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Gold has slid to a 6-month low as its losing streak continues, but the oversold condition of bullion and Gold equities suggests a turnaround – or at least a relief rally – is imminent…as of 7:00 am Pacific, Gold is off $18 an ounce at $1,586…Silver is down 64 cents at $28.80…Copper is down a penny at $3.62…Crude Oil is flat at $96.65 while the U.S. Dollar Index has gained one-fifth of a point to 80.64…

The Dow and the S&P 500 are very close to new all-time highs, and Gold has been trading in the opposite direction of both in recent months…as we mentioned yesterday, commercial traders have trimmed their short positions in Gold to levels not seen since before last summer’s rally – a clear sign that Gold is nearing a bottom as the commercials are rarely on the wrong side of the trade…in addition, we also find it helpful to examine the condition of the double short TSX Gold Index ETF (HGD) and the HGU double long Gold Index ETF for clues that the Gold stocks are ready to reverse…John has charts on both below…

HGD TSX Gold Index ETF

The HGD, the double exposure short ETF, is as overbought now as it was oversold last September…it was a great buy last September, as we pointed out, when everyone was scrambling to buy Gold stocks…the reverse is now the case with investors throwing their Gold stocks off the boat…note how the RSI(14) has hit the level it was at last May when the HGD topped out at $15.89…as of 7:00 am Pacific, the HGD is up another 40 cents at $13.85…

HGU Gold Index ETF

Let’s now take a look at the HGU, the double exposure long Gold Index ETF which closed yesterday at $5.66…RSI(2) is at a low extreme, and the HGU is also now trading within a strong support band between $4.50 and $6.50…this could dip a little lower but an astute contrarian would see a buying opportunity around current levels…through the first 30 minutes of trading today, the HGU is down another 17 cents to $5.49…

Today’s Markets

Asian markets were higher overnight with China’s Shanghai Composite gaining 14 points to close at 2397…European shares are mixed…The U.K.’s FTSE 100 Index climbed above 6400 for the first time since January, 2008, after the minutes for the Bank of England’s last committee meeting were released…the Dow is down 14 points as of 7:00 am Pacific (Fed minutes are due at 11:00 am Pacific) while the Venture Exchange has slipped another 8 points to 1164…

TomaGold Hits High-Grade At Monster Lake Property In Discovery

TomaGold (LOT, TSX-V) is strong this morning after discovering a high-grade Gold zone at vertical depths of 175 to 275 metres at its Monster Lake Property near Chibougamau, Quebec…previously, the property had never been drilled to a depth of more than 125 metres, so this is certainly a legitimate discovery that should be followed closely…M-13-93 cut 5.85 g/t Au over 33.6 metres…M-13-94 returned 5.30 g/t Au over 11.5 metres….and M-13-94 intersected a very impressive 7.20 g/t Au over 42 metres at a vertical depth of 278 metres…LOT opened up 4.5 cents at 16 cents this morning…as of 7:00 am Pacific, it’s 3 pennies higher at 14.5 cents on volume of nearly 1 million shares…high-grade discoveries are rare these days, so this warrants attention…LOT has just 54 million shares outstanding…Quinto Real Capital (QIT, TSX-V) has an option to earn up to a 70% interest in the project and is also up sharply in early trading today…it has a more attractive share structure than LOT…

Mart Resources (MMT, TSX-V)

Mart Resources (MMT, TSX-V) has continued its upward climb since John’s last chart…it hit a new all-time high of $2.31 yesterday on total volume (all exchanges) of nearly 5 million shares…it’s unchanged in early trading today at $2.26…MMT remains in an impressive upsloping channel as shown in this 2.5-year weekly chart…

Note:  Jon holds a position in the HGU.

