Gold has traded between $1,163 and $1,175 so far today…as of 8:15 am Pacific, bullion is up $4 an ounce at $1,169…Silver is off its lows, down 11 cents at $16.04…Copper has fallen 3 pennies to $3.05…Crude Oil has plunged more than $2 a barrel to $76.56 thanks to the Saudis, while the U.S. Dollar Index has retreated one-quarter of a point to 87.01…
Gold prices below $1,200 an ounce appear to be leading to more demand from China and also could encourage price-sensitive retail coin buyers, according to HSBC. “As Western investors still appear to be negative on Gold, based largely on the strength of the U.S. dollar, it is becoming clear that prices below $1,200 an ounce have stimulated greater demand from China,” the bank says. “Increases in the Shanghai premium and greater demand for kilo bars may provide the beginning of a near-term floor for Gold prices. Should heavy investor liquidation recommence, Chinese merchants may step back temporarily and prices could take another dip lower, but we expect that greater emerging-market demand would accompany further price declines.”
Oil Games
Saudi Arabia keeps inadvertently putting more money into the pockets of North American consumers, thanks to a deliberate attempt to “squeeze” shale Oil producers and maintain important U.S. market share…yesterday, the Saudis deepened cuts to U.S. buyers while raising prices for their Oil in other locations, including Asia, where the country had cut its prices for 4 consecutive months…Asia has been an especially competitive market for exporters in recent months, so the focus on maintaining market share in the U.S. caught some traders by surprise but it shouldn’t have…the Saudis are clearly deeply concerned about rapidly rising production in the United States…OPEC meets in Vienna on November 27 to decide on production targets for next year, and market participants are looking for any sign on whether the producer group (becoming very fractured) will move to shore up prices by trimming output…
A significant drop in Crude prices the last couple of months has translated into significant savings for U.S. and Canadian consumers at the gas pumps, and consumer spending is so critical to the North American economy…at the same time, however, the energy sector is taking a hit…some analysts believe, though, that the Saudis are underestimating the resiliency of most shale producers…time will tell with Oil prices now in the mid-to-upper $70’s…
Energy Policy To Play Role In Today’s U.S. Midterms
Polls are pointing to a disgruntled U.S. electorate, disappointed with the Obama administration, handing the Republicans control of the Senate for the first time in 8 years and lifting their majority in the House to the largest margin in half a century as Americans vote in today’s midterm elections…President Obama’s environmental policies (climate change, coal power, the Keystone XL pipeline and oil drilling) will likely hurt Democrats severely in energy-producing states…
Today’s Equity Markets
Asia
China’s Shanghai Composite was relatively unchanged overnight while Japanese traders returned from a holiday and pushed up the Nikkei average by 449 points or 2.7% to a new 7-year high…it closed at 16862…
Europe
European markets are under pressure in late trading overseas…the European Commission slashed its economic outlook for the euro zone today, predicting the currency bloc would grow only 1.1% next year, down from a 1.7% forecast just 6 months ago…the revisions were particularly significant in the 2 largest euro zone economies, Germany and France, for which the commission cuts its projections by nearly a full percentage point for 2015…the GDP forecast for Germany, the common currency’s economic engine, was cut from 2% in May to 1.1%per cent; France went from 1.5% to 0.7%…
North America
The Dow is down 67 points as of 8:15 am Pacific but this follows 5 triple digit gains in 8 sessions, taking the Dow to a new all-time high…
New orders for U.S. factory goods fell for second straight month in September, but the number was in line with expectations…a survey of national factories published yesterday showed a strong rebound in new order growth and backlogs in October…the increase was largely driven by domestic demand…
Of the 366 companies in the S&P 500 that have reported earnings for the third quarter through yesterday, just over 75% have beaten expectations, while 58% have posted revenue that topped estimates, according to data compiled by Thomson Reuters…
The TSX is down 209 points through the first 2 hours of trading while the Venture has slipped 12 points to 754…
