind the curve on this.

Yesterday we posted an important 10-year weekly chart showing how the SMA(50) for Venture advancing issues has reversed to the upside – yet one more piece of evidence that a new bull market is underway.  On Monday, we’ll show how a surge in CDNX volume (volume is such a critical technical indicator) also demonstrates that a major market shift has occurred.  Within a few months, it’s reasonable to believe that the “masses” will be piling into the Venture in ways we haven’t seen since 2010. Do your due diligence and be selective, but get positioned now in the best plays if you aren’t already.  The next six months could be spectacular.

Below is John’s updated 5-year weekly Venture chart, showing a market with steadily increasing buy pressure and room to move higher in the immediate future with RSI(14) currently at 68%.  One possible scenario over the near-term is that the Venture may challenge the 1150 area – the next major chart resistance – before a period of consolidation sets in prior to another leg up that eventually carries the Index to anywhere between 1350 and 1650 by late summer/early fall.  There will likely be several catalysts for this including what we predict will be one of the most significant and dramatic area plays – the Sheslay Valley – that British Columbia has ever witnessed (much more on that in the coming week).

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 in 2013 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 (technology has made it easier for groups opposing mining projects to organize and disseminate information, even in remote areas around the globe).   Ultimately, all of  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 continues to find stiff resistance, as expected, around $1,350.  From $1,275 to the 200-day SMA at $1,303, there is outstanding support, so for now bullion can be expected to trade within that range until it decides to break one way or the other.  We believe the bias in Gold is to the upside, especially given the way the Venture is behaving, so a breakout through $1,350 seems much more likely than a collapse below $1,275.  Despite’s Friday’s weakness due to a better-than-expected U.S. jobs report, Gold managed to post its fifth straight weekly advance by climbing $10 to $1,339.

Below is a 9-month Gold chart from John.  RSI(14) is trending lower at the moment on this chart, so it’s possible bullion may need to consolidate for a little while longer below $1,350 before it’s ready for a breakout.  Buy pressure is strong and so is the bullish trend.  Note the 2013 double bottom reversal pattern.

Silver fell 41 cents last week to close at $20.89 (John will have updated Silver charts Monday as usual).  Copper got hammered on Friday (China-related factors) and closed down 13 cents for the week at $3.09 (very strong support at $3.00).  Crude Oil edged 8 cents higher to $102.58 while the struggling U.S. Dollar Index fell one-tenth of a point to 79.69.  A test of critical support at 79 in the near future appears almost certain for the U.S. Dollar Index.

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 Gold’s largest annual drop in three decades in 2013, the fundamental long-term case for the metal remains solidly intact – 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 “momentum traders” away from bullion.  June’s low of $1,179 was likely the bottom for Gold.  Extreme levels of bearishness emerged in the metal last year.  With the long-term bull market remaining intact, we expect new all-time highs in Gold as the decade progresses.  Inflationary pressures should eventually kick in around the globe after years of ultra-loose monetary policy.

We are in the process of updating our eAlert list, especially in light of recent exploration discoveries and the much improved Venture outlook for 2014.  If you wish to be included in the BMR eAlert system, which sends out occasional important and timely market information that’s not always posted on our site (or before it’s posted on our site), simply click on the “Contact Us” button you see in the top right hand corner of this page, type in “Alert” in the subject line, give us your first name, and hit the send button.  Your email address is not given out to any other party.

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Gold weakened this morning after a moderately better than expected U.S. jobs report for February…bullion traded as high as $1,354 overnight (still stiff resistance around $1,350) but fell as low as $1,326 before stabilizing…as of 8:15 am Pacific, bullion is down $14 an ounce at $1,336…it still has a good chance of posting its fifth straight weekly gain as last Friday’s close was $1,329…Silver is 57 cents lower at $20.87…Copper is down sharply, with traders reacting to the first Chinese company default (Shanghai Chaori Solar Energy) and expressing skepticism about the country’s economic growth projections…Copper has slid 11 cents to $3.11, clearly an overreaction but that’s how markets behave sometimes…Crude Oil is $1.06 per barrel higher at $102.62 while the U.S. Dollar Index has reversed after dipping below 79.50…it’s now up slightly at 79.72…a test of critical support at 79 still appears to be in the works, however…

Physical demand for Gold does need to pick up in order for bullion to maintain its momentum…in China, premiums over spot prices were below $1 an ounce today, compared with over $20 an ounce earlier in the year…the recent drop in the value of the Chinese currency has also made Gold more expensive there…however, the yuan has rebounded sharply this week – its biggest weekly gain in over two years – after an unprecedented tumble since mid-February…this increased volatility in the yuan, and eventually less intervention, come as China’s central bank also pursues an ambitious plan to internationalize the currency and increase its use outside the world’s second-largest economy…the central bank has been aggressively accumulating Gold in recent years to back the yuan though China has not provided an update of its official reserves since 2009…

Technically speaking…Gold’s 10 and 20-day moving averages (SMA’s), at $1,336 and $1,316, respectively, have moved above the 200-day SMA at $1,305, a bullish sign…

Greenspan on Putin & Russia

Interesting comments from former Fed Chairman Alan Greenspan on CNBC this morning…he said he’s pessimistic about the Ukraine crisis because it appears that Russian President Vladimir Putin is trying to some extent to put the Soviet Union back together…

“Putin probably, almost certainly, thinks that one of the great disasters of the 20th century was the demise of the Soviet Union,” Greenspan stated in a “Squawk Box” interview.  “It’s very obvious that he’s trying to work its way back and maintain something similar to that sort of institution.”  He added, “I don’t see that we have the capability of preventing it – except, if we can affect their financial system significantly that it creates deterioration within Russia.”

