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October 6, 2014

BMR Morning Market Musings…

Gold has traded between $1,187 and $1,203 so far today…as of 8:00 am Pacific, bullion is up $10 an ounce at $1,201…Silver is 23 cents higher at $17.09…Copper has added 2 cents to $3.06…Crude Oil is down 78 cents a barrel to $88.96 while the U.S. Dollar Index, having advanced a record 12 straight weeks to its highest level in 4 years, has cooled off somewhat to begin the new week – it’s down nearly half a point to 86.24…

John has a very interesting 20-year monthly Gold chart this morning that bullion bulls should find comforting…no one can say with certainty at this point if Gold is going to hold its 2013 double bottom support at $1,180…however, there are some aspects to the long-term chart that are quite favorable and suggest that any breach of that support could be very brief…

Citi Research is looking for Gold to find support in the $1,130 to $1,160 area should the $1,180 support fail…the bank points out that the last time Gold fell this sharply, the jewelry sector responded vigorously with re-stocking. “This was particularly evident in the big rise in Gold imports into Hong Kong ahead of the 2014 Chinese New Year,” Citi stated. “As the Chinese New Year is now only a few months away, with its increased seasonal luxury goods demands, we expect that if Gold did fall sharply in October that there would once more be substantial buying ahead of that retail season. We therefore believe that Gold is likely to find at least temporary support in the $1,130-$1,160 range should it break its important $1,180/oz support level.”

Alan Greenspan, former Chairman of the Federal Reserve, articulated in an article in Foreign Affairs that China would see unexpected strength in the international financial system if it were to convert some of its foreign exchange reserves into Gold…clearly, there is speculation as to the advantages China could have if it were to purchase and hold more Gold – and that’s a long-term strategy Chinese authorities are continuing to carry out, it appears…

Today’s Equity Markets

Asia

Japan’s Nikkei average extended gains into a second session, climbing 182 points overnight, as a weaker yen boosted exporters…the currency traded in sight of a 6-year low of 110 against the greenback…China’s Shanghai Composite remains closed through tomorrow for the week-long National Day holiday that began last Wednesday…

Europe

European markets are up moderately in late trading overseas…

North America

The Dow is up 13 points as of 8:00 am Pacific…the TSX is 25 points higher while the Venture is off 8 points at 875…

Gold 20-Year Monthly Chart

What’s interesting about this 20-year monthly chart is that the current weakness in Gold is coming after RSI(14) several months ago broke above a downtrend line going back to the 2011 high…as we’ve seen with the both the Dollar Index and the Venture, RSI(14) breakouts/breakdowns can be extremely important indicators…the Slow Stochastics (SS) indicator also broke above its downtrend line and is now re-testing that level as support…so this is encouraging…

What this chart is telling us is that there is some inherent technical strength in Gold…one possible scenario, based on this monthly chart, is that bullion could spike lower (below $1,180) at some point during the next couple of weeks, and then quickly and violently reverse to finish the month above key support in the $1,180’s…the fact that the “smart money” commercial traders have dramatically scaled back their net-short positions in Gold in recent weeks suggests a near-term bottom in bullion is rapidly approaching, if we haven’t seen one already…

GOLD197

Venture 3-Year Weekly Chart

The Venture 3-year weekly chart has been a very reliable guide for more than a year now, so “warning signs” were flashing early last month as soon as RSI(14) dipped below its uptrend line in place since the summer of last year…RSI(14) then plummeted along with the Index which sliced through strong support levels (970 and 920) like a knife through butter…

Is the Index in the process of putting in a triple bottom?…that remains to be seen…the support band between the 2013 low (859) and 875 is critical – a confirmed break below that would lead to a further loss of confidence and the Index would have to search for a new low…

The abrupt reversal in the Venture since the end of August (the Index has plunged 13.8% over the last 24 trading sessions) and the intensity of that move suggests a couple of obvious possibilities – a) commodities have further to fall, or b) the broader equity markets are gearing up for a major correction…another possibility, of course, is that we’ve essentially seen the end of this Venture correction and critical support around 860 will hold…the two problems with the latter theory are the break below the uptrend support line around 920 and the fact that the Index’s 200 and 300-day SMA’s have suddenly started to decline, albeit very gently at the moment…

