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Gold has traded $1,283 and $1,298 so far today…as of 7:30 am Pacific, bullion is down $9 an ounce at $1,285…it came under pressure yesterday as the U.S. Dollar Index rallied to a six-month high following a stronger-than-expected U.S. Q2 GDP report…Silver is off 14 cents at $20.47…Copper is off a penny at $3.23…Crude Oil is 90 cents lower at $99.37 while the Dollar Index is up slightly at 81.45…

The Federal Reserve’s monetary policy statement yesterday turned out to be in line with investors’ expectations…the Fed will wait a “considerable time” after bond purchases end before raising rates, the central bank said, reaffirming a position it has had since late 2012…the Fed also noted that even though unemployment is down, “there remains significant under-utilization of labor resources,” by which it means slack that should keep inflation and interest rates low…economists from J.P. Morgan Chase and forecasting firm Macroeconomic Advisers project the U.S. economy to maintain a growth rate of at least 3% for the rest of the year…the economy hasn’t posted three straight quarters above that mark in nearly a decade…

Investors’ attention is now focused on tomorrow’s U.S. jobs report from the Labor Department…the consensus estimate is for non-farm payrolls to increase by 225,000, down significantly from June’s figure but in line with earlier months…

Barclays says commodity investor flows finally showed signs of improvement in June after outflows most of this year so far. The bank says the health of commodities as an asset class “has improved markedly” this year. “However, the big surprise this year is that investors have continued to withdraw assets from commodity investments on a quarterly basis despite this improvement,” the bank says. “In our view, one reason for this lack of response is the relatively slow pace at which institutional investors are able to take and implement the kind of long-term investment decisions necessary in order to make allocations to commodities. However, recent data indicate that the situation is improving, albeit gradually.”

Today’s Equity Markets

Asia

China’s Shanghai Composite resumed its strong upward climb overnight, gaining 20 points to close at 2202 as it posted its best monthly performance since 2012…John has pointed out the very bullish tone in the Shanghai with measured Fib. resistance at 2500 following this month’s breakout above the neckline in place since 2013…China’s markets have been undermined by slowing economic growth as well as concerns over bad debts, shadow banking and property sectors…but economic data has been improving in recent months, pointing to stabilization in the world’s second largest economy…Q2 growth came in at 7.5% year on year, better than expectations, and the broad consensus is that outlook for the second half is upbeat thanks in part to a series of “mini stimulus” measures from Beijing…

Japan’s Nikkei average erased gains after hitting a new six-month high earlier in the session, snapping its four-day winning streak…the Nikkei closed down 25 points at 15621…

Europe

European markets are down significantly in late trading overseas…the annual rate of inflation in the euro zone fell further below the ECB’s target in July, and to its lowest level since October 2009…the decline is a setback to the ECB which in June launched a series of measures designed to boost growth and start to move the inflation rate back toward its goal of just below 2%…Eurostat said consumer prices were just 0.4% higher than in July 2013, as the inflation rate slowed from 0.5% in June…the inflation rate has now been below 1% for 10 straight months, and that has markets concerned…

North America

The Dow is suffering again this morning, down 148 points through the first hour of trading…the TSX has declined 109 points to 15416 while the Venture is off 6 points to 1005…

Goldcorp Inc. (G, TSX) Update 

Goldcorp Inc. (G, TSX) is up slightly this morning after reporting net earnings of $183 million (U.S.) or 22 cents per share in Q2, a more than 50% increase over the same period last year…all-in-sustaining costs were $852 per ounce in Q2 as continued solid production and cost performance across the portfolio contributed to improved financial results…Goldcorp sees this as the start of a prolonged period of increased production, decreasing costs and reduced capital spending, resulting in significant expected free cash flow generation in 2015 and beyond…

Technically, Goldcorp – and this bodes well for the sector – has broken out above the neckline of an inverted head and shoulders bottom that formed over the past year…near-term Fib. resistance levels range from $30.28 to $35.42…

TSX Gold Index Long-Term Chart

The TSX Gold Index has nudged right up against a long-term downtrend line that formed in the months following the all-time high of 455.38 in September, 2011, when Gold briefly topped $1,900 an ounce…the bearish trend peaked in the first half of last year and a reversal is clearly well under way as evidenced by this 15-year monthly chart…

For a burst of fresh momentum, the Gold Index must break out above the downtrend line and major chart resistance at 210…it has climbed as high as 203.5 this week and closed yesterday at 200.4…what’s interesting is that we’re now in a period when Gold stocks are likely to out-perform the metal (check the TSX Gold Index relative to Gold on this chart)…

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

Disappointing results from GoldQuest Mining (GQC, TSX-V) this morning (but no need to panic) as the company reported assays from initial holes of its extensive 2014 drill program at the San Juan concession group in the DR which includes the Romero Cu-Au deposit…LTP-158, LTP-160 and LTP-161 were drilled between the Romero and Romero South deposit, and all three holes terminated above or adjacent to the target zone, and LTP-159 was drilled to the east of Romero South…no significant intersections from any of those holes…the drill program is now focusing on shallower targets to the north and west of Romero including an interesting porphyry target at La Guama North…GQC has a strong treasury and is drilling into very prospective ground, so four “misses” brings them closer to a hit in our view as the company aims for a potential new discovery to build on the existing Romero resource…GQC is down 3.5 cents at 22.5 cents as of 7:30 am Pacific…