An interesting fact – 10 of the world’s 100 richest people are from Russia, according to the latest Forbes Billionaires list…many of them are believed to have close ties to Putin, and they could be targeted by economic sanctions such as asset freezing if the Ukraine crisis deepens…

Today’s Markets

Asia

China’s Shanghai Composite fell 2 points overnight to finish the week at 2058…Japan’s Nikkei climbed 139 points or nearly 1% to close at 15274…

Europe

Major European markets were down significantly today, between 1% and 2%…

North America

The Dow is down 8 points as of 8:15 am Pacific…U.S. job creation ramped up somewhat in February, posting a better-than-expected gain of 175,000 despite expectations that weather would keep the count low…the unemployment rate edged higher to 6.7%…economists polled by Reuters expected the U.S. economy to have created 149,000 jobs in February, up from the initially reported 113,000 in January…

The TSX is flat as of 8:15 am Pacific while the Venture is holding up well despite Gold’s weakness and is off 2 points at 1037…Fission Uranium Corp. (FCU, TSX-V) has climbed another 10 cents to $1.55 after reporting results from four more holes at Patterson Lake South including PLS14-160 which returned 16.8 m of total composite off-scale radioactivity in 85.5 m total composite mineralization…Alix Resources Corp. (AIX, TSX-V) is one of this morning’s volume leaders, up a penny at 4.5 cents after reporting that it has doubled the size of its North Cap Project above the Sheslay, Grizzly and Hat properties in the Sheslay Valley to nearly 40 sq. km…AIX is forming plans to commence a work program shortly at North Cap West (contiguous to the Grizzly) and North Cap East (contiguous to the entire northern border of the Sheslay), and thawing conditions in the area should help in that regard…

Venture Chart – Critical Reversal In Advancing Issues

We have a very interesting chart from John this morning that demonstrates how the Venture has indeed REVERSED, that the bear market is over and a new bullish phase is well underway…some investors have been so scarred by the 65% drop from the early 2011 high to the late June 2013 low of 859, that their eyes just aren’t open to the fact that this market has indeed turned the corner…

There are many technical indicators supporting the view that the Venture is going to enjoy a robust 2014, including the moving average of advancing issues as seen below in a 10-year weekly chart…what this shows is how the weekly SMA-50 for advancing issues has reversed to the upside, just like it did about midway through 2009…it reversed to the downside in late 2007 and again in late 2011, and those were times to step aside from the market or at least be extremely cautious…the risk-reward ratio is now much more favorable given this very reliable indicator…many investors are often “behind the curve” when it comes to the start of a bear market or the beginning of a new bull market – they recognize the shift later than they should…the time to accumulate is NOW, in our view – don’t wait until the masses have their “light bulb” moment in a few months or you’ll be paying much more for the many stocks you might be looking at now…

Doubleview Capital Corp. (DBV, TSX-V) Updated Chart

Some bullish technical developments in Doubleview Capital (DBV, TSX-V) as shown in this new 3-year weekly chart from John…yes, the RSI(14) is rather high but can continue in this range for an extended period as witnessed in other discovery situations…what’s significant is the up momentum, the strong Fib. support at 23 cents, and the fact that DBV has been consolidating in a 4-week pennant…this type of formation is often followed by a breakout to the upside…the fundamentals support that potential outcome as a significant warming trend is moving into the Sheslay Valley, creating conditions suitable for drilling that DBV may exploit before the end of the month given the fact they’ve been able to raise money through the exercise of warrants…we’ll have more on DBV Monday…DBV is unchanged at 25 cents as of 8:15 am Pacific…

Bayhorse Silver Inc. (BHS, TSX-V)

A speculative opportunity readers should have on their radar screens in the event of any weakness is Bayhorse Silver (BHS, TSX-V) which has been reporting some bonzana-grade Silver assay results from sampling at its Bayhorse Silver Mine Property, a former high-grade producer, in eastern Oregon…the state is full of tree huggers/environmental radicals, so it’s not our favorite exploration and mining jurisdiction, but work is being performed at Bayhorse and the numbers are rather eye-popping to say the least – significant grades of Copper, Zinc and Antimony were also reported in the samples (check out the company’s news release Monday)…

Bayhorse’s 10-day SMA, currently at 13 cents, has been providing excellent support since late last year…chart resistance is at 20 cents (BHS hit a high of 20.5 cents Feb. 26)…below is a 3.5-year weekly chart from John…as of 8:15 am Pacific, BHS is down 1.5 cents at 16 cents…

