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Gold has traded between $1,082 and $1,100 so far today…as of 9:00 am Pacific, bullion is up $5 an ounce at $1,095…Silver has jumped 29 cents to $14.94…Copper is flat at $2.34…Crude Oil, set for its 6th straight weekly loss, is off 37 cents at $44.29 while the U.S. Dollar Index has reversed intra-day and is now down one-fifth of a point at 97.67…

Negative sentiment in the Gold market continues to grow (positive sign) with another bank downgrading its forecasts for the year…in a report released yesterday morning, analysts at French bank Natixis said that they now expect Gold to drop below $1,000 an ounce after the Federal Reserve raises interest rates in September, which would be the first hike in 9 years…

Natixis is making 2 big assumptions – the first being a rate hike next month, the second being that Gold would actually drop after the announcement of a rate hike…bullion has been suffering for more than 2 years in anticipation of a Fed move; the removal of this seemingly endless Fed speculation might actually take the wind out of the sails of the greenback and at least allow Gold to stabilize if not regain some lost ground…the bank added that it now sees Gold averaging $1,100 an ounce for the year and expects prices to average $950 an ounce in 2016…at $950, a significant amount of Gold being mined around the world would be uneconomic…

In any event, we don’t believe the Fed has the courage to initiate a rate hike next month given continuing concerns over deflationary pressures and weakening global growth…

U.S. Jobs Report In Line With Expectations

U.S. employers are adding jobs at a steady clip though the labor market is showing little signs of overheating…non-farm payrolls rose a seasonally adjusted 215,000 in July, the Labor Department reported this morning…revisions showed employers added slightly more jobs during the previous 2 months than previously estimated…the unemployment rate, which is obtained from a separate survey of U.S. households, held steady at 5.3% in July…

The jobs numbers are in line with the Fed’s narrative for how the economy is developing – solid job growth and diminished slack in labor markets but, significantly, no sign of wage or inflation pressure…July’s job’s growth was the norm for 2015 while average hourly earnings of workers, up 2.1% from a year earlier, are showing no signs of acceleration…

The odds of a rate increase at the September FOMC meeting are now at 56%, compared with 46% before the jobs report and 48% yesterday, according to traders based on implied yields of Fed funds futures which are used by investors and traders to place bets on central bank policy…the odds of a rate boost at the December meeting stand at 79%, versus 72% pre-data and 73% yesterday….

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, told the Wall Street Journal  this week that it would take a “significant deterioration of economic data” for him to not vote to raise rates in September…he’ll face opposition…

U.S. Dollar Index Long-Term Chart

The greenback remains a “crowded” trade based on this 20-year monthly chart…note the very overbought RSI(14) conditions that have persisted through the first 7 months of this year…the likelihood of this trend continuing through the balance of 2015 is remote in our view…in other words, stiff Fib. resistance at 100 is likely to continue, and a significant retracement is overdue…a runaway dollar would have to be a major concern for the Fed…

The Dollar Index initially surged higher, to about 98.30, following this morning’s jobs report but has since reversed lower…

Crude Oil Update

WTIC has been performing exactly to script according to John’s charts, and we’re now about to see a test, as expected, of the March $42.41 low…given the steadily increasing sell pressure on this 6-month daily chart, and the bearish fundamentals, it’s likely in our view that Crude may ultimately need to test major support in the mid-30’s (not shown on this particular chart)…that’s one reason the Venture is having problems gaining traction despite the jump today in Gold prices…

Today’s Equity Markets

Asia

China’s Shanghai Composite rallied more than 2% overnight, climbing 83 points to finish the week at 3744…after a “B” wave bounce that took the Shanghai to Fib. resistance and the 100-day moving average (SMA), which is close to “rolling over”, our contention is that a potentially dangerous “C” wave is in progress that could entail another significant plunge in the index over the near to short-term…

Shanghai Composite 2-Year Weekly Chart

Europe

European markets finished modestly lower today…official data from Germany showed that exports fell more than expected in June while industrial output also declined, signaling a setback for the bloc’s largest economy…in contrast, Spain’s industrial output rose 4.5% year-on-year in June, according to official data, the highest annual increase since March 2010…

North America

The Dow is off 108 points as of 9:00 am Pacific…in Toronto, the TSX has lost 109 points while the Venture is 3 points lower at 578…

Thanks to the Alberta NDP’s 20% corporate tax hike, Canadian Natural Resources (CNQ, TSX) reported a Q2 loss this week…the company took a took a $579-million “deferred income tax charge” to account for Alberta’s decision to hike the provincial corporate income tax rate to 12% from 10%, effective July 1…without the charge, CNQ would have reported adjusted net earnings of $174 million or 16 cents a share…hiking corporate taxes – the socialists always love to go after the corporations and the “rich” – is a jobs-killer and a proven losing economic strategy for any jurisdiction…

Venture 2-Month Daily Chart

This 2-month daily Venture chart shows how the EMA(8) is providing strong resistance on any minor relief rallies in the Index…this resistance must be overcome to give us confidence that a legitimate rally or turnaround could be in the works…sell pressure has declined somewhat since late July which is encouraging…the 39-week Venture cycle chart suggests the possibility of a significant turnaround around the end of August/beginning of September…

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

The ever-volatile Cannabix Technologies (BLO, CSE), which doubled in price over 8 sessions last month, has retraced to what should be strong support around 20 cents…a general recovery started to set in after the late June intra-day low of 13 cents…

Cannabix in our view stands to benefit enormously from the growing, albeit unfortunate, social acceptance of marijuana in North America…development of the company’s groundbreaking technology – a marijuana breathalyzer – has been proceeding methodically (though never quickly enough for investors) with an alpha prototype unveiled at the beginning of June…BLO continues to work toward a beta version acceptable for 3rd party testing to assess the operability and measurement precision of the device for use by law enforcement…solid management team has guided this company wisely over the past year…