Mason Graphite Inc. (LLG, TSX-V) Update

After releasing positive drill results Tuesday from the northeast extension of its Lac Gueret Project, Mason Graphite (LLG, TSX-V) added a couple of pennies yesterday on increased volume to close at 80 cents…results confirmed mineralization near surface with excellent widths and mineral continuity beyond the current mineral resource boundary…more assays are pending from other areas…

Technically, LLG is strongly supported by a rising 200-day moving average (SMA) at 65 cents while a near-term resistance level is 85 cents as shown on this 26-month weekly chart…last December’s breakout above Fib. resistance at 52 cents was hugely important and that area has held as support ever since…the overall primary uptrend suggests the possibility for a strong second half of 2014 for LLG…

LLG is down 3 pennies to 77 cents through the first hour of trading…

Discovery Ventures Inc. (DVN, TSX-V) Update 

Discovery Ventures (DVN, TSX-V) continues to look very healthy technically and fundamentally with a just-completed financing for nearly $2.5 million as the company pushes ahead with its promising Willa-MAX project in southeastern British Columbia…the anticipated near-term closing of a $12 million Gold facility with a financing firm in New York would be a major milestone for DVN, giving it the synergistic advantage of a high-grade Gold-Copper deposit in close proximity (85 miles) to its own modern mill facilities…

Below is an updated 2.5-year weekly chart from John…DVN staged a significant breakout last month above 23 cents which has been holding as new support…it closed yesterday at 26 cents…

Fission Uranium (FCU, TSX-V) Update 

With a series of additional drill results over the last couple of weeks, Fission Uranium (FCU, TSX-V) continues to expand its Patterson Lake South discovery prior to a NI-43-101 resource estimate at the end of the year…

Technically, the recent reversal to the upside in FCU’s 50-day SMA is highly encouraging and this moving average, currently at $1.20, should now act as support as it did earlier this year…near-term Fib. resistance exists between $1.32 and $1.46…

As of 7:30 am Pacific, FCU is unchanged at $1.27…

Note:  Jon holds a share position in DVN.

 

 

 

Gold hovered between $1,296 and $1,301 overnight before coming under slight pressure immediately after release of a stronger-than-expected U.S. Q2 GDP figure at 5:30 am Pacific…as of 5:45 am Pacific, bullion is down $6 an ounce at $1,293 but is underpinned by strong support in the $1,280’s…Silver is off 4 cents at $20.52…Copper has reversed and is up 2 pennies to $3.25…Crude Oil, at $101.48, has gained 51 cents while the U.S. Dollar Index has jumped another one-fifth of a point to 81.42…

This is a shortened version of Morning Musings due to an important B.C. property site visit beginning this morning…more on that early next week…our regular Morning Musings resumes tomorrow…

The Federal Reserve’s monetary policy decision comes later today – no major surprises expected as the Fed is seen reducing monthly asset purchases by another $10 billion to $25 billion a month…investors will be searching for clues as to when the Fed may begin to raise interest rates…

Just out – U.S. second quarter GDP rose much faster than expected in Q2, at an annualized rate of 4% vs. estimates of 3.2%…we’ll see if that influences Fed language later today…

U.S. private sector payrolls for July came in less than expected this morning…ADP reported that private businesses created 218,000 jobs in July, a solid number but slightly below the consensus estimate of 230,000 and well off from last month’s figure of 281,000…the Labor Department’s monthly non-farm payrolls report will be released Friday – consensus (prior to the ADP number) has the economy adding 225,000 jobs…

Conditions are “ripening” for a recovery in mine exploration spending, although this may not occur until later in the year due to seasonal factors, SNL Metals & Mining stated yesterday…the mining consultancy said its Pipeline Activity Index “recovered somewhat” in May after an all-time low in April, although it dropped back slightly in June…the industry’s aggregate market cap improved for the sixth month in a row, reaching $1.75 trillion, a 20% increase over December and the highest level since January 2013, said SNL…

Today’s Equity Markets

Asia

China’s wining streak was snapped overnight as the Shanghai Composite posted a slight decline, off 2 points at 2184…meanwhile, Japan’s benchmark Nikkei index scaled a new six-month peak today despite the release of disappointing data…industrial output dropped 3.3% in June from May, significantly below forecasts and marking the first decline in two months…

Europe

European markets are flat in late trading overseas…

North America

Stock index futures as of 5:45 am Pacific are pointing toward a strong open on Wall Street…yesterday, the Dow fell for the fourth session out of five…the TSX finished up a point yesterday at 15446…

Venture Chart Update

The Venture has traded within the 1000-1020 support band for 11 straight sessions, and tested Fib. resistance at 1020 yesterday before backing off slightly to close the day down 3 points at 1017…

This fresh 6-month daily chart from John shows modestly increasing buy pressure and a market strongly supported by a rising 50-day moving average (SMA) at 1006…resistance at 1020, 1027 and 1039 is much weaker than overall support in our view, making the probability of a game-changing breakout in August a near certainty as the bulls assert their control…

John has updates on three very interesting individual company charts this morning that also reflect the underlying strength of the Venture…

