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Gold has traded between $1,224 and $1,237 so far today as it prepares to post its best monthly performance in 4 years…as of 10:00 am Pacific, bullion is up $11 an ounce at $1,233…Silver has added 14 cents to $14.81…Copper is flat at $2.14…Copper stocks in the LME’s warehouses dipped below the 200,000 ton mark for the first time in over a year late last week, pointing to solid demand for the metal according to Commerzbank…Crude Oil is 98 cents higher at $33.76 while the U.S. Dollar Index is up one-tenth of a point at 98.27…

SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, said its holdings rose 0.27% to 762.41 tonnes on Friday, the highest in about a year…Gold funds accumulated their largest inflows since 2009 while equity funds posted their longest run of outflows since 2008 last week, according to Bank of America Merill Lynch…

Hedge funds and money managers raised their bullish stances in COMEX Gold to a 1-year high in the week ending February 23, U.S. Commodity Futures Trading Commission data showed on Friday…they also increased their Silver net long stance to a 4-month high, though Silver has retraced sharply the last couple of weeks (updated charts in today’s Morning Musings)…

Citi’s strategy team has reiterated its positive view on Gold as an asset class…hoped-for coordinated policy stimulus is likely to be disappointing, the bank says, “thus we retain a bullish bias on defensive rates markets and Gold (upgraded) versus risk assets.”

Citi offers some caution, though, saying Gold has been supported by a weaker greenback but the dollar trend can be a “fickle friend”…the bank added, “Gold has also sniffed, through poor equity market trends, heightened risk in terms of global financial systemic risk.  Such market fear can also be a fickle friend that one or two positive economic releases can turn around.” 

Gold will be impacted either positively or negatively by a slew of U.S. economic reports due this week, highlighted by Friday’s February jobs numbers…

India Unveils New Tax Measures On Gold

Disappointing news out of India this morning…the government has reintroduced a local sales tax on Gold jewellery after a gap of 4 years, on top of an already record import duty, as officials attempt to further dampen official demand for the precious metal in the world’s 2nd biggest consumer…Finance Minister Arun Jaitley, presenting his 3rd budget today, announced an excise duty of 1% on Gold and diamond jewellery…a report from his ministry on Friday said Gold was under-taxed in the country, where the richest 20% account for roughly 80% of Gold purchases (what government ministry in today’s over-regulated world won’t think that something is under-taxed?)…

Jewellery sales in India fell in the last 2 months due to the price rally and as consumers delayed purchases in hopes for a cut in the import duty…this forced importers to offer steep discounts over global prices to clear inventory…but India’s Finance Minister surprised the market by not only maintaining that duty but introducing additional tax measures as well…expect a further pick-up in the country’s illegal Gold trade…

Oil Update

Crude Oil is coming off its best week since August 2015 despite some negative words last Tuesday from OPEC Secretary-General Abdullah al-Badri at a speech in Houston…today, the Saudi cabinet issued the following statement: “The kingdom (of Saudi Arabia) seeks to achieve stability in the Oil markets and will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action.” 

A Reuters poll today has boosted market sentiment, indicating that OPEC pumped less crude this month than in January…

Saudi Arabia and several fellow OPEC members agreed with non-OPEC Russia this month on a tentative deal to freeze output at January levels in an attempt to prop up prices…meanwhile, the U.S. Oil-rig count fell by 13 to 400 in the latest week, according to Baker Hughes, maintaining a recent clip of sharp declines…the number of rigs drilling for Oil in the U.S. has plunged 75% since October 2014…it’s tough to slow a ship as large as U.S. shale, however…U.S. Crude Oil production is expected to fall just 1.1% this year and grow 1.7% in 2017, according to an analysis by Cantor Fitzgerald & Co. of 53 producers….

