BullMarketRun.ca

Gold has traded between $1,234 and $1,245 so far today…as of 2:30 am Pacific (this is an early edition of Morning Musings due to travel), bullion is up $6 an ounce at $1,239 as it attempts to overcome key resistance at $1,240…Silver has advanced 30 cents to $16.91…Copper, sucked into the Oil sell-off, is off a nickel at $2.72, its lowest level in more than 5 years…Crude Oil has slipped another $1.31 a barrel to $44.76 while the U.S. Dollar Index (see updated charts below) is up one-fifth of a point at 92.25…

Gold continues to perform well in the face of a strong greenback, and Gold priced in euros is now at its highest level since September…investors in exchange traded products, however, remain cautious…ETP products backed by physical Gold (of which the SPDR Gold Shares is the biggest, with a market share of 44%) have seen 8 consecutive quarterly reductions…the current holding of 1600 tonnes is the lowest since April 2009, at which time Gold was trading at only $900 an ounce…looking at this from a different perspective, a lot of future buying power continues to build…what would happen if many of these investors who have gotten out of bullion suddenly decided to get back in?…

Gold buying in India is expected to gain traction post-January 15 when the next wedding season starts…

Oil Update

Key OPEC members have no interest in trying to prop up the Oil price…OPEC will maintain its decision to keep output unchanged regardless of current prices, the United Arab Emirates’ Oil minister stated today…he said producers outside the group need to be “rational” and adjust their output according to the market…

Alberta Premier Jim Prentice admits the collapse in Oil prices below $50 U.S. a barrel is going to make things tough in the province.  “The circumstances that we are in are the most serious financial circumstances we have seen in this province in 25 years, if not 50,” Prentice said. “Certainly they will affect every Albertan … it’s inescapable.”

A Senate bill to build the Keystone XL pipeline passed a preliminary but key vote yesterday, setting the stage for final passage and a likely showdown with President Obama over the legislation…the bipartisan bill passed 63 to 32 – more than enough to pass the 51-vote majority but 4 votes shy of the two-thirds majority needed to override a likely presidential veto…leaders of the Republican-led Senate acknowledged before the vote that they didn’t have the super-majority but expressed hope that amendments would sweeten the deal enough to swing 4 additional Democrats for the final vote…

TSX Gold Index Chart Update

The TSX Gold Index, aided by rising bullion prices and new multi-year lows in Oil, has surged 28% over the last 11 trading sessions since Christmas Eve…the Gold Index overcame important resistance in the mid 150’s, and a reversal to the upside has occurred in the 50-day SMA for the first time since June of last year…

Next key resistance is 175…below is a 6-month daily chart from John, showing that more gains are likely on the way after the Index closed at 174 yesterday…

TSX Gold Index-Oil Comparative Chart

We’ve been stressing this point over the last couple of months…historically, the TSX Gold Index has staged some big moves in an environment of plunging Oil prices…we’re witnessing a major change here in the relative performance between Gold producers and Oil…

Argentina Makes It Tough On Goldcorp (G, TSX) 

Goldcorp Inc. (G, TSX) reported last night that it expects to record a massive write-down of up to $2.7 billion U.S. on its new Cerro Negro mine in Argentina due to ongoing political and economic challenges in that country…commercial production began at Cerro Negro at the beginning of this month with the mine expected to produce 475,000 ounces this year…however, as Goldcorp stated, “The Argentine government continues to support various actions and programs, aimed at conserving its foreign exchange reserves, including restrictions on importation of goods and services and limitations on the exchange of Argentine pesos into U.S. dollars. The financial consequences of these programs, as well as the continuing inflationary environment in the country, are negatively impacting operations at the Cerro Negro mine. Additionally, the market valuations of future exploration potential have declined.”

Today’s Equity Markets

Asia

China’s Shanghai Composite added 7 points overnight to close at 3236, while trading in Japan resumed after a holiday yesterday with the Nikkei average falling 110 points to close at 17088…

China imported record volumes of commodities last year, taking advantage of lower prices to maintain its position as a massive buyer of global resources despite a slowdown in its broader economy…import volumes of Iron Ore, Crude Oil, Copper and Soybeans hit an all-time-high in 2014, according to official data released today…imports of Iron Ore, Crude Oil and Soybeans for the month of December alone also reached record volumes in a late-year surge of shipments…

Europe

European markets are in positive territory today despite a sell-off in the energy sector…

North America

Stock index futures in New York as of 2:30 am Pacific are pointing toward a modestly higher open on Wall Street after 2 straight losing sessions…the TSX and the Venture are also looking to rebound today…

Fission Uranium Corp. (FCU, TSX) Update

Fission Uranium (FCU, TSX) shot up 12 cents to close at $1.13 yesterday on huge volume as investors cheered a phenomenal maiden resource estimate for its PLS Property in Saskatchewan…the “Triple R” deposit, as it’s now referred to, contains an estimated 105.5 million pounds of uranium resources, of which almost 80 million are in the “indicated” category (the rest are in the “inferred” category)…significantly, more than half of the resource comprises a high-grade zone that makes this deposit one of the best uranium finds in decades…

The shallowness of “Triple R” is also a key feature…a majority of the deposit, located in basement rock which makes it easier to mine, is defined from approximately 60 m to 250 m depth, exceptionally shallow measured against comparable large deposits in the Athabasca basin region…this deposit also still has strong growth potential with mineralization open in multiple directions…Fission will commence a $10 million, 63-hole winter drill program later this week…

Fission is destined to be taken out by a large player – the only questions are who, when and at what price…

Not only are the fundamentals here powerful, but FCU appears to have broken out technically…it finally closed above a downsloping channel yesterday that we’ve been watching closely for several months…in addition, this still has a lot of upside potential as you can see in this 2+ year weekly chart…

Cannabix Technolgies Inc. (BLO, CSE; BLOZF, OTC) Update

One of our favorite companies in the non-resource space remains Cannabix Technologies (BLO, CSE), a first-mover in marijuana breathalyzer technology…the company is rapidly moving toward the unveiling of “Version 1.0” of its breathalyzer prototype…once investors can actually see this feature-rich device, it’ll be “gloves off” in the market, so to speak, with BLO expected to create a stir by garnering even more North American media exposure…

