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Gold has traded between $1,652 and $1,655 so far today…as of 5:40 am Pacific, the yellow metal is down $4 an ounce at $1,656…Silver is a nickel lower at $32.51…Copper is up a penny at $3.87…Crude Oil is 25 cents higher at $107.31 while the U.S. Dollar Index is flat at 79.79…

Precious metals with an industrial use have so far fared the best this year…platinum is up just under 20% and Silver is ahead almost 17% while Gold is up only 6%…slightly improving economic conditions have been the driver for the stronger performance of platinum and Silver versus Gold during this first quarter of 2012…

China’s Ministry of Industry and Information Technology noted in its most recent figures that China has held the title of the world’s number one Gold miner since 2007…the country has continued its dominance in world Gold production with output rising last year by 5.9% to 361  tons…overall, world production of Gold is not that different from where it was 10 years ago, despite the price gains made over the past decade that should have stimulated more production…

Many governments around the world are making it more difficult for companies to put deposits into production with one current excellent example being the socialists in Ecuador who cannot be trusted…any company attempting to do business down there should simply tell that government to pound salt given its confiscatory approach (i.e., a 70% windfall profits tax on Kinross for the proposed FDN operation)…taxation in the mining industry is rising across the globe and poses a serious threat to companies of all sizes…the list of countries that have proposed higher mining taxes in recent months is long…it includes South Africa, Ghana, Zambia, Kyrgyzstan, China, Philippines, Indonesia, Guatemala, Peru and numerous others…tax hikes are coming in the form of royalties, corporate taxes, value-added taxes, profit sharing, windfall taxes and anything else a creative and greedy government can dream up…yes, as we mentioned Friday, “greed” applies to governments (in fact, that’s where it’s most dangerous) just as much as it can be applied to corporations or individuals…

Here’s something refreshing…Singapore has announced that it’s planning to boost its share of the global Gold trade sevenfold after scrapping taxes on bullion, according to International Enterprise Singapore, the city state’s external trade agency…currently, about 2% of world Gold demand flows through Singapore, and the goal is to increase that to 10 to 15% over the next five to 10 years…no doubt they will be successful with that kind of investor-friendly approach…

TSX Gold Index

The first half of March has been rough for Gold producers with the TSX Gold Index plunging 13% over the last 13 sessions…during the same period, Gold itself has fallen by more than 8% while the TSX Venture Exchange has fared better, declining just 6.5% which is a very positive sign…

So what are we to make of this?…

The answer is simple:  Take advantage of this “sale” just like you would jump on any major discount at your favorite retailer…unfortunately, when it comes to the market, most investors do the opposite – rather than buying on weakness, they sell into it…

John has two great charts that illustrate perfectly the opportunity that has been presented in the market with the weakness in Gold and Gold stocks so far this month…we do expect a reversal to begin this week…since the CDNX has been out-performing both Gold and Gold stocks, we expect it will post the best gains over the final 10 trading days of the month…

First, let’s look at the TSX Gold Index in “reverse” by examining the currently overbought HGD – the reverse Gold Index ETF…

If you’re buying the HGD right now, betting against Gold and the TSX Gold Index specifically, you’re on the wrong side of the trade, at least for the short-term…the HGD is clearly overbought and up against resistance…it has also formed a double top…what this tells us is that the Gold Index is about to reverse to the upside, and of course that’s good news for the CDNX...

As we mentioned Friday, on very few occasions over the last decade has the TSX Gold Index ever fallen below its 1,000-day moving average…that has just occurred…without exception, this has always proven to be a great buying opportunity and now should be no different…

Let’s take a technical look at the Gold Index with John’s 9-month daily chart…notice how oversold the SS(14) indicator is…

Expect the Gold Index to begin to reverse this week…

Rainbow Resources (RBW, TSX-V)

Rainbow came out with excellent news late Thursday regarding its Gold Viking and Ottawa properties, though some readers are concerned the stock did not respond Friday…Rainbow continues to work through a trading channel and investors must be patient…for technical and fundamental reasons, we believe there’s a high probability that Rainbow will power through resistance at 29 cents in the near future (by month-end, very early April) so now is an ideal time for additional accumulation…RBW is up more than 50% this quarter and has one of the best-looking charts on the entire CDNX with rising 50, 100, 200 and 300-day moving averages and a surge in volume this year…this is young junior exploration company with unlimited potential given the experienced and successful business people it has at the helm, including the part-owner of an NHL franchise…President David Johnston has assembled a first-rate land package in the West Kootenays and we probably haven’t seen the end of some deal-making, in the West Kootenays or elsewhere for that matter, if one reads between the lines of recent news releases…

Below is John’s updated RBW chart (15 monthly weekly) going back to when it first started trading on the Venture Exchange in January of 2011…notice how the 10-week (50-day) moving average has provided support since late last year…expect that trend to continue…this is the type of chart you look for in the market…Rainbow’s rise has been consistent and orderly and reflects the steady progress this company is making on the ground with its properties…the move in RBW is still in its very early stages in our view…

Note: John and Jon hold positions in RBW (Terry does not) with Jon increasing his position again last week.

RJK Explorations (RJX.A)

Another company we’re watching closely is RJK Explorations (RJX.A) which got as high as 26.5 cents early this month…RJK is currently drilling its Blackwater East Property contiguous to New Gold’s (NGD, TSX) Blackwater-Davidson multi-million ounce Gold deposit…as most BMR readers know, we have followed the Blackwater story closely for the past two years and watched Richfield Ventures climb 10-fold in the process…our last chart on RJK was posted March 5 and it showed the strong possibility of a pullback to the 17 or 18 cent area, which is exactly what occurred…RJK closed at 21.5 cents Friday…

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

Today’s Markets

Stock index futures as of 5:45 am Pacific are pointing to a slightly negative open on Wall Street…Asian markets were quiet overnight while Europe is off slightly this morning…