Below is an updated 6-month daily chart in U.S. dollars (based on OTC listing) as StockCharts.com still doesn’t provide charts for CSE-listed companies…a cup-with-handle pattern has formed…15 cents U.S. (19 cents CDN) is critical support – a drop below that level would invalidate the pattern…

BLO is unchanged at 21.5 cents as of 9:00 am Pacific…note the extreme low RSI(2) level – accumulation is always safest at such extremes…

Sernova Corp. (SVA, TSX-V) Update

Another speculative non-resource play that readers may wish to check out is Sernova Corp. (SVA, TSX-V), a clinical-stage company developing products for the treatment of chronic diseases using therapeutic cells transplanted into an implanted medical device to replace missing proteins or hormones…last month, the company announced that it has started research collaboration with Massachusetts General Hospital to develop a novel treatment for diabetes….

Technically, SVA has pulled back from Fib. resistance at 31 cents into the low 20‘s…buy pressure remains steady and the ADX indicator continues to show a bullish overall trend…the Fib. support band between 20 and 23 cents coincides with the rising 200 and 300-day SMA’s, so this area appears to be an especially attractive entry point…as always, perform your own due diligence…

SVA is off 1.5 cents at 24 cents as of 9:00 am Pacific…

Biorem Inc. (BRM, TSX-V) Update

A situation that intrigues us, technically and fundamentally, is Biorem Inc. (BRM, TSX-V) which has only 13 million shares outstanding and reported revenues of nearly $5 million for Q1 and quarterly profit of $528,000…

Biorem is an environmental biotechnology company that designs, manufactures and distributes a comprehensive line of high-efficiency air emissions control systems used to eliminate odors, volatile organic compounds and hazardous air pollutants…

In mid-June, the company announced it had received several new orders totaling $2.5-million…the orders are for air emission abatement projects in North America, the Middle East and Asia…

“These recent orders are a reflection of our customers’ desires for reliability and the ability to achieve stringent performance targets,” said Derek S. Webb, President and CEO.  “Each of these orders are from repeat customers who are accustomed to having their projects successfully completed on time and on budget. These projects are in the semiconductor, petrochemical, as well as the food and beverage sectors, and represent a cross-section of the potential applications where our advanced biological solutions can be effectively applied.”

Technically, what’s interesting about BRM is the fact that it’s very close to pushing through a downtrend line that has been in place for several years as shown in this 10-year monthly chart…all aspects of this chart are encouraging…BRM closed at 30.5 cents yesterday…

Note:  Jon holds a share position in BLO.

Gold has traded between $1,083 and $1,092 so far today…as of 9:15 am Pacific, bullion is up $6 an ounce at $1,090…Silver is 8 cents higher at $14.67…Copper is unchanged at $2.34…Crude Oil has slid 82 cents to $44.33 while the U.S. Dollar Index has retreated after pushing slightly above 98…it’s currently down one-tenth of a point at 97.76…

According to blogger and investment strategist Peter Grandich, tomorrow’s non-farm payrolls report could spark a $100 move in the Gold price…

“A break below the pennant and it’s a near certainty (in my humble opinion) we see a test of the critical $1,000 area,” Grandich stated.  “Given how incredibly bearish and overcrowded the bearish camp is at the moment, I think such a test would fail and a break below $1,000 would follow,” he concluded…

Three problems, in our view, with that analysis:  1) The “smart money” commercial traders have already dramatically reduced their net short positions in Gold to extreme levels – they appear to be betting on an imminent rally in Gold and they’re seldom wrong;  2) Gold‘s recent weakness is consistent with its 2.5-year weekly chart in that the yellow metal has once again touched the bottom of the downsloping flag where it has staged significant rallies from over the last 2+ years; 3) Tomorrow’s jobs report would have to be a huge surprise (275,000+) to spark a downward spiral of Gold to $1,000 or below…that doesn’t appear to be in the cards given yesterday’s private payrolls report from ADP  that fell short of expectations…

Gold-Silver Ratio

The price ratio of Gold to Silver, a widely watched gauge of the relative value of the two precious metals, is currently 75-to-1, far above the historical average of about 50-to-1 that endured during the 4 previous decades…either Gold has to drop more relative to Silver, or Silver has to rebound faster than Gold…

More Fed Speculation

HSBC looks for the Fed to hold off on hiking U.S. interest rates next month, which analysts say may remove some of the immediate pressure on Gold…HSBC Chief U.S. economist Kevin Logan cites news that the government’s estimates for U.S. economic growth over the last few years have been cut following the annual benchmark revision…the disappointing data raises questions about the economy’s underlying trend rate of growth, and whether the timing is right for a move by the Fed toward tighter monetary policy, Logan says…

Copper Update

Copper remains at a critical point – exactly at an intersection of the bottom of a downsloping flag and its long-term uptrend support going back to 2002…momentum traders are no doubt watching this carefully…Copper could really take a beating if it can’t hold this support…

U.S. Dollar Index Update

Continued speculation regarding a possible Fed rate hike next month is keeping the greenback firm…the Dollar Index cooled off as expected following its action in March and April, but it’s once again testing resistance in the high 90′s…the U.S. economy can’t afford a runaway dollar, and momentum traders will pile in again if the March high is eclipsed…a high dollar also works against the Fed’s goal of trying to jump-start inflation…the greenback will be critical to watch between now and the next Fed meeting in mid-September…

Today’s Equity Markets

Asia

China’s Shanghai Composite fell 33 points or nearly 1% overnight to close at 3662…

