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Gold has traded between $1,160 and $1,176 so far today after Friday’s sudden and powerful run…as of 7:30 am Pacific, bullion is down $15 an ounce at $1,163…Silver is off 21 cents at $15.62…see updated Gold and Silver charts below…Copper is off a penny at $3.06…Crude Oil, which hit a 3-year low last week, is relatively flat at $78.58 while the U.S. Dollar Index, which pulled back Friday after surging to a 4+ year high, was lower earlier this morning but has reversed slightly higher to 87.64…

Holdings in Gold exchange-traded products have continued lower this month but U.S. Mint coin sales are strong so far, according to Barclays…global ETP holdings are down 16 metric tons so far in November and year-to-date outflows now stand at 141 tons…total holdings are now 1,737 tons…meanwhile, data on the U.S. Mint web site show that coin sales so far in November are 38,500 ounces after 88,500 were sold in October, the most for any month since January…

UBS has updated its 1-month target for Gold to $1,180 an ounce from $1,250 previously but left its 3-month forecast unchanged at $1,200.  “The combination of weak sentiment, light positioning and extreme amount of shorts suggests that any surprise upside catalyst or increase in physical demand is likely to result in a more sizeable price move. While we expect initial resistance at the $1,180 level, which had previously acted as strong support, Gold should climb towards the psychological $1,200 mark over a 3-month period on the back of seasonal physical demand,” UBS stated.

Today’s Equity Markets

Asia

China’s Shanghai Composite gained a whopping 55 points or more than 2% overnight, closing at 2473…

Investor sentiment was upbeat after a new date was announced for an anticipated cross-border trading link…the Shanghai-Hong Kong Stock Connect will finally launch on November 17, clearing uncertainty over the start of the program…this is a game-changer for China as it will give foreign investors unprecedented access to its $4.2 trillion stock market…this pilot project will initially allow a net 23.5 billion yuan ($3.8 billion) of daily cross-border purchases…the exchange link is one of China’s biggest steps toward opening up the capital account, increasing use of the yuan and turning Shanghai into an international financial center…

China-Canada Deal

Analysts are saying that a hotly anticipated reciprocal currency deal between Canada and China, announced over the weekend, marks a significant turning point in relations between the 2 countries…the agreement will foster far easier trade between the Canadian dollar and the Chinese yuan, also known as the renminbi…it makes Canada the first country in the Americas to have a deal to trade in the renminbi…authorized by China’s central bank, it will allow direct business between the Canadian dollar and the Chinese yuan, cutting out the middle man – in most cases, the U.S. dollar…Canadian exporters forced to use the American currency to do business in China are faced with higher currency exchange costs and longer waits to close deals…

In economic news, Chinese consumer price inflation remained at a near 5-year low last month, easing concerns of deflation risks for the world’s second biggest economy…but the wholesale sector stayed entrenched in a deflationary spiral with the producer price index falling by a worse-than-expected 2.2% on year…

Key data out of China later this week (Thursday)  – October retail sales, industrial output and fixed assessment investment…

Japan’s Nikkei average fell 100 points overnight to close at 16781…

Europe

European markets are up slightly in late trading overseas…September industrial production for the euro zone will be announced Wednesday followed by important inflation numbers for October on Thursday…

North America

The Dow is down 17 points through the first hour of trading…the TSX is up 16 points while the Venture is 4 points higher at 774…readers, keep in mind that Canadian markets are OPEN tomorrow on Remembrance Day…

New Gold Inc. (NGD, TSX) is taking over Bayfield Ventures Corp. (BYV, TSX-V)…Bayfield shareholders will receive 0.0477 of a New Gold common share for each Bayfield common share held…the offer values Bayfield at 21 cents per common share or approximately $16.6 million, representing a 50% premium to Bayfield’s November 7 closing price…however, that’s still well below BYV‘s 52-week high of 41 cents…

Keep Cannabix Technologies (BLO, CSE) on your radar screen this week as BLO technically reversed last week and is expected to be updating investors shortly with respect to development of its marijuana breath-analysis device…

CDNX 3-Year Chart

Below is an updated 3-year weekly chart for the Venture after the Index snapped a 9-week losing skid Friday on the back of strong gains in precious metals and Uranium…

RSI(14) is at previous support (the 2013 low) and this positive divergence between RSI(14) and the current value of the Venture, which slipped to a new post-Crash low of 745 last week, is bullish…this will be an important trading week for confirmation of last week’s hammer reversal…the Venture closed at resistance (770) Friday…the next resistance area is 800 if a breakout through 770 is confirmed…

Discovery Ventures (DVN, TSX-V) Update

The nearly 30% correction in the Venture from the beginning of September to last week has sent the share prices of many companies – even leaders in this market through the first 8 months of the year – plummeting by half or more…Discovery Ventures (DVN, TSX-V), which continues to make progress with its high-grade Copper-Gold Willa-Max Project in southeastern B.C., is an excellent example…

In the case of DVN, it appears to have found support at an uptrend line as you can see on this 2.5-year weekly chart…a bullish “W” has emerged in the RSI(14), which is coming off previous support, and a bullish engulfing candle pattern formed Friday as well…technically, this looks well positioned for a rebound…as always, perform your own due diligence…

