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Gold has traded between $1,214 and $1,229 so far today…as of 8:00 am Pacific, bullion is down $4 an ounce at $1,223…Silver is up 4 cents at $17.13…Copper is up a penny at $2.96…Crude Oil is below $60 a barrel for the first time since July 2009, down more than $1 a barrel at $58.59, while the U.S. Dollar Index has retreated one-third of a point to 88.30…

Gold has had another strong week, pushing above $1,200 and through key resistance at $1,220.   HSBC commented, “One potentially important development is that Gold ETFs (exchange-traded funds) have seen some modest inflows recently.  At the very least, we can say the flood of selling evident last year has been reduced to a modest outflow in recent months. The longer Gold holds above $1,200/oz, the more it may attract fresh buying and Gold ETFs may begin to build. The impact Oil has on Gold’s direction may be even more crucial than it has been to date. The Oil decline has tended to be negative for bullion but should Oil prices move below $60 (per barrel) and the broader financial markets become worried about the impact of lower energy prices globally, then Gold may receive some ‘safe-haven’ inspired buying.”

Oil Update

Oil’s collapse is now causing some central banks to react…in a rare move, Mexico’s central bank is intervening in currency markets to bolster the peso…meanwhile, Norway’s central bank has unexpectedly cut a key interest rate to 1.25% from 1.5%, its first rate cut since March 2012…as the world’s second-biggest Oil exporter outside of the OPEC, Norway’s economy is heavily reliant on Crude…

The IEA has lowered its 2015 Oil demand growth forecast by 230,000 barrels a day to 0.9 million…it’s the 5th time in the last 6 months that the Paris-based energy watchdog has cut its demand-growth forecast…its highly-anticipated monthly market report also said that the Oil price rout wouldn’t boost demand as much as analysts had hoped…

Silver Demand Forecast To Grow Nearly 30% Within 4 Years

Growing industrial applications for Silver will increase demand for the metal by 27% within the next 4 years, according to a report released this week by the Silver Institute…the report, prepared by a London-based metals consulting firm, said Silver demand is expected to grow by 142 million ounces by 2018 compared to 535 million ounces used in 2013…the report highlighted 8 specific sectors where they see Silver demand growing in the next 4 years: batteries, ethylene oxide, medical, bearings, nanotechnology, automotive, printing and silver inks, and photovoltaic solar panels…

House Passes $1.1 Trillion Spending Bill To Fund U.S. Government Through September 2015

Congress avoided a government shutdown last night after House Republican leaders scraped up enough support to overcome opposition from both sides of the aisle and pass a $1.1 trillion spending bill by the slimmest of margins…to prevent even a brief shutdown, both chambers passed a 2-day stopgap measure…the Senate is expected to pass the spending bill by tomorrow…among the most controversial provisions in the bill is language that would make it easier for banks to engage in derivatives trading, and a rider prohibiting the federal government from designating the sage grouse as an endangered species (impacting western mining and Oil and gas)…

Canadian Household Debt Well Above U.S. & Others

U.S. families’ debt burdens have settled at their lowest level in over a decade, putting the economy on a stronger footing relative to global rivals going into 2015…Canadian household debt, however, continues at high levels…

Total U.S. household debt, when measured as a share of disposable income, has fallen from a peak of 135% in late 2007 to 108% this year through September, according to a Federal Reserve report yesterday…that’s the lowest sustained level since early 2003 and far below levels among households in Canada, Japan, France, Germany and Italy as you can see in this chart from The Wall Street Journal…

Today’s Equity Markets

Asia

Asian markets were mostly higher overnight…China’s Shanghai Composite gained 14 points to finish a volatile week at 2939…China’s industrial production rose 7.2% on year in November, below expectations for a 7.5% increase in a Reuters poll and down from October’s 7.7% rise…meanwhile, retail sales rose 11.7% on year, slightly more than expected…fixed asset investment for the January-November period increased 15.8%, in line with expectations…

Japan’s Nikkei average snapped a 3-session losing skid and climbed 114 points overnight…polls show Prime Minister Shinzo Abe is on track for a landslide win in Sunday’s parliamentary elections…

Europe

European markets are down sharply in late trading overseas on concerns over Oil’s drop…

North America

The Dow is off 178 points as of 8:00 am Pacific…

U.S. consumer sentiment rose in December to a near 8-year high on improved prospects for jobs and wages and on lower gasoline prices, a survey released this morning showed…the Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment for this month came in at 93.8, the highest reading since January 2007 and above the median forecast of 89.5 among 70 economists polled by Reuters…the final November reading was 88.8…

Meanwhile, a gauge of U.S. inflation fell last month, reflecting a sharp drop in energy costs and little price pressure elsewhere in the economy…the PPI index for final demand, which measures changes in the prices firms receive for their goods and services, decreased a seasonally adjusted 0.2% in November from a month earlier, according to the Labor Department…stripping out food and energy costs, producer prices were unchanged in November…

The TSX has fallen 102 points as of 8:00 am Pacific while the Venture is off another 10 points at 653 as of 8:00 am Pacific…

CRB Index Chart Update

The CRB Index is off more than 20% from its yearly high, but likely still has further to drop despite the already oversold conditions…the good news is, certain technical indicators are at levels only seen at important lows during 1999, 2001 and 2009…

A strong support band exists between 230 and 240, which suggests potential near-term downside potential of another 5% or so…the CRB is down another full point as of 8:00 am Pacific at 244.44…

Copper Chart Update

Copper has not been able to overcome stiff resistance at a downtrend line in place since 2013, and is trying to hold on to key support around $2.90…ultimately, Copper will take the path of least resistance and either push above the downtrend line or break decisively below $2.90…

Canadian Dollar Chart Update

The decline in Oil has been taking its toll on the Canadian dollar which still faces significant downside risks, especially if the 85-cent support level does not hold…a drop into the 70’s during 2015 can’t be ruled out…

This 10-year monthly chart shows gradual down momentum in the RSI(14) since the middle of 2011, though there was a brief uptick during the first quarter of this year…