Gold has traded between $1,608 and $1,616 so far today…as of 6:00 am Pacific, the yellow metal is up $1 an ounce at $1,611…Silver is off 4 cents at $29.94…Copper is down a penny at $3.65…Crude Oil is up 14 cents to $96.00 while the U.S. Dollar Index is flat at 80.61…

There’s a very interesting set-up in Gold at the moment as managed money (large funds) has a record high short position compared to a very low net short position by commercial traders…this suggests we’re about to see some high to extreme volatility in Gold…it’s never a wise bet to go against the commercial traders, so we have to side with their bullish stance at the moment…Gold could drop a little more but the COT structure is at least as favorable now as it was before last summer’s big rally…

Below is a chart from www.usfunds.com (updated through last Friday) that gives a very clear buy signal for Gold…bullion, as Frank Holmes has pointed out, has dropped nearly 2 standard deviations on a year-over-year basis…an event like this has happened only about 2% of the time over the last 10 years…following these extreme lows, Gold has historically increased as much as 15% over the next year…

Silver Short-Term Chart

Below is John’s updated short-term Silver chart (9-month daily) to begin the new week…a strong support band exists between 29 and $29.60…RSI(14) is approaching a support area as well…while some additional weakness is certainly possible, the downside risk at this point appears minimal…

Silver Long-Term Chart

The long-term chart (15-year monthly) provides further evidence that Silver is near an important low at the moment given the oversold RSI(2) condition (below 30)…Silver has been a proven buy on this chart anytime RSI(2) has fallen to 25 or lower…what has been developing since last summer is a powerful “Wave 5” move that could drive Silver much higher…

Today’s Markets

Asian markets were mostly lower overnight with China’s Shanghai Composite falling 39 points to 2383…European markets are sharply higher as data released in Germany showed analyst and investor confidence in the country beat all expectations in February and was at its highest level since April, 2010…stock index futures in New York are pointing toward a slightly higher open on Wall Street after yesterday’s holiday…

Venture Exchange-Gold-CRB Comparative Chart

The drop in the CDNX over the past two weeks (43 points to 1186) has spooked some investors BUT there are a couple of important technical points to keep in mind…first, the Index is now trading within a very strong support band between 1166 and 1200…this has held for more than 7 months (the Index hit a low of 1154 late last June)…second, as you can see in the chart below, the Venture broke through a two-year downtrend line in late December in what definitely had to be considered a bullish development…previous resistance typically becomes new support, and that’s what we’re hoping to see now as a “throwback” to the downtrend line has occurred…

Seafield Resources (SFF, TSX-V)

Seafield Resources (SFF, TSX-V) was the very first company BMR began tracking in 2009 when it was trading at just a nickel and a market cap of less than $2 million…its market cap soared to well over $100 million in late 2010 on drill results from its Miraflores Property in Colombia before the bear market set in and took Seafield down along with just about every other company…Seafield has made impressive progress on the ground, however, with the latest NI-43-101 resource calculation for Miraflores showing 1,925,542 ounces in the measured and indicated categories (77,841,ooo tonnes at 0.8 g/t Au at a cut-off of 0.3 g/t)…other areas of the company’s Quinchia Project land package hold excellent potential as well…on Friday, Seafield was halted late in the trading session as the company reported fresh drill results from Miraflores including an outstanding 238.15 metres grading 2.06 g/t Au in QM -DH-50…importantly, this hole – along with QM-DH-51 (90.1 metres grading 0.85 g/t Au) – were collared to the east outside the Miraflores breccia pipe…the latest results will help to add tonnage and grade to Miraflores but we don’t expect a massive move in the stock price given the state of the current junior resource market and the fact Seafield will likely use these results as a springboard to a financing…

Below is an updated Seafield chart from John…the technical challenge for this stock is to break above both downtrend lines on a closing basis…we’ll see what happens…

Dynasty Gold (DYG, TSX-V) Updated Chart

A 5-year weekly chart for Dynasty Gold (DYG, TSX-V) shows strong accumulation in this stock since the beginning of Q4 2012…RSI(14) remains in a nice uptrend…

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

Note: Canadian markets are closed Monday due to Family Day in Ontario and other provinces while U.S. markets are closed due to President’s Day.   Morning Musings returns Tuesday.