There are obviously some fantastic opportunities in this current market environment – some very undervalued situations – when you see a company’s stock move from 7 cents (last Friday) to a 41-cent close yesterday on an all-cash friendly takeover bid…Duluth Metals (DM, TSX) holds 60% of the Twin Metals Minnesota Project, among the world’s largest Cu-Ni-PGM polymetallic sulphide deposits that will be fully owned by Chilean Copper miner Antofagasta Minerals PLC…the offer represents a 284% premium to the 20-day volume-weighted average price of DM’s shares…
Canada Set To Strengthen Economic Ties With China
Interesting – the National Post reported this morning that Prime Minister Stephen Harper is set to announce that Canada has landed a Chinese currency trading hub that should boost exports to Asia, when he visits Beijing this Saturday…the Prime Minister will meet President Xi Jinping this weekend and sources suggest he will announce that Canada has been successful in striking a deal on the renminbi trading hub, to be based in Toronto, that will allow Canadian firms to trade directly in the local Chinese currency, rather than converting loonies into American dollars to do business in China…the deal, which requires the approval of both governments and central banks, should be a significant savings for Canadian companies in transaction costs, as well as offering transparency and confidence for firms that want to do business in China…
Gold 4-Year Weekly Chart
Below is a 4-year weekly chart from John that shows how Gold has touched an important flag support line at $1,160…in the simplest terms, according to Elliott Wave theory, one strong possibility is that Gold will rally from around current levels back toward the top of the flag…however, this would be followed by a “Wave 5” that would take bullion decisively below the flag support line…timing of course is uncertain, but what this means is the likelihood of volatility, and that ultimately a test of support around the $1,000 level certainly can’t be ruled out (easier to see on a longer-term chart below this one)…
Gold 20-Year Weekly Chart
The good news regarding this chart is the current bullish divergence between RSI(14) and price…this suggests the possibility of a rally that, as explained above, could take Gold back up toward the top of the current flag formation…
Longer-term, what’s bearish of course is the break below an upsloping channel since the bull market began in 2001…Gold has also been below its 1000-day moving average (SMA), currently at $1,492, since early last year…this SMA has flattened out and is expected to trend downward in 2015, raising the potential for additional price pressure…
CRB Index Chart Update
The CRB Index is at a level not seen since the summer of 2012, and RSI(14) and SS are both clearly very oversold on this 2.5-year weekly chart…the -DI indicator also appears to have peaked, at least for now…
The CRB can start gaining some traction if it can break above the downtrend line as shown, which means pushing back up above the 275 level…
Canada Carbon Inc. (CCB, TSX-V) Update
Further to John’s update last week, Canada Carbon (CCB, TSX-V) continues to show a lot of technical strength and closed up 3 cents yesterday on volume of more than 2 million shares…fundamentally, the company continues to make headway with its 100%-owned Miller Graphite Project in Quebec…a couple of interesting advisory board appointments were also announced late last week…
This 3-year weekly chart shows strong support at the uptrend line and a bullish “W” formation in the RSI(14) which found support around 50% and is gaining momentum…
CCB is off a penny at 23 cents as of 8:15 am Pacific…
Note: John, Terry and Jon do not hold share positions in CCB.
sooner the mid terms are done with the better,ggi,there’s a heck of a lot of shares out on ggi,with interest of other companys,good to see no panic at this point,except for a few nervous nellies,I’m grabing what i can at this level,this i feel is a good indication that the results pending shortly,will show that ggi has something very,very big here.hang in there.
Comment by tombc — November 4, 2014 @ 9:36 am
As I said a couple months ago. 2008 low coming. Looked at the chart and just felt that it would happen. We are getting closer and closer. I don’t see conditions improving till new years.
Comment by dave — November 4, 2014 @ 9:37 am
Will tax loss season have a dampening effect on the Venture. Should be a good buying time for selected stocks. Will BMR be featuring any such companies over the next couple of months?