Technically, the stock is already beginning to firm in anticipation of what’s to come…below is an updated U.S. chart for BLO (Stockcharts.com doesn’t yet provide charts for CSE-listed stocks)…buy pressure as shown by the CMF indicator is increasing rapidly, and a confirmed breakout above the Fib. 50% level could come today…importantly, the 50-day SMA also reversed to the upside in late December…the bullish trend is very pronounced…

BLO closed  at 14.5 cents on the CSE yesterday and 12.7 cents U.S. on the OTC…the chart below is based on U.S. trading…

Doubleview Capital Corp. (DBV, TSX-V) Update

Doubleview Capital (DBV, TSX-V) has clearly hit some interesting mineralization in the deepest hole ever drilled in the Sheslay district…below are just 2 of a couple of dozen core photos from HAT-23 that have been posted on the DBV web site…

HAT–23, with a total length 650 m, intersected Copper mineralization in Sheslay red stock and dioritic porphyry of the Lisle zone, and initial assay results are pending…

Visual analysis is always very tricky, even with the best geologists and Doubleview is blessed with an outstanding team, but our thinking is that the DBV crew must have had good reason to continue to drill to the depth they did…it’s interesting to note that in December 2013, DBV reported that it had drilled 5 holes for a total of 1,276 m and collected 386 core samples for the lab…in this instance, they drilled 650 m and took 263 core samples…so they drilled half as much (but all on 1 hole) and took two-thirds of the samples they did on 1,276 m when they produced 2 discovery holes…needless to say, this latest drilling gives reason for optimism…core photos on the DBV site show plenty of pyrite and chalcopyrite…the question is, will this good-looking core run?…

U.S. Dollar Index Updated Chart

The near-vertical ascent of the U.S. Dollar Index since last summer can’t last forever but the trend is exceptionally strong as you can see in this updated 2.5-year weekly chart…

The key level to watch at the moment is 93 – that constitutes Fib. resistance and where the Index may react and consolidate for a period of time…overbought RSI(14) conditions have prevailed for more than 5 months…any pullback will have very strong support between previous Fib. resistance at 88 and the rising 50-day SMA, currently at 90…

U.S. Dollar Index 34-Year Weekly Chart

At this point, it’s reasonable to assume that the Dollar Index is gearing up to test its long-term downtrend line which means a move to the mid-to-upper 90’s this year may occur before a significant consolidation phase sets in…as a trader, this is not a trend you want to be in the way of as it may run you over…when it turns, though, the pullback will be sharp…

Note:  John and Jon both hold share positions in BLO.  Jon holds a share position in DBV.

Gold has traded between $1,218 and $1,232 so far today…as of 8:00 am Pacific, bullion is up $3 an ounce at $1,226…Silver has retreated 4 pennies to $16.48 (see updated Silver charts at the bottom of today’s Morning Musings)…Copper is 3 cents lower at $2.76…Crude Oil, which has fallen for 7 straight weeks, has slid another $2.43 a barrel to $45.93 while the U.S. Dollar Index is off its high of the day but still firm at 92.13…

Gold posted its biggest weekly gain since June last year at 2.9%, also snapping a 3-week decline…technically, as John’s 6-month chart showed yesterday, the key for Gold today is to confirm Friday’s breakout above Fib. resistance at $1,216…key resistance is at $1,240…given Gold’s current technical posture, it’s reasonable to speculate that a test of the December high ($1,239) will come this week…

The OECD reported overnight that economic growth in the coming months is likely to be stable in the U.S. and Canada…it will slow in Germany, Italy, Russia and the U.K., and will increase in China and India…

Speaking of India, global statesmen and business titans descended on Prime Minister Narendra Modi’s home state yesterday to pay homage to the man they count on to unleash big-bang reforms and create 1 of the few bright spots in a troubled world economy…Modi says it’s time for India to roll out the red carpet for business, not red tape, to create new economic opportunities…Rio Tinto PLC is paying attention…it has announced plans to invest $500 million in a diamond mining project in the central Indian state of Madhya Pradesh…according to details of the project on the company’s web site, the Bunder deposit is the first diamond discovery in India in over 40 years and one of only 4 new diamond mines globally which are likely to become operational in the next decade…

Oil Update

Analysts at Goldman Sachs have cut their 3-month forecasts for Brent to $42 a barrel from $80 and for the U.S. WTIC contract to $41 from $70 a barrel…the bank cut its 2015 Brent forecast to $50.40 a barrel from $83.75 and U.S. Crude to $47.15 a barrel from $73.75…

“To keep all capital sidelined and curtail investment in shale until the market has rebalanced, we believe prices need to stay lower for longer,” Goldman Sachs’ analysts stated in the report…

The average price of regular gasoline across the U.S. has dropped 27 cents a gallon in the past 3 weeks, to $2.20…this is believed to be the lowest average price in more than 5 years, and further drops of course are possible though probably not as steep…lowest prices in the nation were found in Albuquerque, New Mexico, at $1.76 a gallon…Edmonton has the lowest Canadian prices at 73 cents a liter ($2.76 CDN per U.S. gallon)…

A World Becoming More Chaotic

How will Gold respond in 2015 to an increasingly dangerous and chaotic world trying to cope with the cancer of Islamist extremism, while at the same time handicapped by relatively weak international leadership compared to crises points in decades past?…

The problem is profound…the competitive dynamic between ISIS and Al Qaeda should also be of major concern (for recruiting and publicity purposes, each is trying to be more terrorizing than the other and Al Qaeda – in its view – scored a PR coup in France), while the reach and extent of this evil ideology cannot be underestimated…mainstream media have given non-stop coverage in recent days to last week’s barbaric attacks in France by Islamist terrorists, but little has been heard of the horrifying situation in Nigeria where as many as 2,000 innocent civilians were slaughtered January 3 in a bloody escalation by Islamist group Boko Haram…leader Abubakar Shekau announced the establishment of his “Islamic Caliphate” last August…Boko Haram now controls about 20,000 square miles of territory, an area the size of Belgium, and the Nigerian army is incapable of stopping the jihadist advance…

On the home front, security agencies are “closely monitoring” the situation after a just-released video posted on the Internet repeated calls by ISIS to kill Canadian civilians, police and members of the military…unlike President Obama, Prime Minister Stephen Harper at least seems to understand the “Big Picture” reality of Islamist terrorism when he stated last week, “The international jihadist movement has declared war. They have declared war on anybody who does not think and act exactly as they wish they would think and act. They have declared war and are already executing it on a massive scale on a whole range of countries with which they are in contact.”

