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Gold is moving cautiously higher this morning in advance of today’s important Fed announcement followed by Chairman Ben Bernanke’s media briefing…as of 7:35 am Pacific, the yellow metal is up $3 an ounce at $1,716…Silver is 23 cents higher at $33.23…Copper is up a penny at $3.66…Crude Oil has added $1.02 to $86.81 while the U.S. Dollar Index is off one-tenth of a point to 79.95…

Will Bernanke Disappoint?

Bernanke is widely expected to announce another round of Treasury buying after a two-day meeting of the FMOC…the results of the meeting will be announced at 9:30 am Pacific, followed by Bernanke’s comments to the media beginning at 11:15 am…the Fed will also release its latest economic forecasts at 11:00 am…

The Dow has risen five days in a row – its best streak since March – and is now less than 3% away from 2012 highs…whether the rally continues hinges largely, at least in the short term, on what Bernanke announces, and no doubt he will use his platform to encourage U.S. lawmakers to reach a compromise and avoid the so-called “Fiscal Cliff”…a drop in the U.S. jobless rate to 7.7% in November from 7.9% in October was driven by workers exiting the labor force, a fact certain to disappoint the Fed…as its last program of Treasury purchases, known as Operation Twist, draws to a close, officials look set to replace it with a fresh $45 billion per month in buying…unlike those in Twist, which were funded by sales and redemptions of short-term debt, the new Treasury purchases will further expand the Fed’s $2.8 trillion balance sheet – in effect, new money creation…roughly 89% of economists recently surveyed by the Wall Street Journal said the Fed will keep buying about $40 billion of mortgage-backed securities each month and almost 72% believe the central bank will end “Operation Twist” and replace it with outright purchases of Treasurys…Fed officials have sounded optimistic that their bond-buying programs are helping to push down long-term interest rates, making borrowing cheaper to spur spending and investment…

Some market watchers believe the Fed may disappoint today, that Bernanke may save some of his bullets for later on…Jim Sullivan, chief U.S. economist at High Frequency Economics, told the Wall Street Journal:  “Fed officials are almost universally expected to announce today that QE3 will be expanded…we agree…however, we see some risk that the new purchase program will be somewhat smaller than the $45 billion per month widely expected”…

After Bernanke’s moment today, the media and the markets will certainly be re-focusing on what’s happening, or not happening, in Washington…Bernanke could be more cautious than expected today in terms of additional Fed easing so as not to let the politicians off the hook…

Today’s Markets

Asian markets were bullish overnight with Japan’s Nikkei Index hitting a 7-month high…China’s Shanghai Composite, meanwhile, climbed 8 points to 2083…below is an updated 2.5-year-weekly chart from John on the Shanghai that shows how this Index remains in a downsloping wedge…recently, there has been a divergence between price and RSI which is a sign that this market could be ready to turn the corner which we believe would be positive for global equities in general, including the Venture Exchange which interestingly has shown very  similar trading patterns to the Shanghai…

North American markets are higher in advance of the Fed decision…as of 7:35 am Pacific, the Dow is up 18 points to 13267…the TSX has gained 33 points while the Venture Exchange is up 2 points at 1186…

Kaminak Gold (KAM, TSX-V)

Astute traders would have scooped up Kaminak Gold (KAM, TSX-V) in recent days which was heavily oversold and trading in the $1.00 to $1.10 support band…KAM broke out of its doldrums yesterday by jumping 29 cents to close at $1.29 – right up against its still-declining 20-day moving average (SMA) which is certainly one resistance area…near-term, KAM also faces stiff resistance beginning at $1.40 as John’s chart points out…as of 7:35 am Pacific, KAM is down 6 cents at $1.23…

SilverCrest Mines (SVL, TSX-V)

A quality Silver play we’ve been following this year is SilverCrest Mines (SVL, TSX-V) which is currently trading between support ($2.37) and resistance ($2.95)…it’s unchanged in early trading today at $2.57, just below its 50-day SMA…SVL needs an increase in volume and buying pressure in the near future to regain momentum…near the end of 2008, SVL was sitting at the bargain-basement price of 20 cents…below is an updated 2.5-year weekly chart from John…

Panora Minerals (PML, TSX-V)

Panora Minerals (PML, TSX-V), with a portfolio of potential large copper and copper-Gold deposits in Peru, has strong consistent strong support around 60 cents for much of this year with resistance in the mid-80’s…yesterday, PML climbed 7 cents to 66 cents after closing at its lowest level (59 cents) in several months…this is a play that our readers should certainly keep on their radar screens…as always, perform your own due diligence…below is an updated 2.5-year weekly chart from John…

Note: John, Jon and Terry do not hold positions in KAM, SVL or PML.

Gold has traded between $1,704 and $1,716 so far today…as of 7:15 am Pacific, the yellow metal is off $3 an ounce at $1,710…Silver is down 32 cents to $32.95…Copper is off a penny at $3.65…Crude Oil has gained 33 cents to $85.89 while the U.S. Dollar Index is down one-quarter of a point to 80.06…

FMOC Begins Two-Day Meeting

The Fed kicks off its two-day policy meeting this morning, and economists expect the central bank to announce a new round of Treasury securities purchases when the meeting ends tomorrow…the program would replace its “Operation Twist” stimulus which expires at the end of the year…”Operation Twist” was balance-sheet neutral, so any sign of new money creation tomorrow from the Fed should be market and commodity bullish…Fed Chairman Ben Bernanke could be reluctant to go “all out” at this time, however, if he thinks for some reason that this may dampen the urgency of lawmakers to resolve the so-called “Fiscal Cliff” issue by year-end…he may indeed use his podium tomorrow to put politicians on the spot…

