TSX Venture Exchange and Gold
The Venture continues to out-perform commodities which is particularly encouraging as this is the time of the year when the opposite usually occurs with tax-loss selling applying pressure on the Index. For the week, the Venture actually gained 1 point, snapping a 5-week losing skid, despite Gold’s nearly 2% weekly decline and slightly negative broader equity markets.
With one more trading day left in November, the Venture is off 3.7% for the month but this compares very favorably to the 7.4% drop in Gold, the 10.3% plunge in Copper, and the 10% dive in Crude Oil. What the Venture seems to be saying is that this latest sharp commodity sell-off is nearing the point of exhaustion, and conditions are ripe for the start of a significant rally in the near future – likely within the next couple of weeks, commencing immediately before or after the critical Fed meeting Dec. 15-16.
Keep in mind, the Venture enjoyed its best October in 4 years and support at the August low of 509 appears almost certain to hold given the trends we’re seeing. That sets up a bullish scenario for the Venture going into year-end. This market will take the path of least resistance, so a repeat of the late 2013/early 2014 pattern appears to be in the works. That means investors would be wise to scoop up bargains now and also focus on the current leaders in this market given an important fact – based on historical data, December, January and February are the best 3 months of the year for the Venture with an average combined gain of just over 13%.
A 10% to 20% jump in the Venture from current levels by the end of February would mean multiple opportunities for doubles and triples in certain individual stocks. That’s how you can turn $10,000 into $80,000 on just 3 astute trades:
Stock “A”: $10,000 doubles to $20,000
Stock “B”: $20,000 doubles to $40,000
Stock “C”: $40,000 doubles to $80,000
Even just 50% gains on 3 successive plays would turn $10,000 into $34,000, but think in terms of finding and enjoying a Venture double-double-double over the next 3 months (not as easy as it sounds, but definitely possible if this market climbs 10% to 20% over 3 months). We’re entering the best time of the year for extraordinary results. In addition, the Venture’s basing pattern since September (after the August low) points to the strong possibility of a pivotal technical breakout above 560 resistance, and a reversal to the upside in the 100-day moving average (SMA), by sometime in January.
The best thing for commodities might actually be what so many investors have been fearing – a Fed rate hike increase. This intense speculation regarding the Fed and when it’s finally going to raise interest rates has kept the U.S. dollar very buoyant since the summer of last year. That game may not be so interesting for speculators in just over a couple of weeks after the FOMC meets. Getting this inevitable Fed rate hike out of the way couldn’t come fast enough.
Venture 4-Month Daily “Awareness” Chart
Encouragingly, the Venture has once again found RSI(14) support at 30% on this 4-month daily chart. That’s a level that served as resistance throughout July and August. It needs to hold, and so far it has. Watch where the Venture trades in relation to its EMA(8) and EMA(20), currently 522 and 527, respectively. What will be key is when those short-term moving averages reverse to the upside.
U.S. Dollar Index
The Dollar Index regained technical strength last month after pushing above a descending triangle, fueled by speculation that the Fed will initiate its first rate hike in nearly a decade in December. Fed officials have gone out of their way recently to prepare markets for an imminent interest rate hike. Equities seem to be taking that signal in stride, while traders continue to dump commodities (in this case, sell on rumor, and buy on the news). Speculation regarding a Fed move has been the driving force behind the greenback’s dramatic rise since the summer of last year. Once that news is out of the way, the dollar may actually cool off for a while, and commodities should regain their footing.
The Venture performs best when the greenback is in neutral or retreat. The amazing move in the dollar since the summer of last year has driven down the price of commodities and has been a key factor in the Venture’s nearly 50% decline during that time.
On this 2-year weekly chart, RSI(14) on the Dollar Index recently again met resistance at the 70% level which was support from September 2014 through the end of March this year. A price breakout above the spring high of nearly 101 would not be a welcome development, and it’s probably not something the Fed would want to see either given the deflationary implications.
Gold
Gold took a hit Friday, closing $15 lower at $1,057 on perceived manipulation. A whack of Gold contracts (18,000) were dumped on the market Friday morning during thin trading conditions, immediately following Thursday’s U.S. Thanksgiving. Suspicious, indeed.
