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January 6, 2015

BMR Morning Market Musings…

Gold has traded between $1,205 and $1,215 so far today…as of 8:00 am Pacific, bullion is up $4 an ounce at $1,209…Silver has pushed 11 cents higher to $16.31…Copper is flat at $2.81…Crude Oil remains weak after yesterday’s big sell-off…WTIC is now under $50 a barrel, down $1.23 at $48.82…the U.S. Dollar Index, meanwhile, has jumped one-tenth of a point to 91.51

An observation from HSBS analysts:  “The ability of Gold to track higher in the face of ostensibly bearish moves in currencies and Oil may mean that bullion investors are beginning to view EUR-USD and/or Oil declines as disorderly and therefore prompting safe haven buying in Gold, or that the Gold market is becoming inured to currency and commodity declines,” they say. “Another explanation is that the equity price declines were significant enough to promote more than offsetting flight to quality buying in Gold. The explanations tend to favor further Gold gains.”

Gold For Canada At World Juniors

Congratulations to our Canadian junior hockey stars who re-captured the Gold medal for Canada with a dramatic 54 victory over Russia at the Air Canada Center in Toronto last night…things just aren’t going well for Putin’s Russia these days, and the ruble is tumbling again this morning like it slipped on a patch of Canadian ice…

Today’s Equity Markets

Asia

China’s Shanghai Composite posted a small gain overnight but Japan’s Nikkei average fell 526 points or 3%, putting it near a 3-week low, as trading sentiment was hit by a combination of declining Oil prices and a stronger yen…

Europe

European markets are moderately higher in late trading overseas…on the data front, Markit’s final composite PMI for the euro zone came in at 51.4 – lower than the earlier estimate of 51.7…this is one of the most important forward indicators for the euro zone economy and suggests that the region’s economy grew by just 0.1% in the final quarter of 2014, according to Chris Williamson, chief economist at survey compiler Markit…

North America

The Dow is down another 32 points as of 8:00 am Pacific after yesterday’s steep decline to kick off the first full trading week of 2015

Below is an interesting chart from www.cross-currents.net that shows the strong (some would say “alarming”) buildup of margin debt in the U.S. stock market in recent years…historically, excessive margin debt has preceded substantial market drops, but “timing” is an issue…analysts have been warning about this for a while now but indices have continued to push higher, thanks in large part to momentum and a very accommodating Federal Reserve…

Margin Debt

In Toronto, the TSX is down 106 points as of 8:00 am Pacific while the Venture is off 6 points at 688

Yesterday, the TSX recorded its biggest single-day percentage drop in about 20 months, tumbling nearly 2.5% as the energy sector shed another 6.5%…it has lost about a third of its value in the last 6 months…

Crude Oil Update

The huge drop in Oil prices since last summer is no barrel of fun for many, but there are certainly some offsetting benefits…

Canadian drivers could save as much as $12 billion at the pumps in 2015, according to a new report, if Oil prices stay low throughout the year…if Canadians continue to pay about 98 cents a litre, which was the average gas price in Canada at the close of 2014, that could mean weekly savings of approximately $25 per household…

That adds up to $100 per month, or $1,200 per year, multiplied by more than 8 million Canadian households with cars…

Putting Governments On A Forced Diet

A CIBC World Markets report released last month estimated that the federal and provincial governments in Canada stand to lose a combined $13 billion on plummeting Oil prices…

But is that such a bad thing?…governments at the provincial and federal levels are losing out on money, forcing them to live more within their means, manufacturers are benefiting from a lower Canadian dollar because of the Oil price plunge, while consumers across the country are receiving what amounts to a significant tax cut…while there are certainly some negatives for Canada in the new world order for Oil prices, including of course the loss of investment and jobs directly and indirectly related to the energy sector, as a whole this dramatic event could turn out to be a net positive…it certainly is for the United States, Canada’s largest trading partner, and a healthy U.S. is essential for a growing Canadian economy…

WTIC Long-Term Weekly Chart

Based on a major chart breakdown in the fall and weak fundamentals (oversupply and the apparent determination of the Saudis to encourage lower prices to achieve certain objectives including the weakening of Iran and the U.S. shale industry), we’ve consistently maintained that Crude Oil would drop into the $35 to $50 range – and that time has arrived, perhaps even sooner that many observers expected…