China Posts Record Resource Production

China ramped up production of industrial materials including copper and oil products in November, suggesting smelters and refiners are gaining confidence that the world’s second-largest economy is on a recovery course…Copper output set a record in data issued today, reinforcing an optimistic outlook based on record crude-oil throughput, announced Sunday…the data also support indications of an uptick in industrial demand as measured by China’s official Purchasing Managers’ Index, a measure of nationwide manufacturing activity, which rose to 50.6 in November from 50.2 in October, marking its third straight monthly gain – and second consecutive month in expansionary territory…Copper production rose to 531,000 metric tons in November, up 2.1% on month and 11.6% on year, data from the National Bureau of Statistics showed today…this followed data from the bureau that showed Chinese refiners processed 10.17 million barrels a day of crude oil in November, up 4.2% on month and 9.1% on year…Beijing’s unveiling of a trillion-yuan ($160 billion) package of infrastructure stimulus projects in September provided the catalyst for confidence among resource producers, stabilizing steel and copper prices and encouraging mills to restock, analysts said…

An interesting chart in the Wall Street Journal this morning shows how stocks and stock mutual funds now make up just 37.9% of the average U.S. household’s financial assets, down from 50.5% during the height of the tech-stock boom in 2000, according to the U.S. Federal Reserve…

Today’s Markets

Asian markets were mixed overnight with China’s Shanghai Composite shedding 9 points to 2075…European shares are in solid green territory, thanks in part to a survey that showed a sharp improvement in German investor and analyst sentiment…the Dow is up nearly 100 points as of 7:15 am Pacific, the TSX has climbed 53 points while the Venture is down 6 points at 1181…

Rainbow Resources (RBW, TSX-V) Update

Following last week’s news from Rainbow Resources (RBW, TSX-V), BMR conducted an interview with President David W. Johnston yesterday who expressed a great deal of optimism heading into 2013…below is Part 1 of the interview with Part 2 coming later this week…

BMR: David, we’ll get to Jewel Ridge and some pointed questions on the International in a moment, but first, congratulations on your acceptance into the PDAC Core Shack for the convention in March.  What does this say about Rainbow in your view?

Johnston: It was a great honor, and probably one of the rare occasions when a company in just its second year of existence made it into the Core Shack display.  It’s not like we have some shiny core from a multi-million ounce discovery, but the selection committee clearly saw a lot of merit in our property package and that’s very encouraging.  Our crew has been riding the Rainbow brand very hard all year and in the Kootenays we’ve made a lot of progress with some early stage opportunities, particularly at the International, Gold Viking, Referendum, Whitewater and Rhea properties.  We have some excellent samples and drill core to show from the Big Strike Project at PDAC.  I was at the event last year and over 30,000 people attended.  It was insane.  The great thing about the Core Shack is that it’s limited to a select few companies so the exposure is tremendous.  And we’re in Session “A”, which is the best session to be in as it covers the first two days.  A very significant development for Rainbow and our shareholders.

Rainbow President David W. Johnston at the Gold Viking Property where RBW has results from 10 holes pending.

BMR: As you know, David, at BMR we’ve been very strong supporters of Rainbow this year and we’ll continue to be because we see a young company with some very interesting properties and the right people to achieve success on the ground.  Exploration, however, is a risky business with no guarantees and we just saw an example of that with one of your properties, the International, as results came in below expectations from the first phase of shallow drilling.    What do you say to investors who were hoping for a lot more from the International, based on your own words earlier this year, with regard to this first-ever drill program?

Johnston: We always strive to exceed expectations, and I wish the grades had been better.  So I feel we let investors down in that sense.  But let me say this.  In no way do these results reflect on the overall merit of the International.  We drilled a showing over just 80 or so metres which is just a tiny fraction of the total strike length.  You don’t write off a 40 square kilometre property because of that after just 750 metres of shallow drilling.  We did intersect the vein and lower grade mineralization in each hole.  What we have to do now is move along strike and try to find the source of the high-grade samples we’ve uncovered.  Where we drilled was about a kilometre south of the Forgotten claims where the original discovery was made at the International.  So the best is yet to come in my view in terms of our drilling success at this property.  Discoveries don’t happen overnight.  I’m not making excuses, but ground conditions were challenging during our drilling and we have to investigate what we may be able to do in the future in order to improve our core recovery.  So we learned a lot from this initial drilling that we’ll be able to apply to future programs.

BMR: Why would you start by drilling a secondary target like the “Cabin” showing when maybe you could have drilled the Forgotten area?

Johnston: The Forgotten claims just weren’t drill-ready and we had to spend some time in terms of improving access to that area, which we did.  We felt it was important to complete some initial drilling this summer in order to get a better understanding of everything.  This puts us in good shape for next summer.

BMR: You do seem to be making some interesting progress with Jewel Ridge.  What are you figuring out there that others may have missed previously?

Johnston: A couple of important points with regard to Jewel Ridge.  First, yes, there was a fair amount of historical work done but in this business it’s often the fourth or fifth operator of a project that ultimately makes it successful.  When Greencastle for example got some good results about eight years ago, Gold was trading at $400 an ounce.  So what was not economic previously may very well be economic now.  In fact, Timberline’s Lookout Mountain Project just to the south of us is a great example of that, the progress they’ve made by revisiting that property beginning two or three years ago.  Also, we’re doing something which just hasn’t been done before with Jewel Ridge.  We’re pulling together all the historical data into one data base for a conceptual geological model.  Geologist Sean Derby, who learned his trade in Nevada and knows that area like the back of his hand, he was onsite for our entire drill program and he’s putting together this geological model for Jewel Ridge.  I believe it’s going to be incredibly helpful in terms of moving this project forward.  We’re finishing the year with something we didn’t have at the beginning of the year – an advanced Gold-Silver exploration project in one of the best jurisdictions in the world.”

