BullMarketRun.ca

Gold has traded between $1,180 and $1,194 so far today….as of 7:45 am Pacific, bullion is off $2 an ounce at $1,187 but holding on to almost all of Friday’s gains…Silver, which jumped 7% intra-day Friday, has retraced 23 cents to $16.09 (see this morning’s updated charts)…Copper is off a penny at $3.06…Crude Oil is 71 cents lower at $75.11…Oil hit a new 4-year low Friday and is looking to snap a 7-week slide, its longest losing streak since 1986…speculation is that OPEC producers will not cut production when they meet Nov. 27 as cracks widen within the group…Kuwait’s cabinet and the country’s Supreme Petroleum Council held an “extraordinary” joint meeting yesterday to consider measures to stop the slide in prices…the U.S. Dollar Index has gained one-quarter of a point to 87.89…it dipped as low as 87.20 overnight but rebounded on a surprise GDP number out of Japan…

Gold made an impressive $50 intra-day move Friday, including a nearly $20 jump in just 6 minutes thanks to a range of factors from short-covering to a perceived tightening of the physical market…the potential for a near-term retracement in the greenback, and speculation about a possible “Yes” vote in the Nov. 30 Swiss Gold referendum, could underpin bullion this week and give it a further lift, along with increased tensions in Ukraine as Russia grows increasingly provocative…the “Save our Swiss Gold” proposal aims to ban the central bank from offloading its reserves and oblige it to hold at least 20% of its assets in Gold…however, a vote in favour of boosting Switzerland’s Gold holdings won’t necessarily lift bullion prices, according to Deutsche Bank, which noted there’s a “considerable” chance the motion would pass…the Swiss National Bank could spread out its Gold buying, take transactions off market, or use derivatives to cushion Gold prices from the impact of a ‘yes’ vote, Deutsche stated…

SPDR Gold Trust (GLD), the largest Gold-backed exchange traded fund, is continuing to see outflows…the fund’s holdings fell to 720.62 tonnes last week from 727.15 tonnes the week earlier, the 4th straight decline…if GLD were a central bank, its holdings would be 10th on a list of all central banks and the International Monetary Fund, as compiled by the World Gold Council…GLD was once 6th on the list…its holdings are also equivalent to nearly a quarter of the world’s 2013 mine output that the Gold Council estimated was at 3,018.6 tons…

Paulson & Co., GLD‘s largest investor, reported no change in its holding last week for a 5th consecutive quarter…legendary investor George Soros, however, has sharply cut his stake in Barrick Gold Corp. (ABX, TSX) and several Gold mining company ETFs after boosting his investments in the metal during the second quarter…

The leader of ISIS has ordered the terror organization to start minting Gold, Silver and Copper coins for its own currency – the Islamic dinar…the Associated Press reports that a web site affiliated with the group posted the order late last Thursday, saying ISIS leader Abu Bakr al-Baghdadi instructed his followers to mint the coins to “change the tyrannical monetary system” modeled on Western economies that “enslaved Muslims”…according to photographs of coin prototypes, one of the Gold coins carries the symbol of seven stalks of wheat, mentioned in the Quran, while another has the map of the world, a reference to Islam someday ruling the entire world…it’s unclear where the Islamic State group intends to get the Gold, Silver and Copper for the coins…

Today’s Equity Markets

Asia

Japan’s Nikkei average tumbled over 500 points (2.96%) overnight as fresh data showed the economy shrank in the third quarter, defying expectations for growth…this is what can happen, though, when a government hikes sales taxes…it’s now likely that Prime Minister Shinzo Abe will postpone a second increase in the sales tax with Japan now officially in recession…Q3 GDP contracted an annualized 1.6%, compared with a Reuters’ forecast for a 2.1% gain….the economy contracted 7.3% in the second quarter…

Today marked the launch of the Shanghai-Hong Kong Stock Connect…the Shanghai fared much better than the Nikkei, slipping 4 points to finish at 2475…

