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Gold has traded between $1,181 and $1,195 so far today…as of 8:15 am Pacific, bullion is up $1 an ounce at $1,185…Silver has added a nickel to $16.34…Copper is flat at $2.90…Crude Oil is off 31 cents to $58.63 while the U.S. Dollar Index has gained one-tenth of a point to 94.72…

The key piece of economic data today turned out not to be the U.S. jobs report but China’s weak trade data which will likely prompt the government to introduce additional stimulus measures that should support demand for most industrial metals and other commodities as the year progresses…China’s overall imports in April fell 16.2% from a year earlier, compared with a 12.7% drop in March…

“We expect the Chinese authorities to deliver further policy stimulus in coming quarters, which should see growth lift in the second half of the year, supporting demand for commodities,” said Paul Bloxham, chief economist for HSBC Bank’s Australia and New Zealand region in a Wall Street Journal report this morning…

The head of Asia Currency Research at HSBC, Paul Mackel, stated, “After the softness in the import data, you have to expect further easing…the 100-basis-point cut in RRR on April 19 suggests that Beijing may be prepared to be a bit more aggressive than people think,” he stated in a CNBC report…

U.S. Jobs Report Matches Expectations

U.S. employers resumed a solid pace of hiring last month and the jobless rate fell, perhaps priming the economy to snap back from a brutal winter…non-farm payrolls grew a seasonally adjusted 223,000 in April, in line with expectations and rebounding from a weak March, the Labor Department reported this morning…the March figure was revised downward to 85,000 jobs from a previously reported 126,000…

The unemployment rate, calculated from a separate survey of households, fell to 5.4% in April from 5.5% in March as it nudges closer to the Federal Reserve’s expectation of “full” employment, which it pegs between 5% and 5.2%…

Many economists believe the 1st quarter woes were temporary and that the economy will rebound this spring, as it did last year from a 1st quarter contraction…the Fed predicts a bounce back and is looking for hiring to return to a strong pace as it contemplates an interest rate hike for the first time in nearly a decade…

Workers’ hourly wages grew 3 cents to $24.87 and were up 2.2% from a year earlier…that growth is still modest, but it comes after amid other signs wages are slowly picking up from the weak 2% annual pace of recent years…

U.S.Dollar Index Updated Chart

The U.S. Dollar Index retreated to Fib. support at 94 but the March-April double top and a soon-to-be-declining 50-day moving average (SMA) are just 2 of several indicators that suggest additional weakness is likely in the weeks ahead…a bounce higher toward new resistance around 96 could certainly occur, but the main trend remains bearish with the greenback consolidating after such a powerful run from last September to mid-March…

Dollar Index weakness – perhaps even a drop to major support in the upper 80’s over the next few months – would provide underlying support for the Venture and commodities in general…

U.S. 10-Year Treasury Yield Vs. Gold

Gold strengthened at the beginning of the year as the yield on the U.S. 10-year Treasury Note (TNX) briefly dipped below 1.7%…since then, the TNX has climbed back up to the top of its downtrend line (yesterday) and chart resistance at 2.25%…it has backed off this morning to 2.12%…

If for any reason the 10-year yield were to break out above the 2.25% key resistance, Gold could come under pressure given the pattern that has been evident so far this year…interestingly, the RSI(14) on the TNX has formed a bullish “W” and is trending higher on this 2.5-year weekly chart…

We’ll revisit this chart again in the near future if there are any new significant developments…

Today’s Equity Markets

Asia

China’s Shanghai Composite reversed higher overnight following the weak import numbers which have raised expectations of additional stimulus measures…still, the Shanghai suffered its worst week since July 2010 but that was merely healthy profit-taking…

Shanghai Composite Updated Chart

This is quite the chart – when a market or a stock is in an upsloping channel such as this, momentum is hard to stop and smart traders will buy on the dips toward the bottom of the channel…expect this trend to continue for a while yet…Chinese authorities also appear to be using the market as a wealth building stimulus measure…

Europe

European markets were up sharply today as investors cheered last night’s election results in the U.K. which caught pollsters by surprise…

Unlike Albertans earlier this week, voters in the U.K. took no chances with a risky socialist alternative and last night gave Conservative Prime Minister David Cameron a majority government…the Labour Party lost about 2 dozen seats and leader Ed Miliband has resigned…meanwhile, the separatist Scottish National Party (SNP) – sort of the equivalent of the Bloc in Quebec – swept Scotland…this will present Cameron with some unity challenges but he can confront those from a position of strength with a parliamentary majority…the left-of-center Liberal Democrats suffered their worst-ever defeat, dropping from 57 seats to just 8…

North America

The Dow has surged 260 points as of 8:15 am Pacific, thanks to a jobs report that was neither too weak or too strong…in Toronto, the TSX has climbed 91 points while the Venture has added 4 points to 689…

Influential Canadian investor Kevin O’Leary has some blunt advice for international institutions in the wake of the Alberta election: PULL OUT.

