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Gold has traded between $1,269 and $1,280 so far today…as of 7:30 am Pacific, bullion is up $1 an ounce at $1,277…Silver has advanced 4 cents to $20.44…Copper is a penny higher at $3.17…Crude Oil is flat at $93.04 while the U.S. Dollar Index is off slightly at 80.68…

A Gold vault capable of storing 2,000 metric tonnes, or twice the amount of China’s expected demand this year, has opened in Shanghai and is seeking to benefit from rising physical demand in Asia’s largest economy…the facility is a major vote of confidence for the Chinese Gold market, according to Philip Klapwijk of Precious Metals Insights (www.PreciousMetalsInsights.com)…in addition, as recent World Gold Council data has shown, China’s demand for Gold jewelry, bars and coins continues to rise at a very robust rate…90% of year-to-date growth in consumer demand for bullion came from China and other eastern markets…both Klapwijk and two Bloomberg research analysts have come to the conclusion that the People’s Bank of China (PBOC) has taken 300 tonnes of Gold into reserves in the first half of the year, just under 15% of global supply…the key highlight of the report is that the conclusion was reached independently…at such a massive rate of accumulation, China could match or even surpass U.S. Gold reserves within the next 10 years…

Some believe that Chinese Gold consumption and imports are both running at considerably higher levels than data from GFMS and the World Gold Council would suggest…check out an article on that this morning by Lawrence Williams at www.MineWeb.com…

“In China, you look around and see very few places to put your money,” Duan Shihua, a partner at Shanghai Leading Investment Management Co., told Bloomberg…“With the share market down and the government nudging people away from real estate, Gold will remain a favored choice”…

Bitcoin Going Mainstream?

The virtual currency bitcoin took a big step toward the mainstream yesterday as U.S. federal authorities signaled their willingness to accept it as a legitimate payment alternative…CNBC reported that a number of federal officials told a Senate hearing that such financial networks offered real benefits for the financial system even as they acknowledged that new forms of digital money had provided avenues for money laundering and illegal activity…“There are plenty of opportunities for digital currencies to operate within existing laws and regulations,” said Edward Lowery, a special agent with the Secret Service, which is tasked with protecting the integrity of the dollar…

Signs that the government would not stand in the way of bitcoin’s development, even as it has been cracking down on criminal networks that use the digital money, stoked a strong rally in the price of the crypto-currency…last night, the value of a bitcoin unit soared past $700 on some exchanges…the total outstanding pool of bitcoin, created by a network of online operators, is now worth more than $7 billion…“The decision to bring virtual currency within the scope of our regulatory framework should be viewed by those who respect and obey the basic rule of law as a positive development for this sector,” said Jennifer Shasky Calvery, the director of the Treasury Department’s Financial Crimes Enforcement Network…“It recognizes the innovation virtual currencies provide, and the benefits they might offer”…

Meanwhile, an Allentown, Pennsylvania, shop has made history of sorts by becoming one of only two Subways in the world – the other is in Moscow – to accept bitcoin for payment…

Bottom For Key Base Metals Approaching:  Scotiabank’s Mohr

“I think we’re approaching the bottom in this cycle…I’m hoping that we’ll see the bottom for some of the key base metals in early 2014,” Scotiabank’s commodity market specialist Patricia Mkohr told delegates at the recent Mine Latin America conference…she’s particularly bullish regarding Zinc…“I think Zinc will be the next big base metal play because of mid-decade mine depletion around the world and because of probable smelter bottlenecks developing in China,” she stated…“It’s something the juniors should look at and get involved in”…Mohr is also generally bullish on the prospects for China…an important factor that will have an indelible effect on commodities through the balance of the decade is the on-coming surge in China’s vehicle ownership, Mohr stated, which stood at just 81 vehicles for every 1,000 people in 2012…this compares with the U.S. figure of 794 cars for every 1,000 people…“I guarantee that everyone in China wants to own their own motor vehicle…they are tripling the number highways to allow greater vehicle ownership…this is going to be a great growth sector…it’s very metal intensive and very gasoline intensive”…

OECD Cuts Global Growth Forecast

The OECD today knocked almost half a percentage point off its forecasts for global growth this year and next, blaming a slowdown in emerging markets, brinkmanship over the U.S. debt ceiling and concerns over the Federal Reserve’s tapering for the downgrade…the Paris-based organization promoting the world’s largest advanced economies said the global economy would expand 2.7% this year and 3.6% in 2014, compared with estimates of 3.1% and 4% made in May…

Today’s Markets

China’s Shanghai Composite took a breather overnight after strong gains Friday and Monday…the Index fell 4 points to close at 2193…a 9-month daily chart from John shows how the Shanghai has hit the top of a downsloping flag around 2200 – if it can break above this, look out…

European shares were down modestly today…in New York, the Dow is up 30 points through the first hour of trading…the TSX has gained 14 points while the Venture has added 3 points to 925 as of 7:30 am Pacific…

Barisan Gold Corp. (BG, TSX-V)

Technically, Barisan Gold (BG, TSX-V) is performing according to script after John’s recent chart showed initial resistance on a powerful move in the low 30’s, and then a possible retracement to the 15 to 20 cent area (38.2% to 61.8% Fib. retracement levels)…yesterday, BG closed at 20 cents…while Barisan is not operating in one of our favorite jurisdictions (Indonesia), its recently reported drill intercept there (904 m grading 0.50 CuEq) was world class and drilling continues…over the next couple of months, Barisan could garner a lot more attention – especially if they continue to deliver strong results…worth watching closely…as always, perform your own due diligence…as of 7:30 am Pacific, BG is up half a penny at 20.5 cents…

Madalena Energy Inc. (MVN, TSX-V)

One of our favorite energy plays continues to be Madalena (MVN, TSX-V) which has weakened in recent days due to the announcement of a couple of financings – a bought deal at 47 cents ($8 million), and a $3 million flow-through financing at 54 cents…Madalena is well-positioned for a successful 2014, and the stock has excellent support in the 40’s around current levels…the rising 100-day SMA, not shown on John’s chart below, is currently at 42 cents…2013 has been a year of accumulation in this play which bodes well for an important potential breakout in the coming months…MVN is off half a penny at 45.5 cents through the first hour of trading…

Azincourt Uranium Inc. (AAZ, TSX-V)

It should be an interesting winter for Azincourt Uranium (AAZ, TSX-V) which is in a 50-50 JV with Fission Uranium Inc. (FCU, TSX-V) on the Patterson Lake North Property…as announced yesterday, eight to 10 holes will be drilled at PLS North over the winter (2,500 to 3,000 metres) testing the following:

• A north-northwest-trending central conductive metasedimentary belt;
• Geophysical anomalies under Hodge Lake;
• A prospective north-northwest-trending conductor.

Additional geophysics work will be completed in advance of the drilling to follow up the strong results delivered by the recent airborne survey, and to assist further in drill target selection…the work will include using radon sampling in frozen ice conditions – similar to the technique used at PLS South…

Below is a 15-month AAZ updated chart from John…the stock has traded in a horizontal channel since May between 20 cents and 33 cents…it’s reasonable to expect a breakout by January, at the latest…as of 7:30 am Pacific, AAZ is trading down half a penny at 28.5 cents…

Note: John, Terry and Jon do not currently hold positions in BG, MVN or AAZ…