Kaminak Gold (KAM, TSX-V)

Support at $1 is holding so far for Kaminak Gold (KAM, TSX-V) which has been under intense selling pressure recently…KAM touched a low of 98 cents yesterday before recovering to close up 8 cents for the day at $1.08 on volume of nearly 2 million shares, the busiest day since mid-2011…below is an updated 2.5-year weekly chart from John…as of 7:15 am Pacific, KAM is up a nickel at $1.13…

Unigold Inc. (UGD, TSX-V) Chart Update

Great Panther Silver (GPR, TSX)Chart Update

Note: Both John and Jon hold share positions in RBW.  Jon also has a position in KAM.

Gold is firmer this morning…as of 5:05 am Pacific, bullion is up $9 an ounce at $1,713…Silver is 15 cents higher at $33.26…Copper is at its highest price in almost two months, up 3 pennies to $3.65, as investors took heart from rising factory output growth and strong retail sales in China…Crude Oil has climbed 66 cents to $86.59 while the U.S. Dollar Index is off one-tenth of a point at 80.39…

Today’s Markets

Asian markets were slightly higher overnight with China’s Shanghai Composite leading the way by posting a 22-point gain to 2084…European shares are down modestly while stock index futures in New York are pointing toward a slightly negative open on Wall Street…the Venture Exchange begins the week at 1186, about 20 points above important support…

All Eyes On The Fed This Week

Expectations are that the Fed will announce new stimulus measures after its two-day meeting ends Wednesday, but how it goes about it – if it merely reshuffles its balance sheet or actually expands it – will determine the impact on the Gold market…for new stimulus to have a direct impact on bullion, it needs to be new outright purchases and that’s what some analysts are expecting with the Fed replacing the expiring “Operation Twist” with purchases of longer-term Treasurys funded by new money creation…the central bank is expected to reiterate its open-ended commitment to maintain this “quantitative easing” until it sees a substantial improvement in the labor market outlook…

China Trade Numbers Disappoint But Domestic Demand Still Strong

China’s trade numbers for November came in far below expectations, taking some shine off the encouraging industrial output and retail sales data released over the weekend…however, economists are confident the slump in export growth will not derail the recovery in the world’s second largest economy…the rise in exports, which make up 25% of the country’s gross domestic product (GDP), slowed to 2.9% year-on-year last month, against expectations for a 9% uptick, driven by weaker demand out of the U.S., Europe and Japan…import growth, meanwhile, was flat, below forecasts for a rise of 2%…”The trade numbers are disappointing coming off two months of strong data, but they don’t change the picture of accelerating GDP growth in China,” Darius Kowalczyk, senior economist at Credit Agricole-CIB, told CNBC…”China is not as export dependent as it used to be, what matters now for growth is domestic demand,” he added…

Italy In The Spotlight Again

Italy’s government borrowing costs jumped and its stock market fell sharply today after Mario Monti’s weekend decision to resign as Italy’s prime minister earlier than expected…the yield on 10-year Italian bonds rose 28 basis points to a two-week high above 4.8% after analysts warned financial markets to brace for a fresh outbreak of euro zone political turbulence…Monti has said he will step down when the country’s 2013 budget passes into law, which could be as early as this month, triggering an election in mid to late February, six weeks ahead of schedule…his hand was forced after former Prime Minister Silvio Berlusconi’s party withdrew its support for the technocratic government, while Berlusconi indicated he wanted to return to politics…Monti’s resignation announcement sent firmly into reverse the steady falls in official borrowing costs that Italy has enjoyed under Monti, whose year in office has seen a turnaround in investor confidence towards the country and its reform efforts…early last week, the country’s 10-year bonds were trading on yields below 4.4%, the lowest for two years…Italy faced increased costs in a bond auction planned for Thursday, analysts warned…

Japan Slips Into Recession

Japan slipped into a technical recession in the six months to September, strengthening opposition leader Shinzo Abe’s case for more fiscal stimulus and “unlimited” monetary easing to boost growth in the world’s third-largest economy…final gross domestic product data today showed that output slipped by 0.9% in the three months to September, in line with earlier estimates…however, the government revised down the previous quarter’s estimate to an annualized 0.1% contraction, matching the textbook definition of a technical recession…it would be Japan’s fifth in the past 15 years…

Updated Silver Charts

As usual, John has fresh Silver charts – short-term and long-term – to begin the new week…Silver continues to outperform Gold and that pattern is not expected to change…

Silver Short-Term Chart

RSI(14) is bouncing up from previous support and buying pressure as shown by the CMF remains strong…a decisive move back above the EMA-20 ($33.19) would be bullish…

Silver Long-Term Chart

Rainbow Resources (RBW, TSX-V) Chart Update

Rainbow Resources (RBW, TSX-V) took a hit Wednesday and Thursday on disappointing drill results from the International Property, but a recovery out of oversold conditions started Friday with the stock gaining 2 pennies to close at 15 cents as investors shifted focus to Jewel Ridge where RBW is enjoying some success…the company also got some good news from the Prospectors and Developers Association as a PDAC selection committee granted Rainbow a Core Shack display at the upcoming convention in March…today, we’re conducting an extensive interview with Rainbow President David W. Johnston, the first part of which we’ll be posting tomorrow, and besides some pointed questions on the International we’ll be trying to learn more about Rainbow’s efforts at Jewel Ridge as a “conceptual geological model” is currently being put together for the property…in the meantime, below is an updated RBW chart from John…note the “hammer reversal” last week and how the RSI(14) is rebounding from strong support…

Northern Gold Mining (NGM, TSX)

Northern Gold Mining (NGM, TSX) pulled back mildly as expected and is now regaining strength…what’s interesting about this chart from John, as we’ve pointed out before, is the very pronounced “cup with handle” pattern…NGM is advancing two gold deposits in Ontario…

Ryan Gold (RYG, TSX-V)

Yukon Gold stocks are out of favor at the moment which means there have to be some good bargains available…Ryan Gold (RYG, TSX-V) was sitting on over $30 million in cash at the end of September, and the stock is down about 70% for the year and trading at its lowest price in more than two years…RYG closed Friday at 21 cents, giving it a market cap of approximately $25 million…below is a 7-month daily chart from John…RYG is not ready for an instant turnaround but it’s certainly a good bottom fishing opportunity at this time of the year to consider for patient investors…as always, perform your own due diligence…

Note: John and Jon both hold share positions in RBW.