North American Nickel Inc.  (NAN, TSX-V) Update

Nickel is 1 commodity that has performed well over the last 6 weeks, and it’s up again this morning to nearly $7.50 a pound…

Bottom-fishers may wish to keep an eye on North American Nickel Inc. (NAN, TSX-V) which turned out to a great opportunity last year at this time around the same price as it now…NAN has been basing around the 22-cent level since late September, and is a good candidate in our view to rally higher early in 2015…as always, perform your own due diligence…

NAN, which had $7 million in working capital at the end of September, is unchanged at 21.5 cents as of 8:00 am Pacific…

Blackbird Energy Inc. (BBI, TSX-V)

Venture Oil and gas plays have not yet hit a low, as evidenced by the chart for Blackbird Energy (BBI, TSX-V)…

RSI(14) is moving rapidly toward previous support as shown in this 2-year BBI weekly chart, implying more sell pressure which we’re seeing this morning…a band of Fib. support stretches from 17 to 22 cents, and within that area is where BBI may stabilize…

BBI is off 2 pennies at 23.5 cents as of 8:00 am Pacific…

Note:  John, Terry and Jon do not hold share positions in NAN or BBI.

Gold has traded between $1,216 and $1,231 so far today…as of 8:20 am Pacific, bullion is down $2 an ounce at $1,224…Silver is up 6 cents at $17.11…Copper has added 2 pennies to $2.95…Crude Oil is off 33 cents at $60.61 while the U.S. Dollar Index has surged nearly two-thirds of a point to 88.67…

An improvement in sentiment toward Gold was seen yesterday in the holdings of SPDR Gold Trust…the fund saw inflows of nearly 3 tonnes, bringing total holdings to 724.80 tonnes, up about 1% after recently hitting a 6-year low…

Outflows from all Gold ETF’s are 114,000 ounces so far in December, with the pace having slowed considerably from the last 3 months, according to UBS. “If the current average rate of change in Gold ETFs is maintained for the rest of the month, selling should be limited to about a quarter of average monthly liquidations so far in Q4,” the bank stated. “Interestingly, Gold ETFs are up so far this week, and if the trend continues today and tomorrow, this will be the first weekly net inflow since September.”

Oil Update

Global demand for OPEC Crude in 2015 is expected to fall to its lowest in more than a decade and far below current output, the group said yesterday,  indicating a hefty supply surplus without OPEC output cuts or a slowdown in the U.S. shale boom…however, pundits predicting the imminent demise of OPEC ought to keep in mind this statistic from the International Energy Agency:  OPEC’s share of the global Oil market will rise to 49% by 2040, from 42% currently, as non-OPEC resources dry up…

Iranian President Hassan Rouhani blamed falling Oil prices on “treachery” in an apparent dig at rival Saudi Arabia, according to news wires yesterday…the Iranian leader also called the drop in prices “politically motivated” and a “conspiracy” against the interests of the region. “Iran and people of the region will not forget such conspiracies, or in other words, treachery against the interests of the Muslim world,” he was quoted as saying, during a Cabinet meeting…

The Wall Street Journal reported last night that U.S. energy companies are starting to cut drilling, lay off workers and slash spending in the face of the continued decline in Oil prices…the number of rigs drilling for Oil in North Dakota and parts of Texas has started to edge down, new drilling permits have dropped sharply since October, and many companies say they are going to focus on their most profitable wells…Houston-based EOG Resources Inc. is closing its Calgary office after selling almost all of its Canadian Oil and gas producing assets as it refocuses in the U.S. Matador…

WTIC 2-Year Weekly Chart

Below is an updated 2-year weekly WTIC chart that shows how Crude completely broke down after falling below its long-term support trendline  beginning in August – that was a huge “red flag”…

RSI(2) is currently at a low extreme – just 1.3% – which makes fertile ground for some sort of a rally out of such temporarily oversold conditions…expect the “smart money”, however, to sell into any rallies…

WTIC Long-Term Chart

The WTIC 19-year weekly chart, which we first posted last month, strongly states the case for $50 Oil though exact timing of that is uncertain…there is technical support around $60, $50 and then much stronger support in the mid-$30’s which is where Crude may ultimately end up…

Note that the RSI(14) is currently at its most oversold level – just 13% – than at any point over the last 2 decades…the +DI and -DI indicators are also at extremes not seen over the past 20 years…that is really quite astonishing and demonstrates the “paradigm” shift we’ve witnessed in this market over the last few months…

A near-term bounce out of current very oversold conditions could therefore certainly occur, but such an event would likely be followed by new lows given the fact that the Oil bull market has turned into a bear market for an indefinite period…an average WTIC price of $60 a barrel in 2015 is likely optimistic unless OPEC takes drastic actions or major geopolitical events in the Middle East threaten supplies…

Just as high prices led to “demand destruction”, however, an extended period of weak prices will stimulate demand, encourage the world’s long-term addiction to Oil (much to the chagrin of the anti-Oil lobby), and help boost GDP numbers in certain countries…

And as we’ve emphasized, Oil prices at current levels are a huge bonus for Gold producers…

Bellegrade Tosses A Grenade:  “Canada Is Indian Land!”

As if resource companies and federal and provincial governments don’t have enough on their hands these days, with radical environmentalists and even an American President who seemingly delights in telling half-truths and outright lies about Keystone XL, along comes Perry Belegrade with these fighting words during a fiery speech to assembly delegates in Winnipeg yesterday as he was elected the new national chief of the Assembly of First Nations…

“To the people across this great land, I say to you, that the values of fairness and tolerance which Canada exports to the world, are a lie when it comes to our people.  Canada will no longer develop pipelines, no longer develop transmission lines, or any infrastructure, on our lands as business as usual.

“That is not on.

“We will no longer accept poverty and hopelessness while resource companies and governments grow fat off our lands and territories and resources.

“If our lands and resources are to be developed, it will be done only with our fair share of the royalties, with our ownership of the resources and jobs for our people. It will be done on our terms and our timeline.

“Canada is Indian land.  This is my truth and this is the truth of our peoples.”

