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Gold has traded between $1,115 and $1,124 so far today…as of 9:00 am Pacific, bullion is up $4 an ounce at $1,118…Silver has added 7 cents to $15.32…Copper is down 2 pennies at $2.31…Crude Oil is relatively unchanged at $42.56 while the U.S. Dollar Index is up one-tenth of a point at 96.80…

A key technical level to watch in Gold is $1,131 which is bullion’s 40-day moving average (SMA)…it has been trading below the 40-day for nearly 2 months…a decline this quarter in Gold (it ended June in the $1,160’s) would be the 5th straight loss and the longest quarterly slump since 1999…however, the “smart money” commercial traders have been signaling a rally in bullion since it plunged to the $1,070 level last month, and Gold now has seasonal factors in its favor…traditionally, the late August to early October period has been strong due in part to a pick-up in Asian demand, particularly from India…the monsoon season there has been good which will help drive Gold sales…

Markets will be focused this week on any new developments out of China as well as Wednesday’s Fed minutes from the July 28–29 meeting, after which there was no news conference…just how relevant the Fed minutes will be, however, is a major question, since that Fed meeting preceded China’s 1st currency devaluation in 20 years last week…a lot has changed in the past 2 weeks and a Fed rate hike actually looks unlikely in our view until at least early next year…

Chinese authorities are resorting to increasingly desperate measures as they tackle deflationary pressures, weakening exports, and a slowing economy in general…domestic and international politics undoubtedly played a role as well in last week’s decision to devalue the yuan…in trade-weighted terms, against a whole basket of major trading partners’ currencies, not just the greenback, the renminbi had soared to record highs, making Chinese goods and services uncompetitively priced to world customers…

Oil Update

The U.S. Oil-rig count increased by 2 in the latest week to 672, as reported by Baker Hughes Inc., marking the 4th consecutive week of increases…there’s always a lag between price change and drilling activity, so the jump in rig counts while WTIC prices continue to fall is due to the strength in Crude prices 2 months ago…Oil bulls did receive some good news last week when the U.S. Commerce Department quietly informed members of Congress that it intends to allow Oil companies to sell U.S. Crude to Mexico, in a further weakening of the country’s 4-decade ban on Crude Oil exports…

Commodity Performance Chart

Below is a chart that demonstrates Gold’s strength as a currency…over the past 20 months, since mid-December 2013, and despite a record run by the greenback, the yellow metal is down just 10% in U.S. dollar terms…this compares to a 25% slide in the price of Silver, a whopping 55% decline in WTIC, and a 28% drop in the CRB Index (Thomson Reuters/Jeffries which comprises 19 commodities)…

Gold is the most enduring and valuable currency of all time…it doesn’t default, threaten to default, change governments, debase, or stimulate…Gold conducts no monetary policy…Gold simply “is”…it stands at the center of fiat currency experiments, all of which have failed in the past to dethrone Gold as the world’s most valuable and lasting currency…

Today’s Equity Markets

Asia

China’s Shanghai Composite started the week on a positive note, adding 29 points to close at 3994…Japan’s Nikkei average climbed 100 points to finish at 20620…

Japan’s economy contracted in the 2nd quarter, though slightly less than expected, as overseas demand for Japanese goods slumped and households spent less, raising the possibility the government will act to bolster an anemic recovery…Japan’s GDP shrank 1.6% on an annualized basis in the April-June quarter, according to data released today by the Cabinet Office…that compared with a 1.9% contraction forecast by economists surveyed by The Wall Street Journal…

Europe

European markets were mixed today…

North America

The Dow fell as much as 136 points in early trading this morning before reversing after the release of fresh data that showed the National Association of Home Builders index rising to its highest level since November 2005…as of 9:00 am Pacific, the Dow is now up 28 points…

Earlier this morning it was reported that manufacturing activity in New York state plunged to its weakest level in August since 2009 due to steep drops in new orders and shipments, although optimism on future business improved, according to a New York Federal Reserve survey…the New York Fed’s Empire State general business conditions index tumbled from 3.86 in July to -14.92 in August, its lowest since April 2009…economists polled by Reuters had expected the index to rise to 5.00 this month…a reading above zero indicates expansion…

In Toronto, the TSX is down 60 points as of 9:30 am Pacific with the Gold Index is showing strength…it’s up 4 points to 134…the Venture has fallen 2 points to 571…

Venture 8-Month Daily Chart

The Venture will start to reverse higher once it can overcome its declining short-term moving averages (10 and 20-day) that continue to put pressure on the Index…as you can see in this 8-month daily chart, the Venture has not traded above its EMA(20) in almost 3 months – that’s a long stretch…the breakdown from the uptrend line in late June sparked a significant sell-off that could prove to be the Venture’s “capitulation moment” – time will tell…extreme oversold conditions appear to have peaked in late July, and the sellers are running out of energy given some of the technical indicators…buyers just need some reasons for a sense of urgency to jump into this market and take it into recovery mode…