Europe

European stocks traded modestly lower today…the Bank of England decided to keep its key interest rate unchanged…

North America

The Dow is off 136 points as of 9:15 am Pacific…the number of Americans filing new applications for unemployment benefits rose slightly less than expected last week (270,000), suggesting labor market conditions continued to tighten but not aggressively…it’s the 22nd consecutive week that claims have held below the 300,000 threshold which is associated with a strengthening labor market…

In Toronto, the TSX has fallen 106 points while the Venture is off 5 points to 580 in yet another test of that Fib. support…

TSX 6-Year Monthly Chart

The TSX is pulling back this morning after advancing 6 straight sessions from its July 28 intra-day low of 13939…yesterday, the index came within a whisker of its declining 50-day moving average (SMA), not shown on this chart, which has provided resistance since May…

The “Big Picture” chart (6-year monthly) shows there are significant risks in this market given the increasing down momentum in the SS indicator and the bearish overall trend demonstrated by the ADX…

Richmont Mines Inc. (RIC, TSX) Update

Richmont Mines (RIC, TSX) continues to make money – 14 cents per share through the first 6 months of 2015 – and has also increased its annual Gold production guidance to 87,000 to 95,000 ounces, up from 78,000 – 88,000 previously…

RIC reported record quarterly revenues this morning of $40.6 million (CDN) on Gold production of 26,314 ounces…that lifts 6-month Gold sales to 52,173 ounces at an average price of $1,482 CDN ($1,200 U.S.)…

Q2 cash costs per ounce were $974 (CDN) while all-in-sustaining costs were $1,304 (CDN)…

Q2 2015 net earnings came in at $2.9 million, or 5 cents per share…6-month net earnings are $7.5 million or 14 cents per share…

Richmont’s cash balance as of June 30 was $77.9 million or $1.34 per share (58 million shares outstanding)…working capital was $73.2 million with long-term debt of only $6.2 million…

The company continues its ambitious plans to access the Island Gold Mine’s deep high-grade resources… Richmont anticipates that it will be able to begin production mining in the new resources above level 635 m in the 4th quarter, and subsequently initiate a 2nd production mining horizon above level 735 in the 1st half of 2016…however, the company is planning shutdowns at both the mine and the mill in the 2nd half of the year to install new electrical equipment and make important infrastructure upgrades…these plans are reflected in updated guidance and forecasts…

“We expect that these strategic investments (Island Gold Mine infrastructure) will position us to finish the year on a strong note and provide the needed solid foundation for the mine over the long-term,” explained Richmont President and CEO Renaud Adams…

Technically, Richmont continues to trade within a bullish downsloping flag…note how RIC recently touched the bottom of that flag ($3.14 last Thursday) and has climbed more than 15% since then…

RIC is up 37 cents to $3.67 as of 9:15 am Pacific…

IAMGOLD Corp. (IMG, TSX) Update 

IAMGOLD (IMG, TSX) couldn’t keep out of the red in the 2nd quarter of 2015, despite higher Gold production at lower costs, according to the company’s latest operational results…late yesterday, the IMG reported an adjusted net loss, including discontinued operations attributable to equity holders, of $30.8 million or 8 cents per share for the last 3 months, down from earnings of $8.8 million or 2 cents per share reported in the same period in 2014…all-in-sustaining costs for Q2 were $1,076 U.S. per ounce…the company does have a strong balance sheet with $833 million in cash and bullion…

NexGen Energy (NXE, TSX-V) Update

Without question, one of the top exploration plays in the country is NexGen Energy’s Rook 1 Project in the Athabasca Basin where the company has made a significant high-grade discovery at depth with 5 drill rigs continuing to turn in the summer program…

This morning, the company reported fresh preliminary results (including some high gamma readings) from 5 new holes which all returned substantial mineralization on significant step-outs at the Arrow Zone…as a result, the strike lengths of the high-grade cores in the A2 and A3 shears have been tripled to at least 300 m and 295 m, respectively…the newly discovered mineralization southwest of Arrow remains open in all directions and at depth…

The Arrow zone now covers an area of 645 m by 215 m with a vertical extent of mineralization commencing from 100 to 920 m, and it remains open in all directions and at depth (a 90-second 3-D video of Arrow generated from Leapfrog is available for viewing on the company’s website)…

Technically, NXE showed excellent support in the low 60’s, as expected, and continues to follow an uptrend support line as shown in this 2+ year weekly chart…volatile overall markets have presented some opportunities here…NXE began to unwind modestly overbought conditions after it touched an all-time high of 90 cents June 29…

NXE is off a penny at 73 cents as of 9:15 am Pacific…

Note:  John, Terry and Jon do not hold share positions in RIC, IMG, or NXE…

Gold has traded between $1,082 and $1,093 so far today…as of 9:30 am Pacific, bullion is off $3 an ounce at $1,085…Silver is flat at $14.57…Copper is down a penny at $2.35…Crude Oil is 54 cents lower at $45.20 while the U.S. Dollar Index has added one-tenth of a point to 98.10…the greenback gained momentum yesterday after Federal Reserve Bank of Atlanta President Dennis Lockhart told the Wall Street Journal that it was “appropriate” to see a September interest rate hike, that there’s a “high bar right now to not acting”.

Precious metals consultancy Metals Focus estimates that as much as half of annual new mined production in their survey will be uneconomic at current prices…as Mineweb’s Lawrence Williams pointed out in an article this morning (www.mineweb.com), “Presumably extrapolating this figure across total global Gold output would thereby suggest that as much as 800 tonnes of production could currently be running at a loss. But the consultancy notes, this doesn’t mean that any of the production will fall away through closures and cutbacks, not until the Gold price downturn is more prolonged or more severe. It notes that there may be substantial costs involved in closing an operating mine down, which may mean it is less costly to keep the mine producing at some level – perhaps high grading where this is an option (which may actually increase output).”