“It’s a horror movie unfolding,” O’Leary said in an interview with the Financial Post from New York where he is meeting investors, referring to the election of the NDP under Rachel Notley.  “Until we understand what the (Oil and gas) royalties and taxes are there won’t be any material fund flows – it’s a disaster.”

Alberta’s anticipated economic setback will be a gain for other parts of Canada as human and investment capital flow elsewhere, especially into neighboring provinces British Columbia and Saskatchewan with pro-business, mining-friendly, low-tax policies…

Edmonton resident Laura Lynn Johnston’s t-shirt design is making the rounds on social media after federal Justice Minister Peter McKay made the comment, “I guess it’s Albertastan now”…

Albertans still have their sense of humor, for now at least…

Richmont Mines Inc. (RIC, TSX) Update

Richmont Mines (RIC, TSX-V) continues to be an earnings machine…Q1 2015 net earnings were $4.6 million, or 9 cents per share, against a Q1 2014 net loss of $1.9 million, or negative 5 cents per share…Q1 revenues were $37.2 million vs. $29.5 million during the same period last year, as reported by the company yesterday…

Richmont’s accelerated development of its Island Gold Mine in northern Ontario is on schedule and on budget, while RIC’s Quebec assets performed robustly during Q1 with cash costs and all-in-sustaining costs less than expected…

The company has maintained 2015 production guidance of 77,000 to 88,000 ounces, but our guess is that they will beat those expectations…Richmont had $71 million in cash ($1.22 per share) at the end of March and long-term debt of only $5.2 million…a tremendous turnaround for Richmont and the long-term outlook has to be considered exceedingly positive given the expansion of the Island Gold Mine into a deep high-grade zone…

RIC jumped 20 cents on the news yesterday and is off a penny at $3.95 as of 8:15 am Pacific…a downsloping flag has formed in this 4-year weekly chart, setting up the possibility of an important breakout above the $4 level…

Savary Gold Corp. (SCA, TSX-V) 

People make the difference…Ross Beatty’s investment into Savary Gold (SCA, TSX-V) in March was a major turning point for the company which commenced a 15,000 m drill program at its Karankasso Gold Project in Burkina Faso (65% Savary) just over 2 weeks ago…

Savary has been a huge winner so far this year, climbing from a low of 2 cents to a high of 11 cents…a cup-with-handle pattern has formed on this 2+ year weekly chart, so a minor pullback would not be surprising as temporarily overbought conditions unwind and the handle takes shape…any weakness could be a good opportunity here…as always, perform your own due diligence…

SCA is unchanged at 9.5 cents as of 8:15 am Pacific…

Note:  John, Terry and Jon do not hold share positions in RIC or SCA.

Part 1

“We want to be self-sustaining and paying a dividend,” Fairmont Resources‘ (FMR, TSX-V) President and CEO Michael Dehn told us in an interview.  That’s a lofty goal for any Venture-listed junior resource company, but it’s one that’s within the realm of possibility for Fairmont as it continues to harness the power of high-grade industrial minerals with a suite of attractive properties surrounded by excellent infrastructure in Quebec.

There are many private companies in this space in North America that are profiting handsomely, and Dehn is clearly on track with Fairmont given the rate of progress on the acquisition and permitting fronts since early last year.  There are multiple commercial applications for a range of products – basic to high-end – that are targeted from FMR’s growing inventory of properties led currently by the advanced Buttercup Project.

Dehn sees no shortage of demand, and he learned during the difficult “Bre-X years” while at Goldcorp just how important industrial minerals can be.

Keeping it simple – Fairmont’s Buttercup Project near the Port of Saguenay is permitted for aggregate production from high-grade titano-magnetite, and the company will attempt to leverage success there to advance a growing suite of industrial mineral properties surrounded by excellent infrastructure in Quebec.

“Like now, those were tough days for the Gold sector,” he recalls, “compounded by a strike at one of our mines.  But we had two industrial operations that generated really good, steady cash flow.  Those operations kept the office going and the exploration going.  They were critical. 

“If you look at our population and how much concrete that’s needed just for bridges in Canada, or how much pavement is put down on roadways, how many gravel roads there are, on a per capita basis we’re talking thousands of tonnes of industrial minerals per year for every Canadian just to keep infrastructure in place.  Then there’s the fancy chemicals we need for everything from paint to toothpaste and all the other products we require to make our lives comfortable.  Is there a big opportunity in this sector for Fairmont with the type of properties we have and their logistical advantages in Quebec?  You bet there is.”

Further to our observations regarding Fairmont in today’s Morning Musings, when you’re evaluating whether to invest in a Venture-listed company it’s always critical to begin by taking a close look at the President and CEO.  Dehn is focused and genuine.  He has a very strong command of the business he’s in, developed through more than two decades in the mining industry (senior geologist to CEO) including a dozen years at Goldcorp during which he consolidated the eastern and western ends of the Red Lake Camp under the leadership of Rob McEwen.