U.S. Dollar Index Updated Chart

The U.S. Dollar Index is up today but the greenback has been losing RSI(14) momentum recently and also faces formidable long-term technical resistance around the 90 level…Gold bulls seem to be betting on the idea that the Dollar Index rally will stall, temporarily at least, in the 88–90 range after climbing from a low of 79.77 in early July…the Dollar is the King of currencies at the moment, however, and will ultimately take the path of least resistance which is likely a move into the low to mid-90’s in 2015…

Very strong Dollar Index support does exist between 87, the 50-day moving average (SMA), and the Fib. 88 level…

Today’s Equity Markets

Asia

China’s Shanghi Composite had a quieter session overnight but fell 13 points to close at 2927…

China’s top leaders say the country’s economy faces significant downward pressure and that it needs to adjust to the “new normal” of slower but higher-quality growth…in remarks released at the conclusion of a 3-day meeting on economic policy, leaders reiterated that this year’s major targets are within reach…they also pledged to push ahead with market-based revamps and to stick with existing fiscal and monetary policy…the officials also reiterated that they would widen foreign access to the service sector…they didn’t, however, disclose the government’s growth target for next year, a closely watched figure for how Chinese leaders will manage the economy…

More evidence of economic weakness in Japan…the country’s leading gauge of capital spending snapped a 4-month winning streak in October…core machinery orders fell 6.4% on month, worse than expectations for a 2.4% decline in a Reuters poll and slower than September’s 2.9% increase….

Japan’s Nikkei average slipped 155 points to finish at 17257…

Europe

European markets were mixed today…fresh data showed that the uptake of a low-rate loan program by the ECB met market expectations…

North America

The Dow is bouncing back strongly, up 205 points as of 8:20 am Pacific, after yesterday’s sell-off…

U.S. consumer spending advanced at a brisk clip in November as lower gasoline prices gave the holiday shopping season a boost, offering the latest sign of underlying momentum in the economy…the Commerce Department reported this morning that retail sales excluding automobiles, gasoline, building materials and food services, increased 0.6% last month after an unrevised 0.5% rise in October…last month’s increase suggested consumer spending, which accounts for more than two-thirds of U.S. economic activity, was accelerating in the fourth quarter after slowing a bit in the July-September period…

The TSX has recovered 198 points while the Venture is up a point at 669 as of 8:20 am Pacific…

Venture 10-Year Monthly Chart

This long-term chart paints an excellent picture of where the Venture is at in the context of historical trading…

Probably the key takeaway on this chart is that the -DI indicator has almost hit the peak DI level witnessed before at important turning points in the market…coinciding with this is an extreme low %K reading similar to that which appeared at the height of the 2008 Crash…

From the U.S. Dollar’s run to Oil’s plunge to tax-loss selling, a “Perfect Storm” has driven the Venture below its Crash low of 679 but such oversold conditions have probably only increased the likelihood of a rally commencing during the second half of the month, particularly if Gold strengthens further and Oil prices stabilize…

Highbank Resources Ltd. (HBK, TSX-V) Update

One of the best-performing stocks during a turbulent 2014 for the Venture has been Highbank Resources (HBK, TSX-V) which is preparing to commence the production phase for its Swamp Point North aggregate project near Prince Rupert…

As we wrote nearly a week ago, December is a great time to be searching for bargains in this market and a great one came up Tuesday when some nervous nellies sold HBK down to 12 cents intra-day before a powerful reversal took it to a closing price of 17 cents…this confirmed the very strong technical support between the 15 and 19-cent Fib. levels…dumping this stock at 12 cents was a foolish move – too many traders allow emotion to get in the way of common sense…the company has encountered some minor delays in getting to the production stage but this is a well-run company that does know how to execute, and 2015 is shaping up to be a banner year for HBK…

There is no shortage of demand for Highbank’s aggregate – even before anticipated LNG business kicks in – and the company is expected to gradually ramp up production during 2015 once it begins early in the New Year…keep in mind, the port of Prince Rupert is undergoing a massive infrastructure expansion already valued in excess of $40-billion…Highbank holds strategic advantages over any potential competitors, so we see a long-term value-creation situation here that one rarely finds in a Venture company…

Highbank has been a strong Venture out-performer in 2014 and its 200-day moving average (SMA), currently at 22 cents, continues to rise…

HBK is up 2 cents at 20 cents as of 8:20 am Pacific…

Probe Mines Ltd. (PRB, TSX-V)

One of our favorite Gold exploration companies continues to be Probe Mines (PRB, TSX-V) which released important news last night as the company secured 100% ownership of the mineral rights over the entire 70 km strike length of the Borden Gold belt in northern Ontario…

David Palmer, President and CEO of Probe, stated: “Aside from the initial discoveries of the Borden Gold deposit and the HGZ, this acquisition represents the most pivotal milestone in the project’s transition to a development-stage asset. Probe now owns a 100% interest in the entire Borden Gold deposit, including all the claims along the potential southeast strike extension. Our immediate plan is to initiate an infill drill program in the centre of the HGZ over the claim commonly referred to as the ‘wedge’ claim. We anticipate that this will have a significant impact on our current resource estimate through the addition of more high-grade Gold mineralization.”

Technically, John’s PRB chart last Friday showed the emergence of a bullish new trend with the stock trading around the $2.50 level at the time…PRB is up another 19 cents at $2.95 as of 8:20 am Pacific after hitting an intra-day high of $3.16…momentum is clearly back in PRB’s corner…

Note:  John, Terry and Jon do not hold share positions in HBK or PRB.

