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After coming within about $20 of its April low, Gold staged a dramatic late day rally yesterday on short covering and bargain hunting to finish up over $30 an ounce at $1,394…it has given up a good chunk of those gains so far today…as of 7:15 am Pacific, bullion is down $31 an ounce at $1,363…Silver, which opened significantly lower yesterday before also rebounded sharply, is off 73 cents at $22.19…strong support at $22 held on a closing basis yesterday…Copper is flat at $3.33…Crude Oil is off 23 cents at $96.48 while the U.S. Dollar Index has gained one-third of a point to 84.13…

Gold Exploration Takes Hit – IntierraRMG Has Numbers

IntierraRMG reports, not surprisingly, that based on drilling programs it’s monitoring around the globe, Gold exploration has been hit particularly hard with activity down 55% in March from the same period a year ago…the research firm reckons that figures for the next few months are unlikely to be any better – indeed they could even show a further decline following the dramatic drop in Gold and Silver prices in April and a continued drying up of exploration funding…long-term, the fall-off in Gold exploration is clearly bullish for the metal…less activity on the ground means fewer discoveries and that in turns will lead to less future supply…strong physical demand for Gold continues…India’s purchases of Gold and Silver, for example, shot up 138% in April to $7.5 billion…the World Gold Council reported last week that demand for Gold bars and coins was 10% higher in the first quarter of 2013 compared to a year earlier, while demand for jewellery increased 12%…similarly, central banks’ net purchases exceeded 100 tonnes for the 7th consecutive quarter…

Updated Silver Charts

Below is John’s updated 11-year weekly Silver chart based on Friday’s close of $22.25…the RSI(2) level was even slightly below the most extreme level reached during the Crash of 2008, and then yesterday Silver gapped down and traded around $21 (its lowest level in 2 years) before rallying to close back above support at $22…that type of action is typically a bullish sign, so we’ll see if Silver can follow-through and climb higher this week…there is very strong resistance at $26 which Silver may want to test…ultimately, at some point this year, the technicals suggest that Silver will fall into a support zone between $17.50 and $19.50 an ounce…

Long-Term Silver Chart (11-Year Weekly)

Short-Term Silver Chart (3-Year Weekly)

The short-term chart shows Silver continuing to build a base at the $22 level…yesterday’s action should help in that regard…RSI(2) has spent a lot of time in the extreme oversold area in the past year with the exception of the August-September period when the metal rallied strongly along with Gold…selling pressure remained strong through the end of last week…we’ll see if that changes this week…

Huldra Silver (HDA, TSX-V) Chart Update

The weakness in Silver has hurt all Silver producers, and Huldra (HDA, TSX-V) is no exception as it has plummeted from a high of nearly $1.40 in January to a low last week of 34 cents…commercial production started a couple of months ago at the company’s high-grade Treasure Mountain Property near Hope, B.C., and last Thursday Huldra reported impressive grades from the first 5 holes of an underground drill program…we’re curious to see HDA’s first quarter financials which are due soon…historically, this stock has been quite volatile and at some point we suspect there will be another incredible buying opportunity…John’s 3.-5 year weekly chart shows two important support zones – 28 to 31 cents, and around the 15-cent level…very oversold conditions are beginning to form on this weekly chart…HDA closed Friday at 35 cents…by sometime this summer, production at Treasure Mountain should be running at full tilt…grades are high there but the key of course will be the bottom line – with Silver in the low $20’s, and Zinc and Lead depressed, can HDA make Treasure Mountain a profitable operation?…the company is blessed with strong management who we believe can find ways to adapt to the current Silver price environment, but risks still exist…

Today’s Markets

Asian markets were mixed overnight but Japan’s Nikkei average and China’s Shanghai Composite both gained slightly…the Shanghai has advanced for 5 consecutive sessions and has finally broken above a downsloping channel that started to form in February…the breakout above 2250 is very bullish as John points out in the 6-month chart below…

European shares are mixed in late trading overseas, while the TSX is charging higher this morning…it’s up another 119 points as of 7:15 am Pacific after surging 105 points Friday prior to the long weekend…the Venture is relatively flat while the Dow has gained 25 points…

Iskut River Play

We’ll have much more this week on what’s unfolding in the Iskut River region as the market anxiously awaits more drill results from Colorado Resources‘ (CXO, TSX-V) North ROK Property…one important reason why there’s a pause in drilling at the moment is that approximately 1.5 km of the target strike has not been covered by soil geochemistry, ground magnetic and IP surveying…this is the Edon gossan zone (south of the Mabon zone and the discovery hole), and Colorado needs to look for magnetic and resistivity anomaly trends to determine precise drill hole targets…it’s going to be a very busy summer at North ROK and in the general vicinity of that discovery…at this point it’s obviously way too early to predict if they’re going to be able to outline a major deposit…the market will obviously be speculating on that in the days and weeks to come, but this is a geologically prolific region that has been under-explored despite the fact Imperial Metals (III, TSX) has a monster of a deposit scheduled to go into production sometime next year upon completion of the Northwest Transmission Line…the Iskut River story, we believe, has some serious legs to it and this is going to be a very exciting area to watch over the next few months…

Victory Ventures (VVN, TSX-V)

Victory Ventures (VVN, TSX-V) will be the first (or second) junior to drill in the Iskut River area since the discovery announced by Colorado nearly a month ago (Doubleview Capital Corp. – DBV, TSX-V – is also gearing up to drill its Hat Property and its market cap has zoomed to $3.8 million this morning)….we prefer VVN for various reasons…as we mentioned in our article yesterday, Victory will soon be drilling into some highly prospective IP targets that suggest there is  increasing sulphide content within a southwest-dipping body of syenite rock at the 5 sq. km Copau Property north of the Red Chris and east of North ROK…again, there are never any guarantees in this business when it comes to drilling even the best-looking targets…but there are many reasons to like this play at the moment including its tight share structure and very modest market cap, not to mention the fact that speculation should ramp up as drilling commences around month-end/early June…technically, Victory is looking strong – confirmed breakout Friday – with solid support as shown in John’s 1.5-year weekly chart (John’s Fibonacci levels with Colorado have proven to be very accurate)…

Cache Exploration (CAY, TSX-V)

A stock that caught our attention at the end of last week was Cache Exploration (CAY, TSX-V) given the sharp increase in volume accompanied by a price lift…not sure what to make of this, but the chart is interesting and rumors are circulating that Cache could be looking at picking up ground in the Iskut River area…as always, perform your own due diligence and of course don’t invest money you can’t afford to lose on these highly speculative juniors…

Note: Both John and Jon hold share positions in VVN.