Watch Iraq

A key country to watch for potential supply disruptions in coming months is Iraq…in January, the country exported an average of 3.88 million barrels a day, including exports from Iraqi Kurdistan…this is 660,000 barrels a day more than it was exporting before the advance of ISIS across parts of the country in the summer of 2014, which saw the terrorist group secure around a third of Iraq’s territory…keep in mind that more than three-quarters of Iraq’s Oil is produced and exported from Basra and neighboring provinces in the south which lie more than 500 km from the fighting with ISIS…however, over the past year, due to Iraq’s budget crisis, almost nothing has been done to improve power and water infrastructure around Basra – this has led to growing protests and grievances amid new problems such as job losses and delayed salary payments…Iraqi officials are expecting this summer to be the most disruptive season of protests on record, and some fear it could potentially affect the region’s Oil exports…

In today’s Morning Musings…

1.   A fresh CRB chart paints an interesting picture for commodities…

2.  Updates on 9 Venture plays and 1 CSE stock…

3.  What to make of Silver’s action the last 2 weeks?…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

TSX Venture Exchange and Gold

The Venture posted its 5th straight weekly gain on another increase in volume as it added 7 points to close Friday at 538.  The Index continues to be supported by rising short-term moving averages (the EMA-8 and EMA-20 are currently 530 and 519, respectively).  As long as this continues, so will the upward momentum.  Keep in mind, though, that this market is trading within a band of Fib. resistance up to the mid-550’s (a critical area) that may take a while to overcome.  All indications point toward an eventual major breakout above this resistance but exact timing is very uncertain –  potentially, such an event may not materialize for several months.

The bullish activity since late January, concurrent with rising Gold prices, is a sign of a much better 2016 shaping up for the Venture.   At some point this year, tremendous upside momentum could build in the Index as soon as the 200-day SMA (currently 560) is cleared and reverses to the upside.

The Venture’s RSI(14) has pushed further into overbought territory at 76% on this 6-month daily chart due to current momentum.  Gold’s RSI(14) recently surged well into the 80‘s before pulling back.  At some point, the Venture’s RSI(14) on this chart will retrace to at least the 60% level which is previous resistance.  A pattern that appears to be under construction is a bullish inverted “head-and-shoulders”.  The right shoulder has yet to form.  Any pullback must be understood in that context.

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, and last summer’s fresh weakness with the drop below $1,100, is that it has forced producers to become much more lean in terms of their cost structures. Producers, big and small, continue to make hard decisions in terms of costs, projects, and rationalizing 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 historic 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.

Keep in mind, as well, that in currencies other than the U.S. dollar, Gold performed exceedingly well in 2014 and 2015, and of course so far this year the metal has been shining against the greenback, too.   The widespread negativity in the American media toward Gold over the last few years is likely going to change dramatically at some point during 2016.

U.S. Dollar Index Update

The Dollar Index has been in a short-term uptrend since mid-February since touching the 95.42 Fib. support.  Not surprisingly, it has rallied back to its 50-day SMA where resistance should be expected.  The broader picture for the greenback is not so positive, and we see little threat of a breakout through the 100 level – repeated attempts over the past year have failed.  Significantly, the Fed has also weighed in on the dollar just recently, making its concerns known about the negative affects of a strong U.S. currency.  That has given Gold investors some added confidence.  At the very least we see the Dollar Index testing support around 93 during this first half of the year, a level it hit and bounced off from on a few occasions in 2015.

Keep in mind, the Venture always performs best when the Dollar Index is stable or under pressure.

Gold

Gold traded within a range between about $1,200 and $1,250 last week before settling $4 lower at $1,222 for its 2nd consecutive weekly loss.  However, bullion is still up $104 or 9.3% for February in its best monthly performance since January 2012.  Holdings in Gold-backed exchange-traded products have risen sharply since the start of the year and net inflows continued last week despite a significant upside move in the greenback.