In other roles in the mining and exploration sector, Dehn has been instrumental in positioning companies for strategic and operational success – two specific and more recent examples being Nayarit Gold, a forerunner of AuRico Gold, and Argex.  With the latter, he took it from an exploration company to a technology company with a five-fold increase in share value and more than $5 million raised in financings in less than 18 months.

Dehn has consistently followed a strategic game plan with Fairmont, creating a business model that makes a lot of sense in the current and future junior resource environment.  Industrial minerals may not be as glitzy as diamonds or Gold, but they’re a lot easier and less expensive to extract.

We’ll have more in the days ahead on this speculative but intriguing opportunity.

Gold has traded between $1,178 and $1,190 so far today…as of 9:30 am Pacific, bullion is down $8 an ounce at $1,183…Silver is off 18 cents at $16.31…Copper is steady at $2.90…Crude Oil is down by more than $1 a barrel to $59.67 while the U.S. Dollar Index has added half a point to 94.63…

The 25th edition of the Silver Institute’s World Silver Survey, compiled independently by the GFMS team at Thomson Reuters, was released yesterday…key components of global Silver demand rose in 2014, highlighted by jewelry demand which posted a new record last year…there was also notable growth in some key Silver industrial end uses including ethylene oxide, photovoltaics, and brazing and alloys…gains in supply from mine production and producer hedging were partially offset by a continued decline in scrap supply…

Total Silver physical demand stood at 1.07 billion ounces last year, the 4th highest level recorded since 1990, but a 4% decline from the 2013 total…a main factor in the decrease in physical demand was a fall in coin and bar demand from 2013, which had been a record year…

Silver mine production grew by 5% to reach 877.5 million ounces…this growth is attributable to stronger output from the primary Silver and Copper sectors, new projects that came online last year and significant production gains in Central and South America…primary Silver mine production grew 8% and accounted for 31% of global Silver mine supply…Mexico was the world’s leading Silver producer in 2014, followed by Peru, China, Australia and Chile…primary Silver mine cash costs dropped 16% to $7.74 U.S. an ounce…

More Political Upheaval

If you thought Alberta now has problems with a socialist majority government – wing-nut environmentalists, union reps and university students entrusted with overseeing an economic engine powered by 173 billion barrels of Oil – take a look at what’s unfolding in Britain as a separatist party is set to gain a strong foothold in Westminster as Conservative Prime Minister David Cameron aims for re-election in a possible tight battle with the Labour Party…

Just months after its devastating loss in an independence referendum, the Scottish National Party (SNP) quadrupled its membership and could win every single one of the 59 Scottish seats available in today’s national elections…the thought of so many separatists (they are also social democrats in the European tradition) sitting in Westminster – a scenario Canada of course knows well after years of the Bloc Quebecois in Ottawa – is alien in Great Britain and has alarmed many outside Scotland…SNP leader Nicola Sturgeon could be an unlikely election rock star after today’s votes are counted…

CRB Index Updated Chart

The technical evidence is compelling that the CRB Index is in the early stages of a major turnaround, and that’s good news for the Venture looking out over the next several months…we expect the RSI(14) to gradually follow its uptrend line through the 2nd and 3rd quarters, and that will mean a test of Fib. resistance clustered between about 250 and 272…the CRB closed at 230 yesterday, 11% above what may very well have been a cyclical low established in March…

The CRB’s immediate challenge is to overcome the downtrend line indicated below, which also coincides with chart resistance at 230…how soon this breakout may occur is impossible to predict…a minor pullback from current levels, and some consolidation, could certainly occur first…

A successful push above 230 in the CRB would likely be matched by a breakout in the Venture through critical resistance at 707, so the CRB needs to be watched closely…the key takeaway here is that the CRB is in a bullish overall trend at the moment, one that appears sustainable with increasing momentum through the summer…

The CRB is off 2 points at 228 as of 9:30 am Pacific…

Today’s Equity Markets

Asia

China’s Shanghai Composite extended its pullback overnight, falling another 116 points to close at 4113…

Europe

European markets were mixed today…Reuters reported that European lenders dashed any hopes of an aid-for-reform deal next Monday when euro zone finance ministers are scheduled to meet…

North America

The Dow is up 114 points as of 9:30 am Pacific…in Toronto, the TSX has gained 57 points through the first 3 hours of trading while the Venture, after touching its rising 100-day SMA yesterday, remains flat at 687…

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

There are few companies on the Venture with any hope of ever generating cash flow and building a sustainable, profitable business, but one with immediate and exciting prospects in that regard is Fairmont Resources (FMR, TSX-V) which is effectively harnessing the power of high-grade industrial minerals in logistically strategic areas of Quebec, surrounded by all the necessary infrastructure…what’s even better is that this is a company with a tight capital structure (less than 20 million shares outstanding) led by a President and CEO who has skillfully taken a project from the acquisition stage to full permitting (Certificate of Authorization) in Quebec in less than 12 months – no small feat by any standards, even for a quarry operation…other properties in the company’s pipeline, including some potential high-purity quartz plays that could dazzle investors, can be advanced quickly as well…

