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Gold has traded between $1,285 and $1,301 today as it experiences some end-of-the-week profit taking…as of 8:30 am Pacific, bullion is down $11 an ounce at $1,291…Silver is off 9 cents at $18.22…Copper has tumbled 7 cents to $2.49…Crude Oil is 18 cents lower at $46.13 following the death of King Abdullah while the U.S. Dollar Index has had a volatile day…it surged as high as 95.50 before pulling back…it’s currently up one-quarter of a point at 94.53 (see updated chart below)…it overcame resistance at 93 yesterday in very convincing fashion after the ECB decision to embark on a full-blown QE program…

So much for the silly speculation from certain quarters that Russia might be forced to sell some of its Gold reserves in the face of a collapsing currency…the Russian central bank announced yesterday that its Gold reserves grew by a further 600,000 ounces (18.7 tonnes) in December – the 9th successive month of Gold reserve increases…

Mineweb’s Lawrence Williams, one of the best in the business at assessing demand and supply trends in the Gold market, made these comments in an article this morning at www.Mineweb.com:

“Clearly President Putin is a believer in the ultimate economic benefits of a strong national Gold holding – particularly if some kind of global reserve currency realignment lies ahead in the relatively near future (our emphasis).  As a Reuters report points out, Russia has now more than tripled its Gold reserves in the past 10 years, even as it recently has presumably had to use some of its its international currency reserves to defend the ruble with the national economy having been driven to the brink of recession. The ruble slid almost 50% in the past 12 months which makes the nation’s Gold reserves ever more important to its global economic status.”

Oil Update

Experts seem to agree that King Abduallah’s death won’t change anything with regard to Saudi Arabia’s current Oil policy which seems aimed at breaking the backs of frackers in an attempt to maintain its major share of the global market…the Saudis also appear determined to weaken the rival Iranian regime which of course continues to pose a regional threat…relations between the 2 countries have become increasingly strained over Syria (they have conflicting agendas there) and other geopolitical issues such as the interpretations of Islam, aspirations for leadership of the Islamic world, Oil export policy, and relations with the U.S and the West…

The world will never again see the price of Oil at $100 per barrel – that’s the bold prediction of 1 of Saudi Arabia’s biggest investors, Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud…he’s the chairman of Kingdom Holdings and spoke with CNBC’s “Squawk on the Street” this morning following the death of his uncle, King Abdullah…while he admitted that his country – which derives 90% of its budget from Oil – is feeling the pain of the commodity’s collapse, he predicted that Saudi Arabia would not be the first to blink…he said that a “confluence of events” have led to the fall in Oil’s price, not – as many are suggesting – a Saudi plot to harm North America’s energy industry…

Euro Zone Takes The QE Drug

Markets have so far reacted well to key aspects of the ECB’s expanded asset-purchase program, including the scale of the planned buying and its ‘open-ended’ nature…how the Gold market will digest this over the coming days is anyone’s guess…in the early going, the greenback has been the biggest beneficiary of this euro zone monetary expansion…

Markets are impatient, and they will probably put additional pressure on the ECB to ramp up its QE program in the months ahead if deflationary pressures continue and an economic recovery doesn’t seem to be taking hold…the euro zone also has Greece to deal with as national elections take place in that country Sunday…

At the same time the ECB was unveiling its €60 billion monthly asset-purchase program, Germany’s Chancellor Angela Merkel was advocating for “urgent fiscal reforms” in Europe at the 45th World Economic Forum annual meeting in Davos, Switzerland…in her keynote address yesterday, Merkel said that European leaders must continue to move forward with fiscal reforms if the euro zone is going to emerge strong from its latest economic struggles…

Euro To Head Lower – Updated Chart

The euro definitely hasn’t found a bottom yet as there’s every reason to believe, based on this 20-year monthly chart, that it still needs to test long-term support around 105…that’s also the bottom of a 7-year downsloping flag…this is a huge drop from the mid-2008 high of 160.20…if it crashes through the downsloping flag, watch out…

The euro closed yesterday at 113.16…it fell below 112 this morning for the first time since November 2003, and is on track for its worst weekly performance against the greenback since September 2011…

King Dollar

The U.S. Dollar Index, while still technically overbought at the moment, continues its relentless advance to test resistance at a long-term downtrend line as shown on this 34-year monthly chart…that means the Dollar Index may reach the upper 90’s before a consolidation phase sets in…

If the dollar were to eventually overcome this resistance at the long-term downtrend line, the potential for an extended uptrend to significantly higher levels would increase dramatically…

