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Gold has traded between $1,187 and $1,203 so far today…as of 7:50 am Pacific, bullion is up $8 an ounce at $1,198…Silver has gained 25 cents to $16.04 (see updated Silver charts at the bottom of today’s Morning Musings)…Copper is off 4 cents at $2.82…no surprise – Crude Oil (WTIC) is now testing the $50 level…it has slipped today to its lowest price since the beginning of May 2009…it’s currently off $2 a barrel to $50.68…the U.S. Dollar Index, meanwhile, is up slightly at 91.52 (see updated charts below)…

Gold is definitely getting some help from buyers in China – prices on the Shanghai Gold Exchange were about $7 an ounce higher today than the global benchmark…premiums were about $4 to $5 last week…the increase in premiums reflects strong demand…

Mineweb’s Lawrence Williams, who consistently provides very thoughtful and detailed analysis of supply and demand trends in Gold, reported this morning that “Gold withdrawals from the Shanghai Gold Exchange (SGE) came to just under 58 tonnes for the week ending December 26, bringing the total for the year to that date to just short of the 2,100 tonnes we predicted back in November.  With three trading days still to be reported on it looks as if our predicted level will be exceeded.  With demand always strong in the run-up to the Chinese New Year, January and early February figures are also likely to continue at a high level given the date of the Lunar New Year falls this year on February 19, the second latest date possible in the Chinese calendar.”

Oil Update

The Oil supply glut continues…Iraq plans to expand Crude exports to 3.3 million barrels a day this month, according to Oil Ministry spokesman Asim Jihad…the country exported 2.94 million a day in December, the most since the 1980‘s…meanwhile, Russian Oil production rose to a post-Soviet record of 10.67 million barrels a day in December, according to Energy Ministry data published a few days ago…

We’ll have updated Oil charts tomorrow…

Canada-Russia War On Ice

Speaking of the Russians, we may be having difficulty getting them out of the Ukraine, but at least Canada can deliver the Putin regime an old-fashioned Canadian thumping, physically and on the scoreboard, in tonight’s War On Ice in Toronto as Canada and Russia battle for the Gold medal at the World Juniors…Canada hasn’t won the Gold since the last Venture bull market started in 2009, so perhaps a victory tonight will be a good omen for the markets in 2015…

Crank Up The Oil Furnace!

Across many parts of Canada, it’s a good day to stay indoors, sip from hot chocolate and pay attention to the markets (at least Gold is up)…below is a scene from Montreal yesterday where residents are now paying the price for a West Coast-style green Christmas…

U.S. Dollar Index Update

To understand what might be in store for Gold (and the Venture) in 2015, it’s critical to appreciate the state of the greenback and the trading range of the U.S. Dollar Index which has been on fire since early last summer…

It’s important to note first, though, how well bullion has held up recently in the face of a much stronger dollar that has been driven higher by a divergence in economic and monetary dynamics primarily between the U.S. and Japan and the euro zone…keep in mind that next to the U.S. dollar, Gold was the best performing currency in the world in 2014…it’s reasonable to assume, therefore, that when the dollar finally does start to cool off at some point this year (and it will correct significantly as all markets do when they get over-heated), Gold may enjoy a strong push higher…

Below is a 34-year monthly chart of the Dollar Index that gives some valuable insight into how this market has evolved over the last several years and where it’s likely headed…

The bullish “W” that formed in the RSI(14) midway through 2011 was very telling – it closely resembled the bullish “W” in mid-1985 when the Dollar Index touched a low of 80.43 and then proceeded to gain 50% in value within 6 years…2011 is really when the bull move started in the greenback, after the low of 72.70, and of course it was in September 2011 when bullion hit an all-time high of just over $1,900…

Dollar Index Approaching Long-Term Downtrend Line

The critical “takeaway” from this chart is the long-term downtrend line that currently intersects around the 93 level – will this downtrend line prove to be powerful enough resistance to at least temporarily halt the momentum of the greenback?…the 93 level is also just above the late 2005 high in the Dollar Index of 92.33…

Watch The Fib. Levels & +DI Indicator

Important Fib. resistance levels on this monthly chart are 90.85 and 96.13…

The +DI indicator likely has further to go on the upside, but not much…it’s currently rapidly approaching previous peak levels…

Conclusion

This huge move in the Dollar Index since last summer is getting overheated and is becoming extreme with too many traders on the same side of the fence, but that’s how markets behave – they often overshoot in 1 direction or the other…temporarily technically overbought conditions will probably continue to persist until the Index at least reaches its long-term downtrend line (even a short-lived breakout above that resistance can’t be ruled out)…however, an unwinding of overbought conditions is inevitable at some point this year, and that’s when Gold and the Venture could really gain traction…

Over the longer haul (the next couple of years), it’s certainly feasible that after a correction the Dollar Index could challenge the 100 level and beyond if fundamentals are still in its favor (a lot can change in 6 months or a year)…

U.S. Dollar Index 2.5-Year Weekly Chart

This 2.5-year weekly chart shows very vividly the dramatic move in the Dollar Index since last July…RSI(14) conditions are clearly overbought and destined to unwind in the not-too-distance future – the only question is, when?…there is currently a divergence between RSI(14) and price, and that may suggest that a correction could be coming sooner rather than later…