InZinc Mining Ltd. (IZN, TSX-V)

InZinc Mining (IZN, TSX-V) is an emerging mid-tier Zinc producer with its 100%-owned West Desert Project in Utah…a positive PEA was released in May, and excellent opportunities for resource expansion exist…importantly, the project benefits from all-weather road access, on-site grid power, proximity to natural gas pipelines and is just 90 km from multiple transcontinental rail networks servicing western U.S. ports and major North American markets…

Technically, what we see below is quite an amazing chart – a classic “cup with handle pattern” with a potential breakout above the cup looming…

Critical Elements Corp. (CRE, TSV-V)

We started looking at Critical Elements (CRE, TSX-V) again at the beginning of June when it was trading in the upper teens and showing some bullish chart patterns…the company reported in mid-May that it had started shipping samples of lithium concentrate to a number of users for analysis and validation of the product specifications…the concentrate samples have a low iron content, which is specifically required by certain users…validation of the Rose project material by some of the largest consumers of lithium concentrate with low iron content is part of the process of setting up potential long-term off-take contracts…

Technically, CRE formed a bullish ascending triangle, as we previously pointed out, and yesterday closed above resistance at 25 cents on strong volume…

Contact Exploration Inc. (CEX, TSX-V)

As reported Monday, Contact Exploration (CEX, TSX-V) experienced significant growth during its 2014 fiscal year ended March 31, with petroleum and natural gas revenues more than doubling and total assets increasing by more than 50% when compared with the 2013 year-end…net income was $2.8 million compared to $2 million the previous year and a loss of $4 million in 2012…so things are headed in the right direction…

A successful strategy with CEX over the last year has been to buy at or near the bottom of this impressive upsloping channel…

Note:  John, Jon and Terry do not hold share positions in IZN, CRE or CEX.

 

Gold has traded between $1,296 and $1,313 so far today…as of 8:00 am Pacific, bullion is down $5 an ounce at $1,298…Silver is flat at $20.55…Copper is off a penny at $3.23…Crude Oil is down 56 cents at $101.11 while the U.S. Dollar Index has climbed one-fifth of a point to 81.20, contributing to the reversal in bullion this morning…

Gold holdings in SPDR Gold Shares (GLD, NYSE), the world’s biggest Gold-backed ETF, continue to shows signs of stabilization despite last week’s drop, analysts say…the latest data shows that the ETF holds 801.84 metric tons of the yellow metal in trust, down from the July 18 level of 805.14 tons…Gold holdings in GLD are still positive for the month, however, and the year…holdings stood at 794.62 tons at the beginning of 2014…

The Fed kicks off a two-day meeting today with markets watching for clues as to when the U.S. central bank will begin increasing interest rates…the bank will make a statement tomorrow at the end of the meeting…

Pro-Russia rebels in eastern Ukraine reportedly have suffered their biggest battlefield setbacks in months as numerous western countries prepare to ramp up pressure on Russian leader Vladimir Putin by imposing more sanctions against Moscow later this week…The Wall Street Journal reported that Ukraine army forces had made rapid gains near the site where Malaysia Airlines Flight 17 crashed July 17…officials on both sides of the fighting also told WSJ that the Ukraine army was attempting to cut off supply lines from Russia to the rebels…

Today’s Equity Markets

China’s Shanghai Composite gained another 5 points overnight to close at 2183…investors have turned increasingly optimistic on China over the last week on the back of improving economic data such as HSBC’s July factory activity report, sending the Shanghai Composite to a 7-month high…

China’s stock market is breaking out – a very positive sign, we believe, for commodities, the Venture, and global equity markets in general…below is a 2+ year weekly SSEC chart from John…note the inverted head and shoulders pattern in addition to the important move above the neckline resistance…RSI(14) is now rapidly gaining momentum after following an uptrend line throughout 2014…

The measured resistance level for a breakout from the neckline is 2500, about a 15% move from current levels…such a move could occur very quickly, as in the next couple of months, which coincides with a very bullish outlook for the remainder through the remainder of Q3…

Japan’s Nikkei average, bolstered by upbeat corporate earnings reports and a weaker currency, ended at its highest level in six months overnight…

Europe

European markets were up moderately today…

North America

The Dow has added 40 points as of 8:00 am Pacific…consumers were more confident about the economy in July than they have been in at least six years, data from The Conference Board showed this morning…the Conference Board’s Consumer Confidence Index rose to 90.9, above the prior month’s showing of 86.4…that was the component’s highest since October 2007, and well above economists’ expectations of an 85.3 reading…

In its just-released July Fed survey, CNBC asked Wall Street pros how the Fed’s current policies will end and found market participants surprisingly divided…34% say the most likely outcome is that it “will end badly”, which is defined as either a recession, stock market crash, high inflation or some combination of the three…another 34%, however, think the Fed will “navigate a smooth transition to more normal policy”…25% of the 36 respondents, who include economists, analysts and fund managers, think the risks are evenly balanced…

Interesting statistic – an estimated 1 in 3 American adults with a credit history – or 77 million people – are so far behind on some of their debt payments that their account has been put “in collections”…that’s a key finding from a new Urban Institute Study…it examined non-mortgage debt, including credit card bills, car loans, medical bills, child support payments and even parking tickets…the debt in collections ranged from as little as $25 to a whopping $125,000…but the average amount owed was $5,200…