Disappointing Private U.S. Jobs Report Offset By ISM Report Showing Service Sector Strength

Asia

China’s Shanghai Composite closed down amid a broad-based selloff, even as data showed activity in China’s services sector expanded at its fastest pace in 11 months in July…the Caixin/Markit Purchasing Managers’ Index (PMI) rose to 53.8 from June’s reading of 51.8, hitting the highest level since August 2014 and marking the 12th straight month of expansion…

The staff of the International Monetary Fund is recommending that China wait until at least October 2016 to join an exclusive club of the world’s top currencies…China wants its currency, the yuan, included in a basket of currencies used in IMF operations along with the U.S. dollar, euro, British pound and Japanese yen…it was hoping the yuan could be added this January 1…the IMF board will consider later this month the staff’s recommendation for a delay until October 1 of next year…

Europe

European markets were up sharply today following a slew of positive data and earnings…

North America

The Dow is up 9 points as of 9:30 am Pacific…in Toronto, the TSX is 47 points higher while the Venture is off 2 points at 588…the Index is struggling to get above its 10-day moving average (SMA) which it needs to do in order to show signs of a near-term turnaround or rally…

Pure Energy Minerals (PE, TSX-V) Update

The Lithium space is attractive to many investors at the moment, and another factor in Pure Energy Minerals’ (PE, TSX-V) is that is has a “tech” component to it…as announced yesterday, a wholly-owned subsidiary of PE is now collaborating with SRI International, a research and innovation centre, to develop novel cost-effective methods for Lithium extraction from geothermal brines…funded by the U.S. Department of Energy (DOE), SRI is teaming with Pure Energy’s subsidiary to develop and validate a new generation of highly selective ion exchange resins to separate metals from geothermal fluids more efficiently and at lower cost than current processes…

On July 28, Pure Energy announced a maiden resource estimate for its Clayton Valley South Lithium Brine Project…Clayton Valley is strategically located halfway between Reno and Las Vegas in one of the oldest mining areas in Nevada…

The inferred resource estimate for the project outlines 816,000 metric tonnes of Lithium Carbonate Equivalent (LCE), present as “easily-extractible brine in 2 aquifers (Main Ash Aquifer and Lower Aquifer System),” the company stated…its 8,000 acres of claims comprise 3 contiguous blocks and overlie a deep basin structure…significantly, the zones that host the brines appear to extend much deeper into the basin and extend laterally throughout the entire claim area…

The next stages of drilling will test the depth and potential extension of the deposit as well as new zones recently discovered from Pure Energy’s seismic reflection survey…

We initially introduced Pure Energy to our readers last month when it was trading in the mid-20‘s, based on favorable chart patterns and our bullishness on the Lithium sector…we would view any minor pullback as an opportunity here with strong new support in the high 30’s or the rising 10-day SMA…PE has all the ingredients to attract a wide following through the balance of the summer…

PE is off 2 cents at 43 cents as of 9:30 am Pacific…

Equitas Resources Corp. (EQT, TSX-V) Update

Equitas Resources’ (EQT, TSX-V) continues to test chart resistance at 10 cents…the uptrend line from late last year has remained intact which is particularly impressive given the recent weakness in the Venture…

Last Thursday the company announced the start of a ground exploration program that will include mapping and prospecting, a large loop (approx. 30 line km) EM survey, followed by 4,000 m of diamond drilling once final targets have been defined…

As we’ve stated previously, while there are never any guarantees with a project like this, it’s nonetheless highly interesting and should generate considerable speculative interest, especially when drilling  actually starts…major Nickel camps such as Sudbury, Thompson, Norilsk and Raglan comprise clusters of deposits…to date, Voisey’s Bay stands alone…the question is, where is the rest of the system?…or is there a “rest of the system”?…

In a regional context, magnetic signatures and structural interpretations indicate Garland shares the same style and scale of structural deformation documented at Voisey’s Bay…the east-west strike of the anomalies is notable at Garland…the trend of the anomalies, up to 1 km or greater, lend further encouragement for the discovery of significant mineralized systems…

We look forward to further exploring the geological possibilities at Garland in the weeks ahead…

Technically, an overall uptrend in EQT remains firmly intact and there’s every reason to believe the strong support that’s very evident should continue to hold with a confirmed breakout above chart resistance seemingly inevitable…

Skeena Resources Ltd. (SKE, TSX-V) Update

We initially brought Skeena Resources (SKE, TSX-V) to our readers’ attention in late June when it was trading at 6.5 cents and preparing to begin a diamond drilling program at its very prospective high-grade Spectrum Gold Property southeast of the Sheslay district…late last week, after receiving some attention at a conference in Vancouver, Skeena surged as high as 12.5 cents (chart resistance) but has since retraced to new support at 8.5 cents…it’s up half a penny at 9 cents as of 9:30 am Pacific…

As of July 20, Skeena had completed 2,200 m of a planned 10,000 to 12,000 m summer drill program (50 to 60 holes) with holes averaging 200 m and varying from 50 to 350 m in depth…the program has been designed to expand the historic resource at the 500 Colour and Central zones, the latter of which includes the QC 1, QC 2, Porphyry 1, and Porphyry 2 structures…other holes will test the East Creek Zone, believed to be a possible extension of the Central Zone, and other outlying targets…a 43–101 resource estimate is anticipated to be completed by the end of the year…this is a property with not only a high-grade Gold system, but strong potential for Cu-Au porphyry deposits as well…

Skeena closed $8.1 million in financings in March, more than originally anticipated, to be directed primarily toward advancing the Spectrum Project…Chairman Ron Netolitzky, of course, was recently inducted into the Canadian Mining Hall of Fame for his 2 past successes in NW B.C. – the Snip and Eskay Creek mines…

In Netolitzky’s own words, “In our business, you make it taking shots”. 

