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Gold has traded between $1,187 and $1,210 so far today with weakness setting in following the release of a much better-than-expected U.S. jobs report for November…as of 8:15 am Pacific, bullion is off $10 an ounce at $1,196…Silver is down 18 cents at $16.31…Copper is off a penny at $2.95…Crude Oil is down by more than $1 a barrel to $65.46 while the U.S. Dollar Index has surged two-thirds of a point to 89.28…

Gold is still on track for 1 of its best weeks of the year after rebounding from the $1,140 area intra-day Monday…in the physical markets, Chinese buying remains steady with premiums unchanged at about $1-$2 today…meanwhile, data from the Istanbul Gold Exchange shows that Gold imports into Turkey more than doubled year-on-year to 46.9 tonnes in November, its strongest monthly imports in more than 6 years…

This morning’s U.S. non-farm payrolls report for November has pushed the greenback to new multi-year highs, putting pressure on Gold but bullion has nonetheless shown resilience…U.S. employers ramped up hiring last month, continuing a stretch of robust payroll gains and keeping the economy on track to record its strongest year of job creation since 1999…non-farm payrolls rose a seasonally adjusted 321,000 last month, the strongest month of hiring since January 2012, the Labor Department reported…the unemployment rate, however, remained unchanged at 5.8%…hiring was broad across the economy, led by gains in the professional and business services sector…retail also saw 50,000 new hires heading into the holiday shopping season…in addition, revisions showed employers added a total of 44,000 more jobs in September and October than previously estimated…analysts polled by Reuters were expecting a jobs number of around 230,000 for November, so this morning’s figure caught markets by surprise…the dramatic move was well above the average of 224,000 a month over the past year…

Today’s Equity Markets

Asia

A very volatile session in China overnight as the Shanghai Composite swung both ways within a wide trading range of 165 points…at the end of the day, the index finished up 39 points or 1.4% at a new multi-year closing high of 2939…momentum is moving this market at the moment, and resistance at 3000 will likely be tested next week…

China’s ruling Politburo said it will maintain a “prudent” monetary stance and keep growth within a reasonable range in 2015, signaling it will hold off major changes at an economic policy meeting scheduled to begin next Tuesday…while China will see difficulties in 2015, economic growth is showing resilience and potential, giving the government plenty of room to maneuver, the official Xinhua News Agency reported today…China’s annual Central Economic Work Conference will set an economic growth target for 2015, expected to be around 7%…today’s language about a prudent monetary policy reiterated the government’s previous stance, suggesting there won’t be a major policy shift at that meeting…

Japan’s Nikkei average closed 33 points higher at 17920…

Europe

European markets are up sharply in late trading overseas…Germany’s Bundesbank has cut in half its 2015 growth forecast for the euro zone’s largest economy…the central bank also trimmed its growth estimate for this year…however, the central bank’s president said there were signs that current weakness would soon be overcome…

North America

The Dow, which more often that not responds well on “jobs report” Fridays,  is up 53 points at 17953 as of 8:15 am Pacific…

The TSX is 23 points higher after a large order from Goldman Sachs to sell a basket of Canadian stocks caused the index to tumble during the final hour of yesterday’s trading…the Venture, meanwhile, is off 4 points at 703 as of 8:15 am Pacific…

Richmont Mines (RIC, TSX) Update

We’re bullish on Gold stocks entering year-end and we encourage our readers to perform their due diligence on as many quality producers and explorers as possible…

Canadian-based producers are benefiting from the weak Canadian dollar and much lower Oil prices than they budgeted for…keep in mind, Oil prices account for a significant portion of a producer’s cost structure, so these savings are going right to the bottom line…

If you can find a producer that’s out-performing both Gold and the TSX Gold Index, all the better…1 excellent example is Richmont Mines (RIC, TSX) which is on track for a stellar 2015 that could reward shareholders very handsomely…Richmont has a 1 million ounce high-grade resource to exploit beneath existing workings at its Island Gold Mine in northern Ontario, and the company has already recorded adjusted net earnings of 19 cents per share through the first 9 months of the current fiscal year…any company with Richmont’s revenue and earnings momentum should be on every investor’s radar screen…

Richmont has widely outpaced both Gold and the TSX Gold Index in 2014 as you can see on this 10-year monthly chart…Richmont soared from current levels to more than $12 per share during 2011 when it was one of the hottest stocks on the entire TSX…history could repeat itself in 2015…

RIC is off 2 pennies at $3.78 as of 8:15 am Pacific…

Probe Mines Ltd. (PRB, TSX-V) Update

Another Gold stock with excellent potential for 2015 is Probe Mines (PRB, TSX-V) which continues to advance its multi-million ounce Borden Lake Project in northern Ontario toward the completion of a Preliminary Economic Assessment…PRB has managed to hold critical support around $2 since the second quarter of this year, and the 50-day moving average (SMA) has recently reversed to the upside after being mostly in decline over the last 6 months…

