BullMarketRun.ca

Gold has traded in a tight range between $1,227 and $1,234 so far today…as of 4:45 am Pacific, bullion is down $1 an ounce at $1,230…Silver is off 6 pennies at $19.48…Copper is up a penny at $3.22…Crude Oil, after a 5% jump last week, is unchanged at $97.65 while the U.S. Dollar Index is off nearly one-tenth of a point to 80.22…

“The Gold price is likely to recover from its historic slump this year and increase moderately in 2014,” according to Commerzbank in an outlook released Friday. “Investment demand should gradually revive. In conjunction with robust demand from Asia, this indicates upward movement in the Gold price to $1,400 per troy ounce by the end of 2014.

“Stronger investment demand is essential for upward movement in the Gold price,” the bank said. “The most important question will therefore be when the negative trend amongst ETF investors will be reversed. If strong demand from Asia can no longer be satisfied out of ETF holdings, as has been the case this year, the Gold price is likely to rise.

“In the wake of Gold, and boosted by growing industrial demand, the Silver price should also be able to make good some of its losses next year. As a result of supply problems and rising demand, platinum and palladium are also likely to show supply deficits in 2014, supporting higher prices.”

Today’s Markets

Buoyed by a weaker yen, Japan’s Nikkei soared 350 points or 2.3% overnight to close at 15650…Japan’s economy slowed more sharply in the third quarter than official estimates had previously suggested, according to revised government data released today…the updated calculation of GDP in the three months to September showed that economic output increased at an annualized rate of only 1.1%, compared with an initial estimate of 1.9% announced last month…

China’s Shanghai Composite was relatively unchanged, gaining a point to close at 2238…economic data released over the weekend showed exports exceeded forecasts in November with a 12.7% rise, another sign that the world’s second-largest economy is stabilizing…annual inflation, meanwhile, slowed to 3% in November…a slew of economic data will be released tomorrow in China including industrial production, retail sales and fixed asset investment…

European shares are mixed in late trading overseas…

Stock market index futures as of 5:00 am Pacific are pointing toward a flat opening in New York…several Federal Reserve officials are due to speak today before the Fed goes into its “blackout” period ahead of next week’s policy meeting…

The Case For A Bullish Reversal In The Venture Continues To Build

We have three important charts we’d like to share with our readers this morning concerning the Venture Exchange and why NOW is the time to be encouraged, not discouraged (no matter what the market may do four hours from now or tomorrow)…for investors who are selective, some incredible opportunities exist at the moment – especially if the Venture shoots 10-15% higher from current levels over the next six to eight weeks which is a very real possibility given the current dynamics…support in the low 900’s is solid…the seas are often a little choppy in the first week or two of December, due in part to tax-loss selling, but that’s to the advantage of the buyer…December, January and February are traditionally the Venture’s best months of the year, and this time around should be no exception and could be particularly strong…

Chart #1

The 8-month basing pattern the Venture has experienced since the spring of this year, following a spectacular drop from the 2465 high in March, 2011, has felt akin to slow torture for many investors…the good news is, this basing pattern is providing the foundation upon which the CDNX can finally start to build a sustainable advance as opposed to the sharp, short-lived rallies witnessed in late 2011, early 2012 and the summer of 2012…

John’s first chart is a 5-year monthly that paints the “Big Picture” extremely well…in October, the Venture finally broke above a long-term downtrend line that is now providing important support…deeply oversold RSI conditions earlier this year and during the second quarter of 2012 are like “mirror images” of the overbought conditions that emerged in early 2010 and again in late 2010/early 2011…the ADX indicator shows the long-term bear trend is weakening, while the MACD Histogram is now in the bullish zone (slightly) for the first time since 2011…

As we mentioned a week ago, so many investors (and this includes management personnel in many Venture companies) are trapped in such a fog of negativity at the moment that they can’t see the forest for the trees right now – the Venture is showing every sign of an imminent and significant reversal…it’s impossible at this point to know all the reasons why, but we should find out soon enough…

Venture 5-Year Monthly Chart

“Be Fearful When Others Are Greedy, Be Greedy When Others Are Fearful”

If for whatever reason(s) you’re fearful or discouraged regarding the current market, you really do need to adjust your “herd mentality” thinking because this is when the contrarian usually scores big, like after the Crash of 2008 or during the market highs of late 2010/early 2011…

You can make an incredible amount of money investing in companies on the highly speculative Venture Exchange during any cycle (and you can lose a lot, too), but your odds of success are greatly enhanced when you “load up” in the midst of these oversold periods and exit when conditions get frothy…individual stocks also go through their own cycles, of course, and the same principles apply…you must have a plan to buy and a plan to sell…you must be unemotional and often contrarian in your approach which actually goes against basic human nature – most people act on emotions and prefer to follow, not lead…

