Gold has traded between $1,276 and $1,296 so far today to begin the new week which is highlighted by a scheduled meeting of the FOMC…as of 8:00 am Pacific, bullion is down $15 an ounce at $1,279…Silver has retreated 32 cents to $17.97…Copper has jumped 6 cents to $2.55…Crude Oil is flat at $45.67 while the U.S. Dollar Index has declined nearly half a point to 94.82…
We have updated Gold and Silver charts in today’s Morning Musings, along with a fact chart on a 5-cent play that could begin to roar again in a hurry in this much improved environment for producers and near-producers…
Despite stronger Gold prices this month, Chinese demand is still climbing as represented by withdrawals from the Shanghai Gold Exchange (SGE)…Mineweb’s Lawrence Williams reported this morning that the latest figures show SGE withdrawals of 70 tonnes for the week ending January 16 – the 3rd highest weekly figure ever…
Frank Holmes, CEO of U.S. Global Investors, noted in his weekly Investor Alert: “The institution of the Swiss National Bank’s peg of CHF 1.20 per euro, back on September 6, 2011, was the day that Gold peaked at $1,920 per ounce. With the undoing of the peg and Gold taking off, speculation abounds as to whether the Swiss National Bank’s actions will have once again marked a turning point for Gold. In addition, Silver appears to be breaking out, too.”
Gold’s strong performance since the start of the year has convinced Goldman Sachs to make a U-turn…the bank has revised its short-term forecast, saying bullion will average $1,290 an ounce during the first 3 months of the year…they say prices will be supported by the recent massive quantitative easing program in Europe and shifting expectations that the Federal Reserve will end up hiking interest rates later in the year…the bank still remains bearish on the yellow metal over the long-term, however…
Today’s Equity Markets
Asia
China’s Shanghai Composite began the week on a positive note, climbing 32 points or nearly 1% overnight to close at 3384…Japan’s Nikkei average fell slightly despite news that exports in that country posted a larger than expected increase in December from a year earlier…
Europe
European markets, still in a state of euphoria over the ECB’s QE program unveiled last Thursday, closed higher today as they generally shrugged off last night’s Greece election results…
North America
The Dow is relatively unchanged at as of 8:00 am Pacific…
The S&P 500‘s price-to-earnings ratio, which compares the price of the S&P to analyst projections of what S&P companies will earn over the next 12 months, has risen to 16.6, according to FactSet…not only is that above historical norms, but it is the highest that metric has been since March 2005…
In Toronto, the TSX is flat while the Venture is off 5 points at 673 as of 8:00 am Pacific…as we showed in our Saturday chart, the 680 area is proving to be strong resistance for the Venture and a test of Fib. support at modestly lower levels may represent a strategic buying opportunity – especially in the Gold-Silver space…
Greece Elects Radical Leftists
There’s increased uncertainty in the euro zone this morning as Greece’s anti-austerity party, Syriza, recorded a wider than expected victory in yesterday’s national elections…the market certainly saw this coming – over the past 3 months, Greece’s main stock index has shed roughly a fifth of its value, while nervous depositors have withdrawn several billion euros from the country’s banking system…
Alexis Tsipras, Syriza’s radical leader who was a member of the Young Communist Society in the late 1980’s, swayed naive Greece voters in Obama fashion with his telegenic looks and promises of “social deliverance”, whatever that means …he’s now set to become prime minister of the first euro zone government openly opposed to bailout conditions imposed by the European Union and International Monetary Fund during the economic crisis…he believes in withdrawing from NATO, imposing huge taxes tax on the rich and nationalizing public services (including the banking system, which he argues should be operated for the public good and not for profits)…
So if things were already bad for Greece, we’re about to witness a Greek Tragedy…
“Today the Greek people have written history,” Tsipras stated in his victory speech last night (indeed they have). “The Greek people have given a clear, indisputable mandate for Greece to leave behind austerity” (and, we assume, go back to their free-spending ways and unsustainable welfare state model that got them into this problem in the first place)…
There’s no doubt that for the next while at least, Syriza’s challenge to financial orthodoxy and the political establishment will inspire like-minded European movements in places such as Italy, France, Spain and Portugal…what a mess the euro zone is in, hence their embrace of the QE drug…
What The Euro Zone Really Needs
While Greece is now saddled with a delusional new leader, and expectations are high following the ECB’s decision to implement a full-scale QE program, at least someone in Europe (within the ECB, actually) is giving people the straight goods: “There is nothing we can do as the ECB to lift growth in a lasting way,” admitted ECB executive board member Benoit Coeure over the weekend. “We can’t do everything for Europe, we did our part on Thursday, others have to do their part.”