Gold has traded between $1,226 and $1,240 so far today…as of 8:45 am Pacific, bullion is down $3 an ounce at $1,229…Silver is up 1 cent at $17.11…Copper is off 2 pennies at $2.94…Crude Oil is down nearly $3 a barrel to $60.90, a new multi-year low…OPEC has reduced its demand estimate for 2015 by roughly 300,000 barrels a day, with the cartel saying the effect of the 40% drop in prices on supply and demand is uncertain…Bank of America has warned this morning that OPEC no longer exists in any meaningful sense and Crude prices will slump to $50 a barrel over coming months as market forces shake out the weakest producers…technically, there’s a very strong case for that, especially if support at $60 for WTIC doesn’t hold…adding pressure to Crude today has been the Energy Information Administration’s latest figures showing U.S. commercial crude inventories climbed 1.5 million barrels last week…analysts had anticipated a draw down of 2.2 million barrels…the U.S. Dollar Index is off one-quarter of a point to 88.37…

Gold made an impressive move yesterday, hitting a 6-week high after pushing through key resistance at $1,220…confirmation of that breakout is required today, so another close above $1,220 would be highly encouraging…the U.S. Dollar Index has some major long-term resistance to deal with around the 90 level, so Gold bulls are likely sensing that the greenback is due for some consolidation in the near future which would be bullish for precious metals and the commodities space in general…the next key targets for Gold are $1,240 and the October high of $1,256…

SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, said its holdings rose 0.37% to 721.81 tonnes yesterday…this total is still just shy of a 6-year low but that can be construed as a bullish indicator with the Gold Trust representing a source of potential new buying…

Strong investor demand has lifted American Eagle Silver Bullion coin sales to a record for the second straight year, the U.S. Mint confirmed yesterday…

A study by SNL Metals & Mining shows that major miners now account for 40% of global exploration allocation…in 2014, these 39 larger players budgeted a total of $4.33 billion and accounted for 40% of the $10.74 billion worldwide exploration total…the top 3 explorers were Antofagasta, a Copper producer; Vale, a diversified major; and Fresnillo Plc, a Mexican-based precious metals producer and the world’s leading Silver producer…touching on junior miners, the report stated that an unrelenting “financing drought has squeezed juniors’ budgeting to the point that the majors have become the biggest drivers of early-stage exploration.”  The SNL study also noted that Chile has replaced Canada as the leading jurisdiction for allocated exploration budgets…also falling on the list were the United States, Russia and China…

Today’s Equity Markets

Asia

A volatile session in China overnight…the Shanghai Composite reversed losses to finish more than 2% higher at 2941…early in the session, the index lost over 1% after lower than expected inflation numbers added to concerns of cooling activity in the world’s second-largest economy…the CPI rose 1.4% from the year-ago period, the lowest reading since November 2009 and below a Reuters forecast for a 1.6% increase…the wholesale sector, meanwhile, remained entrenched in a deflationary spiral – the PPI fell 2.7% on year in November, worse than the 2.4% decline forecast…

Japan’s Nikkei average fell 400 points or 2.25% overnight to close at 17413…

Europe

European markets are up slightly in late trading overseas…the Athens stock market has stabilized today after plunging nearly 13% yesterday, its biggest 1-day fall since December 1987, after the Greek Prime Minister’s surprise decision to call early presidential elections…markets are nervous that the high-stakes gamble by Antonis Samaras could trigger early parliamentary elections and pave the way to the stridently anti-austerity, hard-left Syriza party assuming power…voting for a new head of state will begin next week…

North America

The Dow is down 162 points as of 8:45 am Pacific on fresh global economic growth concerns…

An inflation gauge closely watched by Federal Reserve officials has fallen to the lowest level since the financial crisis, potentially complicating the interest rate outlook as investors brace for a possible Fed rate increase as soon as mid-2015…the 5-year forward 5-year inflation breakeven rate hit 2.0185% this month, the lowest since the end of 2008, according to the data provided by Dutch-based Rabobank…the gauge measures what the average inflation rate will be during a 5-year period starting from 5 years from today, in this case between 2019 and 2024…

In Toronto, the TSX is down 260 points as of 8:45 am Pacific…on top of plunging Oil prices, the Bank of Canada came out this morning with an estimate that house prices in the country are overvalued by as much as 30% and also warned that household debt remains the biggest risk to Canada’s economy…

The Venture is off 11 points at 674…if the firmness in Gold continues, expect the higher prices to begin to resonate in the junior resource sector once tax-loss selling has exhausted itself…historically, on average, this is the week the Venture puts in its monthly low before a rebound begins…

TSX Gold Index Chart Update

It’s a Perfect Storm to fuel a significant move in Gold producers – higher Gold prices and weak Oil prices…Canadian-based producers are also enjoying the added benefit of a low Canadian dollar…the mainstream media keeps harping about the negative affects on Canada of a sagging energy sector, but no one seems to have picked up on the fact that the current environment is a screaming buy signal for Gold producers, many of whom have also trimmed a lot of fat over the last couple of years during a 40% drop in the U.S. Gold price…their cost structures are improving even more with Oil down so sharply this quarter…

TSX Gold Index buy pressure has replaced sell pressure which was dominant for 3 months starting in September…the Gold Index is now attempting to gain momentum above its 50-day moving average (SMA) which is starting to flatten out in the 150‘s…this is a bullish technical set-up that suggests the Index may push higher to test resistance in the coming weeks near its 200-day SMA around the 180 level…

The Gold Index has added another 2 points to 157 as of 8:45 am Pacific…

The GDXJ – Market Vectors Junior Gold Miners ETF

Another bullish sign for Gold stocks can be seen in the Junior Gold Miners ETF (GDXJ, NYSE) which includes the likes of Torex Gold Resources Inc. (TXG, TSX), SEMAFO Inc. (SMF, TSX), OceanaGold Corp. (OGC, TSX), Primero Mining Corp. (P, TSX), China Gold International Resources Corp. (CGG, TSX), Lake Shore Gold Corp. (LSG, TSX), Fortuna Silver Mines Inc. (FVI, TSX) and Northern Star Resources Ltd. (NST, AU)…

The key breakout point to watch for with the GDXJ is the $30 level which would also put it convincingly above the downtrend line…a double bottom appears to have formed this quarter, RSI(14) is showing a bullish “W”, and a +DI/-DI crossover in the SS appears imminent…

Richmont Mines (RIC, TSX) Update

Richmont Mines (RIC, TSX) remains our favorite producer as it has both earnings momentum and price momentum with the stock hitting a new multi-year high again this morning of $4 per share…Richmont also has a 1 million ounce high-grade resource to begin exploiting in 2015 under existing workings at its Island Gold Mine in northern Ontario…