Australia has reached a free trade deal with China, cementing ties with its largest economic partner and reducing the nation’s reliance on resource exports…Australia is the most China-dependent developed economy in the world with exports to the nation accounting for 5.3% of GDP…the deal will open up the Chinese economy in various sectors, including services and agriculture, to Australian exports…

Europe

European markets have reversed earlier losses and are up moderately in late trading overseas…

North America

The Dow is relatively unchanged as of 7:45 am Pacific…the U.S. calendar is packed with a slew of important data releases this week including industrial production, PPI, CPI, housing starts, existing home sales and the Philadelphia Fed manufacturing survey…in addition, on Wednesday, the FOMC releases minutes of its last meeting…

The TSX has added 72 points while the Venture is up a point at 778 as of 7:45 am Pacific…

Osisko Gold Royalties Ltd. (OR, TSX) and Virginia Mines Inc. (VGQ, TSX) have entered into a definitive agreement to combine the 2 companies to create a new leading intermediate royalty company with two world class Gold royalty assets in Quebec…the transaction combines 2 high quality asset portfolios, including 2 long-life revenue generating Gold royalties (Osisko’s 5% NSR royalty on the Canadian Malartic mine, and Virginia’s sliding-scale 2.2% – 3.5% NSR royalty on the Eleonore mine)…both the Osisko and Virginia royalties cover not only the operating mines, but also the high-potential land packages surrounding the mines…

CDNX 3-Year Chart

Technically, the Venture is looking much healthier after last week’s action which included confirmation of a “hammer” candle on this 3-year weekly chart…RSI(14) is bouncing up from previous support…the Index has an excellent chance at accelerating to the upside this week, with a breakout above resistance at 770, especially if Gold can gain traction above $1,200 an ounce…

Columbus Gold Corp. (CGT, TSX-V) Update

With a major upcoming drill program (64,000 meters in 250 rotary holes) at its 100%-owned Eastside Gold discovery in Nevada, and a growing multi-million Gold resource in French Guiana with more assay results and an updated resource estimate pending, investor interest in Columbus Gold (CGT, TSX-V) may gather immediate or near-term additional momentum…technically, as John’s 2-year weekly chart this morning shows, CGT is in the midst of a breakout above both Fib. resistance and a downtrend line…there are few juniors as active as CGT is at the moment, so an upswing in Gold prices and a rebounding Venture should disproportionately favor this stock…

First, let’s take a look at the technical picture which has turned increasingly bullish…the breakout above the downtrend line in place since the spring is particularly significant…in addition, up momentum in the RSI(14) and SS indicators suggest the likelihood of an imminent confirmed breakout above measured Fib. resistance at 45 cents…it’s exciting to identify technical patterns like this in a stock that also has strong fundamentals in its favor…

CGT 2-Year Weekly Chart

Multi-Million Ounce Resource in French Guiana

More than 20,000 meters of Phase 2 drilling was completed by the end of October at CGT’s Montagne d’Or Gold deposit with all expenditures financed by London-listed Nordgold (the world’s 13th largest Gold producer) as part of a $30 million exploration and development program pursuant to which they can earn a 50.01% interest in the project by completing a bankable feasibility study by no later than March, 2017…the deposit is presently defined over 2,500 m x 400 m and to an average depth of 250 m from surface, so an open-pit operation is being targeted here…

Given results of Phase 2 drilling to date, which has featured some high-grade intervals such as 33.5 m @ 3.15 g/t Au in MO-14-164 and 38.6 m @ 4.48 g/t Au in MO-14-167 (nearly 600 m away in the principal UFZ Zone), tonnage and overall grade of this deposit are sure to increase, and portions of the current inferred resource will be upgraded to measured and indicated categories…the company is aiming to deliver an updated resource estimate by the end of January, followed by a preliminary economic study by the end of the Q1 2015…the resource estimate released earlier this year did not fully take into account the potential of the high-grade zones occurring within the low-grade envelopes at Montagne d’Or…the inferred resource, utilizing a cut-off grade of 0.4 g/t Au, gave a total of 140.1 million tonnes grading 1 g/t Au for 4.31 million contained ounces of Gold…