What European governments must do across the board is enact pro-growth policies – urgent structural reforms are required to boost investment, raise competition, cut bureaucracy, and improve labor market flexibility…but where is the political leadership and skill to do that?…ultimately, it may take a fresh economic vision from America – a popular new president with a bold free enterprise-focused plan that catches on in other parts of the world…
Is Gold In A New Bull Phase On Its Way To $3,000?
Is Gold’s move this month merely a counter-trend bounce within the context of an ongoing bear market, or is this the actual start of a powerful new bull phase underpinned by a growing frustrating with fiat currencies and global economic and political destabilization?…those are 2 schools of thought, but the strength of Gold in the face of a rising greenback and falling Oil prices over the last 2-and-a-half months goes against historical norms and suggests that the “tide may have turned” in the bullion market…
The minor pullback we’re seeing today is merely healthy profit-taking and consolidation after 3 very strong weeks to begin 2015…Gold should find strong support in the low $1,260’s, a Fib. area and previous resistance which is also just above the 200-day moving average (SMA)…
Gold 34-Year Weekly Chart
What the bears should be concerned about regarding this 34-year chart is that it’s quite possible Gold has started a “Wave 5” move that could carry it to much higher levels over the next couple of years…
Gold’s “Wave 1” move took it from the $260’s at the beginning of the decade to a high of just above $1,000 in 2008, a gain of nearly 300%…
“Wave 3” started during the 2008 financial crisis just below $700 an ounce and took Gold to an all-time high of $1,924 in the late summer of 2011, a gain of 183%…
Wave “2” was the pullback in late 2008…”Wave 4” was the correction from 2011 to a potential low of $1,130 early last November…”Wave 5“, according to Elliott theory, could produce a dramatic rise to nearly $3,000 an ounce, though we might not like the world we live in at that point…
A few critical things to keep an eye on in this chart…first, RSI(14) is showing strong up momentum and is at an appropriate level for a breakout, in the coming weeks or months, above the important 50% level…second, the gap is narrowing between +DI and -DI, so a bullish crossover in the ADX indicator could be in the works…third, sell pressure remains dominant right now on this long-term chart but an abrupt decline in this sell pressure would be another sign of rapidly changing dynamics in the Gold market…
Clearly, more time is needed to assess what might be going on here but it might be wise to “expect the unexpected”…a year ago, no one thought Oil would be trading at $45 in early 2015…a year from now, what will we be saying about Gold?…
Gold Surges In Non-U.S. Dollars
Gold held in non-U.S. dollars has been a very good place to be over the past year or so…Gold prices in euros are up approximately 18% already in 2015, compared to a 9.2% gain in dollar terms…last year, Gold prices climbed 12% in euros (and Japanese yen), compared to a 1% drop in dollar terms…
Below is a 13-month Gold performance comparative chart in euros, Canadian dollars and U.S. dollars…also, note the recent change in this shorter-term chart in the ADX indicator and buy pressure in Gold vs. the greenback…
Follow The Money
One of the major themes we’ve been emphasizing over the last couple of months is how Gold stocks – in particular producers and near-term producers – tend to perform exceptionally well in a low Oil price environment…Canadian companies also benefit from a very weak loonie (as shown above, the Gold price is rising even more dramatically in Canadian dollars)…
So last week’s financing and takeover events should serve as an early clue that 2015 could turn out to be a spectacular year for Gold stocks – producers, near-producers, and the best exploration plays…
Over just a couple of days last week, no less than 6 companies announced bought deal offerings: Romarco Minerals (R, TSX), Detour Gold (DGC, TSX), Osisko Gold Royalties (OR, TSX), Primero Mining (P, TSX), Asanko Gold (AKG, TSX), and Richmont Mines (RIC, TSX)…combined, these companies are raising a whopping $789.8 million…the previous week, Yamana Gold (YRI, TSX) unveiled a $260.2 million equity deal of its own, while Lydian International (LYD, TSX) tapped the market for $16.5 million…
Meanwhile, of course, Goldcorp (G, TSX) announced a takeover bid for junior developer Probe Mines (PRB, TSX-V), offering a solid premium at the $5 per share offer price. As Frank Holmes noted, “We view this deal as a turning point in the risks mining companies have been willing to take relative to recent transactions.”