TSX Venture Exchange and Gold

The Venture lost another 35 points last week to close at 1186 but selling abated during the last half of the week.  Bears are quickly running out of time to drive the Index below critical support as tax-loss selling winds down and the Venture approaches a period of seasonal strength during the final trading week before Christmas.  The Venture may also get some support from the FMOC meeting this week when the Fed may announce new easing measures which could amount to an expansion of its balance sheet.  If the “Fiscal Cliff”, tax loss selling and a host of other factors can’t drive the Venture to a new 52-week low in December, then a major shift in psychology could occur with the market coming to the conclusion that the lows for this cycle have been put in and the chances of an upside breakout (a move through the down trendline in place since 2011) are greater than another breakdown through support.

RSI(2), shown below on John’s 7-month daily chart, closely resembles the pattern witnessed when the market bottomed in late June.  Sellers’ exhaustion once again appears to have set in, so we’re anticipating that critical support will hold which should be bullish going into 2013.

Gold

Gold continues to bounce around and some of the recent volatility may have been due to year-end fund liquidation and squaring of positions as seen last year at this time.  Gold dipped below $1,700 during the week but closed Friday at $1,704 to trim its loss to just $11 for the week.

Traders will be focused on the FOMC meeting this week.  The Federal Reserve is expected to maintain its bond buying at $85 billion a month after a meeting on Tuesday and Wednesday, replacing the expiring “Operation Twist” with purchases of longer-term Treasurys funded by new money creation.  The central bank is also expected to reiterate its open-ended commitment to maintain this “quantitative easing” until it sees a substantial improvement in the labor market outlook.  Fed Chairman Ben Bernanke will speak to the media Wednesday afternoon to explain the Fed’s decision.

Central banks continue to be active buyers in the Gold market.  The Bank of Korea announced it increased Gold reserves 20% last month to diversify investments, boosting holdings for the fourth time since June.

“We retain a positive view on Gold as the physical market has responded to lower prices while central bank buying continues,” Barclays stated.  They also noted that lower Gold prices appear to have stimulated interest from India and China.

John’s 6-month daily chart shows a very strong support band between $1,675 and $1,700.  RSI(14) is showing increasing up momentum.  Overall, we’re looking at a bullish scenario here, not a bearish one.

Silver fell 33 cents last week to $33.11 (John will have updated short-term and long-term charts tomorrow).  Copper was unchanged at $3.62.  Crude Oil dipped nearly $3 a barrel to $85.93 while the U.S. Dollar Index briefly fell below 80 during the week but recovered to close up one-fifth of a point at 80.41.

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, Gold is being driven by both the Fear Trade and the Love Trade.  The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, is having a huge impact on Gold.

The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, governments and world leaders in general, an environment of historically low interest rates and negative real interest rates that won’t end anytime soon (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), money supply growth, massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on.  QE3 has arrived, and massive central bank intervention is now taking place to prevent a breakup of the euro zone and to kick-start the global economy.  It’s hard to imagine Gold not performing well in this environment.

Welcome to our site, or at least the initial version of it!  BMR has been online for three years and strictly through word-of-mouth we have built a loyal following. 

We’re continuing with our plans to ultimately build a very unique investment and money-management resource site that goes considerably beyond what we have now.  While we focus a great deal on the Gold and Silver markets and trends in the global economy, and of course the technical health of the TSX Venture Exchange (CDNX), an important component of this site will always be original research on undiscovered junior exploration companies or small producers, mostly in the Gold and Silver exploration space, that offer very real and significant upside potential. We are extremely selective in the companies we feature and put forward to investors – we prefer quality over quantity.  However, investors must understand that these are still highly speculative situations and entail considerable risk, volatility and unpredictability.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. Always perform your own due diligence and please read our disclaimer at the bottom.

We use a combination of fundamental and technical factors in determining the value and potential of a stock.  In terms of fundamentals we look for a company with a superb project supported by strong management.  Management must possess integrity, solid ethics and a determination to succeed and build shareholder value.

At BullMarketRun (BMR) we approach the handling of money from a biblical perspective and this is an important topic we will be sharing with our readers (and listeners) as the site continues to develop. The Bible teaches so much about money and how to handle it and invest it –  there are literally thousands of verses on how we should handle the money and possessions that God entrusts us with.  By examining the life of Jesus and reading the Word of God, we can all become fully equipped to be successful investors and handle money wisely.  If it’s the other way around –  if you’re a slave to money by being in debt for instance, or if you don’t respect the value of money and spend it foolishly –  you’re in trouble and you’ll never be blessed financially.  We have a God who thinks big – He created the universe – and He wants us to think big  in every area of our lives.  When we handle money from a Biblical perpective (His money that we have been given stewardship of) He will bless our financial decisions and an increase of tenfold or a hundredfold is always possible.  This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life.  It is the most important decision you’ll ever make.