We started following Fairmont in January, and the fact that the share price has backed off somewhat since then has made us even more excited about this opportunity as the company continues to execute on its game plan…the general market will catch on to what’s evolving here soon enough…

We’ll have more in a separate piece on FMR later today, but below is a quick review as well as an updated chart from John that confirms technically why this is such a bargain at 10 cents (market cap under $2 million)…

Fairmont’s flagship Buttercup Property near Chicoutimi features high-grade titano-magnetite which has multiple potential commercial applications as dense aggregate…the high, consistent density of this aggregate (4.5 to 4.6) is what makes its special – along of course with the deposit’s location (30 km north of the Port of Saguenay) and its easy access…the local community is fully behind the project and the company has received its CA from Quebec authorities, allowing for up to 300,000 tonnes of aggregate production annually from the property…

The key now, of course, is to line up sales contracts for Buttercup, and interest has been high since the company announced the property was permitted, according to President and CEO Michael Dehn who learned about the value of industrial minerals while serving 12 years at Goldcorp (G, TSX) under the leadership of Rob McEwen…

Readers should note that Fairmont is in discussions with a large private Canadian industrial minerals company as announced early last month…this is a company with annual sales in excess of 1.5 million tonnes of bulk handled industrial minerals with global customers…its initial interest in the Buttercup (they are currently testing material from the property) is for the dense aggregate for customers producing concrete-coated pipelines…the excellent potential for Fairmont to build partnerships like this is an example of how we see FMR growing and building shareholder value in the process…

Technically, some very encouraging signs here…FMR recently hit support at the bottom of a bullish downsloping channel, while RSI(14) is beginning to turn higher after touching long-term support…buy pressure (CMF) has also actually picked up since February, so it appears “smart money” was accumulating with the pullback in the share price…it’s reasonable to expect the top of the downsloping channel to be tested in the near future…

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

The intense accumulation in Eskay Mining (ESK, TSX-V) since the summer of 2013 has been quite amazing given the state of the markets, and there’s every reason to believe there has to be something significant in the works here, especially given an almost total absence of news…

Eskay controls 40 sq. km surrounding the prolific past producing Eskay Creek mine, and they have some giant neighbors – Pretium Resources (PVG, TSX) and Seabridge Gold (SEA, TSX)…while it was in operation, Eskay Creek was the second richest deposit in North America and the 5th largest Silver producer in the world…

We can’t help but think there are some bigger companies looking at ESK’s land package for a potential deal…

Technically, a confirmed breakout above Fib. resistance at 15 cents would be significant…very strong support around 11 cents…

ESK is up 1.5 cents at 11.5 cents as of 9:30 am Pacific…

Castle Mountain Mining Company Ltd. (CMM, TSX-V) Update

Non-resource issues have drawn the most attention of Venture investors recently, but one of the shining lights in the exploration sector has been Castle Mountain Mining (CMM, TSX-V) which is up by about 50% for the year…the market responded well to the recent news of the appointment of Dr. David Adamson as CEO to replace Fraser Buchan, while Castle Mountain also recruited Ian Cunningham-Dunlop as Vice-President, Exploration…this certainly strengthens the management team…

We alerted our readers to CMM on the morning of January 19 when the company reported some impressive high-grade drill results from its advanced Castle Mountain Project in southern California…CMM took off from the upper 30’s and climbed as high as 55 cents that day – the 200-day SMA at the time – before consolidating at slightly lower levels…

Results are pending from a follow-up drill program…concurrent with the announcement of management and board changes last month, CMM also completed a $2 million financing at 35 cents…

Technically, CMM is finally gaining traction about its 200-day SMA which has flattened out at 44 cents…key resistance remains at the previously identified 59-cent Fib. level on this 2-year weekly chart…

CMM is off half a penny at 48.5 cents as of 9:30 am Pacific…

Note:  Jon holds a share position in FMR.

Gold has traded between $1,187 and $1,198 so far today…as of 9:00 am Pacific, bullion is down $3 an ounce at $1,190…Silver has lost 4 cents to $16.47…Copper has retreated slightly to $2.89…Crude Oil is off its highs of the day but is still up 54 cents at $60.94…WTIC is now within a strong band of resistance between $60 and $65…the U.S. Dollar Index, meanwhile, has fallen a full point to 94.10 on ADP’s weaker than expected private jobs report for April…the Fed is running out of weather excuses…analysts who were calling for jobs growth of up to 275,000 in April are likely to be way off the mark when the Labor Department provides its numbers Friday morning…this could cause a major technical breakdown in the U.S. Dollar Index, as we’ve been explaining in recent days, which will support the Venture and commodities…

U.S. private sector payrolls once again expanded at a mediocre pace last month, according to ADP’s employment report this morning…private payrolls increased by just 169,000 jobs in April…economists surveyed by The Wall Street Journal expected ADP would report 205,000 new jobs were added last month…the March ADP increase was revised down to 175,000 from 189,000…