Paramount Gold & Silver Corp. (PZG, TSX, AMEX)

When we see charts like this, we can’t help but be bullish on the overall outlook for Gold and Silver despite this morning’s weakness…Paramount Gold & Silver (PZG, TSX & AMEX) has been making progress on a couple of fronts (Mexico and Nevada), and the technicals are showing an important breakout in the stock even though PZG is off slightly this morning…Paramount has broken above a downtrend line, RSI(14) is climbing a nice uptrend and buy pressure has replaced sell pressure which had been dominant for much of the past year…a turnaround is in progress here as evidenced by this 2-year weekly chart…PZG is down 2 cents at $1.39 on the AMEX as of 8:15 am Pacific…

Note: John and Jon both hold share positions in DBV and AIX.

Gold is strengthening after dipping as low as $1,330 overnight…as of 8:15 am Pacific, bullion is up $9 an ounce at $1,346…we have two important Gold charts this morning – see below…Silver is 18 cents higher at $21.34…Copper is flat at $3.21…Crude Oil is 19 cents lower at $101.26 while the U.S. Dollar Index is under pressure again, off more than one-third of a point to 79.72…

Check out Mineweb (www.mineweb.com) for some interesting comments from Eric Sprott regarding Gold in a Podcast interview with Geoff Candy (Podcast Gold Weekly – The Effects of Gold Market Manipulation and the Opportunities for Equities):  Sprott stated, “I wrote an article called “Don’t miss this Golden opportunity” which is available on Sprott.com and basically it hypothesized that the price of Gold was manipulated in the last two years, that we had this linear trend of where was Gold was going, that we got off that trend and of course the trend started in 2000 and was right on trend until 2011.  Then all of a sudden it came off that trend. Our argument is that when it goes back to trend, it should be at $2,100 today and it would be something like $2,400 at the end of the year. I strongly believe that’s the case, I strongly believe the western central banks have very little Gold left (our emphasis) and I suspect it’s probably going to overshoot that trend line when all is revealed that western central banks don’t have as much Gold, if any, and people say well how can you say they may have no Gold?  I say, well, the U.S. owns theoretically over 8,000 tons of Gold, Germany asked for their Gold back and they deliver five tons. Well how can you only deliver five tons when you’ve got 8,000 tons? And it’s not logistics because China imports 100 tons a month.

“This is not a logistical issue,” Sprott continued…“You can look at all the data.  It’s quite relevant, it’s there and I think western central banks who don’t have to declare that they’re selling Gold because they have a line in their balance sheet called Gold and Gold receivables.  One line and how much is physical and how much has been leased which was very convenient on their part, and I think they’ve been leasing it out for the last 14 years (our emphasis) and demand has always exceeded supply for that time. When I wrote the article “Do the western central banks have any Gold left”, in late 2012 it seemed obvious.  We knew how much Gold they had and now it’s 12 years later, and they probably don’t have any left. Was I surprised to see the raid on Gold and the dumping of the ETFs at 1,300 tons come up?  No I was not because that was the problem, they didn’t have Gold.  And I believe it to this day.  We’re all going to find out that they don’t have the Gold, that they’ve got a currency that’s valueless, that most of the countries are broke. That’s the easiest call in the world to make, that most countries are broke.  Look at the obligations they have and look at the income they have and there’s just no way they’re going to meet their obligations, which means their currencies are going to be coming under pressure. What’s the alternative to currencies?  The alternative is to own something real and for the most part the intention goes to Gold.”

Gold – The “Big Picture” 20-Year Chart

We have two important Gold charts this morning…the first is a 20-year chart going back to 1995 that of course shows the 1999 low of $253.20 and the September 2011 all-time high of $1923.70…a few things are interesting about this chart:

1. RSI(14) has formed a bullish “W” pattern and is now at 45% and moving up; there was a slight divergence between RSI(14) and price at the end of 2013 – bullish…

2. Gold found strong support around the Fib. 61.8% retracement level; the 50% retracement is $1,027 but a drop to that level seems highly unlikely given the breakout in the Venture and many Gold stocks, and the fact that Gold ETF selling peaked last year which has moved a lot of supply off the market in 2014…

3. The bearish trend that started in late 2011 clearly peaked last year as shown by the ADX(14) indicator; +DI is on the increase and a bullish potential +DI/-DI crossover could certainly occur at some point this year…

Gold 2-Year Weekly Chart

This 2-year weekly chart tells us the following:

1. Gold broke above a short-term downtrend line in February and has been attempting, without success so far, to push through stiff resistance around $1,350…

2. RSI(14) at 57% has plenty of room to move higher and is climbing an uptrend line…

3. A bullish +DI/-DI crossover occurred in February – this has a better chance of staying intact now than it did in 2012 unless major new sources of selling come into the market…

4. Gold is within shouting distance of pushing through a downtrend line in place (now around $1,375) since the $1,800 recovery high in 2012…this is why overcoming resistance at $1,350 is so critical…