Technical support is the strongest between $35 and $40, and it was the $40 level where Oil topped out between 2000 and 2004

This long-term weekly chart shows extremely oversold conditions that are unprecedented going back 2 decades…keep in mind, markets often do go to extremes – more so in today’s media and information saturated world driven so much by the Internet…

Given the extreme nature of this chart (RSI-14 at 10%, ADX indicator has gone crazy), it’s safe to assume we’re going to see continued volatility…at some point fairly soon, we’re likely going to see a sharp rebound but that could be followed later by new lows…

Bottom line – $40 Crude appears to be a virtual certainty, and at that point some incredible bargains will open up in the energy sector…

WTIC5(2)

TSX Gold Index-Crude Oil Comparative Chart

The drop in Oil prices will assist Gold producers’ efforts to trim costs, and the weak Canadian dollar is also a boon for Canadian Gold producers who are now fetching over $1,400 Canadian per ounce…

Historically, the TSX Gold Index has responded bullishly to a drop in Oil prices – not always initially, but soon thereafter…conversely, Gold stocks have consistently run into trouble when Oil has exceeded $100 a barrel…

In this comparative chart going back to 2001, you can see how history is once again repeating itself – the TSX Gold Index is now moving in the opposite direction of Oil…it’s reasonable to expect that Gold producers’ stock prices during 2015 will once again return to a period of relative out-performance vs. Oil…

WTIC4(2)

TSX Gold Index Chart Update

After a couple of months of trying, the TSX Gold Index is finally gaining some traction above its 50-day moving average (SMA), and what to look for now is whether the 50-day will hold as new support and ultimately reverses to the upside…

The Gold Index is looking healthier but still faces some major challenges including a stiff band of Fib. resistance between 158 and 176…it may take some time to work through that, we’ll see…

The Gold Index is up 7 points at 162 as of 8:00 am Pacific

SPTGD2(1)

Richmont Mines (RIC, TSX) Update

In late September/October and into early November, Richmont Mines (RIC, TSX) was a steal as it retreated to strong support at its uptrend line while the company continued to put out robust results from its operations in Ontario (Island Gold mine) and Quebec…Richmont is a classic example of a Canadian producer that’s enjoying a double-whammy benefit – sort of like the icing on a very delicious cake in this case – from a weak loonie and a collapse in Oil prices…

Richmont has both price momentum and earnings momentum as 2015 begins…in addition, the company is starting the process of extracting a game-changing 1 million ounce high-grade resource beneath existing workings at its Island Gold Mine in northern Ontario…

RIC, with only 48 million shares outstanding, has virtually no debt and is sitting on cash of approximately $40 million…the company recorded adjusted net earnings of 19 cents per share through the first 9 months of this fiscal year including 10 cents per share in Q3…a repeat performance in Q4 would give RIC yearly net earnings of around 30 cents per share…the company expected to produce between 85,000 and 90,000 ounces of Gold in fiscal 2014 – through Q3, 2014 production stood at 71,354 ounces…with no news since mid-November, an update from the company is probably close at hand and more good news is likely on the way given how things have progressed so well in recent months…

Technically, RIC is climbing an upsloping channel that should lead the stock to much higher levels in 2015RIC represents 1 of the best opportunities in our view in the entire Gold stock sector…

RIC hit a new multi-year high of $4.29 in early trading today, and is up 23 cents at $4.21 as of 8:00 am Pacific…this is RIC‘s 7th straight up day, so an imminent small corrective pullback could be in order…

RIC2(1)

Kiska Metals Inc. (KSK, TSX-V) Update

Last week, we wrote again about the important new Copper-Gold discovery in north central British Columbia reported in mid-December by AuRico Gold at its Kemess East Property, about 1 km from Kemess Underground which is currently in the permitting stage…

While Kemess East is likely going to get even more interesting, given results such as 768 m of 0.44 g/t Au and 0.39% Cu including 132 m of 0.75 g/t Au and 0.50% Cu in KH-1404, investors should put the “Quesnel Trough” in general on their radar screens because this is a prolific area that just beginning to heat up again given the Kemess East results…

A picture tells a thousand words…check out the map below and look at that trend…(Kemess East is 6.5 km north of the past producing Kemess South mine)…