TSX Venture Exchange and Gold

It was another rough week for the Venture Exchange which fell 20 more points to close at 1186, thanks in large part to a $57 weekly drop in the price of Gold and a 7% tumble in Silver prices.  The Venture has declined in 13 out of the last 17 sessions.  While this has clearly frustrated many investors, it’s important to point out that the Venture remains in a strong support band between 1166, the December low, and 1200 as John’s 3-month daily chart points out.  RSI(14) is at 33% and also approaching previous support.  Historically, February has typically been a strong month for the Venture but that pattern is so far not holding up in 2013.  The Index is off 43 points of 3.5% for the month.  By comparison, the TSX Gold Index is down 4.3% for February, the TSX is flat (up 2 points), the Dow has gained almost 1% while the Nasdaq is up 1.6%.  Lower Gold and Silver prices have clearly had a negative affect on the Venture.  It’s hard to imagine, however, that Gold and Silver will drop much more, and we’ll explain why in more detail in this piece and in Tuesday’s Morning Musings.

Venture Down Trendline Now Support?

In late December we alerted our readers to an important technical development with the Venture as it finally broke above a 2-year down trendline.  What was previous resistance becomes new support, and it’s interesting to see that the Venture is now indeed testing that support.  It’ll be interesting to watch how this plays out over the coming week and possibly beyond – if the Venture’s current weakness is simply a normal “throwback” to the trendline.

Seafield Resources (SFF, TSX-V) was halted late Friday and then reported a spectacular hole from its Miraflores deposit in Colombia – 238.15 metres at 2.06 g/t Au, collared to the east outside of the Miraflores breccia pipe.  Seafield, which was the very first company BMR started to cover when it was trading around a nickel in 2009 (it hit nearly 80 cents in late 2010 on massive volume), will be interesting to watch Tuesday and could help give the Venture a lift.  It was trading at 10 cents when it was halted Friday.

Gold

The week-long holiday in China and some other Asian countries was one of the contributing factors in Gold’s drop last week as the yellow metal fell through support in the mid-$1620’s and slipped slightly below $1,600 intra-day Friday before closing at $1,610.  It’ll be important to see if bargain-hunters step up to the plate with all Asian markets back in action tomorrow.

The spin from the G-7 and G-20 meetings was that no “currency war” exists or will exist, rhetoric that also helped to push Gold lower.    At the G-20 in Moscow, finance ministers and central bankers pledged to refrain from competitive devaluations and said monetary policy would be directed only at spurring price stability and growth, wording very close to a statement by the G-7 earlier in the week.  As the year progresses, we’ll see if that pledge is worth the paper it was written on (likely not).  By letting Japan off the hook and urging action to address the weak global economy, G-20 policymakers also signaled that further monetary easing and fiscal easing could lie ahead.

Another factor that led to Gold’s decline was the mainstream media’s focus on hedge fund selling, in particular the fact that George Soros sold half his holdings in the SPDR Gold Trust ETF (GLD) in the fourth quarter last year, according to quarterly filings.  Bloomberg attributed the sell as a move that may “bolster speculation that Gold’s 12-year bull-run is coming to the end.”   However, Frank Holmes at www.usfunds.com wisely pointed out that “Soros may have liquidated his Gold holdings because he identified a significant short-term opportunity in the currency markets” – the Japanese yen.  The Wall Street Journal reported that Soros gained “almost $1 billion on the trade (yen) since November,” during a time the yen declined nearly 20% in four months.

Meanwhile, the World Gold Council said in a report that while global central banks built up stocks of Gold last year to their highest levels since 1964, global demand for bullion actually fell by 4%.  Bears cited the lack of buying from emerging market powerhouses India and China.

Below is an updated 2-year weekly chart from John that shows more selling pressure in Gold at the moment than at anytime over the last two years.  This does increase the possibility that Gold could drop into the $1,500’s in the coming weeks, but that still won’t change the long-term bullish picture.

Silver fell $2.13 for the week to close at $29.30 (John will have updated short-term and long-term Silver charts Tuesday morning).  Copper was off 2 pennies at $3.72.  Crude Oil gained 14 cents to $95.72 while the U.S. Dollar Index gained one-quarter of a point to 80.48.