God Bless,

Terry Dyer

Owner/Publisher, www.BullMarketRun.com

Disclaimer:

BullMarketRun.com (BMR) is completely independent from any companies it covers.  BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site.  We accept no advertising either.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company. We strongly recommend that you consult with a qualified investment adviser, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions. The stocks we cover, by definition, are highly speculative and potentially very volatile. Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks.  We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.  Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.

Forward Looking Statements:

All statements in BMR’s reports, other than statements of historical fact, may be forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.

Gold has recovered back above $1,700 after dipping as low as $1,682 this morning…as of 8:00 am Pacific, the yellow metal is up $2 at $1,702…Silver is 2 cents higher at $33.06…Copper has added 2 pennies to $3.63…Crude Oil is flat at $86.29 while the U.S. Dollar Index is up one-tenth of a point at 80.39…

Morgan Stanley Views Gold As Favorite Metal For 2013

Morgan Stanley says Gold is its “preferred fundamental metal exposure heading into 2013″…the third round of quantitative easing in the U.S. and European Central Bank’s unlimited bond-purchase program are the most important factors for a continuing weak trend in the U.S. dollar, and in turn a key for stronger Gold prices in the short term, according to Morgan Stanley…“However, low nominal and negative real interest rates, ongoing geopolitical risk in the Middle East and continued mine supply issues are also supportive,” the firm said…Morgan Stanley said it looks for continued support from central-bank buying and for a recovery in Indian demand as the country becomes more accustomed to higher prices…Morgan Stanley said Silver is a “cheap proxy to Gold” and said it looks for the metal to outperform Gold in 2013…

U.S. Jobs Report Shows Weaknesses Despite Headline Numbers

U.S. job growth picked up in November and the unemployment rate fell, as the economy seemed to shrug off Superstorm Sandy…that was a nice headline but these statistics nonetheless masked some internal weakness which is one reason why Gold has reversed this morning…non-farm payrolls increased by a seasonally adjusted 146,000 last month, the Labor Department said this morning…the unemployment rate, obtained by a separate survey of U.S. households, fell two-tenths of a percentage point to 7.7%, the lowest level since December, 2008…economists surveyed by Dow Jones Newswires expected a gain of 80,000 in payrolls and a 7.9% jobless rate…however, the drop in the unemployment rate appeared to reflect a continued exodus of workers from the labor force…the labor force participation rate, already around 30-year lows, fell further in the month to 63.6%…that represented 350,000 fewer workers…in all, there were a net 122,000 fewer people working in the United States last month compared to the month earlier…while November’s rise in employment was well ahead of expectations, it followed sharp downward revisions to the prior two months…October’s non-farm payrolls rose 138,000, versus the initially reported 171,000, and September was up 132,000, not 148,000…

Canadian Economy Adds Nearly 60,000 New Jobs Last Month

The Canadian economy created an impressive 59,300 new jobs last month, thanks to an increase in full-time work at private sector employers…that is a substantial improvement from October when the economy eked out a meagre 1,800 new jobs…and it’s an even better showing than August and September when 34,000 and 52,000 new jobs were created, respectively…

Draghi Sees Gradual Euro Zone Recovery Beginning Later In 2013

The European Central Bank slashed its euro zone economic outlook for next year yesterday, forecasting further contraction at a time of record unemployment, but decided to keep interest rates on hold as it saw no big threat from inflation…Mario Draghi, ECB president, said a “gradual recovery should start later in 2013”…speaking after a meeting of the interest rate-setting governing council, he said the “prevailing consensus” on the council was to keep the main refinancing rate on hold at 0.75%…

Today’s Markets

Asian markets were mixed overnight but China’s Shanghai Composite posted another strong gain, climbing 33 points to 2062…European shares are up modestly in late trading overseas, while North American markets are appear to be headed toward a positive finish to the week…as of 8:00 am Pacific, the Dow is 28 points higher, the TSX has gained 8 points while the Venture Exchange is off 3 points at 1184…

Some interesting market figures…while trading volume has languished in New York in 2012 – down 19% this year for equities and 13% for options – investor sentiment, strangely enough, entered December at its highest level since late March…bullish sentiment was at 42% while the bears were at 34.6%, according to the latest poll from the American Association of Individual Investors…total equity fund outflows have hit $125 billion and nearly $300 billion has poured into bonds…cash parked in money market funds, with near-zero interest rates, also has been on the rise, with $2.61 trillion tucked on the sidelines, according to the latest numbers from the Investment Company Institute…there’s no question, there’s lots of money sitting on the sidelines that potentially could be poured into the stock market, leading to an explosive upside move…what the trigger might be, though, is anyone’s guess…

U.S. Household Net Worth Rises To Highest level In 5 Years In Q3

The net wealth of U.S. households rose in the third quarter to its highest since late 2007, providing a hopeful sign for future consumer spending…net financial wealth grew $1.72 trillion to $64.77 trillion, the Federal Reserve said Thursday…that left household wealth $1.2 trillion short of where it stood in the fourth quarter of 2007, just as the economy was sinking into a severe recession…wealth peaked at $67.3 trillion in the third quarter of that year…rising home prices helped drive the increase in the latest quarter…the value of real estate owned by households rose about $300 billion, the Fed said…stock holdings climbed by about $520 billion…increases in wealth could make consumers feel more comfortable spending their money…many economists think consumers spend a few cents of every dollar they gain in wealth…the data, part of the Fed’s quarterly Flow of Funds report, also showed Americans continued their 4-year-old effort to shed debt…households cut debt at a 2% annual rate in the third quarter, the steepest drop since the second quarter of 2011…

John has three individual chart updates this morning – GoldQuest Mining (GQC, TSX-V), Everton Resources (EVR) and Critical Elements (CRE, TSX-V)…as always, perform your own due diligence…

GoldQuest Mining (GQC, TSX-V)

Everton Resources (EVR, TSX-V)

Critical Elements Corp. (CRE, TSX-V)

Note: Jon holds a share position in GQC.