Today’s Equity Markets

Asia

China’s Shanghai Composite fell 54 points overnight to close at 3231 after reports of upcoming new listings this week…

Europe

European markets are mixed in late trading overseas…speculation continues to mount that the ECB will announce a QE program later this month…

North America

The Dow is off its lows of the day, down 81 points as of 8:00 am Pacific…the TSX has fallen 192 points, despite strength in the Gold Index this morning which is now above the 170 level for the first time in 3 months…

The Venture is off 9 points at 678 through the first 90 minutes of trading…the zone of support to watch closely ranges from 654 to 680…

Venture 5-Year Weekly Chart

Oversold conditions even more intense than those witnessed during the second quarter of 2013 have prevailed since October on the Venture, though a gradual thawing continues after the deep freeze the Index was plunged into…

It’s clearly a safer time now to pick away at bargains than it was at anytime from October through early December…each year throughout this bear market since 2011, RSI(14) has consistently moved out of oversold territory – like it’s in now at 27% – to at least the 50% level…investors who have sold into those rallies have been able to buy back at lower levels later on…

AuRico Gold (AUQ, TSX) Update

John’s New Year’s chart for AuRico Gold (AUQ, TSX) showed the strong possibility of a very bullish start for AUQ which is also beginning to benefit from increased investor awareness of the company’s Copper-Gold porphyry drilling discovery at Kemess East reported December 15…

AUQ has surged 25% through just the first 7 trading sessions of 2015, and the stock is also now breaking above a long-term downtrend line on John’s 3-year weekly chart…juniors who are strategically positioned in the Quesnel Trough area around Kemess East can be expected to benefit from AuRico’s important discovery, with more drilling and an initial resource estimate on the way…

AUQ is up 23 cents at $4.89 as of 8:00 am Pacific, putting it above the downtrend line where it closed at Friday…

Probe Mines (PRB, TSX-V) Update

The chart for Probe gave some distinctive bullish signals during the first half of December, and readers who took advantage of that opportunity have seen PRB jump about 25% since that time…a mild pullback in the near future wouldn’t be surprising given the sharp move since the important November 5 intra-day low of $1.96, but PRB is well-positioned to continue to be a Venture “out-performer” in 2015 based on both technical and fundamental factors…

Winter drilling at the Borden Project in northern Ontario, and a Preliminary Economic Assessment (expected during the first half of 2015) will keep news flow strong over the coming months…Borden represents a significant new Gold discovery in a previously under-explored part of Ontario, and is distinguished by a number of features including well-developed infrastructure, a consistent and well-zoned mineralized horizon, and a NI-43–101 resource estimate that includes an important high-grade zone…

PRB is off 7 cents at $3.25 as of 8:00 am Pacific…PRB should be strongly supported by its rising 50-day moving average (SMA), currently at $2.72…

Fairmont Resources Inc. (FMR, TSX-V) Update

Another Venture out-performer we see continued high opportunity in is Fairmont Resources (FMR, TSX-V), for reasons we initially outlined late last week…this company also stands to benefit directly from lower fuel prices…

As an industrial minerals company, Fairmont is not in the most “glamorous” of sectors but it’s in a profitable one…in mid-December, the company received a certificate of authorization which allows 300,000 tonnes annually of aggregate production at its Buttercup Property near Chicoutimi, Quebec…based on a historical resource, the current plan is to produce titano-magnetite aggregate from lens A, and quarry toward lens B thereafter…

Armed with the “CA”, Fairmont is now in a position to line up sales agreements in advance of production, and that’s in part what can energize this stock over the winter…if the company is successful in meeting its cash flow targets, then the upside potential here is truly significant for a stock that has less than 18 million shares outstanding and a current market cap of just over $3 million…

Fairmont took the Buttercup from the acquisition stage to the certificate of authorization in less than a year, so this is an experienced management team that knows how to achieve milestones and targets…

Technically, below is a 1-year weekly chart (with Venture comparative) that really speaks volumes about the strength of the overall uptrend FMR has been in since the beginning of last year…note also the breakout above the short-term downtrend line in place since late September…

Silver Short-Term Chart

Silver in December finally staged a definitive breakout above a downtrend line that was in place since the summer on this 9-month daily chart…the December 1 dramatic move from an intra-day low of $14.15 to a close above $16 was technically highly significant…as expected, superb support has been demonstrated around $15 and the metal made a recent run toward near-term resistance at $17.50 before backing off to current levels around $16.50…

Note how the downtrend line has become new support, while there’s also near-term support around $15.60…RSI(14) is holding support and moving up, so the immediate trend continues to be generally positive amid the choppiness we’re seeing in the current trading…

Silver Long-Term Chart

This 34-year monthly chart continues to give hope that Silver could be preparing for a powerful “Wave 5” move to the upside, though we caution that this could take some time to play out (if indeed this theory is correct)…

RSI(14) has bounced off previous long-term support which will need to hold along with key price support in the immediate vicinity of $15…

Fundamentally, Silver has been hurt by a slowdown in global economic growth…if economies in the euro zone, China, India and Japan perform better than expected in 2015 (that’s a big “if”), Silver could begin to appreciate rapidly…Silver will also follow Gold to the upside, if Gold suddenly decides to take off for any number of possible reasons…

One note of concern on this chart is the sell pressure that has prevailed since the beginning of 2013, after a decade-long period of buy pressure…based on historical patterns, sell pressure could persist for a considerable time yet…

Note:  John, Terry and Jon do not hold share positions in AUQ, PRB or FMR.

