Gold rose to its highest level in 2 weeks today on a falling dollar after yesterday’s minutes of the last Federal Reserve policy meeting drove markets to push back expectations for the likely timing of an interest rate rise…as of 7:45 am Pacific, bullion is up $7 an ounce at $1,228 after trading as high as $1,235…Silver has added 27 cents to $17.66 (a close above $17.60 would be technically bullish)…Copper has surged a nickel to $3.08 while the U.S. Dollar Index is up slightly at 85.31…it appears a record winning streak of 12 straight weekly gains is over for the Dollar Index which is obviously generating some short-covering in Gold…
In the minutes of the Fed’s Sept. 16-17 meeting, several officials expressed concerns that disappointing growth in Europe, Japan and China could restrain U.S. exports…meantime, the stronger currency – by reducing the cost of imported goods and services and putting downward pressure on commodity prices – could hold U.S. inflation below the Fed’s 2% objective…the Fed staff slightly reduced its projection for medium-run growth in part because of these concerns…
As we pointed out at the beginning of the week, the dramatic scaling back of net-short positions by commercial traders, as shown in recent COT reports, was a strong clue that Gold could be gearing up for a reversal…whether this is a true reversal, as opposed to a mere bounce out of oversold conditions, remains to be seen…another positive sign, from a contrarian standpoint, is that holdings in SPDR Gold Trust, the world’s top Gold-backed ETF and a good proxy for investor sentiment, fell 5.38 tonnes to 762.09 tonnes yesterday – the lowest since December 2008…initial demand out of China, following a one-week break for that country’s National Day holiday, was reported to be encouraging yesterday…
Interesting – the prospect of a harsh northern hemisphere winter, a potential OPEC supply cut and a volatile geopolitical picture may send Oil prices back toward $100 a barrel by the end of the year, according to a CNBC survey of strategists and traders…the average price of OPEC’s basket of 12 crudes has fallen below $90 a barrel for the first time in 2 years…
Today’s Equity Markets
Asia
Asian markets were mixed overnight…China’s Shanghai Composite added another 6 points to close at 2389 while Japan’s Nikkei average slipped 117 points to finish at 15479…
Europe
European markets are mixed in late trading overseas…the Bank of England left its benchmark interest rate unchanged as expected today as wage growth and productivity remained surprisingly weak, lagging the country’s economic recovery…meanwhile, German foreign trade data this morning showed its biggest fall in more than 5 years…
North America
After yesterday’s powerful move, the Dow is down 125 points as of 7:45 am Pacific…Alcoa (AA, NYSE) kicks off the unofficial start of Q3 earnings season after today’s close as investor attention shifts from the Federal Reserve back to corporations, and what they have to say about the final quarter of the year and 2015…
The TSX is down 128 points while the Venture is off 3 points to 846 as of 7:45 am Pacific…
A valuable perspective shared yesterday by Sprott Global Resource Investments Ltd. and Michael Kosowan…
“Mergers and acquisitions (M&A) activity in the mining sector was anemic for most of 2013, but as the Cayden example (CYD, TSX-V) suggests, things are beginning to change. Deals are happening. In fact, according to data compiled by Bloomberg, deals valued at $11.2 billion total have been proposed and completed so far in 2014, the highest annual figure in three years.
“As deal-making revives, there is an opportunity for speculators and investors to capitalize – but they will need to keep a discerning eye. It’s not going to be as easy as buying any company with ‘Gold’ in its name, like we saw in the Gold run-up of 2009-2011. It’s about hitting the ‘sweet spot’ by being selective and finding the most likely takeover candidates.
“Mergers and acquisitions in the Gold space typically happen at both market tops and market bottoms. They occur at tops because companies are flush with cash and are able to expand and buy assets.
“At market bottoms, they occur when larger companies with foresight purchase distressed assets. Companies recognize that they can bolster their ‘pipeline’ of future projects and/or upgrade their existing portfolios at attractive prices.