CDNX341

Doubleview Capital Corp. (DBV, TSX-V) Update

Doubleview Capital (DBV, TSX-V) was halted pre-market this morning, at the company’s request, pending news…we’re always nervous about trading halts as they tend to lift investors’ expectations beyond reasonable levels…however, in certain circumstances, sometimes they are necessary…in the case of Doubleview, this halt is obviously related to drill results as the company indicated a week ago that assays were expected in the “very near future”DBV was halted on both previous occasions this year when drill results were issued…

While it would be nice to see a “glory hole” out of the Hat, we’re not expecting one – those are very rare…

Success for Doubleview, in our estimation, would simply be to show improvement over the last set of results in mid-May that the market didn’t react well to, in part due to poor communication…what we’re hoping to see is evidence of higher grade potential within “Anomaly B” which is now known as the Lisle Zone…will Doubleview deliver?…we’re anxious to find out…markets can be punishing, especially in the current environment, if a company can’t demonstrate that it’s moving forward in the right way…DBV needs to pass this test…

Technically, DBV has been showing momentum recently and rising 200 and 300-day SMA’s at 19 cents and 15 cents, respectively, are helpful…

DBV30

North Arrow Minerals Inc. (NAR, TSX-V) Update

Any additional weakness over the next couple of months in North Arrow Minerals (NAR, TSX-V) should be considered an early Christmas gift, in our view, as diamond discoveries have kick-started the junior exploration market before and could do so again…North Arrow is working on numerous Canadian diamond projects (grassroots to advanced-staged), and the Pikoo play in Saskatchewan (winter drill program coming up) looks particularly exciting in terms of fresh district-scale possibilities with NAR leading the way and well-financed…with President and CEO Ken Armstrong, and Chairman Gren Thomas, among others, NAR features a highly respected management group and board – they’ve been responsible for the discovery of many kimberlites in Canada and Africa, including of course the Diavik mine in the Northwest Territories…

Below is an updated 1.5-year weekly NAR chart from John…resistance has been very strong around 80 cents since the end of last year…another resistance area is 65 cents…significant support in the immediate vicinity of the Fib. 38.2% retracement level (54 cents)…as always, perform your own due diligence…

NAR is off 2 pennies at 60 cents through the first 90 minutes of trading…

NAR6

Contact Exploration Inc. (CEX, TSX-V) Update

Contact Exploration (CEX, TSX-V), one of our favorite oil and gas plays the last couple of years, has hit two important “contact” points on its 2.5-year weekly chart – the bottom of an upsloping channel in place since mid-2013, and RSI(14) support…

In late August, the company reported net income of nearly $1.1 million for the quarter ended June 30, more than double net income for the same period last year…recently, Contact also successfully completed drilling at three new Kakwa (Alberta Montney) wells, and these look promising…it’ll be interesting to see the initial 30-day production volumes (CEX holds a 25% working interest)…CEX remains very active on other fronts in the Montney and elsewhere…

Keep in mind that stock from a $10 million June financing (39 cents non-flow-through, 44.5 cents flow-through) has now become free trading – just something to be aware of, as we mentioned previously, as this could put some more downward pressure on the stock…potential good news from the Montney may drive enough volume in the stock to help clean up any paper that comes into the market from the PP…

CEX is unchanged at 45.5 cents as of 8:00 am Pacific

CEX23

Short-Term Silver Chart

Silver plummeted to a fresh multi-year low on Friday in knee-jerk reaction following a better-than-expected U.S. employment report…for starters, Silver needs to gain traction above its 10-day SMA around $17.40, but the likely trading range for the metal over the coming weeks appears to be between chart support at $16 and previous support (now new resistance) around $18.60…

Since the beginning of last month, Silver’s RSI(2) on this 6-month daily chart has spent most of its time in oversold conditions below 30, reversing the extreme overbought situation that persisted through much of June…one encouraging recent sign is that we’re seeing higher lows in the RSI(2) while the price of the metal drops to new lows…

SILVER206

Silver Long-Term Chart

After failure of support around $17.50, the next obvious major support for Silver is $16 – a level it breached during the 2008 Crash but reclaimed as support in late 2009 as you can see in this 11-year monthly chart…interestingly, the Slow Stochastics indicator is at its lowest level in a decade – this is really a time to be bullish, not bearish, when one looks at the long-term “Big Picture” for Silver – what we’re seeing in the sentiment and technical indicators now is the mirror image of what emerged in early 2011 when metal raced to a high of nearly $50 an ounce with almost everyone jumping on the bandwagon…

SILVER205

Note:  Jon holds a share position in DBV.