Abbreviated part of an interesting piece at www.mineweb.com:

By Lawrence Williams

Paul Mylchreest’s occasionally-produced Thunder Road Report always makes for fascinating reading and delivers insights into the markets which most mainstream analysts miss – or choose to ignore. He’s now producing his unique view on the markets under the auspices of London broker, Seymour Pierce, which one hopes does not cramp his style too much!

The latest report, which he put out today, suggests that the insights are still incisive – and often worrying, for those looking to their financial futures, but there is the advantage that under the Seymour Pierce banner it is now available to those who may want it in hard copy, as well as online.

Mylchreest is a believer in the Kondratieff, or Long Wave economic theory. Wikipedia describes this as sinusoidal-like cycles in the modern capitalist world economy. Averaging fifty and ranging from approximately forty to sixty years, the cycles consist of alternating periods between high sectoral growth and periods of relatively slow growth. Unlike the short-term business cycle, the long wave of this theory is not accepted by current mainstream economics – which puts Mylchreest somewhat out on a limb, as he accepts himself. However to set against this the theory does support the ‘supercycle’ idea which gained a certain amount of mainstream acceptance during the recent commodities boom.

Mylchreest titles the Executive summary of his latest report – Inflationary Deflation: creating a new bubble in money and looks at the way excessive monetary stimulus, coupled with low interest rates, creates financial bubbles and reckons that Central Banks are now creating the ultimate bubble – in Money – in an attempt to counter what he sees as the downward leg in most recent Long Wave cycle. He notes “first it was NASDAQ, then it was real estate and now it is money” (He describes the “Inflationary Deflation” paradox as referring to the rise in price of almost everything in conventional money and simultaneous fall in terms of gold.)

“This”, Mylchreest notes referring to the QE policies being followed by most major governments and Central Banks “is the biggest debt bubble in history. Each time deflationary forces re-assert themselves, offsetting inflationary forces (monetary stimulus in some form) have to be correspondingly more aggressive to keep systemic failure at bay. The avoidance of a typical deflationary resolution of this long wave is incubating a coming wave of inflation. This will not be the conventional “demand pull” inflation understood by most economists.

“The end game is an inflationary/currency crisis, dislocation across credit and derivative markets, and the transition to a new monetary system, with a new reserve currency replacing the dollar. This makes gold and silver the “go-to”assets for capital preservation.”

As Mylchreest sees it physical gold is the ONLY financial asset with no counterparty risk and a several thousand year track record as a store of wealth par excellence. Furthermore, gold is the only asset which outperforms during both inflation and deflation and he reckons we are seeing a battle to the death in these opposing forces.

From www.mineweb.com

Gold has traded in a range between $1,685 and $1,699 so far today…as of 7:30 am Pacific, the yellow metal is up $2 an ounce at $1,696…Silver is 20 cents higher at $33.11…Copper is off a penny at $3.64 after rising five straight sessions…Crude Oil is off $1.30 at $86.58 while the U.S. Dollar Index has rallied one-third of a point to 80.14…

ECB, Bank of England Leave Rates Unchanged

The European Central Bank left key interest rates unchanged today, as expected, at a record low 0.75%, while the deposit rate paid on money parked overnight at the institution was held at 0%…meanwhile, the Bank of England also left monetary policy unchanged today, voting as it did last month not to buy more government bonds and pump money into Britain’s stagnant economy…the decision comes despite finance minister George Osborne saying yesterday that Britain’s economy would grow much more slowly than expected over the next three years and that a key debt reduction goal would not be met…the forecasts also showed Britain’s economy was likely to shrink over the last three months of 2012 – a prospect reinforced by weak trade data earlier today and downbeat purchasing managers’ surveys this week…

Today’s Markets

Asian markets were mixed overnight…Japan’s Nikkei average hit a 7-month high while China’s Shanghai Composite fell 3 points to 2029 after yesterday’s sharp jump that took it back above the 2000 level…on the economic front, U.S. jobless claims fell 25,000 to a seasonally adjusted 370,000, according to the Labor Department this morning…economists had expected a reading of 380,000 compared with 393,000 in the prior week…North American markets are down slightly in early trading with the Venture is flat at 1185 as of 7:30 am Pacific…

Copper Chart Update

Copper’s resilience continues to be impressive, and it’s one reason we continue to believe the Venture will perform much better in the first quarter of 2013…below is a 2.5-year weekly chart update for Copper from John…Copper broke out of a long down trendline in September, and has since successfully re-tested that breakout area which has become new support…the next major resistance is $3.90…

Canadian Dollar Update

Another important leading indicator for the economy and the markets is the Canadian Dollar which has tremendous technical support between 99 cents and $1.00…the loonie had a powerful run from early June to September, pulled back in October, stabilized in November, and now appears ready to head higher once again as it has broken above its EMA-20…below is a 3-year weekly chart from John…

Rainbow Resources (RBW, TSX-V) Update

Rainbow Resources (RBW, TSX-V) took a hit yesterday, with some follow-through selling this morning, after the company’s exploration update Tuesday – not surprising given the disappointing results from the International, but likely more a reflection of the general market and tax-loss pressures…continued good prospects for Jewel Ridge and other properties (even including the International as just a tiny fraction of the vein structure has been tested) will give RBW a good opportunity for a rebound as the month progresses…history shows it’s also a bad time of the year to be a seller of any stock…the overall strength of Rainbow’s Big Strike Project in the Kootenays is reflected in the fact that PDAC has awarded RBW with a core shack display for Big Strike at the March convention in Toronto…this puts RBW in a very select, elite group – in particular because the display is apparently for Session “A” which covers the first two days of the convention…as of 7:30 am Pacific, RBW is off another 2.5 cents to 11 cents, putting RSI(2) in very oversold territory…