The TSX is up 41 points as of 8:00 am Pacific while the Venture is off 4 points at 1016…the Venture’s 10-day SMA has reversed to the upside as the month draws to a close…the rising 50-day SMA has provided excellent support this month to keep the Index above the 1000 level…

B2Gold Corp. (BTO, TSX) has increased its equity ownership in Calibre Mining Corp. (CXB, TSX-V) to approximately 15.2% by exercising common share purchase warrants for proceeds to Calibre of $500,000 (the warrants entitled B2Gold to purchase 10 million Calibre common shares at a price of five cents per share)…Calibre will use the proceeds to advance its 100%-owned Montes de Oro Gold project in Nicaragua, and for general working capital…

Balmoral Resources Ltd. (BAR, TSX) Update

Balmoral Resources (BAR, TSX) continues to hover around Fib. resistance while an overextended RSI(14) condition on the 1-year weekly chart has persisted since early May…the odds of a pullback to “cleanse” temporarily overbought conditions (within the context of a primary uptrend) have increased based on BAR’s current technical posture…

BAR is off 2 pennies at $1.65 as of 8:00 am Pacific…

Source Exploration (SOP, TSX-V) Update

Significantly, Source Exploration (SOP, TSX-V) has held important support around 10 cents the last couple of months, as expected, so the “firming up” on Friday and yesterday was no major surprise…late last month, Source commenced a follow-up 2,000 metre drill program at its Las Minas Project 270 km east of Mexico City after reporting some stellar results in April…the company has strength behind it with Chairman David Baker (he managed and grew Goldbrook Ventures until it was ultimately sold in 2012 to its Chinese joint venture partners for approximately $100 million) and a solid geological team…

This round of drilling at Las Minas is intended to expand the higher grade skarn mineralization outlined by winter drilling at the Santa Cruz area, in preparation for an initial resource calculation, and test a couple of other high priority targets…

A major band of resistance exists between 15 and 17 cents, but this is a stock in a primary uptrend – as demonstrated by the 3-year weekly chart below – so an eventual breakout above that area seems highly plausible…as always, perform your own due diligence…

SOP is unchanged at 13.5 cents as of 8:00 am Pacific…

Edge Resources Inc. (EDE, TSX-V) Update

After a strong move in May and June, junior Oil play Edge Resources (EDE, TSX-V) pulled back from a 52-week high of 28.5 cents to the upper teens where it has met exceptional support…you’ll note that RSI(14) on this 4-year weekly chart unwound to the 50% level and has now formed a bullish “W”…

Last Thursday, Edge announced that it has entered into a new revolving demand loan facility of up to $17-million with ATB Corporate Financial Services…this facility significantly reduces the company’s cost of capital and provides Edge with a much larger pool of funds to accelerate positive developments on the ground…the company has been consistently adding reserves at an exceptionally low cost…

EDE has yet to trade so far this morning…it gained 2.5 cents yesterday to close at 22 cents…

Platinum Chart Update

The Platinum price remains 8% higher year to date…while the end to the devastating strike in South Africa will see roughly 10,000 ounces of platinum find its way onto the market in coming months, sanctions against Russia over its intervention in Ukraine has kept prices on the boil…Russia and South Africa combined account for close to 70% of global supply of Platinum which, along with Palladium, is mainly used to clean emissions in automobiles…rising demand from China and other emerging markets is causing “a structural shift” in PGM demand as these countries tighten emissions controls…

This 20-year monthly chart from John shows the potential for Platinum to really soar if it can break above a downtrend line that formed after the sharp rise through mid-2011…the downtrend line also matches with Fib. resistance just above $1,500…

Note:  John holds a share position in EDE.

 

Gold has traded between $1,301 and $1,310 so far today…as of 8:30 am Pacific, bullion is down $4 an ounce at $1,304 after Friday’s $14 rally…Silver is off 17 cents at $20.57 (see updated Silver charts at bottom of today’s Morning Musings)…Copper is up a penny at $3.25…Crude Oil is down 67 cents at $101.42 while the U.S. Dollar Index is off slightly at 80.99…

As John’s updated 6-month daily chart showed Saturday, Gold has strong near-term support in the $1,280’s, and two resistance bands to work through just above current prices – $1,306 to $1,310, and $1,320 and $1,330…a sustained move above $1,330 would put the bears on the defensive…a busy economic calendar in the U.S., including a Fed meeting tomorrow and Wednesday, and geopolitical developments could both impact Gold positively or negatively this week…

Gold finished June at $1,327 and is headed for a possible July decline after rallying 10% in the first half of the year, a gain that outpaced broad measures of commodities, equities and treasuries…

Sales of Gold coins at the U.S. Mint are heading for the worst month since March, Bloomberg reported this morning…holdings in ETF’s backed by the metal fell by 2.3 tons last week, or 0.1%, the first drop in five weeks…

Hot spots around the world aren’t likely to cool off anytime soon, and at the very least that should put a floor of strong support underneath Gold prices…

Hamas is attempting to negotiate a new arms deal with North Korea for missiles and communications commitment that will allow it to maintain its offensive against Israel, according to Western security sources as reported by The Sunday Telegraph…security officials say the deal between Hamas and North Korea is being handled by a Lebanese-based trading company with ties to the Palestinian terrorist organization…Hamas officials are believed to have already made an initial cash down payment to secure the deal and are hoping that North Korea will soon begin shipping extra supplies of weapons to Gaza…

Stepping up pressure on Moscow, the U.S. yesterday released satellite images it says show that rockets have been fired from Russia into neighboring eastern Ukraine and that heavy artillery for separatists has crossed the border…the images, which came from the U.S. Director of National Intelligence, show blast marks where rockets were launched and craters where they landed…officials said the images show heavy weapons fired between July 21 and July 26 – after the July 17 downing of Malaysia Airlines Flight 17….

