TSX Venture Exchange and Gold & Silver
The Venture Exchange has recently been consolidating just underneath a resistance band between 1350 and 1365, and a time of decision is fast approaching as we’re now seeing a squeeze between this band and the SMA(20) as shown in John’s chart below. RSI has formed a bullish “W” while volume and buying pressure remain steady. An increase in volume will be required to carry the Index through the resistance. For the week, the Venture gained 10 points to close at 1345. The 10, 20, 50, 100 and 1000-day moving averages are all pointing north while the 200, 300 and 500-day SMA’s continue to decline. It’s reasonable to expect that the Venture will soon overcome immediate resistance and challenge the 200-day around the 1400 level.
Gold
Gold climbed within just a couple of dollars of the $1,800 level Thursday before retreating Friday on a better, though confusing, U.S. jobs report. President Obama got an apparent gift in the final jobs report before the elections as the unemployment rate magically fell below 8% for the first time since 2009. Non-farm payrolls increased by only 114,000 in September but the government household survey showed the biggest monthly jobs gain in many years. In our view the most likely reason for the drop in the unemployment rate is due almost entirely to individuals leaving the labor force as opposed to any significant job creation, and that is clearly an indictment against the fiscal policies of the Obama administration. For those reasons the U.S. dollar is in the tank, caught up in a vicious downtrend that has no end in sight. This is bullish for Gold and commodities in general.
Gold gained $10 for the week, closing at $1,781. Silver was essentially unchanged, finishing at $34.51. Copper was up a penny at $3.75 while Crude Oil fell $2.31 a barrel to $89.88. The U.S. Dollar Index slipped more than half a point to 79.33.
Below is John’s updated Gold chart. Generally, the set-up is bullish going into next week. Expect an increase soon in volatility based on the Bollinger Band Width.
John will update the short and long-term Silver charts Tuesday morning.
Gold held in exchange traded funds reached a new record high last week and sales of Gold and Silver coins by the U.S. Mint were very robust in September. According to Bloomberg, people purchased the most American Eagles from the U.S. Mint in eight months. Almost 70,000 ounces were sold last month – the most since January.
Indian Gold Demand Up
The rupee’s recent strength has helped to increase Indian Gold demand with flows climbing to a five-month high, according to UBS. What’s helped bring shoppers back to the market is the fact that the exchange rate is back to where the rupee was in April. This improvement in the currency comes just in time as the wedding season is in full bloom. Every year, about 10,000 weddings are held in India from late September through January, in between the monsoons and the summer heat. Gold has historically been closely linked with the celebration of weddings, as the bride wears the precious metal and gifts of Gold coins are given to the newlyweds. In addition, Diwali will be celebrated in November. The Festival of Lights is India’s biggest and most important holiday of the year and is celebrated by almost 1 billion Hindus around the world. Traditionally, on the first day of Diwali, it is considered auspicious to clean the home and shop for Gold.
The “Big Picture” View Of Gold
As Frank Holmes so effectively illustrates at www.usfunds.com, Gold is being driven by both the Fear Trade and the Love Trade. The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, is having a huge impact on Gold.
The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, governments and world leaders in general, an environment of historically low interest rates and negative real interest rates that won’t end anytime soon (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), money supply growth, massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on. QE3 has arrived, and massive central bank intervention is now taking place to prevent a breakup of the euro zone and to kick-start the global economy. It’s hard to imagine Gold not performing well in this environment.
@bmr. What do you think will be the volume catalyst for the venture?
Comment by Tony T. — October 6, 2012 @ 4:57 pm
Thanks for all the hard work you do. This sight is a real blessing and I pray you prosper as you continue to share your knowledge.Let’s hope this sector finally catches fire again and we all get the gains we have waited so patiently for !!! KD
Comment by KD Dougan — October 7, 2012 @ 2:05 am
Let’s hope we can do it this week coming up as its finally going to feel good!
Comment by steven — October 7, 2012 @ 8:07 am
I think the Venture can go up from these levels and breakthrough the 1400 level shortly…it’s long overdue!
Comment by RAJ — October 7, 2012 @ 8:08 am
RAJ, I think you right on! 1350 is the key this week to climb to 1400 soon!