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 keep the euro zone intact 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 more than 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 is trying to hold support in the $1,620’s…as of 4:30 am Pacific, the yellow metal is down $6 an ounce at $1,628…Silver is off 23 cents at $30.17…Copper is flat at $3.72…Crude Oil is 42 cents lower at $96.89 while the U.S. Dollar Index is up over one-tenth of a point at 80.56…Gold’s next major support below the $1,620’s is $1,600…

Today’s Markets

Asian markets were mixed overnight…Japan’s Nikkei average suffered its second straight weekly loss after its longest weekly winning streak in 54 years…European shares are flat while stock index futures in New York as of 4:30 am Pacific are pointing toward a flat to slightly lower open on Wall Street…the two-day G-20 meeting begins in Moscow today…the Wall Street Journal reports this morning that in a fresh effort to calm talk of currency wars, the Group of 20 industrial and developing nations will pledge to ensure that their monetary policy is focused on price stability and growth, rather than weakening their currencies, according to the draft of a statement they intend to release tomorrow… economic data due today includes the University of Michigan Consumer Sentiment survey for February at 9.55 a.m. New York time…analysts polled by Briefing.com expect the index to fall to 73.5 from 73.8 in January…

Paulson Maintains Stake In SPDR, Soros Cuts Back

Billionaire investors George Soros and Louis Moore Bacon cut their stakes in exchange-traded products backed by Gold last quarter while John Paulson maintained his holdings…Soros Fund Management LLC reduced its investment in the SPDR Gold Trust, the biggest fund backed by the metal, by 55% to 600,000 shares as of Dec. 31 from three months earlier, a U.S. Securities and Exchange Commission filing showed yesterday…Bacon’s Moore Capital Management LP sold its entire stake in the SPDR fund and lowered holdings in the Sprott Physical Gold Trust…Paulson & Co., the largest investor in SPDR, kept its stake at 21.8 million shares…

Venture Exchange Chart Update

The Venture Exchange fell 8 points yesterday to 1197 after two straight days of slight gains…John’s 3-month daily chart shows RSI(14) approaching support as is the Index…investor patience is critical as this basing pattern continues…

Rainbow’s Growing Jewelry Box At Jewel Ridge

Less than two weeks after reporting a high-grade Silver discovery at its Jewel Ridge Project in Nevada, Rainbow Resources (RBW, TSX-V) has delivered more surprising high-grade results from this intriguing property – and on claims it now owns 100%…Rainbow negotiated a deal with private landholders to secure the “Croesus” claims, about 40 hectares of strategically important ground within the Jewel Ridge package…the company announced the closing of this transaction after market hours yesterday, and also released stellar historical drill results from Croesus including hole N85-36 (drilled by Homestake 20 or 30 years ago) that returned 4 g/t Au over 18.2 metres from surface…other results from Croesus included 6.1 metres grading 4.9 g/t Au (4.5 m to 10.6 m in PL7-15) and 7.5 metres grading 3.7 g/t Au (15.2 to 22.7 m in N85-31)…in this business, those are terrific numbers…in addition, grab samples collected by Rainbow at Croesus confirmed the presence of impressive mineralization with Gold values ranging from 1.4 g/t to 3.2 g/t while Silver values ranged from 8.9 g/t to 24.7 g/t…immediately to the west of Croesus, on Rainbow’s shared ground, grab samples returned 1.5 g/t Au and 190 g/t Ag, and 4.4 g/t Au and 85.3 g/t Ag…

