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Gold is under pressure to begin the new week…as of 6:10 am Pacific, the yellow metal is off $16 an ounce at $1,651 after dipping as low as $1,643…as John’s updated chart showed yesterday, bullion has been trading in a symmetrical triangle in recent weeks but that pattern appears to have broken down this morning…Gold does have very strong support at $1,625 and $1,645…this week’s Lunar New Year in Asia may curb physical demand for bullion as China and most Asian markets are closed…Silver is down 35 cents at $31.06…Crude Oil is 31 cents lower at $95.41…Copper is off 3 pennies at $3.70 while the U.S. Dollar Index is up nearly one-tenth of a point at 80.30…

The U.S. Federal Reserve’s balance sheet has grown to a record size according to data released by the Fed last Thursday showed…the Fed’s balance sheet – a broad gauge of its lending to the financial system – stood at $2.997 trillion on Feb. 6, compared with $2.991 trillion on January 30…the Fed’s holdings of Treasuries totaled $1.717 trillion as of last Wednesday versus $1.710 trillion the previous week…

China Equity Rally Fueled By Money Supply Growth

A significant reversal in China’s money supply growth really started to kick in late last year as shown in the Bloomberg chart below…this helps account for the upside breakout last month in the Shanghai Composite, especially after the Index pushed through a two-year down trendline as John’s charts illustrated…periods of strong growth in the money supply in China, and a rising equity market there, generally translate into a bullish environment for commodities…

China is expected to continue with its accommodative monetary policy which will lend support to the equity rally there…in addition, China’s new leadership is focused on growth as officials seek to improve and reform policies that will provide its residents with opportunities and social security, higher incomes and better standards of living…this will encourage domestic consumption which is such a key drive now of the Chinese economy…growth is set to be considerable over the next several years…some analysts expect that China’s GDP will almost equal that of the U.S. within a decade after annual compound growth of nearly 7%…

What Are Companies’ Real All-In Cash Costs Of Gold Production?

Interesting comments from Frank Holmes at www.usfunds.com over the weekend…”George Topping and David Hove from Stifel Nicolaus dug deeper into the all-in cash costs measure suggested by the World Gold Council that would vastly understate the cost of Gold production at around $1,100…Realistically, the four senior Gold producers’ real total cost of production is closer to $1,800…We commented previously on Newmont’s Gold production decrease from 7.5 million ounces to 4.98 million ounces over 10 years despite spending $16 billion in capex…Topping noted the picture was not any better for Barrick Gold according to the report; over the last six years Barrick’s Gold production declined 15% to 7.3 million ounces, all this while spending $20 billion in capex…He is completely right in pointing out that if a company is not increasing production then all capital expenditures must be considered sustaining capital expenditures…We are in agreement that if you do not measure your costs, you will not get an improvement in your performance”…

Silver Short-Term Updated Chart

Like Gold, Silver has also been trading in a symmetrical triangle recently…breakouts in patterns like this are often to the upside but not always as we’re seeing this morning…the $30.50 to $31 area is a strong support zone for Silver…buying pressure has been weakening recently…

Silver Long-Term Chart Update

Silver’s long-term chart shows it’s still in the very early stages of a powerful “Wave 5” move that is expected to ultimately carry it to new all-time highs…another test of support in the upper 20’s can’t be ruled out, however…

Today’s Markets

Most Asian markets are closed due to the Lunar New Year holidays…European shares are mixed ahead of a meeting of euro zone finance ministers…stock index futures in New York as of 6:10 am Pacific are pointing toward a slightly positive open on Wall Street…the Venture Exchange is looking to hold support at 1200 and rebound this week after declining in 10 out of the last 12 sessions…it closed Friday at 1206, a 23-point drop for the week…today is Family Day in British Columbia which may reduce trading volume on the Venture…why the B.C. government didn’t synchronize this day with other provinces in the country (third Monday in February) is a very good question…

Focus Graphite (FMS, TSX-V)

There was strength in graphite stocks last week and that trend for this quarter may certainly continue…Focus Graphite (FMS, TSX-V) is currently up 40% from its December lows…it closed Friday at 70 cents, slightly above its rising 50 and 100-day moving averages (SMA) which are providing support…a move above the 80-cent level would constitute a breakout…below is an updated 2.5-year weekly chart from John…

Graphite One (GPH, TSX-V)

John was correct in recently calling for a breakout in Graphite One (GPH, TSX-V) which climbed a nickel last week to close at 23.5 cents…the chart shows an overbought RSI(14) condition, however, and strong resistance at 25 cents, so buyers at current levels need to be very careful as far as the short-term is concerned as a near-term consolidation is likely…the company recently closed a private placement at 14 cents to raise $600,000…

Note: John, Jon and Terry do not hold share positions in FMS or GPH.

