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Gold has traded between $1,186 and $1,195 so far today…as of 8:00 am Pacific, bullion is down $2 an ounce at $1,191…Silver is off 19 cents at $16.56…Copper has slid 2 pennies to $2.72…Crude Oil is down 74 cents at $60.52, though U.S. Crude inventories have dropped for a 5th straight week, while the U.S. Dollar Index has fallen another half point to 95.36…

McKinsey & Company, a respected global management consulting firm, has published a study showing that worldwide mining operations are as much as 28% less productive today than a decade ago…it attributes increases in capital expenditures and operating expenditures as having the greatest impact on productivity trends…up-sizing projects by increasing the productive capacity of the project to shorten the mine life did not yield the higher IRR’s predicted by the models…

Turkey’s highest Gold price in more than 3 years appears to be curbing the appetite for the metal in the 4th-biggest buyer…the country imported 1.65 metric tons of bullion in May, 21% less than a month earlier and the least since July of 2014, the Istanbul Gold Exchange’s web site showed yesterday…Turkish Q1 consumer demand for bullion slid 42% from a year earlier, according to World Gold Council data…

A good sign for Gold’s prospects over the next year if you’re a contrarian – investors have cut holdings in bullion-backed exchange-traded products to the lowest since 2009 as surging stock markets from China to the U.S. have hurt demand for the metal…the assets contracted 5.45 metric tons, or 0.3%, to 1,594.08 tons as of yesterday, according to data compiled by Bloomberg…the hoard has slumped 39% since reaching a record 2,632.52 tons in December 2012, shrinking by 33% in 2013 and a further 9.3% last year…

Gold 34-Year Monthly Chart Update

This 34-year chart shows how Gold has been in a “Wave 4” correction since late 2011…one cannot rule out the possibility that “Wave 4” could deepen to the Fib. 50% level, just above $1,000, but this would likely be followed by a powerful “Wave 5” move to the upside that would ultimately lead to a new all-time high…

It’s also possible that Gold is now essentially at the end of “Wave 4” with rock-solid support on a long-term monthly chart at an uptrend line cutting through about $1,180 as we showed Monday…

Venture-U.S. Dollar Index Comparative Chart

The direction of the U.S. Dollar Index is key to understanding the Venture trend, and what’s encouraging from a Venture standpoint is that the greenback has run out of steam after a parabolic move from last summer that led to a double top formation in March-April…the recent rally in the Dollar Index was merely a test of new resistance at the uptrend line where it broke down from in late April as you can see in this 9-month daily chart through the end of May…our interpretation (and, so far, John has been very accurate with the greenback) is that the Dollar Index could ultimately test the 88 Fib. support level – a bearish trend that would definitely be supportive of the commodity sector and the Venture over the coming months…a weaker dollar scenario would suggest that the Fed won’t initiate a rate hike until sometime in 2016…

What Ferbus Tells Us About The Impact Of A Higher Greenback

The FRB/US model of the U.S. economy, which the public was able to fully access last year on the Fed’s web site, is one of several that Federal Reserve Board staff consults for forecasting and the analysis of macroeconomic issues, including both monetary and fiscal policy…

Fed officials rely heavily, but certainly not exclusively, on Ferbus’s calculations, which suggest that the hit to the U.S. economy of the parabolic move in the dollar from last summer to March is just beginning to be felt…according to Ferbus, a 10% increase in the exchange rate ripples through the economy gradually…in the 1st quarter after the shock, growth is shaved by a negligible 0.08% and the inflation rate by 0.1%…but the impact grows steadily for 3 years, as producers, exporters, importers and consumers adjust their habits…after 2 years, about 0.75% will have been lopped off GDP…

The much higher dollar since last summer has already negatively impacted the U.S. economy in 2015, and Ferbus tells us that those affects can be expected to intensify over the final half of the year – this is ultimately what may cause the Fed to delay a rate hike until 2016…

Click on the link below if you want to know more about Ferbus – not a perfect model but a useful tool nonetheless…

Meet The Fed’s Friend, Ferbus

Venture-U.S. Dollar Index Comparative Chart

The extreme gap between the Dollar Index and the Venture on this 15-year monthly chart is quite similar, on an inverse basis, to the huge gap that emerged in early 2011 when the Venture topped out at 2465 while the Dollar Index hit the low 70’s and then started a recovery that led to last summer’s parabolic move…

We expect to see a gradual closing of this gap over the next few months…notice also how the Venture %K hit an extreme low in late 2014, a mirror image of the extreme high in late 2010 – more evidence that we have seen the bottom of this market…

Today’s Equity Markets

Asia

Asian markets were mixed overnight with China’s Shanghai Composite essentially unchanged…the yuan is now Asia’s leading currency for doing business with China, trumping the Japanese yen and the Hong Kong dollar as Beijing aggressively pushes it through international trade channels…within Asia, the yuan now accounts for 31% of payments exchanged with China, up from 7% just 3 years ago, according to the latest data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), a provider of payments services…the data from Swift excludes payments by central banks…

Europe

European equities are up significantly today after the ECB held its key interest rates unchanged…at his monthly press conference following the ECB governing council meeting, bank President Mario Draghi also raised inflation expectations for this year to 0.3%…inflation next year is seen at 1.5%…this is helping the euro today…

North America

The Dow is up 146 points as of 8:00 am Pacific…private sector job creation in the U.S. swung higher in May after a lackluster April, with companies adding 201,000 positions for the month, according to payroll firm ADP…the number was in line with expectations for a 200,000 gain thanks largely to a big jump in service sector jobs…

In Toronto, the TSX has gained 74 points while the Venture has added 2 points to 691…

Ivanhoe Energy Inc., a company that proposed using a unique heavy oil technology to develop its Tamarack thermal Oilsands project in northern Alberta, has been declared bankrupt after it failed to reach a restructuring proposal under the Bankruptcy and Insolvency Act…in a news release yesterday, the Robert Friedland-backed Vancouver-based company, which also has projects in Ecuador and Mongolio, said it worked “diligently” with major creditors and its court-appointed trustee, Ernst & Young, since filing a notice of its plan on Feb. 20 but no “viable restructuring proposal” resulted…

Biorem Inc. (BRM, TSX-V)

Readers may wish to perform their due diligence on Biorem (BRM, TSX-V), an environmental biotechnology company that designs, manufactures and distributes a comprehensive line of high-efficiency air emissions control systems used to eliminate odors, volatile organic compounds and hazardous air pollutants…BRM, which has only 13 million shares outstanding, has reported a strong turnaround in its financial performance over the last 2 quarters, including Q1 2015 as announced Monday (revenue of $4.8 million and net earnings of $528,000)…

BRM is up 3 cents to 32 cents as of 8:00 am Pacific after touching a high of 37 cents in early trading…

Note:  John, Terry and Jon do not hold share positions in BRM.