PyroGenesis Canada Inc. (PYR, TSX-V) Update

A company we’ve been watching closely since it was trading in the low-to-mid 30’s has been PyroGenesis Canada (PYR,TSX-V)…PYR is clearly worthy of our readers’ due diligence, and the stock has significantly outperformed the overall market in 2015 and has been immune to the recent plunge…

The fact that PyroGenesis has become the partner of choice for the U.S. Department of Defense and other multinationals as their technology development resource for waste processing and waste-to-energy applications should be enough to grab one’s attention…

Quite simply, this company is the world leader in the design, development, manufacturing and commercialization of advanced plasma processes…it provides engineering and manufacturing expertise, cutting-edge contract research, as well as turnkey process equipment packages to the defense, metallurgical, mining, advanced materials, Oil & gas, and environmental industries…the PyroGenesis team of experienced engineers, scientists and technicians works out of a Montreal office in a 3,800 sq. m manufacturing facility…

Below is a 2-year weekly chart for PYR which has recently been flirting with a breakout above the Fib. 50% resistance level (39 cents)…PYR has been trading within a downsloping flag since the beginning of 2014, and a challenge of the top of that flag could be in the works during Q3 or Q4…as always, perform your own due diligence…

PYR is off a penny at 39 cents as of 9:30 am Pacific…

Another One Bites The Dust

Certain companies in the production stage can sometimes present a greater risk than when they were simply exploring for resources…the latest example is Banks Island Gold (BOZ, TSX-V) which took its underground mine south of Prince Rupert into production without a feasibility study…yesterday, the company announced that it has suspended all operations at its Yellow Giant mine as of July 31, and will put the mine into care and maintenance until permitting and regulatory issues at the project are resolved and the company has sufficient working capital to recommence operations…Yellow Giant provided direct employment for over 100 people and indirect employment for many more…

It’s possible Banks could suffer a similar fate as another B.C. company, Huldra Silver, which is now operating as Nicola Mining (NIM) after a major debt restructuring…

So when you see a junior promoting itself as a “mine development company”, be careful – especially when there’s no feasibility study to back it up…

Note:  John holds a share position in EQT.

Gold has traded between $1,082 and $1,095 so far today…as of 8:15 am Pacific, bullion is up $6 an ounce at $1,092…Silver has added 13 cents to $14.62…Copper is flat at $2.37…Crude Oil has regained 86 cents to $46.03 after a steep fall yesterday while the U.S. Dollar Index is down one-tenth of a point to 97.38…

One bright spot for the precious metals market – the U.S. Mint reported a whopping 469% increase in July coin sales compared to last year…according to the U.S. Mint’s sales data, 202,000 ounces of Gold, representing a variety of denominations of American Eagle and Buffalo Gold coins, were sold last month, compared to just 35,500 ounce of Gold sold in July 2014…last month’s sales represented the strongest pace for the year…in total, the U.S. mint has sold 571,500 ounces of Gold in the first 7 months of this year, up 38% vs. the same period last year…in a note published yesterday, commodity analysts from Barclays said this level of retail interest has not been seen since early 2013, which suggests this is a price-driven response as 2013 Gold also dropped violently before rallying…

Reuters reported this morning that South Koreans are on course to buy a record amount of Gold in 2015, worried that a meltdown in China’s stock markets will destabilize South Korean equities and keen to replenish a traditional store of value in an era of low interest rates…

The hardest hit among Gold ETPs has been the world’s largest, SPDR Gold Shares (GLD, NYSE)…according to data compiled by GLD, Gold held in trust fell 38.74 tonnes to end July at 672.7 tonnes…the ETF’s Gold reserves are now at their lowest level since March 2008…July was also the worst month for investor redemptions in GLD since December 2014 when its reserves fell by almost 45 tonnes…that month, of course, was followed by a strong rebound in Gold prices…

“If You Don’t Own Gold, You Know Neither History Nor Economics”

Some more words of wisdom from one of our favorite commentators, Frank Holmes, in his regular weekly Investor Alert at www.usfunds.com.  “With so much gloom and doom in the media surrounding Gold right now,” Holmes observed, “you might wonder why coin sales are soaring at multi-year highs. The reason is pretty simple: Gold is on sale.

“High net worth individuals and other savvy investors realize that even now, as herds of people are rushing for the exit, owning Gold is one of the best ways to manage systemic risk. They follow that Greeks had their cash in banks frozen like in Cyprus only a few years ago.  Ray Dalio, founder of Bridgewater Associates, said it best: ‘If you don’t own Gold, you know neither history nor economics.’

“On a final note,” Holmes concluded, “there appears to be a battle between the debt markets and equity markets. The debt market yields suggest rates will not be rising next month or quarter, while equity markets suggest they will. I think the bond market is more accurate. With a struggling global economy and commodity deflation odds favor rates will not rise soon in America, and Gold will revert back to the mean.”