“Fallout from the collapse of Oil prices and the surging value of the dollar are weighing on job creation,” the report said…

Wave Goodbye To The Alberta Advantage

So, we woke up on this 6th of May and discovered that political history has been made in Alberta as voters in that province have elected, largely by accident (this was not a campaign based on ideology), an NDP majority government…the Progressive Conservatives deserved to be punished for their arrogance and sense of entitlement that really began to flourish under Premier Redford, who we referred to previously here as “Alison in Wonderland”…Jim Prentice had a glorious opportunity to be the face and the engine of change at this time in Alberta, but he fumbled the ball badly and snatched defeat from the jaws of victory…his political career is in shambles…

The charismatic Rachel Notley came from nowhere and filled the void of leadership…but behind her smile and great speaking abilities is a very weak team of NDP candidates (full of union reps, environmentalists, students, and even a Hugo Chavez aficionado from Chile) and a slate of policies that are destined, over time, to kill jobs and drive investment out of the province…the NDP would be smart to try to govern from the center, but chances are they won’t…human nature is such that they will delight in their first taste of the fruits of power, and they can be expected to attempt to “over-reach” and remake Alberta in their image…provincially across Canada, throughout history, NDP governments have almost always inflicted serious economic damage…Alberta benefited from that, drawing brain power and financial capital from those jurisdictions in years past…now the tables will be turned…

In many respects, the PC’s deserved to lose their 44-year grip on power…what Albertans don’t deserve, however, are job-killing, investment-killing economic policies that will no doubt be ushered in by the NDP which has a policy platform that is really no different than the one the B.C. NDP implemented to the destruction of that province’s economy in the 1990’s…capital – human and financial – shifted dramatically from B.C. to business and mining friendly Alberta in the late 1990’s, and now we’ll see the reverse of that over the next few years…B.C. and Saskatchewan will benefit the most as Alberta raises corporate taxes by at least 20%, targets the “rich” with higher personal taxes, conducts a royalty “review”, dramatically jacks up the minimum wage, and generally broadens the scope of government in that province…the flight of human and investment capital from Alberta will gradually increase over time…Christy Clark and Brad Wall are smiling this morning…they can be expected to exploit this opportunity, just like Alberta once did to B.C. and Saskatchewan…as investors, this is something to prepare for…as far as we’re concerned, Alberta now represents significant jurisdictional risk…

Investors have wasted no time in rendering their judgement of last night’s election results…money is being taken out of Canadian Oil and gas stocks again this morning (this actually started yesterday in anticipation of an NDP victory) as this development is being viewed as “extremely dangerous” to an industry already reeling from last year’s collapse in prices…

“The business climate in the Oil patch could turn a bit more difficult to navigate than in the past, as Notley has been one of the harshest critics on issues of royalties, taxes and environmental policy,” said a report from Desjardins Securities in Quebec.

What an understatement…

Today’s Equity Markets

Asia

China’s Shanghai Composite turned negative in the final hour of trading overnight, ending down 1.6% at its lowest level since April 21…this comes on the back of a 4% slump in the previous session after local media reported that several brokerage houses are implementing stricter margin financing rules…

Europe

European markets were down modestly today…on the data front, a final composite Purchasing Managers’ Index for the euro zone came in above expectations this morning…the April figure rose to 53.9 above a flash estimate of 53.5…

North America

The Dow is off 48 points as of 9:00 am Pacific…Federal Reserve Chair Janet Yellen today warned that equity market valuations were “generally quite high”, though she said the Fed was not seeing the hallmarks of a bubble…interesting that she would make those comments, and at this time…

Canadian markets, including the Oil-sensitive Venture, are under-performing in light of last night’s NDP sweep in Alberta…Premier-elect Notley may very well attempt to “soothe” the markets in the days ahead, but those will merely be words…actions will speak differently later…

In Toronto, the TSX is down 173 points as of 9:00 am Pacific while the Venture has fallen 9 points to 687…

TSX Updated Chart

The TSX is under pressure again today but bargain hunters will likely step in at and just below the 15000 level, an area highlighted by a wedge support line as shown in this 2.5-year weekly chart…the 200-day moving average (SMA) and the rising 100-day SMA intersect just above 14900…so there is plenty of support here (just like the Venture has around 680) and the outlook for the U.S. Dollar Index gives us added confidence that this support has an excellent chance of holding…

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

Given events in Alberta, all the more reason to be bullish about companies with strong projects and proven management teams in Saskatchewan and British Columbia…

With a rapidly growing high-grade uranium discovery, NexGen Energy (NXE, TSX-V) has increased its bought deal financing at 50 cents per share to $23.75 million (expected to close in about 3 weeks, just before the start of the company’s summer drill program at its Rook 1 Project in Saskatchewan’s Athabasca Basin)…

Previous chart resistance at 52 cents is now strong new support…looks like a powerful summer shaping up for NXE given this bullish 2+ year weekly chart…

