BullMarketRun.ca

Gold has traded between $1,235 and $1,243 so far today…as of 6:50 am Pacific, bullion is down $1 an ounce at $1,238…it’s on track for back-to-back weekly gains (it jumped $32 last week to close at $1,223) and struck a 5-week high Wednesday…Silver is off a nickel to $17.32…Copper, which hit a 7-month low this week on global growth concerns, is up 4 cents to $3.03…Crude Oil has rebounded 31 cents a barrel to $83.04 (it briefly fell below $80 yesterday for the first time since 2012) while the U.S. Dollar Index is up more than one-tenth of a point at 85.09, headed for its second straight weekly decline after 12 straight weekly advances…

Martin Murenbeeld, Chief Economist at Dundee Capital Markets, believes +$1,300 Gold may not be far-fetched.  “One of the things that tend to be overlooked…is that the real interest rate in the U.S., particularly at the short end, is going to remain negative right through 2015,” he stated in an interview with Kitco.  “Furthermore…you will have significant additions to global liquidity and that is one of the key factors in our models and forecast.” 

In a sign of higher investor interest, SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, said its holdings rose 0.24% to 760.94 tons yesterday…that’s a slight bump from a 6-year low of 759.44 tons reported at the end of last week…

Today’s Equity Markets

Asia

China’s Shanghai Composite fell 15 points overnight to close the week at 2341…meanwhile, Japan’s benchmark Nikkei surrendered early gains to close down 206 points or 1.4% at 14532 – a new 4.5-month low…it was the Nikkei’s worst worst week in 6 months…

Europe

European markets are up sharply in late trading overseas…

North America

The Dow has jumped 162 points as of 6:50 am Pacific after 6 straight losing sessions…U.S. consumer sentiment rose in October to the highest in more than 7 years, boosted by views on personal finances and the national economy, a survey released this morning showed…the Thomson Reuters/University of Michigan preliminary October reading on the overall index on consumer sentiment came in at 86.4, the highest since July 2007…the gains were unexpected, as a Reuters survey showed a forecast for a slip to 84.1 from last month’s 84.6 reading…

Longer-term charts paint a troubling picture, but this 9-month daily provides hope that a Dow rally could gain some traction after a 1,500-point (8.6%) decline in just 19 trading sessions from September 19 to Wednesday of this week…

What Will The Fed Do? 

Is it possible that after consistently winding down QE 3 since the beginning of the year that the Federal Reserve might take its foot off the brake in the near future, given deteriorating global financial conditions?…stocks got a much-needed lift yesterday when St. Louis Federal Reserve President James Bullard (a non-voting member of the FOMC) suggested to Bloomberg TV that the Fed should consider pausing its QE taper.  “We have to make sure that inflation expectations remain near our target. And for that reason, I think a reasonable response by the Fed in this situation would be to…pause on the taper at this juncture, and wait until we see how the data shakes out in December,” he said.

Those comments came two days after those of San Francisco Fed President John Williams, also a non-voting member of the FOMC, told Reuters: “If we get a sustained, disinflationary forecast…then I think moving back to additional asset purchases in a situation like that should be something we seriously consider.”

Others are much more skeptical of a potential QE comeback…however, various global events – from deteriorating economic conditions in the euro zone to Ebola to Iraq to a major sell-off in Crude Oil – have taken most people, likely even voting members of the Fed, by surprise in recent weeks…the bond market made it clear Wednesday that it has dialed back its expectations for a Fed interest rate increase until late 2015 or early 2016…

The TSX has gained 142 points in the first 20 minutes of trading while the Venture, trying to post back-to-back daily gains for the first time since the end of August, is up 8 points at 800 as of 6:50 am Pacific…energy plays are rallying…

TSX Updated Chart

The correction in the TSX has been an unwinding of very overbought technical conditions that persisted since late last year through the end of August as you can see in this 6-year monthly chart…typically, a pattern such as this will ultimately cleanse itself by going to the opposite extreme, so at some point in the coming months it’s a strong possibility that highly oversold conditions could materialize…that’s why this correction likely has further to go but it will include relief rallies along the way, as we’re seeing now…for the time being, the TSX has been held up by chart support around 14000…interestingly, the nearly 5000-point gain in the index since late 2011 came on gradually declining volume…

U.S. Dollar Index Updated Chart

The recent parabolic move in the U.S. Dollar Index still needs some unwinding…the near-vertical climb in the 50-day moving average (SMA) doesn’t seem sustainable, so Gold certainly stands to benefit as the Dollar generally pauses for a period of time…the nearest band of support is between 84.5 and 85.0, followed by more support at 83.5…the rising 200-day SMA is currently 81.36…the Dollar is still the strongest currency out of a bad bunch and may attract safe-haven buying support in the event of more global turmoil and market gyrations…