Excellent op-ed piece (“Our Duty is to Stand Firm in the Face of Russian Aggression”) from Canadian Prime Minister Stephen Harper in Saturday’s Globe and Mail regarding Russia – more than any other western leader, Harper understands the “big picture” threat to world peace and security posed by the Putin regime…below is an except from his comments…

“The pro-Russian separatists “derive their material, political and logistical support from the Putin regime, and their criminal aggression and recklessness reflect the values of their Russian benefactors…Russia’s aggressive militarism and expansionism are a threat to more than just Ukraine; they are a threat to Europe, to the rule of law and to the values that bind Western nations.  Canada will not stand idly by in the face of this threat…with Mr. Putin’s Russia increasingly autocratic at home and dangerously aggressive aborad, now is not the time to ease the diplomatic and economic pressure on the regime…sustained, strong and co-ordinated action among like-minded countries is the best way to ensure that our actions have the maximum impact on the Putin regime…it is difficult to foresee any circumstance under which Mr. Putin’s Russia could be readmitted to the family of G7 nations.”

Today’s Equity Markets

Asia

Asian markets shrugged off Wall Street’s jitters Friday with a strong start to the week…China’s Shanghai Composite led the way, rocketing 51 points higher overnight to close up for the seventh straight session at a 7-month high of 2178…the mini-stimulus that was delivered in April and May seems to be having an effect…profits at industrial companies in China increased 17.9% in June from a year earlier, after gaining 8.9% in May, data from China’s statistics bureau showed yesterday…that was the biggest advance since an 18.4% jump in September and came after a private gauge of Chinese manufacturing last week rose to an 18-month high…China has cut reserve requirements for some banks, accelerated infrastructure spending and loosened property curbs as Premier Li Keqiang seeks to keep growth from falling below his 7.5% target…

Japan’s Nikkei gained 72 points to close at 15529, a new 6-month peak…

Europe

European markets were mixed today…the European Union has agreed to impose economic sanctions against Russia for its role in the Ukraine crisis. The outline agreement was reached on Friday but didn’t include any penalties on the energy sector…Moscow reacted to the sanctions by warning that they would hamper cooperation on global security issues…

North America

The Dow is off another 22 points as of 8:30 am Pacific after Friday’s 123-point decline…it’s an important week for earnings and economic data including a jobs report, a preview of second quarter GDP, and ISM manufacturing data…in addition, the Federal Reserve meets tomorrow and Wednesday to review monetary policy before monthly U.S. payrolls data is released Friday…according to economists’ estimates compiled by Bloomberg, employers probably added 231,000 workers to non-farm payrolls in July, after a 288,000 increase in June…the unemployment rate is expected to hold steady at 6.1%, its lowest level in nearly six years…

The TSX is down 17 points while the Venture has shed 3 points to 1014 as of 8:30 am Pacific…

Contact Exploration Inc. (CEX, TSX-V) Update

Contact Exploration (CEX, TSX-V) released updated financials this morning…the company experienced significant growth during the 2014 fiscal year ending March 31…petroleum and natural gas revenues more than doubled from fiscal 2013 while total assets increased by more than 50%…net income for fiscal 2014 was $2.8 million compared to $2.1 million for 2013…CEX is unchanged at 44 cents as of 8:30 am Pacific…

Constantine Metal Resources Ltd. (CEM, TSX-V) Update

Constantine Metal Resources (CEM, TSX-V), which we mentioned last week when it was still trading under 20 cents, is worthy of our readers’ close attention as the summer progresses…last Wednesday, the company released results from the first two holes of a 10,000-metre drill program at the Palmer VMS Project in Alaska…initial drilling has intersected a thick lens of massive sulphides 150 metres down dip of the lower edge of the South Wall zone, a major expansion of the zone to depth…hole CMR14-54 returned 22.1 m grading 2.48% Cu, 4% Zn, 24 g/t Ag and 0.39 g/t Au…if additional holes can return even better grades, then CEM could gain a lot more attention…

The current drilling is part of a $6.2-million (U.S.) budget for 2014 financed by partner Dowa Metals & Mining Co. Ltd. of Japan…Dowa is in the second year of an option agreement in which it can earn 49% in the Palmer project by making aggregate expenditures of $22-million (U.S.) over four years…at this early stage, Palmer hosts a 4.75-million-tonne inferred resource grading 1.84% Cu, 4.6% Zn, 0.28 g/t Au and 29 g/t Ag…