TSX Venture Exchange and Gold

After meeting resistance at a downtrend line in place since September, the Venture retreated 20 points last week to close at 687.  Volume was lighter than usual, as it typically is during the first half dozen or so trading days of the New Year, but should pick up in the coming week – especially if Gold continues to trend higher and Crude can at least stabilize.  Overall company news flow in the junior sector should also pick up which may help.

Key near-term resistance for the Venture is just above 700 as you can see in this 2-month daily chart.  As long as the Fib. support band can hold between 654 and 680, the Venture’s gradual recovery from its all-time low December 16 of 637 should continue.  Buy pressure remains steady.

Venture 9-Month Daily Chart

This 9-month chart shows how important it is for the Venture to overcome resistance at the downtrend line.  Above that, the next hurdle will be the still-declining 50-day SMA, currently at 723, followed by the 745, 770 and 800 levels.

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 eventually create a supply problem and therefore great opportunities in Gold and quality Gold stocks.  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 enjoyed its best week in a month and continues to climb an RSI(14) trendline, suggesting another move higher is likely in the works for the coming week.  On Friday, bullion jumped $14 an ounce to close at $1,223 as the greenback cooled off slightly.

The fact that Gold has performed as well as it has over the past 2 months (an 8% gain from the early November low of $1,130) despite a strong move in the U.S. Dollar Index is a very encouraging sign.  Physical buying out of China, leading up to the Lunar New Year February 19, is providing significant support.  Bullion is also attracting a safe haven bid with Islamist terrorism rocking France and creating more global chaos.

Gold’s breakout Friday above Fib. resistance at $1,216 requires confirmation Monday.  The $1,240 level represents key resistance.  The bears will certainly be put on the defensive if bullion is able to clear $1,240.

Silver closed the week at $16.52 (updated charts tomorrow morning).  Copper remains soft, closing at $2.79.   Crude Oil (WTIC) posted its 7th straight weekly decline, finishing at $48.36, while the U.S. Dollar Index backed off Friday but still closed half a point higher for the week at 91.92.

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 the ISIS and al Qaeda, and 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;
• 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 – a “day of reckoning” will come;
• Continued net buying of Gold by central banks around the world;
• Mine closings, a sharp reduction in exploration and a lack of major new discoveries – this these factors should contribute to a noticeable tightening of supply over the next couple of years.

Gold, enjoying its best week in a month, has traded between $1,207 and $1,219 so far today…as of 8:30 am Pacific, bullion is up $8 an ounce at $1,217…Silver has added 7 cents to $16.45…Copper is flat at $2.79…Crude Oil is down $1.41 a barrel at $47.38 while the U.S. Dollar Index, quite volatile today, is currently off one-third of a point at 92.00 following a jobs report that was in line with expectations…

Gold prices are currently at their highest level relative to Oil since the late 1990′s as bullion retains some of its appeal despite the downward spiral in Crude amid rising supplies and lackluster demand…

The U.S. posted its strongest year of job growth in 15 years, according to Labor Department data this morning, and the unemployment rate fell to a post recession low last month, evidence of momentum for the labor market marred by softer wages and a rise in workforce dropouts…non-farm payrolls rose a seasonally adjusted 252,000 in December with broad-based gains across a wide array of sectors…however, the key metric of hourly wages fell from the month before, a sign that labor cost pressure isn’t present…disappointing wage and labor force participation growth are still problematic for the economy…

Executives at Vanguard Group, the No. 1 U.S. mutual fund company, said yesterday that deflation is a real risk to the global economy…

The arrival of freezing weather across much of the U.S. hasn’t revived the natural gas market…prices for natural gas, used to heat half of U.S. homes, hit a more-than 2-year low this week and are down 35% since mid-November, thanks to a supply glut…daily gas production has set a record for 11 straight months, according to consulting firm Bentek Energy…

Oil Update

A victory for Keystone this morning – Nebraska’s highest court has just tossed a lawsuit challenging the proposed route for the pipeline…1 less excuse for President Obama, but he’ll invent others…

While a final bottom for Crude may not come until it reaches the mid to upper $30‘s, there’s no question that the opportunity exists for a strong rally to break out at almost any time given the extent of unprecedented oversold conditions…John’s 19-year WTIC chart that we posted Tuesday showed how abnormal the current pattern is…the strength of the U.S. dollar has been adding to the pressure on the Oil market from oversupply and the Saudis’ goal of driving the price down to preserve and increase market share, put the squeeze on U.S. shale producers and weaken the Iranian regime (the Saudis, Kuwait, United Arab Emirates and Qatar are counting on combined reserve assets estimated by the IMF at $826 billion to withstand multi-year price lows)…

Industrial output in Germany, adjusted for seasonal swings, fell 0.1% in November from October, when it climbed a revised 0.6%, the Economy Ministry in Berlin said today…analysts in a Bloomberg News survey predicted an increase of 0.3%…in France, the decline was 0.3% compared with a forecast in a separate survey of a 0.3% gain…

North America

The Dow has retreated 198 points as of 8:30 am Pacific…the Dow gained 536 points the previous 2 days following its worst start to a year since 2008…many are afraid of missing out on potential gains as the Index continues to trend higher…interestingly, according to Morningstar Inc., during 2014 only about 13% of actively managed, large-company stock funds beat the 13.7% return posted by the S&P 500 including dividends…hedge funds have struggled, as well…the HFRI Equity Hedge Index, which tracks the performance of hedge funds investing in stocks, posted returns of 2.3% during the year, their worst relative performance since 2011…

The TSX is off 118 points through the first 2 hours of trading while the Venture is down 3 points at 684…