The Costs of Over-Regulation

Another great example of the problem of regulatory over-reach and political correctness in the United States, which helps explain why the economy isn’t performing all on cylinders:  Hundreds of U.S. public companies are coming up short as they face a deadline to reveal whether their supply chains contain even trace amounts of minerals linked to violence in Africa…the Wall Street Journal reported yesterday that companies shelled out roughly $709 million and 6 million staff hours last year to comply with rules to disclose “conflict minerals” in their supply chains, according to recent research by Tulane University and Assent Compliance, a New York consulting firm…next year, they will need to hire auditors to evaluate their results…

This is a disgraceful massive waste of money and time, and it all arises from the infamous 2010 D0dd-Frank Act passed by a Democratic controlled Congress…the Act mandated that companies begin to disclose in reports filed with the U.S. Securities and Exchange Commission whether any Tin, Tantalum, Tungsten or Gold in their supply chains is connected to violent militia groups in the Democratic Republic of the Congo…the conflict-torn country holds vast reserves of these 4 minerals which are widely used in a flurry of products, from electronic devices to engagement rings to auto parts…

Oil Update

Remarks over the weekend by Iran’s oil minister, who said the country could boost output within a week of the lifting of international sanctions, added to Crude Oil’s bearish tone to begin the new month…in an interview with Iranian state television, Oil Minister Bijan Namdar Zangeneh said the country could lift production by 500,000 barrels a day within a week of the lifting of sanctions and by 1 million barrels a day within a month after that, according to Bloomberg…

Meanwhile, the Oil-rig count in the U.S. rose by 5 to 664 last week, Baker Hughes Inc. reported Friday, undercutting expectations that the country’s Oil production had peaked…

Gold Seasonality Chart

Historically, going back to 1996, there are no 2 better back-to-back months for Gold than August and September…approximately two-thirds of the time, Gold has closed higher each month with a combined gain of 4.1%…

Gold 2.5-Year Weekly Chart

The fear of a continued immediate decline in Gold straight down to $1,000 doesn’t hold water with us given the current technical posture of this very reliable 2.5-year weekly chart, plus the fact that commercial traders have dramatically reduced their short positions to extreme levels…it’s never very wise to go against the “smart money” commercial traders who now appear to be of the opinion that a rally is in the works for bullion…

Gold has been consolidating within a downsloping flag for more than 2 years…consistently, it has tested the top of that flag (resistance) and the bottom of it (support)…late last month, Gold touched the bottom of that flag while RSI(14) has also landed at previous support going back to the end of 2014…perhaps this is why commercial traders have decided now’s not a wise time to be short…

First significant resistance on the upside is around $1,150…Gold could certainly still test the $1,000 level this year, but the immediate path of least resistance is probably a rally to the upside, not a further plunge toward $1,000…even if Gold were to test $1,000 in the near future, a major rally would likely ensue from that level based on the current COT structure and other indicators…

Gold has fallen for 6 consecutive weeks for the 1st time since 1999…

CRB Index 10-Year Monthly Chart  

The Thomson-Reuters CRB Index is up 2 points this morning to 201 after closing yesterday slightly below its post-Crash early 2009 low of 200.16…whether this important support around 200 holds is questionable, especially with Crude Oil expected to come under continued pressure…

If we adjust the CRB Index for inflation, prices are now significantly cheaper relative to the 1986 bottom (197) even though nominally the index is at almost the same level…

This 10-year monthly chart shows a huge gap has opened between the CRB’s current price and its long-term downtrend line going back to 2011…if the 200 support can’t hold, then a test of 180 is likely, a level not seen since late 2001…

A total of 19 components make up the CRB Index, and the largest single one is Crude Oil which represents 23% of the index…

Today’s Equity Markets

Asia

China’s Shanghai Composite soared 134 points or 3.7% overnight to close at 3756, its biggest daily gain since July 10 as the “rescue team” stepped up its crackdown on short-selling…

Yet more disappointing economic news out of China over the weekend and yesterday raises more questions about the government’s ability to steady the economy…the Caixin China manufacturing PMI fell to a final reading of 47.8 in July, a 2-year low…this followed Saturday’s announcement by the government’s National Bureau of Statistics that China’s official PMI slipped to 50.0 in July from 50.2 in June…the trend is not encouraging…

Europe

European markets are mixed in late trading…Greece’s stock market re-opened yesterday and plunged 16%…it was off another 4% today before stabilizing…

North America

The Dow is flat as of 8:15 am Pacific…in Toronto, after yesterday’s holiday, the TSX has added 10 points while the Venture has slipped 1 point to 593…

Pure Energy Minerals (PE, TSX-V) Update

Pure Energy (PE, TSX-V) is surging again this morning on strong volume…it gapped up and hit a Fib. resistance level at 47 cents following news that a wholly-owned subsidiary of the company is now collaborating with SRI International, a research and innovation centre, to develop novel cost-effective methods for Lithium extraction from geothermal brines…funded by the U.S. Department of Energy (DOE), SRI is teaming with Pure Energy’s subsidiary to develop and validate a new generation of highly selective ion exchange resins to separate metals from geothermal fluids more efficiently and at lower cost than current processes…

Refer to our reports and John’s charts last week…as of 8:15 am Pacific, PE is up 11.5 cents at 45 cents…

CDNX Seasonality Chart

Historically, the 4 best months of the year for the Venture are (in order) December, February, January and August…actually, nearly two-thirds of the time, the Index has posted gains in August, September and October…

The worst 4-month stretch for the Venture is the 1 just completed – April, May, June and July that have combined for a total average decline of 7%…

The Venture just experienced its 2nd-worst July ever with a tumble of 11.5%…only July 2008, with a drop of just under 16%, was worse than the just completed July going back to 2002 in this market…

Interestingly, following both previous July swoons in 2008 and 2002, the Venture commenced a new bull market within 5 months…perhaps history will repeat itself…

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

Doubleview Capital (DBV, TSX-V) has stabilized after unnecessary panic drove it as low as 7 cents July 24…controversy has erupted over the Hat and the Sheslay district because there is value there, which long-term holders especially should find encouraging…

Keep in mind, also, that a huge advantage for the Hat Project is that it falls under a very recent (2011) Land Use Plan that had extensive First Nation and other stakeholder involvement…

