Gold has traded between between $1,192 and $1,207 so far today…as of 8:30 am Pacific, bullion is down $7 an ounce at $1,197…it has climbed for 7 straight sessions, its longest winning streak since 2012…Silver has fallen 12 cents to $16.98…Copper is off 3 pennies at $2.77…Crude Oil has retreated $1.51 a barrel to $49.92 while the U.S. Dollar Index is up slightly at 97.47…
Caution over bullion’s price rally was evident as SPDR Gold Trust continued to see outflows yesterday…holdings fell nearly 6 tonnes to 737.24 tonnes, the lowest since January…physical demand across Asia has also reportedly slowed this week as the rally in prices has restrained buying…Gold faces resistance at $1,200, the 100-day moving average (SMA) at $1,208, and the March high of $1,223 (slightly above a Fib. level, see updated chart below)…
Markets will be paying close attention to a speech by Fed Chair Janet Yellen that’s scheduled to begin 25 minutes before stock markets close today in North America…her speech is part of the Federal Reserve Bank of San Francisco’s Conference on “The New Normal for Monetary Policy”…
Japan Drifts Further Into Deflation
The “new normal” for monetary policy hasn’t done much for Japan, except create an equity bubble…the country is drifting back toward deflation, 2 years after launching a radical monetary policy experiment to cure the affliction, which underscores the difficulties in pulling the world’s 3rd-largest economy out of its long slump…
The government said today that its most closely watched price gauge was flat in February from a year earlier, far below the 2% target that the central bank had aimed to hit by this spring…it was the lowest level since May 2013 for the CPI, excluding fresh food prices and the effects of a tax increase…in the 7 quarters since the Bank of Japan Governor first fired what he calls his “bazooka”, Japan’s GDP has grown at a sluggish average annual pace of about 0.2%…
The Middle East Powder Keg
“I am looking at the map,” said a U.S. defense official, in a Wall Street Journal report yesterday by Jay Solomon and Gerald F. Seib. “I am looking at (Islamic State) affiliates. I am looking at all the fighting. And I am wondering who is the archduke that is going to get assassinated and kick off a big war.”
At the moment, despite a Saudi Arabia-led coalition taking aim at Iran-backed Houthi rebels in Yemen, there’s virtually no threat of an immediate or near-term disruption to world Crude supplies from this conflict (Yemen is a minor producer)…however, this week’s developments are nonetheless extremely serious and threaten to make Yemen center stage for an increasingly bitter clash between the Sunni-majority Saudi Arabia and Shiite-majority Iran…the possibility of a broad-scale Sunni-Shiite war breaking out in the Middle East, anytime over the next year, cannot be dismissed…
The Houthi minority group has overrun most of Yemen in the past 7 months and seized control of the capital and government…Saudi Arabia is the main ally of Yemen’s U.S.-backed president, Abed Rabbo Mansour Hadi, and the kingdom said its airstrikes were in defense of what it considers the legitimate government of Yemen…Hadi has reportedly fled to Saudi Arabia after being chased by the Houthis…
Yemen is also the home of al-Qaeda in the Arabian Peninsula – AQAP, often described by experts as the terror group that represents the greatest threat to the American homeland, despite its lower profile in comparison to the likes of ISIS which is also capitalizing on the chaos in Yemen…
Iran has increasingly been projecting its power and influence throughout the Persian Gulf, creating escalating tensions with Saudi Arabia and its allies. Events in Yemen demonstrate that the threat of a broad-scale Sunni-Shiite war breaking out in the Middle East cannot be discounted. Yemen is only a minor Oil producer but the conflict there could also bring a “risk premium” back into Crude.
