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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.