Our view is we will see Gold break above $1,400 in the not-too-distance future…however, a shorter-term chart (9-month daily) shows RSI(14) levels in overbought territory and a slight divergence between RSI(14) and price, so one cannot rule out the possibility of some consolidation below $1,350 and a test of support around $1,300 before bullion surges higher again…tough call in terms of what immediately lies ahead – the next several trading sessions should prove interesting…physical demand needs to show strength at $1,350 and higher…

Putin’s Expensive Adventure

The Bank of Russia sold a record of $11.3 billion in foreign currencies to help stabilize the ruble after markets panicked Monday in the wake of Russia sending troops to the Crimea region of Ukraine…the central bank released the costs of its intervention on a daily FX operations report…the bank did not release any further information…along with the currency intervention, the central bank also had to hike rates 150 basis points to 7% on Monday to stop the dramatic slide in the currency…on Monday during the height of the Ukrainian-Russian conflict, the U.S. dollar hit an all-time high of 36.614 against the ruble…

Today’s Markets

Asia

China’s Shanghai Composite shook off concerns over the country’s first-ever domestic bond default, and climbed 6 points to finish at 2060…solar equipment producer Chaori Solar said it will not be able to meet interest payments on bonds due tomorrow…Japan’s Nikkei surged 237 points overnight or 1.6%…

Europe

European shares are up slightly in late trading overseas…as expected, the ECB left its main interest rate and its deposit rate unchanged at 0.25% and 0%, respectively…ECB President Mario Draghi gave a news conference following the decision, stating that the modest recovery in the euro zone was continuing…he firmly reiterated forward guidance…the Bank of England also kept interest rates at record lows today…

North America

The Dow is up 74 points as of 8:15 am Pacific…the number of Americans filing new claims for unemployment benefits fell more than expected and hit a three-month low last week, a sign of strength in a labor market that has been hobbled by severe weather…separately, the U.S. government sharply revised down non-farm productivity for the fourth quarter, mirroring the economy’s slow growth pace in the same period…

According to news organizations, estimates for new-job creation in tomorrow’s non-farm payrolls report for February hover between 143,000 to 150,000…113,000 jobs were created in January…the stock market is likely to win either way tomorrow…if the jobs number is weaker than expected, markets will shake it off and blame it on bad weather…on the flip side, investors may find reasons for encouragement from a better-than-expected jobs number…

TSX Updated Chart

The TSX continues to hug the top of an upsloping channel with RSI(14) in overbought territory at 74%…could we see a breakout – even a “false” breakout – above the channel in the near future?…absolutely, but that would likely create very overbought conditions which would be followed by a healthy pullback…a minor correction from current levels is also possible based on this chart…as of 8:15 am Pacific, the TSX is down 17 points…

The Venture continues to rock ‘n roll…it’s up another 9 points at 1038 as of 8:15 am Pacific…next major resistance, as John’s charts have pointed out, is the 1150 area…

Alix Resources Corp. (AIX, TSX-V) – The Sheslay Valley’s Undiscovered 3.5-Cent Opportunity

A company worthy of our readers’ due diligence which has gone through some important changes recently and is interestingly 100% focused on the Sheslay Valley is Alix Resources Corp. (AIX, TSX-V)…they have been steadily building a strategic land position in this rapidly emerging area, and their most recent coup was securing a very reasonable deal with privately-held Divitiae Resources to acquire a claim package that covers the entire northern border of Prosper Gold Corp.’s (PGX, TSX-V) Sheslay Property (mineralization trends north, open in all directions in fact) and much of the northwestern border of Garibaldi Resources Corp.’s (GGI, TSX-V) Grizzly Property…as the masses become more aware of the discoveries and the potential of the Sheslay Valley, and all three major players (PGX, GGI and Doubleview Capital Corp. – DBV, TSX-V) commence drill programs, Alix will be in an ideal position to gain serious attention and traction in the market…so rather than chasing AIX at potentially much higher levels, now in our view is “accumulation time” with the stock strongly supported by a rising 50-day moving average (SMA) and a 200-day SMA that has flattened out at 3 cents…interestingly, AIX is pursuing not just Cu-Au porphyry opportunities in the Sheslay Valley, but sees the potential for epithermal Gold deposits as well…in addition to its “North Cap” holdings, immediately above Prosper and Garibaldi, Alix controls nearly 50 sq. km on strike southeast of the Grizzly and east of Teck Resources Ltd.’s (TCK.B, TSX) Eagle Project…AIX is quickly becoming a serious player in this area, and our due diligence shows they have a highly capable geological team that’s not interested in playing “closeology” – they are going to push hard with a game plan to drill and make discoveries of their own…the chances of more discoveries on the Sheslay, the Grizzly and the Hat are high, not to mention elsewhere…AIX has become extremely well positioned to take full advantage of that and is actively preparing a game plan for tackling priority areas along the Prosper and Garibaldi northern borders and in the south where there are interesting Minfile showings (Halt and Vi) that are worthy of serious investigation…

Below is a 4-year weekly AIX chart from John…the RSI(14) and ADX(14) indicators point to a well-defined bullish trend with the 5-cent level as key resistance…AIX is unchanged at 3.5 cents as of 8:15 am Pacific on total volume (all exchanges) of more than 700,000 shares…it has liquidity…as always, perform your own due diligence…

Coming Soon: Part 2 of our Special Feature on DBV:  “Hang On To Your Hat”.  Doubleview is looking strong this morning and we’ll be providing a short update tomorrow in advance of the second part of our feature on the Hat discovery.