Richmont raised production guidance for 2014 to 85,000 to 90,000 ounces…the company’s cash and short-term deposits increased to $38 million at the end of September…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…

Richmont has recorded back-to-back exceptional quarters, boosting net earnings to 16 cents per share through the first 9 months of 2014…Q4 should also be strong with the company reaping the benefits of a lower Canadian dollar and a significant drop in Oil prices…Richmont’s current market cap of around $185 million is still exceedingly modest in our view given the company’s assets and ability to drive earnings and value in 2015…

Technically, Richmont appears to be warming up for a powerful move toward the next 2 Fib. measured resistance levels…with this kind of momentum, expect RSI(14) to reach into overbought territory for an extended period…this means we could see a move over the short-term to at least the first Fib. resistance level at $5…

RIC is up 14 cents at $3.87 as of 8:45 am Pacific…

Eldorado Gold Corp. (ELD, TSX) Update

Try to stick with producers with low cost profiles – Eldorado Gold (ELD, TSX) is certainly 1 of those…the company’s all-in sustaining cash costs averaged $735 per ounce in the the third quarter while cash operating costs averaged $488 an ounce (adjusted net earnings were $36 million or 5 cents a share)…the company expects to produce 790,000 ounces of Gold this year, slightly higher than original estimates…

Eldorado broke above a downtrend line in June and soared nearly 50% before retracing recently during the sector sell-off to base support just below $6…ELD is now beginning to gain traction above $8 a share, an important Fib. resistance area…

As of 8:45 am Pacific, ELD is up 4 cents at $8.29…

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

The extent of the sell-off in the Venture over the last 3+ months has had a lot to do with the increased influence of energy plays…Contact Exploration (CEX, TSX-V) is an excellent example of how Oil and gas plays started to dangerously break down in late September/early October…

Approximately $80 million has been wiped off Contact’s market cap since it hit a high of 56 cents…this 2.5-year chart shows why TA is so critical in assessing an overall trend as well as potential important turning points…CEX‘s upsloping channel stayed intact for more than a year until the beginning of October – that’s when we warned of trouble on the horizon for this play, and it wasn’t a good sign for the overall sector either…

What’s critical now is to see if CEX can hold support around 20 cents…we’re not sure that it will as oversold conditions are not yet at an extreme level…

CEX is off a penny at 20 cents as of 8:45 am Pacific…

Note:  Jon holds a share position in RIC.

Gold is firmer again today as it threatens to confirm a breakout through key resistance at $1,220…as of 8:15 am Pacific, bullion is up $29 an ounce at $1,233…Silver is 79 cents higher at $17.16…Copper is up 3 pennies at $2.97…Crude Oil has recovered 56 cents to $63.61 while the U.S. Dollar Index has pulled back three-quarters of a point to 88.35…the fact that the bears could only drive Gold down $13 an ounce last Friday in the face of a huge bumper sticker reading “Blowout Jobs Report”, with no downside follow-through yesterday, suggests that this move in Gold should be taken very seriously…

Gold is getting some help from jitters in global equity markets, and comments by 2 Federal Reserve policymakers…Dennis Lockhart, head of the Atlanta Federal Reserve, said late yesterday that he was in no rush to drop the Fed’s pledge to keep interest rates near zero for a “considerable time”, while San Francisco Fed chief John Williams said the phrase was still appropriate following a much better than expected U.S. November jobs report…

China’s largest Gold producer, Zijin Mining, is taking a 9.9% strategic stake in Canada’s Pretium Resources (PVG, TSX), developer of the ultra high-grade Brucejack Gold Project in northwest British Columbia (see additional details as well as updated Pretium chart below)…

Nickel prices are down slightly today, about 6 cents to $7.43 a pound, but are still near a 9-week high hit last week after an Indonesian court upheld a ban on Nickel-ore exports, threatening to curb global supplies…the ruling has cemented a turnaround in the Nickel market, which like most commodities had fallen sharply over the past 6 months…with shipments from the world’s biggest Nickel producer curtailed, Nickel supplies could remain tight for years, according to some analysts…a burgeoning recovery in the U.S. also is expected to feed demand and spark higher prices…

Today’s Equity Markets

Asia

China’s stocks, currency and corporate bonds suffered their largest tumbles in years overnight after Beijing took fresh steps to rein in growing risks in the country’s debt-laden financial system…

The bond market was the first to fall, which sent yields higher, after a regulator banned investors from using low-grade corporate debt as collateral to borrow cash…the turmoil then spread to the yuan, which recorded its biggest 2-day tumble ever, while the benchmark Shanghai index fell as much as 6% in the last hour of trading after rallying to a 3.5-year high of 3091 earlier in the session…the Shanghai finished down 160 points or 5.3%, its biggest fall since 2009…keep in mind, however, the Shanghai had jumped 20% over the last month to become the world’s top performing index in 2014, and significant technical resistance was evident at the 3000 level as John’s charts have shown…so some profit-taking was also happening…

Japan’s Nikkei closed down 122 points overnight or less than 1%…

Europe

European markets are down sharply (more than 2%) in late trading overseas…Greek stocks crashed 11% with continued political jitters in the country contributing to the intensity of the sell-off…

North America

The Dow has lost 191 points as of 8:15 am Pacific on global economic concerns…

Americans plan to spend more on gifts this Christmas than in any holiday season in the past five years as economic optimism hits a post-recession high, according to the CNBC All-America Economic Survey…meanwhile, U.S. small business optimism surged in November to its highest level in nearly 8 years, the latest indication the economy is positioned for faster growth in 2015…the National Federation of Independent Business said today that its Small Business Optimism Index increased 2 points to 98.1 last month, the highest reading since February 2007…

In Toronto, the TSX is down 39 points while the Venture is off 2 points at 678 as of 8:15 am Pacific…it fell as low as 675 in early trading, a few points below the 2008 Crash bottom…

CRB Index Updated Chart – What It Tells Us About The Venture

The collapse in the CRB Index since the summer has been quite dramatic with the Index falling 21% which helps explain the Venture’s 34% decline since the end of August…