Widespread Mineralization At Jewel Ridge

Rainbow is quickly putting the Jewel Ridge puzzle together no small accomplishment given the fact that no other company has properly assembled all of the historical data…the property map that was released yesterday provides a bigger picture view of what’s unfolding with locations of some historical drill results as well as Rainbow’s sampling…mineralization literally extends from one end of the property to the other – a distance of at least three kilometres, so this indeed could be a very substantial system…RBW has already reported that “mineralization appears to be continuous along the Hamburg-Dunderberg contact”…importantly, Rainbow has also discovered high-grade silver mineralization at Jewel Ridge as evidenced by the argillic zone encountered in JR-12-04 (one of six RC holes drilled in November)…most previous operators, interestingly, didn’t even bother assaying for Silver – including Greencastle back in 2004…near the northern boundary with Barrick, Rainbow collected a grab sample that graded nearly 400 g/t Ag –  2.5 kilometres to the north of JR-12-04…meanwhile, approximately 750 metres northeast of JR-12-04, historical drill results include 18.1 metres grading 3.4 g/t Au, 12.2 metres grading 4.0 g/t Au, 10.6 metres grading 4.4 g/t Au, and 21.8 metres grading 1.0 g/t Au…all historical drill results, as well as historical soil sampling data and of course Rainbow’s Phase 1 drill results, are being incorporated into a conceptual Jewel Ridge geological model that could become a “game-changer” for Rainbow – possibly in the coming weeks…we’ve said all along, this is a fabulous property – and now it’s starting to show its true potential…mining exploration history in North America is full of examples of companies that have gone back to properties like Jewel Ridge and have turned them into huge success stories thanks to a fresh set of eyes, geological re-interpretation and higher metal prices…what also excites us, of course, about Rainbow is the company’s recent Gold-Silver discovery at Gold Viking in the Kootenays – a property never previously drilled – and news is likely imminent regarding that…in addition, Rainbow’s substantial land position in the flake graphite region of the Slocan Valley is of significant importance – especially considering the market’s appetite for graphite at the moment…what seems likely, based on the company’s January 18 news release, is a spin-out of this asset or a JV…Rainbow’s 100-square-kilometre land package includes strategic claims within shouting distance of privately-held Eagle Graphite’s processing facility…Eagle is the only producer of natural flake graphite in western North America….

Zenyatta Ventures (ZEN, TSX-V)

One of the hottest graphite stories has been Zenyatta Ventures (ZEN, TSX-V) which has soared to the $2 level after trading at 15 cents in August…Zenyatta is targeting the $13 billion synthetic graphite market as it develops a rare vein-type deposit it discovered two years ago in northwestern Ontario…who knows how much higher this could ultimately go (that’s pure speculation) but John’s 2-month daily chart shows there’s an increasing likelihood that ZEN may have to pause and take a breather over the near-term given the extreme overbought condition of the RSI(2)…the RSI(2) was also in an extreme position in late December/early January which was followed by about a month of sideways action in a narrow trading range…ZEN has gotten way ahead of its supporting 50-day moving average (SMA) this month which it has touched, or nearly touched, on three occasions since its big move started late last summer…

GoldQuest Mining (GQC, TSX-V)

GoldQuest Mining (GQC, TSX-V) is drilling aggressively in the Dominican Republic and we can’t help but think there’s a good chance that this will result in a new discovery at some point this year, especially with GQC much more confident with its targeting given what it has learned from the Romero discovery…below is an updated 2.5-year weekly chart from John…GQC is starting to look more bullish and gained 6 cents yesterday to close at 60 cents…

Critical Elements Corp. (CRE, TSX-V) Updated Chart

Critical Elements Corp. (CRE, TSX-V) is a situation for patient investors that continues to look interesting with very strong support at the rising 200-day SMA at 18 cents…CRE closed up half a penny yesterday on total volume (all exchanges) of 1.3 million shares…as always, perform your own due diligence…

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

Gold continues to find strong support around current levels…it dipped as low as $1,640 overnight but is currently up $3 an ounce at $1,646 as of 5:25 am Pacific…Silver has gained 21 cents to $30.99..Copper is flat at $3.72…Crude Oil is up 9 cents to $97.10 while the U.S. Dollar Index has shot up nearly half a point to 80.54…

Q4 2012 Was Second Strongest Ever Quarter For Gold Demand

World Gold demand from October through December was the second strongest of any quarter on record and 2012 was the second-highest ever for a full year behind 2011, the World Gold Council reported this morning in its quarterly report on demand trends…fourth quarter demand rose 4% year-on-year to 1,195.9 metric tons, while the value of the Gold demand climbed 6% to a near-record $66.2 billion… growth in jewelry and central bank demand exceeded declines in the investment and technology sectors, the report said…“The strength in the fourth quarter was very much driven by a recovery in India,” said Marcus Grubb, managing director of investment for the WGC…Indian demand jumped 41% in October-December from the same period a year ago, helping the country maintain its role in 2012 as the world’s largest consumer, he said…full-year 2012 global demand dipped 4% to 4,405.5 tons from a record 4,582.3 tons in 2011…an increase in demand from institutional investors and central banks only partly offset a year-on-year decline in consumer demand, the report said…the value of Gold demand for 2012 hit a record of $236.4 billion during a year when the average price of Gold rose 6% to the highest ever at $1,669 an ounce…data for the report was compiled by the consultancy Thomson Reuters GFMS…