Fairmont Resources Inc. (FMR, TSX-V) Update

Yesterday, we provided an initial overview of some fundamental drivers behind Fairmont Resources (FMR, TSX-V) which significantly out-performed the Venture during 2014 by doubling in value…given the fact Fairmont has just received its certificate of authorization for extraction at its Buttercup Property near Chicoutimi, Quebec, and has other plans in the works in the industrial minerals space in that province, we can’t help but be bullish on this company’s prospects for 2015…the possibility of near-term production and cash flow for a deal with only 17.5 million shares outstanding is attractive to say the least…Fairmont is also the kind of company that will benefit from lower fuel prices…

This morning, John gives us a look at FMR from a technical perspective with a 3-year weekly chart…

The decline from last year’s 30-cent high was a very normal retracement to the rising 300-day moving average (SMA) at 15 cents which is also a Fib. support level…astute traders and investors will accumulate on that kind of healthy retracement for the next wave up…

What’s interesting as 2015 begins – why we’re so excited about FMR from just a technical standpoint – are the bullish confirmations in the RSI(14), Slow Stochastics and ADX indicators…it’s not often in this market that you see that kind of a “triple play” in technical indicators, but that’s the situation with FMR which closed up half a penny yesterday at 19.5 cents…

Gold Bullion Development Corp. (GBB, TSX-V) Update

Gold Bullion Development’s (GBB, TSX-V) final permit for production at the Granada Gold Property near Rouyn-Noranda is expected in the near future…not surprisingly, the process has taken longer than expected which is why we didn’t start alerting our readers to GBB again until just very recently…

We find the current dynamics with GBB more compelling than they have been at any point since late 2009…with a multi-million ounce resource identified through drilling of just a small portion of the LONG Bars Zone, with Oil prices and the Canadian dollar now both well below the estimates in the Pre-Feasibility Study for Granada, and Gold trading above $1,400 CDN, the economics of GBB’s high-grade “rolling start” are robust…

In addition, the fact that GBB will now be able to include data available from 481 historical drill holes into the next mineral resource update is also highly significant (there are nice near-surface grades in some of those holes including 10.55 g/t over 3.66 m in 93–185 and 6.65 g/t over 9.11 m in 92-67)…the historical data will be added to the 88,467 m in 424 holes and wedges the company drilled from 2009 to 2012…

Below is an updated 3-year weekly GBB chart…yesterday’s high volume day was another sign of growing accumulation as GBB attempts to break out above the 5-cent level…for the first time since late last June, when a significant rally started and carried on for the next 2 months, GBB has pushed above its 100-day SMA and appears to be gaining comfort above that level…

Focus Graphite (FMS, TSX-V) Update

On December 16 we alerted bottom fishers to Focus Graphite (FMS, TSX-V) which had been showing strong support in the mid-30‘s since October, and in mid-December RSI(14) fell into the low range and near support on John’s 1-year weekly chart…since then, FMS surged more than 40% to a high this week of 53 cents…as of 8:30 am Pacific, it’s unchanged at 50 cents…

Focus, which recently completed and filed an environmental and social impact assessment (ESIA) for its Lac Knife Graphite Project in northeastern Quebec, has made powerful moves beginning in the last half of December in each of the past 5 years…it’s also worth noting that Focus has the attention of Dundee whose analysts recently wrote, “Focus is the most advanced Canadian graphite developer” with a “place among top tier assets when it comes to grade, flake distribution, recovery and purity.”

John’s updated 1-year weekly FMS chart shows an unconfirmed breakout above Fib. resistance at 49 cents, in addition to the breakout in December above a downtrend line in place for the past few months…

Note:  John, Terry and Jon hold share positions in GBB.

Gold has traded between $1,204 and $1,217 so far today…as of 8:30 am Pacific, bullion is up $3 an ounce at $1,214…Silver has slipped 7 cents to $16.46…Copper is flat at $2.80…Crude Oil is 23 cents higher at $48.88 while the U.S. Dollar Index has climbed another one-fifth of a point to 92.23 as it rapidly approaches a long-term downtrend line on the 34-year monthly chart we posted Monday…

Despite the fact Gold is now back above $1,200 U.S. and showing resilience in the face of a continued strong greenback, the world’s largest Gold-backed ETF, SPDR Gold Trust, reported another 3-tonne outflow yesterday…holdings are now at their lowest since late 2008 at 704.83 tonnes…

Gold will continue to flow into India unobstructed as Reuters reported that a government minister said yesterday there are no plans to impose any new curbs to imports (the collapse in Oil prices is helping India control its current account deficit)…according to government numbers, 151.8 tonnes of Gold was imported into India in November…imports fell to 39 tonnes in December and are around 7 tonnes so far in January…in late November, the government removed the 80:20 rule but it has maintained increased duty costs which in 2013 were raised to 10%…the Gold lobby in India is pushing to get the government to reduce those tariffs on the yellow metal…

Inflation rates across the world’s largest economies eased for the 6th straight month in November as energy prices fell sharply, and the trend toward lower inflation is likely to continue in the months ahead…the OECD said the annual rate of inflation in its 34 members was 1.5% in November, down from 1.7% in October…

Minutes released yesterday from the Federal Reserve’s December meeting gave little reason to believe the central bank was considering raising interest rates ahead of schedule…interestingly, though, the meeting included several references to the urgency U.S. officials and market participants are placing on new policy actions to counteract slow growth outside the U.S., particularly in the fledgling euro zone…

Today’s Equity Markets

Asia

China’s Shanghai Composite cooled off on profit taking overnight, falling 80 points or 2.4% to close at 3294…Japan’s Nikkei, however, climbed 282 points or 1.7% thanks in part to a weaker yen…

Europe

European markets were up sharply today on expectations that that the European Central Bank (ECB) would implement further aggressive stimulus measures…

North America

The Dow has soared 286 points as of 8:30 am Pacific, and is now in positive territory for the year…comments late yesterday by Fed Bank of Chicago President Charles Evans has helped the bullish tone…Evans suggested the Fed may not move on interest rates until 2016…

In Toronto, the TSX is up 145 points through the first 2 hours of trading while the Venture has added 5 points to 689…