DVN is up half a penny at 21.5 cents as of 7:30 am Pacific…

Blackbird Energy Inc. (BBI, TSX-V) Update

Blackbird Energy (BBI, TSX-V) is cashed up (recently closed a $30 million financing) and has held up much better than most of its peers in the energy space in recent months…in fact, it is threatening to push to new highs…BBI began the year below a dime and hit a multi-year high of 44.5 cents (slightly above Fib. measured resistance) during the last half of October…technically, it’s well-supported by a rising 100-day SMA currently at 30 cents…

Last Thursday, BBI announced the acquisition of 10 additional Montney sections…it now holds a 100% working interest in 46 contiguous sections (29,440 acres) and a total of 50 sections of Montney rights at Elmworth…the latest acquisitions are on the western border of Blackbird’s existing Elmworth block and are within 3 miles of the company’s 6–26–70–07W6 Middle Montney well that was spudded on October 20…

BBI is off a penny at 39 cents as of 7:30 am Pacific…

Uranium Sector Heats Up – Cameco Corp. (CCO, TSX) Chart 

Keep an eye on Uranium stocks which really came to life Friday…Uranium has been climbing steadily since August, to a fresh 52-week high, and there are a number of factors contributing to that…

Fission Uranium (FCU, TSX-V) remains one of our favorites in this sector…

A good “bellwether” for the Uranium sector of course is Cameco Corp. (CCO, TSX) and its chart is looking increasingly bullish as you can see below…it broke above chart resistance Friday and is up slightly again this morning…

Gold 4-Year Weekly Chart

This an update to a very revealing chart we posted last Tuesday that presented a strong case for a possible imminent rally in Gold…

Bullion touched an important flag support line last week (briefly, it actually fell below it) but importantly closed the week strong at $1,178…in the simplest terms, according to Elliott Wave theory, one strong possibility is that Gold will rally back toward the top of the flag around the $1,300 area in a continuation of a “Wave 4” pattern…however, this would be followed by a “Wave 5” that would take bullion decisively below the flag support line…timing of course is uncertain, but what this means is the likelihood of volatility and perhaps a stronger than expected finish to the year than many investors currently expect…ultimately a test of support around the $1,000 level certainly can’t be ruled out (easier to see on a longer-term chart below this one)…

Gold Long-Term Monthly Chart

The good news regarding this chart is the current bullish divergence between RSI(14) and price…this suggests the possibility of a rally that, as explained above, could take Gold back up toward the top of the current flag formation…

Longer-term, what’s bearish of course is the break below an upsloping channel since the bull market began in 2001…Gold has also been below its 1000-day moving average (SMA), currently at $1,492, since early last year…this SMA has flattened out and is expected to trend downward in 2015, raising the potential for additional price pressure…

Silver Short-Term Chart

Silver held critical support around $15 last week, and Friday’s reversal came on high volume…note the downtrend line in place since July…a large gap has opened between the current price and that downtrend line which is serving as major resistance…RSI(14) is emerging out of oversold conditions and -DI has likely peaked…expect Silver to gradually move higher over the near-term in another attempt to test the downtrend resistance…

Silver Long-Term Chart

This 34-year monthly chart gives hope that Silver could be preparing for a powerful “Wave 5” move to the upside, though we caution that this could take some time to play out…

RSI(14) is at previous long-term support and this will need to hold along with key support in the immediate vicinity of $15…

Note:  John and Jon hold share positions in BLO.

“The leverage that we have been putting together is going to pay off big-time,” explained Steve Regoci (see video excerpt below), the Garibaldi Resources‘ (GGI, TSX-V) President and CEO who was extremely upbeat Friday afternoon and not just because Gold and Silver took off sharply to the upside.

There is no shortage of challenges facing all junior resource companies these days, but the uphill battle is made a whole lot easier when you have all-in drilling costs of less than $100 a meter and you’re hitting a high-grade structure within 50 meters of surface.  Garibaldi’s early success at its Silver Eagle discovery in central Sonora State is clearly gaining momentum, given Friday morning’s announcement from the company, and now the next stage is to continue to grow that discovery while also boldly stepping out nearly 3 km to the southeast where hyperspectral ‘hot spots’ are lighting up the Tarichi Gold-Silver target like a Christmas tree.

Hyperspectral technology, and proprietary data gained from that, paid big dividends for Garibaldi in 2009 when it cashed in on its Temoris option with Paramount Gold & Silver (PZG, NYSE), and the same technology and data have been instrumental in defining no less than 11 high-priority targets at Rodadero North along a NW-SE trending corridor 10 km long and 5 km wide.

Significant producing mines are located in all directions around Rodadero.  “Two decades from now, there will still be new deposits found in this region,” stated Regoci.  “The geology is prolific and there’s still much to be discovered.”

Based on developments at Rodadero, Garibaldi will be doing more than its share to help maintain Sonora’s status as the most actively explored state (out of 31) in Mexico.

Click on the arrow (video) below for fresh comments and interesting new insight on Rodadero from Regoci following Friday’s news (should automatically provide high quality HD viewing – if not, simply manually adjust your setting at the bottom right corner of the video).

Note:  John and Jon both hold share positions in GGI.