Barrick Gold Making Changes

Barrick Gold Corp. (ABX, TSX) is taking a massive writedown on its copper business, resulting in a $3.06-billion net loss in the fourth quarter, and signalling that it’s prepared to make major changes in the way it does business, according to a report from CP this morning…Barrick says it doesn’t plan to build any more new mines at this time and has put several mine expansions on hold…as a result, it’s cutting or delaying US$4 billion in previously budgeted capital spending and writing down the value of its copper business unit by US$4.2 billion after taxes…it’s also looking to reduce overhead costs by more than $100 million this year, although it didn’t provide details on how it will make those cuts…the company’s president and chief executive officer, Jamie Sokalsky, said investors are demanding fundamental change in the Gold industry…”Rising costs, poor capital allocation and the pursuit of production growth at any cost in the industry have led to declining equity valuations across the sector,” Sokalsky said in a statement…”Barrick highlighted the need for change last year, and we are increasingly taking strong action and re-focusing our business based on the principle that returns will drive production, production will not drive returns”..

Weaker Than Expected Economic Data Out Of Euro Zone

The euro zone slipped deeper into recession in the last three months of 2012 after its largest economies, Germany and France, shrank markedly at the end of the year…2012 was the currency bloc’s first full year since 1995 in which no quarter produced growth…economic output in the 17-country region fell by 0.6% in the fourth quarter, the EU’s statistics office reported today, following a 0.1% drop in output in the third quarter…the drop was the steepest since the first quarter of 2009 and more severe than the average forecast of a 0.4% drop in a Reuters poll of 61 economists…for the year as a whole, gross domestic product (GDP) fell by 0.5%…

CRB Index Updated Chart

John’s updated 2.5-year weekly chart for the CRB Index shows the Index is holding important trendline support around 300 after meeting resistance at 320 in September…the Venture Exchange performs best when the CRB Index is in a strong uptrend…the CRB’s breakout above a downsloping flag in August was a significant development…if the trendline support can hold, this would certainly be positive for the Venture…we’ll be keeping a close eye on this in the coming days…

Today’s Markets

There were firm gains in Japan and Hong Kong overnight, though China’s Shanghai Composite remains closed until Monday due to the Lunar New Year holidays…Australian shares hit a four-year high on strong corporate earnings…European markets are under minor pressure due to weak economic data as mentioned earlier…stock index futures in New York as of 5:25 am Pacific are pointing toward a mildly negative open on Wall Street…

The Venture Exchange enjoyed its highest volume day of the year yesterday, posting a 5-point gain to 1204…Orko Silver (OK, TSX-V) jumped 46 cents to close at $2.60 after receiving a takeover offer from Coeur D’Alene Mines Corp. (CDE, NYSE) that’s a little juicier than the one received from First Magestic Silver (FR, TSX) in December…the Venture also got a boost yesterday from a takeover offer for Sterling Resources (SLG, TSX-V) which jumped 36 cents on big volume to close at 83 cents…these takeovers, and previous ones in recent months, demonstrate how undervalued some Venture issues are at the moment…

Huldra Silver (HDA, TSX-V)

Huldra Silver (HDA, TSX-V) continues to make excellent progress toward full commercial production at its high-grade Treasure Mountain Mine near Hope, B.C., but weak markets recently have pushed the stock below the $1 level for the first time since last June/July…(Coeur D’Alene Mines holds a piece of HDA by the way)…on Tuesday, HDA announced it has increased its convertible debenture financing from $6 million to $10 million, which is a strong vote of confidence by investors in the company…concentrates from Huldra’s mill in Merritt are being shipped on a regular basis…full commercial production is expected to begin by the end of this first quarter…the high grades from Treasure Mountain make Huldra particularly attractive, and the project also holds tremendous exploration upside as much of the land package has yet to be drilled…John’s 2-year weekly chart shows strong support around current levels as the stock continues to base in a horizontal channel between 90 cents and $1…it closed up 2 pennies yesterday at 92 cents…

Cap-Ex Ventures (CEV, TSX-V) Updated Chart

John’s Fibonacci levels are often quite accurate and that has certainly been the case with Cap-Ex Ventures (CEV, TSX-V) which has retreated after climbing as high as 50 cents earlier this month…it closed down nearly a nickel yesterday to 31.5 cents, half a penny below the rising 50-day moving average (SMA) which should provide support…immediately below the 50-day, there is strong Fibonacci and chart support between 28 and 30 cents…

Note: Jon holds a share position in HDA.