Eskay Creek Mining Corp. (ESK, TSX-V) Update

We introduced this “sleeper” for our readers’ due diligence February 18, and since then Eskay Creek Mining (ESK, TSX-V) has climbed more than 50%…it’s a certainty that northwest British Columbia is going to be a hot exploration area this year, all the way up to the Sheslay Valley and beyond…ESK controls 40 sq. km surrounding the prolific past producing Eskay Creek mine, and they have some giant neighbors – Pretium Resources Inc. (PVG, TSX) and Seabridge Gold Inc. (SEA, TSX)….while it was in operation, Eskay Creek was the second richest deposit in North America and the fifth largest Silver producer in the world…a technical adviser for ESK is the highly respected James Rogers, P.Geo., who was Chief Geologist at the Eskay Creek mine between 1994 and 2003…Rogers prepared an ESK corporate presentation which is available on their web site – we suggest our readers check it out…

Technically, ESK has successfully broken out above a long-term downtrend line after finding rock-solid support at 3 cents…in recent weeks there has been a volume surge in the stock which is what initially caught our attention…below is an updated 5-year weekly chart from John…the stock is attempting to overcome important resistance at 10 cents…

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

The ever-volatile Mason Graphite (LLG, TSX-V) continues its roller coaster ride…the 50-day SMA provided excellent support on the retracement from the late December high of $1.08 to the late January low just above 60 cents…there has now been a breakout above resistance at 85 cents as you can see in this 2+ year weekly chart…

Note: John and Jon both hold share positions in GGI, AIX and DBV. Jon also holds a share position in PGX.

Gold has traded between $1,332 and $1,342 so far today…as of 7:45 am Pacific, bullion is up $5 an ounce at $1,339…Silver is 9 cents higher at $21.23…Copper is off a penny at $3.22…Crude Oil has retreated 79 cents to $102.54 while the U.S. Dollar Index is down slightly at 80.06…

India’s mammoth parliamentary election will start on April 7, authorities announced today, kicking off a race that pits charismatic Hindu nationalist leader Narendra Modi and his National Democratic Alliance (NDA) against the unpopular Nehru-Gandhi family’s ruling Congress party…the Gold lobby has put its support behind the reform-minded and business-friendly Modi, so it’s perceived that a victory by him may result in the loosening of restrictions on Gold imports which has fueled a black market in bullion in India and has negatively impacted the jewelery business there which employs thousands of people…

A total of 814 million people have registered to vote in India, a number larger than the population of Europe, making this the biggest election the world has ever seen…results are due to be announced on May 16…voting will be held in nine stages, staggered until May 12, to allow security forces to be effectively deployed during an exercise that has often been marred by violence, ballot-rigging and buying votes…

Today’s Markets

Asia

Asian markets were mixed overnight…Japan’s Nikkei climbed 176 points to 14898 while China’s Shanghai Composite slipped 18 points to finish at 2053…

China has sent its strongest signal yet that its days of chasing breakneck economic growth were over, promising to wage a “war” on pollution and reduce the pace of investment to a decade-low as it pursues more sustainable expansion…Reuters reported that in a State of the Union style address to an annual parliament meeting that began today, Premier Li Keqiang said China aimed to expand its economy by 7.5% this year, the highest among the world’s major powers, although he stressed that growth would not get in the way of reforms…in carefully crafted language that suggested Beijing had thought hard about leaving the forecast unchanged from last year, Li said the world’s second-largest economy will pursue reforms stretching from finance to the environment, even as it seeks to create jobs and wealth…after 30 years of red-hot double-digit growth that has lifted millions out of poverty but also polluted the country’s air and water and saddled the nation with ominous debt levels, China wants to change tack and rebalance its economy…it’s important to note, however, that at 7.5% growth China’s appetite for commodities will remain very strong…

Europe

European markets are mixed in late trading overseas…data showed today that rising exports and a gradual improvement in investments were behind the euro zone’s stronger-than-expected growth in the last quarter of 2013…the $9.5 trillion economy rose by 0.3% in the October-to-December period, a figure that compared to 0.1% growth in the previous three months, Eurostat reported…

North America

The Dow is off 20 points as of 7:45 am Pacific…ADP Research Institute reported this morning that the U.S. private sector added 139,000 jobs in February, less than the 160,000 estimated…despite the tepid results, and a large downward revision to January’s numbers, the data won’t likely move analysts to change their forecast for Friday’s widely-watched U.S. employment report from the Labor Department…another report this morning had the Institute for Supply Management’s non-manufacturing index for February coming in at 51.6 versus a 54 reading in January…