PRB, unchanged at $2.57 as of 8:15 am Pacific, has significantly out-performed the price of Gold since early 2013…

The Venture’s “39-Week Cycle” 

Why the Venture has carved out a consistent pattern of 39-week cycles is a mystery that we can’t explain…however, just because it’s a mystery doesn’t mean it should be ignored or dismissed…in fact, looking at where the current cycle is at, our readers should draw great encouragement from what appears to be emerging which is an imminent new uptrend…

Below is a chart going back to 2001 that shows how this this pattern has played out…it’s particularly noteworthy now because the current 39-week period is rapidly drawing to a close (before year-end)…“peaks” and “troughs” typically occur at the end of each of these cycles…if history is any guide, the Venture is very close to moving out of this current trough…

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

The first half of December is usually the best time of the year to shop for bargains on the Venture, and one that we’re immediately eying is Highbank Resources (HBK, TSX-V) which is on the verge of putting its Swamp Point North aggregate project near Prince Rupert into production…

There is no shortage of demand for Highbank’s aggregate – even before anticipated LNG business kicks in – and production is expected to gradually ramp up throughout 2015…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…

Technically, HBK has landed at the top end of an exceptionally strong support band – the “sweet spot”, as we call it – as defined by Fib. support levels which you can see on John’s 2+ year weekly chart…recent weakness can be attributed to some selling to exercise warrants which expired at the end of November…

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 half a penny at 20.5 cents as of 8:15 am Pacific after dipping as low as 18 cents intra-day yesterday…as always, perform your own due diligence…

Note:  Jon holds a share position in RIC.

Gold has traded between $1,201 and $1,215 so far today…as of 8:00 am Pacific, bullion is flat at $1,210…Silver is up 14 cents at $16.57…Copper has added 4 pennies to $2.96…Crude Oil is off 85 cents at $67.53 while the U.S. Dollar Index has retreated more than half a point to 88.35 after some strengthening in the euro following a European Central Bank meeting and comments by Mario Draghi…

ECB President Draghi today said the governing council will decide early next year whether its current policies are sufficient to raise inflation toward its target, and noted the decline in Oil prices may make that objective more difficult to attain…outlining new, lower forecasts for economic growth and inflation over the coming 2 years, Draghi said that should the council conclude its policies aren’t sufficient to end a period of very low inflation, that would “imply altering the size, pace and composition of our measures.”

The ECB today left its key interest rates unchanged at record lows, reinforcing its position that borrowing costs cannot go any lower despite inflation weakening further below the bank’s target…the euro remained steady around $1.23 after the ECB left its main interest rate, the cost of borrowing at the central bank’s regular loans, at 0.05%…it also left its deposit rate at –0.2%, meaning banks continue to pay for parking excess reserves at the central bank…the ECB’s stimulus measures so far seem to be having little effect in terms of kick-starting the euro zone economy or stoking inflation…some top members of the ECB’s 24-member Governing Council have voiced openness to large-scale purchases of sovereign bonds, known as quantitative easing, and Draghi’s comments during his news conference today suggested the ECB may go in that direction early in the New Year…

Starbucks Turns To The Lure Of Gold

Starbucks is jumping on the Gold bandwagon over the Christmas holiday season…until January 5, U.S. and Canadian customers who participate in the “It’s a Wonderful Card Ultimate Giveaway” will have the chance to win an exclusive 10 karat Gold Ultimate Starbucks card…according to the company, the cardholders will be part of history as only 14 Gold cards will be made, “making it the most exclusive Starbucks card ever made.”  Each card, which will be engraved with the customer’s name, will be good for 1 free food or beverage item every day for the next 30 years, which works out to about $50,000 worth of Starbucks goodies…

Today’s Equity Markets

Asia

After years of estrangement, China’s small investors are rushing back into stocks, driving a rally that has made the Shanghai the top-performing major market in the world this year…Chinese stocks bolted higher again today to record their best 1-day gain since 2012, adding juice to a 7-month rally that has brought 1 of the world’s biggest markets back to life after years of dismal performance…this is all occurring in the midst of the slowest pace of economic expansion in more than 5 years…however, Beijing’s surprise move to cut interest rates last month has attracted fresh cash to the market, along with the opening of a trading link with Hong Kong that allows more stock investment by foreigners…

The Shanghai soared 121 points or 4.35% overnight to close at 2900, just 100 points below important technical resistance…the Shanghai has now leapfrogged India as the world’s top-performing index so far this year…the market has charged higher in 10 of the past 11 trading days, notching up record trading volumes this week and gains this year of 37%…meanwhile, Japan’s Nikkei average extended gains into a 5th session, tracking movements in the currency as the yen weakened to a new 7-year low vs. the greenback…