There is a clear path forward for Doubleview at the Hat given its multi-year exploration and drilling permit, and the power of the Land Use Plan…

Technically, this 2.5-year weekly chart shows how DBV has bounced off RSI(14) support at 40%…the stock has been trading within a bullish downsloping flag since early 2014…a resumption of drilling in the near future could certainly be the catalyst to generate a breakout by pushing DBV through the top of the flag…

DBV is off 2.5 cents at 10 cents as of 8:15 am Pacific…

Claude Resources Inc. (CRJ, TSX) Update

It was a rough July for both Gold producers and explorers, but Gold in Canadian dollars held up reasonably well and this is why we see excellent value in some Canadian-only smaller producers…

One excellent example is Claude Resources (CRJ, TSX-V) which fell below an uptrend line but found support, as expected, as its rising 200-day SMA, currently 50 cents…investors over-reacted when the company temporarily suspended underground mining operations at its Seabee Gold mine in northern Saskatchewan due to nearby forest fires…full production quickly recommenced (the surface stockpile was utilized while underground operations were briefly suspended) and the company confirmed that it expects to meet its production guidance for the year…

Like Richmont Mines (RIC, TSX), Claude has been a stellar performer since last year thanks to improving fundamentals…CRJ will be releasing its 2nd quarter financials August 13…

Technically, the rising 200-day remains solid support while Fib. resistance exists at 80 cents…investors, especially those with a long-term perspective, have a chance to do exceptionally well here…

CRJ is off a penny at 64 cents as of 8:15 am Pacific…

Kirkland Lake Gold Inc. (KGI, TSX)

A prudent approach, aided by a weak loonie, has allowed Kirkland Lake Gold (KGI, TSX) to remain profitable and generate free cash flow over the past 12 months…

Kirkland Lake operates Canada’s highest-grade Gold mine and expects production to ramp up to 160,000 to 180,000 ounces per year beginning in 2016 at an average grade of 0.44 ounces per ton (15.1 g/t)…the company reported net income of $19.8 million or 27 cents per share in fiscal 2015…

Technically, strong support was demonstrated last month around $4.50 – a Fib. level which is also in close proximity to the rising 300-day SMA (not shown on this chart)…the EMA(200) at $5.09 is declining and that’s going to provide near-term resistance…there’s little doubt, though, that the primary trend has reversed in KGI after the stock bottomed around $2 in late 2013…

KGI us up a penny at $4.79 as of 8:15 am Pacific…

Silver Short-Term Chart

Silver’s immediate challenge is to get back above the $15 level which was previous support…interestingly, through the recent turmoil, Silver has been able to hold slightly above its $14.15 low late last year…strong chart support around $13.50…

Silver Long-Term Chart

An explosive push higher (eventually) – 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 could develop…

It seems possible that the bottom of “Wave 4” came late last year when Silver briefly plunged to just above $14 an ounce, though that could be challenged again shortly with the possibility of a new low…RSI(14) has so far managed to hold support which goes back to 2001…

Sell pressure continues to remain very 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…this doesn’t necessarily mean that Silver has hit rock bottom yet, however…

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

Let there be no doubt – for several major reasons, the Sheslay district eruption in northwest B.C. is very much in the middle of the radar screen for the 5,000-member Association for Mineral Exploration British Columbia (click on the arrow at the bottom of our report to listen to a very revealing 1st excerpt from an exclusive BMR audio interview).    

That can only be good news for Doubleview Capital (DBV, TSX-V), Garibaldi Resources (GGI, TSX-V), Prosper Gold (PGX, TSX-V) and others caught up in a firestorm that started in late May after Tahltan Central Government President Chad Day issued a controversial open letter regarding Sheslay district exploration and potential future mining activities.

The DBV, GGI and PGX geological teams have the credentials and enough technical information based on 2 years of intense exploration (plus historical databases) to make the claim that this district has a growing probability of hosting a string of world class deposits across a minimum 30-km long NE/SW trending mineralized corridor that stretches north-south for at least 15 km.

AME BC – Standing Up For Mineral Exploration In B.C. & The Sheslay District

AME BC, whose roots go back a full century when it was known as the Chamber of Mines, is funded entirely by its membership (no government subsidies) and advocates strongly and effectively for the industry, especially when the “B.C. brand” could be at stake.

Significantly, AME BC was one of the many stakeholders involved in the creation of the critical Atlin-Taku Land Use Plan signed in 2011 between the Taku River Tlingit First Nation and the provincial government, a groundbreaking deal that Premier Christy Clark declared would bring “certainty” for investors.  The Land Use Plan, allowing for exploration and potential resource development throughout large portions of the Sheslay district, covers Doubleview’s entire Hat Property where recent important drilling, stepping out 1 km from the Lisle Zone Discovery, was halted by a blockade led by a group of Tahltan protesters.

“I recognize we’re at a sensitive point here and I have a high degree of respect for the Tahltan Nation,” emphasized Glen Wonders, AME BC Vice-President – Technical and Government Affairs, in an exclusive interview with BMR.  “I believe there are ways to find common ground…shared land interests are nothing new in B.C.,” he added. 

Click on the arrow below for the 1st excerpt (just over 2 minutes) of a fascinating interview with Wonders that gives AME BC’s important views on the district, the Land Use Plan and the “B.C. brand” (more in the coming days):

Note:  Both John and Jon hold share positions in DBV and GGI.

TSX Venture Exchange and Gold

Reminder:  Canadian markets are closed for tomorrow’s civic holiday.  U.S. markets are open.

A glimmer of hope appeared over the final few trading sessions of a miserable month of July for the Venture as the Index held Fib. support at 580 with extreme oversold conditions beginning to abate.