TSX Venture Exchange and Gold

It was another slow week for the Venture Exchange, despite impressive moves in a few issues.  The Index declined slightly each day last week (it was off 23 points for the week to close at 1206) and has posted losses in 10 out of the last 12 sessions.  However, strong support exists at 1200 and common sense suggests that if the Index couldn’t be knocked down to a new low in December amid tax-loss selling, weakness in Gold and the over-hyped “fiscal cliff” drama, it’s not about to happen now.  What this speculative market needs, however, is a catalyst – a spark, whatever you want to call it – that will convince the many investors sitting on the sidelines to jump back in.  That catalyst could be anything from a discovery to a sudden increase in Gold and Silver prices.  This market is in the midst of a healing process and this requires investor patience.  Looking out over the next several months, we see some tremendous opportunities given the fact sentiment right now is so negative and many investors are frustrated and discouraged.  It’s the opposite environment to what existed in late 2010 and early 2011 when everyone was so bullish.  It was a good time to be a seller back then.  Right now, some investors are wisely preparing to make potential fortunes by accumulating beaten-down quality companies that could easily double or triple by mid-year under improved market conditions.

Below is a 2-month daily CDNX chart from John that shows a convergence of support around the 1200 level.  As we’ve mentioned previously, a key thing to watch for as the month progresses is a reversal to the upside in the 50-day moving average (SMA).  That hasn’t occurred just yet but that moment could be close at hand.  A convincing move on strong volume through the important 1240 resistance area would definitely signal a bullish new trend.

Gold

Gold finished relatively unchanged last week at $1,667.  The COT structure (commercial traders) is looking a lot more favorable as they have cut back their short positions recently to levels not seen since just prior to last summer’s major move to the upside. Gold is finding solid support in the immediate vicinity of its 200-day moving average which is slowly rising.  As John points out in his 6-month daily chart below, Gold for several weeks has been trading in a symmetrical triangle and a resolution to this current pattern is drawing near.  Important resistance of course at $1,700.

Silver fell 41 cents last week to close at $31.43 (John will have his usual short-term and long-term Silver charts tomorrow morning).  Copper stayed relatively unchanged at $3.74.  Crude Oil slipped over $2 a barrel to $95.72 while the U.S. Dollar Index gained a full point to 80.21.

Margins will decline this coming week for most of the metals traded on the New York Mercantile Exchange and its Comex division, including Gold, Silver, Copper and Platinum.  Exchange operator CME Group said the changes, announced late Thursday, will go into effect after the close of business on Tuesday. The lower margins were made as part of the “normal review of market volatility to ensure adequate collateral coverage.” Margins are the performance bond that futures traders must put up to be in a position and act as collateral, or protection from default.

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 has hovered between $1,666 and $1,675 so far today…as of 5:40 am Pacific, the yellow metal is down $3 an ounce at $1,668…Silver is flat at $31.44…Copper is up 2 pennies to $3.73…Crude Oil is 23 cents higher at $96.06 while the U.S. Dollar Index is off over one-tenth of a point at 80.15…

As per a reader’s request, below is an interesting chart from John (monthly) comparing Gold with Platinum since 2000…

Currency Wars

The euro struggled to regain losses it suffered yesterday after the European Central Bank cited the currency’s recent strength as a risk for the euro-zone economy…the comments, made by ECB President Mario Draghi, surprised the market…”The ECB citing of euro strength in the context of its assessment of risks to price stability is the latest example of how currencies are increasingly becoming part of the policy debate,” said Morgan Stanley…meanwhile, the Chinese yuan, also known as the renminbi, fell Thursday to its weakest level since late December…in fact, the yuan has been creeping down since January 14, when it hit a record high against the U.S. dollar at about 6.21, as China’s central bank steps up its intervention in the foreign exchange markets to curb yuan appreciation – especially in light of the weakness in the Japanese yen which has fallen around 16% versus the dollar in anticipation that new Prime Minister Shinzo Abe will push his agenda of aggressive monetary policy easing to weaken the currency…yesterday, the Japanese Finance Minister actually said the yen has weakened more than intended…