Updated Venture Chart

Venture support this week has held just above the now rising 20-day moving average (SMA), currently at 675, and the 664–680 Fib. levels as outlined below in this 2-month daily chart…that support needs to continue to hold to keep the recovery from the December low intact…

Richmont Mines (RIC, TSX) Update

Richmont Mines (RIC, TSX) has intersected more high-grade Gold at depth in exploration drilling at its Island Gold mine in northern Ontario, confirming the excellent potential for the down plunge extension of the mine’s mineralization…highlights included hole GD-14–01C, drilled from surface, which intersected the targeted “C” Zone” at a vertical depth of 1,203 m, and assayed 19.87 g/t Au over a true width of 3.93 m…significantly, this intersection is approximately 250 m down plunge from the limits of the currently defined resources…

Last year, Richmont announced NI-43–101 indicated resources for the Island Deep discovery of 1.1 million ounces (456,000 tonnes grading 11.52 g/t Au in the indicated category for 169,000 ounces, and inferred resources of 3.2 million tonnes grading 9.29 g/t Au for 955,000 ounces)…

The company this morning also announced a 61,000 m drill program ($7.6 million) for Island in 2015…the first objective will be to test the eastern extension potential of the resource between 500 and 1,000 m depth…

RIC is up a nickel at $4.06 as of 8:30 am Pacific…

Cannabix Technologies Inc. (BLO, CSE) Update

Cannabix Technolgies (BLO, CSE), one of our favorite non-resource companies, is poised for a major breakthrough during this first quarter of 2015 as progress continues toward the unveiling of “Version 1.0” of its marijuana breathalyzer prototype…

We predict it’ll be a “game changing” moment for BLO when its feature-rich breathalyzer, powered by the latest software, is shown in studio for the first time…”all the gloves are off”, so to speak, at that point, and the attention that BLO will receive may dwarf the significant exposure it has already garnered for being a first-mover in the development of a patent-pending marijuana breath-analysis device for law enforcement and the workplace…

As far as the market is concerned, some important observations: 1) For the first time since its debut on the CSE in late June of last year, BLO has formed an impressive support base in a tight trading range from which it appears ready to launch higher; 2) American interest in BLO continues to build which is critical because this is mainly a U.S. story – of the 5.4 million Cannabix shares that have traded since December 1, more than half of that volume (53%) has been in the U.S. where the stock trades on the OTC under the symbol “BLOZF“…

Updated Chart

Technically, BLO is showing all the textbook signs of getting ready for a potential breakout above Fib. resistance at 14 cents CDN (12 cents U.S.)…

The rising 50-day moving average (SMA) is providing exceptional support and is about to cross above the 100-day SMA which has flattened out in preparation for a reversal to the upside…RSI(14) has unwound from temporarily overbought conditions in November and has found strong support around the 50% level (it’s currently showing up momentum at 57%)…

A picture tells a thousand words – quite simply, BLO will take the path of least resistance which should be higher based on the technical dynamics and the fundamental factors mentioned above…below is a 4-month daily BLO chart in U.S. currency (charts for stocks on the CSE aren’t yet available from Stockcharts.com)…

On New Year’s Eve, BLO announced the resignation of 2 directors who had joined the company in its early days as a mining entity in late 2011…that opens the door for some fresh expertise, so we do expect BLO will further strengthen its board in the near future as it prepares for an exciting new stage in its development in 2015…

Fairmont Resources Inc. (FMR, TSX-V)

This is such a real and refreshing Venture opportunity with immediate potential catalysts to drive value…combined with the simplicity of it all, we’re compelled to label this a “Special Situation” highly worthy of our readers’ attention and due diligence – especially given the current state of the junior resource market…

It’s rare that a Venture company is so fortunate and lucky enough to be in the position of Fairmont Resources (FMR, TSX-V) which is rapidly moving toward yet another milestone that has the potential to deliver near-term cash flow and earnings momentum over the next several years…that’s the kind of scenario that not only keeps a junior resource company in business, but allows it to thrive no matter what the overall market conditions are…and with just 17.5 million shares outstanding, this experienced group has the benefit of an extremely favorable share structure…

We’ve uncovered other success stories in Quebec; Fairmont, we’re convinced, will be added to that list…currently, it has a tiny market cap as it has been flying “under the radar”…in our view, that’s about to change as FMR has all the ingredients to do what 95% of Venture companies can only dream about – create shareholder wealth…

Fairmont has embraced the “KISS” principle…it’s an industrial minerals company, and relatively easily they can make products that are in demand…running a quarry is not rocket science and it can be highly profitable, especially when you’re in an area, as FMR is, with easy access that’s blessed with all the infrastructure you require…

As you can see on the map below, the Buttercup (along with FMR‘s other properties which we’ll get to in the coming days), is just 30 km north of Chicoutimi and less than an hour’s drive from the Port of Saguenay…

FMR Receives Certificate of Authorization For Buttercup

Just a few weeks ago, shortly before Christmas when most investors were still in shock from the Venture’s nearly 40% collapse, Fairmont announced that it had just received the all-important “CA” – the certificate of authorization (the extraction permit) for its Buttercup Project from Quebec’s MDDEP…that’s a valuable certificate, allowing production of up to 300,000 tonnes annually of titano-magnetite aggregate from the Buttercup…notably, the project received the unanimous support from the counsellors of the Municipality of St-David-De-Falardeau…

Armed with the “CA”, Fairmont is now in a position to line up sales agreements in advance of production, and that’s in part what can energize this stock over the winter…

This company delivered on its promise of securing a “CA” for extraction…that was a major milestone, so we don’t doubt their ability to start nailing down buyers for their product in the very near future…

And what’s FMR‘s current market cap?…just $3.3 million based on the current price of 19 cents (the rising 300-day SMA has been providing solid support around 15 cents)…

Buttercup’s titano-magnetite is the kind of clean, dense (heavy) aggregate that should command interest…from landscaping to rail tracks, it has valuable potential uses…