Quesnel Trough

About 65 km southeast of the AuRico discovery, the Kliyul Project optioned by Teck Resources Ltd. (TCK, TSX) from Kiska Metals Corp. (KSK, TSX-V) could be where the next discovery occurs in this area…Teck is highly bullish on this project, and for good reasons, and the major is planning an extensive initial drill program as part of its option to earn a minimum 51% interest in the property by spending $5.5 million

Exploration at Kliyul dates back to the 1940‘s when several Gold-bearing quartz veins were discovered on the property and in its immediate vicinity…

There are numerous geological features at Kliyul that have Teck geologists excited, including Cu-Au bedrock mineralization associated with a monzonite/diorite dyke swarm, gypsum-filled fractures, pyritization and elevated Cu-Au-Mo in silts and soils – these are all consistent with the presence of a porphyry hydrothermal system at depth…

But that’s not all…

The Kliyul zone (an 800 x 800 m magnetic high anomaly) was tested with 21 mostly shallow drill holes (less than 125 m) prior to 1995 which returned significant Copper-Gold intercepts in magnetite breccia…meanwhile, the most recent drilling at Kliyul, in 2006, yielded encouraging Copper and Gold intersections from two deeper holes…KL0630, a 217.8-metre intersection, averaged 0.52 g/t Au and 0.23% Cu…

In other words, Teck definitely has something to chase here…

Kiska Updated Chart

Kiska is one of those Venture exploration companies that has the strength to survive the worst of bear markets…the fact that this stock is near an historical low, at the same time as developments on the ground in the general area near Kliyul have suddenly turned very bullish, probably explains why bargain hunters are starting to nibble at KSK…

This 2.5-year weekly chart shows rapidly declining sell pressure, a bullish +DI/-DI crossover in December, and exceptional support at 4.5 cents…there could be a huge reward for patient investors if Teck makes a discovery at Kliyul, and Kemess East continues to impress…

KSK is up half a penny at 6.5 cents as of 8:00 am Pacific

KSK1(1)

XMET Inc. (XME, TSX-V) Update

The Venture’s “December-January Effect” and historical patterns in XMET Inc. (XME, TSX-V) made for a good short-term opportunity as expected a few weeks ago, as XME hit resistance at 6 cents New Year’s Eve and again yesterday after trading as low as 3 pennies Christmas Eve…

XME is unchanged at 5.5 cents as of 8:00 am Pacific

XME1(2)

Note:  Jon holds a share position in RIC.

January 5, 2015

BMR Morning Market Musings…

Gold has traded between $1,187 and $1,203 so far today…as of 7:50 am Pacific, bullion is up $8 an ounce at $1,198…Silver has gained 25 cents to $16.04 (see updated Silver charts at the bottom of today’s Morning Musings)…Copper is off 4 cents at $2.82…no surprise – Crude Oil (WTIC) is now testing the $50 level…it has slipped today to its lowest price since the beginning of May 2009…it’s currently off $2 a barrel to $50.68…the U.S. Dollar Index, meanwhile, is up slightly at 91.52 (see updated charts below)…

Gold is definitely getting some help from buyers in China – prices on the Shanghai Gold Exchange were about $7 an ounce higher today than the global benchmark…premiums were about $4 to $5 last week…the increase in premiums reflects strong demand…

Mineweb’s Lawrence Williams, who consistently provides very thoughtful and detailed analysis of supply and demand trends in Gold, reported this morning that Gold withdrawals from the Shanghai Gold Exchange (SGE) came to just under 58 tonnes for the week ending December 26, bringing the total for the year to that date to just short of the 2,100 tonnes we predicted back in November.  With three trading days still to be reported on it looks as if our predicted level will be exceeded.  With demand always strong in the run-up to the Chinese New Year, January and early February figures are also likely to continue at a high level given the date of the Lunar New Year falls this year on February 19, the second latest date possible in the Chinese calendar.”

Oil Update

The Oil supply glut continues…Iraq plans to expand Crude exports to 3.3 million barrels a day this month, according to Oil Ministry spokesman Asim Jihad…the country exported 2.94 million a day in December, the most since the 1980‘s…meanwhile, Russian Oil production rose to a post-Soviet record of 10.67 million barrels a day in December, according to Energy Ministry data published a few days ago…

We’ll have updated Oil charts tomorrow…

Canada-Russia War On Ice

Speaking of the Russians, we may be having difficulty getting them out of the Ukraine, but at least Canada can deliver the Putin regime an old-fashioned Canadian thumping, physically and on the scoreboard, in tonight’s War On Ice in Toronto as Canada and Russia battle for the Gold medal at the World Juniors…Canada hasn’t won the Gold since the last Venture bull market started in 2009, so perhaps a victory tonight will be a good omen for the markets in 2015

Crank Up The Oil Furnace!