TSX Venture Exchange and Gold

The Thursday-Friday turnaround in both Gold and the Venture is highly encouraging, and confirmed the analysis regarding the RSI(14)-price divergence patterns we had pointed out a week ago.

After falling for 9 consecutive sessions and hitting a multi-year intra-day low of 746 Wednesday, the Venture reversed Thursday and then really kicked into gear Friday with one of its best single-day gains in a long time – a 19-point jump to finish the week at 770.  We’ll gladly take the modest three-quarters of a point weekly advance as that officially snapped a 9-week losing skid that wiped as much as 27% or 278 points off the value of the Index.

What’s next after the tumultuous activity since the start of September?

Technically – and keep in mind the technical picture is critical because the drop below key support levels in the 900‘s in September was advance warning of imminent trouble – a bullish engulfing reversal pattern Wednesday/Thursday was confirmed by Friday’s white candle.

Fundamentally, these are certainly very challenging times for the resource sector but we believe some rare opportunities have opened up these last few weeks in certain companies that are active with strong projects and have access to capital.  The commodity sector has been hit very hard since the summer, due to a variety of factors including the explosive move in the U.S. Dollar Index, but the greenback’s ascent appears to have temporarily stalled.  This will give commodities a good chance to rebound and emerge out of very oversold conditions.

Venture 6-Month Daily Chart

Last week we pointed out that the divergence between the Venture’s RSI(14) and price was curious, and cause for encouragement.  The new low in the Index was not confirmed by RSI(14) which hit extreme levels in mid-October.  In addition, sell pressure (CMF) has weakened considerably from its October peak and may now be ready to transition into buy pressure.  The evidence strongly suggests that selling – at least for now – has exhausted itself, and that was demonstrated by the action in the Venture Thursday and Friday.

This updated 9-month daily chart shows RSI(14) now slightly above 30 and showing some up momentum.  The 770 level is resistance – it’s also the 10-day moving average (SMA) – so a close above 770 early in the coming week is important.  -DI appears to have peaked.  The balance of probabilities suggests a greater chance of additional near-term gains in the Index as the recovery intensifies.

The Seeds Have Been Planted (And Continue To Be Planted) For The Next Big Run In Gold Stocks

There’s no better cure for low prices than low prices. The great benefit of the collapse in Gold prices in 2013 is that it forced producers (at least most of them) to start to become much more lean in terms of their cost structures. Producers, big and small, have started to make hard decisions in terms of costs, projects, and rationalizing their their overall operations. Exploration budgets among both producers and juniors have also been cut sharply. In addition, government policies across much of the globe are making it more difficult (sometimes impossible) for mining companies to carry out exploration or put Gold (or other) deposits into production, thanks to the ignorance of many politicians and the impact of radical and vocal environmentalists (technology has made it easier for groups opposing mining projects to organize and disseminate information, even in remote areas around the globe). Ultimately, all of these factors are going to eventually create a supply problem and therefore great opportunities in Gold and quality Gold stocks.  Think about it, where are the next major Gold deposits going to come from?  On top of that, grades have fallen significantly just over the past decade.

Gold

What a week for Gold.  The yellow metal appeared to be one punch away from being knocked out around the middle of the week, but it’s always wise to be cautious of extreme sentiment in one direction or the other.  John gave a strong case for Gold holding support around $1,150, give or take $10 or $20, followed by a potentially sharp rally.  Indeed, Gold held at $1,130 and the sharp rally may have started in earnest Friday when it shot up $37 an ounce to finish the week at $1,178, a gain of $5 from the previous Friday.

How Gold behaves Monday/Tuesday is going to be critical – follow-through action to the upside is required next week to confirm a reversal.

This 5-year weekly chart shows a “hammer” – similar to that seen at other important lows over the last several years – so (possibly) things could get really interesting in the Gold market before the year is out.

Gold 5-Year Weekly Chart

Gold 6-Month Daily Chart

This short-term chart shows the extreme oversold RSI(14) conditions that recently emerged, mirroring the overbought RSI(14) conditions in the U.S. Dollar Index.  -DI has clearly peaked, which is a bullish sign.  The near-term key for Gold will be to push back above resistance at $1,200.

Silver bounced off key support around $15 and closed Friday at $15.83.  That was still a 35-cent loss for the week, but the move off $15 was impressive (updated Silver charts Monday morning).  Copper added a penny to $3.07.  Crude Oil fell another $1.89 a barrel to $78.65 while the U.S. Dollar Index reacted at the 88 Fib. resistance level, as expected, and closed Friday at 87.57.  That was a gain of three-quarters of a point for the week but it appears the greenback is ready for at least a minor consolidation to digest its large gains the last few months.  That, of course, would give relief to the beleaguered commodity sector.

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been driven by both the Fear Trade and the Love Trade.  The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, has had a huge impact on bullion and will continue to support prices.   Despite Gold’s largest annual drop in three decades in 2013, the fundamental long-term case for the metal remains solidly intact based on the following factors:

• Growing geopolitical tensions, fueled in part by the ISIS terrorist group (air strikes won’t stop them) and a highly dangerous and expansionist Russia under Vladimir Putin, have put world security in the most precarious state since World War II;
• Weak leadership in the United States and Europe is emboldening enemies of the West;
• Currency instability and an overall lack of confidence in fiat currencies;
• Historically low interest rates;
• Continued strong accumulation of Gold by China which intends to back up its currency with bullion;
• Massive government debt from the United States to Europe – a “day of reckoning” will come’;
• Continued net buying of Gold by central banks around the world;
• Flat mine supply and a sharp reduction in exploration and the number of major new discoveries.