Below is an updated 2.5-year weekly chart from John…CEM is trading at levels not since seen 2011, a very bullish sign…note that there is measured Fib. resistance at 21 cents, followed by 31 cents (not shown on this chart), so a brief near-term consolidation is certainly possible with the rising 20-day SMA likely to provide very strong support on any pullback…CEM is off half a penny at 21 cents as of 8:30 am Pacific…

NioGold Mining Corp. (NOX, TSX-V) Update

NioGold Mining (NOX, TSX-V) has been looking attractive ever since it broke above a long-term downtrend line in the low teens in early December…

NOX surged as high as 35 cents intra-day Friday after it was announced that Osisko Gold Royalties Ltd. (OR, TSX) has signed an LOI with NioGold, pursuant to which Osisko will acquire 14 million flow-through common shares of NOX at 35 cents per share through a private placement…in addition, Osisko will purchase from NioGold (for $150,000) the right to repurchase certain royalties on its claims…

As we pointed out in late May, NioGold commenced a 1,400-metre drill program on its recently acquired H zone, now consolidated as part of the company’s Malartic Block Property along the Cadillac Trend…drill results are pending…the Marban Block already has three deposits (Marban, Kierens and Norlartic) which collectively host estimated measured and indicated resources of 1.5 million ounces of Gold (32,127,000 tonnes grading 1.48 g/t Au) plus inferred resources of 600,000 ounces (16,478,000 tonnes grading 1.13 g/t Au)…

Below is an updated 2+ year NOX chart from John…an important confirmed breakout has occurred here above 22.5 cents…the stock is unchanged at 28 cents through the first two hours of trading…

Prosper Gold Corp. (PGX, TSX-V) Update

Quite simply, the geology is too prospective and the team on the ground, led by the highly respected Dirk Tempelman-Kluit, is too talented for Prosper Gold (PGX, TSX-V) not to hit BIG at the Star Project in the Sheslay district this summer…at this point, it’s just a matter of remaining patient for the first results to come in before the PGX train starts to pick up speed…

Technically, PGX has superb support in the mid-30’s and resistance currently at 40 cents as you can see in the 2.5-year weekly chart below…a declining 50-day SMA has been pressuring and restraining PGX in recent weeks, coupled we suspect with some selling of flow-through shares purchased at 40 cents in last summer’s financing…the dynamics with PGX could really change dramatically once the flow of results from the Star Project begins…

PGX is up 4.5 cents at 41.5 cents as of 8:30 am Pacific…

Great Prairie Energy Services Inc. (GPE, TSX-V) Update

Great Prairie (GPE, TSX-V) is another energy play we’ve been tracking closely, and the current technical set-up suggests there’s a strong possibility of a breakout in the near future above a narrow horizontal channel that has formed this month between 50 and 55 cents…directly beneath this channel, providing excellent support, is the rising 50-day SMA at 46.5 cents (not shown on the 6-month chart below)…

GPE, unchanged at 54 cents as of 8:30 am Pacific, reported net income of $1.4 million on total revenue of $5.3 million for its first quarter ended March 31…

Silver Short-Term Chart

This 6-month daily chart shows how extreme RSI(2) conditions in Silver persisted over nearly two weeks in June…since then, RSI(2) has been gradually unwinding and is currently at 57%…Fib. support levels in this market at the moment are key in our view…John has highlighted several Fib. retracement areas – $20.33 (touched last week), $20.08, $19.82 and $19.50…

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Silver Long-Term Chart

Silver has broken out above one important downtrend line but has been trading in rather choppy fashion recently…RSI(2) closed last week at 69% – could unwind a little more – with the metal still marginally below strong resistance around $22…

Note how the SS is moving up from a low bullish “W” while the ADX indicator shows the growing potential for a bullish +DI/-DI crossover this quarter…bottom line – Silver looks highly attractive around the $20 level…

Note:  John and Jon both hold share positions in PGX.

TSX Venture Exchange and Gold

The Venture continues to follow a predictable path and is beginning to gain momentum after a healthy and successful test of the 1000 support level.  A band of resistance exists between the mid-1020’s and the March high of 1050, but the end result of the kind of overall technical pattern displayed by the Venture since the fall of last year can only lead to one thing – a major breakout, an event we’re certain to see here in Q3.  So lock in on the most attractive opportunities now as the companies best positioned for success will significantly outperform the overall market and provide investors with unusual upside potential over the next couple of months.

As we stated last weekend, a bullish “W” formed in the RSI(14) on the 6-month daily Venture chart just below the 50% level – this is typically a highly reliable near-term reversal pattern, especially when it appears just after a successful test of strong technical support.  This is also a repeat of what occurred in late May when an RSI “W” formed after the Index revisited the 970 level. RSI(14) is now above 50%, gaining momentum.

After a sluggish Monday (Mondays have a tendency to be like that), the Venture gathered steam as the week progressed and closed Friday at its high for the day and the week – 1017.44, a modest gain of 5 points from the previous Friday.  We expect an even stronger week to finish off the month.  In short, the table is set for a breakout – likely in August – above 1050, followed by an immediate acceleration of this bullish phase.

Below is John’s updated 6-month daily chart.  Note the increase in buy pressure last week, and a bullish +DI/-DI crossover also appears to be in the works.  What’s notable, too, on this chart is the pattern of higher lows since February.