Europe

European markets are down significantly in late trading overseas due to disappointment over the outcome of the ECB meeting…

This should prove interesting – Russian President Vladimir Putin is due to deliver his annual Presidential address to the Russian Federal Assembly today…no doubt he’ll find ways to blame the West for his country’s problems…Putin’s speech will be keenly watched as Russia’s currency tumbles and the economy struggles on the back of the decline in the Oil price and sanctions on the Putin regime for its incursions into Ukraine…

North America

The Dow is down 83 points as of 8:00 am Pacific…fewer Americans filed for unemployment benefits last week, with jobless claims falling by 17,000 to 297,000, according to the Labor Department…non-farm payrolls for November will be released tomorrow…

The TSX is off 173 points while the Venture has fallen 8 points to 714 (next support around 710) as of 8:00 am Pacific…

Bank of Canada Governor Stephen Poloz says a broad and sustained economic recovery may finally be at hand…Poloz acknowledged yesterday that the economy is stronger than he thought, in large part because exporters are feasting on the resurgent U.S. economy and a lower Canadian dollar…as expected, the central bank kept its key interest rate unchanged at 1%, extending the longest period of rate stability since the early 1950’s.  “Canada’s economy is showing signs of a broadening recovery,” the central bank said in its final rate-setting announcement of 2014. “The hoped-for sequence of rebuilding that will lead to balanced and self-sustaining growth may finally have begun.”

Gold Updated Chart

Gold’s current technical posture suggests that the metal is gearing up for another leg higher…this would catch many investors off guard, as overall sentiment toward Gold remains negative despite Monday’s dramatic move that many pundits seem to be shaking off as an insignificant “anomaly”…

There are several important takeaways regarding this 1-year weekly chart…

1.  Take note of the “True Strength Index” at the bottom of this chart – it is ideally positioned for a near-term bullish crossover, similar to the situation that occurred at the end of last year/beginning of 2014…

2.  RSI(2) divergence with price – RSI(2) has been in an overall uptrend since bottoming in September despite Gold’s fall to a multi-year low in early November…if the current trend continues, expect RSI(2) at some point to push into overbought territory for an extended period as it did 3 times earlier this year…

3.  -DI appears to have peaked at the same time as Gold bottomed around $1,130…

4.  We’ve seen a consistent string of white candles on high volume over the past several weeks…

5.  Gold seems to have enough energy to push through key resistance at $1,220 which would bring in a wave of fresh buying – the $1,220 level is the top of a downtrend line that bullion may overcome shortly…

TSX Gold Index Updated Chart

Gold producers are looking bullish as well based on this 6-month daily TSX Gold Index chart…accumulation since early November has been robust…

Once the Gold Index overcomes a key band of resistance between 155 (the 50-day moving average, SMA) and 160, the race is on to higher levels which ultimately could mean a challenge of the 200-day SMA currently at 182 (don’t look at just the producers in the TSX Gold Index, search for profitable smaller producers with earnings momentum such as Richmont Mines, RIC, TSX)…

WTIC Updated Chart

The possibility of $50 Oil at some point in 2015 certainly can’t be ruled out given the current supply glut which is not expected to ease anytime soon despite the nearly 40% drop in prices since the early summer…in addition, it’s clear the Saudis are going after market share as they continue what’s likely to be a long-term price war against North American shale producers…today, the Saudis slashed their January prices in both the U.S. and Asia…the Saudis are low-cost producers and they’ve used the good times in Oil to build up huge foreign exchange reserves – they can easily survive an extended period of weak prices…however, they might be underestimating the resolve and entrepreneurship of many U.S. shale players…

While some major technical damage has been inflicted on WTIC, starting with the breach of long-term uptrend support, oversold conditions have clearly emerged during this 4th quarter which ultimately could lead to a rally into the $70‘s…the bearish trend for now appears to have peaked, but Crude will have its challenges in 2015 (and will likely see new lows) with a chart like this…

December Bottom-Fishing Opportunities

Radius Gold Inc. (RDU, TSX-V)

Radius Gold (RDU, TSX-V) became a great bargain in December of last year, and we anticipate the same will hold true this time around…RDU closed at 6.5 cents yesterday for a market cap of just under $6 million, though the company reported a working capital position of $10 million (including $3.2 million in cash) as of September 30…Radius, led by Simon Ridgway, is focused on Gold and Silver opportunities in Central America, Mexico and Idaho…

This 10-year monthly chart shows RDU is sitting very close to long-term support at 6 cents…that level also represents the top of the downtrend line that RDU broke out from at the beginning of this year…it’s not unusual to see a retest of the downtrend line which is what is occurring now…

GoldQuest Mining Corp. (GQC, TSX-V)

The International Speculator has given up on GoldQuest Mining (GQC, TSX-V) but we haven’t…GoldQuest has been around a long time and has some valuable assets…the company is also still armed with a net cash position of more than $5 million, so they won’t be disappearing anytime soon…historically, GoldQuest has always been a smart speculative buy under a dime for patient investors who are looking for potentially huge leverage on a “whopper” of a drill hole…2014 has been a disappointing one in terms of exploration results for GQC in the DR, but they still have many exceptional targets that have yet to be tested…

On John’s 10-year monthly chart, you can see that GoldQuest’s long-term support band is between 6 and 8 cents…that’s an inexpensive lottery ticket with a great chance of paying off big-time at some point during 2015…as always, perform your own due diligence…

Note:  Jon holds a share position in RIC.