Deflationary concerns around the globe and the prospect of Fed tapering had a lot to do with Gold’s plunge during the spring of 2013 below the technically and psychologically important $1,500 level, along with the strong performance of equities which drew momentum traders away from bullion. Deflationary concerns persist, and now Gold is having to grapple with a bullish U.S. Dollar.  However, we’re convinced that the 40% drop in Gold from its September 2011 all-time high is merely a healthy correction within an ongoing long-term bullish cycle that will take the metal to new all-time highs as the decade progresses.  There are many potential catalysts, including inflationary pressures that should eventually kick in, to power Gold to $2,000 and beyond within a few years.

Gold has traded between $1,131 and $1,168 so far today…as of 8:15 am Pacific, bullion is up $23 an ounce at $1,164 thanks in part to a weaker than expected U.S. jobs report for October…Silver is up 25 cents to $15.67…Copper had added 2 pennies to $3.06…Crude Oil has gained $1.15 a barrel to $79.06 while the U.S. Dollar Index is down one-quarter of a point to 87.81…

Gold came under renewed pressure this week after falling below $1,180 last Friday – its lowest level reached during a 28% plunge last year…encouragingly, however, despite more strength in the greenback this week, and talk about an imminent “collapse” in Gold prices to $1,000 an ounce or lower, bullion managed to hold important support and took off to the upside this morning…if you’re a contrarian, another bullish indicator – SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, said its holdings fell 0.41% to 732.83 tonnes yesterday – a new 6-year low…

Russia appears to be getting more aggressive again with Ukraine, a situation that could once again escalate and provide some support for Gold prices…according to a Reuters report on information received from the Kiev military, a column of 32 tanks, 16 howitzer artillery systems and trucks carrying ammunition and fighters has crossed into eastern Ukraine from Russia.  “The deployment continues of military equipment and Russian mercenaries to the front lines,” spokesman Andriy Lysenko said in a televised briefing referring to yesterday’s cross-border incursion…Russia is also trying to show strength by increasing military flights close to NATO air space in Europe…

Russia’s rouble has hit a new all-time low against the dollar…it has lost more than 12% of its value in 7 days and has fallen 40% against the greenback since the start of the year…

Another geopolitical threat – ISIS – is certainly on the mind of Abdalla Salem el-Badri, the secretary general of OPEC, who made these comments to CNBC:  “I’m not a politician, but ISIS is a problem, and this matter should be solved very quickly. This will affect existing production, it will affect investment, it will affect the behavior of people. It will affect the area tremendously,” el-Badri warned.  “We (the West and the Arab countries) are in the same situation. Don’t tell me it is a Middle Eastern problem. It is a worldwide problem.”

Today’s Equity Markets

Asia

Markets were mixed in Asia overnight…China’s Shanghai Composite climbed as high as 2454 – levels not seen since February 2013 – before closing down 7 points at 2419…the Chinese central bank confirmed that it had pumped $125.91 billion U.S. (approximately 769.5 billion yuan) worth of 3-month loans into the financial system during September and October…

Japan’s Nikkei jumped 88 points to finish the week at 16880…

Europe

European markets are mixed in late trading overseas…some encouraging data out of Germany…exports there surged 5.5% in September, rebounding from a steep fall in August…

North America

The Dow is off 8 points as of 8:15 am Pacific while the S&P 500 is up a point at 2032…in Toronto, the TSX has jumped 121 points while the Venture has added 8 points to 760 – 2 straight days of gains after a 9-session losing skid…

The S&P has surged more than 10% to a new all-time since last month’s correction that took it down to 1821…what will be interesting now is how the S&P handles Fib. measured resistance at 2035…RSI(14) at 62% is showing diminishing up momentum and divergence with the index…the next several trading sessions should prove interesting…

U.S. Dollar Index Updated Chart

The U.S. Dollar Index may have temporarily run out of steam after slightly overshooting measured the measured Fib. resistance target at 88 yesterday…the RSI(14) divergence associated with the new high is also a clue that the greenback may need to pause and catch its breath for a while, allowing Gold to regain some luster…the Dollar Index should show strong support around the 85 level on any pullback to unwind overbought conditions…

U.S. Dollar vs. the Yen

The Japanese yen has hit a 7-year low vs. the U.S. dollar – but again, the greenback is clearly in overbought territory and at some point soon is going to have to retrace some of these gains…measured Fib. resistance at 116…