Gold started losing momentum during the week of October 19 when buy pressure began decelerating rapidly as shown by the CMF in our 6-month daily chart. This continued into the following week, which is when we decided (Oct. 27) to recommend buying the DUST (3x Gold Miners Bear ETF) as a hedge against a drop to $1,100 or below in bullion. We closed out that position Friday (Nov. 6) for a gain of 60% over just 9 trading sessions. That’s not to say the DUST won’t ultimately head higher, but what we’ve been watching for recently are signs of a strong rebound in the TSX Gold Index after a steep decline of 20% over just 8 trading sessions (Oct. 28-Nov. 6). The Gold Index has started to stabilize, trading within a range of 118 to 128 the last 3 weeks, and appears poised to finish the year higher than it is now based on its improving technical posture. That’s why we’ve flipped back to the HGU which returned 35% over 12 sessions for us a couple of months ago.
For the week, bullion was off $20. However, Gold is emerging out of very oversold RSI(14) conditions, similar to the pattern in late July. Sell pressure remains strong but is slowly abating.
Gold 2.5-Year Weekly
Gold has traded within well-defined parameters over the last 2-and-a-half years as shown in this long-term weekly chart, with repeated moves between the bottom and the top of the downsloping flag. However, the high in May ($1,232) fell short of the top of the flag, as did the recent run that peaked at $1,192 in early October. At some point, Gold will make a decisive move either above or below the flag – that will be a critical turning point.
As you can see below, for the 4th time since late 2013 Gold has hit the bottom of the downsloping flag. The SS indicator is in the right position to reverse higher. Further downside is very limited. However, one can’t rule out a brief, manipulated plunge to $1,000. Conceivably, some “dark forces” may have enough firepower to create a temporary (false) breakdown below the channel to shake the remaining loose apples off the tree. Such an event can be expected to be followed by a hammer reversal.
Now is NOT the time to be fearful regarding Gold or Gold stocks, quite the opposite in fact. Greed can be a good thing, and very profitable, when others are fearful and there’s blood on the streets.
Silver fell another 7 cents to $14.20. Copper was off a penny to $2.08. Crude Oil added 31 cents to $41.77 while the U.S. Dollar Index jumped another half point to finish at 100.08.
The “Big Picture” View Of Gold
As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been driven by both the Fear Trade and the Love Trade. The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, has had a huge impact on bullion and will continue to support prices. Despite Gold’s largest annual drop in 3 decades in 2013, and current weakness, the fundamental long-term case for the metal remains solidly intact based on the following factors (not necessarily in order of importance):
- Growing geopolitical tensions, fueled in part by the ISIS and al Qaeda, and a highly dangerous and expansionist Russia under Vladimir Putin, have put world security in the most precarious state since World War II;
- Weak leadership in the United States and Europe is emboldening enemies of the West;
- Currency instability and an overall lack of confidence in fiat currencies;
- Historically low interest rates/highly accommodating central banks around the world;
- Continued solid accumulation of Gold by China which intends to back up its currency with bullion;
- Massive government debt from the United States to Europe – a “day of reckoning” will come;
- Continued net buying of Gold by central banks around the world;
- Mine closings, a sharp reduction in exploration and a lack of major new discoveries – these factors should contribute to a noticeable tightening of supply over the next couple of years.
Jon, have you spoken with Regoci in the last couple of days, or have you heard any rumours regarding the likelihood of a NR on the assay results of hole 1 from Grizzly this week.
Comment by Tom UK — November 29, 2015 @ 5:45 am
Tom, I just think it’s reasonable to expect an update from GGI this coming week…last week was obviously interrupted, news flow-wise, by the U.S. Thanksgiving…Regoci says they are pushing the lab hard for results…that’s always a good sign.
Comment by Jon - BMR — November 29, 2015 @ 6:55 am
Jon, do you knows at what approximate depth does the pyrite magnetite start in hole 1?