Crude Oil Updated Chart
There are some important changes in the 6-month daily chart for Crude that suggest a rally could be in the works, perhaps fueled by a Middle East “risk premium”…it’s still too early to say for sure, but below are some significant technical developments to consider despite this morning’s pullback…
Over the last 2 sessions, Crude has broken above its 50-day SMA ($48.69) and a downtrend line (the downtrend line could be tested shortly on a retrace prior to a surge higher)…RSI(14) has pushed convincingly above the 50% level, and a bullish +DI/-DI cross has occurred…the key level to watch is around $53…a possible scenario here is a run into the high $50’s where Crude reacted in December…a cluster of Fib. resistance exists between $57 and $65…
Overall, the bearish fundamentals (the world is awash in Oil) and the major technical breakdown that occurred last year still point to the possibility of Crude ultimately sliding into the $30’s…a significant rally from current levels could certainly occur but should be viewed skeptically if it does…
WTIC 6-Month Daily Chart
Gold Updated Chart
Gold is currently fighting chart resistance at $1,200…however, a bullish +DI/-DI cross has occurred in this 6-month daily chart for the first time since the beginning of the year…this was followed by a major rally in Gold…
Bullion really does need to conquer the $1,220 area to get “momentum” traders back on its side and put the bears on the defensive…
Today’s Markets
Asia
China’s Shanghai Composite gained 10 points overnight to close near a 7-year high despite weak data…industrial profits for the first 2 months of 2015 fell 4.2% on year, the worst decline since 2012…Japan’s Nikkei fell 185 points or nearly 1% on deflationary concerns and weaker than expected retail sales…
Europe
European markets were mixed today…
North America
The Dow is up 21 points as of 8:30 am Pacific…U.S. economic growth cooled in the fourth quarter as previously estimated, with businesses throttling back on inventory and equipment investment but robust consumer spending limiting the slowdown in the pace of activity…GDP expanded at a 2.2% annual rate, unrevised from last month’s forecast, the Commerce Department said today in its 3rd estimate…the economy grew at a 5% clip in Q3…
The government also reported that after-tax corporate profits fell at a 1.6% rate in the 4th quarter as a strong dollar dented the earnings of multinational corporations…
In Toronto, the TSX is off 70 points while the Venture has slid 2 points to 677…a close above resistance at 680 today would be technically significant…
Cannabix Technologies Inc. (BLO, CSE, BLOZF, OTC) Update
We’re keeping a very close eye on our favorite speculative non-resource play, Cannabix Technologies (BLO, CSE), which is now threatening to break out of a bullish pennant that started to form last month after the stock erupted from 17.5 cents to 77 cents in just 8 sessions (massive accumulation, it appears) between February 2 and February 11…Cannabix, of course, is a first-mover in the potentially hugely lucrative marijuana breathalyzer space, and the company is now conducting internal testing of the alpha version of its breathalyzer prototype with medical marijuana users…
Cannabix’s technology is drawing increased attention, and not just among investors, so the move early last month could prove to be a harbinger of things to come…
This 5-month daily chart, based on BLO’s OTC listing as Stockcharts.com still does not provide charts for CSE-listed companies, shows the current attempted breakout above the pennant…confirmation of a breakout has not yet occurred, but this is a classic bullish technical pattern with imminent possibilities…
BLO opened slightly lower on light volume this morning and is currently off a penny at 47 cents on the CSE as of 8:30 am Pacific…
International Montoro Resources Inc. (IMT, TSX-V) Update
Technically and fundamentally, International Montoro Resources (IMT, TSX-V) is looking exceptionally strong heading into April…drilling is expected to commence imminently (within a few days) at the Company’s Serpent River Project in northern Ontario, immediately west of Sudbury, where the massive Pecors anomaly represents a high-value Ni-Cu-PGE target and the potential for an important new discovery…the source of the anomaly apparently resides in the older underlying Archean basement rocks…the Ontario Geological Survey has conducted some significant studies regarding Pecors and their conclusions support the findings of IMT’s technical team…
One thing is for certain – this first deep hole is going to generate some buzz…
Technically, the IMT chart shows an acceleration of a bullish trend with the growing possibility of a major breakout above a 6-month horizontal channel, similar to the pre-breakout patterns John correctly identified recently in both NioCorp Developments (NB, TSX) and North Arrow Minerals (NAR, TSX-V)…as always, perform your own due diligence…
Terrax Minerals Inc. (TXR, TSX-V) Update
Terrax Minerals (TXR, TSX-V) has been firming up recently with a winter drill program in progress at its Yellowknife City Gold Project in the Northwest Territories…in the Crestaurum Zone, the company continues to hit higher-grade mineralized shoots, as reported March 11, within a discrete shear striking northwest and dipping southeast…the shear has been followed on surface for approximately 4 km and has been drilled over 1.2 km of strike length up to a depth of approximately 100 m from surface…results from more holes are pending from the Crestaurum Zone (the Barney Zone is also being drilled with a 2nd rig), and drilling is scheduled to continue until spring break-up early next month…
The Yellowknife City Gold Project encompasses almost 100 sq. km of contiguous land immediately north of the city of Yellowknife in the Northwest Territories…through a series of acquisitions, the company claims it now controls 1 of the 6 major high-grade Gold camps in Canada – and the least explored…
Technically, TXR has successfully pushed above a downtrend line on this 2.5-year weekly chart…Fib. support held at 25 cents last year, and TXR has now closed for 2 straight sessions above Fib. resistance at 37 cents…
Note: John and Jon both hold share positions in BLO. Jon holds a share position in IMT.
Lion One Metals, my favorite stock flying under radar.