Garibaldi Resources Corp. (GGI, TSX-V) – GGI Goes Big At Rodadero

Garibaldi Resources‘ (GGI, TSX-V) most recent news on developments at Rodadero is carrying a lot more weight this morning with an announcement that the company has arranged a $1 million financing to rapidly accelerate its current drilling and exploration programs at this high-grade Silver-Gold Project in central Sonora State, Mexico…Rodadero has become a very compelling situation given the shallowness of the mineralization, the number of targets over a broad area and the interesting transition from high-grade Silver at Silver Eagle (drill results confirming the sampling) to a Silver-Gold and base metal environment (confirmed through sampling) moving toward the east and southeast…this system has legs to it – Rodadero North has targets stretching 10 km north-south and 5 km east-west…

Keep in mind that this same group, using hyperspectral technology and proprietary data generated from that, unlocked tremendous value for GGI shareholders out of the Temoris option in Mexico several years ago…utilizing the same technology, they may have a home run in the making at Rodadero…

Rodadero is in a prolific neighborhood which – along with the very promising results to date – helps explain the interest in the project from a leading international Silver and Gold producer and a privately-held Chinese company as disclosed by GGI a couple of weeks ago…may that have something to do with this morning’s news?…

GGI is up 1.5 cents at 20.5 cents as of 8:15 am Pacific…we’ll have more regarding GGI over the weekend…

HGD Updated Chart

The double leveraged HGD is a TSX-listed bear ETF that essentially gives us an inverse look at the TSX Gold Index…

John pointed this out in a previous chart last month – the HGD was looking bullish, pushing up against the top of a downsloping channel and threatening to break out…that’s exactly what occurred, and then it pulled back yesterday after meeting resistance Wednesday just above $24…

A move through $24 resistance by the HGD would certainly be a bearish development for Gold stocks…for now, the bullish trend in the HGD appears to have peaked as shown by the ADX indicator…

TSX Gold Index Long-Term Monthly Chart

Below is an updated long-term monthly TSX Gold Index chart…so far, critical support around 135 is holding…interesting, the Gold Index shot up about 40% at the beginning of the year and then decided to give back 40% on a sell-off down to this week’s low of 128.54 – a level not seen in more than a dozen years…

The Gold Index is up 7 points at 142 as of 8:15 am Pacific…

WANTED Technologies (WAN, TSX-V) Update

We’ve mentioned this one on several occasions, and the company continues to progress…as reported October 23, WANTED Technologies (WAN, TSX-V) had a 39% year-over-year increase in revenues and record net income of $2,634,753 or 11 cents per share for fiscal 2014 – the best results in the company’s history…

Since 2005, WANTED has stored more than 1 billion detailed records on hiring activity throughout the U.S. and Canada…this proprietary database contains more than 100 billion data elements which are used for analytical applications throughout multiple business sectors…the company’s most recent significant license agreement is one of many applications of WANTED’s “big data” for the employment sector…the challenge for WANTED will be to remain innovative while pursuing its growth in a relatively new and competitive field…new players, new alliances and new technological solutions may very well emerge in this market…

John’s updated 2.5-year weekly chart for WAN shows increasing buy pressure and RSI(14) approaching the top of a downtrend line…a breakout above that downtrend line would be significant…

WAN is up 4 cents at $1.19 as of 8:15 am Pacific…

Note:  John and Jon both hold share positions in GGI.

Gold has traded between $1,140 and $1,150 so far today…as of 7:50 am Pacific, bullion is up $6 an ounce at $1,146…Silver has added 7 cents to $15.39…Copper is off a penny at $3.03…Crude Oil has fallen $1.03 a barrel to $77.65 while the U.S. Dollar Index had gained one-third of a point to 87.77 after nearly touching Fib. resistance at 88…

Sales of Silver coins have picked up sharply as the price of precious metals has declined, so much in fact that the U.S. Mint says it has run out of American Eagle Silver bullion coins for now.  “This is to inform you that due to the tremendous demand we have experienced in the last several weeks, the U.S. Mint has temporarily sold out of its American Eagle Silver bullion coins,” the Mint said in a memorandum to authorized purchasers late Wednesday. “We continue to produce 2014-dated coins and will advise you when additional inventory will be available for sale.”

The U.S. Mint’s website shows that sales of Gold coins were strong in October, with the combined total of 88,500 ounces for American Eagle and Buffalo coins the most since this January…sales of Silver Eagle coins were even stronger as the total of 5.79 million ounces was the most in a single month since January 2013…

Bernanke On Monetary Easing

Former Federal Reserve Chairman Ben Bernanke predicted that the European Central Bank (ECB) would have a rough time implementing U.S-style monetary easing…speaking yesterday at the Schwab IMPACT conference, the ex-central bank chief said the ECB faces political barriers to enacting such an aggressive program.  “The barriers to doing it are not really economic,” he said. “The legal and political barriers being thrown up are going to make it very difficult to do that.“

Bernanke also made some interesting comments pertaining to the Fed’s recent QE programs.  “There never was any risk of inflation,” he boldly stated.  “The economy was in great slack. If anything we were worried about deflation.  Four years later there’s not a sign of inflation. The dollar is strengthening. They’re saying, ‘Wait another 5 years, it’s going to happen.’ It’s not going to happen.”