Across many parts of Canada, it’s a good day to stay indoors, sip from hot chocolate and pay attention to the markets (at least Gold is up)…below is a scene from Montreal yesterday where residents are now paying the price for a West Coast-style green Christmas…

Montreal Storm

A real Canadian winter returns: Snow and ice blanket Montreal over the weekend, and temperatures are plunging today (photo submitted by BMR reader).

U.S. Dollar Index Update

To understand what might be in store for Gold (and the Venture) in 2015, it’s critical to appreciate the state of the greenback and the trading range of the U.S. Dollar Index which has been on fire since early last summer…

It’s important to note first, though, how well bullion has held up recently in the face of a much stronger dollar that has been driven higher by a divergence in economic and monetary dynamics primarily between the U.S. and Japan and the euro zone…keep in mind that next to the U.S. dollar, Gold was the best performing currency in the world in 2014…it’s reasonable to assume, therefore, that when the dollar finally does start to cool off at some point this year (and it will correct significantly as all markets do when they get over-heated), Gold may enjoy a strong push higher…

Below is a 34-year monthly chart of the Dollar Index that gives some valuable insight into how this market has evolved over the last several years and where it’s likely headed…

The bullish “W” that formed in the RSI(14) midway through 2011 was very telling – it closely resembled the bullish “W” in mid-1985 when the Dollar Index touched a low of 80.43 and then proceeded to gain 50% in value within 6 years…2011 is really when the bull move started in the greenback, after the low of 72.70, and of course it was in September 2011 when bullion hit an all-time high of just over $1,900

Dollar Index Approaching Long-Term Downtrend Line

The critical “takeaway” from this chart is the long-term downtrend line that currently intersects around the 93 level – will this downtrend line prove to be powerful enough resistance to at least temporarily halt the momentum of the greenback?…the 93 level is also just above the late 2005 high in the Dollar Index of 92.33

Watch The Fib. Levels & +DI Indicator

Important Fib. resistance levels on this monthly chart are 90.85 and 96.13

The +DI indicator likely has further to go on the upside, but not muchit’s currently rapidly approaching previous peak levels

Conclusion

This huge move in the Dollar Index since last summer is getting overheated and is becoming extreme with too many traders on the same side of the fence, but that’s how markets behave – they often overshoot in 1 direction or the other…temporarily technically overbought conditions will probably continue to persist until the Index at least reaches its long-term downtrend line (even a short-lived breakout above that resistance can’t be ruled out)…however, an unwinding of overbought conditions is inevitable at some point this year, and that’s when Gold and the Venture could really gain traction…

Over the longer haul (the next couple of years), it’s certainly feasible that after a correction the Dollar Index could challenge the 100 level and beyond if fundamentals are still in its favor (a lot can change in 6 months or a year)…

USD2(2)

U.S. Dollar Index 2.5-Year Weekly Chart

This 2.5-year weekly chart shows very vividly the dramatic move in the Dollar Index since last July…RSI(14) conditions are clearly overbought and destined to unwind in the not-too-distance future – the only question is, when?…there is currently a divergence between RSI(14) and price, and that may suggest that a correction could be coming sooner rather than later…

It’s interesting to note that on this chart, measured Fib. resistance is at 93 – the end of “Wave 5“…that lends support to the idea that we’ll soon see the Dollar Index top out, at least temporarily, at its long-term downtrend line shown in the previous chart…

USD4(1)

Today’s Equity Markets

Asia

China’s Shanghai Composite Index has started 2015 where it left off – on a tear…the Index shot up 117 points or 3.6% overnight to finish at 3351…that’s the highest close since August 2009 as investors snapped up shares of the largest companies and developers on the first trading day of the New Year…

Japan’s Nikkei was off slightly, closing at 17409

Europe

European markets are down significantly in late trading overseas as concerns mount over the economic health of the euro zone…the euro itself hit a 9-year low against the greenback today…

North America

The Dow has tumbled 208 points as of 7:50 am Pacific with energy companies leading the losses…the TSX has fallen 316 points, though the Gold Index is positive and could be ready to build some traction above its 50-day moving average (SMA)…