We’ve gone through a period when Gold stocks have been absolutely hated, but that’s when the greatest opportunities almost always arise…
Gold Bullion Development Corp. (GBB, TSX-V) Update
One beaten-down junior with a very valuable asset, and a chart that tell us it’s in a new uptrend, is Gold Bullion Development (GBB, TSX-V)…
The facts speak for themselves…after making an important discovery in early 2010, which we followed closely, GBB is now just 1 permit away from approval to put the Granada Gold Property into production…earlier this month, IAMGOLD Corp. (IMG, TSX) received its authorization to process Granada ore at its nearby Westwood mill, so GBB appears to be closer than ever to receiving its final nod of approval from Quebec authorities…
The LONG Bars Zone at Granada still has huge upside potential for resource growth – 80% of it is still untested (open to the east, west, north and at depth), while a property resource of 1.5 million ounces at an average grade better than 2 g/t Au has already been outlined as per the chart in the picture below…
Following a 3-year high-grade “rolling start”, which features very robust economics – especially if the loonie and Oil remain depressed – Gold Bullion is targeting production of 100,000 ounces per year over a minimum of 10 years…
Granada is in a safe jurisdiction surrounded by excellent infrastructure in a community with a strong mining tradition, Rouyn-Noranda, Quebec…
With numbers like these, based on quite conservative assumptions including $1,400 CDN Gold and a much higher Oil price, GBB’s high-grade rolling start at Granada represents a near-term game-changing moment for the company – as significant as hole #17 in the spring of 2010…
Fairmont Resources Inc. (FMR, TSX-V) Update
Another near-term producer in Quebec we like is Fairmont Resources (FMR, TSX-V) which continues to build an impressive inventory of industrial mineral properties…
In December, the company received its Certificate of Authorization allowing for up to 300,000 tonnes of titano-magnetite aggregate production annually from its flagship Buttercup Property near Chicoutimi, Quebec…most quarries in Canada are privately owned and many are exceptionally profitable…Fairmont’s management team is highly experienced in this area and believes that Buttercup offers excellent potential to drive organic growth in the company…
To learn more about the opportunity we see in FMR, click on the link below…
Technically, FMR completed a normal retrace to its rising 300-day moving average after a surge from just above a nickel to a high of 30 cents in 2014…the stock significantly out-performed the Venture last year and appears ready to do the same in 2015…
FMR is unchanged at 20 cents through the first 90 minutes of trading today…
Noront Resources Ltd. (NOT, TSX-V) Update
Noront Resources (NOT, TSX-V) is valuable to look at in the sense that it can be viewed as a Venture “bellwether” and historically has often been a good leading indicator of where this market is headed…
At the moment, NOT’s bullish signals are actually gaining strength as shown by the RSI(14) as well as the CMF and ADX indicators…we’ll watch for a reversal to the upside in the EMA(20) which would definitely be a sign of a new uptrend gaining hold…
NOT is up 1.5 cents at 31.5 cents as of 8:00 am Pacific…
Silver Short-Term Chart
Silver in December finally staged a definitive breakout above a downtrend line that was in place since the summer on this 9-month daily chart (note how the downtrend line became new support in early December)…
The December 1 dramatic move from an intra-day low of $14.15 to a close above $16 was technically highly significant…as expected, superb support was demonstrated around $15…
Last week, the metal climbed as high as $18.50 – within just a few pennies of the the Fib. 50% level resistance level…while doing so, RSI(14) edged into overbought territory which helps explain today’s pullback…
We expect Silver to find support around the December high of $17.35…
Silver Long-Term Chart
This 34-year monthly chart continues to give 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)…the reasons for such a move are also not clear…for now, Silver is going along for the ride with Gold…
RSI(14) has bounced off previous long-term support which will need to hold along with key price support in the immediate vicinity of $15…
One note of concern on this chart is the sell pressure that has prevailed since the beginning of 2013, after a decade-long period of buy pressure…based on historical patterns, sell pressure could persist for a considerable time yet…
Note: John, Terry and Jon hold share positions in GBB. Jon also holds a share position in FMR.