Comment by Martin — November 29, 2015 @ 8:41 am
well here i go again for your climate change DORK of the week. The US taxpayers should be outraged, Obama is attending the conference in Paris with an entourage of 500 people, including 200 secret service, a team of 6 doctors, 35 presidential vehicles, 12 speech writers, 12 teleprompters, 1 presidential helicopter, his personal chef and staff, that’s just to mention some and oh ya, lets not forget HOW they all got there. REALLY? CLIMATE CHANGE? my dork of the week folks…..
Comment by tombc — November 29, 2015 @ 9:05 am
Just going by the news, Martin, we know the pyrite-magnetite mafic unit started just below 100 m in hole 3 and at about 140 m in hole 4 on the step-out to the west-southwest. We know that hole 1 bottomed in this unit, so it’s safe to assume it probably started below 100 m as well.
Comment by Jon - BMR — November 29, 2015 @ 9:33 am
Bob – from yesterday, keep in mind that assays never come out when a CEO says they will. In my 25 years of investing, I have never known there not to be delays. I always target a week to 2 weeks out from when a company says they are coming. Hardy has to sign off on the release and I don’t think he is back in the country yet.
Comment by dave — November 29, 2015 @ 10:35 am
I see more photos on the Grizzly Photo Gallery
Comment by Franky — November 29, 2015 @ 11:40 am
garibaldiresources.com/s/Photo_Gallery.asp?ReportID=604184
Core Out!!!!
Comment by Martin — November 29, 2015 @ 11:46 am
That core pic of the Mafic Volcanic unit – Is that 292.7 meters? If that started at 100 meters or so like the other holes – look out!!!
Comment by Dan1 — November 29, 2015 @ 12:10 pm
Wonder are those from hole 4, looks like hole 5 is marked step out to the east…
Comment by Tombc — November 29, 2015 @ 12:15 pm
What have GGI discovered here? What ever it is, it looks like it is on a very large scale.
Comment by Dan1 — November 29, 2015 @ 12:17 pm
Wonder if they will show us where hole 5 was drilled? Those core pics are from hole 5 because one of them is almost 300 meters deep. They did not drill that deep in the other holes – I think.
Comment by Dan1 — November 29, 2015 @ 12:22 pm
To the east, doesn’t say how many meters. It’s on the map.
Comment by Tombc — November 29, 2015 @ 12:29 pm
Saw the updated map on drill locations was also posted – garibaldiresources.com/i/maps/Grizzly/Grizzly-Central-Magnetics.pdf
Comment by Maxwell — November 29, 2015 @ 12:36 pm
Yes, hole 5 step out to the east. Looks to be at least 800 meters east of hole 3. If so, this appears to be a massive, massive, massive system!
Comment by Dan1 — November 29, 2015 @ 12:36 pm
Going by the drill core in hole 5, the system may be dipping to the east.
Comment by Dan1 — November 29, 2015 @ 12:45 pm
Driiling to the east, i was wrong yesterday. Best looking core to date!!
Comment by Martin — November 29, 2015 @ 12:48 pm
Is’t a monster Dan!!
Comment by Martin — November 29, 2015 @ 1:30 pm
Interesting new info for sure, Dan. My take on it is that the Grizzly Central system is trending west and west-southwest toward Kaketsa about 2 km away, but keep in mind the eastern limits have not yet been defined. This would explain the aggressive step-out – at least 500 meters – to the east of holes 1 and 2, where there is strong geochem. That core at 200 meters depth in hole 5 sends a powerful message. Looks like we’ll hear from GGI again this coming week and it could be better than ever.
Comment by Jon - BMR — November 29, 2015 @ 2:31 pm
Two extremes at play here. Eqt promoted like crazy before the drilling campaign than stopped. Ggi never really promoted prior and are now sending out photos of every drill core better we even know the results. Interesting moves on both sides.
As for eqt news, I’m thinking the end of the week or early next. Wouldn’t look good on management to release results tomorrow after granting themselves options on friday.
Comment by seamus — November 29, 2015 @ 3:34 pm
Good observation, Seamus. GGI knows something. They also have the advantage of being the third company to drill in a district where 50 holes have been completed over the last 2 and a half years, plus another 50 or so historically on the Star system, with an unusually high hit ratio. Plus they’ve put years of prep into the Grizzly before actually drilling it. So the circumstances are very different. EQT is in a much more grassroots situation with less data, less area knowledge, to go on. That doesn’t mean they can’t make a big discovery instantly or later on, but it does help explain their “restraint” since drilling began.