Today’s Markets

Asian markets were mostly higher overnight, though Japan’s Nikkei average fell 200 points to close at 11153 as its longest weekly winning streak in 54 years came to an end…the Nikkei finished down for the first time in 13 weeks…China’s Shanghai Composite climbed 14 points to close at 2432…European shares are higher today, thanks in part to a strong banking sector…European shares were higher in morning trade on Friday as the banking sector rallied after the European Central Bank detailed the repayments needed from the intuitions that borrowed money after the sovereign debt crisis…the ECB announced that 21 European banks will pay back another 5 billion euros of the LTRO (long term refinancing operation) to the central bank…this marks the unwinding of the ECB’s crisis measures…President Mario Draghi said yesterday that the repayments were a sign of confidence…stock index futures in New York as of 5:40 am Pacific are pointing toward a slightly lower open on Wall Street…

Venture Exchange Updated Chart

The Venture has closed down for 9 trading sessions out of the last 11 but is still trading within important support…it hit the downsloping wedge at 1204 intra-day yesterday before closing 6 points lower at 1206…below is an updated chart (2-month daily)…

More Signs Of Strength In China

Chinese exports and imports rose strongly in January, pointing towards solid growth both in China and abroad at the start of 2013…inflation in China also receded last month, slowing to 2% from 2.5% cent in December…but analysts called for caution in interpreting the figures because next week’s Chinese New Year holiday will have caused significant distortions since companies tried to push as much business as possible into January before work came to a halt…moreover, the timing of the holiday – which fell in January last year but February this year – has probably made year-on-year trade growth appear stronger and inflation weaker than is really the case…Chinese exports rose 25% from a year earlier, the fastest pace since April, 2011, and up from 14.1% in December…imports increased 28.8%, more than four-times December’s 6% rise…

China & The Graphite Market

The fact that graphite stocks have done well since December is another indication that the Chinese economic recovery is for real…China is the world’s largest graphite consumer and exporter, so economic activity in that country is critical when it comes to this market…government policy is also important, and in December China’s Ministry of Industry and Information Technology (MIIT) released a document entitled, “Graphite Industry Access Conditions”…this is the first time that China has set access standards for its graphite industry…this tightening of policy on its graphite industry, along with an acceleration of the transformation, upgrading and structural adjustment of the graphite sector, should be supportive of world graphite prices in general…

Galaxy Graphite Corp. (GXY, TSX-V)

Galaxy Graphite Corp. (GXY, TSX-V) was the Venture’s biggest percentage gainer yesterday, for stocks with volume of 100,000 shares or more, as it jumped a whopping 233% (from 3 cents to a closing price of 10 cents) on volume of 8.2 million (12.3 million including all markets)…GXY, which has only about 24 million shares outstanding, announced positive results from a sampling and geophysical program at its Buckingham graphite project in Quebec…given the market’s appetite for graphite plays, and this kind of impressive “game changing” volume, GXY is definitely worth keeping on one’s radar screen…below is a 1-year daily chart from John that shows various resistance levels as GXY potentially works higher…as always, perform your own due diligence…

Eagle Graphite Corp. – IPO On The Way?

Few investors are aware that the West Kootenay region of British Columbia hosts one of only two operating natural flake graphite mines in North America…amid a confirmed ramping up in activity at Eagle Graphite’s processing facility near Nelson, rumors are again circulating that the privately-held company is working diligently toward an IPO…the Valhalla Metamorphic Complex is a world class flake graphite area – and a particularly interesting one because it hosts an actual producer…one of two interesting recent developments in this district was the announcement by Rainbow Resources (RBW, TSX-V), the second largest landholder in the region (next to Eagle Graphite) with approximately 100 square kilometres, that it’s pursuing options “aimed at unlocking the value of its large flake graphite land package” in order to focus on its Gold-Silver assets…this could mean a number of different things, and we may get more insight next week when we interview RBW President David W. Johnston…just a week after RBW’s announcement, Anglo-Swiss Resources (ASW, TSX-V) announced it had entered into a definitive agreement to sell its Kenville Gold Mine for $10 million to a private Alberta company to focus on its Blu Starr flake graphite property near Eagle’s mill…rest assured, the Slocan Valley is going to heat up on the flake graphite front and two Venture-listed beneficiaries of that are going to be RBW and ASW…Eagle Graphite has about 80 interesting pictures on its web site (www.eaglegraphite.com) – below is just one of them…

