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TSX Venture Exchange and Gold

The Venture posted its 7th straight weekly gain (we haven’t been able to say that for quite some time) as it continues to climb toward the next Fib. resistance at 591.  The Index added another 14 points last week to close at 576 and is now up a whopping 24% since its January 20 record low of 466.  This is shaping up to be the best March for the Venture since 2009.

A compelling argument can be made that what we’ve seen since late January is the first wave in a new bull market.  It’s reasonable to expect a modest pullback in the not-too-distant future but we would expect to see very strong support in the 550’s, right around the highs of last August, September and October.  There has been a dramatic improvement in the technical health of this market as John’s latest charts have shown, supporting the thesis that a long-term bear cycle has finally come to an end (hallelujah).   It will be months yet before many investors accept and recognize this which is fine – the “early movers”, those who can discern what’s likely to unfold through the rest of this year, therefore have a major advantage – similar to the situation in early 2011 when only a minority of investors were fortunate enough to pick up on the fact that the Venture had suddenly swung into a bear phase.

The Venture has outperformed the broader equity markets over the last 6 months.  That’s notable because it represents a major trend shift, a critical indicator in assessing the likely direction of the junior resource sector over the course of at least the next year.  In early 2011, the Venture’s 2-year outperformance vs. the major indices came to an abrupt halt.  And we all know what happened not long after that as the commodity complex went into a prolonged downturn beginning late that year, taking just about every stock with it.  Another important shift has occurred, this time in the Venture’s favor, and it bodes well for the balance of 2016 and into 2017.

Financings are picking up which is another good sign.  In the Lithium space, which is likely to remain hot this year, two companies in our Top 50 Opportunities List announced major financings Friday – Lithium X Energy (LIX, TSX-V) for $7.6 million, and Nemaska Lithium (NMX, TSX-V) for $13 million.

In today’s Week In Review And A Look Ahead…

1.  Venture’s 6-month chart shows how momentum has increased with the important breakout above the 550’s…

2.  U.S. dollar remains constrained – good news for the Venture…

3.  Why Gold’s downside is limited…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold has traded between $1,253 and $1,276 so far today…as of 9:00 am Pacific, bullion is down $12 an ounce at $1,260…Silver is flat at $15.59…Copper is up 2 cents at $2.25…Crude Oil has climbed 70 cents a barrel to $38.54 while the U.S. Dollar Index has declined more than one-tenth of a point to 96.15 after a failed rally early in the day…

Supporting bullion, holdings of SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, rose to 25.68 million ounces yesterday, the highest since August 2014…physical Gold demand apparently slowed in top consumer China this week, while a strike by jewelers protesting against the imposition of a new tax has temporarily curbed demand in No. 2 market India…jewelers in India are estimated to be losing about $150 million a day as a shutdown to protest a proposed tax enters its 2nd week, according to the All India Gems & Jewellery Trade Federation…shops will remain closed until the government assures jewelers that the 1% duty will be withdrawn, said Bachhraj Bamalwa, a director at the federation, which represents 300,000 jewelers and bullion dealers across the country…

Dennis Garland, editor and publisher of the Gartman Letter, on Gold in an interview on CNBC:  “The trend is up, the trend has been up for the last several months and I continue to think that as long as the monetary authorities are going to remain as expansionary as they are…this trend will continue,” he said.   “Monetary expansion equals higher Gold prices…the Fed will have no choice to at least hold monetary policy steady, if not become more expansionary following what the leads are from the ECB.  Don’t fade this trend.”

Oil Update

The International Energy Agency said in a monthly report that oil might have bottomed, and that low prices were beginning to impact crude output outside producer organisation OPEC.  “There are clear signs that market forces…are working their magic and higher-cost producers are cutting output,” the Paris-based IEA said…the group, which coordinates energy policies of industrialized nations, says it now believes non-OPEC output will fall by 750,000 barrels per day (bpd) in 2016 compared to its previous estimate of 600,000 bpd…it also says Iran’s post-sanctions return to exporting has been more gradual than expected, keeping its barrels from putting significant pressure on the market…still, this week Iran said it would not participate in any production freeze until it had regained market share…

In today’s Morning Musings…

1.  What the U.S. dollar’s behavior tells us about the Venture…

2.  GoldQuest and Precipitate Gold flex their muscles in the Dominican Republic…

3.  Gauging the next wave up in a discovery play…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold has traded between $1,236 and $1,272 so far today…as of 9:30 am Pacific, bullion is up $16 an ounce at $1,269…Silver has jumped 23 cents to $15.51…Copper is down a penny at $2.23…Crude Oil has retreated 73 cents to $37.56 while the U.S. Dollar Index, after initially spiking above 98 on this morning’s ECB news, has tumbled more than a full point in a major intra-day reversal to 96.15…the Dollar Index is clearly under technical pressure and that’s bullish for Gold…