Few management teams have been given license by their boards to pursue mergers and acquisitions just yet, but those with strong balance sheets and a mandate to deploy capital are taking advantage of the low valuations across the sector.”
Gold Updated Chart
Below is an update to the chart we posted Tuesday…this is a bullish interpretation based on a 3-year weekly chart, and it assumes key support at $1,180 holds which it has (at least for now)…what we’ll be watching for on this chart as the month progresses is a quick reversal in sell pressure...the recent change from more than a year of buy pressure to sell pressure has to be a concern…the last switch from buy pressure to sell pressure occurred at the beginning of 2013, and we all know what happened over the next several months…on an encouraging note, RSI(14) formed a bullish low “W” at 30% and continues to move higher…
It’s very interesting that Gold did not break last year’s double bottom low despite a record run in the U.S. Dollar Index…
U.S. Dollar Index Updated Chart
After 12 straight weekly advances, the U.S. Dollar Index is finally starting to cleanse overbought conditions…at a minimum, it’s reasonable to expect an eventual drop to a support band (previous resistance) between 83.50 and 84.50…this would take pressure off the Venture which typically responds unfavorably to a sharply rising greenback as we’ve witnessed since the beginning of September…
The HGD – A “Mirror Image” Of The TSX Gold Index
Below is a 3-year weekly chart for the HGD on the TSX – the double-short ETF that tracks the S&P/TSX Global Gold Index (securities of global Gold sector issuers listed on the TSX, NYSE, NASDAQ and AMEX)…in effect, this is like viewing the TSX Gold Index in reverse…it provides another perspective…
Gold stock investors have to watch for 2 things in this chart: Will the HGD break out at some point this quarter above the downsloping channel you see below, and will its 200-day SMA reverse to the upside? (sell pressure, dominant since early this year, is rapidly declining)…if both of those events occur, then Gold stocks will experience further weakness…we’ll revisit the HGD as the month progresses…
Contact Exploration Inc. (CEX, TSX-V) Update
Recently, we raised the possibility of near-term weakness in Contact Exploration (CEX, TSX-V) due to free-trading paper coming into the market and a chart that was showing some minor deterioration…
Yesterday, CEX broke below an uptrend channel in place since the summer of last year, while RSI(14) slipped below previous support – two clear indications of fresh technical weakness…there is Fib. support at 38 cents and strong chart support in the low 30’s…
CEX is unchanged at 42 cents through the first hour of trading – 2 cents above the still-rising 200-day SMA…
Spectra7 Microsystems Inc. (SEV, TSX-V)
If the reality of the Venture hitting a multi-year low has you depressed, you may wish to immerse yourself in a more pleasing “virtual” reality with the help of Spectra7 Microsystems (SEV, TSX-V)…
SEV, a speculative tech play that made its Venture debut early last year, jumped 16 cents or 26% on news yesterday regarding the release of VR7050, what the company calls “the industry’s first chip capable of enabling lightweight, ultrathin active interconnects that achieve the requisite high speed and low latency for gesture recognition processing and motion control featured in the latest gaming and virtual reality products.”
No doubt SEV is involved in an interesting space with tremendous growth potential, and we’ll be watching with curiosity to see where investors take the stock during this fourth quarter…this morning, the company announced it has arranged a $4.75-million subordinate secured non-revolving loan facility which “will allow us to further strengthen our balance sheet to enable continued accelerated growth,” according to CEO Tony Stelliga…
“Enable” is one of the buzz words Spectra7 likes to use…it’s mentioned twice among 52 words in a long-winded sentence describing what the company is about under “What We Do” on its web site. “Spectra7 Microsystems Inc. is a high performance analog semiconductor company delivering unprecedented speed, resolution and signal fidelity that enables ultra-light, high-speed, micro-thin interconnects which enable new classes of industrial design for market-leading consumer electronic products including Ultra-HD 4K Displays and Televisions, Virtual Reality, Wearable Computing and Tablets.”
