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Gold is under pressure for the fifth straight trading session, thanks in part to continued strength in the greenback…as of 7:25 am Pacific, bullion is off $21 an ounce at $1,404…Silver has retreated 81 cents to $22.60…Copper is down 6 cents to $3.22…Crude Oil is $1.61 lower at $92.60 while the U.S. Dollar Index has climbed nearly one-third of a point to 83.84…

Updated Gold Chart

Important Fibonacci support levels for Gold are $1,424, $1,404 and $1,385 in this updated chart from John…

U.S. Producer Prices Drop The Most In 3 Years

As we’ve been mentioning lately, deflation has to be more of a concern for policymakers around the world at the moment than inflation…in the U.S., producer prices saw their largest drop in three years in April as gasoline and food costs tumbled, pointing to weak inflation pressures that should give the Federal Reserve plenty of latitude to keep monetary policy very accommodative…the Labor Department said this morning that its seasonally adjusted producer price index fell 0.7% last month, the biggest decline since February, 2010…wholesale prices had dropped 0.6% in March…underscoring the tame inflation environment, wholesale prices excluding volatile food and energy costs nudged up 0.1%,  the smallest increase since November…the so-called core PPI had risen 0.2% in each of the previous four months…meanwhile, activity in New York state’s manufacturing sector unexpectedly contracted in May, falling to the lowest level in four months as new orders and employment pulled back, data from the New York Federal Reserve showed this morning…the New York Fed’s “Empire State” general business conditions index fell to minus 1.43 in May from 3.05 in April, thwarting economists’ expectations for an increase to 4…it was the first reading below zero since January, which indicates contraction for the sector…

Today’s Markets

Japan’s Nikkei average soared another 2.3% overnight to close at 15096, its highest level since January, 2008…a weaker yen, which is making Japanese exporters more competitive, continues to propel the Nikkei…China’s Shanghai Composite gained 8 points to close at 2225…Chinese Premier Li-Keqiang stated his government has limited room to use policy stimulus to support the economy… European shares are up slightly in late trading overseas despite some disappointing economic data out of the euro zone where economic output contracted for a sixth straight quarter…a slight recovery in Germany failed to offset recessions in France and Italy…the current downtown in the euro zone has now stretched for longer than the 2008-2009 recession, though the drop in output isn’t yet as severe as it was four years ago…business surveys for April suggest the bloc’s economy will likely decline again this quarter…euro zone GDP last expanded during the third quarter of 2011, a time when Germany was growing at rates of 3% or more and recessions were largely limited to small countries such as Greece, Ireland and Portugal…North American markets are under modest pressure in early trading today…the Dow is off 16 points at 15199 through the first 55 minutes of trading…the TSX has shed 94 points while the Venture is off 6 points to 944…

Struggling Resource Sector Saved From NDP Rule In British Columbia

At this difficult time in the junior resource sector, investors got some surprising and very welcome news late last night…what appeared would be an almost certain NDP victory in the B.C. election- according to almost every poll – instead became an historic upset by the Liberal Party as the free enterprise, centre-right coalition led by Christy Clark won a decisive majority government to claim its fourth consecutive election victory going back to 2001…this was a huge win for resource development (with national implications) over the radical agenda put forward by the NDP that even rejected the expansion of an existing pipeline in that province that has operated safely for more than 50 years…the NDP also promised it would run deficits with a tax-and-spend platform that reminded many voters of previous disastrous NDP governments in the 1970’s and 1990’s that forced capital (investment and human) to flee the province…former premier Mike Harcourt actually stated on the Sun News Network last night (before it became apparent the NDP was in trouble) that, “The Liberals and Conservatives focus far too much on the economy…the NDP has a balanced approach”…didn’t Bill Clinton say, “It’s the economy, stupid”?…what the socialists in B.C. still fail to understand is the concept of wealth creation and the fact that the best social program is a private sector job…the NDP also promised a “review” of natural gas fracking and no doubt would have nixed several mining, resource and other development projects for “environmental” reasons…the Liberals in B.C. aren’t without their sins and there’s more they can do to make mining exploration easier in the province, including a quicker approval process for permits, but the industry is no doubt breathing a sign of relief this morning as it won’t have to face the uncertainty and potential negative consequences of four years under the NDP…British Columbia is still open for business, and for that we are grateful…the socialists will have four years to try and figure out how they blew a 20+ point lead in the opinion polls in a late collapse even more dramatic than the Maple Leafs’ performance in Boston two nights ago…

Liberal Election Victory Is Good Timing For Northern B.C. Copper-Gold Discovery

Political stability has returned to British Columbia at a time when the Iskut River region is heating up in a major way with an important early discovery by Colorado Resources (CXO, TSX-V) and a ramping up of exploration activity in the vicinity of Colorado’s North ROK Property…we’ve been following this story closely since Day 1 and we believe this area is shaping up to become Canada’s exploration “hot spot” over the summer…in a situation like this, how the markets are behaving can be almost irrelevant…Colorado hit a new high yesterday on speculation, climbing 36 cents to close at $1.35 on total volume (all exchanges) of more than 4 million shares…CXO appears to be right on track to reach the Fibonacci $1.92 level, as John has laid out, and the potential for much higher prices certainly exists if upcoming step-out drilling results confirm NR13-001 which returned 242 metres grading 0.63% Cu and 0.85 g/t Au…

If you’re looking for the next “up-and-comer” in the region with a low market cap, tight share structure and the potential to explode over the summer, our favorite is Victory Ventures (VVN, TSX-V) which already has a drill program lined up to commence soon at its 100%-owned Copau Property within approximately 5 kilometres of Colorado’s discovery…we also wouldn’t be surprised if Victory expands its footprint in the area as it has the expertise and the means to astutely build on its land package…geologically, the Iskut River region is indeed prolific (Imperial Metals‘ Red Chris Mine goes into production next year) and still very under-explored…with little outcropping, IP surveys (as Colorado has shown) help immensely in the selection of highly prospective drill targets and this is also why Victory has such a great opportunity at Copau…an IP survey located a strong chargeability response (increasing with depth, similar to North ROK) underlying the southwestern portion of the property…they have numerous targets to work with at Copau…Victory closed up a penny-and-half yesterday at 10 cents and has a tight share structure even with the financings that it’s currently closing…as always, perform your own due diligence, but VVN in our view is the company in the best position at the moment to benefit from Colorado’s success…below is an updated 1.5-year weekly chart from John…note the breakout yesterday which does need confirmation…

Colorado Resources (CXO, TSX-V) Updated Chart

Northern Shield Resources Inc. (NRN, TSX-V)

In a challenging market environment, watching Northern Shield Resources (NRN, TSX-V) recently has been interesting as the company’s stock price has doubled over the last 13 trading sessions from 10.5 cents near the end of April to yesterday’s closing price of 21 cents…NRN has also just concluded financings totaling $2.7 million, money they’ll use for an initial drill program continue to advance exploration and development activities in both Greenland and northern Ontario…with approximately 150 million shares now outstanding, NRN has a market cap in excess of $30 million…we’re sure that many companies would like to know what NRN’s “secret sauce” is…they’ll need very good results to support and/or significantly increase this kind of a market cap in the current environment, but the chart tells us that this is a company that definitely needs to be on investors’ radar screens..no need to chase this one at the moment but it’s worth keeping an eye on in the coming weeks and over the summer…

Note:  John, Jon and Terry do not hold share positions in NRN.  Jon holds share positions in CXO and VVN.