Gold traded as low as $1,227 this morning but got a strong boost on the release of a weak U.S. non-farm payrolls report for December…as of 7:30 am Pacific, bullion is up $17 an ounce at $1,245…Silver has gained 57 cents to $20.12…Copper has added 4 cents to $3.32…Crude Oil is nearly $1 a barrel higher at $92.59 while the U.S. Dollar Index has tumbled one-third of a point to 80.64…

TD Securities looks for Gold and Silver to slide some more, but not dramatically, in the early months of 2014 now that the Fed has started to taper its bond-buying program…TD then looks for the metal to stabilize and rise in the latter part of the year with the help of continued interest in Asia and renewed investment demand while the Fed likely to keep interest rates low despite an uptick in core inflation…Platinum and Palladium are among its favored metals for the year…

More predictions, for what they’re worth…Barclays expects Gold to average $1,205 an ounce in 2014 but test the 2010 lows in the process, according to an outlook report released yesterday…Silver is seen averaging $19, Platinum $1,539 and Palladium $768…

Gold has become inexpensive compared to Crude Oil, says investor and newsletter writer Dennis Gartman…he points out that it takes slightly more than 13 barrels of West Texas Intermediate crude oil to buy an ounce of Gold currently, compared to 22.5 barrels back in late 2011…the ratio fell as low as 11.5 barrels last July, he says. “Gold is cheap relative to crude oil, or Crude Oil is expensive relative to Gold; we care not which ‘position’ one wishes to see as relevant,” Gartman says. “However, as we watch gold buying continue at a heady pace in China and even too in India despite the latter’s government’s attempt to quell demand, we are impressed.” He says “the time for being short Gold is now behind us” but has refrained from turning bullish, with the exception of a long Gold/short Japanese yen position…“We are still refraining from doing so, but rest assured that our interest is piquing and our propensity to act is rising,” Gartman concludes (source: Kitco)…

Long-Term Chart:  Gold vs. U.S. 10-Year Treasury Note Yield

An interesting chart from John comparing Gold with the 10-Year Treasury Note yield (TNX), which we’ll comment on more next week…the yield has fallen this morning to 2.89% after encountering resistance again around 3.00%…

Weak U.S. Jobs Report

This was surprising, especially considering the strong private sector ADP jobs report earlier this week…the U.S. Labor Department reported this morning that job creation stumbled in December (the worst month in nearly 2 years) with the economy adding just 74,000 positions even as the Fed voted to take the first steps in eliminating its stimulus program…the unemployment rate dropped to 6.7%, below economists’ estimates and due primarily to continued shrinkage in the labor force…the labor force participation rate tumbled to 62.8%, its worst level since January 1978…

China Overtakes U.S. As World’s Biggest Trader

China became the world’s biggest trader in goods for the first time last year, overtaking the U.S. for all of 2013 and finishing the year with record trade figures for December…the total value of China’s imports and exports in 2013 was $4.16 trillion, a 7.6% increase from a year earlier on a renminbi-adjusted basis, according to figures released by the Chinese government today…the U.S. will release its full-year figures in February but its total imports and exports of goods amounted to $3.57 trillion in the 11 months from January to November 2013, making it a virtual certainty that China is now the world’s biggest goods trading nation…

China’s exports in December came in lower than expected, rising at an annual rate of 4.3%…imports, however, beat forecasts with an 8.3% year-over-year rise, up from 5.3% in November…they were boosted by high raw-material shipments…China brought in 6.33 million barrels a day of Crude Oil in December, a record, and Copper, iron ore and plastic imports were up strongly, too…

Today’s Markets

Asian markets were mixed overnight…China’s Shanghai Composite fell to a new 5-month low for a 2nd straight session following as investors continued to fret about a glut of IPO’s…the Shanghai fell 14 points to 2013…Japan’s Nikkei average climbed 32 points to finish the week at 15912…European shares are up moderately in late trading overseas…in New York, the Dow is off 23 points as of 7:30 Pacific…

Thanks to strength in commodities today, the TSX is up 84 points through the first hour of trading while the Venture has added another 4 points to 961…the Venture has strung together a very impressive 12-session winning streak, topping the longest consecutive daily advances in 2010 (11) and 2011 (10) during a rip-roaring bull market…

Dynasty Gold Corp. (DYG, TSX-V)

Over the next couple of weeks we’ll be highlighting some “cheapies” trading at 2 cents or less that have a chance in 2014…one of those is certainly Dynasty Gold (DYG, TSX-V) which was hoping to drill its promising early-stage Strike Property near Stewart last summer but didn’t receive its permits in time…the Strike, which has Gold-Silver and base metal (Cu-Pb-Zn) potential, with high-grade Silver and Zinc surface sampling results reported in November 2012, is underlain by Jurassic sedimentary and volcanic rocks of the Hazelton group – the same rocks that hosted the mineralization at the former Eskay Creek mine…the goal at the Strike will be to intercept precious and base metal enriched veins and potential strata-bound polymetallic mineralization at depth, particularly over the northern part of the property which appears to be the most prospective based on geophysical data…