Corvus Gold (KOR, TSX)

Corvus Gold (KOR, TSX) has been a strong performer throughout the year but note in John’s 2-year weekly chart below that the stock is once again near the top of an upsloping trading channel…KOR came out with some positive news this morning as the company provided the results of an independently prepared preliminary economic assessment (PEA) for its North Bullfrog Project in Nevada…the two phased PEA development plan is based on the company’s updated resource estimate and does not include any of the 2012 drilling outside of the Mayflower deposit infill drilling…the study produced a robust positive economic analysis for a conceptual, low capex, heap leach project that generates average annual Gold production of 74,800 ounces over 10 years at a life of mine strip ratio of 0.48 to 1 (overburden to process feed), indicating a pre-tax, pre-royalty NPV(5%) of $166M, and an IRR of 26% at $1,479 per ounce Gold…the PEA also shows the project has a considerable leverage to the Gold price, with a pre-tax, pre-royalty NPV(5%) of $345M and an IRR of 43% at $1,800 per ounce Gold…KOR is up a nickel at $1.77 as of 7:30 am Pacific…

Woulfe Mining (WOF, TSX-V)

Below is a chart from John that some of our readers have requested for Woulfe Mining (WOF, TSX-V) which has over 300 million shares outstanding but some interesting projects in South Korea…Ned Goodman at Dundee Corp. announced yesterday that Dundee has acquired another 5.6 million shares of WOF through the Venture Exchange, giving it nearly 40 million shares or almost 12% of the total number of shares outstanding (plus 10 million warrants)…WOF has doubled in price since a low of 19 cents in August…it’s unchanged in early trading today at 36 cents…

Note:  John and Jon both hold share positions in RBW.

Gold is trying to regain its footing after being smacked down slightly below $1,700 yesterday…as of 4:45 am Pacific, the yellow metal is up $8 an ounce at $1,705…Silver is 20 cents higher at $33.11…Copper is up another penny at $3.64…Crude Oil has gained 20 cents at $88.70 while the struggling U.S. Dollar Index has rebounded more than one-tenth of a point to 79.78…traders said that heavy selling from global macro funds, options activity and year-end tax selling – some related to the looming hike on dividend taxes associated with the so-called “fiscal cliff” – helped to weaken demand for bullion…

Obama To Lobby Business On U.S. Debt Limit

President Obama will seek to enlist senior corporate executives in his bid to permanently increase the U.S. borrowing authority as part of the negotiations over the fiscal cliff, according to the White House…the President is expected to ask business leaders at the quarterly meeting of the Business Roundtable lobby group today for their help to persuade Republicans on Capitol Hill to find a solution to avoid a debt ceiling crisis like the one that engulfed the nation last year…Congress will probably have to vote to increase the debt ceiling early next year or risk putting the U.S. in default, opening the door to another potential stand-off between the White House and Republican leaders…a prolonged fight over an increase in the debt ceiling last year ultimately ended up in the U.S. losing its Triple A credit rating…

Chinese Property Sector On The Mend

The Wall Street Journal reports this morning that several large Chinese property developers reported stronger sales for November, in a fresh sign that the sector is on the mend even as Beijing vows to keep a firm grip on the market…analysts said demand remains fairly strong and many developers are scrapping or cutting back on special discounts that were introduced when the housing market was struggling late last year…China’s housing prices have remained largely unchanged since the beginning of the year, though sales have been creeping up since June, aided by government policies that favor first-time home buyers and improve access to funding for developers…

Today’s Markets

Asian markets (overall, now at a 16-month high) were very strong overnight, led by China’s Shanghai Index which surged 57 points or nearly 3% to 2032…investors cheered comments from new Communist Party chief Xi Jinping that set his economic agenda ahead of the party’s central economic planning meeting this month…he listed tax reform, urbanization and allowing the market to play a bigger role in setting resource prices as among his priorities…European markets are up modestly while as of 5 am Pacific, futures in New York are pointing toward a positive open on Wall Street…the Venture Exchange slipped below the 1200 level yesterday, closing at 1193, but on light volume…critical support, as John has outlined, is 1165…

U.S. Dollar Index Chart Update

The drop in Gold occurred yesterday despite continued weakness in the greenback which has hit a 6-month low against the strengthening euro as the European debt crisis seems to have at least stabilized…the Dollar Index appears to have formed, or is forming, a head-and-shoulders top with RSI(14) currently at 44% and moving lower as shown in John’s 2.5-year weekly chart…the neckline is at 79 where the Index should find support, at least for now…

Rainbow Resources (RBW, TSX-V) Update

It took about an hour to fully digest it, but Rainbow finally delivered some meat to investors yesterday…a portion of it didn’t taste so good, but most parts were definitely tasty enough to convince us to stick around for the desert – whether that’s sooner or later…the not-so-tasty part, of course, was the International and we’ll comment on that first before getting to the juicy Jewel Ridge meat that we had some fun sinking our teeth into…what could be developing at Jewel Ridge is much more significant than we first imagined given specific geological details in yesterday’s news and an important “clue” that most investors may have overlooked…

