Weekly Trends: July 27, 2013

Constructive week for all metals and the TSX-Venture | Klondex Mines Ltd. is “Stock of the Week”

Commodity Talk

It has been a constructive week for all metals. We highlighted gold and platinum last week as potential candidates to move through resistance – gold through $1300 into the $1330-$1350 resistance, and platinum from $1434 into $1450 resistance and potentially up to $1500. The $1350 zone in gold is definitely a resistance point and it appears to be building another rounded top before moving lower. Key Fibonacci retracement levels using the $1348 high and $1179 low are the 33% retracement at $1292 and the 50% retracement at $1264.

These technicals will likely go out the window after Thursday’s FOMC rate decision, as speculators will look for clues on QE tapering.

Gold Yearly Chart 2013

Gold Yearly Chart


The TSX-Venture opened the week at 920, broke through resistance at 930, and regained the 50-day moving average for the first time since February. The market has digested the move for the last several days. The Relative Strength Index (RSI) stayed above 50 all week and the TSX-Venture New Highs – New Lows indicator fluctuated between -10 and +2, both good signs.

The $HUI Gold Bugs Index broke through the ascending triangle resistance at 245 and has regained the 50-day moving average. While this move is positive, it is likely to be short lived given Q2 earnings season is just getting underway. There will likely be a significant move lower before capitulation given the realized gold price sales for many miners will be $300 less than in Q1.

The FOMC rate decision is July 31st and is followed by the release of US non-farm payrolls and unemployment data on Thursday; both of these are market-moving events.

TSX-V Regains 50-day Moving Average



Klondex Mines LogoShares outstanding: 64,435,144
Share price: $1.27
Market cap: $81.8 million

This week we take a look at Klondex Mines (KDX.TO), a gold development stock in Nevada. Klondex’s Fire Creek project is high grade (over 8 g/t) and has a NI 43-101 resource estimate of over 2 million ounces. An updated resource estimate is expected later this year, which will include an additional 120,000 feet of drilling.

Klondex issued a news release on Friday that states Newmont will process the Fire Creek ore during a bulk sample. This bulk sample will allow Klondex to generate near term cash flows as they continue to develop the project. A PEA is also expected by year end and if the numbers look good expect Klondex to be a potential takeover candidate. Another positive sign is that insiders, led by Glenn Poutney, have been very active buyers in the open market this year.

Klondex Mines Stock Chart

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