Dynasty Gold (DYG, TSX-V)

We’d all love to own a stock under a nickel that suddenly explodes like Graphite Galaxy did yesterday…in the current market environment, there are definitely some “diamonds in the rough” that are trading under a nickel and have plenty of upside potential because of a combination of cash in the bank, strong management or high quality projects…at times like this, great wealth is born when one can identify even just a few situations that have the potential to move sharply higher once the Venture starts gaining traction…Dynasty Gold Corp (DYG, TSX-V), we believe, is one such opportunity as the company is sitting on well over $1 million in cash, has low overhead at the moment, a Gold resource in China it’s looking to sell, and an interesting new Gold-Silver property in the Stewart district…the DYG chart is also favorable…it’s clear to us that this stock hit bottom at 2 cents…

Strategic Oil & Gas (SOG, TSX-V) Chart Update

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

Metals markets are quiet so far today…Gold has hovered between $1,673 and $1,683…as of 6:05 am Pacific, the yellow metal is flat at at $1,677…Silver is off a penny at $31.84…Copper is steady at $3.72…Crude Oil is relatively unchanged at $96.56 while the U.S. Dollar Index is up over one-tenth of a point at 79.94…

Platinum prices surged to their highest level in nearly 17 months yesterday as South African supply worries continue to underpin prices…the rise appears to be the result of traders continuing to factor in ongoing supply concerns rather than any fresh breaking news, according to Jim Steel, precious-metals analyst with HSBC…traders said the market is still reacting to news earlier this week out of Anglo American Platinum, the world’s largest producer…in particular, a U.S. trader cited comments from outgoing Amplats chief executive Cynthia Carroll describing the industry in South African as in crisis…the country provides around three-quarters of the global mine supply…

Today’s Markets

Asian markets were generally lower last night with China’s Shanghai Composite falling 16 points to 2419…European shares are mixed..the European Central Bank (ECB) held its main interest rate at a record low of 0.75% today, maintaining its policy in order to see whether an economic recovery sets in later this year or is derailed by the euro’s rise…the appreciation of the euro to a 14-month peak against the dollar and a 30-month high versus the yen prompted French President Francois Hollande to call yesterday for an exchange rate policy to protect the currency from “irrational movements”…stock index futures in New York are pointing toward a flat opening on Wall Street…U.S. non-farm productivity fell in the fourth quarter by the most in nearly two years as output increased marginally despite steady gains in employment, the Labor Department just reported…a separate report showed that weekly unemployment aid applications fall to 366,000, indicating steady but modest hiring…

Carney Questioned By British Lawmakers

Bank of Canada governor Mark Carney, the next governor of the Bank of England, said today he would move carefully with any changes to the way the BOE runs monetary policy but suggested he might favor committing to stimulus for an economy over a period of time…”In my view, flexible inflation targeting – as practiced in both Canada and the UK – has proven itself to be the most effective monetary policy framework implemented thus far,” Carney told British lawmakers…”As a result, the bar for alteration is very high,” he said in written answers to questions from a parliamentary committee…Carney, who will soon become the first foreigner to run Bank of England in its 318-year history, faced a three-hour question-and-answer session with the committee after submitting his testimony…in it, he said that while moving cautiously, reviewing monetary policies would be important…Carney said central banks “may need to commit credibly to maintaining highly accommodative policy even after the economy and, potentially, inflation picks up”…he also did admit, however, in a global context, that the “returns of quantitative easing have declined as the scale of the programs has increased”…

Venture Exchange Updated Charts

John has a couple of interesting charts this morning on the Venture Exchange which show a convergence of important support around current levels…the Index closed down a few points yesterday to 1212, exactly at its 50-day moving average (SMA) which has flattened out and has been providing support since early January…there is also Fibonacci retracement support at 1209 and downsloping wedge support around 2004…so the 1200 area appears likely to hold, especially if the 50-day SMA can reverse to the upside in the coming days…such a reversal helped usher in major rallies in early 2012 and again last summer…