Venture 6-Month Daily Chart

Venture 5-Year Weekly Chart

RSI(14) on this 5-year weekly chart (with Gold comparative) continues to follow an uptrend line which illustrates how the bulls are now firmly in control.  In addition, you’ll note that the 50% RSI level has held as support throughout 2014 after serving as resistance since mid-2011 (major trend change).  A modestly overbought condition in the RSI that emerged in March when the Index hit 1050 gradually unwound to that new support level.

The Q2 decline that took the Venture to massive support at 968 May 20 came on light volume, and accumulation (CMF indicator) remains steady and strong – the most extended period of healthy accumulation we’ve seen, actually, in a few years.  This is a very bullish scenario, and includes a recent +DI/-DI crossover.  Those who gave up on this market during the 8% retreat from 1050 made a profound miscalculation.  Astute investors have a great chance to cash in big over the next few months in particular before the possibility of a fourth quarter correction.

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 carry out exploration or 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.

Gold

Gold has strong Fib. support in the $1,280’s and that was certainly evident last week as bullion dipped briefly below $1,290 and rebounded at the end of the week to close at $1,308.  Friday’s $14 gain was impressive, but bullion is now in the middle of one resistance band ($1,306 to $1,310) and below even more important resistance between $1,320 and $1,330.

How Gold finishes off this month is going to be interesting.  Overall, we remain on the bullish side due to the performance of the Venture.  Those who are calling for Gold and Silver to “plunge” – those arguments simply don’t hold water given how the Venture, a proven reliable leading indicator for both metals, is behaving.

Silver touched a Fib. support level in the low $20’s last week but recovered sharply Friday to finish at $20.75, a loss of just 14 cents for the week.  Copper gained 6 cents on encouraging economic data out of China to finish at $$3.23.  Crude Oil fell just over $1 a barrel to close at $102.09 while the U.S. Dollar Index enjoyed another strong week, gaining half a point to 81.04.

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 and will continue to support prices.   Despite Gold’s largest annual drop in three decades in 2013, the fundamental long-term case for the metal remains solidly intact based on the following factors:

• Growing geopolitical tensions, fueled in part by a highly dangerous and expansionist Russia under Vladimir Putin, have put world security in the most precarious state since World War II;
• Weak leadership in the United States and Europe is emboldening enemies of the West;
• Currency instability and an overall lack of confidence in fiat currencies;
• Historically low interest rates, a Fed balance sheet at more than $4 trillion (still expanding), and money supply growth around the globe;
• Signs of increasing inflation;
• Continued strong accumulation of Gold by China which intends to back up its currency with bullion;
• Massive government debt from the United States to Europe;
• Continued net buying of Gold by central banks around the world;
• Flat mine supply and a sharp reduction in exploration and the number of major new discoveries

Deflationary concerns around the globe and the prospect of Fed tapering had a lot to do with Gold’s plunge during the spring of 2013 below the technically and psychologically important $1,500 level, along with the strong performance of equities which drew “momentum traders” away from bullion.  The June 2013 low of $1,179 was 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 and the reluctance of central banks to increase interest rates.

 

 

Gold has traded between $1,290 and $1,300 so far today…as of 8:30 am Pacific, bullion is up $4 an ounce at $1,298…Silver is up 16 cents to $20.52…Copper is down 2 pennies at $3.23…Crude Oil is unchanged at $102.07 while the U.S. Dollar Index has gained nearly one-fifth of a point to 81.03…

Gold hit $1,287 on an intra-day basis yesterday, its lowest price since June 19, as U.S. equities reached hit new record highs and after data showed jobless claims fell and global manufacturing increased…

Gold premiums in India nearly halved in the latest week as higher supplies and sluggish domestic demand in a seasonally slack period weighed on the market there…demand is generally low during the monsoon period with Festivals re-starting in September and continuing until November…India is estimated to have imported 100 tonnes of Gold in June, a significant pick-up in demand after private agencies were allowed to import the metal…estimates are that imports will slip to about 40-50 tonnes this month before ramping up considerably by September…

Meanwhile, after a slow start in June, India’s monsoon season is expected to continue its wet revival phase next week, and that’s good news for Gold…India’s farm sector accounts for around 14% of the economy but two-thirds of the country’s 1.2 billion people depend on farming for their livelihood, and more than half of its arable land needs monsoon rains…India’s rural farming areas account for about 60% of the country’s Gold purchases…

U.S. defense and diplomatic officials said yesterday that Russia is firing artillery over its border into Ukraine, the first time American officials have publicly alleged direct participation in fighting on behalf of separatists.  “If true, this represents a serious escalation on Putin’s part,” said Michael McFaul, the former U.S. ambassador to Russia and White House adviser. “Instead of using last week’s tragedy as a pretext for ending this war, he seems to be doing the opposite, doubling down.”  The latest finding, based on U.S. intelligence that officials would not detail, comes as European Union diplomats appeared yesterday to be overcoming some of the political divides that have tempered their response so far to the Ukrainian crisis, moving to place sanctions on Russian access to European capital markets, energy technology and sensitive military goods…