Canadian Dollar Update

Pressure continues on the loonie after the central bank’s first interest rate cut in nearly 6 years earlier this week, a response to plunging Oil prices…

The Canadian economy is certainly in for some significant stimulus given sharply reduced fuel costs for consumers, lower mortgage rates and the Conservative government’s targeted tax cuts…this will take a while to work its way through the system, however, and will also be partly offset by the negative affects –  in Western Canada in particular – of the plunge in Oil prices…

Historically, the Venture has performed best when the dollar is an uptrend…so a weak loonie is definitely a headwind for the CDNX, though Gold producers and near-term producers will attract increased interest…

How low could the loonie go?…for now, the 2008–2009 support band between 78 cents and 80 cents may hold…breach of that support has to be considered a distinct possibility, especially in the event Oil prices fall further which seems likely…

Dropping Like Flies

There’s Gold In That Sewage Sludge!

Researchers at Arizona State University have quantified the amount of metals that winds up in sewage sludge and calculated its potential worth…samples were collected from across the U.S. and it was discovered there could be up to $13 million worth of metals in the sludge produced by a city with a population of 1 million annually…that includes $2.6 million in Gold and Silver…

While it won’t be possible to extract all the metal from the sludge, the study’s authors say it could become an important source of revenue for cities interested in profiting from waste that is costly to dispose of…

The process is already being tested in Japan’s Suwa Nagano Prefecture at a sewage plant located near a number of manufacturers…plant officials report harvesting 2 kg of Gold in every metric tonne of ash generated by burning sludge, making it more mineral-rich than some Gold mines…

More than half of the sludge in the U.S. is currently being used as fertilizer but the practice has raised environmental concerns – largely due to the potentially toxic chemicals it can leave behind.

While researchers say we’ll never fully get rid of sewage sludge, it’s time to start thinking of it as a valuable resource.

The complete report was published online this week in Environmental Science & Technology…

Today’s Equity Markets

Asia

China’s Shanghai Composite finished a volatile week on a positive note, gaining 10 points to finish at 3353…

Japan’s Nikkei jumped 183 points or 1% to close at 17512…

Europe

European markets were positive again today on the heels of the ECB’s announcement yesterday…

North America

The Dow is down 34 points as of 8:30 am Pacific…the TSX is 61 points higher while the Venture is still struggling to gain traction above 680 resistance…it’s down 3 points at 677 through the first 2 hours of trading…

Fairmont Resources Inc. (FMR, TSX-V) Update

Fairmont Resources (FMR, TSX-V) is a major up-and-comer in the industrial minerals space in Quebec, and this morning the company announced the acquisition of 2 quartzite properties (Forestville and Beau Comeau)…what the company sees here is the potential for a raw material source used in high-purity glass, fiber optics, ferrsilicon and silica metal…

Historical assay results from Quebec’s Sigeom database show some remarkable grades of silicon dioxide (many above 99% with the highest being 99.91%) at Forestville in 162 samples collected mostly in a north to south transect along the western portion of the claims covering more than 4 km…

FMR, which impressively in less than a year took its flagship Buttercup Property from the acquisition stage to a Certificate of Authorization for the production of titano-magnetite aggregate, is up 3 cents at 20 cents on the news this morning, as of 8:30 am Pacific…this is a company on the rise with the potential to begin generating strong cash flow from aggregate sales in 2015…both the fundamentals and technicals are solid with this “special situation” play that has less than 20 million shares outstanding…

Newstrike Capital Inc. (NES, TSX-V) Update

Slowly but surely, Newstrike Capital (NES, TSX-V) is inching higher with the potential for a technical breakout if it can overcome resistance around $1.11…the increase in volume this week is encouraging…

As you can see on John’s 2.5-year weekly NES chart, RSI(14) is currently in a “squeeze” between its uptrend and downtrend lines…the current trend favors a breakout to the upside, but the action in Gold will likely prove to be critical in the outcome here…

Four months ago, Newstrike announced results of a very robust Preliminary Economic Assessment for its Ana Paula Project in the prolific Guerrero Gold belt (NI-43-101 was filed on SEDAR October 30)…we urge our readers to check that out as the projected capital costs are relatively low and the IRR is 47.5% with a 2-year payback…the deposit at Ana Paula can be described as having a high-grade core, surrounding by a lower grade envelope of Gold and Silver mineralization…the high-grade nature of this Gold mineralization starts just below surface and extends to approximately 700 m deep…

NES is off 4 pennies at $1.02 as of 8:30 am Pacific…

Note:  Jon holds a share position in FMR.