“Strange Bedfellows: Dow Jones and the Precious Metals”
By Joshua Enomoto, FutureMoneyTrends.com Contributor
*Opportunity Alert* Why This Gold Junior Could More than Double in the Next 120 Days!*
First off, this is the real deal, Canarc Resource Corp is founded and led by Bradford Cooke, the founder and current CEO of Endeavour Silver who trades on the NYSE with a $1 billion market cap.
Why do we think it can more than double in the next 120 days? In their most recent PR, it focused mainly on a letter of intent regarding a private placement deal, however, if anyone was to read the entire PR (most don’t) they would have seen something incredibly bullish for this 14 cent junior gold.
The company has agreed to a 120 day period to negotiate with the private placement investor an option to earn up to a 51% interest in their New Polaris project for a total investment in exploration and development totaling $30 million. The value and opportunity in this going through is that Canarc Resource Corp currently has a market cap of just 13 million, see the price valuation problem? It is possible that in the next 120 days, Canarc has $30 million cash, a joint venture partner, and is still only worth $13 million, not likely… Not likely if this closes, Canarc should see a massive increase in their share price almost over night!
EPIC Opportunity for FutureMoneyTrends.com Members
We believe Canarc Resource Corp could potentially be not only our biggest winner for 2012, but our biggest winner for years to come.
THIS IS THE REAL DEAL!!! Please see our Canarc Resource Corp Profile below.
Company: Canarc Resource Corp.
Symbol: TSX: CCM & OTC-BB: CRCUF
PPS: $0.15 CRCUF, $0.14 CCM
Canarc Resource Corp trades on the senior exchange in Canada under CCM, however, since the vast majority of our members live in the United States, we will be referring to Canarc Resource Corp using their American symbol CRCUF. Please note it makes no difference in how a person holds the stock or what exchange someone buys it from.
CRCUF is a growth-oriented gold exploration and mining company focused on the discovery and development of gold deposits in North America.
CRCUF’s core asset is the 100% owned, past producing, 1.1 million oz (NI 43-101) New Polaris Gold Mine project located in north-western British Columbia. New Polaris is now poised for the development of a 72,000 oz per year, high-grade, underground gold mine.
Potential Joint Venture: When we met with Bradford Cooke he said that getting a joint venture done was at the top of his priority list so that he could then focus on their 2 other projects as well as possibly accumulating more gold projects.
Bradford Cooke is currently the CEO of both CRCUF and Endeavour Silver which trades on the NYSE for around 10 bucks with a $1 billion dollar market cap. Bradford is a geologist with 36 years of experience in the mining industry, specializing in the discovery and development of mineral deposits. Bradford has laid out a very aggressive plan for CRCUF this year and he has our highest confidence.
CRCUF also has 2 other projects that Bradford refers to as “potential elephants.”
Tay-LP Property in South Central Yukon, Canada
Favorable Geology – Similar to other recent gold discoveries in the Tintina Gold Belt by Atac Resources and Yukon Nevada Gold.
Multiple Targets – Historic drilling highlights include 3.6 gpt/24.3m, 1.3 gpt/31.8, and 4.0gpt/10.5m
Strong Potential – Significant opportunities to expand known gold zones and make new gold discoveries.
Windfall Hills Property in Central British Columbia, Canada
Large Property – 3800 Hectares
Good Location: 65kms south of Burns Lake, BC and 90 kms northwest of New Gold’s Blackwater 7.8 million ounce discovery
Existing Data – In 2011 CRCUF defined multi-element geochemical anomaly (Au-Ag-As-Sb) and extended trend to northwest.
For more information, please visit Canarc.net
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Never base any decision from information contained in our website, emails or Issuer profiles. Conduct your own independent in-depth investigation regarding such matters and consult with your registered investment adviser, financial consultant, attorney or other professional before proceeding with any financial decisions. The reality is that these revered assets would only effectively protect against one of these events, and certainly not both at the same time. Runaway inflation would lead to higher prices in EVERY asset class as the dollar is being devalued and would require nominally larger amounts of greenbacks to purchase an identical product before the inflation. A stock market crash, however, suggests deflation, a situation where everyone wants to sell and no one wants to buy, and while it is certainly possible that the Dow and gold could eventually share a 1:1 ratio, where one gold ounce could buy one share of the entire Dow index, the problem is, nobody knows for sure how the actual numbers will stack up. W ould it be Dow 1,000: Gold 1,000? Or Dow 6,000: Gold 6,000? Of course, in a deflation, every asset’s price is reduced as supply exceeds demand, and therefore, the value of the dollar increases.