Comment by Jon - BMR — November 29, 2015 @ 3:47 pm
What about Dbv? Heard from your sources? Any rumors? Do u think we will get news this week as well?
Comment by Sameer — November 29, 2015 @ 5:44 pm
There is some correlation between some of the core and those at brucejack, we could hit wild grade gold anywhere at anytime in these system, this is big! we have just scrath the surface here. These are relatively shalow hole to date. Any input from your friends geologists Jon? News tuesday morning or even tomorrow! This is awesome!
Comment by Martin — November 29, 2015 @ 7:02 pm
@Dave-Seems like RYU is an odd pick for you. Can you explain what you feel is interesting about this company? Personally, I would find it hard to get excited about it due to the fact that the industry is so competitive. Thoughts?
Comment by seamus — November 29, 2015 @ 7:36 pm
Jon: do you finally think the turnaround in the Venture will happen going into 2016???…its been a long 4 years for this! i don’t think we should be too excited for a 10% move up when we are already down 85%?
Comment by STEVEN1 — November 29, 2015 @ 8:05 pm
Steven1, the behavior of the Index since August has been encouraging. A significant rally is definitely in the works, just in time for what is traditionally the strongest 3 months of the year. That’s the best way to look at this market right now, and let the Venture tell us when it’s ready to do more than just rally for a few months out of oversold conditions. Having said that, a 10% to 20% lift from current levels would present some extraordinary opportunities because it likely wouldn’t be a broad-based move – it would be restricted to a small portion of the market, magnifying gains in those particular companies, the ones that are active at the moment and have the capital to make things happen. The Venture needs commodities to stabilize and begin to recover, a big discovery somewhere, and the U.S. dollar to slow down.
Comment by Jon - BMR — November 29, 2015 @ 8:25 pm
Doubleview new website…
So what’s the deal with DBV? DDD4 Do you still read this website, any insight you’re willing to share?
Comment by ConcernedCitizen — November 30, 2015 @ 2:26 am
Nine large copper producers in China agreed on an initial plan to cut refined metal output by more than 200,000 tonnes in 2016, following moves already announced by China’s nickel and zinc makers.
Many investors were sceptical that the output cuts would be implemented because of the past tendency in China to keep open loss-making operations to preserve jobs.
“Capacity in China is as much social in many cases as anything else, but at $4,600 copper, it seems that even in China you can’t fight economics forever. Some of these guys have costs at $6,000-$6,500,” said Wiktor Bielski, head of commodities research at VTB Capital in London.
Comment by ConcernedCitizen — November 30, 2015 @ 3:55 am
Doubleview Presents Comprehensive Data of Hat Property and New Website
Comment by Martin — November 30, 2015 @ 5:57 am
Yes, as expected, a new and improved site for DBV. Looks good, Martin, with some interesting info.
Comment by Jon - BMR — November 30, 2015 @ 6:00 am
DBV – fieldwork will resume as soon as DBV concludes financing arrangements – per NR
Comment by david — November 30, 2015 @ 6:57 am
From DBV PR: “A large, multi-year program of follow-up drilling is being finalized. Priorities are to establish a mineral resource by in-fill drilling and by stepping out both laterally and to depth, and to test by drilling a number of technically attractive parts of the property.”
Comment by ConcernedCitizen — November 30, 2015 @ 7:10 am
When can we expect GGI assay results on first cores?
Comment by Tony T — November 30, 2015 @ 7:20 am
Good question, Tony T…they can’t be too far off, especially considering GGI has pushed core to the lab very quickly which is a good sign. Perhaps they’ll give us another update first, followed by results…
Comment by Jon - BMR — November 30, 2015 @ 7:27 am
Thanks Jon.
Comment by Tony T — November 30, 2015 @ 7:33 am
DBV states PowerPoint Presentaion will be added to the new website Dec. 02nd
Check that core pick…she’s a beauty
This might be bottom of Hole #23 which they are now referring to it as game changing
CST & PRW waking up today
Comment by Don — November 30, 2015 @ 10:48 am