NXE is unchanged at 55 cents as of 9:00 am Pacific…

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

The chart for Doubleview Capital (DBV, TSX-V) continues to look highly favorable:

1.  Confirmed breakout above the downsloping flag

2.  Confirmed breakout above Fib. resistance at 15 cents

3.  Confirmed breakout above the 200-day SMA which is now reversing to the upside

Buy pressure (CMF) is on the increase while the RSI(14) is at a very modest level (56%) on this 3-year weekly chart – plenty of room to move higher…

On the ground, it’s obvious that major progress in being made in expanding the Gold-rich Hat Copper porphyry system in terms of both volume and grade…importantly, the company has also found a way to significantly reduce drilling costs as reported April 21…

Final assay results from hole 23 and and a fresh round of drilling are imminent…

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

Gold has traded between $1,185 and $1,200 so far today…as of 9:00 am Pacific, bullion is up $7 an ounce at $1,195…Silver has added 19 cents to $16.56…Copper is strong at $2.93…Crude Oil has climbed above $60 a barrel this morning for the first time since December 11…it’s currently up nearly $2 a barrel to $60.89, thanks in part to reports of slowing output from Libya…the U.S. Dollar Index, meanwhile, has fallen one-quarter of a point to 95.17…

The Commerce Department reported this morning that the U.S. trade deficit surged to its highest level ($51.4 billion) in nearly six-and-a-half years in March, another sign that the strong greenback is hurting the U.S. manufacturing sector…it was the biggest percentage jump since December 1996…with March’s trade deficit coming in worse than assumed, growth is likely to be revised down to show a contraction when the government publishes its second GDP estimate later this month…that is what has given bullion another lift this morning while knocking the Dollar Index down after it hit an early morning high of nearly 96…

The Gold market will also continue to remain focused on the U.S. payrolls number to be released Friday, and another weak report on the heels of the very disappointing March data could allow bullion to finally gain traction above $1,200 an ounce…the expectations of some analysts that as many as 275,000 jobs were added in April could be wildly off the mark…

Mineweb’s Lawrence Williams wrote this morning (www.Mineweb.com) that “for the second week in a row, Gold withdrawals from China’s Shanghai Gold Exchange (SGE) have been at around 50 tonnes – a high level for the post Chinese New Year period. Withdrawals from the exchange for the first 16 weeks of the year have already reached around 780 tonnes suggesting that if flows out of the SGE are maintained we could be in for a new record year with withdrawals well in excess of those of 2013, which totaled almost 2,200 tonnes.”

U.S. Dollar Index Updated Chart

As you can see in the 2.5-year weekly chart below, extreme overbought RSI(14) conditions in the U.S. Dollar Index persisted from last September until the beginning of April…the surge from the low of 79 in the 2nd quarter of last year to the high of 100.71 in mid-March was one of the most explosive moves by the greenback on record, predicated on the widely held assumption of a Federal Reserve rate hike by June…that has about as much of a chance at happening now as a re-election of the Progressive Conservatives today in Alberta…

This is important for the near-term direction of the Venture…the immediate test for the Dollar Index is whether it can hold support roughly in a range between last week’s low (94.47) and the 96 level, and then reassert its strength…

It’s noteworthy that for the first time since its move began last summer, the Dollar Index is now trading below its 50-day moving average (SMA) which is flattening out and threatening to roll over later this month…ultimately, the potential of a major correction in the Dollar Index to the high 80’s can’t be ruled out, and that would be very bullish for commodities and the Venture…

Euro Updated Chart

Additional evidence that the Dollar Index could be on the verge of breaking down…the euro appears to have put in at least a temporary double bottom around 105…at this point, it likely needs to ease off slightly to test what should be new support at 110, just above the 50-day SMA which has flattened out and could soon start to reverse to the upside – just the opposite of what may occur with the U.S. Dollar Index…

Important Copper Update

This is a fascinating chart going back 20 years…

Copper is actually coming off its best weekly performance since 2011, and (critically) has pushed above an RSI(14) downtrend line that has been in place since shortly after the 2011 all-time high of $4.65 a pound…

The long-term uptrend support line from the 2001 low has held…notice also the 4 circled RSI(14) lows…they each corresponded with important market bottoms and were followed by powerful upside moves…

Currently, the metal is trading within a bullish downsloping flag on this monthly chart, sell pressure has abated significantly, and the -DI indicator has likely peaked…

This is not to say Copper is about to immediately “go through the roof”…what this chart does give us, though, is compelling evidence that a major turnaround is in its early stages, that $2.42 was likely the bottom of a correction that spanned nearly 4 years…a breakout above the downsloping flag would certainly confirm this interpretation…

Today’s Equity Markets

Asia

China’s Shanghai Composite, overdue for a pullback, was knocked down 4% overnight, losing 182 points to finish at a 2-week low of 4298…news reports came out that several Chinese brokerages have tightened requirements for margin lending…