“ECB Pulls Out All The Stops” was one of this morning’s news headlines…the reality is, the desperation of central banks continues and Gold buyers can sense it…the ECB cut interest rates today and expanded its asset-purchase program to €80 billion ($88 billion U.S.) a month in a bid to boost inflation and reinvigorate a stuttering euro zone economy…the central bank cut its deposit rate to minus 0.4% and its main interest rate to zero…

ECB economists now expect consumer prices to rise by just 0.1% in 2016, having forecast in December they would rise by 1% (weather forecasters are more accurate), with inflation set to pick up to 1.3% in 2017 and 1.6% in 2018, still short of the ECB’s target of just below 2%…bottom line is, the ECB – like every other central bank right now – is grasping at straws…

The ECB’s move will likely push interbank lending rates in the euro zone close to the new deposit rate, which will be set at minus 0.4%…this is in stark contrast with the U.S. interbank rate, which is around 0.3%…however, once inflation is accounted for, rates in the U.S. have actually been lower…

ECB President Mario Draghi said the outlook for economic growth in the euro zone has been revised slightly down, mainly reflecting the weakened outlook for the world economy…he added that he did not anticipate the need to reduce rates further but new facts could change the situation…the euro zone’s 19 countries are now seen posting average growth of 1.4% in 2016 rather than the 1.7% forecast in December…

Julian Jessop, head of commodities research for Capital Economics, reiterated his end-of-year forecast for Gold at $1,350 an ounce and noted that bullion is getting strong support from developments in the U.S. economy  “The resilience of the Gold price in recent weeks,” he said, “can largely be explained by a rebound in U.S. inflation expectations.  The main drivers in Gold have been swings in the U.S. currency, the ebb and flow of safe-haven demand, and, above all, shifts in inflation expectations.”

New Gold (NGD, TSX) Hedges For Rainy River

New Gold (NGD, TSX) has hedged nearly all of its remaining 2016 Gold production to ensure cash flow for its Rainy River Project, the company announced yesterday…it’s an unusually large amount for a miner after bullion’s most robust move in 4-and-a-half years…New Gold says it has hedged 270,000 ounces of Gold for the remaining 9 months of the year through options contracts at a cost of $2 million, starting in April, giving them a minimum price of $1,200 an ounce and a maximum of $1,400 an ounce…

In today’s Morning Musings…

1.  Updated TSX Gold chart – shorts beware…

2.  New Carolin Gold (LAD, TSX-V) completes financing, updated chart shows strong momentum…

3.  Next moves for PE, GBB and VGN…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold has traded between $1,261 and the low $1,240’s so far today…as of 9:15 am Pacific, bullion is down $6 an ounce at $1,255…Silver is up 2 pennies at $15.34…Copper has added 4 cents to $2.24…Crude Oil has rallied $1.50 a barrel to $38.00 while the U.S. Dollar Index has fallen one-quarter of a point to 97.00…

Today’s Gold action is very encouraging with another test of strong support in the immediate vicinity of $1,250 and near the top of a pennant the metal broke out from last week…

Gold is enjoying its best start to a year since 1974, according to data from Bloomberg…the rise is being fueled by holdings in exchange-traded funds backed by the metal which are already up 18% in 2016, increasing at the fastest pace since 2009…investors bought into the funds for 18 straight days through Monday, the longest spree in 5 years which was finally interrupted by some outflows yesterday…

The exodus from Gold-backed ETP’s which began in earnest in 2013 was a very bearish sign for the metal back then…likewise, the rush back into these ETP’s has to be considered a bullish omen for 2016…negative real interest rates in growing number of economies around the world have made Gold a more attractive investment, and that trend is likely to continue…the goal of negative rates is to deter institutions from storing cash in banks and to flush that cash out into alternative investments, spurring the economy, growth and inflation while discouraging upward pressure on currencies…how effective that approach will be remains to be seen…

“Gold does well when central bankers appear to be losing control, and in the present environment that means signs that deflation is getting a grip,” said Matthew Turner, a precious metals analyst at Macquarie Group Ltd. in London…

The Bank for International Settlements (BIS) – known as the central banks’ central bank – is warning there’s a “gathering storm” in the global economy, in part caused by governments around the world running out of monetary policy options…in two separate notes, published March 6, BIS economists highlighted the fragile global economic backdrop and said negative interest rates could become a reality for many more countries as central banks search for ways to stoke real growth and battle issues like low Oil prices…monetary authorities in about two dozen countries around the world have dropped policy rates below zero to try to revive economies…the Bank of Japan adopted negative rates this year, joining counterparts in Denmark, the euro area, Sweden and Switzerland…about $7.9 trillion of sovereign debt also offers sub-zero yields…