Extreme oversold conditions are now emerging, however, which means the CRB is likely quickly approaching a turnaround…this should give relief to the Venture…timing-wise, this fits well with the traditional strength in the Venture during the last half of December and into the first couple of months of the New Year…

The CRB became overbought in early March of this year (the +DI indicator peaked at that time) and hit its yearly high in June…in retrospect, those were riskier periods to go long on the Venture…the best time to go long on the Venture is when the CRB is heavily oversold as it now with the +DI indicator at the lowest level it has been at anytime over the past 2-and-a-half years…

TSX Updated Chart

Yesterday’s fresh multi-year low in Crude Oil sent the TSX tumbling as much as nearly 500 points intra-day before it settled 330 points lower at 14144…the energy sector fell 5.7% for its worst setback in more than 3 years…the TSX has fallen 1000 points in the last 11 sessions through yesterday, eroding its year-to-date gain to just 3.8% as investors ponder where Oil is ultimately headed and what the ramifications might be if prices remain around current levels in 2015…

“It is likely the case that the direct impact of a drop in Oil prices on the Canadian economy is negative as lower activity in the Oil and gas sector offsets, at the national level, the benefit to consumers from lower gasoline prices,” Royal Bank economists wrote in a note (the Bank of Canada is on the record stating that the Oil price slide will cut Canada’s economic growth by one-third of a percentage point in 2015)…the Canadian dollar, meanwhile, fell to another 5-year low just above 87 cents U.S., another signal that investors are growing increasingly concerned about all things Canada…

The TSX flashed an “early warning” sign at the end of September when it broke below an upsloping channel in place since the summer of 2013 as well as chart support at 15000…the bottom of that upsloping channel and the 15000 area then became resistance, hence the latest sell-off after the TSX spent 5 trading sessions slightly higher than 15000 but couldn’t gain traction above that level…

Important support for the TSX rests at 14200 and 13500…it would be encouraging if the TSX could claw its way back above 14200 and begin to build a base from there…the October low was 13647…

All That Glitters Might Be Gold Stocks

Gold stocks are running counter to the TSX so far this week, with the TSX Gold Index up another 5 points in early trading today to 154…a weak Canadian dollar and low Oil prices are exceedingly bullish factors for Canadian Gold producers, which is why a company like Richmont Mines (RIC, TSX) and others in this sector represent such a tremendous opportunity in our view going into 2015…the fundamentals are in their favor, especially if Gold continues to remain firm above $1,200 an ounce…

New Gold Inc. (NGD, TSX) Update

The fourth quarter is scheduled to be New Gold Inc.’s (NGD, TSX) strongest of the year, which should bring NGD’s consolidated full-year Gold production into the 380,000 to 420,000 ounce guidance range as reported by the company October 30 (keep in mind, NGD’s Rainy River Project in Ontario is expected to be in full production by 2017 at 325,000 ounces per year, below average industry costs)…

Based on the cost profile of the company’s 4 operations through the first 9 months of 2014, and New Gold’s fourth quarter plans, the company expects all-in sustaining costs for the full-year to come in between $815 and $835 per ounce – below industry average…NGD generated $58 million in net cash from operations in Q3 and was sitting on over $400 million in cash and cash equivalents at the end of September…

Technically, NGD has found support at its 50-day moving average after collapsing below that SMA in September…resistance recently has been strong around the Fib. $5.14 level, but NGD is now threatening to overcome that…the stock is up 26 cents at $5.32 as of 8:15 am Pacific…

Pretium Resources Inc. (PVG, TSX) Update

As mentioned earlier, Pretium Resources (PVG, TSX) has landed an $81 million financing through one of China’s largest mining companies, Zijin Mining Group…the proceeds will help pay for capital expenditures including camp infrastructure at Pretium’s Brucejack Project…Zijin will purchase 12.83 million shares of Pretium at $6.30 through a private placement, giving the company a 9.9% interest in PVG and a seat on Pretium’s board…PVG boss Bob Quartermain expects strong Asian demand for Gold to underpin and drive Gold prices…

Technically, Pretium could rapidly accelerate if it can break above Fib. resistance and its declining 500-day SMA at $7.25…that’s where key resistance rests…PVG is up 52 cents at $7.17 as of 8:15 am Pacific…

Calibre Mining Corp. (CXB, TSX-V) Update

One of the highest quality Gold explorers on the Venture is Calibre Mining Corp. (CXB, TSX-V) which bargain-hunters should keep an eye on in the days ahead in the event of any addition pre-Christmas weakness…

A healthy technical consolidation occurred in Calibre during October and early November after quite a dramatic run that began near the end of May…support has held, as expected, between the 9 and 12-cent Fib. levels…

Results from a 5,000-meter Phase 1 drill program at the Eastern Borosi Gold-Silver Project, financed by IAMGOLD Corp. (IMG, TSX) have so far been very encouraging, and more assay results are pending…

Meanwhile, at the end of October, CXB announced commencement of a Phase 1 diamond drilling program (1,500 meters in up to 13 holes) on the Minnesota Gold Project within the B2Gold Corp. (BTO, TSX) joint venture on the Borosi concessions, northeast Nicaragua…Calibre controls a 49% interest in the JV while B2Gold has a 51% interest and is project operator…BTO has the right to earn an additional 19% per cent in Borosi by spending $6 million in additional project expenditures over 3 years…

CXB is off half a penny at 12.5 cents as of 8:15 am Pacific…a very strong support band exists between 9 and 12 cents as shown on this 2.5-year weekly chart…

Note:  John, Terry and Jon do not hold share positions in NGD, PVG or CXB.  Jon holds a share position in RIC.

