Gold has hovered between $1,666 and $1,675 so far today…as of 5:40 am Pacific, the yellow metal is down $3 an ounce at $1,668…Silver is flat at $31.44…Copper is up 2 pennies to $3.73…Crude Oil is 23 cents higher at $96.06 while the U.S. Dollar Index is off over one-tenth of a point at 80.15…
As per a reader’s request, below is an interesting chart from John (monthly) comparing Gold with Platinum since 2000…
Currency Wars
The euro struggled to regain losses it suffered yesterday after the European Central Bank cited the currency’s recent strength as a risk for the euro-zone economy…the comments, made by ECB President Mario Draghi, surprised the market…”The ECB citing of euro strength in the context of its assessment of risks to price stability is the latest example of how currencies are increasingly becoming part of the policy debate,” said Morgan Stanley…meanwhile, the Chinese yuan, also known as the renminbi, fell Thursday to its weakest level since late December…in fact, the yuan has been creeping down since January 14, when it hit a record high against the U.S. dollar at about 6.21, as China’s central bank steps up its intervention in the foreign exchange markets to curb yuan appreciation – especially in light of the weakness in the Japanese yen which has fallen around 16% versus the dollar in anticipation that new Prime Minister Shinzo Abe will push his agenda of aggressive monetary policy easing to weaken the currency…yesterday, the Japanese Finance Minister actually said the yen has weakened more than intended…
Today’s Markets
Asian markets were mostly higher overnight, though Japan’s Nikkei average fell 200 points to close at 11153 as its longest weekly winning streak in 54 years came to an end…the Nikkei finished down for the first time in 13 weeks…China’s Shanghai Composite climbed 14 points to close at 2432…European shares are higher today, thanks in part to a strong banking sector…European shares were higher in morning trade on Friday as the banking sector rallied after the European Central Bank detailed the repayments needed from the intuitions that borrowed money after the sovereign debt crisis…the ECB announced that 21 European banks will pay back another 5 billion euros of the LTRO (long term refinancing operation) to the central bank…this marks the unwinding of the ECB’s crisis measures…President Mario Draghi said yesterday that the repayments were a sign of confidence…stock index futures in New York as of 5:40 am Pacific are pointing toward a slightly lower open on Wall Street…
Venture Exchange Updated Chart
The Venture has closed down for 9 trading sessions out of the last 11 but is still trading within important support…it hit the downsloping wedge at 1204 intra-day yesterday before closing 6 points lower at 1206…below is an updated chart (2-month daily)…
More Signs Of Strength In China
Chinese exports and imports rose strongly in January, pointing towards solid growth both in China and abroad at the start of 2013…inflation in China also receded last month, slowing to 2% from 2.5% cent in December…but analysts called for caution in interpreting the figures because next week’s Chinese New Year holiday will have caused significant distortions since companies tried to push as much business as possible into January before work came to a halt…moreover, the timing of the holiday – which fell in January last year but February this year – has probably made year-on-year trade growth appear stronger and inflation weaker than is really the case…Chinese exports rose 25% from a year earlier, the fastest pace since April, 2011, and up from 14.1% in December…imports increased 28.8%, more than four-times December’s 6% rise…
China & The Graphite Market
The fact that graphite stocks have done well since December is another indication that the Chinese economic recovery is for real…China is the world’s largest graphite consumer and exporter, so economic activity in that country is critical when it comes to this market…government policy is also important, and in December China’s Ministry of Industry and Information Technology (MIIT) released a document entitled, “Graphite Industry Access Conditions”…this is the first time that China has set access standards for its graphite industry…this tightening of policy on its graphite industry, along with an acceleration of the transformation, upgrading and structural adjustment of the graphite sector, should be supportive of world graphite prices in general…
Galaxy Graphite Corp. (GXY, TSX-V)
Galaxy Graphite Corp. (GXY, TSX-V) was the Venture’s biggest percentage gainer yesterday, for stocks with volume of 100,000 shares or more, as it jumped a whopping 233% (from 3 cents to a closing price of 10 cents) on volume of 8.2 million (12.3 million including all markets)…GXY, which has only about 24 million shares outstanding, announced positive results from a sampling and geophysical program at its Buckingham graphite project in Quebec…given the market’s appetite for graphite plays, and this kind of impressive “game changing” volume, GXY is definitely worth keeping on one’s radar screen…below is a 1-year daily chart from John that shows various resistance levels as GXY potentially works higher…as always, perform your own due diligence…
Eagle Graphite Corp. – IPO On The Way?
Few investors are aware that the West Kootenay region of British Columbia hosts one of only two operating natural flake graphite mines in North America…amid a confirmed ramping up in activity at Eagle Graphite’s processing facility near Nelson, rumors are again circulating that the privately-held company is working diligently toward an IPO…the Valhalla Metamorphic Complex is a world class flake graphite area – and a particularly interesting one because it hosts an actual producer…one of two interesting recent developments in this district was the announcement by Rainbow Resources (RBW, TSX-V), the second largest landholder in the region (next to Eagle Graphite) with approximately 100 square kilometres, that it’s pursuing options “aimed at unlocking the value of its large flake graphite land package” in order to focus on its Gold-Silver assets…this could mean a number of different things, and we may get more insight next week when we interview RBW President David W. Johnston…just a week after RBW’s announcement, Anglo-Swiss Resources (ASW, TSX-V) announced it had entered into a definitive agreement to sell its Kenville Gold Mine for $10 million to a private Alberta company to focus on its Blu Starr flake graphite property near Eagle’s mill…rest assured, the Slocan Valley is going to heat up on the flake graphite front and two Venture-listed beneficiaries of that are going to be RBW and ASW…Eagle Graphite has about 80 interesting pictures on its web site (www.eaglegraphite.com) – below is just one of them…
Dynasty Gold (DYG, TSX-V)
We’d all love to own a stock under a nickel that suddenly explodes like Graphite Galaxy did yesterday…in the current market environment, there are definitely some “diamonds in the rough” that are trading under a nickel and have plenty of upside potential because of a combination of cash in the bank, strong management or high quality projects…at times like this, great wealth is born when one can identify even just a few situations that have the potential to move sharply higher once the Venture starts gaining traction…Dynasty Gold Corp (DYG, TSX-V), we believe, is one such opportunity as the company is sitting on well over $1 million in cash, has low overhead at the moment, a Gold resource in China it’s looking to sell, and an interesting new Gold-Silver property in the Stewart district…the DYG chart is also favorable…it’s clear to us that this stock hit bottom at 2 cents…
Strategic Oil & Gas (SOG, TSX-V) Chart Update
Note: John and Jon both hold share positions in RBW and DYG.
