Gold pushed to a new record-high this morning after advancing $107 last week and $82 the week before…the yellow metal hit $1,896, just $42 shy of the $1,938 Fibonacci target John gave us just recently…as of 8:15 am Pacific, Gold is up $32 an ounce at $1,885…we do expect Gold to soon pull back as it has clearly become overextended on a temporary basis…the charts show a very overbought condition…Gold is making its longest run of weekly gains since April, 2007, and that’s when corrections usually happen…Gold is also trading abnormally above (28%) its 200-day moving average (SMA) which was $1,470 as of Friday…a 10% correction in Gold can’t be ruled out but that should go hand-in-hand with a rising equity market, so the exploration stocks should start to play some catch-up to this higher Gold price environment…
Gold may reach $2,000 an ounce by year-end, extending this year’s gain to 41%, according to the median forecast in a Bloomberg survey of 13 traders and analysts at a conference in Kovalam, India, Saturday… that would be the biggest yearly jump in the Gold price since the 127% surge in 1979, according to Bloomberg data…below is an interesting chart from Bloomberg comparing Gold with the S&P 500 since 1971…in 1980, one ounce of Gold was 7.6 x the S&P 500…Gold’s relative performance then declined for the next 20 years with the S&P taking the lead in 1992 and peaking at 5.3 x the value of Gold in 1999…currently, Gold’s value is roughly 1.6 times greater than the S&P 500…it’s a very telling chart and the trend seems likely to continue…
Citibank has substantially increased its projected 2012 Gold price from an average of $1,324 an ounce to $1,650 (which they may have to revise upward yet again)…”Increased global risk, U.S. dollar weakness, growing inflationary fears, the U.S. debt downgrade and continuing sovereign debt risks in Europe have increased investor appetite for Gold, triggering recent price strength,” Citigroup declared…they see an average price of $1,500 for 2013, up from their earlier estimate of $1,225…Citibank seems to be behind the curve on the yellow metal…
All eyes will be on Fed Chairman Ben Bernanke Friday when he’ll be giving a much-anticipated speech at a symposium in Jackson Hole, Wyoming, which will be closely watched for any signs of Fed policy direction…at the same meeting a year ago, Bernanke made strong hints regarding a potential “QE2” and markets, including Gold, took off to the upside…can Bernanke pull a rabbit out of the hat again and produce some “shock and awe”…we’ll have to wait and see…
The economic data that really spooked the market last week was the huge fall in the Philly Fed Index…the decline of nearly 34 points in the headline index to -30.7% was the biggest drop in measure of economic confidence since October, 2008, one month after the fall of Lehman Brothers…there’s a belief among some analysts, however, that instead of being driven by the economy, the drop in confidence shown by the Philly Fed Index may have been motivated more by the recent volatility on Wall Street and the financial capitals of the world…the markets seem to be pricing in a U.S. recession but what may actually occur is just a period of very slow growth…meanwhile, robust growth continues in the emerging markets and that was a point emphasized by Bank of Canada Governor Mark Carney in his testimony before a Commons committee Friday…“Ongoing strength in major emerging markets should also help maintain commodity prices at relatively high levels,” Carney stated…that’s a positive for the commodity-dependent Venture Exchange…
As of 8:15 am Pacific, Silver is looking bullish, up 77 cents at $43.67…Copper is off 2 pennies at $3.96, Crude Oil is off its highs but is still up 87 cents to $83.13 while the U.S. Dollar Index is off one-fifth of a point to 73.95…the major indexes are recovering this morning…the Dow and TSX are strong this morning while the CDNX is following through on an encouraging performance Friday and is up 12 points at 1777…the CDNX held its ground Friday in the face of sharp declines in New York and Toronto and appears to have found strong support in the 1760 area…