The Venture is off 10 points at 697NexGen Energy (NXE, TSX-V) is unchanged at 38 cents…the company has commenced an 18,000 m winter drill program at its 100%-owned Arrow zone at the Rook I Property, located in the southwest part of Saskatchewan’s Athabasca basin…the program will utilize 3 diamond drill rigs…2 rigs are currently drilling at the Arrow zone, and will exclusively focus on this land-based, high-grade, basement-hosted uranium discovery…the third drill rig will be deployed around the middle of this month to target northeast and southwest from Arrow along the Patterson conductor corridor which is 7 km in strike length through the western section of Rook I, and several other high-priority regional geophysical targets that show similar signatures to that of the Arrow discovery area…

Venture 9-Month Daily Chart Update

The Venture is in retreat today after closing Friday at its downtrend line in place since September as you can see on this 9-month daily chart…1 day does not a week make, so we’ll see how the dust settles in the coming days and if indeed the Venture can push above this resistance…keep in mind the Venture is still very much in the “December-January Effect” period, so it wouldn’t be surprising to see some strength later this week…

CDNX9(1)

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

There’s good reason to be bullish on an old favorite, Gold Bullion Development Corp. (GBB, TSX-V), especially given its current technical posture and the company’s anticipated progression to producer status in 2015

A near-term return visit to the Cadillac Trend is going to give us fresh insight into this important area of northwest Quebec, where GBB is very active along with a number of other companies…

Below is an updated 6-month GBB daily chart…a now-rising 50-day SMA, and an RSI(14) with increasing up momentum, together suggest that a breakout in the near future above the downtrend line is very probable…

GBB is unchanged at 4.5 cents as of 7:50 am Pacific

GBB2(1)

Athabasca Nuclear Corp, (ASC, TSX-V)

The Pikoo diamond play in Saskatchewan, led by North Arrow Minerals (NAR, TSX-V), could very easily heat up during this first quarter of 2015, so we suggest investors carry out some due diligence on companies active in the area – especially considering how valuations have been knocked down over the last few months…

We’ve already highlighted North Arrow, which is also busy on other diamond fronts…it’s well-financed and led by a “Who’s Who” in diamond exploration…

Among the more speculative “area plays”, a company with excellent potential on some excitement out of the emerging Sask Craton camp,  is Athabasca Nuclear (ASC, TSX-V)…ASC gained a penny-and-half Friday after announcing it had added to its holdings by entering into an option agreement to acquire a 100% interest in the 1,300 hectare Pikoo North project…

Technically, ASC has built a strong base of support at 2.5 cents and closed Friday at 4.5 cents, slightly below a downtrend line in place since late 2013…if ASC is able to overcome that resistance (around 5 cents), it’ll be worth paying some serious attention to…

ASC1

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

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…

SILVER6(1)

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 and Japan can show some fresh strength in 2015 (and that’s a big “if”), Silver could begin to appreciate rapidly…

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…

SILVER5(1)

Note:  Jon holds a share position in GBB.

January 1, 2015

Happy New Year, And A Look Ahead At 2015…

Happy New Year!…our wish is that 2015 is full of peace, joy, good health and prosperity for each of our readers…

This is a special New Year’s Day edition of Morning Musings with charts for Gold, the Venture, and various market tidbits including information on an area in north central British Columbia that has so far been overlooked by investors as an important recent drilling discovery was announced just 10 days before Christmas at the tail end of tax-loss selling…

BMR is taking a 3-day holiday break Friday, Saturday and Sunday, and we’ll return with Morning Musings Monday, January 5, to kick off the first full trading week of the New Year…

Gold averaged $1,265 U.S. an ounce in 2014 and finished the year at $1,183, down just slightly from where it closed December 31, 2013…in a way, that can be viewed as a victory for the yellow metal given the collapse in Oil prices and a huge move in the greenback – the Dollar Index enjoyed its best year since 2005, and appears poised for more gains during the first half of 2015 given bullish technical and fundamental factors…bullion performed very well against every currency in 2014 except the U.S. dollar…

Commodity Complex Hit Hard In 2014

Oil seems destined to fall through the $50 floor at some point early in 2015 before potentially recovering strongly later in the year when demand is likely more in line with supply, and the Saudis have accomplished their geopolitical aims…clearly, part of their multifaceted strategy is to weaken Iran and its Russian ally…