BMR – In Obama fashion with his telegenic looks
Bert – Are you thinking that the Americans are that gullible
to elect a President TWICE for his looks. My goodness, his
record should speak for himself, about the only country
in the world doing well today. I can’t say the same for
Harper, going to have a budget, going to have a surplus,
going, going, gone. I would suggest he will be sneaky &
have a spring election, unless of course, crooked Duffy
leaves the country.. We’ll see how he looks in opposition
after the election.
Comment by Bert — January 26, 2015 @ 8:43 am
Report on C.BLO
Cannabix Provides Alternative to Costly Drug Detection Tactics
Accesswire
6 hours ago
WHITEFISH, MT / ACCESSWIRE / January 26, 2015 / Most drivers are familiar with breathalyzer tests, which quickly and accurately determine how much alcohol someone has consumed. Originally developed in the 1930s, the device determines how much ethanol is in the breath by measuring the electrical current between an anode and cathode. Law enforcement agencies around the world now use the device as both a preliminary screening and evidentiary tool to prosecute drunk drivers.
With the legalization of medical a nd adult-use marijuana in the U.S. and Canada, there is a growing demand for a device capable of testing for drivers that are impaired by marijuana, more specifically “THC”. Law enforcement agencies have few tools at their disposal for detecting “high” drivers, with many agencies resorting to specialized police officer training programs. In many cases, a suspect that’s taken in for such an offense must undergo lengthy testing from a “DRE” (more on this below) then undergo blood tests to confirm.
In this article, we’ll take a look at the problems with the existing marijuana detection techniques and explore how one company is developing an innovative solution.
What’s the Legal Limit?
The legal limits for driving under the influence (“DUI”) for alcohol are well established throughout the country and around the world. If a driver tests above the legal limit, they are charged with a DUI and face penalties that vary by state and country. The legal limits for marijuana consumption – specifically THC, the psychoactive component of marijuana – are a lot less certain given the recency of legalization in many jurisdictions.
In Colorado and Washington State, where adult-use marijuana has been legalized for over a year, the legal limit for THC has been established at five or more nanograms per milliliter. Critics say that the level is unfair for marijuana users, since the drug metabolizes slowly and stays in the blood for a long time, while others argue that the blood or urine tests necessary to accurately measure THC are overly invasive to those who may not even be guilty.
There is also a lot of disagreement on what constitutes impairment when driving. While there’s little doubt that driving “high” is dangerous, as evidenced by numerous vehicular studies, the five nanogram per milliliter limit appears more of an arbitrary pick rather than a number rooted in science, according to advocacy organizations like NORML. Furthermore, organizations like the Institute for Behavior and Health (IBH) argue that the 5 ng/ml per se limit provides the appearance of protecting the public, but in reality it only protects marijuana users driving under the influence of marijuana from prosecution. Nearly all marijuana users test below 5 ng/ml of active THC in blood only a few hours after their last use. Because of the unavoidably long delay between arrest and blood collection, it is certain that THC concentrations were higher when these drivers were stopped for suspicion of drugged driving because of rapidly declining THC levels after marijuana use stops[1]. Regulators across various states and countries will likely have to continue working to find the right legal limits over time as the debate has just started.
