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Gold is on track to end the week higher after an important intra-day reversal Monday...as of 7:00 am Pacific, bullion is down $2 an ounce at $1,389…Silver is off 16 cents at $22.27…Copper is flat at $3.28…Crude Oil is down $1.08 a barrel to $93.17 while the U.S. Dollar Index is at 83.56, down one-third of a point…

The SPDR Gold Trust reported late yesterday that its holdings had fallen by another 1.5 tonnes, bringing its total outflow for the week to 19.8 tonnes…the fund is on track for its largest weekly outflow since the week ending April 26…at 1,018.567 tonnes, its holdings are at their lowest in more than 4 years…

Total ETF lquidation this year now stands at 450 tonnes of gold, equivalent to mine production from all of Africa and South America during the same period…very strong physical demand is very apparent in the Gold market below $1,400…we’ll have to wait and see what the catalyst will be for Gold to push through $1,400 again and perhaps take another run at the $1,500 level…

“Gold should still be in demand as an alternative currency,” said Daniel Briesemann, a commodities analyst at Commerzbank AG in Frankfurt (source: Bloomberg, Nicholas Larkin article)…“The quantitative easing by central banks should lead to a depreciation in rates for major currencies and in the end should also lead to some inflation concerns, although this is not an issue at the moment…as long as institutional investors are selling Gold ETP holdings, this will probably outweigh robust retail demand”…

Debt Loads In Asia Piling Up – “A Host Of Land Mines Ahead” For China

An interesting article in this morning’s Wall Street Journal…debt loads in Asia’s emerging economies – gauged by public and private debt as a percentage of gross domestic product – now exceed what they were in 1997, when Asia went into a financial crisis that lasted for several years…much of the run-up has come over the last four years…the overall debt-to-GDP ratio rose to 155% in mid-2012, from 133% in 2008, according to the most recent data from McKinsey Global Institute…China, the world’s second-largest economy, has led the borrowing binge…its debt-to-GDP rose to 183% in mid-2012, from 153% in 2008, according to McKinsey…some economists say China’s debt-to-GDP ratio has risen higher and faster, to above 200%, based on government data that more fully incorporate non-traditional “shadow” lending institutions such as trust companies, which operate in parallel to the mainstream banking system…”China’s financial system is still fragile and vulnerable,” says Yu Yongding, a Chinese economist who has served as an adviser to China’s central bank…”I don’t think there will be a financial crisis at the moment, but there are a host of land mines ahead”…

Today’s Markets

Japan’s Nikkei average hit John’s Fibonacci 14000 level overnight and then violently reversed to the upside, finishing the day up 128 points to close the week at 14612…the Nikkei was ripe for a correction and it’s quite possible it was just a 2-day event with new highs coming in the near future…China’s Shanghi Composite gained 13 points to 2289…European shares are modestly lower in late trading overseas…the Dow is down 67 points through the first 30 minutes of trading in New York, while the TSX is off 10 points to 12651 where it’s supported by its 100-day moving average (SMA)…the Venture is up 3 points to 945…Solvista Gold Corp. (SVV, TSX-V), which we highlighted earlier in the week following release of impressive results from its property in Colombia, is beginning to gain traction as we anticipated it might as the news got digested by investors…a breakout could be imminent…refer to John’s chart from Wednesday…

Here’s A Rarity:  A Venture Company With Earnings Momentum

Okay, how often do you see a Venture company actually make money?…a certain model seems to be working very well for Macro Enterprises Inc. (MCR, TSX-V) which reported Q1 earnings yesterday of 40 cents per share ($9.68 million) on total revenue of $60 million vs. 21 cents per share and $41 million in revenue during the same period last year…the stock climbed 64 cents on its second-highest volume day ever to close at $3.21, a five-fold increase in just 6 months, and an insider took advantage of the jump in price and volume yesterday to sell 80,000 shares for about $250,000 according to insider trade summaries at www.TMXMoney.com…Macro is a construction and maintenance service provider to the energy and resource industries…potentially, this is a stock that ultimately could provide a dividend if earnings and cash flow continue to improve…we asked John to examine the MCR chart and here’s what he came up with…as always, perform your own due diligence…

Iskut River Play

On Monday we’ll be providing a complete overview of the Iskut River play, covering about a dozen companies including of course the leader of the pack – Colorado Resources (CXO, TSX-V), and our early pick (Victory Ventures, VVN, TSX-V) which has enjoyed a strong month of May…VVN could accelerate sharply in June as drilling commences at its Copau Property west of North ROK and immediately north of Imperial Metals‘ (III, TSX-V) Red Chris claims and deposit…

Earlier this week, we spoke with Peter Bernier of Prosper Gold (PGX.H, TSX-V), and that’s another company to watch very closely as soon it resumes trading as we’ve mentioned already…Prosper’s qualifying transaction (a deal with Firesteel Resources – FTR, TSX-V on its Copper Creek Property northwest of Telegraph Creek, about 170 km  from Colorado’s discovery) is in the review stage with the Exchange which could take another 6 weeks or so…Bernier has the same team with Prosper that he had with Richfield Ventures which of course made the huge discovery at Blackwater a few years ago and ultimately got taken over by New Gold Inc. (NGD, TSX-V), so the fact that Bernier’s team has chosen northwest B.C. for their next major project speak volumes as they reviewed many other properties elsewhere…

Doubleview Resources‘ (DBV, TSX-V) Hat Property, where high-grade Gold and copper were first discovered in prospecting in the 1960’s, is contiguous to Copper Creek, and a drill program is set to begin shortly – hence the increased activity in DBV recently…Doubleview doesn’t have the kind of technical team that Prosper is blessed with, but they’ve reviewed a lot of encouraging historical data and are confident with their drill targets…this is definitely another area to watch closely…Prosper will have everything in place to start drilling this summer, shortly after their QT is approved…

Below is a chart from John on DBV after it climbed 3 cents yesterday to close at 15 cents…

Gold Standard Ventures (GSV, TSX-V)

Gold Standard Ventures (GSV, TSX-V) appears to be on the rebound after falling from a $3 high last year to a low of 47 cents early this month…on Tuesday, GSV reported assay results from 8 drill holes at its Railroad Project in Nevada and they included a 73.5-metre interval grading 3.67 g/t Au on a 75-metre step-out, extending the high-grade zone north of the known deposit…GSV remains confident that the North Bullion deposit represents a major Carlin-style discovery that can be further demonstrated as such in the coming months…only a small portion of the 10 km strike length has been explored…GSV has 84 million shares outstanding with working capital of about $4.5 million at the end of the first quarter…it has climbed for 3 straight trading sessions, closing yesterday at 76 cents…John’s 6-month chart shows how very oversold conditions emerged during April, lasting through to early May…

Note: John and Jon both hold share positions in VVN.  Jon also holds share positions in CXO, SVV and MCR.