With regard to the International, there’s no way to sugar-coat this though Rainbow (annoyingly to some) tried its best yesterday – the assays were surprisingly horrible, as simple as that, and we have some tough questions for David W. Johnston when we do our next interview with the Rainbow President…his grab samples don’t seem as shiny as the stars anymore with top results from shallow drilling coming in at 14 and 10 grams per tonne…sorry, David, no matter how you “spin” that one the math doesn’t add up…the Cabin showing was impressive at surface but Silver values just didn’t carry in the vein as hoped for and expected, but that’s also the nature and risk of exploration…mind you, if Rainbow thought for even a minute that the “Forgotten” claims further north were a better target, then that’s where they should have drilled first even if meant waiting for another year (for access purposes) to carry out the drilling…the best way to kill a property is to drill it, so it’s important to go after the best target(s) first…the International, however, remains a very credible property…major deposits around the globe have been overlooked simply because a company walked away from a property way too early after just a few bad or mediocre holes…the International has a potential 7-kilometre strike length and a known vein structure…somewhere along that structure could be a near-surface, high-grade deposit…or perhaps a deposit that’s deeper down…only a tiny fraction of the property has been tested, so we’re certainly not ready to write it off despite disappointing initial results…up until this summer, there had never been any drilling at the International…less than 800 metres now is like a drop in the bucket…

Investors also have to keep in mind that the International is only one of 8 properties Rainbow holds in its Big Strike Project…one of the major reasons we were attracted to Rainbow in the first place was the fact there’s a basket of opportunities for this company – it isn’t just a one-trick pony – in a proven mining district in British Columbia…Rainbow is also aggressive, and when a company is aggressive there will be some mistakes and misses on the ground…too many companies in this market right now are hiding their collective heads in the sand, afraid to do any work, unwilling to take any risks, and too lazy to do what it takes to make something happen for shareholders…Rainbow is not in that category…we give them credit as well for intelligent work in becoming the second largest landholder (they could joint-venture this) in the Slocan Valley flake graphite region which we believe could develop into a world class camp in the coming years…privately-held Eagle Graphite is a producer there…

Before we get to Jewel Ridge, there does appear to be some glimmer of hope for potential good results yet to come out of Gold Viking…Rainbow did hit some interesting Silver values right near the surface in just the second hole ever drilled at that property – 45 g/t over 4.6 metres which included two 1-metre intercepts that have been sent back to the lab for fire assay analysis…often in a case like this, the grade comes back higher…so what was 45 g/t Ag over 4.6 metres has a decent chance of improving to 75 g/t Ag or even better…results are pending for 10 more holes…will Rainbow hit something that’s much more significant than Hole #2?…that’s what we’ll find out in the coming weeks…geologically, RBW is in a very prospective area which is also just 8 miles south of the Willa deposit which Discovery Ventures (DVN, TSX-V) is aiming to put into production…

There’s no question Jewel Ridge has emerged as Rainbow’s “Crown” Jewel, and that’s an important development given the fact the company is still in the midst of trying to make a discovery at one of its properties in the Kootenays…RBW has completed a 6-hole drill program at Jewel Ridge in Nevada, and each of the 6 holes has intersected “favorable mineralized zones” at the past producing property…descriptive language like “intense silicic alteration with considerable jasperoid content” and a hole that has “strong affinities” to an historical hole that assayed 2.1 g/t Au over 39.6 metres suggests to us that Rainbow has a great chance of reporting some excellent assays in the near future…also, the fact they’ve cut a deal to secure 19 patented claims in an area where they’ve made a prospecting discovery – before any assays are in – strongly suggests they know they have found or drilled something of significance…

Some other things also caught our attention including a “conceptual geological model” that is being produced for Jewel Ridge…Rainbow is in possession of hundreds of historical drill holes for Jewel Ridge, so it’s quite possible they may feel confident enough to soon come out with some sort of preliminary estimate of potential tonnage and ounces for this property…mineralization, Rainbow reported, “appears to be continuous along multiple contacts over a north-south trend of at least 4 kilometres”…this is of course lower-grade mineralization in the context of the type of deposits in this general area, but tonnage can add up in a hurry with these systems…

Getting back to the point regarding Rainbow’s purchase of those 19 claims, we found it interesting that the words “100% ownership” were used in reference to those claims with Rainbow pointing out that “these are not part of the Company’s joint-venture Jewel Ridge option agreement with Greencastle Resources Ltd.”…this is just speculation on our part, but given that language, Rainbow’s recent heavy emphasis on Jewel Ridge, and the possibility of good results, we wouldn’t be surprised if Rainbow is contemplating 100% ownership of the entire Jewel Ridge package by cutting a new deal with Greencastle…markets generally prefer 100% ownership situations to joint ventures, so a move like that by Rainbow would make sense from their standpoint and would potentially be quite significant in terms of overall “valuation” of RBW…

So while the International news wasn’t what we were expecting, Rainbow has put all of its cards on the table and they still hold a very good hand in our view…assays for 16 more drill holes are pending (B.C. and Nevada), and our level of confidence in the Jewel Ridge Property has increased substantially…

Edgewater Exploration (EDW, TSX-V)

Edgewater Exploration (EDW, TSX-V) is worthy of our readers’ due diligence as it continues to aggressively advance its main asset, the 100% owned Corcoesto Gold deposit in northwest Spain…the company also has an advanced Gold project in Ghana…EDW has an interesting chart as John shows below…it formed a “cup” as a basing pattern and now appears ready to start the formation of the “handle”, so we do see the possibility of a better potential entry point (a slight pullback) over the next couple of weeks…EDW closed yesterday at 48.5 cents, up half a penny…

Kaminak Gold – Bottom-Fishing Time?

As we mentioned yesterday, now is usually a good time to do some bottom fishing with the top Yukon plays and that certainly includes Kaminak Gold (KAM, TSX-V) which has taken a beating recently…it has become very oversold technically, but for some strange reason many investors are too fearful to jump in during situations like this but that’s exactly when risk is at its lowest…KAM has a strong support band between $1 and $1.10 as shown in this 3-year weekly chart…it fell as low as $1.05 yesterday before closing down 4 cents at $1.13, KAM’s 7th straight losing session…

Note:  John and Jon both hold share positions in RBW.  Jon also holds a share position in KAM.