OPEC Cuts Forecasts For Oil Price Growth & Global Demand

OPEC has cut its forecasts for the price growth and global demand for Oil…in its annual World Oil Outlook, published today, the group said there would be a “small decline in real values” over this decade together with a “constant nominal price” of $110 per barrel between now and 2020…economic forecasts for the U.S. were raised, while predictions for the “BRIC” countries (Brazil, Russia, India and China) were cut in the medium term…OPEC added that there was a danger of “substantial over-capacity in the sector”…

Today’s Equity Markets

Asia

Asian markets were mixed overnight…China’s Shanghai Composite gained 7 points to close at 2426 while Japan’s Nikkei average slipped 145 points to finish at 16792…

Europe

European markets are mixed in late trading overseas…ECB President Mario Draghi struck a dovish tone as he spoke after the bank decided to keep interest rates on hold…the Bank of England also left interest rates unchanged…

North America

The Dow is up 22 points as of 7:50 am Pacific…Wall Street embraced economic reports that had the government’s tally of Americans filing for jobless benefits falling by 10,000 to 278,000 last week, better than the expected 285,000…another report had productivity rising more than estimated in the third quarter…non-farm payrolls for October are due tomorrow…

The TSX is up 12 points while the Venture, trying to snap a 9-session losing skid, is flat at 747…it would be nice if it could start flying higher like a 747…

Euro Turnaround On The Way?

The euro has plunged sharply since mid-July and this has corresponded with weakness across the commodity sector…there are signs, however, that the euro is approaching at least a temporary bottom given a strong divergence between RSI(14) and price, and the support band that exists between 124.5 and 125…

TSX Updated Chart

The 2,000-point drop in the TSX during September and October has helped to unwind quite an extreme RSI(14) overbought condition on this 6-year monthly chart that persisted for nearly a year…the question now is, was this recent drop merely a correction within an ongoing bull market or was it the first major leg down in a new bear phase?…

This chart doesn’t give us that answer, but it does confirm that there’s major support around 14200 with Fib. resistance at 15800…the TSX’s 200-day moving average (SMA), currently at 14802, continues to rise and a sustained move back above that would be a very bullish sign…

Richmont Mines (RIC, TSX) Update

Another very strong quarter for Richmont Mines (RIC, TSX) which this morning reported adjusted Q3 2014 net earnings of $4.6 million CDN or 10 cents per share vs. an adjusted net loss of $1.1 million in Q3 2013…9–month adjusted net earnings for 2014 now total $8.3 million, or 19 cents per share, compared to an adjusted net loss of $4.5 million or 11 cents per share in the prior year period…

Gold sales of 24,635 ounces in Q3 2014, at an average price of $1,386 CDN, represented a 60% increase over prior year Gold sales of 15,438 ounces at an average price of $1,367 CDN (Richmont is clearly benefiting from a lower Canadian dollar)..

The company had cash and cash equivalents of nearly $40 million as of September 30 and long-term debt remains low at $5.8 million…

Richmont, which experienced a more than 10-fold increase in its share price between late 2008 and the fall of 2011, slumped all the way back down to a bargain basement price of $1 per share late last year…it started to reverse course with a vengeance after 2 important events this year – 1) The release April 1 of an updated resource calculation for its producing Island Gold Mine, including the Island Deep extension; and 2) The company’s return to profitability in Q2 of this year as it reported record revenues and net earnings of $4.7 million (10 cents per share) for the April-May-June period…

Recently, Richmont raised production guidance for 2014 to 85,000 to 90,000 ounces…importantly, they’re well-positioned to “seize the moment” with development of the Island Gold deep discovery which has NI-43-101 indicated resources of 456,000 ounces grading 11.52 g/t Au and inferred resources of 3.2 million tonnes grading 9.29 g/t Au…the discovery remains open in all directions after 100,000 meters of underground drilling in 2013…preparations are under way for mining of the first stopes in the lower resource, expected at the end this year…

RIC is up 33 cents at $2.61 as of 7:50 am Pacific…

Primero (P, TSX), Argonaut (AR, TSX) Report Q3 Losses

The red ink continues to flow at some other Gold producers…Primero Mining Corp. (P, TSX) reported a 42% increase in Gold equivalent ounces produced in Q3 2014 (59,673 vs. 41,998 in Q3 2013) but the company’s all-in sustaining costs were $1,154 (in line with expectations) and it reported a net loss of $105.9 million U.S. (66 cents per share) in Q3 2014, almost all of that due to a goodwill impairment charge of $99 million relating to the Brigus acquisition…

Argonaut Gold (AR, TSX) reported a $1.82 million U.S. Q3 2014 loss vs. a profit of $6.6 million in Q3 2013…third quarter revenue was $37.4 million from Gold sales of 29,410 ounces, compared to $42.4 million from Gold sales of 30,792 ounces in Q3 2013…cash cost per ounce sold in the third quarter was $786, compared to $680 in the same period the prior year…

TSX Gold Index Updated Chart

Yesterday, the beleaguered TSX Gold Index hit a low (128.54) not seen in nearly 13 years…it is, however, bouncing back this morning, up 7 points at 136 as of 7:50 am Pacific…

Keep in mind that this chart from John is a 15-year monthly chart, so it’s quite possible that the Index – despite a scary drop below 130 – may rally and hold monthly support in the band between 137 and 150…in other words, there is the possibility for a significant rally here…the 150 area will certainly provide resistance…