Comment by STEVEN — October 7, 2012 @ 8:09 am
We all thank you very much, KD. Enjoy a wonderful Thanksgiving!
Comment by Terry - BMR — October 7, 2012 @ 9:44 am
From : THE VANCOUVER SUN
Canadian miners see signs of new life in equity financings
After falling more than 40 per cent, a bounce-back in mining stocks expected to lure issuers to test markets in months ahead
By Euan Rocha, Reuters October 5, 2012
A sudden squall of equity deals arranged for Canadian junior miners signals a potential thaw in a year-long freeze on new financings that has held back the pace of mining exploration.
Over the past year, the flow of bought deals – a type of equity financing commonly used by early-stage miners in Canada – slowed to a crawl as the eurozone debt crisis and a pullback in emerging economies fuelled market uncertainty.
Equity financings are the lifeblood of early-stage mining companies, which rely on them to fund their projects, and when economic fears paralyze markets hundreds of Canadian miners and explorers are often deprived of the capital needed to survive.
Mining stocks have now started to bounce back after falling more than 40 per cent over the past year, reflecting a brighter macroeconomic outlook. And the S&P TSX Metals & Mining Index is up more than 25 per cent since July, giving some early-stage miners confidence to wade back into equity markets.
Tyler Swan, a CIBC managing director in equity capital markets, sees a flurry of financings in the months ahead.
“There is a large pipeline in place, of companies looking to come to market before the end of the year,” he said.
Sandstorm Gold Ltd. was one of the first to take the plunge. The company, which recently raised $150-million for itself, focuses on arranging production-sharing, or so-called streaming, deals to fund mining projects of others.
“Our financing was somewhat of a bellwether for the rest of the industry to see that financings can be done, and investment banks since then having been going around trying to convince mining companies to raise equity,” said Nolan Watson, chief executive of Sandstorm.
The numbers illustrate the pent-up demand. About $400 million was raised through fewer than 30 bought deals in the spring and summer of 2012, compared with roughly $2 billion raised via 80 deals a year earlier, according to Oreninc, a firm that tracks financing activity among juniors in Canada.
But investor sentiment seems to be turning, thanks to a brighter economic outlook. The U.S. Federal Reserve recently outlined plans for a third aggressive program to lift the U.S. economy, while China has given the go-ahead to some 60 infrastructure projects worth over $150-billion.
Not coincidentally, precious metal explorers Premier Gold Mines and Torex Gold Resources Inc this week outlined plans for bought deals to fund projects. And Labrador Iron Mines Ltd, one of Canada’s newest ore miners, has joined the rush.
Bought deals help reduce risk for issuers by allowing them to sell shares to an underwriter, or a syndicate that in turn markets the equity to the public.
Torex, which owns the Morelos gold project in Mexico, said on Monday it plans to raise about $350-million through a deal being led by BMO Capital Markets. Premier Gold, which owns assets in Ontario and Nevada, aims to raise $60-million in a deal led by RBC Capital Markets.
In a sign that the equity window may have also opened for miners outside precious metals, Labrador Iron Mines plans to move on a $30-million bought deal led by Canaccord Financial.
New issuers are also stepping up. Last month, Ivanplats – the mining company founded by billionaire Robert Friedland – began a long-awaited process to list on the Toronto Stock Exchange. The company, which owns copper and platinum projects in Africa, plans to sell about 60-million shares at between $4.50 and $5.40 as part of its initial public offering.
Read more: vancouversun.com/business/Canadian+miners+signs+life+equity+financings/7348765/story.html#ixzz28dmhsVHA
Comment by Bert — October 7, 2012 @ 10:52 am
stock challenge lets start a stock portfolio where each one shares their best ideasyou can set up a practice account at your bank and put your best five stocks in it and than share your results daily weekly or monthly I started one with equal weight of five stocks rbw spm mgp cgj azx
Comment by GIL — October 7, 2012 @ 5:18 pm
I meant to say at least 5 stocksI also have ws in my portfolio
Comment by GIL — October 7, 2012 @ 5:48 pm
Would like to hear more about stocks you think an investor can put away and not worry about for lets say 5-years. In particular producers. I am already in New Gold which I know you mention from time-to-time as well as Richmont Mines and Great Panther Silver. Thanks!
Comment by Michael — October 8, 2012 @ 9:15 am