Gold has traded in a range between $1,644 and $1,656 so far today in thin trading due in part to the continuing holiday in China and other Asian countries…as of 6:05 am Pacific, the yellow metal has erased earlier losses and is now unchanged for the day at $1,651…Silver has also recovered, now up a penny at $31.13…Copper is firm at $3.74…Crude Oil is 53 cents higher at $98.04 while the U.S. Dollar Index is relatively flat at 80.00…Platinum has widened its premium to Gold to a 17-month high…

Check out an excellent article by Lawrence Williams at www.mineweb.com this morning – “Silver (Probably) The Best Asset In The World Right Now – Mylchrest”.

Today’s Markets

Japan’s Nikkei average slipped 1% overnight to close at 11251, thanks in part to a firmer yen…European shares are higher today while stock index futures in New York as of 6:05 am Pacific are pointing toward a positive opening on Wall Street…President Barack Obama outlined an ambitious liberal agenda in his State of the Union address last night that included raising the minimum wage, increasing spending on infrastructure, attacking climate change and passing gun-control legislation (how a significant raise in the minimum wage will help promote job growth is a dilemma for the President)…Obama repeated his earlier calls for reducing the budget deficit through a mix of tax increases and spending cuts…he would support “modest reforms” in programs including Medicare, as long as wealthy Americans contribute as well…he also said the U.S. would enter into negotiations with the European Union aimed at reaching a transatlantic free trade agreement…

Venture Exchange Chart Update

The Venture Exchange managed to stay above the top of a critical support band yesterday and ended a 6-session slide with a 3-point gain to close at 1199…so far, 2013 is starting very differently than 2012 and 2011 which actually might be a good sign from a contrarian point of view…investors have a habit of looking into the rear-view mirror and memories of an ugly March each of the past two years is still fresh in their minds…March could very easily be a lot different this time around…

Dynasty Gold (DYG, TSX-V)

Dynasty Gold (DYG, TSX-V) has kept its burn rate low to preserve cash and is sitting on approximately $1.3 million at the moment with an opportunity to boost that significantly if it’s able to secure a buyer for its Gold asset in China…last fall, the company also picked up a very interesting new property in the Stewart district of B.C. and initial field work returned impressive rock chip sampling numbers including 7.2 g/t Au and 4,395 g/t Ag…technically, the stock appears to have bottomed at 2 cents (its 2012 low) and has been trading between 2.5 cents and 4 cents so far in 2013…below is an updated chart as requested by one of our readers yesterday…patient investors could do very well with this one by the end of the summer, assuming DYG carries out a drill program at its Stewart property which appears to be its intention…a successful sale of its Gold deposit in China could potentially bring several million dollars into the treasury, so this is definitely a play to keep an eye on for a possible double, triple or better within six months or so…

Graphite One (GPH, TSX-V)

As expected, Graphite One (GPH, TSX-V) met stiff resistance at 25 cents Monday and closed down again yesterday at 21 cents after hitting an intra-day low of 19.5 cents…consolidation is expected to continue with the 20-day moving average (SMA) providing strong support at 18 cents while the EMA-20 is 16.4 cents, just above the rising 50-day SMA…so there is plenty of support between 16 and 18 cents which would certainly be a “sweet spot” on a further pullback to unwind overbought conditions…below is an updated chart from John…GPH has successfully closed a $600,000 private placement…

Lomiko Metals Inc. (LMR, TSX-V)

Another graphite play came to life yesterday as Lomiko Metals (LMR, TSX-V) jumped 2.5 cents on over 3 million shares to close at 8 cents…the company announced it has arranged a strategic alliance agreement with Graphene Laboratories Inc., a privately held New York company currently providing graphene to thousands of scientists at leading institutions around the globe, including academic universities, national laboratories in many countries and a broad spectrum of industrial entities…industrial clients include Fortune 500 companies involved in researching graphene and the development of graphene-related products…based on John’s 2.5-year weekly chart below, LMR appears to have a good chance to push through technical resistance at 9 cents…as always, perform your own due diligence…