Based on an historical resource (non-compliant) and extensive sampling, Buttercup has an abundance of titano-magnetite with some special characteristics that could also attract the interest of steel makers as a high-end product for use in blast furnaces (upon additional permitting at the Buttercup)…we’ll get more into that in the near future…

Highly confident in its property, and given the relatively straightforward and inexpensive process of blasting, crushing and sorting, Fairmont hasn’t seen the need to incur the costs of a NI-43–101 resource estimate or a feasibility study…keep in mind, this is a simple aggregate quarry, not an underground or open-pit precious metals mine…even with those situations, some feasibility studies aren’t worth the paper they’re written on…there is always a certain degree of risk and unknown factors with any production scenario, but operating a quarry at the Buttercup should be about as simple as it gets…

The junior resource sector has been hit hard in recent months but this has created unprecedented opportunities for investors among select companies, particularly those with a “niche” (like BLO and FMR) and a simple low cost model with an opportunity to sustain operations and grow internally…

Fairmont has many refreshing aspects to it – we’ll have more tomorrow…

Precipitate Gold Corp. (PRG, TSX-V) Update

We’ve mentioned this one before – keep an eye on Precipitate Gold (PRG, TSX-V) and its exploration activities in the Dominican Republic…yesterday, the company reported highly encouraging results from a recent IP survey at the Ginger Ridge zone within the company’s Juan de Herrera Project…

The main Gold target chargeability anomaly has been extended an additional 850 m north of discovery hole 5 which returned 13.4 g/t Au over 5.0 m within 18 m of 4.5 g/t Au as reported by the company late last September…most investors have overlooked this discovery given the state of the markets over the last 4 months…interest in PRG should definitely pick up once a new drill program is announced…

Below is a 2-year weekly PRG chart…the stock made progress during a challenging 2014, and the overall technical posture gives a favorable outlook for 2015…

PRG is off 3 pennies at 16 cents as of 8:30 am Pacific…the mid-teens appears to be a very attractive entry point based on John’s chart below…as always, perform your own due diligence…

Calibre Mining Corp. (CXB, TSX-V) Update

Calibre Mining (CXB, TSX-V) has enjoyed an active start to 2015 with total volume (all exchanges) of nearly 3 million shares through the first 4 trading days of the New Year…

CXB was a strong out-performer in 2014, a trend that seems likely to continue in the year ahead…

A healthy technical consolidation occurred in Calibre during last October and early November after quite a dramatic run that began near the end of May…support held, as expected, between the 9 and 12-cent Fib. levels…

Results from a 5,000-meter Phase 1 drill program at the Eastern Borosi Gold-Silver Project, financed by IAMGOLD Corp. (IMG, TSX) have so far been very encouraging, and more assay results are pending…

Meanwhile, at the end of October, CXB announced commencement of a Phase 1 diamond drilling program (1,500 meters in up to 13 holes) on the Minnesota Gold Project within the B2Gold Corp. (BTO, TSX) joint venture on the Borosi concessions, northeast Nicaragua…Calibre controls a 49% interest in the JV while B2Gold has a 51% interest and is project operator…BTO has the right to earn an additional 19% per cent in Borosi by spending $6 million in additional project expenditures over 3 years…

CXB is off half a penny at 14.5 cents as of 8:30 am Pacific…the 50-day SMA is now on the rise again, a positive sign, while support at the rising 100-day SMA, currently at 13 cents, has been superb since the stock broke out near the end of June last year…

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

Gold has traded between $1,209 and $1,219 so far today…as of 7:50 am Pacific, bullion is down $4 an ounce at $1,215 (check below for an updated Gold chart)…Silver is up 6 cents at $16.61…Copper has slid a penny to $2.80…Crude Oil is off slightly at $47.78 while the U.S. Dollar Index has gained nearly half a point to 92.21…bullion’s resilience in the face of a surging greenback is impressive to say the least…

Another terrorist attack by Islamic extremists…black-clad gunmen this morning stormed the Paris offices of a satirical newspaper known for lampooning Islamic radicals, killing 12 and injuring as many as 15 before escaping.  “We’ve avenged the honor of the prophet!”, the killers shouted in French, according to witnesses…

The markets potentially could be impacted in a few hours by the release of the latest Fed minutes, due at 11:00 am Pacific, which will cover the FOMC’s Dec. 16-17 meeting…at that time, the central bank said it will be “patient” in considering the timing of the first rate increase since 2006…

The U.S. Mint reported brisk Gold coin sales on Monday – 42,000 ounces, compared with 18,000 ounces in all of December…meanwhile, despite Gold‘s jump yesterday to a 3-week high, global holdings in Gold ETP’s fell yesterday to 1,597.4 metric tons, the lowest level since April 2009, according to data compiled by Bloomberg…

The latest available COT data, for the week ended Dec. 30, shows that hedge funds and money managers raised their net long positions in Gold futures and options for the first time in 3 weeks…

Oil Update

No surprise here – President Obama, oblivious to the facts, the will of Congress and the American people, NAFTA and the strategic importance of the Canada-U.S. energy relationship, is more interested in pandering to his radical environmental lobby and “building” his so-called “environmental credentials”, has threatened to veto legislation from the House and Senate approving the Keystone pipeline…

The Saudis are apparently nervous about a possible leadership transition given what’s going on in the Oil market…King Abdullah Bin Abdulaziz Al-Saud, 90 years old, was admitted to hospital on New Year’s Eve suffering from pneumonia while the country wages a battle for Oil market share and flexes its financial, military and diplomatic muscle on several fronts…

Oil market oversupply may last months or even years, but prices could recover if non-OPEC producers (our emphasis) “act rationally”, the United Arab Emirates (UAE) Oil minister said in remarks published today…what about OPEC producers acting rationally?…