Gold has traded between $1,199 and $1,216 so far today…as of 8:15 am Pacific, bullion is up $14 an ounce at $1,213…Silver has risen 8 cents to $16.55…Copper (see updated chart below) is off 3 pennies at $2.92…Crude Oil has gained $1.16 a barrel to $68.04 while the U.S. Dollar Index has added another one-third of a point to 88.89…

The SPDR Gold Trust, the world’s top Gold-backed exchange-traded fund, actually saw inflows of 2.4 tonnes yesterday after holdings hit a 6-year low…

Gold trading on China’s largest physical bullion bourse has already exceeded last year’s record volume as the world’s biggest consumer seeks to exert more influence on the global market…the volume of all contracts on the Shanghai Gold Exchange, including those in the city’s free-trade zone, was 12,077 metric tons in the 10 months through October, compared with 11,614 tons during all of 2013, according to a report today from Bloomberg which cited data from the bourse’s website…this total is expected to climb to 17,000 tons by the end of the year…while China vies to extend its influence over the bullion market with new contracts aimed at luring international investors, trading volumes are still a fraction of those in London, where benchmark prices are determined…

Commerzbank expects Gold prices to average $1,200 an ounce in 2015…the German bank anticipates a weaker first half of the year for Gold ahead of potential interest rate hikes in the U.S. by the summer, but their view is that bullion should rebound during the second half of 2015 after bottoming out in the low $1,100‘s…Commerzbank expects average 2015 Silver prices of $17 an ounce, with the metal following Gold’s lead…

The euro slipped to a 2+year low today with the latest dose of drab economic data bolstering expectations of further easing ahead of tomorrow’s ECB monthly meeting…persistently low inflation and a sputtering economic recovery have ramped up the pressure on the central bank to expand its program of asset purchases…however, if the ECB doesn’t deliver more stimulus tomorrow (which some market participants are anticipating), a short-covering rally could occur in the euro which would also be bullish for Gold…

Today’s Equity Markets

Asia

Markets in China and Japan hit new multi-year highs overnight…the Shanghai Composite gained 16 points to close at 2780 as it continues its march to resistance at 3000…the Nikkei, meanwhile, added another 57 points to finish at a 7-year high of 17720…

Europe

European markets are mixed in late trading overseas…data today showed a sharper slowdown in euro zone private sector activity than first estimated…composite PMI in the currency bloc was revised down to 51.1 from 51.4 in November…

North America

A slew of U.S. economic data today…this morning’s ADP national employment report fell slightly short of market expectations…the figure showed a rise of 208,000 jobs in November, while the market was expecting something in the range of 230,000…the ISM services index beat expectations with a leap to a 3-month high of 59.3 for November…U.S. non-farm productivity grew a bit faster than initially thought in Q3, while sharp downward revisions to compensation pointed to muted wage inflation that should give the Fed room to keep interest rates low for a while yet…the Fed’s Beige Book report on the economy is due later this morning, and that could have an impact on the markets…

The Dow is up 3 points as of 8:15 am Pacific…the TSX has jumped 130 points while the Venture has added 3 points to 723…

GoGold Resources Inc. (GGD, TSX), an emerging Gold-Silver producer in Mexico, has announced the closing of a bought deal offering of 13,333,500 common shares at a price of $1.50 per share for gross proceeds to the company of just over $20 million…GGD is off 3 pennies at $1.45 as of 8:15 am Pacific…

Copper Updated Chart

Copper has been unable to overcome its downtrend line this year and is now testing support around $2.90 as you can see in John’s 2.5-year weekly chart…RSI(14) is currently bouncing off a support level that has given birth to previous rallies since the first half of 2013…

Money managers, who often end up on the wrong side of the trade, have been betting on declines in Copper for 10 straight weeks, the longest stretch since August 2013…Copper, dubbed by traders as the metal with an economics Ph.D., tumbled 6.6% in November, the most in 17 months…investors have been selling amid speculation that a slowdown is set to deepen in China, where economists are already forecasting the weakest expansion since 1990…