 

Gold has traded between $1,193 and $1,199 so far today…as of 7:30 am Pacific, bullion is up $2 an ounce at $1,195…the rising 20-day moving average (SMA) at $1,189 is providing support…Silver has added 2 cents to $16.30…Copper is flat at $2.95…Crude Oil has fallen $1.40 a barrel to $64.44 while the U.S. Dollar Index is off nearly one-tenth of a point at 89.29…

Some interesting notes concerning China and Gold from Frank Holmes, CEO and Chief Investment Officer for U.S. Global Funds, in his weekly Investor Alert at www.usfunds.com.  “China’s central bank seems to view the current price levels in Gold as opportunistic.  The Peoples Bank of China circulated a draft plan to further ease import restrictions on bringing Gold into China.   Qualified miners, all banks that are members of the Shanghai Gold Exchange, and even commemorative Gold and Silver coin makers would be eligible to import bullion.  The move would hopefully cut the premium paid to direct Gold imports to China and may encourage miners and refiners to seek opportunities outside of China to secure Gold.

“Tightening the supply demand balance for new mine production, China, the world’s largest producer, is forecast by the China Gold Association to see its current 10% Gold production growth rate to fall by 2015 as lower prices deter new capital deployments to grow production.”

Today’s Equity Markets

Asia

Another robust performance overnight by the Shanghai Composite which surged 84 points or 2.9% to close above 3000 for the first time since April 2011…this is after a 9% jump last week, the Shanghai’s best weekly performance in 5 years…Chinese trade data today revealed a sharp slowdown in November exports and imports which may drive stimulus expectations…the country’s trade surplus, however, rose to $54.5 billion, beating estimates…

Japan’s Nikkei edged slightly higher to close just 64 points shy of 18000…the Japanese economy contracted 1.9% in annual terms in the July-September period, according to revised data released today that confirmed a recession in the world’s third-largest economy ahead of parliamentary elections this coming Sunday…data for both business and public spending were worse than anticipated…

Europe

European markets are down modestly in late trading overseas…

North America

The Dow is relatively unchanged at 17957 as of 7:30 am Pacific…

The TSX, with the energy and financial sectors under pressure, has fallen another 250 points to 14224 while the Venture is 9 points lower at 693 as of 7:30 am Pacific…

Will The Drop In Oil Lead To A Jump In Gold Sales In India?

There is clearly a direct connection between the drop in Oil prices and the decision by authorities in India about 10 days ago to begin relaxing that country’s restrictions on Gold imports…if weakness in Oil continues well into 2015, as expected, it’s conceivable that all restrictions on Gold imports in India could be scrapped – India, in fact, could increase Gold imports to record levels and still not add to the current account deficit if Oil prices remain around current levels…savvy traders who picked up on this may have contributed to Gold’s major reversal a week ago today, shortly after India announced the elimination of its 80:20 rule on Gold imports…

The Reserve Bank of India is “reasonably comfortable” with the current account deficit because of lower Oil prices, Deputy Governor H R Khan stated last Wednesday.  “So taking all that into account, a view has been taken that we’ll give up this 80:20,” he told reporters.

India’s restrictive Gold and Silver import duties were imposed by the previous government to help control the country’s current account deficit, with annual Gold imports in particular contributing so strongly to the deficit…the government raised the import tax on Gold, and the central bank also placed aggressive curbs on imports of the yellow metal as it was one of the biggest drivers of India’s trade deficit the measures helped narrow the trade as well as the current-account gap, though this intervention also led to a substantial increase in Gold smuggling…

India’s current-account deficit had touched an all-time high of 6.7% of GDP in the last quarter of 2012 and remained uncomfortably wide in the first half of 2013, dragging the rupee to a record-low…both the RBI and the government have said that a current account deficit of up to 2.5% is acceptable, and it slid to 1.7% in the second quarter of this year (the Q3 current account deficit should show further improvement with the drop in Oil prices)…

Crude is India’s largest import item by value, followed by Gold…together they accounted for 42% of all imports in October…however, Oil imports by value are falling sharply, with October’s $12.36 billion being 19.2% below the same month last year…this represents a reduction in the current account deficit of about $2.6 billion, and that’s just 1 month of Oil imports…

Conservatively, India should save in the neighborhood of at least $40 billion on Oil imports in 2015 versus 2013 if current price levels persist…this is based on an average Brent oil price of around $108 a barrel in 2013 and daily imports of around 4 million barrels, 5% above what they have been in the first 10 months of this year…

In contrast, even if Gold imports recover to 2013 levels of just under 1,000 tonnes from the current likely 2014 outcome of around 850 tonnes, the extra cost is less than the saving on Oil…if Gold averages around $1,200 an ounce in 2015, 1,000 tonnes would cost about $38.4 billion…

WTIC Long-Term Chart

Morgan Stanley today lowered its forecasts for Crude Oil prices for the next 5 years, reiterating some concerns that supplies will likely keep prices down for an extended period with peak oversupply expected during Q2 2115…for its base case scenario, the U.S. bank sees Crude averaging $70 per barrel during 2015, down nearly 30% or $28 from its previous forecast…the bank sees prices gradually recovering to an average of $100 per barrel in 2017, just $4 below where it had the price in its previous forecast…

Technically, this 34-year WTIC chart from John shows something quite normal from a long-term perspective – a retreat to uptrend support in the low $60’s in place since the bull market began in Oil in 1999…Fib. 38.2% support is also at $63…RSI(14) is currently at previous support and has dropped in similar fashion as it did in 2008…in a worst-case scenario for 2015, WTIC could potentially test a very strong support band between $40 and $50 if the $60 level doesn’t hold and global economic growth is weaker than expected…

When it comes to Oil, there’s no better cure for low prices than low prices…for some countries, the plunge in Oil is going to cause considerable financial pain…for others, including the U.S., China, Germany and India, low prices will benefit consumers and give an overall boost to GDP…this should also lead to increased demand for Oil which in turn should help soak up the oversupply going through 2015…

Importantly, the IMF calculates that Oil’s plunge since the summer of this year could add nearly a percentage point to China’s GDP, and we all know how critical China’s economy is to the commodities space…

Venture Seasonality Chart

It might be a little difficult to appreciate this at the moment, but December historically is the best month of the year for the Venture with an average Index gain of 4% since 1999…typically, the Venture will experience some weakness during the first half of the month – especially in a “down” year – before rebounding sharply immediately before and after Christmas, a rally that often extends into January and February…