For your own due diligence, here’s another statement from Stelliga taken from SEV‘s latest MD&A:
“Spectra7 is at the cusp of a new and exciting growth phase driven by the global growth of wearable computing, virtual reality and ultra thin high resolution displays. Recent first market availability of leading consumer products featuring the company’s latest products underscore the company’s ability to rapidly deliver new products that enhance consumer experience. Our high performance analog signal processing capabilities and strong system expertise enable us to deliver on our vision of setting the industry standard for ultra light, micro thin extended interconnects capable of delivering ultra high resolution and dramatic consumer appeal of product industrial design. As a result, Spectra7 continues to demonstrate its ability to execute operationally to drive revenue growth and gross margin.”
Technically, there’s no denying that SEV is showing strength…below is a 2-year weekly chart from John…the key for SEV will be to overcome resistance in the mid-80’s…SEV climbed as high as 83 cents in early trading today but is now down 3 pennies at 75 cents as of 7:45 am Pacific…
Note: John, Terry and Jon do not hold positions in HGD, CEX or SEV.
So much for looking forward to higher gold prices, what
difference does it really make ? The Venture is worn out
& it doesn’t adhere to anything, except the fear of the
herd.
Comment by Bert — October 9, 2014 @ 7:50 am
Hip hip hooray finally got your attention on sev and its huge growth curve ahead fully expect it to be bought out probably by Facebook as they own Oculus Rift the price tag is in the dollars $$ – Next is DVG when they begin testing on their gamechanging linear motor pump which will eliminate the old pump jacks in the oilfield these results will truly be a company maker – it will be a 5 well pilot test starting before the end of the month presumed to be with Crescent Point in the bakken of Saskatchewan what people dont understand its more of a showcase testing has been done over and over with great announced results confirming this i fully expect this story to trade up to $1.50 before the end of the year as the test will be 30 days
Comment by berrypolin — October 9, 2014 @ 9:07 am
Bert, we are witnessing the final flushing of the weak hands. How long this continues is anybody’s guess, but when the Venture turns around it will grab everyone by surprise. We’ve been holding on for dear life these past few years, a few more weeks of this is not going to kill us.
Comment by chris — October 9, 2014 @ 9:29 am
I should at least congratulate you for bringing forward a winner,
they are difficult to come by these days.
Comment by Bert — October 9, 2014 @ 9:31 am
Chris
Appreciate your thoughts, but one would have to be gifted
with nerves of steel to watch anything or anyone being
down this long. I doubt if it will turn with vengence
because of the turmoil in the world, from ISIS to
Eboli, to Russia, to Ukraine etc. etc. By the way the
events in Ukraine & sanctions against Ruaaia are not
helping matters, in fact, there’s talk of a recession
in the European Union & the possible negative impact
on the U.S. I am known to be very optimistic but being
human, i do get down & i feel there are many on this board,
who feel the same, the difference being, i complain in
writing, why not ? especially if it brings forward a
positive post by you & hopefully others.
Comment by Bert — October 9, 2014 @ 10:18 am
BLO – Unless there was a reason for the sudden sell off of BLO shares, we should see a nice uptick when the prototype is announced. Wonder if there was some sort of delay that us retailers are not aware of but the institutions got an inside scoop on?
Comment by Dan — October 9, 2014 @ 10:59 am
Dan, called the company and they told me everything is on track. I was watching level 2 and there were big asks being put and pulled within minutes. It sure felt like someone was messing with the stock.
Comment by chris — October 9, 2014 @ 1:36 pm
Dan – we have 3 months before that happens… When BMR talks about doing DD they mean it… wish I would have read the exchange submission first before investing 3K at 19…. never again… BLO was an exploration company, change horses, rasied some money and will not haave a device for over a year available for sale or lease.
good idea?? yep… implementation?? slow… they have licensed a patent for exclusive use…. I cant seem to find out for how long.
probably missed it somewhere…
and the thing with patents – great until you have to defend them.. then you need a ton of dough to do it.
