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Gold has traded between $1,244 and $1,256 so far today…as of 7:05 am Pacific, the yellow metal is up $4 an ounce at $1,246…Silver is up a dime at $19.92…Copper has edged a penny higher to $3.20…Crude Oil is off $1.34 a barrel to $92.34 while the U.S. Dollar Index is flat at 80.65…

Many Gold producers are making progress at reducing costs wherever they can, according to a New York-based commodities research firm…CPM group sees this trend continuing into 2014…in a report released yesterday, CPM Group said they’ve seen all-in sustaining costs decline roughly 18.3% to $1,003 an ounce in the third quarter of this year, compared to $1,227 an ounce in the second quarter…that’s quite a dramatic improvement and likely better than most investors realize…CPM surveyed Gold mining operations and companies that cover 41% of global mine production…

“CPM Group has stated in the past that producers can and would cut their costs, to the surprise of many Gold equity investors,” they said. “The third quarter may prove to be the beginning of an extended period of cost reductions.  The ability of mining managers to demonstrate to investors that they can restrain costs and focus on profitability over growth in ounces of production could help lure investors back into the Gold share market over the next few years”…the cuts have come from costs associated with sustaining production, which include the development capital and exploration expenditures on sustaining production and general and administrative costs, CPM said…cutting operating costs is a little more difficult, they emphasized…“Labor and energy costs are among the highest operating expenses. Labor costs are sticky, and energy costs are beyond the control of producers unless they hedge their diesel, natural gas, and electricity costs.  Additionally, scaling back on sustaining costs may not (affect) the mining company’s near-term operations significantly.”

They also cautioned that the current reductions in capital and exploration expenditures for new and existing operations will weigh negatively on future Gold mine supply as well as be supportive for Gold prices in the medium term.  “The loss in mine supply can be supportive of Gold prices, but it does not necessarily push Gold prices higher,” CPM said. “The primary driver of Gold prices, which can make it move significantly higher or lower, is investment demand.”

Yamana Gold Inc. (YRI, TSX) and New Gold Inc. (NGD, TSX) – Encouraging Charts

Two companies with all-in sustaining costs well below the industry average are Yamana Gold Inc. (YRI, TSX) and New Gold Inc. (NGD, TSX)…after examining long-term charts for each yesterday, John sees plenty of evidence for a near-term reversal which suggests Gold will hold above its late June low ($1,179) and perhaps surprise some investors with a year-end rally (this is also consistent with the behavior of the Venture over the past few months and its encouraging 3-year weekly chart)…

Both Yamana and New Gold have exceptionally strong support around current levels – Yamana closed yesterday at $9.22 while New Gold finished at $5.21…RSI(2) levels on each are at 10.70 and 3.24, respectively, reflecting the kind of oversold conditions seen on just a few other occasions over the last decade…historic opportunities? – absolutely, especially for investors with longer-term time horizons…

Yamana Gold (YRI, TSX) 10-Year Monthly Chart

New Gold Inc. (NGD, TSX) 10-Year Monthly Chart

Today’s Markets

Asian markets were mixed overnight…Japan’s Nikkei Average fell 66 points while China’s Shanghai Composite gained 18 points to close at 2201, putting it just 11 points shy of a one-month high…

European shares are moderately higher in late trading…Germany’s two dominant political blocs pledged billions in fresh spending on pensions, education and infrastructure as part of a coalition deal (still needs ratification) reached in the early hours today, potentially moving the country to the left on some economic and social issues…meanwhile, consumer sentiment data from German think tank GfK managed to beat market expectations…the forward-looking figure for December showed a tick higher to 7.4, against an estimate in a Reuters poll of 7.1…

In New York, the day before American Thanksgiving, the Dow is up 21 points as of 7:05 am Pacific…a slew of mixed economic data out of the U.S. this morning…the Thomson-Reuters consumer sentiment index rose to 75.1 in November, above expectations…a gauge of planned U.S. business spending on capital goods unexpectedly fell in October and new orders for long-lasting manufactured goods were down, pointing to a loss of momentum in factory activity…meanwhile, initial claims for state unemployment benefits fell 10,000 to a seasonally adjusted 316,000, the Labor Department reported this morning…economists polled by Reuters had expected first-time applications to rise to 330,000 last week…the four-week moving average for new claims, which irons out week-to-week volatility, slipped 7,500 to 331,750…

The Nasdaq closed above 4000 yesterday for the first time in 13 years (since Sept. 7, 2000), the latest milestone in a 2013 stock rally fueled by easy money from the Fed and robust investor demand for a broader swath of fast-expanding companies…a rise of 23.18 points yesterday to 4018 put the index up 33% for the year…it remains more than 1000 points below its record close of 5049 on March 10, 2000…

Both the S&P 500 and the Dow Jones Industrial Average have surpassed records with regularity this year…the Dow has set 43 all-time closing highs in 2013 and is up 23% for the year…the S&P 500 has climbed 26%…

The TSX is 10 points higher while the Venture has added 2 points to 930 as of 7:05 am Pacific…

Ryan Gold Corp. (RYG, TSX-V)

Ryan Gold (RYG, TSX-V) is yet another company that is pulling out of the Yukon, citing “generally poor market conditions”…but investors should be able to read between the lines – the Yukon is simply not as friendly as it used to be for mining and exploration…one geologist we spoke to, who has worked in the Yukon for over 30 years, complains about how environmentalists have hijacked many government departments…capital will quickly flee any jurisdiction where it doesn’t feel welcome, and that’s what has been happening in the Yukon and even in Quebec which for the first time in years is no longer in the top 10 list of the Fraser Institute’s survey of mining friendly jurisdictions around the globe…

Ryan Gold added in its Monday post-market news release:  “Going forward, the company plans to evaluate assets for junior mining companies that are more advanced than its Yukon projects. The company currently has approximately $20 million in working capital, which the company will seek to deploy into projects or investment opportunities that have become available because of current poor market conditions”…investors liked what they heard, and RYG gained 3 cents yesterday on one of its best volume days of the year (925,000) to close at 14 cents…

Madalena Energy Inc. (MVN, TSX-V)

The recent weakness in Madalena Energy Inc. (MVN, TSX-V) has been an opportunity brought about by the company’s announcement of two separate financings – a bought deal in the amount of $8 million at 47 cents which is expected to close next week, and a flow-through financing at 54 cents which has already closed…it has been a good year for MVN, and the company’s prospects for 2014 look better than ever…MVN was the Venture’s volume leader yesterday, gaining 3 pennies to close at 51 cents…it’s unchanged through the first 35 minutes of trading after dipping as low as 49 cents…below is an updated 2.5-year weekly chart from John…the EMA(20) has been providing terrific support…accumulation has been strong throughout 2013…

Note: John, Terry and Jon do not hold share positions in YRI, NGD, RYG or MVN.