The TSX is off 2 points while the Venture has added 5 points to 1026 through the first 75 minutes of trading…Fission Uranium Corp. (FCU, TSX-V) reported stellar results this morning from 20 more holes at PLS…significantly, the results and location of these holes has merged two shallow depth high-grade zones (R780E and R945E) into one much larger zone…the easternmost hole in this merged zone also returned the best results out of the 20 holes, 86 m total composite mineralization in a 205-m section (107.0 m to 312 m), including 10.86 m total composite off-scale (greater than 9,999 counts per second) radioactivity…this bodes very well for further expansion to the east…FCU’s goal is to connect all zones identified along a 1.78 km strike length…the stock is up a nickel at $1.48 as of 7:45 am Pacific…

NexGen Energy Ltd. (NXE, TSX-V) is off 3 pennies at 46.5 cents after announcing that it has arranged a $10 million bought deal financing at 45 cents with a syndicate of underwriters led by Dundee Securities…John has an updated chart on Azincourt Uranium Inc. (AAZ, TSX-V) further down in today’s Morning Musings…

Garibaldi Resources Corp. (GGI, TSX-V) Updated Chart

John’s charts have been extremely accurate with regard to Garibaldi Resources Corp. (GGI, TSX-V), including the predicted breakout above the bullish flag formation in January that led to the 24-cent initial Fib. level (there are higher Fib. levels as this progresses), but it’s important to note that the stock has pulled back this week to chart, RSI(14) and Fib. level support…all three generally coincide with a rising 50-day moving average (SMA) at 17 cents as seen in the 6-month daily chart below…the 1,000-day SMA, interestingly, has flattened out at 17.5 cents and appears ready to reverse to the upside which would be a very bullish technical development…the 100, 200, 300 and 500-day SMA’s are all in bullish alignment…the main trend is exceedingly positive and that’s why accumulating on weakness has been a successful strategy with GGI ever since it broke out of a long-term downtrend in the early summer of last year…the “nervous nellies” tend to do the opposite – they have a bad habit of becoming fearful when a stock drops and they don’t buy when they should…

Given GGI’s strong fundamentals, including the fact the company is in the best financial position of any junior in the Sheslay Valley and controls the largest land package there with high quality multiple targets over a broad area, the best is certainly yet to come in our view from Garibaldi…the company also continues to be very active in Mexico where it has already demonstrated the ability to generate shareholder value…we expect the 1-2 punch of the Sheslay Valley and Mexico to make GGI one of the most exciting plays on the Venture this year…

Below is a 6-month GGI daily chart update from John…GGI is off 1.5 cents at 18 cents as of 7:45 am Pacific…

Ashburton Ventures Inc. (ABR, TSX-V)

Ashburton Ventures (ABR, TSX-V) has a couple of major factors in its favor including a very strategic 13 sq. km land package in the Sheslay Valley, the Hackett Project, much of which is contiguous to the entire eastern border of Doubleview Capital Corp.’s (DBV, TSX-V) Hat Property along a trend that dips southeasterly…get the picture?…DBV’s discovery holes HAT-08 and HAT-11 were collared approximately 1,000 m west of the Hackett border, and historical showings (B.C. Minfile reports) indicate mineralization trending toward the Hackett…a large gossan has been observed from the air over the western portion of the Hackett, and historical aeromagnetics have identified a magnetic high on the southern portion of the claims…the Hackett has been largely unexamined (no previous drilling) but it’s quite conceivable that any deposit on the Hat could extend to the east and cover at least a portion of Ashburton’s ground, or something totally separate may exist on the Hackett…with DBV in a position to potentially resume drilling later this month, interest in ABR should pick up significantly…yesterday, we spent some time as part of our due diligence with one of ABR’s geologists, and rest assured the company has no intentions of sitting back and playing a “closeology” game with the Hackett – it plans to go after this property hard and get on the ground as quickly as possible to prioritize drill targets…

In the meantime, ABR has carefully assembled three significant PGM-Ni-Cu projects covering over 250 sq. km in southwest Yukon, parts of which are contiguous to Wellgreen Platinum Ltd.’s (WG, TSX-V) Wellgreen deposit – one of the largest undeveloped PGM deposits in the world which has both open-pit and underground potential…ABR’s Ultra and Spy projects have some very interesting high-grade Platinum targets based on historical showings…at just 5.5 cents with only 36 million shares outstanding, the risk-reward ratio with ABR is highly attractive in our view…

Notable on this 2.5-year weekly chart is the heavy accumulation that began in ABR at the end of January…stock has been moving from weak hands into strong hands, and that’s always a bullish sign…

Abcourt Mines Inc. (ABI, TSX-V)

Abcourt Mines (ABR, TSX-V) has done a masterful job of managing its cash flow and steadily advancing its Elder Gold Mine near Rouyn-Norando, Quebec, toward commercial production…Abcourt also recently released an updated resource estimate for its past-producing Abcourt-Barvue Silver-Zinc Property, 50 km north of Val d’Or…