While Gold suffered its 6th straight weekly loss (its longest weekly losing skid since 1999), the Venture snapped a 5-week losing streak with a tiny gain of 2 points after a mid-week plunge as low as 580.  That support was tested 3 times during the week and held.

For the month, the Venture was off a whopping 77 points or 11.5%, making July 2015 the 2nd worst July since 2002.  Only the 2008 plunge of nearly 16% was more dramatic than what Venture investors just experienced for this July on an historical basis.

Venture 7-Month Daily Chart

A key breakdown for the Venture came in late June when support at the uptrend line from the December low was breached as you can see in John’s 7-month daily chart.  Important Fib. support between the high 620‘s and the mid-640‘s also gave way.  With the drop to 580, the Venture has lost as much as 76.4% of its value following its early 2011 post-Crash high of 2465.

At the very least, a “relief” rally could be underway but what’s really needed for confirmation of this is a push through Fib. resistance around 610.  Pay attention to the short-term (10 and 20-day) moving averages.  This market has not traded above those since late May, for more than 2 months, so the 1st sign of a potential turnaround will be a move above these SMA’s.  If they continue to provide resistance, the market will once again retreat to lower levels – as simple as that. 

While a Gold rally could quickly develop, Crude Oil is looking weak and appears destined to test its March low.  So that’s a factor working against the Venture at the moment.

Hope In The Form Of The Venture’s 39-Week “Cycle”

We do see a good possibility of a significant turnaround commencing on the Venture within the next 4 to 6 weeks, simply based on its 39-week “cycle” pattern.  Interestingly, this also fits within the timeline of the Fed’s next meeting in mid-September – a crucial one, indeed.

Strangely enough, over the last 15 years, there has been a consistent pattern of trend reversals at the end of each 39-week period on the Venture – you can see it quite clearly on the fresh version below, through Friday, which is important to look at and understand.

What this chart suggests is that a cycle low will occur around the end of August into the beginning of September – that’s when the current 39-week period expires.

The vertical blue lines separate each 39-week period.

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, and recent weakness with the drop below $1,100, is that it has forced producers to become much more lean in terms of their cost structures. Producers, big and small, continue to make hard decisions in terms of costs, projects, and rationalizing 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.

U.S. Dollar Index Update

The Dollar Index picked up strength at just the right time last week as RSI(14) touched important support at the uptrend line since mid-May and then immediately reversed higher as opposed to breaking down.  In addition, the index found support at the rising 50-day SMA just above 96.

Does the U.S. Dollar Index have to put in a triple top for 2015?  Perhaps.  A runaway dollar would be dangerous, so we can’t believe for a second that the Fed would want to see a breakout in the Dollar Index through the 100.71 high it hit in March.  This would actually be counter-productive to the Fed’s desire to jump-start inflation, and would generally impair the U.S. economy.

One of the reasons for the economy’s disappointing performance during the 1st half of 2015 was the delayed affect of the impact of the record surge in the dollar during the 2nd half of 2014. It’s reasonable to expect the Dollar Index to run into fierce resistance in the high 90‘s as we’ve been stating, after it retraced to Fib. support around 93 in May and then retested that level a month later.  The correlation between the greenback and the Venture is very high, so an extended period of Dollar weakness – even for just 6 months or so – would give the junior resource market some much-needed relief.  Perhaps that’s what we’ll see beginning in September or the very early fall.

It’s hard to imagine the Dollar Index, through the balance of this year, repeating the strength it showed over the final 4 months of 2014.

Gold Update

The fear of a continued immediate decline in Gold straight down to $1,000 doesn’t hold water with us given the current technical posture of this very reliable 2.5-year weekly chart , plus the fact commercial traders have dramatically reduced their short positions.  It’s never very wise to go against the “smart money” commercial traders who now appear to be of the opinion that a rally is in the works for bullion.

Gold has been consolidating within a downsloping flag for more than 2 years.  Consistently, it has tested the top of that flag (resistance) and the bottom of it (support).  In late July Gold touched the bottom of that flag while RSI(14) has also landed at previous support going back to the end of 2014.  Perhaps this is why commercial traders have decided now’s not a wise time to be short.

First significant resistance on the upside is around $1,150.  Gold could certainly still test the $1,000 level this year, but the immediate path of least resistance is probably a rally to the upside, not a further plunge toward $1,000.

For the week, Gold was off $3 an ounce, closing at $1,095.

Silver gained a nickel last week to finish the month at $14.79.  Crude Oil, under continued pressure, fell more than $1 a barrel to $46.77.  Copper slid 2 pennies to $2.37 while the U.S. Dollar Index was essentially unchanged for the week at 97.19.

Is a “reversal” underway on the Venture after its 2nd worst July in 14 years? 

Only July 2008, with a tumble of just under 16%, was worse than the just completed July (11.5% decline) going back to 2002 in this market.

Interestingly, following both previous July swoons in 2008 and 2002, the Venture commenced a new bull market within 5 months.  Perhaps history will repeat itself.

The Venture’s technical situation at the moment is as follows based on John’s fresh 4-month daily chart:

1.  Extreme oversold RSI(14) conditions are abating;

2.  Fib. support at 580 was tested 3 times last week and held;

3.  Sell pressure is declining rapidly;

4.  The short-term bearish trend (ADX indicator) is clearly weakening.

Two technical events are required in order to confirm at least a short-term turnaround – breakouts, and preferably on increased volume, above the EMA(8), currently 596, and the EMA(20), currently 617.  Both EMA’s have been providing stiff resistance the last 3 months.  The EMA(8) has flattened out and could be ready to reverse to the upside.

More in Sunday’s Week In Review And A Look Ahead.

Venture 4-Month Daily Chart