BHP Billiton Ltd. (BHP, NYSE), the world’s biggest miner, expects Chinese growth will be strong enough to underpin consumption…at a recent seminar in Sydney, Australia, the company emphasized that about 250 million more people are expected to move move from rural areas to cities in the Asian country by 2030, bolstering demand for products including metals and food…

Lower Copper prices will also limit supply expansion and help the metal rebound…capital expenditures for Copper producers tracked by Bloomberg Intelligence are set to decline 21% this year from 2013, and fall a further 10% in 2015…

Richmont Mines (RIC, TSX) Update

The most attractive Gold producer we see at the moment is Richmont Mines (RIC, TSX), the subject of a BMR eAlert prior to yesterday’s trading when RIC was still available for around $3.50…over the last few months we’ve been pointing out the huge turnaround in this company’s fortunes…old-old-fashioned earnings momentum is driving Richmont higher along with the fact the company has outlined a 1 million ounce high-grade resource beneath existing workings at its Island Gold Mine in northern Ontario…

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 the 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…

Through the first 9 months of fiscal 2014, Richmont has recorded adjusted net earnings of 19 cents per share…this Rouyn-Noranda based company is also benefiting from a lower Canadian dollar and weak Oil prices…

Richmont expects to produce between 85,000 to 90,000 ounces of Gold in 2014…the company’s cash and short-term deposits increased to nearly $40 million at the end of September…so 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…mining of the first stopes of the lower resource is expected to commence by the end of this month or very early in the New Year…

Technically, Richmont has broken out above 2 key levels – $3 and $3.50…the next measured Fib. resistance is $5…Richmont has significantly outperformed both the TSX Gold Index and the price of Gold in 2014, so RIC could easily explode much higher over the near-term if Gold‘s current momentum accelerates into year-end and the beginning of 2015…

RIC is at a new multi-year high of $3.88, up 20 cents, as of 8:15 am Pacific…

The “December Effect” – A Look At Historical Venture Trading During December Since 2000

The table below features certain Venture trading statistics compiled by John for the month of December going back 14 years…due to tax-loss selling and other factors, the first couple weeks of the month has consistently proven to be an ideal time to carry out some bargain-hunting in advance of an uptrend that typically commences immediately prior to Christmas…

As we mentioned yesterday:

1.  In the last 14 years, the Venture’s December low has never occurred after December 21;

2.  In the last 14 years, the uptrend has never started before December 9…

Given Gold‘s extraordinary move Monday, and the encouraging follow-through we’re seeing today, it’s quite likely that this year’s December and yearly low will occur sooner rather than later…in other words, don’t procrastinate with your “shopping” for market bargains…

U.S. Dollar Index Updated Chart

The U.S. Dollar Index continues to surge higher which makes Gold‘s current strength all the more impressive…what’s interesting about the Dollar Index is that whenever it has shown traction above 88 recently, fresh buying has come into bullion…the Dollar Index has confirmed a breakout above Fib. resistance at 88 but significant band of chart resistance, due to previous highs in 2008, 2009 and 2010, exists up to the 90 area…the next Fib. measured resistance is 93…

There’s no question the Dollar is currently technically overbought – those conditions have existed since September – and is also up against stiff resistance, so Gold traders could be anticipating a near-term reversal in the greenback…as you can see on this 2.5-year weekly chart, the +DI indicator has peaked while an RSI(14) divergence with price is another sign that the Dollar Index is getting closer to the point where it will pause and consolidate the sharp gains it has made since the early summer…

Canadian Dollar Updated Chart

It’s possible the Canadian dollar could be gearing up for a rally which would be bullish for commodities and the Venture…the loonie has Fib. support at 88 cents which so far it’s holding onto…RSI(14) on this 20-year monthly chart is also at previous support…

If the 88 level doesn’t hold, then a rally may not begin until strong support at 85 is tested…

Kaminak Gold Corp. (KAM, TSX-V) and North Arrow Minerals (NAR, TSX-V) 

Given the Venture “December Effect”, watch for potential opportunities in the coming days in 2 quality juniors – Kaminak Gold Corp. (KAM, TSX-V) and North Arrow Minerals (NAR, TSX-V)…both companies of course are very active with strong balance sheets…as always, perform your own due diligence…KAM and NAR closed at 70 and 48 cents, respectively, yesterday…

Technically, KAM has exceptional support at 60 cents while NAR has a strong band of support between 40 and 50 cents…

KAM 2.-5 Year Weekly Chart

NAR Long-Term Monthly Chart

Note:  Jon holds a share position in RIC.