Richmont Mines’ (RIC, TSX-V) High-Grade Bonanza

Certain Gold producers are looking increasingly attractive, considering the potential for higher bullion prices and the balance sheet benefits of lower Oil prices and a weak Canadian dollar…

Rouyn-Noranda-based Richmont Mines (RIC, TSX) is in the midst of a major turnaround in its financial performance and has a new cornerstone asset to ensure a bright future – a 1.1 million ounce high-grade inferred resource below its Island Gold Mine near Wawa, Ontario…at a time when truly high-grade deposits are becoming quite scarce, this is something to pay attention to…

Richmont, which experienced a more than 10-fold increase in its share price between late 2008 and the fall of 2011, slumped all the way back down to a bargain basement price of $1 per share late last year…it started to reverse course with a vengeance after two important events this year – 1) The release April 1 of an updated resource calculation for its producing Island Gold Mine, including the Island Deep extension; and 2) The company’s return to profitability in Q2 of this year as it reported record revenues and net earnings of $4.7 million (10 cents per share) for the April-May-June period…

Recently, Richmont raised production guidance for 2014 to 85,000 to 90,000 ounces…the company’s cash and short-term deposits increased to $38 million at the end of September…they’re well-positioned to “seize the moment” with development of the Island Gold deep discovery which has NI-43-101 indicated resources of 456,000 ounces grading 11.52 g/t Au and inferred resources of 3.2 million tonnes grading 9.29 g/t Au…the discovery remains open in all directions after 100,000 meters of underground drilling in 2013…development of the first mining horizon on the 635-metre level will be completed in early 2015, in accordance with previously established plans…

RIC Updated Chart

Technically, RIC is looking very strong after a healthy retracement from a nearly 2-year high of $3.07 September 2 to a double reversal bottom pattern that formed late last month and early this month…RSI(14) and buy pressure are showing increasing momentum…this is a “keeper” in our view for the long-term, especially considering the high-grade million-plus ounce Island Deep resource…

Richmont will be releasing full financial results for the third quarter and first 9 months of 2014 before markets open on Thursday, Nov. 6, with a conference call later that day…

RIC is up 3 cents at $2.71 as of 6:50 am Pacific…

Agnico Eagle Mines Ltd. (AEM, TSX) Update

Speaking of producers, Agnico-Eagle (AEM, TSX) is also backed by strong fundamentals and may have started a powerful “Wave 5” move after retracing to a Fib. support level just beneath the 300-day moving average (SMA)…buy pressure has remained steady in AEM despite the fall from a July high of $45.83 to a recent low of $31.20…

Discovery Ventures Inc. (DVN, TSX-V) Update

A lot of babies have been thrown out with the bathwater, so to speak, on the Venture in recent weeks…that kind of carnage always opens opportunities, and one situation to consider is Discovery Ventures (DVN, TSX-V)…DVN’s share price has been sliced in half since the beginning of last month…importantly, it has strong Fib. and uptrend line support at 19 cents as you can see in the 2.5-year weekly chart below…

Discovery has made substantial progress in recent months in accelerating its Willa-Max high-grade Gold-Copper Project toward potential production in southeast British Columbia…

DVN is up half a penny at 19.5 cents as of 6:50 am Pacific…

Mission Ready Services (MRS, TSX-V) Update

Mission Ready Services (MRS, TSX-V), which we’ve recently been pointing out to our readers for their due diligence, has had a great week…this company certainly appears to be in the right space at the right time…it provides solutions to the global defense, security and first-responder markets in the areas of cleaning, logistics, maintenance, program management and client representation…a week ago, the company, which is gaining momentum with some of its clients, announced the closing of a $4 million private placement at 25 cents per unit…

Recently, MRS was awarded a $1.5 million contract for research and development of the U.S. Marine Corps’ next-generation body armor architecture…this followed the awarding of a larger contract MRS is participating in for warehousing and operations support services to clean and launder, stock, and store up to 7,800 pallets of individual protective personnel equipment (IPPE) for the Marine Corps’ Logistics Systems Command (MCLC)…

MRS started trading late last year after completing its qualifying transaction (formerly Priceless Piranha Capital Corp.)…

Technically, MRS has been climbing an upsloping channel since the beginning of August…yesterday, it broke out above resistance in the mid-30’s on high volume…as always, perform your own due diligence…

MRS is unchanged at 39 cents as of 6:50 am Pacific…

 Note:  Jon holds a share position in RIC.