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Gold is firmer today, aided by reports of strong physical buying out of Asia (why does China remain so aggressive at accumulating Gold?)…as of 7:05 am Pacific, the yellow metal is up $12 an ounce at $1,594…Silver has jumped 25 cents to $29.22…Copper is 4 pennies higher at $3.55…Crude Oil has added $1.07 a barrel to $93.13 while the U.S. Dollar Index is off one-fifth of a point to 82.49…

Investors sold 106.2 metric tons valued at $5.4 billion from exchange-traded Gold products in February, the most since their creation in 2003, data compiled by Bloomberg show…another 26.1 tons was cut since then…Credit Suisse Group AG and Barclays Plc say the 12-year rally will peak this year and billionaire George Soros reduced his stake in the biggest ETP by 55% in the last quarter…prices are within 4% of a “bear market” (20% decline from the 2011 high) after the longest string of monthly losses since 1997…

While the mainstream media continues to make a big issue of the above and that Gold is off to its “worst start to a year in a quarter century”, suggesting the “bubble” has burst in bullion’s longest rally since the end of World War 1, the Gold chart is holding up extremely well and physical buying continues to underpin this market…fund liquidation has been intense in recent months, yet Gold has held above critical support at $1,500…the “smart money” commercial traders are more bullish now than they’ve been in a long time, while the perfect set-up exists for a major new uptrend given overall sentiment levels and record short positions that have been built up by large funds (“managed money”)…so many traders and investors can’t see beyond tomorrow and are chasing the “flavor of the day” (i.e., the Dow, the S&P 500, the Nikkei), creating tremendous opportunities for more patient investors in Gold and the beaten-down Gold stocks…yes, Gold is out of favor at the moment – the exact opposite of the situation in the summer/fall of 2011 when everyone was jumping on the bandwagon and bullion had clearly become overbought and due for a major correction…

Today’s Markets

Asian markets were lower overnight on profit-taking with China’s Shanghai Composite falling 24 points to 2287…the Nikkei was off just slightly and closed at 12315…European shares are generally flat…Italy’s 12-month funding costs hit a 3-month high today…the official political consultation over a new government in Italy is not due to start before next week…the Dow has set a record high for a 6th consecutive session…as of 7:10 am Pacific, the Dow is up another 24 points at 14471…the TSX is up 41 points at 12899, its late January high, while the Venture has gained 6 points to 1122…

Contrarian Call

With the major equity markets technically overbought, at least on a near-term/short-term basis,  we like how the HXD (double short S&P/TSX 60 ETF) has been bottoming recently in a horizontal channel between about $7.60 and $8.00…this has good potential as a defensive move and short-term trade…as always, perform your own due diligence…we expect Gold and Gold stocks (the producers at least) to continue to run counter-cyclical to the broader markets…the HXD is currently off 3 cents at $7.62…

TomaGold Corp. (LOT, TSX-V) and Real Quinto Capital Corp. (QIT, TSX-V) Expand Drilling At Monster Lake Discovery

TomaGold Corp. (LOT, TSX-V) and Quinto Real Capital Corp. (QIT, TSX-V) have expanded their drill program at the Monster Lake Property to 5,000 metres…the companies announced that drilling resumed on the 325 Gold Zone this morning…the new holes (dark blue dots) will test the zone along strike at at depth as seen in the map below…the big question is, does the the 325 Zone become wider and richer at depth as appears very possible given results of the first nine holes?…

Richmont Mines (RIC, TSX) Updated Chart

One of our readers brought up Richmont Mines (RIC, TSX) over the weekend which dipped to $2.30 last week, its lowest level since the 2008 Crash and a correction of about 80% from its late 2011 all-time high…RIC is making excellent progress adding high-grade resources to its Island Gold Mine in Ontario (the new “C” zone has higher average widths and grades than what Richmont is currently mining closer to surface and remains open in all directions)…all of RIC’s bad news (Francoeur, Wasamac) seems to be behind it, and the company was sitting on $60 million in cash at the end of the year with virtually no debt…the stock has recently recovered to $2.60 but that still leaves RIC below book value ($3 per share)…the first sign of a major turnaround in the stock will be a move above the downsloping wedge…below is a 2.5-year weekly chart from John…

Amarc Resources (AHR, TSX-V) Update

Amarc Resources (AHR, TSX-V), affiliated with the Hunter Dickinson Group, is working on several potential large-scale projects in British Columbia including Galaxie – one of the few remaining under-explored areas of the prolific Stikine terrane…in a sign of the times, AHR is trading at its 2008 Crash all-time lows at 7.5 cents (market cap approximately $10 million)…it was sitting on nearly $6 million at the end of December…

Note: John holds a share position in AHR while Jon holds a position in the HXD.