Venture Exchange Chart #2

Below is another Venture (2.5-year weekly) chart that shows how the Index has finally broken above a down trendline in place since 2011, but has yet to gain any traction as a result…the Index has stayed above the down trendline, however, and this former resistance should now become new support…patience, as always, is critical…many conditions are in place for a stronger market to emerge this quarter…

Gold Canyon Resources (GCU, TSX-V)

Interesting news release from Gold Canyon Resources (GCU, TSX-V) yesterday as the company commented on the sharp decline in is share price over the last five months, from just over $2 in September to the current 66 cents…a major part of the problem, GCU admitted yesterday, was the company’s historical practice of issuing a large number of flow-through shares…“Gold Canyon had historically issued a large number of flow-through common shares, which, because of the associated tax treatment in Canada for qualified flow-through mining expenditures undertaken by the company, carry a much lower cost base than regular shares…the lower cost base allows resource money managers to sell these shares at prices that, despite declining market prices generally, are still profitable, providing more attractive optics than selling at a loss”…the company also commented: “Market participants have indicated that, due to investor fatigue with the mining sector, both retail and institutional, and prolonged mining sector weakness, resource money managers are experiencing higher than normal redemption challenges in their funds and managed accounts, causing them to sell shares to raise the cash needed to make redemption payments…with respect to Gold Canyon’s shares in particular, the continued recent demand has resulted in bids to buy at reasonable valuation levels, providing the sellers with better liquidity than is the case with many other mining issuers, and indeed than had historically been the case with Gold Canyon until very recently”…

GCU currently has over 130 million shares outstanding, giving it a market cap of $90 million…its Springpole Project in northern Ontario has an indicated resource of 4.41 million ounces of Gold and 23.8 million ounces of Silver (128.2 million metric tonnes grading 1.07 g/t Au and 5.7 g/t Ag) and an inferred resource of 690.000 ounces of Gold and 2.7 million ounces of Silver (25.7 metric tonnes grading 0.83 g/t Au and 3.2 g/t Ag)…the company is holding about $10 million in cash…the bleeding in GCU’s share price could continue for a while longer if the markets don’t rebound soon as GCU has fallen through important technical support…as John shows in the 4-year weekly chart below, the next major support band begins at 43 cents…this doesn’t mean it’ll necessarily fall that low, but the risk certainly exists…43 cents would put a value of approximately $12 on each ounce in the ground (inferred and indicated) at Springpole…GCU hit an all-time high of over $4 a share in the spring of 2011…this is a good lesson in how share structure is so important…many companies are suffering because of the issuance of too many flow-through shares (for our GBB followers, that is an issue) and/or too many shares in the hands of institutions who in some cases have been forced to sell at various times over the last year…

Probe Mines (PRB, TSX-V)

Probe Mines, with only 66 million shares outstanding, has fared much better in the market with its Borden Lake deposit which has just over 4 million ounces in the indicated and inferred categories (see January 15 news release for breakdown)…buying pressure, as indicated by the Chaiken Money Flow (CMF), has been strong in recent months with solid technical support at the $1.80 level (just above the 100-day moving average) which it has not closed below since the middle of November…

Note: John, Jon and Terry do not hold positions in GCU or PRB.

Gold has traded between $1,667 and $1,676 so far today…as of 5:55 am Pacific, the yellow metal is up $1 an ounce at $1,674…Silver is off 14 cents at $31.68…Copper is down 2 pennies at $3.72…Crude Oil has slipped $1.45 a barrel to $95.15 while the U.S. Dollar Index is up one-third of a point to 79.83…

Hong Kong’s net Gold flow to mainland China jumped 47% in 2012 to a record high of 557 tonnes, indicating robust demand in China, which vies with India to be the world’s top Gold consumer…Hong Kong shipped 114 tonnes of Gold to China in December, also a record high for monthly exports…its total Gold shipments to China in 2012 jumped 94% from the 2011 total to over 832 tonnes, but imports also were six times higher at 275 tonnes, data from the Hong Kong Census and Statistics Department showed yesterday…”It is not a surprise,” said Dan Smith, head of metals research at Standard Chartered…”Consumer and investment appetite was quite strong, and no one knows how much the central bank is buying”…investors are waiting for a research report from the World Gold Council due next week, which will show whether China overtook India last year as the world’s top Gold consumer…