Europe

Most European markets were down sharply today…

North America

The Dow has lost 72 points as of 9:00 am Pacific…interesting – many investors appeared to ditch American stock funds last month in the biggest exodus since the financial crisis…but far from taking that as a bad sign, it could be interpreted as an indication that stocks have more room to run…

In April, U.S. equity mutual funds and ETFs saw outflows of $35.8 billion, according to TrimTabs…that’s the biggest move away from American stocks since October 2008…and the bearish tone is confirmed by the flows in the leveraged ETF space, where leveraged short ETFs saw an increase in assets of 4.6%, while leveraged long ETFs saw assets dip by 2.5%…

In Toronto this morning, the TSX is off 126 points as of 9:00 am Pacific while the Venture is actually up 2 points at 701…

GoldQuest Mining (GQC, TSX-V) Update

If Copper is set to strengthen more as the year progresses, investors should keep an eye on GoldQuest Mining (GQC, TSX-V) which has retraced as expected in recent days after a sudden spike from 8.5 cents to 20 cents in just 4 trading sessions…the company released a revised and more robust PEA for its Romero and Romero South Gold-Copper deposits in the Dominican Republic last Wednesday, and GQC’s exploration upside in the DR remains huge – more discoveries are very possible despite a string of disappointing results the last couple of years…

GQC is finding support at its 200-day SMA (13.5 cents) while its 100-day SMA (11 cents) has reversed to the upside…what to watch for with GQC is this – a potential breakout above the downtrend line shown below…that’s where it met resistance last week…many technical indicators will flash a major buy signal if or when GQC is able to climb above 20 cents…

GQC is up half a penny at 14.5 cents as of 9:00 am Pacific…

Cannabix Technologies Inc. (BLO, CSE, BLOZF, OTC) Update

Recent selling in Cannabix Technologies (BLO, CSE) got overdone and those who unloaded out of fear around 29-30 cents unfortunately gave up their shares at very strong support around last year’s high and the bottom of a downsloping flag that has recently developed…

BLO’s marijuana breathalyzer is an exciting “disruptive” technology with enormous company-building possibilities for Cannabix…we expect continued strong news flow…despite the retreat from the February high of 77 cents, the primary trend remains very bullish which should result in an eventual breakout above the downsloping flag for the next major leg up…

BLO is a penny higher at 38 cents on the CSE as of 9:00 am Pacific…

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

Gold has traded between $1,180 and $1,194 so far today…as of 9:15 am Pacific, bullion is up $13 an ounce at $1,191…Silver has jumped 47 cents to $16.57…Copper is off slightly at $2.88…Crude Oil hit a new yearly high this morning but has now backed off 41 cents to $58.74…the U.S. Dollar Index, meanwhile, is up one-fifth of a point to 95.46 after hitting a 3.5-month low last week…

Gold has certainly started this first full trading week of May on a positive note…whether that translates to bullion snapping a 4-week losing skid will likely be determined by this Friday’s U.S. jobs report (the March report was miserable, and the Fed will run out of weather excuses if April’s isn’t much better)…

According to currency analysts at BNP Paribas, the Dollar Index may have put in a near-term bottom last Friday…looking ahead, their view is that the greenback could find more strength by the end of the week with a better-than-expected employment report.  “Our economists expect a solid rebound in April non-farm payroll employment, to 275,000.  They also expect hourly earnings to pick up to 2.3% year-over-year, which would be another indication that the Fed may not be able to hold back from rate rises for very long,” they stated. “We think strong data will create a more fundamental driver for the rise in U.S. yields, which would bolster the U.S. Dollar.”

We’ll examine the greenback in more detail over the coming days…a bounce higher during this week is reasonable but there’s plenty of technical evidence to suggest that the Dollar Index is in the midst of what could be an extended and much-needed consolidation, and may have hit its high for the year in March after a remarkable surge from last summer…Dollar bulls are counting on a strong jobs report Friday – they will be running for the hills if that number disappoints…

TSX Gold Index 6-Month Daily Chart

Gold stocks are looking good which leads us to believe the U.S. Dollar will be restrained over the short to medium-term…

The TSX Gold Index finally pushed above Fib. resistance in the mid-160’s last week, and the Index is also now above its 50-day SMA (165) which is beginning to flatten out…a rising 100-day SMA in the upper 160’s is a positive sign…

What to watch for here is whether the Gold Index can hold support in the mid-160’s…the trend over the last several weeks has certainly been encouraging…the Index formed a double bottom late last year with higher lows following the healthy retrace to strong chart support at 150 in early March…

The Gold Index is flat at 168 as of 9:15 am Pacific…

TSX Gold Index Relative To Gold

This chart that goes back to the 2011 all-time high in Gold and the TSX Gold Index is quite revealing…notice how the Gold Index broke above a long-term downtrend line relative to the metal early last year, followed by a plunge during the October-November panic that has led to the development (right shoulder now evolving?) of what appears to be a classic inverted head and shoulders bottom…