It’s interesting to note that on this chart, measured Fib. resistance is at 93 – the end of “Wave 5“…that lends support to the idea that we’ll soon see the Dollar Index top out, at least temporarily, at its long-term downtrend line shown in the previous chart…

Today’s Equity Markets

Asia

China’s Shanghai Composite Index has started 2015 where it left off – on a tear…the Index shot up 117 points or 3.6% overnight to finish at 3351…that’s the highest close since August 2009 as investors snapped up shares of the largest companies and developers on the first trading day of the New Year…

Japan’s Nikkei was off slightly, closing at 17409…

Europe

European markets are down significantly in late trading overseas as concerns mount over the economic health of the euro zone…the euro itself hit a 9-year low against the greenback today…

North America

The Dow has tumbled 208 points as of 7:50 am Pacific with energy companies leading the losses…the TSX has fallen 316 points, though the Gold Index is positive and could be ready to build some traction above its 50-day moving average (SMA)…

The Venture is off 10 points at 697…NexGen Energy (NXE, TSX-V) is unchanged at 38 cents…the company has commenced an 18,000 m winter drill program at its 100%-owned Arrow zone at the Rook I Property, located in the southwest part of Saskatchewan’s Athabasca basin…the program will utilize 3 diamond drill rigs…2 rigs are currently drilling at the Arrow zone, and will exclusively focus on this land-based, high-grade, basement-hosted uranium discovery…the third drill rig will be deployed around the middle of this month to target northeast and southwest from Arrow along the Patterson conductor corridor which is 7 km in strike length through the western section of Rook I, and several other high-priority regional geophysical targets that show similar signatures to that of the Arrow discovery area…

Venture 9-Month Daily Chart Update

The Venture is in retreat today after closing Friday at its downtrend line in place since September as you can see on this 9-month daily chart…1 day does not a week make, so we’ll see how the dust settles in the coming days and if indeed the Venture can push above this resistance…keep in mind the Venture is still very much in the “December-January Effect” period, so it wouldn’t be surprising to see some strength later this week…

Gold Bullion Development Corp. (GBB, TSX-V) Chart Update

There’s good reason to be bullish on an old favorite, Gold Bullion Development Corp. (GBB, TSX-V), especially given its current technical posture and the company’s anticipated progression to producer status in 2015…

A near-term return visit to the Cadillac Trend is going to give us fresh insight into this important area of northwest Quebec, where GBB is very active along with a number of other companies…

Below is an updated 6-month GBB daily chart…a now-rising 50-day SMA, and an RSI(14) with increasing up momentum, together suggest that a breakout in the near future above the downtrend line is very probable…

GBB is unchanged at 4.5 cents as of 7:50 am Pacific…

Athabasca Nuclear Corp, (ASC, TSX-V)

The Pikoo diamond play in Saskatchewan, led by North Arrow Minerals (NAR, TSX-V), could very easily heat up during this first quarter of 2015, so we suggest investors carry out some due diligence on companies active in the area – especially considering how valuations have been knocked down over the last few months…

We’ve already highlighted North Arrow, which is also busy on other diamond fronts…it’s well-financed and led by a “Who’s Who” in diamond exploration…

Among the more speculative “area plays”, a company with excellent potential on some excitement out of the emerging Sask Craton camp,  is Athabasca Nuclear (ASC, TSX-V)…ASC gained a penny-and-half Friday after announcing it had added to its holdings by entering into an option agreement to acquire a 100% interest in the 1,300 hectare Pikoo North project…

Technically, ASC has built a strong base of support at 2.5 cents and closed Friday at 4.5 cents, slightly below a downtrend line in place since late 2013…if ASC is able to overcome that resistance (around 5 cents), it’ll be worth paying some serious attention to…

Silver Short-Term Chart

Silver in December finally staged a definitive breakout above a downtrend line that was in place since the summer on this 9-month daily chart…the December 1 dramatic move from an intra-day low of $14.15 to a close above $16 was technically highly significant…as expected, superb support has been demonstrated around $15 and the metal made a recent run toward near-term resistance at $17.50 before backing off to current levels around $16…

Note how the downtrend line has become new support, while there’s also near-term support around $15.60…RSI(14) is holding support and moving up, so the immediate trend continues to be generally positive amid the choppiness we’re seeing in the current trading…

Silver Long-Term Chart

This 34-year monthly chart continues to give hope that Silver could be preparing for a powerful “Wave 5” move to the upside, though we caution that this could take some time to play out (if indeed this theory is correct)…

RSI(14) has bounced off previous long-term support which will need to hold along with key price support in the immediate vicinity of $15…

Fundamentally, Silver has been hurt by a slowdown in global economic growth…if economies in the euro zone, China and Japan can show some fresh strength in 2015 (and that’s a big “if”), Silver could begin to appreciate rapidly…

One note of concern on this chart is the sell pressure that has prevailed since the beginning of 2013, after a decade-long period of buy pressure…based on historical patterns, sell pressure could persist for a considerable time yet…

Note:  Jon holds a share position in GBB.