Gold fell as low as $1,638 overnight but has rebounded to $1,648 (essentially unchanged for the day) as of 6:05 am Pacific…Silver is off 6 pennies at $30.89…Copper is up 2 cents at $3.72…Crude Oil is 51 cents higher at $97.54 while the U.S. Dollar Index is off slightly at 80.23…this week’s holiday in China has perhaps eroded some of the physical demand for Gold which may explain bullion’s weakness yesterday as it declined by more than 1%…markets have reopened in Japan and South Korea but remain closed in China, Singapore, Hong Kong, Malaysia and Taiwan…

G-7 Rhetoric On Exchange Rates

The world’s largest developed nations reaffirmed their “commitment” not to target exchange rates in a statement today aimed at addressing concerns over a fresh round of global currency wars… in a move widely seen as an attempt to defuse tensions over recent rapid moves in the currency market, the Group of Seven countries – comprising the U.S., Canada, the UK, France, Germany, Italy and Japan – said they would “consult closely” on any action in foreign exchange markets…“We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates,” the ministers and governors said…the G7 statement, which comes ahead of a meeting of Group of 20 finance ministers and central bankers in Moscow on Friday, avoided any direct comment with regard to Japan which has been engaging in a deliberate policy of weakening the yen…

Euro Chart Update

The bullish trend for the euro continues which is not good news for the U.S. Dollar Index which has been strengthening recently but faces stiff overhead resistance…below is a 2.5-year weekly euro chart update from John…the breakout from the cup-with-handle pattern was significant…this is a classic example of how bottoms are formed in markets, and the Venture Exchange is no different…sentiment toward the euro was incredibly negative last summer but that was exactly the time to be a buyer…

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Updated Gold Chart

Below is an interesting 9-month daily chart from John that shows Gold’s strong support band between $1,626 and $1,640, the top portion of which was tested overnight…note how the down trendline is providing resistance…a “squeeze” is developing, however, between this down trendline and the support band which means that the next month or so is a critical time for bullion…the upside fundamentals for Gold remain firmly intact but “momentum traders” have left this market for now…undoubtedly, they will return as they have in the past…

OPEC Lifts World Oil Demand Growth Forecast

World oil demand will grow faster than previously thought in 2013, OPEC said in its monthly report today, citing signs of a recovery in the world economy…consumption of Oil will expand by 840,000 barrels per day (bpd) this year, 80,000 bpd more than previously expected…

Today’s Markets

Many Asian markets remain closed for the Lunar New Year holidays but Japan re-opened with a gain of 216 points to close at 11369, just over 100 points shy of last Wednesday’s 33-month high…according to Reuters, a U.S. Treasury official voiced support for Japan’s aggressive policies to combat deflation and bolster growth…European shares are mostly higher while stock index futures in New York as of 6:05 am Pacific are pointing toward a flat to slightly negative open on Wall Street ahead of President Obama’s State of the Union address this evening…

Venture Exchange Chart Update

The Venture Exchange has declined in 11 out of the last 13 sessions and closed below the 1200 level yesterday (1196) for the first time since December 27…the support zone that now must hold is 1166 to 1190 as John shows in the 3-month daily chart below…

Big North Graphite Corp. (NRT, TSX-V)

Another graphite play for our readers’ due diligence is Big North Graphite (NRT, TSX-V) which climbed a penny-and-a-half yesterday on its highest volume day in over two months…important resistance is at 10 cents, so watch for a potential breakout above that level…the company just came out with positive news this morning (pre-market) from its Mexican graphite project which includes the Nuevo San Pedro mine…

Prophecy Platinum Corp. (NKL, TSX-V)

Below is a 6-month daily chart for Prophecy Platinum (NKL, TSX-V) which has been moving in the opposite direction of the Venture Exchange in recent sessions, gaining 16 cents yesterday to close at $1.15…the chart also compares NKL with the the platinum price…

Note: John, Jon and Terry do not hold share positions in NKL or NRT.