Note the downtrend line in place since the 2011 high of 455.38 (a whopping 72% correction since that time while the Venture’s decline since its 2011 high has been 69.7%)…

Madalena Energy Inc. (MVN, TSX-V) Update

It’s worth paying attention to Fib. resistance levels…since hitting Fib. resistance at 81 cents early this year, Madalena Energy (MVN, TSX-V) has struggled with problems compounded by share structure (a lot of paper issued since late last year) and the recent overall decline in the energy sector…

Any rallies in MVN in the foreseeable future at least are just that – rallies within the context of a bearish chart with the declining 50 and 100-day SMA’s (39 and 42 cents, respectively) providing significant near-term resistance…

MVN is off 2 pennies at 32.5 cents as of 7:50 am Pacific…

Note:  John, Terry and Jon do not hold share positions in RIC or MVN.

Gold got hit hard overnight as the greenback surged, not surprisingly, following midterm elections in the U.S. that delivered an overwhelming victory for Republicans…bullion dipped to a 4.5-year low of $1,136 but is trying to claw its way back…as of 8:15 am Pacific, Gold is down $23 an ounce at $1,145…as John’s charts have shown, there is a general area of support in the vicinity of $1,150 – give or take $10 or $20 an ounce – so we’ll see if buyers step up to the plate over the next couple of days…clear evidence of strong physical support is what’s required very quickly to help put a floor under the price of bullion, otherwise $1,000 Gold won’t be far off…Silver nearly touched $15 overnight, a key support area, but has trimmed those losses…it’s off 54 cents at $15.49 as of 8:15 am Pacific…Copper is down 3 pennies to $3.03…Crude Oil is rallying, up $1.39 a barrel to $78.58 after data this morning showed that U.S. inventories rose less than expected…as well, rumors are circulating of a pipeline explosion in Saudi Arabia (Vladimir, are you up to something again?)…the U.S. Dollar Index, meanwhile, has climbed nearly half a point to 87.47 (see updated charts below) as it closes in on Fib. resistance around 88…

King Dollar, with a lot of momentum behind it, is weighing heavily of course on the commodities’ sector…2 other factors this week may further bolster the greenback or temporarily slow it down…the regular monthly meeting of the European Central Bank is tomorrow – continued weak economic data out of the euro zone may push the ECB to enact more monetary stimulus – while the October U.S. jobs report is due Friday…

Reflecting current investor sentiment toward Gold, holdings in SPDR Gold Trust, the top Gold-backed ETF, fell 0.32% yesterday to 783.22 tonnes, the lowest total since September 2008…

Bullion has lost nearly $100 an ounce over the past week, rekindling memories of a stunning 2-day drop in the spring of last year that did ignite some physical buying…

Today’s Equity Markets

Asia

Asian markets were mixed overnight…China’s Shanghai Composite was off 10 points to close at 2040…HSBC’s China services PMI for October hit a 3-month low…the report follows data earlier this week showing mixed readings on China’s manufacturing sector…Japan’s Nikkei average climbed for a 5th straight session, hitting a new 7-year high…

Europe

European markets rallied strongly today, with all major indices up over 1%…weak economic data for the euro zone did little to dent sentiment…

North America

The Dow is up 79 points as of 8:15 am Pacific…traders are cheering a new form of “hope and change” in Washington while the ADP jobs report came in better than expected this morning…private employers added 230,000 jobs last month, the largest gain since June which casts a positive light on the labor front 2 days before the non-farm payrolls report…

Shakeup On Capital Hill

In a clear rebuke of President Obama, his agenda and leadership, Republicans swept to victory in yesterday’s U.S. Congressional elections…politically, how this plays out over the next couple of years – and the impact this will have across the broad markets – will prove to be highly interesting…the Republicans, who now control both houses of Congress for the first time since 2006, don’t have a filibuster-proof majority (they also have some of their own internal divisions) so theoretically they could bring up all the pro-drilling, anti-EPA, pro-Keystone bills they want, but either Democrats will likely filibuster them or Obama, who has shown little desire or few skills for the art of compromise, will veto them…

Washington’s dysfunction probably won’t end anytime soon – the rancor may get worse leading up to the 2016 Presidential elections – but the Republicans may be able to motivate the Obama administration in some specific areas (certain energy and tax reform initiatives, international trade deals, etc.)…at the very least, they’ll derail any agenda the President may have had for his final 2 years in office, and likely make life more than a little miserable for him…Republican senator Ted Cruz, who’s eying a potential Presidential bid in 2016, recently told the Washington Post that the first priority next year should be a string of hearings on President Obama, “looking at the abuse of power, the executive abuse, the regulatory abuse, the lawlessness that sadly has pervaded this administration.”  For their part, the Republicans’ national brand needs some work if they hope to not only maintain Congressional control in 2016 but also win back the White House…

President Obama, who stated last month that his “policies are on the ballot…every single one of them,” will hold a news conference later today…he has invited congressional leaders to a meeting at the White House on Friday before he disappears to Asia for 8 days…????