Technically, a significant development needs to be stressed here – there has been a confirmed breakout in ABI above a long-term downsloping channel…this is shaping up to be a strong year for Abcourt…below is a 2.5-year weekly chart…ABI is off half a penny at 8 cents as of 7:45 am Pacific as it tests the downsloping channel as new support…

Azincourt Uranium (AAZ, TSX-V) Updated Chart

Since April of last year, 33-cent resistance on Azincourt Uranium Inc. (AAZ, TSX-V) has been tested no less than nine times on a weekly basis and AAZ has not been able to sustain a weekly close above it…so when there is a breakout here (we believe it’s just a question of when, not if), watch out…AAZ hit an intra-day high of 34 cents yesterday on volume of more than 1 million shares before closing up 3 cents at 32 cents…it’s off a penny at 31 cents as of 7:45 am Pacific…AAZ and JV partner Fission 3.0 Corp. (FUU, TSX-V) commenced an 8-10 hole drill program at PLN in late January, and AAZ has also commenced work at its recently acquired uranium projects in the Macusani district of southeast Peru…

Magor Corp. (MCC, TSX-V)

One of our favorite tech companies is Magor Corp. (MCC, TSX-V) and we suggest readers check out the company’s news release yesterday as MCC is clearly making progress – in fact, “significantly exceeding expectations” – with its Aerus service delivery platform…patient investors could do extremely well with Magor, and we expect their business model to start delivering significant bottom line results during the second half of this year…

MCC is off a penny at 31 cents on light volume as of 7:45 am Pacific…below is a 1-year weekly chart from John…volume and buy pressure both need to pick up in order for MCC to start gaining traction again, but important support is holding at 31 cents…MCC has a strong story and (again) the best time to accumulate is on weakness when others are asleep at the switch…as always, with each and every company, perform your own diligence…

Note: John and Jon both hold share positions in GGI.  Jon also holds share positions in ABR and MCC.

Gold continues to struggle with the $1,350 area…as of 8:15 am Pacific, bullion is down $13 an ounce at $1,337…Silver is off 25 cents at $21.16…Copper is up 3 pennies at $3.22…Crude Oil is off $1.61 a barrel to $103.61 while the U.S. Dollar Index is up one-tenth of a point to 80.17…

Gold has retreated this morning from 4-month highs on a perceived easing of tensions in Ukraine…Russian troops taking part in military exercises close to the border with the Ukraine have apparently been called back to their bases, and there are reports that cabinet ministers from Ukraine and Russia are talking…speaking at a news conference outside his residence in Moscow this morning, Russian President Vladimir Putin said there was “no need yet” for Russia to exercise its authority, adding that he was not considering the annexation of Crimea and any force used would be a last resort…Russia, however, reserved the right to use all options in Ukraine to protect its compatriots there who were living in “terror”, he added…Putin’s comments lifted Russian markets after a panic sell-off yesterday, which may have caused him to reassess strategy (markets may constrain his actions more effectively than any Western government can)…while he said sanctions being considered against Russia would be counter-productive, a senior U.S. official said Washington was ready to impose them in days rather than weeks…

“We are not going to meddle,” Putin stated.  “But we think all Ukraine’s citizens, no matter where they live, should have the same rights to … determine the future of their country.”

Not to downplay the situation in the Ukraine, because Putin simply can’t be trusted and the events of recent days will certainly have implications for relations between Russia and the West, but it’s important to point out that Ukraine’s GDP is less than one-tenth of that of Greece and is not part of any global supply chain…that’s what the markets are focusing on right now at least…

Today’s Markets

Asia

China’s Shanghai Composite was stable overnight, falling 4 points to close at 2071…China’s National People’s Congress – with nearly 3,000 members it’s the largest parliamentary body in the world – begins its annual spring session today to review past policies and present future plans for the country…however, it is still reckoned as a rubber-stamp for decisions already made by the state’s executive organs and the Community Party of China…

Japan’s Nikkei average was up modestly overnight…

Europe

European markets have rebounded strongly on a less hawkish tone out of Russia…Eurostat, the European Union’s statistics office, estimated today that consumer prices in the 18 countries sharing the euro rose 0.8% year-on-year this month, a sign of stability that cooled expectations that the ECB might ease monetary policy as early as next week…ECB President Mario Draghi said the direct impact of the Ukraine crisis on the continent’s economy would be relatively limited…still, he added, “the geopolitical dimensions” of the crisis could have effects that “go beyond the actual links.”