In today’s Morning Musings…

1.  Cannabix Technologies (BLO, CSE) remains strong after a significant technical breakout – updated chart…

2.  The junior Gold stock with nearly $20 million in the bank that could make a lot happen in 2016…

3.  What does the Venture seasonality chart say about March?…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold has traded between $1,262 and $1,279 so far today…as of 9:30 am Pacific, bullion is down $2 an ounce at $1,265…Silver is off 22 cents at $15.40…Copper has retreated a nickel to $2.21…Crude Oil has declined $1.11 a barrel to $36.77 while the U.S. Dollar Index is flat at 97.10…

Rick Rule on the move in Gold, speaking with Kitco News at PDAC:  “If this rally falters a little bit, some people will say it’s over and miss the real move, which I believe is to come.  What we need to understand right now is that institutional investors have to be in the Gold space because it’s the only sector that’s working.”

Meanwhile, respected Gold analyst Adrian Day told Kitco’s Daniela Cambone that this year’s rally is much different from the one seen early last year.  “In the past few years, particularly last year, what you saw with the spike in Gold stocks was short covering, it was virtually all short covering,” he explained. “What you’ve seen this year is different, and it’s not just we haven’t seen the short covering, we’ve actually seen shorts go up on virtually every senior Gold stock.” 

Oil Update

The Oil price climb was slowed down today after Kuwait stated that it would only agree to an output freeze if all major producers take part…meanwhile, a report today from analysts at Goldman Sachs said the recent surge in Oil prices was premature and unsustainable…

“While these dynamics (rising prices) could run further, they simply are not sustainable in the current environment,” the analysts wrote.  “Energy needs lower prices to maintain financial stress to finish the rebalancing process; otherwise, an Oil price rally will prove self-defeating, as it did last spring.  While we still believe Oil will likely rebalance this year and create a deficit market by year end, ‘green shoots’ of a deficit alone are not sufficient for a new sustainable bull market.  Only a real physical deficit can create a sustainable rally which is still months away should the behavioral shifts created by the low prices in January and February remain in place.”

WTIC 6-Month Daily Chart

Crude prices are being driven by technical momentum at the moment including a big jump in volume and buy pressure as you can see in our updated 6-month daily chart…the 50-day moving average (SMA) has flattened out and should soon also begin to reverse to the upside, giving prices a further lift…watch for new support at $35 and a test this month of Fib. resistance at $40…the 200-day SMA, currently $44, could also be challenged over the coming weeks…strong sell pressure for more than 4 months has been replaced with buy pressure, so the short-term trend is clearly bullish despite today’s minor retreat…we’re maintaining our long position on the HOU ETF with the aim of locking in profits in the WTIC $40 to $44 range…

Petronas Pushes Back On Trudeau

The “climate change” fanaticism of Justin Trudeau and the Liberal government in Ottawa is now threatening British Columbia’s $36 billion Pacific NorthWest LNG Project according to a report yesterday in the Financial Post…the project, to be located on federal lands on Lelu Island near Prince Rupert, received a largely favorable assessment from the Canadian Environmental Assessment Agency (CEAA) last month, was greenlighted by the B.C. government in November 2014, and received conditional corporate support – or a final investment decision – from Malaysia’s Petronas and its partners in June of last year…but the new federal Liberal government is toughening up environmental reviews of major energy projects to regain “public trust” and as it strives to meet international commitments to reduce greenhouse gas emissions…after spending $12 billion to get the project to this stage, and having suffered multiple delays and setbacks, including aboriginal and environmental movement opposition, the Financial Post says Petronas has conveyed to federal cabinet ministers that it won’t accept additional hurdles and has threatened to walk away from the project if it’s not approved as is by Trudeau by March 31…

In today’s Morning Musings…

1.  Cannabix Technologies (BLO, CSE) jumps as much as 50% this morning…

2.  NexGen Energy (NXE, TSX-V) reports more stellar high-grade results from its Arrow Zone Uranium deposit at Rook 1…

3.  Another high-volume day for Blackbird Energy (BBI, TSX-V) as it releases updated proved plus probable reserves…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold has traded between $1,258 and $1,274 so far today…as of 9:30 am Pacific, bullion is up $8 an ounce at $1,267…Silver has added a dime to $15.61…Copper has retreated 2 pennies to $2.26 after a big gain last week…Crude Oil has jumped $1.57 a barrel to $37.48 while the U.S. Dollar Index has fallen one-quarter of a point to 97.08…

China raised its central bank Gold reserves by the smallest amount since the nation started disclosing monthly increases last year…the People’s Bank of China expanded holdings by 0.6% to 57.50 million ounces in February from 57.18 million ounces a month earlier, according to its web site…Chinese markets, however, were closed during the week of February 8 for the Lunar New Year holiday which may have impacted central bank buying…global bullion prices jumped 11% in February, the biggest monthly increase in 4 years, as investors sought a haven from financial turmoil…