Venture Exchange-TSX Gold Index

Below is a interesting 12-year monthly chart from John that compares the Venture Exchange with the TSX Gold Index during that time…the Gold Index has out-performed the Venture during most of this period, though recently the Venture has managed to hold up a little better – it’s down 10% from its September high vs. a 21% drop in the Gold Index…since the end of January, 2001, the Venture has gained only 25% while the Gold Index has climbed a more respectable 160%…this compares with a nearly 30% increase in the Dow during the same period…

Shanghai Composite Chart Update

China’s Shanghai Composite Index has been on fire since it broke out of a two-year downtrend in December (check out the dark blue line in John’s chart below), a pattern we hope repeats with the Venture Exchange…overnight, the Shanghai Composite posted a slight gain to close at 2434…it does face resistance, however, at 2450 – at which point it may need to consolidate and digest its recent sharp gains…

The Chinese New Year begins February 10, marking the Year of the Snake, which is a key shopping period…this year more than ever, the spending patterns of China’s 1.3 billion people are expected to be scrutinized as a measure of how the economy is fairing – not only as it recovers from last year’s slowdown, but also as it switches from a reliance on exports to consumption…”We think consumption will be one of the key drivers of the Chinese economy this year,” according to to Dariusz Kowalczyk, a senior economist at Credit Agricole in Hong Kong…”And the consumer should be stronger because of more confidence, faster economic growth and fast gains in incomes”…

Today’s Markets

Japan’s Nikkei Index jumped a whopping 3.8% or 417 points overnight to close at its highest level since October, 2008…the yen fell sharply on bets that the central bank governor’s decision to step down early will leave the door open for a governor eager for more aggressive monetary easing…European shares are mixed today…euro zone retail sales fell sharply in December, down 0.8% on the month and down 3.4% on an annual basis…other EU data released yesterday did continue to show slight improvement as the euro zone PMI rose to 48.6 in January from 47.2 in December…while stock index futures in New York as of 5:55 am Pacific are pointing toward a slightly negative open on Wall Street…the Venture Exchange closed at 1215 yesterday…the 50-day moving average has flattened out at 1210 and is providing support…

Corvus Gold (KOR, TSX) Chart Update

Corvus Gold (KOR, TSX) had a stellar 2012 but is off to a rough start in 2013, down over 20%…the stock closed yesterday at $1.33…the EMA-20 is declining for the first time in over a year…there is strong chart support, however, at $1.30 while the rising 200-day moving average is at $1.20 provides additional support…Corvus has made great strides with its 100% owned North Bullfrog Project which covers approximately 68 square kilometres in southern Nevada just north of the historic Bullfrog Gold mine formerly operated by Barrick…

Note: John, Jon and Terry do not hold share positions in KOR.

Gold has traded between $1,672 and $1,683 so far today…as of 5:25 am Pacific, the yellow metal is up $2 an ounce at $1,676…Silver is 14 cents higher at $31.90…Copper is flat at $3.74…Crude Oil is up 65 cents at $96.82 while the U.S. Dollar Index has climbed slightly to 79.62…Gold gave encouraging signs yesterday with an intra-day reversal despite strength in the greenback and weakness in the Oil market…

Today’s Markets

Asian markets were mostly significantly lower overnight, though China’s Shanghai Composite bucked the trend with a slight gain to close at 2433…China’s central bank pumped a record amount into money markets today in an attempt to satisfy demand for cash before next week’s Chinese New Year holiday…the liquidity injection is only short term in nature and does not constitute a shift in monetary policy, but analysts said it underscores how the central bank has honed its use of open market operations in recent months to ensure a more stable funding backdrop for banks, investors and companies…European shares are higher today as investor confidence was boosted by a series of earnings releases and positive business activity data in the euro zone, helping stocks to recover from losses yesterday…troubles are certainly not over in the euro zone, though…Spain is tackling a corruption scandal, as Prime Minister Mariano Rajoy denied allegations that he received secret cash payments…in Italy, there is growing uncertainty over the outcome of the upcoming elections with former Prime Minister Silvio Berlusconi gaining ground…there are also fresh concerns over the health of the Italian banking system…stock index futures in New York are pointing toward a positive open on Wall Street after yesterday’s 130-point drop in the Dow…the Venture Exchange fell 12 points yesterday to 1217, slightly above the 50-day moving average which has provided support since early January…