21 Comments

  1. Gold up 12$ and venture down another 11 pts. I give up trying to make any sense of this…. Good luck to all whom are holding dbv. I hope you guys/gals get the news you’re waiting for…. my heart would be pounding with excitement/nervousness….

    Comment by Tony T — October 6, 2014 @ 8:46 am

  2. DBV trading! Anyone w/ opinions at this time?

    Comment by bgr — October 6, 2014 @ 9:49 am

  3. Two hours left and DBV hasn’t released any news. I don’t think we’re going to see any news during market hours. And if we do, the stock will continue to be halted. I don’t think Farshad wants to repeat the same mistake with the previous drill results.

    Comment by chris — October 6, 2014 @ 10:03 am

  4. DBV – Halted all day? Good or bad. If the release is at the end of trading today, I will predict not so good results. If release is tomorrow morning, then good results. Anybody else with their prediction?

    Comment by Dan — October 6, 2014 @ 10:17 am

  5. Alix Resources Corp AIX:TSXV – News Alert

    Alix Encounters Promising Gold and Copper Values at Sheslay South Fork

    Comment by Bert — October 6, 2014 @ 10:25 am

  6. Well, I know that no one wants to hear this, but I think the tsx.v could be heading to its lows of 2008 in which case it would be a double bottom from a charting standpoint. Although silver is having a strong day, some too are saying that silver could test 15.20 or so, another double bottom from 2008 low.

    Comment by david — October 6, 2014 @ 10:28 am

  7. Further to my post. The US dollar is down 87 cents/points and still the venture is tumbling down 14 pts as I type this… What the heck is going on? Why is everyone bailing??

    Comment by Tony T — October 6, 2014 @ 11:38 am

  8. Dan, I’ve held stocks which were halted one, two, even three days. 9/10 times good news followed. From my perspective, it wouldn’t make sense to halt a stock all day then release bad drill results. I think something else is going on behind the scenes as well.

    Comment by chris — October 6, 2014 @ 1:18 pm

  9. Tony T, I think we’re seeing the final capitulation.

    Comment by chris — October 6, 2014 @ 1:23 pm

  10. Dbv news:
    DOUBLEVIEW DRILLS INTO STRONGEST MINERALIZATION DISCOVERED SO FAR AT HAT PROPERTY

    Doubleview Capital Corp. is preparing to restart diamond drilling at its Hat copper-gold porphyry discovery in the Sheslay district, northwest British Columbia, after intersecting the strongest mineralization yet encountered at the property in the most recently completed drill hole, HAT-022. HAT-022, collared 230 metres east of HAT-012 and 87 metres east of Hat-011, returned 404.2 metres of 0.25% Cu and 0.255g/t Au (0.4% Cu Eq), including a 118.4-metre interval grading 0.55% Cu and 0.41 g/t Au (0.80% CuEq).

    Drilling Highlights:

    HAT-022 demonstrates the potential for higher grades and length within the Sheslay Red Stock zone of alteration identified earlier this year;
    All 7 new holes show continuity of mineralization and some include the Hat’s best grades to date in the Lisle Zone;
    Mineralization remains open in all directions – several large coincident geological, geophysical and geochemical targets surrounding the Lisle Zone have yet to be drill-tested.
    Mr. Farshad Shirvani, President and CEO, stated: “These latest results confirm our belief that the Hat Property has become a very important new discovery with large-scale deposit potential in a robust, under-explored district where Doubleview is taking a leading role. We have systematically advanced this project through each round of drilling, expanding the mineral zone both laterally and to depth so we have ample reasons to expect fresh breakthroughs as work continues.