China held its big central planning meeting over the weekend with economic officials laying out plans to promote growth…government officials said China’s GDP will grow by 6.5% to 7% this year…that’s a hefty number by world standards, if it’s to be believed, but it’s also the slowest projected growth rate laid out by China in more than 25 years…the consumer price index growth target is around 3% while the budget deficit is projected at 3% of GDP…

Qu Hongbin, chief China economist at HSBC, wrote in a morning note that the National People’s Congress growth target reflected a “significant expansion” of fiscal policy.  “This will provide greater support to the financing needs of infrastructure projects, which holds the key to (stabilize) growth,” Qu said. “We expected infrastructure investment will be become stronger, and there will be more progress in tax reduction, increased subsidies to migrant workers’ property purchase needs and other supply side reforms in 2016.”

Oil Update

“They want $50 Oil, this is going to become the new anchor for global oil prices,” said Ross, one of the industry’s most respected forecasters for his bold price predictions and decades-long history of consulting with OPEC members.  “While it may not be an official target price, you’ll hear them saying it. They’re trying to give the market an anchor.”

In today’s Morning Musings…

1.  Updated charts for both Gold and Silver…

2.  Equitas Resources (EQT, TSX-V) signs a definitive deal to acquire majority interest in 6 Gold properties, including a small-scale producer, covering 184 sq. km in Brazil…

3.  Renewed interest in Blackbird Energy (BBI, TSX-V) as Crude prices strengthen…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

A significant trend change in the BMR Top 50 Opportunities List that was unveiled December 4 – money is flowing more aggressively now into junior exploration stocks after producers were first out of the gate in January.  This isn’t unexpected as a growing number of investors are becoming more comfortable with the idea that the Gold market has fundamentally changed.

Combined, the 5 categories have posted a stellar average gain of 37.3% vs. an 8.7% advance for the Venture.  The TSX is down 1.1% during that time, the Dow has fallen 4.7% while the NASDAQ is off 8.3%.  Gold has climbed 15.9% over the last 3 months.

The BMR Explorers’ Category has the best momentum at the moment with the 17 picks posting an average return of 43.3%.  Cordoba Minerals (CDB, TSX-V) and Lithium X Energy (LIX, TSX-V) have led the way with massive gains of 207.7% and 193.8%, respectively.

Gold Producers have jumped 41.5% with Kirkland Lake Gold (KGI, TSX), Claude Resources (CRJ, TSX), Richmont Mines (RIC, TSX) and OceanaGold (OGC, TSX) setting the pace with gains of 73.6%, 64.9%, 59.2% and 48%, respectively.  Seven of the 8 selections in that category have gained in value.

Near-Term Producers/Advanced Resources category is up 37.2%.  True Gold Mining (TGM, TSX-V), about to be merged with Endeavour Mining (EDV, TSX) in a deal announced Friday, has surged 93.9% since December 4.  Gold Standard Ventures (GSV, TSX-V) has powered 84.9% higher, GoldQuest Mining (GQC, TSX-V) has surged 81.5% while Kaminak Gold (KAM, TSX-V) has enjoyed a 53.8% advance.

The best performing category is Sleepers Under A Nickel – 3 very speculative plays that are doing extremely well.  Walker River Resources (WRR, TSX-V) is up a whopping 180% while Ashburton Ventures (ABR, TSX-V) and Kiska Metals (KSK, TSX-V) have each gained 66.7%.

The Non-Resource category is starting to gain traction and is now up 8.7%, led by a 25% jump in Greencastle Resources (VGN, TSX-V).  Greencastle, which is still trading about 30% below its working capital position, holds a couple of Gold properties in Nevada.  More importantly, however, they own 8 million shares of Deveron Resources (DVR, TSX-V) which will soon to be trading on the CSE as a drone and technology deal with an incredibly exciting business model and some powerful players behind it.

We’ve also added 4 new companies to our list – Canasil Resources (CZL, TSX-V), Calibre Mining (CXB, TSX-V), Gold Bullion Development (GBB, TSX-V) and Nevada Energy Metals (BFF, TSX-V) are up a combined 9.6% over just 2 weeks.

In today’s report is a performance review of each category.  In total, 38 of the 50 picks have increased in value since the 4th of December, 10 are down and 2 are unchanged.  The average return so far, as mentioned, is an impressive 37.3%.  We’ll be issuing an updated Top 50 Opportunities List (#2) in the near future.

1.  Four explorers post 3-month gains of 100% or more…

2.  Interest continues to build in Nevada Lithium plays…

3.  Certain non-resource plays that could surge during this 1st half of 2016…

In total, 38 of the 50 picks have increased in value since the 4th of December, 10 are down and 2 are unchanged.  The average return so far, as mentioned, is an impressive 37.3%.  We’ll be issuing an updated Top 50 Opportunities List (#2) in the near future.

To view the full report, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…