Below is an updated Venture “Seasonality Chart” covering the 1999-2014 period…based on historical patterns, there’s a strong chance the Index will put in a bottom sometime this week…

Venture 4-Month Daily Chart

While the Venture is at a new multi-year low this morning, RSI(14) is approaching previous support on this 4-month daily chart, and doesn’t seem likely to reach the same oversold level it hit in October…such a scenario would represent a bullish divergence between RSI(14) and price, laying the groundwork for a reversal in the Venture beginning prior to Christmas…

In the meantime, happy bargain hunting – this is not weakness to be fearful of…

Venture 10-Year Monthly Chart

This 10-year monthly chart provides some hope that the Venture is very close to a turnaround as it closes in on the 2008 Crash low of 678.62…

You’ll notice on this chart that the -DI indicator is very close to the peak levels achieved in both DI’s at critical highs and lows since 2008…in addition, the %K indicator is now even lower than it was at the depths of the 2008 panic…

If you stretch an elastic band enough, it’ll snap – what’s happening here is that the Venture is being stretched to such extreme oversold levels, it may suddenly “snap” and react in a sudden and powerful way to the upside…

It’s no coincidence the Venture’s weakness since September has come at a time when the U.S. Dollar Index has surged higher, almost in parabolic fashion…the Dollar Index may have a little further to run but its current overbought current will need to unwind at some point in the near future, and that’s when the Venture should gain traction…

Discovery Ventures Inc. (DVN, TSX-V)

One of the few Venture stocks up since the end of October, and doing good volume, is Discovery Ventures (DVN, TSX-V) which has found excellent support at an uptrend line in place since last year as you can see on John’s 2.5-year weekly chart…

DVN continues to advance its high-grade Willa-Max Copper-Gold Project in southeastern British Columbia, and now has permitting to conduct an underground percussion drilling program to take samples from the Willa resource…keep in mind that a company like Discovery, pushing to go into production over the next year or 2, stands to benefit significantly from a weak Canadian dollar and lower Oil price environment…

DVN is off 2 pennies at 20.5 cents as of 7:30 am Pacific…

Silver Short-Term Chart

Encouragingly, Silver is finally gaining traction above a downtrend line in place since the early summer…last Monday’s dramatic move from an intra-day low of $14.15 to a close above $16 was technically highly significant…Silver is currently consolidating for a potential run at the $17.50 resistance area…superb support has been demonstrated at $15…

Silver Long-Term Chart

This 34-year monthly chart continues to give 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 (if indeed this theory is correct)…

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

Fundamentally, Silver has been hurt by a slowdown in global economic growth…if economies in the euro zone, China and Japan can show some fresh strength in 2015, the Silver price could begin to accelerate rapidly…

Note:  John, Terry and Jon do not hold share positions in DVN.

TSX Venture Exchange and Gold

Despite a jump in Gold, it was another rough week for the Venture with the Index surrendering 40 more points (5.4%) after a 6% decline the previous week.  The Venture traded briefly below 700 toward the end of the session Friday but closed at 702.

While the Venture keeps hitting new multi-year lows, we’re seeing a divergence between the Index level and RSI(14).  That’s usually a sign that a bottom is being formed and a turnaround is on the way.  John’s updated 9-month daily chart illustrates the RSI(14) divergence with price.  It would be encouraging in the week ahead if the Index were able to hold support around current levels, or at least remain above the 2008 Crash low around 680.

Keep in mind that if the Venture were to experience a “normal” December, it should finish the year at about 780.  That would give it a 4.6% monthly gain, the average December advance since 1999.  So selling into this current weakness makes no sense.  Actually, this is when astute buyers actually have the best chance at some quick trading profits.  Last year, if you recall, the Venture fell about 50 points during the first 9 trading sessions of the month.  Sentiment was very bearish.  The Index stabilized over the next 6 sessions and then took off sharply to the upside as it commenced a record consecutive daily winning streak.

Venture Historical December Trading

It might not feel like it right now, but historically December is indeed the Venture’s best month of the year.  The first 2 weeks of December tend to be weak followed by the start of a significant uptrend during the last half of the month.  This momentum typically carries into January and February before a spring thaw and then a summer rally.

If one averages out the dates of the December lows going back to 2000, there’s a good chance we’ll see the Venture bottom out in the week ahead – December 12, to be precise, is the “magic” date.  Over the last 3 years, the low has been put in on December 15, 13 and 19, respectively.  The probability is extremely high, therefore, that we will see a bottom anytime over the next 10 trading sessions.  If you pick away at the best opportunities in the days ahead, it’s almost impossible NOT to make money looking out over the next couple of months.

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

Despite Friday’s setback, Gold enjoyed a terrific week.  In fact, if the best the bears can do is knock bullion down $13 an ounce on weak Oil and a blowout U.S. jobs report that sent the Dollar Index exploding to new multi-year highs, then clearly they’re losing their hold on this market.  Something is underpinning Gold, and this is why we believe that a convincing breakout through the resistance band between $1,200 and $1,220 is in the works by year-end or the beginning of 2015.

For the week, Gold finished at $1,193 for a gain of $24.  Bullion enjoyed a spectacular turnaround Monday when it plunged into the low $1,140‘s and then immediately rallied almost $80 an ounce on short-covering and a variety of fundamental factors.

The question now is, what is Gold‘s path of least resistance?  We’re about to find out.  The closest support is $1,180 while $1,200 to $1,220 remains formidable resistance.

Gold 5-Year Weekly Chart

Over the next couple of months, we believe Gold has a greater chance of moving toward the top of the downsloping flag than breaking below it.  This suggests a move as high as about $1,300, at which point Gold will have to make a critical decision.

Like Gold, Silver experienced an important reversal Monday and managed to hang on to most of those gains by the end of the week.  Silver climbed 71 cents from the previous Friday to finish at $16.29 (updated Silver charts Monday morning).  Copper gained 3 pennies to $2.95.  Crude Oil hit five-and-a-half year lows, finishing the week down 31 cents at $65.84.  The U.S. Dollar Index surged more than a point to close at 89.36.

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.