Nevada Eastside Project – District-Scale Potential

Columbus has a significant early-stage discovery at its Eastside Project in Nevada, about 30 km west of the mining town of Tonopah, and now they’re set to really ramp up drilling with a large program slated to commence in January…the last round of drilling was highly encouraging (see CGT’s Feb. 19 news release) with the best hole, ES-27, cutting 64 m of 1.43 g/t Au including 8 m of 5.86 g/t Au…recently, through mapping, 5 new target areas have been outlined…drilling in January will begin at the original target that hosts a large area of shallow oxide-Gold mineralization still open to the south that measures about 1.6-km long and up to 600 m wide…

Interestingly, mapping over the entire 46.4-sq. km Eastside claim block has identified 41 separate rhyolite domes, which are known to be important for controlling Gold mineralization at Eastside…the domes range from 100 m to 1,000 m in diameter…hydrothermal alteration has been identified in, or near, about half the domes…significantly as well, dozens of faults have been identified and mapped throughout the claim block, mostly trending north and northeast…within some of these structures is where drilling should encounter higher grades…

Eastside has outstanding infrastructure for mining and processing, and a major power transmission line passes through the claim block…the management team at Columbus is highly regarded and features CEO and Chairman Robert Giustra, cousin of the legendary Frank Giustra…as always, perform your own due diligence…

CGT is up 1.5 cents at 48 cents as of 7:45 am Pacific…

Niogold Mining Corp. (NOX, TSX-V) Update

Niogold Mining (NOX, TSX-V) has launched a 40,000-meter definition drilling program, beginning with 3 rigs, at its 100%-owned Marban Property in northwest Quebec…the aim is to improve the current in-pit resource for 100% conversion to measured and indicated…keep in mind that Osisko Gold Royalties recently increased its position in NOX to 19.5% (it now holds 23.6 million shares)…

Technically, NOX has found strong support at its rising 200-day moving average (SMA) at 23 cents…this could finish off 2014 on a strong note…

NOX is unchanged at 25 cents as of 7:45 am Pacific…

U.S. Dollar Index 6-Month Daily Chart

Some technical weakness has been creeping into the U.S. Dollar Index recently…most notable is the RSI(14) divergence with price as you can see on this 6-month daily chart…the main trend remains bullish but the Dollar Index, which has staged a vigorous advance since the summer, seems likely to retrace to at least the mid-80’s where Fib. support and the 50-day SMA converge…it’s trading within an upsloping channel…in that kind of a pattern, expect back-and-forth movement between resistance (the top of the channel) and support (the bottom of the channel)…Fib. resistance at 88 has so far proven to be very strong…

Even a modest pullback in the greenback would give the commodity sector some much-needed relief…

U.S. Dollar Index Long-Term Chart

This 34-year monthly U.S. Dollar Index chart gives a valuable “Big Picture”…note the important breakout this summer above the first downtrend line (8.5 years), and the fact the Index is now up against resistance going back to 2009…the current pattern is remarkably similar to the one in the late 1990‘s…

Ultimately, it’s reasonable to expect the Dollar Index to take a run at the long-term downtrend line in the mid-90‘s – but how quickly that could occur is impossible to predict…

Silver Short-Term Daily Chart

Silver has managed to hold critical support at $15…on Friday it also powered above RSI(14) resistance going back to early August…note the downtrend line in place since July…expect Silver to gradually move higher over the near-term in another attempt to test the downtrend resistance…

Silver Long-Term Chart

This 34-year monthly chart gives hope that Silver could be preparing for a powerful “Wave 5” move to the upside, though we caution that this could take some time to play out (if indeed this theory is correct)…

RSI(14) is at previous long-term support and this will need to hold along with key support in the immediate vicinity of $15…

Note:  Jon holds a share position in CGT.