Tumbling Oil prices could prove to be a boon for the many Asian economies that depend on Crude imports…combined with loose monetary policy and a gradual recovery in global demand for goods and services, falling Oil prices should help lift emerging Asia’s GDP growth this year to 4.7% from an estimated 4.3% in 2014, according to consulting firm Capital Economics…the countries that are expected to benefit the most, in order, are Korea, Thailand, Philippines, India. Taiwan, Hong Kong, China, Singapore, Indonesia and Malaysia…lower Oil prices are also helping India with its current accounts deficit, making it easier to increase Gold imports…

Canadian Dollar Chart Update

Plunging Oil prices and general weakness across the commodity sector has certainly taken its toll on the Canadian dollar as you can see below in John’s 10-year chart…a near-term rally out of oversold conditions seems likely, but the loonie probably hasn’t found a bottom just yet – nor will it until at least later in the year based on the current technicals plus some obvious fundamental factors…such a scenario is a major positive for Canadian Gold producers, along with multi-year lows in Oil prices…

The loonie has been pressured by a downtrend line in place since late 2011 on this long-term monthly chart (the bear market in the Venture started about 6 months earlier)…at the moment, a large gap has opened up between the loonie’s current value (0.844 cents U.S.) and the downtrend line…that fact, combined with RSI(14) touching support, suggests that a near-term rally is probably in the works which should give relief to battered commodities and the Venture…

Ultimately, the loonie seems destined to test 2009 support in the upper 70‘s…like we’ve witnessed previously, a new bull market in the Venture should commence around the time the loonie has bottomed…

Gold Chart Update

The key price that Gold needs to overcome in order to put the bears on the defensive is $1,240, Fib. resistance which was also the December high…

This 6-month daily chart shows Gold climbing an RSI(14) trend line – as long as that continues, the possibility of a near-term breakout is very real…if and when that trend line is breached, bullion would come under pressure and at the very least we would likely see another test of $1,180 support…

A +DI/-DI bullish crossover is in its early stages – we’ll see if this is able to intensify in the coming days…

Today’s minor pullback is normal and healthy – the weekly close will be critical, especially with Friday’s jobs report…

Today’s Equity Markets

Asia

China’s Shanghai Composite jumped another 23 points overnight to close at 3374, while Japan’s Nikkei was relatively unchanged at 16886…

China has dropped decade-old quotas limiting exports of strategically important minerals that sparked a global trade dispute and led some countries to reduce their reliance on Chinese supplies…in 2010, China pushed global rare-earth prices sharply higher – in some cases 10-fold – when it slashed its export quota on the 17 elements by 40% from the preceding year…China has said it was an effort to clean up a highly polluting domestic rare-earth mining industry…the U.S., European Union and Japan in 2012 complained that China was using the quota system to push up global rare-earth prices in violation of WTO rules…since then, the world has reduced its reliance on the minerals from China, which until recent years produced about 93% of the world’s rare earths…that figure is believed to have dropped to around 86% as other producers have ramped up supply…

Europe

European markets are up significantly in late trading overseas following weak CPI data…consumer prices in the euro zone fell on an annual basis in December for the first time since the depths of the financial crisis more than 5 years ago, increasing pressure on the European Central Bank to step up its stimulus program as early as this month (the ECB meets Jan. 22, 3 days before general elections in Greece)…the EU’s statistics agency today said consumer prices last month were 0.2% below their December 2013 levels…that was the first year-over-year fall since October 2009 which marked the last in a sequence of 5 months of deflation…

North America

The Dow is rebounding after a negative start to the first full trading week of the New Year…as of 7:50 am Pacific, the Dow is up 127 points…private employers added 241,000 jobs to their payrolls in December, surpassing projections of a 226,000 gain, according to the ADP National Employment report released this morning…the figures come 2 days before the Labor Department’s non-farm payrolls report…economists surveyed by Reuters are looking for employment growth of 240,000 last month and a jobless rate of 5.7%…

The TSX is up 82 points as of 7:45 am Pacific while the Venture is flat at 686…Radius Gold (RDU, TSX-V) was halted 10 minutes before the open this morning, pending news…

Updated Venture Chart

John’s 9-month Venture chart posted Monday showed how the Index had closed last Friday right up against resistance at the downtrend line from September on the 9-month daily chart…that’s a key level (707) the Index must push above in order to build fresh momentum and keep the recovery from the December 637 low intact…

Below is 2-month daily chart…while the uptrend line from mid-December has been broken, Fib. support exists between 664 and 680 while the 20-day moving average (SMA) is beginning to flatten out at 675…

It would be a bearish development for the Venture if it were to fall below support in the 660‘s…

AuRico Gold Inc. (AUQ, TSX) Update

Since a clear technical “buy” signal recently, as outlined in our New Year’s Day chart, AuRico Gold (AUQ, TSX) shot up 80 cents or 21% over the first 3 trading days of the year…this morning, AUQ is pulling back modestly in sympathy with Gold stocks in general…as of 7:50 am Pacific, it’s off 4 cents at $4.61…

The intensity of the move in AUQ is at least partly attributable to enthusiasm over the company’s recently announced discovery at Kemess East in north central British Columbia…this is an area that we’re convinced is going to heat up significantly over the first half of 2015…

Given that discovery, we believe the odds of AUQ eventually staging a major breakout above a long-term downtrend line have increased substantially…this is definitely a situation to keep on one’s radar screen…

Paramount Gold & Silver Corp. (PZG, TSX, NYSE) Update

Paramount Gold & Silver (PZG, TSX, NYSE) was the subject of a BMR eAlert December 1 and has jumped 48% since then, thanks to the anticipated developments concerning Paramount and Coeur Mining Inc. (CDE, NYSE) with CDE‘s proposed buy-out out of PZG in an all-share swap…PZG is now moving in lockstep with CDE, and yesterday also reported highly encouraging results from the Dana vein at San Miguel…that vein is strategically located between the high-grade Don Ese deposit and Coeur’s Guadalupe mine just 800 m to the west…

Below is a 3-year weekly PZG chart based on its U.S. listing…PZG has finally broken above a long-term downtrend line, suggesting a test of Fib. resistance at $1.32 (U.S.) is in the works…

Note:  John, Jon and Terry do not hold share positions in the above-mentioned companies.