Drug Recognition & Testing
The single largest barrier in prosecuting those driving under the influence of marijuana is the testing process. Since the drug’s legalization is so recent, the process of determining if someone is likely “high” and quantitatively testing the “high” is inefficient, invasive, and even costly for many law enforcement agencies. The good news is that at least one company is getting close to completing development of an innovative solution to the problem.
Currently, U.S. law enforcement officials undergo a training program to become a Drug Recognition Expert (“DRE”). These DREs detect behavioral patterns and use roadside tests to determine if someone is likely “high” before subjecting them to definitive blood or urine test. In Canada, the government has spent hundreds of thousands of dollars sending law enforcement officials to the U.S. to become trained as DREs and have only arrested a handful of people.
In 2012, just 1,126 drug impairment charges were made against Canadian drivers compared to 60,000 charges for alcohol impaired drivers. These numbers are partly due to the fact that there are just 570 active-duty DREs in the country. The cost of training police officers to become DREs can be between $5,800 and $17,000 each in recent years, while the true effectiveness of the techniques leaves a lot of room for improvement.
A Marijuana Breathalyzer
Cannabix Technologies Inc. (BLOZF) (CSE:BLO) is a company developing a hand-held marijuana breathalyzer for law enforcement that will look to provide instantaneous results at road-side as to whether there is THC in a person’s system by way of breath testing. While the device remains in development, the company has been actively securing patents on the concepts and is working with a engineering firm to create the first prototypes, which could be used to test the efficacy and usability of the device.
The underlying research for breath testing for THC was originated at the Karolinska Institute in Sweden. In a 2010 paper published in the Journal of Analytical Toxicology, scientists described a method for determining the level of THC exhaled in breath. Cannabix has worked with this research to develop a device that can stand up to the rigors of police use in the field. It has done so by leveraging an experienced team of medical and business professionals.
Finally, the company’s management team is well-qualified to execute on its vision and bring the product to market. President Kal Malhi worked as a Canadian Mountie for a decade, spending several years in the drug investigation team. In 2011, he left the force to focus his efforts in the business world and partnered with Dr. Raj Attariwala, who has a doctorate in biomedical engineering and works as a radiologist and nuclear medicine physician.
Conclusions
There are many different opportunities for investors interested in the marijuana space, ranging from growing operations like Tweed Marijuana Inc. (OTC:TWMJF) (TWD.V) to vaporizer manufacturers like Vape Holdings Inc. (VAPE). With its modest market capitalization, ongoing development of its breathalyzer prototype, and experienced management team at the helm, investors may want to take a closer look at Cannabix Technologies.
[1] Read at Institute for Behavior and health website…
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Comment by John BMR — January 26, 2015 @ 12:47 pm
I don’t own any shares in GGI, but I was wondering since they haven’t released any results, maybe they are entertaining a takeover target? Either that or the results were stolen by a Mexican drug cartel.
Comment by chris — January 26, 2015 @ 1:01 pm
Jon, my assumption is that your site visit was Rodadero and the reason you haven’t released any info is because GGI has some sort of announcement pending?
Comment by Dan — January 26, 2015 @ 1:03 pm
Hi Dan, the current trading in GGI reminds me so much of last April/early May. The nervous nellies sold to 15 cents, then were made to look silly. History is about to repeat itself. Keep the faith because Rodadero is going to roar, not to mention La Patilla + B.C.
Comment by Jon - BMR — January 26, 2015 @ 1:36 pm
Hi Jon, hope history does repeat itself because I bought more GGI shares 🙂
Comment by Dan — January 26, 2015 @ 1:40 pm
For goodness sake, i didn’t think the headline would come this soon –
GREEK ELECTION WINS PUTIN A FRIEND IN EUROPE
Comment by Bert — January 26, 2015 @ 1:53 pm
Sure sounds like your question was answered,Dan.