    “We have assembled an exceptional technical team under the leadership of Mr. Pat McAndless, P. Geo., the Company’s senior technical advisor, that is passionate and driven to succeed. We have a vision for where this is going as we build tonnage, find higher grades, and demonstrate scale. The property is fully permitted and the camp and complete drill outfit are on site”.Table 1 : Significant Assay Results of this drilling program:

    DDH From To (m) Length Cu (%) Au Ag CuEq(%)
    (m) (m) (g/t) (g/t)

    HAT-022 43.4 447.6 404.2 0.25 0.25 0.41 0.40
    HAT-022 including 116.4 419.0 302.6 0.30 0.28 0.41 0.46
    HAT-022 and 302.9 421.3 118.4 0.55 0.41 0.77 0.80
    HAT-022 and 294.2 354.6 60.4 0.67 0.56 0.80 1.00
    HAT-021 246.3 346.0 99.7 0.19 0.13 0.37 0.26
    HAT-021 including 246.3 292.7 46.4 0.26 0.18 0.59 0.37
    HAT-020 0.0 301.4 301.4 0.11 0.12 0.20 0.19
    HAT-020 including 213.8 301.4 87.6 0.28 0.27 0.23 0.44
    HAT-020 including 217.6 228.8 11.2 0.38 0.51 0.31 0.67
    HAT-020 and 253.5 297.0 43.5 0.43 0.37 0.30 0.65
    HAT-019 48.4 444.8 396.4 0.13 0.10 0.29 0.19
    HAT-019 including 48.4 74.0 25.6 0.11 0.37 0.37 0.32
    HAT-019 and 249.7 433.0 183.3 0.22 0.13 0.45 0.30
    HAT-019 including 286.0 436.8 150.8 0.25 0.14 0.52 0.34
    HAT-019 and 397.5 408.3 10.8 0.67 0.18 1.46 0.78
    HAT-019 and 342.0 420.2 78.2 0.37 0.18 0.85 0.47
    HAT-019 including 359.7 420.2 60.5 0.43 0.18 1.01 0.54
    HAT-018 42.1 314.0 271.9 0.15 0.17 0.39 0.25
    HAT-018 including 170.7 314.0 143.3* 0.23 0.27 0.54 0.39
    HAT-018 and 179.8 314.0 134.2* 0.24 0.28 0.57 0.41

    * includes 2.0 metre contaminated sample recorded as 0 value

    HAT-017 39.7 459.9 420.2 0.17 0.14 0.38 0.25
    HAT-017 including 221.0 459.9 238.9 0.27 0.22 0.43 0.40
    HAT-016 45.7 429.0 383.3 0.14 0.11 0.35 0.21
    HAT-016 including 160.7 189.4 28.7 0.36 0.08 1.52 0.42
    HAT-016 and 256.2 335.6 79.4 0.32 0.32 0.27 0.51
    A Drill Plan is located on the website of the company. Drill holes HAT-016 and HAT-017 successfully targeted the southwest continuation of the Lisle Zone. Drill hole HAT-018, directed to the northwest, was abandoned in strong copper-gold mineralization and short of its intended target due to difficult drilling conditions in fractured sulphides. Drill holes HAT-019 and HAT-021 expanded the Lisle Zone southwest in the down-slope direction whereas Drill hole H-20 expanded the Zone northerly. Drill hole HAT-022 was an 87 metre step-out to the east of drill hole HAT-011 that assayed 451 metres of 0.21% copper, 0.18 g/t Au and 1.79 g/t Ag (0.33% Cu Eq), including 330 metres of 0.25% copper, 0.22 g/t Au and 1.84 g/t Ag (0.39% Cu Eq). Due to the fact thatthat potential metal recoveries in possible future mining and processing operations at the Hat Project have not been investigated and are unknown, and because both precious and base metal market prices are volatile in both the short and long-term, copper equivalent (CuEq%) estimates cannot be used to predict the current or future value of Hat mineralization. While Doubleview is very encouraged by results from 22 drill holes completed to date at the Hat Property, there has been insufficient exploration to define a mineral resource, and it is uncertain if further exploration will result in the target being delineated as a resource.