The Coming Advance

We emphasize – yet again – that a rising tide will not lift all boats, so expect a “market within a market” – an acceleration of what we’ve seen over the last number of months…a relatively small percentage of Venture plays will do the heavy lifting, at least in the initial stages of a significant advance…that’s the space to pay attention to for the best gains…focus on the companies with healthy balance sheets, competent management, strong and active projects, and the ability to execute both on the ground and in the market…do your due diligence…don’t be afraid to pick up the phone and speak with company management…avoid “lifestyle” companies like the plague…pay close attention to share structure – so many Venture companies have obliterated their share structures over the last year, the latest example being Everton Resources (EVR, TSX-V) which is issuing nearly 60 million shares (36 million flow-through at 5.5 cents) to raise $3 million…investors will see many rollbacks in 2014, and (thankfully) a good number of Venture companies will simply cease to exist (that will actually be good for the market)…

Chart #2

John’s second chart shows something we haven’t seen for quite some time – the Venture is actually out-performing Gold at the moment, and that’s always a bullish sign…it’s the reverse of what occurred in early 2011 when the Venture started to under-perform vs. Gold, an obvious red flag…for the first time this year, the Venture also has a rising 100-day moving average (SMA)…

After a breakout through the 970’s, which seems very possible by month-end, the first Fib. resistance level is 1008 followed by 1053 which is in the immediate vicinity of the declining 300-day SMA…the current resistance in the 970’s can then be expected to provide future support on any pullbacks…

Venture 13-Month Daily Chart

Chart #3

John’s third chart is the latest update of the one we’ve been following consistently recently – the 3-year weekly…what this shows is steady accumulation since July, shortly after the 859 low near the end of June and three months of deeply oversold conditions as measured by the RSI(14)…again, the Venture broke above an important downtrend line in October and has managed to stay above that trendline for the past two months…key RSI(14) resistance on the 3-year weekly is right around 50…what we expect to see is a breakout above that level shortly after the Index is able to overcome resistance in the 970’s…

Venture 3-Year Weekly

Good News For The Venture – U.S. Dollar Index Is In Trouble

Interestingly, the Venture broke above a long-term downtrend soon after the U.S. Dollar Index broke below a long-term uptrend…historically, the Venture performs best when the Dollar Index trend is bearish…right now, the Dollar Index is looking very vulnerable to a potential free-fall below critical support at 79 during the first quarter of next year…RSI(14) is heading south, and so too is the 200-day SMA and dollar bulls can’t ignore this much longer…the Bitcoin craze could have more to it than we realize – faith in traditional currencies is clearly eroding which, one would assume, is a great reason to continue to believe in the importance and power of Gold (the Chinese are certainly thinking that way)…

Dollar Index 2.5-Year Weekly Chart

Frank Holmes On The Greenback

A valuable resource investors should check out each weekend is Frank Holmes’ Investor Alert at www.usfunds.com… Holmes gave his take on the U.S. dollar in his December 6 issue…“One too many of the investors and analysts we speak to on a daily basis is completely oblivious to the recent behavior of the U.S. dollar. The recent macroeconomic data released has helped propel the equity markets higher, based on the notions that (1) the recovery is in full swing and (2) the labor, manufacturing, and economic releases are at multi-year highs. One would expect that the taper talk 2.0 which has followed recent macroeconomic data releases would have the U.S. dollar flying high. But as the chart above shows, the exact opposite has happened. In fact, despite the calls for December tapering piling up on the basis of visible improvements to the labor market, the U.S. dollar has failed to respond. The U.S. dollar trades in the foreign exchange market, which transacts well over $4 trillion on average per day, making it the most liquid market, and clearly one where any type of manipulation is nearly impossible. The interpretation we give to this is that the U.S. dollar weakness signals tapering is unlikely in the short term, and a continuation of the U.S. dollar downtrend is likely. These developments should bode well for gold going into the new year as we expect the historic negative correlation between Gold and the U.S. dollar to gain momentum.”

Drill, Baby, Drill

Companies who are actively drilling properties with strong geological merit are of special interest to us right now – in particular because of the time of the year – and below are chart updates on two additional situations we’ve been tracking recently (on Friday we posted a chart update on Garibaldi Resources – GGI, TSX.V)…John correctly identified the accumulation “sweet spot” for Barisan Gold Corp. (BG, TSX-V) – 15 to 20 cents on a Fibonacci retracement – and the strong support between 15-16 cents within a bullish ascending triangle in Global Cobalt Corp. (GCO, TSX-V) which rocketed to a Fib. target of 24 cents Friday…

Barsian Gold Corp. (BG, TSX-V)

Global Cobalt Corp. (GCO, TSX-V)

The 24-cent Fib. level is resistance in Global Cobalt Corp. (GCO, TSX-V) until a confirmed breakout occurs…in the meantime, volatility is likely to continue within the ascending triangle…

Silver Short-Term Chart

Silver’s 6-month daily chart is interesting with a clear divergence between RSI(14) and price…the recent bearish trend is waning with strong support around current levels…

Silver Long-Term Chart

The long-term bullish case for Silver remains intact despite the 60% drop from the 2011 high…the 13-year monthly chart shows oversold levels that haven’t been seen in a dozen years since 2001…

Note: John and Jon both hold share positions in GGI and BG.