The Gold market will have plenty of fresh U.S. economic data to chew on in the coming days.  The Institute for Supply Management issues its manufacturing survey on Tuesday and service-sector survey on Thursday. Other data will include the ADP report on private-sector jobs growth and the Federal Reserve’s “Beige Book” report Wednesday, then weekly jobless claims, productivity, unit-labor costs and factory orders on Thursday. The all-important non-farm payrolls report is due out Friday.

Bullion in 2015 posted its 3rd straight annual loss in U.S. dollar terms for the first time since 1998.  As we’ve been pointing out, however, the bear market that started in Gold in late 2011 reached the long-term average late last year in terms of both duration (47 months) and decline (44%).  A new bull cycle now appears to be underway, confirmed in our view by the breakout above a long-term downsloping channel around $1,200.  Gold could even drop as low as $1,150, in the vicinity of its rising 50 and 200-day SMA’s, and that still wouldn’t change the very bullish outlook for 2016.

The world is slipping into increasing political and economic chaos during President Obama’s final year in office, and Gold and Gold stocks could absolutely soar in the process.  In fact, even though Oil is facing supply and demand problems right now, the possibility even exists for a spike in Crude this year in the event the Middle East descends into all-out war brought on by Russia and Iran.  Both countries took advantage of a weak U.S. presidency under Jimmy Carter in the late 1970’s – rest assured, they will attempt to do so again before Obama leaves office.  There’s also ISIS and other Islamist terrorist groups to contend with who present a far greater danger to the world than “climate change”.  It will likely take a powerful new President to fix this mess and reassert common sense and American strength on all fronts.

Gold 6-Month Daily Chart

What was interesting last week in Gold was the breakout above a bullish pennant followed by a throwback to the top of that pennant which also coincides with Fib. support at $1,222.  Monday’s trading to finish the month, and the following few days, will therefore be quite interesting and important in terms of setting the tone for March.  A quick move to $1,300 can’t be ruled out – neither can a correction to the next Fib. support at $1,160.  The primary trend, however, is unquestionably bullish.

Silver had a disappointing week, falling another 65 cents to $14.67 after a 43-cent loss the previous week (updated charts in Monday’s Morning Musings).  Copper added another nickel to $2.14.  Crude Oil jumped more than $3 a barrel to $32.84 while the U.S. Dollar Index surged 1.5 points to 98.09.

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 3 decades in 2013, and a new multi-year price low in late 2015, the fundamental case for the metal remains solidly intact based on the following factors (not necessarily in order of importance):

Gold has come under mild pressure on this final day of the trading week, down $14 an ounce at $1,218 as of 9:00 am Pacific after a high earlier this morning of $1,241…Silver has slipped 37 cents to $14.73…Copper has jumped 4 cents to $2.14…Crude Oil is 34 cents higher at $33.41 after hitting a 7-week high earlier in the day, while the U.S. Dollar Index has surged two-thirds of a point to 98.13 where it’s up against significant resistance…

U.S. economic growth slowed in the 4th quarter, but not as sharply as initially thought, with businesses less aggressive in their efforts to reduce unwanted inventory, which could hurt output in the first 3 months of 2016…GDP increased at a 1% annual rate instead of the previously reported 0.7% pace, the Commerce Department reported this morning in its 2nd GDP estimate…economists polled by Reuters had expected that Q4 GDP would be revised down to as little as 0.4%…the economy grew 2% in Q3…

A slew of U.S. economic data came out this morning with equity markets turning lower after consumer sentiment for February came in below expectations at 91.7, down from 92.0 in January…

Holdings in Gold-backed exchange-traded products rose 2.4 metric tons to 1,678.6 tons through yesterday, the highest in a year, according to data compiled by Bloomberg…

Investment money has been flowing back into commodity assets again in 2016, led by inflows into Oil and Gold, Barclays reports…this comes after 2015 was the 3rd consecutive year of net outflows from commodity assets…the bank’s data shows that exchange-traded products have become the single largest category of commodity investment…commodity-linked ETPs posted a net inflow of $5 billion in January alone…