Below is an updated Dow chart from John which shows the RSI(2) extreme overbought condition is beginning to unwind…more near-term consolidation can be expected as the Dow digests its impressive gains since late November…

Rainbow Resources (RBW, TSX-V)

Rainbow Resources (RBW, TSX-V) is off to a good start at its Jewel Ridge Gold-Silver Project in Nevada with a high-grade Silver discovery so close to surface, you could almost shovel it out of the ground…RBW intersected 601 g/t Ag over a 3-metre interval from 15.2 to 18.2 metres in hole JR-12-04…this argillic zone also included 1.1 g/t Au and 13.5% combined lead and zinc…Silver mineralization was continuous from surface to nearly 50 metres, grading 45.6 g/t…where there is one of these argillic zones, there is often a cluster of them…Greencastle’s 2004 drilling, surprisingly, did not assay for anything other than Gold…RBW cut wide envelopes of low grade Gold and Silver mineralization in four out of the six holes drilled at Jewel Ridge, which is exactly what they had to do…the grades are consistent with what’s expected in the area and what can potentially be mined economically…the Silver discovery throws an interesting twist into Jewel Ridge as a lot of Silver was mined historically in the area…it appears Rainbow has two deposit types at Jewel Ridge – a sediment hosted Gold system with Silver values, and a polymetallic replacement system featuring higher grade Silver plus lead and zinc…it’ll be interesting to see how this plays out with further exploration…a conceptual geological model is being prepared for Jewel Ridge which will be another important step forward for this project…Rainbow is the first company to compile all of the available historical data on Jewel Ridge into one data base…combined with the fresh drilling data, Rainbow should be able to very effectively pinpoint the best locations for Phase 2 drilling…more results are expected soon from Jewel Ridge (rock sampling plus perhaps some historical data) while final assays are also pending from Gold Viking where Rainbow has made a Gold-Silver discovery in the southern part of the property…

Blackwater – 25 Million Ounces?

Some interesting comments from New Gold Inc. (NGD, TSX) director Pierre Lassonde who apparently told reporters following a speech at last week’s Roundup mining conference in Vancouver that “There is a 50/50 chance that it (Blackwater) will be a 25 million ounce camp“…Blackwater currently hosts a Gold resource of just over 10 million ounces…Lassonde said his projections are based not only on indicated and inferred resources in the Blackwater zone, but also on additional discoveries on nearby ground including the Capoose Property…”In between,” he said, “there is a lot of interesting geochemistry”…Lassonde’s prediction bodes well for several juniors in the area including one of our favorites, Parlane Resource Corp. (PPP, TSX-V), which just recently made a drilling discovery at its Big Bear Property in a hole that’s right on strike between Blackwater and Capoose…geologically and for infrastructure purposes, it makes perfect sense for New Gold to take out Parlane which is gearing up for a second round of drilling at Big Bear in the spring…

Cap-Ex Ventures (CEV, TSX-V)

Cap-Ex Ventures (CEV, TSX-V) released a stellar maiden resource estimate for its Block 103 iron ore property yesterday, and the stock climbed as high as 50 cents before closing at 47 cents for a gain of 2 pennies on total volume (all exchanges) of 1.7 million shares…below is an updated chart from John…note the 52-cent Fibonacci level where stiff resistance can be expected…

Mart Resources (MMT, TSX-V) Chart Update

Mart Resources (MMT, TSX-V) continues to be a terrific performer and has remained in an upsloping channel since late 2011…

Note: John and Jon hold share positions in RBW.