The TSX Gold Index has blasted through resistance at 416 and is up 15 points at 429…Richmont Mines (RIC, TSX-V), one of our favorite small producers, has hit a new all-time high of $9.95 and is currently up 60 cents at $9.81…immediately beside Richmont’s Wasamac Property is Visible Gold Mines (VGD, TSX-V) with two drill rigs in action and a potential discovery at Wasa Creek where assays are still to come on eight of nine holes completed as of last Tuesday…with Wasa Creek, Wasa East and Joutel, VGD has an opportunity to explode in the coming weeks and now is the time to be positioned given what’s developing on the ground for VGD and the stock’s favorable chart patterns…VGD is currently up 2.5 pennies at 33.5 cents…Currie Rose Resources (CUI, TSX-V) has been very quiet on the news front so far this summer since launching a 10,000 metre drill program early last month…CUI has been holding up well, despite the recent overall market weakness, and continues to trade in a horizontal trend channel as John shows below in an updated CUI chart…the company’s properties at Mabale Hills and Sekenke are quite capable of producing a discovery, though we’re most excited with Sekenke’s potential given the fact it surrounds and runs in between two past producing high-grade mines…CUI’s summer drill program started about seven weeks ago at Mabale Hills while potential targets continue to be nailed down at Sekenke…
Kaminak Gold (KAM, TSX-V) is looking good this morning, up 11 cents to $4.28…Silver Quest Resources (SQI, TSX-V), which has a strong presence in both the Yukon and British Columbia with high quality land packages including a 25% interest in the northern portion of New Gold’s (NGD, TSX) Blackwater deposit, is 3 pennies higher at $1.13…Goldex Resources (GDX, TSX-V) is beginning to firm up after strangely falling to 7.5 cents last week following the release of very promising drill results from its El Pato Gold Property in Guatemala that included 5.04 g/t Au over 30.48 metres…GDX is up a penny at 8.5 cents…more assay results are pending from El Pato…the company continues with bulk sampling there and is expected to soon start a drill program at its El Arco Property in Mexico…with a market cap of just $8.5 million, GDX holds good potential…
Jon, can you comment on the huge disconnect between gold prices and junior exploration companies? Producers are seeing some major moves upward but juniors and midcaps are getting almost no volume. Is there any point in continuing to hold on to juniors that dont move while we watch the whole gold sector hit higher highs daily? Feel like im missing the boat here.
Comment by jeff — August 22, 2011 @ 2:29 pm
Jeff – look at the CDNX over the last 5 years on a weekly chart… the volume that has been missing shows up increasingly as we travel thru the bull…. we were close to hitting the low in 05 and have survived… the disconnect has been hashed out in many places and is the result of ETF’s, ‘a who cares’ attitude, margin issues, and something that someone wrote that when gold went up the stocks didnt .. gold dropped and then the stocks took off.. kinda like the money is made in the metal, then boom it drops then that money goes into the stocks to crate the mania that most have been talking about…
the volume and sp appreciation will happen ….. its all about timing .. so noone knws when… but most agree that it will!! on the CDNX chart notice the big volume drive last fall… when theres a market the money follows:)
Comment by Jeremy — August 22, 2011 @ 3:00 pm
Jeff .. more info 🙂 theaureport.com/pub/na/10645
Comment by Jeremy — August 22, 2011 @ 3:49 pm
Jeff,
The best is yet to come regarding the junior’s …
This is actually the most bullish setup for a junior resource explosion I have ever seen.
In the gold market there is some heavy psychology going on.
Every time gold makes a new high, the market percieves this high as THE FINAL HIGH.
So, Why invest in a junior if we have seen the final high … get it?
What the average investor dosn’t realize is that we are NOT seeing the final high in gold.
This action will probably go on for a while longer.
But when the psychology changes and the market realizes that we are no where near a high in the gold market, the juniors will play catch up.
At this point the juniors will rally hundreds of percent over a period of a year.
It won’t end until the juniors are over-valued!!!