Equitas Resources Corp. (EQT, TSX-V) Update

Equitas Resources (EQT, TSX-V) has several factors in its favor at the moment including momentum and anticipation…given that so many juniors appear to be taking the summer off, this is 1 company that’s getting rewarded for its efforts as it prepares for a 4,000-m drill program starting soon at its Garland Nickel Project 20 miles southeast of the Voisey’s Bay mine in Labrador…

People make the difference, and hard-working President Kyler Hardy has helped assemble a highly qualified team with expertise in all facets of the business, so we believe this is a group that investors can have trust and confidence in…Everett Makela, VP-Exploration, brings over 30 years of exploration experience to Equitas which includes important roles with Inco and Vale (he retired from Vale as Principal Geologist, North America, in 2012)…Makela understands the Voisey’s Bay deposit and the area exceptionally well…he excels at target generation, design and implementation of exploration programs, and the creation of joint venture and alliance opportunities…interpretation of geophysical data is being handled by a trusted Makela associate, Alan King, who’s a recognized expert in electromagnetic exploration methods who previously served as the chief geophysicist for Vale’s global exploration operations…

In late June, Equitas added mining analyst and industry economist Raymond Goldie to its board of directors…Goldie is the author of Inco Comes to Labrador, a book on Inco’s acquisition, progression and development of the Voisey’s Bay deposit…he frequently appears on national television and as a keynote speaker at mining conferences…

Hardy Interview – Part 2

What makes Equitas different from most other companies on the Venture, many of whom have lost the trust of investors?…that was the question Jon threw at Hardy – click on the arrow to listen…

Importantly, Equitas has designed its camp to position itself to drill throughout the winter in the event of a discovery out of the approximately 14 holes that are planned to be drilled to depths between 250 and 350 meters…

Click on the arrow to listen to Hardy’s comments regarding the flexibility of the camp set-up…

Technically, Equitas continues to show strong up momentum as it challenges Fib. resistance at 15 cents…EQT is off half a penny at 13.5 cents as of 9:00 am Pacific…

Garibaldi Resources Corp. (GGI, TSX-V) Update

Everything including the kitchen sink was thrown at Garibaldi Resources (GGI, TSX-V) since the start of the 2nd quarter, including indiscriminate fund selling and flow-through pressure (totaling more than 12 million shares), chaotic behavior from a First Nation leader, and the 2nd-worst July ever for the Venture…

With all of that now out of the way, the possibility of a strong recovery out of extreme oversold conditions clearly exists which is why GGI responded so vigorously on positive news Friday out of both Mexico and the Sheslay district…Garibaldi has the advantage of news flow from 2 separate jurisdictions, a factor that proved pivotal for the company in 2014…

Technically, GGI formed a bullish engulfing pattern Friday on record volume of 3.2 million shares (all Canadian exchanges)…John’s 2-year weekly chart shows a peak in the bearish trend occurred at exceptional support at 4.5 cents…keep in mind, GGI soared 600% in 12 months from the late June 2013 low of 4.5 cents to last year’s early summer multi-year high of 32 cents…past performance doesn’t guarantee future results, but history quite often repeats itself in these volatile speculative markets…

GGI is unchanged at 6 cents as of 9:00 am Pacific…

Pilot Gold Inc. (PLG, TSX) Update

Pilot Gold (PLG, TSX) is active on 2 significant projects – Kinsley Mountain in Nevada and TV Tower in Turkey – and reported working capital of $16 million (CDN) as of June 30…

PLG has plunged from a high of nearly $1.30 in January to a recent low of 33 cents…extreme oversold conditions emerged at the end of July/early August, setting up a good chance for a strong rally before the summer is over…very strong sell pressure is now in decline…

PLG is up half a penny at 40.5 cents as of 9:00 am Pacific…

Silver Short-Term Chart

Silver has recorded 3 straight weekly gains, putting it above a downtrend line for the 1st time since late June…what will be important now is if the metal can hold potential new support at the $15 level which is also defined by the downtrend line…interestingly, through the recent turmoil, Silver was able to hold slightly above its low late last year…

RSI(14) has been showing increasing up momentum and should find support at the 50% level…a major challenge for Silver over the coming weeks will be the band of Fib. resistance it needs to work through between $15.30 and $16.60…

Silver Long-Term Chart

An explosive push higher (eventually) – is this actually a scenario that could unfold in Silver over the next couple of years?…quite possibly, given the look of this 34-year monthly chart, though at the moment it’s hard to understand all the factors that could come into play to generate the kind of “Wave 5” move that could develop…

It seems possible that the bottom of “Wave 4” came late last year when Silver briefly plunged to just above $14 an ounce, though that could be challenged again shortly with the possibility of a new low…RSI(14) has so far managed to hold support which goes back to 2001…

Sell pressure continues to remain very strong, however, as shown by the CMF – amazingly, at levels not seen in nearly 25 years since the low of $3.51…this intense sell pressure at the moment, which started modestly in early 2013, could continue for a while yet…this should be viewed in a larger context as a bullish contrarian indicator given historical patterns…it doesn’t necessarily mean, however, that Silver has found a bottom just yet…

Note:  John and Jon both hold share positions in GGI.  John also holds a share position in EQT.