Gold has traded between $1,192 and $1,212 so far today…as of 8:00 am Pacific, bullion is down $11 an ounce at $1,202 after yesterday’s dramatic run from the low $1,140’s…Silver has added 2 cents to $16.48…Copper is off 2 pennies at $2.95…Crude Oil has slid $1.42 a barrel to $67.58 after making its biggest daily gain yesterday since 2012…the U.S. Dollar Index, meanwhile, has jumped one-half of a point to 88.50…

Yesterday’s turnaround in Gold was impressive but the close above $1,200 requires confirmation today…we’ll see if that occurs…John has updated charts this morning for both Gold and Silver…in top consumer China, local Gold prices were trading at a premium of less than $1 an ounce today, slightly lower than yesterday’s $1-$2…evidence of stronger demand from China will be critical in order for bullion to gain traction above $1,200 an ounce… 

A major catalyst for Gold‘s move yesterday came overnight when Moody’s Investors Service cut Japan’s government debt rating by 1 notch…the credit-rating firm flagged delays to planned tax increases as fueling uncertainty about Japan’s ability to reduce its fiscal deficit…weak PMI’s out of Europe and China also helped lift Gold yesterday, along with short-covering and a lower U.S. dollar…

Another wise observation from Mineweb’s Lawrence Williams (“China Holds The Gold Price Key”, www.minweb.com)…Williams stated yesterday, “There is a very strong belief among many analysts that China is building its Gold reserves to at least match, or perhaps exceed those of the U.S., and if it should come clean and announce a major increase in its reserves – the last time it did so was nearly 6 years ago – this would give an immediate massive fillip to the Gold price and is a scenario those traders short Gold must dread.  Or, even if this is not the case, should China wish to see the Gold price rise in order to keep its citizens who have purchased Gold happy (they were effectively encouraged to do so by the government-owned banks) or to embarrass the West, it has enormous foreign exchange reserves available to intervene in the market and buy physical Gold sufficiently to turn the markets around strongly.”

Did You Know?

John has uncovered a couple of interesting statistics regarding the Venture’s behavior in the month of December…

1.  In the last 14 years, the Venture’s December low has never occurred after December 21…

2.  In the last 14 years, the uptrend has never started before December 9…

Today’s Markets

Asia

China’s Shanghai Composite went on a massive run overnight, surging 83 points or 3% to close at 2763…Reuters reported late in the session that the People’s Bank of China may unveil a cut in the reserve requirements for banks on the back of recent weak data…official factory activity data has fallen to an 8-month low, prompting talk of further aggressive intervention from authorities…

Japanese stocks ended at a new 7-year high for the second straight day, reversing earlier losses as the yen weakened against the dollar…

Europe

European markets are mixed in late trading overseas…Russia’s ruble suffered its worst 1-day decline yesterday since 1998, and it appears the Russian economy will tip into recession next year – especially with low Oil prices…this makes Vladimir Putin more dangerous than ever, a potential bullish catalyst for Gold…

North America

The Dow is up 68 points as of 8:00 am Pacific…U.S. home prices rose at a faster year-over-year pace in October than in September, snapping a 7-month slowdown…real estate data provider CoreLogic said this morning that prices increased 6.1% in October compared with 12 months earlier…that was up from September’s year-over-year increase of 5.6%…

The TSX has gained 74 points while the Venture is flat at 725 as of 8:00 am Pacific…

Gold – Can It Follow-Through? 

Gold‘s move yesterday was eye-popping, but 1 day doesn’t make a market…the key for bullion at the moment is follow-through…in TA, you also always look for confirmation – false breakouts and breakdowns are common (they deceive a lot of traders and investors), so to reduce risk it’s always wise to wait for confirmation of a particular move…

What we’re looking for in Gold today is another close above resistance at $1,200, preferably above the 50-day moving average (SMA) at $1,206…this won’t guarantee that bullion is “off to the races”, but it would demonstrate that the odds of seeing higher prices have increased substantially…

If you recall, John’s Gold charts in recent weeks have pointed out the possibility of bullion being in a “Wave 4” move that would take it up toward the top of a downsloping flag around $1,300 an ounce…that scenario indeed could be playing out…

This 6-month daily chart shows strong up momentum in the RSI(14) at 57%, and notably an uptrend in accumulation since the beginning of November…

Two immediate Fib. resistance levels to keep an eye on – $1,216 and $1,240…

Silver Updated Chart

A spectacular move in Silver yesterday as it plunged in the overnight hours to as low as $14.15 before staging a powerful comeback and closing at $16.46, above the downtrend line in place since the early summer…again, this action requires confirmation today…Silver had trouble last week gaining traction above the downtrend line – we’ll see in the coming days if it can turn that area into new support…

A bullish engulfing pattern formed in Silver yesterday as it did in Gold…

CRB Index Updated Chart

Below is a fascinating chart that gives powerful evidence that the CRB Index might be forming a critical low…

This a weekly chart from John that goes back 5 years…notice the long-term downtrend line that served as important resistance on 2 separate occasions last year…

In January, the CRB finally pushed through that resistance which also ushered in a strong move for the Venture until late summer…what has occurred since then is a retracing of the CRB all the way back to the downtrend line which is new support…this area corresponds with strong support for the CRB witnessed during the second quarter of 2010, just prior to a powerful advance…