After a very promising start, it turned out to be a dismal year for the commodities complex with the CRB Index tumbling nearly 30% from its 2014 high to long-term support at 230 New Year’s Eve…

If you invested the right way in Coffee futures, you would have made a fortune in 2014…Coffee was the best-performing commodity as it soared nearly 50%…

Crude Oil was the worst commodity, falling nearly 50%…it got clobbered for both fundamental and technical reasons, and charts suggest we may not see a bottom in WTIC until it hits the mid-$30‘s…

Palladium put in the best performance of any metal, climbing about 12%…many analysts are bullish on Palladium entering 2015, as well as Nickel and Zinc which performed decently in 2014

Silver was off  nearly 20% in 2014 with the Gold-Silver ratio ending the year at 75.4, significantly above the long-term average of 60, so Silver has some catching up to do…interestingly, while there was more selling in Gold-backed ETF’s in 2014, Silver-backed ETF’s experienced net inflows as retail investors took advantage of the drop in prices…

Argentina & China Lead Global Equity Markets

The best-performing global equity market in 2014? – Argentina, with a gain of 59%…China’s Shanghai Composite took second spot as it surged 53%…John correctly called a major breakout in the Shanghai in late July from around 2200 after an inverted head-and-shoulders bottom, and on the final day of the year it hit a projected Fib. level at 3200

The Dow posted its 6th consecutive yearly advance, gaining 7.5%, and the chart is quite bullish for the Dow’s prospects in 2015

Where To From Here For The Venture?

The Venture suffered its 4th consecutive yearly decline, falling a whopping 25% after a 24% sell-off in 2013 and significant drops in both 2012 and 2011…the Venture plummeted 74% from its early 2011 high to its recent new all-time low of 637

Has the Venture Bear finally exhausted itself – is there hope on the horizon?…

While it’s impossible at this point to predict if we’ve seen the final bear market low in the Venture, there are reasons to believe that from a fundamental standpoint, 2015 should mark a turning point when we may actually see the first annual advance since 2010…the second half of 2015, in particular, could be much different than the last half of 2014 with Oil expected to stabilize and rebound, and Gold likely to benefit from the growing realization that the massacre in the mining sector is leading to a supply problem…

We have 2 charts this morning that should give readers some hope as the New Year begins…

Venture 1-Year Daily Chart

Some extreme oversold conditions emerged during the final quarter of 2014 which potentially may have signaled a “capitulation” event, but that remains to be seen…

In any event, what’s encouraging is that the Venture’s RSI(14) on this 1-year daily chart has broken above a trendline, buy pressure has replaced sell pressure (CMF), and a bullish +DI/-DI crossover (ADX indicator) could be in the works…

What is going to be key during January is whether or not the Venture can push above the downtrend line in place since September, and work its way through resistance toward 800…if the Venture stalls at the downtrend line, that would be bearish…in other words, the Index needs to bust through the 700 area on good volume, maintain that momentum en route to the next resistance at 745, and at least begin to build a strong base in the 700‘s…a band of resistance stretches from 700 to 800

CDNX8

Venture Long-Term Chart

This chart is quite fascinating…in October, John suggested we may not see a bottom in the Venture until the -DI indicator reached previous peak historical levels…this finally occurred in December as the Index touched a new all-time low of 637, about 40 points below the 2008 Crash low…

Interestingly, on the monthly chart the support at the 2008 low has held – it has been re-established, at least for now, which is important to note…in addition, the %K indicator is beginning to move higher from an all-time extreme low

Based on this chart, a case can be made that indeed we’ve seen a final bottom in this market…the behavior of the Index during the first quarter of 2015 should help to confirm that…

CDNX7(2)

Gold Chart Update

Gold faces some immediate challenges as 2015 begins – one of them being to overcome resistance at $1,200

This 5-year weekly chart gives a great picture of what has been happening in Gold since mid-2013…bullion has been bouncing around within a downsloping flag…after a successful test of support at the bottom of that flag in early November ($1,130), it’s reasonable to expect that we’ll see another attempt to break above that flag in 2015 which would mean a test of resistance around $1,300

For now, then, we see Gold continuing to trade within this downsloping flag…a breakout above that flag, or a breakdown below it, would usher in a new trading range…bullion could easily surprise to the upside or the downside ($1,000?) during 2015, but we do expect higher prices than now by year-end…