The International Monetary Fund trimmed its global growth forecasts again yesterday…the IMF cut its forecast down to 3.4% this year from April’s forecast for 3.7% growth due to geopolitical risks over Ukraine and Iraq, as well as lowered expectations for key emerging markets…

Today’s Equity Markets

Asia

China’s Shanghai Composite surged to a fresh three-month overnight, jumping 22 points to close at 2127…meanwhile, Japanese shares finished at a six-month peak, rebounding from Thursday’s modest losses after June consumer price inflation rose 3.3% on year, in line with estimates…

Europe

European markets were under pressure today with some indices falling by more than 1%…German business confidence fell short of expectations, weighing on German stocks as the report underscored worries that growth in Europe’s largest economy is losing steam…widely watched figures from the Ifo Institute showed its business climate survey fell to 108.0 in July, marking a third straight monthly decline and missing expectations for 109.4…the reading for June was 109.7…Germany’s business climate has recently been pressured, in part by concerns about local companies with ties to Russia…earlier today, however, the GfK institute said German consumer sentiment reached its highest level since December 2006…

North America

The Dow is headed for its third consecutive daily loss…it’s down 147 points at 16937 as of 8:30 am Pacific…

Below is a 6-year monthly Dow chart…all indications are that the Dow will keep hitting fresh all-time highs during this summer as it’s currently in “Wave 3” of a 5-Wave Motive Phase…a level to watch for over the near/short-term is 17150 which is the target for the current wave…note how the RSI(14) has been climbing an uptrend line since the third quarter of last year…before any major correction sets in, extreme overbought conditions could emerge and persist for at least a short period but the Dow is not at that stage yet…

What’s interesting and somewhat perplexing is that despite the big move in the Dow since mid-2011, volume has been gradually declining…a lot of money could still be sitting on the sidelines…if and when the public gets seriously engaged in this market (usually the late stage in a bull phase), the Dow could easily over-shoot on the upside by a wide margin…a “melt-up” scenario in the markets, therefore, certainly can’t be ruled out…

The TSX is up 50 points as of 8:30 am Pacific while the Venture has added a point to 1013…diamond explorer North Arrow Minerals (NAR, TSX-V) continues to look strong (see yesterday’s chart) and is up a penny at 80 cents through the first two hours of trading…

Terrax Minerals Inc. (TXR, TSX-V) Update 

TXR climbed 5.5 cents yesterday to close at 45 cents after releasing very encouraging high-grade sampling results (Gold values up to 547 g/t) from its Yellowknife City Gold Project…the project lies on the prolific Yellowknife greenstone belt, and covers 15 km of strike length on the northern extension of the shear system that hosts the high-grade Con and Giant Gold mines…drilling and prospecting continue, and TXR expects to announce more results in the coming weeks…

We’ve mentioned TXR on several previous occasions, and below is an updated 13-month weekly chart that paints an interesting picture of the current technical situation…TXR has shown strong support around the 40-cent level (Nov./Dec. last year, June/July this year) which corresponds well with Fib. analysis…

A downtrend line has been in place since March, and what’s critical to watch for in the near future is whether or not TXR stages a confirmed breakout above this downtrend line…RSI(14) appears to have found support and is now rising at 46%…a bullish DI/-DI crossover also seems to be taking shape, so the sharp correction from the mid-March 90-cent high could be just that – a healthy pullback to the still-rising 300-day moving average (SMA) – not shown on this chart – and very strong overall support around 40 cents…as always, perform your own due diligence…

TXR is unchanged at 45 cents as of 8:30 am Pacific…

Pine Cliff Energy Ltd. (PNE, TSX-V) Update 

Further to John’s chart earlier this week, Pine Cliff Energy (PNE, TSX-V) has staged a confirmed breakout above the Fib. $1.73 level and is now trading at the top of a long-term upsloping channel (another breakout looming?)…interest in PNE has climbed rapidly since the company announced a week ago that it has entered into a binding agreement to acquire certain shallow natural gas assets in Alberta and Southern Saskatchewan from a senior oil and gas producer for cash consideration of $100-million…

PNE is up 2 cents at $1.90 as of 8:30 am Pacific…

West Point Resources Inc. (BLO, CSE) Update

We’re more excited than ever regarding the potential of West Point Resources (BLO, CSE) and its marijuana breathalyzer technology…the initial version of the Cannabix breathalyzer is under development with BLO having selected a highly experienced prototype manufacturer out of Vancouver…BMR eAlert subscribers will be receiving a special report on BLO in the very near future…

Technically, John likes what he sees in how BLO has traded since its debut June 26 on the CSE…BLO climbed as high as 32 cents July 7 before correcting to a low of 18 cents earlier this week (it closed yesterday at 21 cents), but that pullback should be viewed in the context of a normal Fib. retracement which we’ll explain in more detail in our coming eAlert…

The normal charts we use aren’t yet available for CSE listings but below is a chart that tracks the price-volume movement in BLO over its first 20 trading sessions…note the strong support around the 20-cent level and the drop-off in volume on the pullback…with a market cap of only $6.4 million, BLO holds incredible potential upside given that it’s at the forefront of marijuana breathalyzer technology with law enforcement in desperate need of a device that can effectively test drug-impaired drivers…

Note:  John and Jon both hold share positions in BLO.