With deeply oversold RSI(14) levels, and the CRB at a proven support area, NOW is the time to be particularly bullish regarding commodities…that’s not mainstream thinking at the moment but mainstream thinking likes to follow, not lead…

At the very least, this is the ideal set-up for a strong rally that should begin within days or the next couple of weeks…

Paramount Gold & Silver Corp. (PZG, NYSE & TSX)

Keep a close eye on Paramount Gold & Silver (PZG, NYSE & TSX) as Reuters reported yesterday that Coeur Mining Inc. (CDE, NYSE), the biggest U.S. producer of Silver, is in “advanced negotiations” to acquire PZG…neither company has made any official comment, but the Reuters report sent PZG up significantly yesterday as it gained 15 cents to finish at 91 cents on the TSX…

The Reuters report stated, “The talks are the latest sign of how low metal prices are driving companies into consolidation, as they strive to lower their cost base, expand their deposits and become more profitable.  Paramount’s San Miguel mining project neighbors Coeur’s Palmarejo Silver-Gold mine in northern Mexico.  The deal would enable Palmarejo to continue as one of the largest and highest grade Silver and Gold mines in the world for at least another 7 years…”

The key to Paramount’s San Miguel Project is the high-grade Don Ese Vein, identified by Garibaldi Resources Corp. (GGI, TSX-V) about 6 years ago…Don Ese appears to be an extension of Palmarejo…

Below is a 3-year weekly chart for PZG based on U.S. trading…a move up to resistance at the downtrend line and the Fib. $1.07 level would represent about a 25% to 30% advance beyond yesterday’s U.S. closing price of 81 cents…

PZG is up a penny at 92 cents on the TSX as of 8:00 am Pacific…

Nicorp Developments Ltd. (NB, TSX-V) Update

NioCorp Developments (NB, TSX-V), which completed a $10.6 million financing earlier this month, continues to make progress with its high-grade, large tonnage Niobium Project in Elk Creek, Nebraska…the company is currently carrying out additional infill drilling to elevate the resource to the measured and indicated category…NB is also working on optimizing metallurgical recovery, while a feasibility study is also being initiated (Niobium has physical and chemical properties similar to those of Tantalum, it’s a rare and a soft transition metal primarily used in the production of high-grade steel such as that used in gas pipelines)…

Technically, NB has gradually unwound an overbought condition that emerged in May and has been consolidating within a horizontal flag…a breakout at some point above this flag (and above Fib. resistance at 79 cents) appears very possible…as always, perform your own due diligence…

NB is off a penny at 69 cents as of 8:00 am Pacific…

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

 

Major volatility in precious metals markets since trading for the new week began last night…not surprisingly, there was some knee-jerk reaction to the decision by Swiss voters to overwhelmingly reject a proposal to lift central bank bullion holdings to 20% of its foreign exchange reserves…Gold futures slid more than $25 an ounce to a low of $1,143 before bouncing back in a powerful way…the metal got some help in that regard on the news that Moody’s had cut Japan’s sovereign debt rating…as of 8:00 am Pacific, Gold is up $30 an ounce at $1,198…Silver, which slipped as low as $14.42, has also rebounded sharply…it’s now up 71 cents at $16.29…Copper has added 2 pennies to $2.94…Crude Oil sank briefly below $64 overnight but is now up $1.12 a barrel to $67.26 as it tries to find an equilibrium below $70 a barrel…the U.S. Dollar Index, meanwhile, has retreated nearly half a point to 87.96…

India on Friday removed its current 80:20 import rule which required that 20% of all imported Gold had to be exported before any new shipments could be brought in…that rule was largely ineffective and contributed to a growing smuggling trade…however, the removal of this constraint on the official supply chain should nonetheless be positive for Gold as the inflow of metal into India is freed up a little more…

Holdings of the world’s largest Gold-backed exchange-traded fund, SPDR Gold Shares, fell by 1.2 tonnes on Friday to a 6-year low of 717.6 tonnes.

Net bullish-dollar positions have reached a record of $48 billion with the extension of a sharp rally in the dollar that began early this summer…the last time there was a net-long position to this extent was in 2009 which was followed shortly thereafter by a sharp decline in the dollar and a move higher in Gold…

Gold-Oil Comparative Chart

This 34-year monthly chart from John compares the price of Gold with WTIC over the last 3-and-half decades…the 2 commodities don’t always move exactly in tandem as you can see below but there is often a close correlation…generally, Gold has performed better relative to Oil since the 2008 financial crisis, a trend that seems likely to continue…bullion’s plunge wasn’t nearly as steep as Oil’s was in 2008–2009, and the metal has been holding up impressively well in recent months despite a 40% drop in the Oil price and a surging greenback…