    Quality Assurance/Quality Control

    All drill cores were sampled on site by sawing the core length-wise, placing one half core securely in a bag for transfer to the prep lab and one half retained for future reference. 1365 core samples were submitted to an independent fully accredited ISO 9001:2008 certified analytical laboratory where gold was determined by fire assay and atomic absorption (AA) methods, and 45 other elements, by four acid digestion followed by induced coupled plasma/emission spectrometry (ICP-ES) determination. Samples with copper content greater than the ICP upper detection limit (>10,000 ppm) were analysed by atomic absorption. QA/QC protocols were observed at all stages of core processing, including security in transit of samples with “chain of custody” documentation, preparation of duplicate samples, insertion of standard samples into the sample stream, replicate analyses of samples, and performance of check assaying by a second independent laboratory. Data have been reviewed by an independent consultant who found all analytical data to be fully acceptable in terms of reproducibility.

    Mr. Erik A. Ostensoe, P. Geo., a consulting geologist, is Doubleview’s Qualified Person with respect to the Hat Project as defined by National Instrument 43-101 Standards of Disclosure for Mineral Projects. Mr. Ostensoe has reviewed and approved the technical contents of this news release. He is not independent of Doubleview as he is both a shareholder and a co-optionor of the Hat Project.

    Comment by Paul — October 6, 2014 @ 1:54 pm

  11. DBV results are out.

    Comment by Tom UK — October 6, 2014 @ 2:00 pm

  12. DBV news out – good results…let’s see what the market says.

    Comment by KevinMc — October 6, 2014 @ 2:15 pm

  13. Hi Jon/John. The silver chart have formed a nice engulfing pattern (which will need confirmation). So perhaps we can turn this sell off corner and head back northward. Another day like this tomorrow would be nice. I do hear more people now saying this could be a bottom.

    Comment by Ed — October 6, 2014 @ 2:17 pm

  14. Chris – What do you think of my prediction now? DBV results?

    Comment by Dan — October 6, 2014 @ 3:00 pm

  15. Tonnage is building for DBV and drilling will resume shortly. Hole 22 is the last to hole to have been drilled and has produced the best result. Hopefully Pat and his team will get some better grades with the next round of drilling. The PR has been written better than Prosper’s recent results, so hopefully the market will react a bit more positive to this one.

    Comment by Tom UK — October 6, 2014 @ 3:09 pm

  16. Jon – When do you think we will see more results from Mexico from GGI? Also when do you think they will start to drill the Grizzly? Was your trip to Sheslay postponed? – after PGX results and now DBV which as you said earlier didn’t hit a glory hole yet.

    Comment by Dan — October 6, 2014 @ 3:14 pm

  17. Dan, results were ok. Grades could be better but tonnage is building. Hole 22 was the best of the bunch. Let’s see how the market reacts tomorrow… it will tell the whole story.

    Comment by Chris — October 6, 2014 @ 3:29 pm

  18. Excellent news from DBV, which sets things up nicely for upcoming site visit, Dan. Two key points – 1) DBV is indeed finding higher grades, 118 m section of 0.80 CuEq on the last hole is a breakthrough – they need more of that; 2) The Hat is unquestionably a new deposit in the Sheslay district – every hole on this last round hit with some long intersections. They are on their way. A lot of work to drill this off and continue to build tonnage and grade, but strong possibilities here.

    Comment by Jon - BMR — October 6, 2014 @ 3:29 pm

  19. Jon, if we drill a couple of more holes like hole 22 in this upcoming drill program, then look out. It shows there are higher grades on the property. All in all, the results are good. They are moving the project forward which is important.

    Comment by Chris — October 6, 2014 @ 3:35 pm

  20. Totally agree Jon – people think results are bad if we don’t hit a glory hole…no true whatsoever. I think these results show DBV has something great. What are your thoughts on what the market will do tomorrow?

    Comment by KevinMc — October 6, 2014 @ 3:43 pm

  21. Great news today on DBV! That should get the play going finally!….PEM-V had a great day too!

    Comment by STEVEN1 — October 6, 2014 @ 5:43 pm

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