U.S. Dollar Index Long-Term Chart

The problem commodities are having can be explained by an updated version of this long-term U.S. Dollar Index chart (34-year monthly) which we’ve shown previously as it gave an important “heads up” that the greenback was headed significantly higher on a major technical breakout…

The action in the Dollar Index we’re seeing now is comparable to that witnessed at the beginning of 1997 when it also broke above an 8-year triangle formation…the Index took off from just below 95 and peaked at 120 by early 2002…

Based on this chart, the Dollar Index is facing resistance in the high 80’s and also at the long-term downtrend line which currently intersects around the high 90’s…it’s reasonable to expect that, over time, the Index will eventually test resistance at that long-term downtrend line…

U.S. Dollar Index Short-Term Chart

Short-term, the greenback is clearly in overbought territory – a condition that will have to unwind in the not-too-distinct future…in addition, the 50-day moving average (SMA) is rising in near-vertical fashion and this is simply not sustainable…look for a potential major rally in Gold and commodities when the Dollar Index decides to correct – at the moment, a key area to watch is Fib. resistance at 88…

Philadelphia Gold & Silver Index 

The highly respected Frank Holmes, CEO and Chief Financial Officer for U.S. Global Investors, pointed out this chart in his weekly Investor Alert last weekend – in 3 decades, the XAU (Philadelphia Gold & Silver Index) has NEVER experienced a losing streak of more than 3 years…will a 2014 year-end rally prevent that from occurring?…we’ll have to wait and see…

HUI Index Long-Term Chart 

The HUI Index briefly plunged below 150 in early trading today, a few points under its 2008 Crash low, but it has since pulled back to 154…in a worst-case scenario, an eventual drop to the 100 area probably can’t be ruled out…neither can a sharp rally in the near future given the extent of bearish sentiment…

WTIC Updated Chart

The Saudis, it appears, have declared war on the U.S. shale industry but most analysts believe WTIC would have to remain at or below $70 a barrel for an extended period in order to put a serious dent into U.S. production…Crude prices tumbled again yesterday as the market reassessed the latest pricing announcement from Saudi Arabia and banks scrambled to hedge outstanding derivative positions…

OPEC is due to meet in Vienna later this month (Nov. 27) but whether they’ll be able to agree on lowering output and propping up prices is questionable…OPEC has long targeted $100 Oil, but that also provided an incentive for North American companies to develop shale plays and lift production…so shale is the fundamental imbalance in the system that has triggered Oil’s pullback…

WTIC has long-term support band between $70 and $75…the trend has been bearish since early July, as you can see on this 6-month daily chart, and the break below the downsloping channel last month was a huge red flag…plenty of technical resistance in the $80’s on rallies…

Blackbird Energy Inc. (BBI, TSX-V) Chart Update 

Blackbird Energy (BBI, TSX-V) is cashed up (recently closed a $30 million financing) and has held up much better than most of its peers in the energy space in recent months…BBI began the year below a dime and hit a multi-year high of 44.5 cents just a couple of weeks ago (slightly above Fib. measured resistance)…technically, it’s well-supported by a rising 100-day SMA currently at 30 cents…

BBI is off half a penny at 35.5 cents as of 8:15 am Pacific…

Cannabix Technologies Inc. (BLO, CSE) – Another Winner In Yesterday’s U.S. Voting

In historic votes in conjunction with yesterday’s midterms, residents in Alaska, Oregon, and Washington, DC, voted to legalize marijuana…but the measures won’t take effect immediately as they need to work through some final procedural hurdles to become law…Florida’s medical marijuana amendment, meanwhile, fell short of the 60% approval it needed to pass, although it got majority support from voters…

All the more reason we see a compelling opportunity in Cannabix Technologies (BLO, CSE) which is a first-mover in the development of a patent-pending marijuana breath-analysis device for law enforcement and the workplace…the downward pressure on the stock over the last number of weeks appears to have reversed and was related entirely in our view to volatility in the markets and, more importantly, a substantial amount of 5-cent private placement stock, most of which seems to have been soaked up…volume in BLO continues to be impressive, and the company is inching closer to unveiling an initial prototype of the Cannabix Breathalyzer…

Technically, BLO may have formed an important low Monday at 5 cents on high volume…it opened at a nickel and closed at 6 cents Monday, moved half a penny higher yesterday and is up on strong volume again this morning…while BLO has been very volatile since its debut on the CSE in late June, we see great upside potential here for a variety of reasons including a likely ramping up of exposure for the Cannabix Breathalyzer in the huge U.S. market…

BLO is up a penny at 7.5 cents as of 8:15 am Pacific…

Cannabix has the potential to benefit enormously from the growing social acceptance of marijuana…while it’s a trend we believe is unfortunate, the change in attitudes (like toward same-sex marriage) over the last several decades – particularly since the Clinton Presidency – is astounding as you can see in this chart below from the Pew Research Center…

Meanwhile, the latest figures on marijuana tax revenues from the Colorado Department of Revenue hit a new high in the month of August, with recreational sales totaling about $34.1 million, compared to $29.3 million the previous month…and Colorado has taken in about $45 million in total tax revenues from both medical and recreational marijuana year-to-date…the industry has also served as a jobs creator across Colorado…as per a September report, the state has licensed more than 18,660 individuals (and counting) to work in Colorado’s cannabis industry, indicating the prospect for new jobs is only growing…

Note:  John and Jon both hold share positions in BLO.