North America

The Dow has surged 203 points as of 7:30 am Pacific…the TSX has gained 77 points while the Venture is up 3 points at 1021…

CRB Index Updated Chart

Significantly, the CRB Index has broken out above a downsloping wedge and also out of a bearish RSI(14) range (between 20% and 60%) that it was trapped in since April, 2011, based on this 4-year weekly chart…this is clearly bullish in terms of the “big picture” outlook for the Venture in 2014…the CRB Index closed at 306 yesterday…a minor near-term pullback after such a strong move since late December is certainly possible, but next major resistance is 320…

Alberta Ranks Third Overall, Quebec Given The Boot Out Of The Top 20 Mining Jurisdictions

Alberta remains the most attractive jurisdiction for mining investment in Canada, according to the yearly global survey of mining executives released by the Fraser Institute…for the second consecutive year, Alberta ranked first in Canada and third worldwide in the survey, which is based on input from 690 mineral exploration and development company executives…this year’s survey spotlighted 112 jurisdictions worldwide…

“Miners praise Alberta for its transparent and productive approach to mining policy. The province offers competitive taxation regimes, sound legal systems, and relatively low uncertainty around land claims. That’s what miners look for,” said Kenneth Green, Fraser Institute senior director of energy and natural resources and director of the Survey of Mining Companies 2013…

Three Canadian jurisdictions – Alberta (3), New Brunswick (7), and Newfoundland and Labrador (9) – ranked in the top ten worldwide, followed by Saskatchewan (12), Yukon (19), Quebec (21), Manitoba (26), Ontario (28), Nova Scotia (29), British Columbia (32), Nunavut (44), and the Northwest Territories (47)…from 2007 to 2009, Quebec topped the survey, then dropped to fifth position in 2011, 11th position in 2012 and finally 21st worldwide in 2013, owing in part to amendments to Quebec’s Mining Act and recent tax policy changes…

“If Quebec wants to renew confidence in the global mining sector, it should reduce red tape, minimise the risk associated with policy changes and tax increases, and respect negotiated contracts,” Green said.

This year’s survey recorded improved perceptions of British Columbia’s political stability and availability of labour and skills…the top 10 most attractive jurisdictions for investment worldwide include (from the top) Sweden, Finland, Alberta, Ireland, Wyoming, Western Australia, New Brunswick, Nevada, Newfoundland & Labrador, and Norway…

NexGen Energy Ltd. (NXE, TSX-V) Update

NexGen Energy (NXE, TSX-V) has shown strong support in the 40’s, coinciding with Fib. levels between 39 and 49 cents, as the company continues to drill at its Rook 1 discovery in the southwestern Athabasca basin…John has an updated chart below…

Several significant zones of high radioactivity were encountered in the first hole at NXE’s Arrow prospect…one hole is currently being drilled from the same collar as discovery hole RK-14-21, but at a shallower angle…if they can nail the breccia zone where it intersects with the unconformity, this hole could have superb potential…meanwhile, another hole is being drilled about 30 m along strike to the northeast…NXE is off 2 pennies at 50 cents as of 8:15 am Pacific…

Azincourt Uranium Inc. (AAZ, TSX-V)

Azincourt Uranium (AAZ, TSX-V) continues to pick up steam and has gained another 3 cents to 32 cents on strong volume as of 8:15 am Pacific…we’ll have an updated chart tomorrow on AAZ…

GoldQuest Mining Corp. (GQC, TSX-V) Update

GoldQuest Mining (GQC, TSX-V) continues to look very strong from a technical standpoint as the company gears up for more drilling in the DR to test promising areas in the district around the multi-million ounce AuEq Romero discovery…last month, the company commenced an important heli-borne ZTEM geophysical survey covering its entire 100%-owned Tireo concessions which will allow GQC to quickly evaluate the complete area to depths beyond 1 km in order to identify potential new hydrothermal systems…the 60-km strike length of the Tireo concessions has been unexamined to date…great potential for new drilling discoveries by GoldQuest this year in our view…

Below is a 2.5-year weekly GQC chart…the stock has excellent support in the low 30’s in the immediate vicinity of the 50 and 200-day SMA’s…a strong resistance band exists between 40 and 48.5 cents…GQC is unchanged at 36 cents as of 8:15 am Pacific…

Wellgreen Platinum Ltd. (WG, TSX-V)

Interesting results this morning from Wellgreen Platinum (WG, TSX-V), though the stock is down slightly on the news…Wellgreen will be releasing an updated Preliminary Economic Assessment on its Wellgreen deposit in southwest Yukon during the second quarter which will evaluate a combination of open-pit mining and selective bulk underground mining of higher-grade material at a reduced capital spending level…

As the company reported this morning, new drilling data and assay results from historic drill core that was previously only selectively sampled have led to a new interpretation of the Central zone at Wellgreen that indicates that wide bands of higher-grade mineralization, like those seen in the previously released Far East zone, occur well away from the sediment-contact-related zones that were the historic focus at Wellgreen…we’re bullish on Platinum and this will be an interesting story to follow in 2014…Wellgreen is one of the largest undeveloped PGM deposits in the world – one of the very few with open-pit potential – and if they can make the economics of this viable, WG could perform exceedingly well…this morning’s news is certainly encouraging…

For the past six weeks, WG has been trading between 75 cents and $1 after breaking out of a 10-month horizontal channel…the rising 50-day SMA is in the upper 70’s and has been providing excellent support since the beginning of the year…below is a 2.5-year weekly chart from John…note that the RSI(14) is moving up from a bullish “W”…WG is down 6 cents at 88 cents as of 8:15 am Pacific…as always, perform your own due diligence…