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July 23, 2013

BMR Morning Market Musings…

Gold has traded between $1,326 and $1,338 so far today…as of 7:05 am Pacific, bullion is down $2 an ounce at $1,333 after closing at a 4-week high yesterday…Silver is off 25 cents at $20.30…Crude Oil has slipped 79 cents to $106.15…Copper is unchanged at $3.16 while the U.S. Dollar Index is up one-tenth of a point at 82.27…

Commerzbank says it’s probably too soon to call Gold’s bounce a lasting reversal, and they’re likely correct…“The crossing of the $1,300 threshold evidently prompted investors to cover their short positions, thereby further boosting the price increase.  That said, given the ongoing ETF (exchange-traded-fund) outflows, we believe it is still too early to describe this as a lasting trend reversal.  What is more, the Indian central bank yesterday evening announced additional measures aimed at curbing Gold imports – these are likely to further cool demand in a country that is still the world’s largest Gold consumer.  For one thing, imports will be linked to exports in future. For example, 20% of the imported volume will have to be re-exported in the form of jewelry. What is more, it will only be possible to sell Gold to the jewelry industry and importers will have to retain Gold in warehouses“…

The All India Gems & Jewelry Trade Federation estimates that Gold imports in the second half of the year will fall 63% year-on-year to 175 metric tons, a figure disputed by Commerzbank…“In our opinion, this is an overly pessimistic appraisal which is probably aimed at encouraging the Indian central bank and government to loosen the restrictions“…

Today’s Markets

Chinese stocks led Asian markets higher overnight as speculation grows that Beijing may take stimulus measures to boost a slowing economy…the Shanghai Composite rallied 39 points or almost 2%, closing at 2044…Japan’s Nikkei average climbed 120 points to finish at 14779…European stocks are modestly higher in late trading overseas…In New York, new record highs this morning in both the Dow and the S&P 500 thanks to some stronger-than-expected earnings reports…as of 7:05 am Pacific, the Dow is up 38 points to 15584…the TSX is 3 points higher while the Venture has added a point to 930…Zenyatta Ventures (ZEN, TSX-V) continues its impressive run with a breakout this morning to a new high, but where it closes today will be key…it’s up 18 cents to $4.34 through the first 35 minutes of trading…GoldQuest Mining (GQC, TSX-V) is looking strong in early trading today…initial drill results from the Guama trend west of Romero can’t be far off, and a fresh discovery would give GQC a powerful lift…

Crude Oil Chart

One of the factors driving Gold over the last couple of weeks has been the jump in Crude Oil prices to 16-month highs…demand for imported Oil is falling rapidly with the increased ability to get western Oil (WTIC) to markets on the U.S. Gulf Coast and the West Coast…yesterday, WTIC climbed to a premium against Brent for the first time since 2010…so with Crude in the spotlight, let’s take a look at a couple of charts…

The 10-year monthly chart is quite striking as it shows that while WTIC is currently near important resistance at $110, there is clearly potential for a major breakout to the upside – not necessarily immediately, but perhaps in the coming months…this would likely catch a lot of investors by surprise and could hurt U.S. growth prospects…that’s why John has titled this chart, “The Looming Crisis In Oil Prices”…at some point, however, demand destruction will set in if Oil prices climb too high as we’ve seen in the past…

WTIC 6-Month Daily Chart

The short-term chart for Crude shows temporarily overbought conditions, strong resistance at $110 but plenty of support between $100 and $104…

Pacific Potash Corp. (PP, TSX-V) Chart Update

What we’ve considered in recent months to be one of the top plays on the VenturePacific Potash Corp. (PP, TSX-V) – continues to look strong and has impressive liquidity…PP gained 2 cents yesterday to close at 19 cents after announcing it intends to commence a 6-well drill program in September at its Amazonas Potash Property in northwestern Brazil…below is a 2.5-year weekly chart update from John…a breakout at some point this quarter appears likely…

Victory Ventures (VVN, TSX-V) Update

There has been considerable staking recently in the general vicinity around the newly-named Sheslay River Project, optioned by Pete Bernier’s Prosper Gold (PGX., TSX-V), and Garibaldi Resources‘ (GGI, TSX-V) Grizzly Property that adjoins the western and southern boundaries of the Sheslay…this speaks to how hot this entire area could become with Bernier’s arrival on the scene and now that an exploration program has started at Sheslay with drilling expected to commence by early next month…Victory Ventures (VVN, TSX-V) is first out of the gate to announce that it has acquired some claims near the Grizzly, with that news coming out this morning, and more companies will be following suit in the near future…in the case of Victory, we’re still shaking our heads over the company’s news earlier this month regarding its acquisition of the Fortuna Property near Kamloops (claims conveniently purchased from VVN’s President) followed by a sloppy description (and an even more confusing “clarification” a couple of days later) of its first hole drilled at the Copau Property near Iskut…at the end of May, no company was in a better position to benefit from Colorado Resources‘ (CXO, TSX-V) exciting discovery at North ROK than Victory given the drill-ready status of Copau and the two financings VVN completed in May…the company had built up plenty of momentum and its stock price doubled…but then they popped their own balloon by announcing the Fortuna acquisition (confusing signal to the market, why not more ground near Iskut?) while also fumbling the ball with their drill program at Copau…we’re still holding out hope that Victory will get its act together, and perhaps this morning’s news is a start (cynics may say it’s a sign of desperation), but they have done serious damage to their brand and have shaken investors’ confidence in the company over the last few weeks…more drilling at Copau is scheduled for early next month…the Venture market is risky enough given the volatility of metal prices and the hit-and-miss nature of the exploration business…investors have little tolerance these days for companies that find a way to trip over their own feet and can’t effectively execute opportunities to drive shareholder value…

Amarc Resources Ltd. (AHR, TSX-V) Update

We expect British Columbia to be an exploration hotspot this summer, and a company to keep an eye on in that respect (as we’ve mentioned on previous occasions) is Amarc Resources (AHR, TSX-V) which has five separate high quality deposit targets in the province (Au, Ag and Cu)…technically, AHR is beginning to look a lot healthier…below is a 2.5-year weekly chart…AHR closed at 6.5 cents yesterday (resistance), putting it above its 100-day moving average (SMA) for the first time in more than 6 months…as always, perform your own due diligence…

Aldrin Resource Corp. (ALN, TSX-V) Update

Aldrin Resources Corp.’s 12,000-hectare Triple M Property in the Patterson Lake area of Saskatchewan (9 kilometres south to 11 km west of the Fission-Alpha Minerals discovery) should stir up interest as the year progresses, with drilling currently planned for January…the conductive trends at Triple M property parallel the mineralized Patterson Lake conductors and fault…ALN has shown good liquidity and is very close to breaking above a long-term down trendline as shown in John;s 3-year weekly chart…

Note: John and Jon both hold share positions in GGI and VVN.  Jon also holds a share position in PP and GQC.

2 Comments

  1. CCB HALTED!

    Comment by STEVEN — July 23, 2013 @ 6:26 am

  2. Who made the comment about selling ZEN.

    Comment by John — July 24, 2013 @ 6:00 am

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