The current market paradigm is that precious metals are acting as “risk-off” assets, meaning that investors fearful of volatility are seeking shelter in fiat currencies, namely, the US dollar. One doesn’t have to personally “believe” in this trend, but rather acknowledge that it exists and look for trading opportunities as a result.
Let’s start off by looking at a 3-month snapshot of the Dow Jones Industrial Average:
Generally speaking, the Dow has been trading steadily upwards above its 50 day moving average, with much of the bullishness being attributed to the markets pricing in a potential QE3. That potentiality became a reality on September 13th, and since that fateful day, investors on Wall Street have been trying to push the index past the 13,600 resistance level, but failed repeatedly. Finally, on October 19th, the Dow dropped to 13,350, or a 2% drop from its quantitatively-induced high. The doji star the day prior proved ominous. As you may know, doji stars occur when the opening and closing price of a trading session are identical or close to identical. In and of themselves, they reveal very little aside from the fact that there was ultimately very little enthusiasm by either the bulls or the bears to push the price one way or the other; however, in this particular context, it revealed hesitation in moving forward with the prevailing trend. Another big drop on the 23rd confirmed that the bears established near-term control of the sector, with their eyes firmly set on the 200 DMA, sitting just under the 13,000 mark.
Interestingly, if we take a look at gold’s 3-month chart, we see a very similar pattern:
The yellow metal started to rally around mid-August, after a half-year of frustrating consolidation from February’s highs. The price continued to surge higher based on speculation of central bank money printing that eventually was realized through major announcements by the European Central Bank, the Federal Reserve, and the Bank of Japan. Since all commodities are priced in US dollars, the announcement of QE3 was the biggest catalyst for gold.
Unfortunately, at least for the near-term, it has proven to be the final one. The major psychological target for the gold bulls was the 1,800 price point, but it proved elusive, with the 1,780 level instead proving strong and consistent resistance. Gold’s decline came a bit sooner than the Dow’s, as on October 5th, the metal failed to secure and hold a recent run-up. From then on, aside from a few isolated sessions, the price of Gold continued to roll downwards.
Whatever fundamental catalyst that failed to get the Dow above 13,600 clearly put a ceiling on gold’s nominal target of $1,800. Let’s get real here: the driver that got both the index and the metal up and running was speculation of QE3. And the reason they both failed earlier in the year and now is risk, specifically the Eurozone debt crisis sending scared money scrambling into the waiting arms of the dollar.
But as with any crisis, there is an opportunity, for those that are patient and have a steely resolve. Both the Dow and gold have suffered through a correction but will resume their upward trajectory. The fundamental players are the same, namely the Federal Reserve’s commitment to QE3 and low interest rates. With the economy dragging its feet, the only option, aside from universally unpopular austerity programs, would be to aggressively increase the scope of quantitative easing.
Let’s take a look at the technicals, starting with the Dow Jones:
Based on the Slow Stochastic oscillator, the current status of the Dow is extremely oversold. In fact, over the last 3 years, if you were to simply “buy” the index based on when the Stochastic was below the 20 level, 75% of the time, you would have realized an immediate profit. As the RSI is also nearing an oversold status, more often than not, the chances are good that the index will rise from here.
It’s the same story with gold:
With the yellow metal, the conditions are even better. Analyzing the same 3 year period, buying on sub-20 Stochastics would have been a good decision 80% of the time. And whether you were bullish on equities or on commodities, the simple fact is, even if you were to have bought when the Stochastics gave a “false” reading, you would eventually be in the black only a few months later.
Perhaps the best opportunity, however, is silver:
Since it tracks the price of gold 70 to 80 percent of the time, it too is poised to rise from its currently oversold status. While it is more volatile than its illustrious cousin, the current spot price of $32.10 is worth taking a look at. The bears met significant resistance trying to push the price under $32, and momentum indicators suggest that the downturn is losing steam and that a reversal could be in play shortly.
In conclusion, whether we like it or not, the Dow is currently trending parallel to the precious metals and the same fundamentals that affect the index have had a similar effect on gold. That being said, it is the Fed’s solemn pledge to prop up the economy by propping up the stock market, which means the Dow will be roomies with gold in the foreseeable future.