Gold has traded between $1,661 and $1,674 so far today…as of 6:00 am Pacific, bullion is down $3 an ounce at $1,665…Silver is 29 cents lower at $31.55…Copper is off a penny at $3.74…Crude Oil has retreated $1.23 a barrel $96.54 while the U.S. Dollar Index is up one-quarter of a point to 79.42…

The COT structure for Gold is looking a lot more bullish after commercial traders last week trimmed back their short positions to the lowest levels since last August, just prior to Gold’s big rally…”Peak Gold” has been a topic recently in the media as the senior Gold miners find it difficult to grow…the U.S. Geological Survey recently reported that U.S. mines produced 230 metric tons of Gold in 2012, down from 234 metric tons in 2011…similarly, Silver production was down to 1,050 tons in 2012 from 1,120 tons in 2011…lower Gold and Silver production should ultimately lead to higher prices…

TSX Gold Index Chart

Not only are the commercial traders saying that Gold is gearing up for another rally, but the oversold condition of the TSX Gold Index suggests that Gold stocks are going to heat up in February…below is a 2-year weekly Gold Index chart from John relative to Gold (the numbers on the right hand side of the chart, 0.17 to 0.29, indicate the ratio between the two)…note that RSI(2) is at the most extreme level seen at anytime over the last two years…

Updated Silver Charts

As usual, John has updated short-term and long-term charts for Silver this morning…the next important resistance level is $32.50…Silver is once again out-performing Gold…

Silver 9-Month Daily Chart

Silver 15-Year Monthly Chart

“Wave 5” continues to progress well…RSI(2) also recently bottomed just below 30, giving us another clue regarding the bullish short-term direction of Silver…RSI-2 on this 15-year chart typically fluctuates between 90+ (overbought) and less than 30 (oversold)…it’s currently 56 with plenty of room to move higher again…

Today’s Markets

Asian markets were mixed overnight with Japan and China posting small gains…the Shanghai Composite added 9 points to close at 2428…European shares are lower today, generally down 1% or more, thanks in part to new data showing that factory prices remained disappointing for December…stock index futures in New York are pointing toward a lower opening on Wall Street after the Dow hit its highest level last week in over five years, closing Friday just above 14000…for the month of January, U.S. stocks experienced the best month in more than two decades…per the Stock Traders’ Almanac market indicator, the “January Barometer,” the performance of the S&P 500 Index in the first month of the year dictates where stock prices will head for the year…though it may not feel like it for Americans, shareholders and investors have recovered the more than $8 trillion in wealth lost during the recession with the Dow breaching 14000 and the S&P above 1500…a new survey from Spectrem Group shows that millionaire confidence in the economy hit the highest level in two years, led by their bullishness on the economy and corporate earnings…

We expect the strength in the broader equity markets and higher Gold and Silver prices to ultimately help ignite the Venture Exchange which has been like a very slow moving train so far this year…the Venture gained a whopping 1 point for the month of January…the 30 and 40-day moving averages, however, have reversed to the upside – an event we haven’t seen since last August, just prior to a nearly 20% advance in the Index…

Cap-Ex Ventures (CEV, TSX-V)

Cap-Ex Ventures Ltd. (CEV, TSX-V) has more than doubled since December, closing Friday at 46 cents, and this morning the company released the first resource estimate on its wholly owned Block 103 Property in Labrador, northeast of Schefferville…the inferred resource is 7.2 billion tonnes at 29.2% total iron (18.9% magnetic iron) based on a cut-off grade of 12.5% magnetic iron…a PEA (Preliminary Economic Assessment) is expected later this quarter…this world class resource covers an area with a strike length of approximately 4 kilometers and a width of 2.5 kilometres…however, based on the magnetic airborne survey previously completed, Block 103 covers a strike length of approximately 12 kilometres…mineralized zones are open toward the northwest and southeast and to depth…

TrueClaim Exploration (TRM, TSX-V)

TrueClaim Exploration (TRM, TSX-V) has recently backed off after a powerful move that took it from a low of 2 cents at the end of October to a high of 10 cents in January…the company recently announced a small 8-cent financing and the stock closed Friday just below that at 7.5 cents…the rising 100-day moving average at 6.5 cents provides very strong technical support along with the Fibonacci 61.8% retracement level which is 7 cents…below is an updated 6-month daily chart from John…

Graphite One Resources (GPH, TSX-V)

As we’ve noted, graphite stocks started to pick up in December and Graphite One (GPH, TSX-V) is another example of that…below is an interesting chart from John that shows a confirmed breakout at 15 cents in GPH…the stock closed Friday at 18.5 cents when the company also announced it had arranged a non-brokered private placement to sell up to 4.3 million units on a “commercially reasonable-efforts” basis at a price of 14 cents per unit for gross proceeds of up to $602,000…over the short-term, due to the financing, GPH could test new support around 15 cents…as always, perform your own due diligence…

Note: John holds a position in TRM.