A bullish “W” has also formed in the RSI(14)…quite simply, one can conclude from this that Gold stocks have indeed bottomed which suggests that Gold itself has either found its low or is very close to doing so…

Agnico-Eagle Mines Ltd. (AEM, TSX) Update 

The overall strength of this Agnico-Eagle Mines (AEM, TSX-V) chart is additional evidence that the bear market in Gold stocks is over after more than 70% in value was wiped off the TSX Gold Index between late 2011 and early last November when the Index hit it lowest level (129) since 2001…

AEM successfully retested its 2013 low late last year, and is now attempting a breakout above Fib. resistance at $38…the general public doesn’t love Gold stocks right now but they should based on the message delivered through this chart…

Crude Oil Update – WTIC’s Wall Of Resistance

Crude Oil enjoyed a strong April, as John’s charts suggested it would, but WTIC now faces a powerful band of resistance between $60 and $65 a barrel…this resistance won’t be overcome easily, and it’s also reasonable to expect WTIC to soon consolidate its recent gains…support levels are $57 and $54…it would be surprising if the $54 level isn’t tested…there has been immense volatility in this market – expect that volatility to continue…

Today’s Equity Markets

Asia

China’s Shanghai Composite gained 40 points overnight to close at 4482…less-than-stellar economic data out of China continues to fuel bets that Beijing will unveil further support measures, and that’s obviously market-bullish…

The HSBC final PMI showed China’s vast factory sector stalling in contraction for April, with a reading of 48.9, marking its fastest drop in a year…China’s official PMI for April topped expectations, coming in at 50.1 last Friday, while HSBC’s preliminary reading, released April 22, fell to 49.2…

A holiday in Japan today – the Nikkei was closed…

Europe

European markets finished moderately higher today, although the U.K. exchange was closed due to a public holiday…

North America

The Dow is up 74 points as of 9:15 am Pacific…in Toronto, the TSX has added 30 points while the Venture is 1 point higher at 700…

VANC Pharmaceuticals Inc. (NPH, TSX-V) Update

VANC Pharmaceuticals (NPH, TSX-V), in a hot sector at the moment, came out with news this morning after being halted the entire day Friday…the company announced that it has received drug identification numbers (DINs) from Health Canada for 5 new generic molecules as an initial notice of consent for new drug submissions…these 5 molecules will comprise 14 dosage forms across various therapeutic categories, including both chronic (long-term) therapy and acute (short-term) therapy…

VANC says it will commence manufacturing of these products once Notice of Compliance (NOC) is received from Health Canada, which is anticipated in the next few weeks…the NOC from Health Canada provides the authorization for VANC to market and sell the generic molecules in Canada…

Technically, as we noted last month, NPH started looking stronger after breaking out above a short-term downtrend line with strong support at the rising 50-day SMA…the CMF shows increasing buy pressure…important Fib. resistance at 55 cents…the overall trend remains encouraging…

NPH has gained 6 cents to 55 cents as of 9:15 am Pacific…it opened at 54 cents and climbed as high as 61 cents…

Silver Update

Back in 2008, the Gold-Silver ratio spiked to just above 80, meaning that you needed more than 80 ounces of Silver for each ounce of Gold…in 2011, however, that ratio dropped to near 30 as Silver out-dazzled Gold and zoomed to $50 an ounce…the ratio has since climbed steadily higher, reaching the mid-70’s and now it’s beginning to trend lower at 73…

One of 2 things will likely happen over the next year – 1) either Gold and Silver will take off again to the upside with Silver outperforming, thereby lowering the Gold-Silver ratio; or 2) the Gold-Silver ratio will narrow as Gold falls more than Silver does…the point is that this ratio is historically out of whack and this needs to correct…the average ratio level over the last 20 years has been 60, though longer-term averages in the Gold-Silver ratio are much lower…

Silver Long-Term Chart

An explosive push higher – is this actually a scenario that could unfold in Silver over the next couple of years?…quite possibly, given the look of this 34-year monthly chart, though at the moment it’s hard to understand all the factors that could come into play to generate the kind of “Wave 5” move that appears to be in the works here…

It seems quite possible that the bottom of “Wave 4” came late last year when Silver briefly plunged to just above $14 an ounce…RSI(14) has managed to hold support which goes back to 2001…

Sell pressure continues to remain strong, however, as shown by the CMF – amazingly, at levels not seen in nearly 25 years since the low of $3.51…this intense sell pressure at the moment, which could continue for a while yet, should therefore be viewed in a larger context as a bullish contrarian indicator…

Silver Short-Term Chart 

Silver found strong support in the mid-$15.50’s, as expected, and the current RSI(14) trend is favorable…

You can see in the chart below how Silver gained momentum in late November after it pushed above a downtrend line…we’re now at another important point as Silver has pushed up against a downtrend line that formed after the late January high of $18.50…once the metal overcomes this resistance (the overall pattern suggests it will, the only question is when), then it should be ready to challenge the first Fib. level you see which is just below $18…

Note:  John, Terry and Jon do not hold share positions in NPH.