Comment by Tombc — January 26, 2015 @ 1:55 pm
Are we to believe that Jon made a trip to Mexico for a site visit ?
I would suggest that he tried to visit some property in BC & got
snowbound & such an experience, best be kept to himself.
Comment by Bert — January 26, 2015 @ 3:17 pm
MIGHT WANT TOO LOOK AT vfx COMPANY CEASED OPERATIONS BECA– USE RECIEVABLES NOT PAID 13 MILLION RUMOURS HAS IT THEY HAVE INSURANCE TO COVER ,TRADING @ .015 TIME WILL TELL
Comment by BRIAN — January 26, 2015 @ 4:01 pm
Jon please give me your comments on the 283 million o/s of GBB and rumours of a potential rollback. It seems like a lot of shares. Also the price at 5 cents is midway between the 52 week hi and lo.
Comment by Hugh — January 26, 2015 @ 5:51 pm
good morning bmr boys. I bring to your attention once agai HERON RESOURCES(HER TOR TSX)the press release jan 26 “HERON to release WOODLAWN PEA results in first of 2015” regards walter emond
Comment by walter emond — January 27, 2015 @ 1:23 am
Hugh, Frank Basa has made it unequivocally clear there are no plans for a rollback on GBB. So those aren’t “rumors” – those are simply incorrect assumptions and guesses by some people who think that just because there are a lot of shares O/S, that’s reason enough for a rollback. We addressed this point ourselves in December. This project has enough going for it that it can support 300 million shares O/S. That’s the key (companies that roll back are usually failures with weak asset strength). If they didn’t have this kind of a resource and robust PFS numbers on the rolling start, share structure would be problematic.
One advantage actually with this number of shares O/S of course is liquidity. I can see some huge volume kicking in on GBB as the year progresses. The total market cap at the moment is about $15 million, which is peanuts considering how advanced the project is including the proven and probable high-grade open pit reserves that form the 3-year rolling start (6-month pre-tax payback). 1.5 million ounces at 2.2 g/t Au and potential for much more as outlined. I’m playing GBB for the turnaround, and I’m convinced it’s going to be big. Accumulation is happening at a nickel here, from weak hands into strong hands, and then watch how this unfolds in February and March. Supply around a nickel is coming from last year’s flow-through PP, but it’s steadily being soaked up.
Comment by Jon - BMR — January 27, 2015 @ 2:14 am
Jon how can you so confident about GGI. In a release of november Steve mentionned that assay results will be out first half of december.
One and half month later nothing. He could have release information why that delay, like assay have to be done again. Also the financing
was for Rodadero in the release. When they close it it was for Grizzly. That two even make me wonder.
This make me and other investers nervous, when CEO change his mind.
Jon why are you still so confident? I put to much money in GGI
Thanks alain
Comment by alain — January 27, 2015 @ 7:03 am
Alain, I see nothing unfolding but a very positive scenario for GGI. And while this is just speculation on my part, I suspect things have been quiet on the news front recently potentially due to ongoing discussions with at least 1 major who (it was disclosed previously) have already visited Rodadero. On the B.C. side, lots of potential triggers there with the Grizzly, and some other properties as well. This is a group that’s focused on always moving things forward so I think we’re going to see a very big and interesting picture emerge here shortly.
Comment by Jon - BMR — January 27, 2015 @ 9:13 am
Thanks Jon, but steve should have already release the assay results scheduled first half december as mentionned in their new release of november.
This would have made shareholders more confortable.
Thanks and I greatly appreciate your work
Alain
Comment by alain — January 27, 2015 @ 11:14 am
I think it’s pretty obvious from the visuals that have been reported, Alain, that Silver Eagle continues to look exceptionally good; I think Silver Eagle and Rodadero overall might be looking so good, in fact, that something much more significant could be developing with GGI which may explain the mystery of the recent silence.
Comment by Jon - BMR — January 27, 2015 @ 11:46 am