Frank
Comment by Frank — August 22, 2011 @ 4:04 pm
GBB… another weak day as majority players are now small investors like me…. it goes up and down in the range of 35-40 cents with no real volume… I should have dumped again at 39 cents as it is coming down now. If there are movements, it should be in September or October…. BER is really quiet and I will scoop some when it is coming down to 11 cents… but this is a low low price. SFF seems to have a good raise but the volume did not show support. It can go down easily…. VGD has a strong day with 4 cents up. NAR and SD is zero volume… the storm may be coming…. usually, the storm will do damages only. CQX has some small buys but again, so volume support.
Comment by Theodore — August 22, 2011 @ 4:07 pm
I don’t think the disconnect will last much longer, Jeff, and here’s one reason: Producers will be scrambling to add ounces to their production profiles with Gold trading where it is. I am convinced we’re going to start seeing, very quickly, some intense takeover activity with large, medium and small producers gobbling up juniors with great properties and/or buying individual properties outright. A lot of these producers are sitting on large piles of cash right now. Let me give you one simple example that involves two companies we follow a lot at BMR. Richmont Mines has made no secret of the fact they are looking for a potential acquisition, preferably something close to their Camflo Mill which has unused capacity. Adventure Gold is coming out with a 43-101 in the near future for Pascalis-Colombiere. Based on drill results to date and property history, it’s quite possible, though we of course won’t know for sure until the 43-101 comes out, but it’s quite possible Pascalis could contain in the neighborhood of 400,000 to 500,000 ounces. A deposit like that could add potentially 40,000 ounces a year to Richmont’s production which is significant for them. Makes sense to buy the property outright from AGE. AGE gets a whack of cash (and/or stock), the stock goes up and the company is set for bigger and better things. Activity such as that also lifts the whole junior sector. I think we’re going to start seeing a wave of that stuff. So, at the moment, while you may be frustrated that AGE is trading at just 48 cents and hasn’t moved with the price of Gold recently, it could very well be on the verge of something huge as they might be able to fetch a juicy price for Pascalis. There are many other situations like that in the sector right now. Any company with an advanced property and 43-101 resources in a good jurisdiction stands to do extremely well, plus the companies that are enjoying exploration success. Patience is a virtue. Hang in there because some of these companies are going to enjoy their day in the sun soon enough.
Comment by Jon - BMR — August 22, 2011 @ 5:31 pm
3 hours before the market opens, i checked the price of gold, down over 3 dollars,
which prompted me to think, something positive must be going on in the world.
Sure enough, manufacturing in Europe better than expected, as a result all
European markets up, Dow, Nas & S&P futures also up, in fact the Dow up around 130
pts. If this continues, we should have a strong day. R !
Comment by Bert — August 23, 2011 @ 2:51 am
more info Jeff:)
http://goldstocktrades.com/blog/2011/08/23/gold-bullion-moves-parabolic-look-for-mining-stocks-to-play-catch-up/
Comment by Jeremy — August 23, 2011 @ 4:37 am
thanks guys
Comment by jeff — August 23, 2011 @ 5:37 am
3 hours after my last post, things don’t seem as rosy out there & gold stocks seem
to want to follow gold down. I have to be optimistic & hope for at least a
positive close. R !
Comment by Bert — August 23, 2011 @ 5:41 am
Martin Dallaire interview with Stanlie Hunt now online at VGD website and smartstox.com/
Comment by Andrew — August 23, 2011 @ 7:40 am
Martin’s interview is worthwhile listening too, if you haven’t done so. He refers now to two flagship properties (Cadillac and Joutel).
Comment by Andrew — August 23, 2011 @ 7:57 am
I endorse your point of view Jon (# 6). Indeed, the large gold producers are making huge profits on their sale and as these companies are not companies with dividends, they have a lot of money for acquisitions, which will inevitably follow. We will witness a very interesting fall. Indeed, once the results published 43-101, it will be some “bidding war” on some stocks. Very positive for certain stocks held by the BMR’s Portfolio.
Comment by Sylvain — August 23, 2011 @ 8:44 am