The main destinations for those flows have been Oil and Gold ETPs, with each receiving about $2.7 billion, according to Barclays.  “First, Oil prices in the low $30’s are viewed as cheap by many investors.  With most analysts forecasting a rebound in Oil prices over 2016, it is perhaps not surprising that investors have been persuaded to take out exposure, especially as current prices are similar to those that bottomed out during the financial crisis in early 2009. Second, poor U.S. data have pushed forward market estimates of the next Fed rate hike, and which has lead to a period of dollar weakness. Combined with an uptick in concerns about the health of financial markets and institutions, this has created a bid for Gold as a safe haven,” Barclays stated…

Goldcorp (G, TSX) is down sharply this morning (more than 10%) after the company announced that it has slashed its dividend and lowered its production guidance for the next 3 years as it tries to maintain a strong balance sheet and faces unexpected problems at an Ontario project…the Vancouver-based mining giant also moved from a monthly dividend of 2 cents U.S. a share to a quarterly dividend at the same level, effectively reducing the annual payout by two-thirds…Goldcorp said this lowered dividend still offers a “competitive” yield, while allowing the company to invest in its growth projects…meanwhile, Goldcorp has removed its Cochenour Project in the Red Lake district from its production guidance for the next 3 years and said Cochenour is re-entering the “advanced exploration” phase due to unexpected geologic issues underground that have delayed development…

In today’s Morning Musings…

1.  Confirmed breakout in Crude Oil above a downtrend line going back to November…

2.  A look at Metanor Resources (MTO, TSX-V) after a high-volume week…

3.  Kiska Metals (KSK, TSX-V) shows new life…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold has traded between $1,214 and $1,254 so far today after successfully testing support again at $1,200 to begin the week…as of 9:30 am Pacific, bullion is up $17 an ounce at $1,243…Silver has added 9 cents to $15.35…Copper is up a penny at $2.11…Crude Oil has rebounded, now up 25 cents at $32.12 while the U.S. Dollar Index is off slightly at 97.38 after showing strength earlier in the morning…

Gold continues to outperform Platinum and Silver as the yellow metal benefits from safe-haven flows in 2016, says Commerzbank…the Gold/silver ratio has climbed to over 80, its highest level since December 2008, the bank says. “Gold is also continuing to strengthen relative to Platinum and currently costs nearly $290 per troy ounce more than Platinum.”

Zinc in London jumped to the highest level since October as production cuts tighten global supplies…Zinc has soared more than 20% in about 6 weeks after Glencore and Nyrstar announced production cuts late last year to cope with a slump in prices…the market will have a deficit of 440,000 metric tons this year, according to Mitsui Mining & Smelting Co., the biggest supply shortfall in a decade…that’s obviously bullish for prices…

Oil Update

Oil prices erased their losses in mid-morning as the greenback fell while government data showed a much smaller build in U.S. Crude inventories than an earlier industry report suggested…U.S. Crude stocks rose by 3.5 million barrels in the week ended February 19 to 507.6 million barrels, a record high, while gasoline inventories fell for the first time since November, according to data from the U.S. Energy Information Administration (EIA)…Oil slipped yesterday when Saudi Arabia’s Oil minister disappointed some market participants by dismissing the possibility of a coordinated production cut among large producing nations…

In today’s Morning Musings…

1.   Updates on some high-flying Gold stocks…

2.   The coming drone deal that could take the CSE by storm…

3.   Fresh developments this morning on the medical marijuana front in Canada…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold is challenging the $1,250 level again this morning as it attempts a breakout above a bullish pennant as you can see in our updated 6-month daily chart this morning (refer to Sunday’s Week In Review And A Look Ahead for more a more detailed analysis of what’s driving this 2016 move in bullion).

Technically, there has been impressive support at $1,200 for Gold, as expected, and the money flow into bullion is unlike anything we’ve seen in quite some time (note the strong buy pressure as shown by the CMF).