Comment by Tom UK — November 4, 2014 @ 12:34 pm
I agree tomUK. I think that the end of the first week to all of the second week of Dec. we will see this carnage bottom. It will be the perfect time to get the fire steels. IMHO I see even GGI going lower. But I think Jon does have a winner with this one. The sad part is that none of the stocks will perform on drilling news until the metals improve unless its just an earth staggering discovery.
Comment by dave — November 4, 2014 @ 12:52 pm
Once oil puts in its bottom and reverses trend, the commodity complex will follow. Usually oil heads higher after an election. We’ll see if this pattern occurs again.
Comment by chris — November 4, 2014 @ 1:24 pm
Wonder if GGI found any shiny new core at Rodadero? Awefully quiet since last update other than the core photos. Gota wonder if one day GGI will halt with an announcement of the source of the mineralization.
Comment by Dan — November 4, 2014 @ 1:25 pm
Just to add to my previous post, the dollar is approaching a zone where the Fed has shown concern in the past (since the crisis started) and taken steps to turn it back down. That zone is 88-89. Every time it’s hit this zone it reverses trend and heads below 80. If same thing happens again, it should help gold/silver.
Comment by chris — November 4, 2014 @ 1:43 pm
RG UPDATE ANYONE??
Comment by STEVEN1 — November 4, 2014 @ 8:14 pm
Good if the fed is acting when the dollar is too strong, we wait for the 2008 low, it must be coming soon!!
Comment by Yvonne Kindström — November 4, 2014 @ 11:29 pm
Check their website Steve, they say there is no material reason for increase.
Comment by Tom UK — November 5, 2014 @ 3:04 am
Obviously someone was accumulating RG for whatever reason. They do have a large portfolio of properties. We’ll see if there’s any follow-through today.
Comment by Jon - BMR — November 5, 2014 @ 3:59 am
Jon: considering gold/silver is getting smoked due to US$, Venture only down 2-3 pts? are we done with the selling in your opinion on the venture? we must be getting somewhat close?
Comment by STEVEN1 — November 5, 2014 @ 6:40 am
Quite possible, Steven…we’re in unpredictable times but you can certainly present a case for a near-term turnaround…again, what’s interesting at the moment, we’ve seen a new low on the Venture this week but a strong RSI(14) divergence to go with that…good sign…critical at the moment is whether Gold can hold support around the $1,150 area, give or take $10 or $20….a close for the week above the $1,150 level would be reason for encouragement…lots of fear and discouragement at the moment, positive if you’re a contrarian…the Dollar Index needs to cool off…
Comment by Jon - BMR — November 5, 2014 @ 7:35 am
Just a little heads up, the ARAMCO pipeline in Saudi Arabia has exploded. No news yet if this a sabotage or not. Oil should catch a bid…
Comment by chris — November 5, 2014 @ 7:40 am
Anastasios Drivas’s Romios Gold Resources Inc. (RG) added two cents to five cents on a busier-than-usual 1.72 million shares, prompting IIROC to ask the junior if it had any material changes. It did not. Romios has $880,000 in working capital and has been exploring at the same handful of gold properties in Northern British Columbia for over a decade. Three of its properties are next to the Galore Creek gold deposit, where proximity helped Mr. Drivas boost the stock up to 90 cents in 2007. Then, Galore Creek’s owners, Teck Resources Ltd. and NovaGold Ltd., were planning to build a $2-billion mine at the property. They had to put that plan on hold when costs soared to $5.2-billion. Teck and NovaGold revisited Galore Creek in 2010, but a mine was still an expensive $5-billion. It would, however, have been extremely profitable had gold remained above $1,600 an ounce. At that price it would have an after-tax NPV of $2.75-billion compared with $137-million at today’s gold price.
Romios does have some winter exploration planned, in Ontario not B.C. Mr. Drivas is going to resume drilling at the company’s Lundmark-Akow gold property. Assays from Lundmark boosted Romios to $1 in 1998, but then the company was forced to put all work on hold in 2003, “pending discussions with the North Caribou Lake First Nation.” Those discussions finally wrapped up on Feb. 19, 2014
Comment by zippy — November 5, 2014 @ 10:32 am