Gold-Oil Long-Term Comparative Monthly Chart

WTIC 2-Year Weekly Chart

Where will Crude Oil find a floor?…market forces will decide that, but keep in mind that markets often take prices to extremes…the world is awash in Oil at the moment, and that’s not going to end anytime soon…the fracking boom has driven U.S. output to the highest in 3 decades, contributing to a global surplus that Venezuela last week estimated at 2 million barrels a day, more than the production of 5 OPEC members…U.S. output is expected to increase further in 2015 (from a current level of about 9.1 million bpd to 9.4 million bpd)…

Based on the oversupply problem, plus long-term charts, it wouldn’t be surprising if WTIC traded as low as $40 to $50 a barrel at some point in 2015 before recovering (nothing cures low prices like low prices)…who will blink first, OPEC or U.S. producers?…it’s possible that OPEC – the Saudis in particular – could be underestimating the resilience of many North American shale producers…

Companies loaded with too much debt or operating in fringe locations face big trouble if U.S. Crude prices remain below $70 for an extended period…but some analysts believe U.S. companies will attempt to outlast OPEC which is facing pressures too…the Saudis are low-cost producers (it’s believed they can break even at $30 a barrel),  but current prices are below the level needed by 9 member states to balance their budgets according to data compiled by Bloomberg…

“We are entering a new era for Oil prices, where the market itself will manage supply, no longer Saudi Arabia and OPEC,” said Mike Wittner, the head of Oil research at Societe Generale SA in New York. “It’s huge. This is a signal that they’re throwing in the towel. The markets have changed for many years to come.”

WTIC 2-Year Weekly Chart

Oil’s problems began after a drop below a long-term support trendline in August and September…technical pressures have been intense, and important support at $70 has been breached (that level is now new resistance)…Oil’s immediate challenge is to stabilize and then attempt to overcome the current downtrend line…periodic rallies out of temporarily very oversold conditions can certainly be expected, but the biggest risk is still to the downside…

WTIC Long-Term Chart

Interestingly, RSI(14) has plunged to its lowest level ever (15%) on this 19-year weekly WTIC chart… that’s what a 40% sell-off can do…at some point, we’re likely to see a rally out of oversold conditions but this could easily be followed by another plunge that takes Oil to a new low…

Today’s Markets

Asia

China’s red-hot Shanghai Composite took a breather overnight, slipping 2 points to close at 2681…investors digested 2 separate gauges of Chinese November factory activity today…the official PMI for November fell to 50.3, missing estimates for a 50.6 figure and slowing from October’s reading of 50.8…meanwhile, HSBC’s final reading hit a 6-month low of 50, in line with the bank’s preliminary figure but lower than October’s final reading of 50.4…

Japanese shares surged to a new 7-year high as the yen weakened against the dollar…

Europe

European markets are down modestly in late trading overseas…the euro zone’s manufacturing PMI for November came in slightly below expectations at 50.1 after a 50.6 reading in October…

North America

The Dow is down 63 points as of 8:00 am Pacific…surprisingly, Americans spent about 11% less during the long holiday weekend ahead of Cyber Monday’s online sales, according to survey results released yesterday by the National Retail Federation…

The TSX is off 152 points while the Venture has fallen another 11 points to 730 as of 8:00 am Pacific…

Venture 4-Month Daily Chart

The 1 encouraging aspect of the current Venture chart is the RSI(14) divergence with price, clearly evident in this 4-month daily…it’ll be interesting to see if the RSI(14) uptrend line holds over the next week or 2…there should be strong support around the 710 level…

Last year, it was wise to be a buyer when the Index was soft through the first couple weeks of the month…this year will probably be no different, and the current set-up in commodities is such that we could see a tremendous rally going into year-end and the early part of 2015…

Venture 5-Year Weekly Chart

For more than a year, the Venture was riding an upsloping RSI(14) trendline but that all changed in September…however, the good news is that the extent of current oversold conditions tells us that the Index is not far off another important low which means a turnaround is on its way beginning later this month…

For some reason, investors are the most discouraged when RSI(14) levels are at current extremes…likewise, they’re the most bullish when conditions are extremely overbought as they were in late 2010 and early 2011…

This chart is telling us to embrace the current weakness and profit from it in the early part of 2015…

Silver Short-Term Chart

Silver disappointed last week when it couldn’t gain traction after breaking above a downtrend line in place since the summer on the 9-month daily chart…the sudden and sharp sell-off in Oil obviously got in the way of Silver pushing higher…

On a positive note, Silver’s resilience after briefly plunging to nearly $14 an ounce in overnight trading is impressive indeed…the metal is making another attempt to push through the downtrend line – we’ll see if that occurs this week…for now, critical support has again held 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 quickly emerge out of a collective slump, the Silver price could accelerate rapidly…