9 cents is not so bad but I fear it will be under 5 UNTIL the prototype is announced…. but more than likely until it is proven, but still no biz opportunites until they commercialize it…
and who are the other players in the space?? I dont know who they are but there have to be more than one.
19 to 10 in 3 days smells…. of what I dont know.. but it stinks
Comment by Jeremy — October 9, 2014 @ 3:25 pm
Jeremy, I posted this article a while back but maybe you didn’t see it.
Watch the interview with Kal Mahli on youtube
Hope this helps you.
Comment by chris — October 9, 2014 @ 4:00 pm
Jeremy, with all due respect I don’t believe you have a full understanding of the opportunity here and how BLO is a first-mover in an important technology that is desperately needed, not only by law enforcement but it has potential applications in the workplace as well. No one likes to buy a stock at 19 cents and see it trading at half that price a few days later, but we’re also dealing at the moment with exceptionally volatile markets and that’s why this is jumping around. I sat down face to face with Rav and looked him straight in the eye and fired some hard questions at him; these guys know what they’re doing, they have a game plan, and a tremendous chance for success. That’s my opinion – many others see the same opportunity. A reader mentioned this previously – a little bit of patience here is key. This company has been trading for only 3 months. Have you spoken with management? If not, give them a call. These guys are building a powerful real business. And nothing has changed about this business in the last 2 weeks to warrant a drop in the market cap from $6 million to under $3 million.
Comment by Jon - BMR — October 9, 2014 @ 4:08 pm
Jon, if I may add something that you didn’t address. The media. Once BLO gets the prototype and moves on to the clinical trials the media will be all over them. So we will get a lot of free publicity. The markets are not doing well at the moment… somebody might be dumping stock to raise money. But as you said, nothing has changed.
Comment by chris — October 9, 2014 @ 4:24 pm
Jon, if it’s possible, can we get an updated DBV/GGI chart tomorrow?
Comment by chris — October 9, 2014 @ 4:25 pm
You’re very correct on that point, Chris. The BLO story in the media has massive legs to it, particularly in the U.S. This prototype is going to be ready very quickly – major difference once people have something they can see.
Comment by Jon - BMR — October 9, 2014 @ 4:29 pm
Chris, we’ll be updating DBV tomorrow and then GGI early next week. I have a hunch we’ll be hearing from GGI very soon. When they have something to say, it’s usually important.
Comment by Jon - BMR — October 9, 2014 @ 4:35 pm
A low barrier of entry has to be considered when investing in BLO. Completion is evident. I read recently about the government of Colorado providing money to a company which is developing its own breathilizer. My advice would be to trade it but don’t fall in love with it.
Comment by Steve — October 9, 2014 @ 5:16 pm
Guys BLO did a financing at 5 cents!!!! All the 5 cent PP holders are blowing out there paper, BLO will trade down to that 5 cent
Level by Nov 3rd. Please this isn’t rocket science, if you owned BLO at 5 cents and could sell it now at 10 and take a double
In this market, would you!?!? I sure would!
Comment by Blotrader — October 9, 2014 @ 7:01 pm
I am not the only one dismayed with this market. A few words from
Danny Deadlock, one of the few out there that i really respect.
Quote This has been an ugly year for small stocks but the past
week / month is really getting under my skin (and no doubt the
huge majority of you). Selling is completely indiscriminate and
when buy orders dry up, panic selling is easily setting lower lows.
unquote
Comment by Bert — October 10, 2014 @ 2:44 am
Hey all.. thx for the links, and while I may not be the best at doing my own DD I created a dialog which is helpful to all… didnt do it with that intent but tis good.. thx to all
Comment by Jeremy — October 10, 2014 @ 5:19 am
1st level of support is .15 on GGI. But the bids are weak right now, we will have to wait and see if the bids build when it hits that level. Then .13 – and .09 is strong support. PGX level 2 has it stationed between .06 and .09 right now.
Comment by dave — October 10, 2014 @ 6:36 am