Although many if not most, of the gold junior investors have fled the building, I think this budding mine is a special case.
Market Cap of $16 mill ($13. US)!!!
For that you get:
a
A fully permitted mine (as of last Friday) with $6 mill in the bank that has had $30 mill invested in drilling and infrastructure done by Emperor, the former owner.. (as well as the large amount already invested by LIO.
Its on the same structure zone and has many of the same characteristics, (collapsed volcanic caldera) as some of the major mines in the world-Porgera, Liher and of course there is:
Vatukoula. The mine which is 32 miles away from Tuvatu that has mined 7 mill oz.of gold since 1923 and has 4 mill more and counting. (About $13 billion at today’s US gold price)
Geologists figure both volcanoes have the same geologic history,and time table,. Both have highly mineralized collapsed calderas.
Vatukoula has been mined down to 1300 meters–but
Tuvatu has had only a relatively small area explored, and only some drilling below 300 meters (in places) with the veins getting wider and richer the deeper they go. The rock is solid, to make for easier mining. Apparently Tuvatu sits higher than Vatakoula so dewatering may be less of a problem,
Tuvutu has a number of highly prospective spots on their property that have never been touched. (check out new presentation)
Their current resource estimate is high grade at about 1 million ounces , indicated and inferred–BUT- they didn’t include any of the veins narrower than 1.2 meters (lots of them) and the resource was capped at 40 grams a ton. The former owner found 4.2 meters of 252 g/t.–there’s got to be more of that, I would imagine.
They have a trained and relatively inexpensive work force living near by. Vatakoula has laid off a lot of their men.
146 square miles under licence that contains many undrilled, highly prospective targets. Plus Fiji mining law gives first dibs to land near the closest mine.. Fiji wants and encourages more mining.
40 km paved and hard gravel road to deepwater port where dore will be sent somewhere to be refined-Austrailia/China?. Fuel costs way down. Electricity runs through property.
And last but by far from least- management–Walter Berukoff, Chairman & CEO; Founder and CEO of Miramar Mining, Northern Orion, La Mancha Resources. First two sold for over a billion each and I think La Mancha for half a billion. (La Mancha’s share price went from $.03 to $3.50–I wish I would have known more about him then) Also George S. Young, Director; Former President & Director MAG Silver, and Stephen Mann, Managing Director; Geologist, is very highly regarded in mining circles.
Berukoff owns a third of the company so not diluting, or keeping it to a minimum would be very important to his interest and he certainly is not the type of guy to be bullied about.
I think that these guys getting this property and getting all the permitting etc. was a major coup. Tuvatu may be known by only a small percentage of gold investors, but I bet most executives in the major gold companies of the world, know about it.
I’ve spoken a lot with, LIO’s IR guy, Joe Gray, but I don’t feel right disclosing much of his takes on the mine, but it sounds like a low capex to development and a low gold production price per ounce.
To me,in my very humble opinion, there seems little down side at such a low market cap, and the upside?
At the least, it will be a money making mine imho. At the most, you could be tagging along with an elephant and for a (seemingly ridiculous low Canadian market cap of $16 mill) there seems to me little downside risk.
Comment by Carl — March 27, 2015 @ 8:02 am
Venture closes 1.8 pts above 680 pts. Jon. Do we need a more decisive close above 680 to confirm a bullish move?
Comment by tony t — March 28, 2015 @ 1:02 am
Tony, any breakout, as John has always emphasized, requires confirmation. So the Monday close will be important. This market is looking much healthier, and volume has been picking up as well. The really key critical level remains the resistance around 707. Speculatively, the possibility certainly exists for an April surprise to the upside – perhaps even a 10% move, which would imply something significant unfolding very quickly—–big move in commodities, equities overall, a major discovery??? We should get some answers in the coming days…
Comment by Jon - BMR — March 28, 2015 @ 3:01 am
Thanks for that very interesting situation in Fiji. I will definitely be looking closely at Lion and if it as good as it seems I will get involved.
Can’t help but notice the continued lack of any sort of balance in the so called “geo political” analysis. Iran has NEVER invaded another sovereign state and seems to be be minding its own business and not interfering in other countries. The one country in the region that does have a large nuclear arsenal and is constantly threatening to attack its neighbors is Israel and it’s neocon supporters in the US. These lunatics seem hell bent on starting a nuclear war in the middle east and it is a bit disturbing that this site is giving encouragement to the warmongers. War is an extremely ugly human activity and for this site to actively support these people is a worry. Negotiation and compromise is always preferable to warfare and destruction unless you are a psychopath or being paid by the weapon manufacturers. I’m not sure where you guys fit in.
Comment by patrick — March 28, 2015 @ 4:37 am