GOLD2(2)

British Columbia’s Newest Copper-Gold Porphyry Discovery

Had the timing of this announcement been a little different, more investors would have already caught on to this…rest assured, this important discovery will begin to resonate among astute investors by early in the New Year…potentially, some huge percentage gains could be made in 2015 on some of the juniors active in this general area where a second important discovery could also be in the works…

On December 15, AuRico Gold (AUQ, TSX) announced that a 19-hole drill program (27,000 meters) has uncovered a new mineralized porphyry system at Kemess East, located just 1 km east of the previously delineated Kemess underground deposit and 6.5 km north of the 50,000 tonne per day Kemess mill facility in north central British Columbia (the Kemess South open-pit mine was in operation from 1998 to 2011 and produced 3 million ounces of Gold and 749 million pounds of Copper)…

Drill results show higher grades than Kemess Underground, currently in the permitting stage…a Feasibility Study on that project was released by AuRico in March of 2013 and proposes an underground block caving operation with average annual production of 105,000 ounces of Gold and 44 million pounds of Copper over a 12-year mine life..

Some are calling the AuRico Kemess East results the best B.C. porphyry discovery since the Red Chris deep hole in 2008, and what this is going to do is revive interest not only in this area but in other B.C. Copper-Gold porphyry targets…are there opportunities here for investors? – absolutely…

AuRico closed 2014 at $3.85…check the bottom of today’s report for a very revealing AUQ chart…

Kemess East Discovery

Highlights of the drilling at Kemess East include:

768 m of 0.44 g/t Au and 0.39% Cu including 132 m of 0.75 g/t Au and 0.50% Cu in KH-1404;

304 m of 0.56 g/t Au and 0.42% Cu including 76 m of 1.2 g/t Au and 0.66% Cu in KH-1409;

601 m grading 0.50 g/t Au and 0.39 % Cu including 278 m of 0.71 g/t Au and 0.48% Cu in KH-1308.

We’re going to see much more out of Kemess East in the near future with AuRico announcing an expanded drill program that will focus on additional delineation of this system as well as more exploration drilling…preliminary mineralogical assessment indicates that Kemess East has similar characteristics to the adjacent underground deposit…

AuRico has also stated that it expects to produce an initial resource estimate for Kemess East in early 2015

Quesnel Trough Map

Below is a map taken from the Kiska Metals‘ (KSK, TSX-V) web site which shows the Kemess area and how prolific the “Quesnel Trough” is…it’s not surprising AuRico has made a discovery right next to Kemess Underground…there are undoubtedly more discoveries to be made along this trend, which includes the operating Mt. Milligan mine (2 billion pounds of Copper reserves and at 6 million ounces, the second-highest Gold reserves in the country)…

We specifically draw your attention to Kiska’s Kliyul Project, optioned by Teck Resources (TCK, TSX) which has planned an upcoming drill program at this exceptional target which could easily produce another major Quesnel Trough discovery about 65 km southeast of Kemess…

Kiska is trading at a mere 4.5 cents – KSK is one of our “sleepers” that could erupt in 2015 – while Garibaldi Resources (GGI, TSX-V) recently expanded its Red Lion holdings (bordering Kliyul) to 45 sq. km due to “extremely strong” geochemical signatures…interestingly, Teck is on GGI‘s doorstep on 2 important fronts – Kliyul, and Grizzly, and it wouldn’t surprise us if there are discussions of some sort between the 2 companies…GGI has a powerful situation building in Mexico, but the dynamics in B.C. for GGI have become more interesting than ever…

Meanwhile, Lorraine Copper Corp. (LCC, TSX-V) is worth keeping on one’s radar screen – it made a brief run last summer on speculation surrounding an “expression of interest” from another company with respect to its Lorraine property (in between Kliyul and Mt. Milligan) which is held in a joint venture between Teck (51%) and Lorraine (49%)…

Some majors are definitely actively looking at B.C. projects…with geological possibilities that we see from just this 1 map below, there’s no wonder…

Darb_summary BMRAuRico Gold Chart

Kemess East could be what ultimately allows AUQ to overcome the long-term downtrend line shown in John’s 3-year weekly chart…

We’ll keep an eye on this one for a potential move at some point in 2015 above the downtrend line – that would constitute a major breakout…base support is at $3.50

AUQ2

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

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