RSI(14), which has unwound from above 80% earlier this month, has formed a bullish “W” which supports the contention that Gold has an excellent chance of reaching the next measured Fib. resistance level at $1,288 very soon.

As of 6:30 am Pacific, Gold is up $19 an ounce at $1,244 – now above the pennant – despite a stronger U.S. Dollar Index this morning.

The TSX Gold Index has gapped up to 188 at the open and appears ready to test the 200 level for the first time since 2014.

Gold has traded between $1,214 and $1,228 so far today after successfully testing support again yesterday at $1,200…as of 9:15 am Pacific, bullion is up $17 an ounce at $1,225…Silver has added a dime to $15.26…Copper is off 2 pennies at $2.10…Crude Oil has fallen $1.66 a barrel to $31.73 while the U.S. Dollar Index is flat at 97.45…

After Friday’s extremely large announced Gold purchases into the two major U.S.-based Gold ETFs – SPDR Gold Shares (GLD) and the much smaller iShares Gold Trust (IAU) – 1-day increases of 19.3 tonnes and 4.0 tonnes, respectively – yesterday’s trading action in Gold in Asia to start the week was strange indeed…nonetheless, the yellow metal showed strong support yesterday and erased some of its losses before turning higher today…physical Gold purchases are rising in volume and that’s a very bullish sign…

India’s overseas Gold purchases are likely to hit a more than 2-year low in February, as rising prices and hopes for a cut in import taxes keep buyers away, industry sources say…India’s imports of the metal are expected to drop to 25 tonnes this month according to a median of estimates from several industry participants including bank dealers and traders…that would be about 67% below month-ago levels and the lowest since September 2013 when arrivals were hit by a government mandate to export a fifth of all Gold imports…jewellers and retail consumers have apparently been delaying purchases in the hope prices will correct and that India will cut its import duty by 4 percentage points in this month’s budget, according to a senior analyst at consultancy Thomson Reuters GFMS…

Harmony Gold Mining Co. and Acacia Mining Plc announced today that they’ve locked in profit margins at some of their African operations…Harmony, which gets 95% of its production from South Africa, hedged its local currency for a third of its annual production, while Acacia took out contracts known as zero-cost collars on 136,000 ounces of Gold from Buzwagi, a Tanzanian mine, at $1,150 an ounce to $1,290 an ounce…hedging can be a risky strategy if it’s not carried out at the proper time…Barrick Gold spent at least $5 billion in 2009 canceling contracts against the risk of prices declining while AngloGold Ashanti spent at least $2.6 billion getting out of such arrangements…

Oil Update

Speaking at a conference in Houston, OPEC Secretary-General Abdullah al-Badri said today that, if successful, a “freeze” on Crude Oil output could trigger other action but the days when the group was responsible for cutting production alone are over…he said last week’s tentative pact to freeze output at January levels, a deal reached among Saudi Arabia, Russia, Venezuela and Qatar, was just a start…investment bank Jefferies expects OPEC output to hit 32.6 million barrels per day (bpd) in the 2nd quarter, including higher Iranian output, with markets starting to rebalance by the 3rd quarter as production outside OPEC falls by 800,000 bpd this year….

WTIC 6-Month Daily Chart

There is a lot of negativity surrounding the outlook for Crude Oil, but the short-term chart is showing that the rally from the $26.05 low earlier this month may have further to go despite today’s sell pressure…

What’s interesting on John’s 6-month daily chart is the unconfirmed breakout above a downtrend line going back to November…we’re watching this closely as technical momentum could come into play here which has a chance of lifting prices about 20% from current levels…the 50-day moving average (SMA) is still declining but beginning to flatten out around $33…

In today’s Morning Musings…

1.   Canopy Growth (CGC, TSX-V) breaks out above a symmetrical triangle…

2.   Updated chart for Canasil Resources (CLZ, TSX-V) as fresh results confirm discovery at Sandra-Escobar…

3.   Cordoba Minerals (CDB, TSX-V) jumps 50% over 9 sessions…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…