Dynasty has a low burn rate and is sitting on just over $1 million in cash, certainly enough to kick-start a drill program this summer…below is a 2.5-year weekly chart from John…support is at 1 cent, an excellent entry point in our view for patient investors, with resistance between 2 and 4 cents…the company’s cash position, and the chance of a hit at the Strike, limits the likelihood of a rollback at the present time…

Encanto Potash Corp. (EPO, TSX-V) Chart Update

Technical alert from John – Encanto Potash (EPO, TSX-V) is on the rebound, having put in what appears to be a double bottom and now breaking above a downtrend line and an RSI(14) trend line…EPO is unchanged at 16.5 cents as of 7:30 am Pacific…

Barisan Gold Corp. (BG, TSX-V) Chart Update

Barisan Gold (BG, TSX-V) took a hit yesterday, falling 12 cents to close at 21.5 cents – its lowest close since November 19…the company reported very solid assay results from most of recently completed hole UTD-004 at its Upper Tengkereng Project in Indonesia, but they weren’t spectacular enough to satisfy some of the speculators who came into this play over the last couple of months…drilling of UTD-005 starts shortly…geologically, this story is still very much intact…technically, in terms of the stock, the Fib. 15-cent retracement level coincides with the rising 100-day moving average (SMA), so that’s clearly a major support price support level…a band of support runs from 15 to 21 cents…below is a 2+ year weekly chart from John…

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

Gold has traded between $1,224 and $1,233 so far today…as of 7:35 am Pacific, bullion is up $1 an ounce at $1,227…Silver is down 2 cents at $19.51…Copper has touched a 2-week low, off 4 pennies at $3.29…Copper’s weakness today is due in part to a gauge of Chinese producer prices which fell for a 22nd straight month…Crude Oil is up 14 cents to $92.47 while the U.S. Dollar Index is down slightly at 81.00…

The world’s largest Gold-backed exchange-traded fund, New York’s SPDR Gold Shares, reported its first outflow of the year yesterday, of 1.5 tonnes, taking its holdings to a 5-year low of 793.121 tonnes…last year the fund saw an outflow of more than 550 tonnes, the first year its holdings had fallen since its launch in 2004…

Bloomberg reported today that Silver stockpiles on the Comex in New York have hit 176.28 million ounces, the highest in 16 years since July 1997…inventories have climbed for 7 straight sessions, the longest stretch since February, reflecting the slump in investor interest in Silver ETPs which is interpreted by some analysts as a bullish contrarian sign…Silver prices tumbled 36% in 2013, the worst year for Silver since 1981 and the biggest decline after corn among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index…

Today’s Markets

Asia

China’s Shanghai Composite closed overnight at its lowest level since August, down 17 points at 2028…a wave of initial public offerings has started, China’s first ones in over a year, which is putting supply pressures on the market…meanwhile, Chinese consumer inflation slowed to 2.5% in December (a 7-month low) from November’s 3% figure, coming in below Reuters’ expectations for a 2.7% gain…producer price inflation, a measure of the price of goods as they leave the factory gate, remained mired in deflationary territory, falling 1.4% in December year-on-year, the same as November…excess manufacturing capacity along with weak global commodity prices have weighed on producer prices in China…

Japan’s Nikkei average fell 241 points or 1.5% to close at 15880…

Europe

European shares are slightly lower in late trading overseas…the ECB has left its benchmark interest rate unchanged at 0.25%…at a news conference following the rate decision, ECB President Mario Draghi stated that while a recovery is underway in the euro zone, it’s still too early to declare victory…he continues to insist that he does not see a deflationary threat at the moment…

North America

The Dow is off 24 points as of 7:35 am Pacific…the Labor Department tomorrow releases December numbers for new hiring and the jobless rate…

The Venture Exchange, which has posted 11 consecutive winning sessions and is trading above its 200-day moving average (SMA) for the first time since 2011, is up a point at 957…the TSX is off 4 points at 13611 but has staged a confirmed breakout above resistance at 13500…the next major resistance is around the 13800 level according to John’s 4-year weekly chart…

TSX 4-Year Weekly Chart Update

Barisan Gold Corp. (BG, TSX-V) Update

Barisan Gold (BG, TSX-V) reported solid initial results this morning from the fourth hole just completed at its Upper Tengkering Porphyry Prospect in Indonesia, though the stock is under selling pressure in early trading…UTD-004 was drilled to a final length of 1,465 metres…the hole was fully mineralized with the exception of an 82 m barren zone near the top of the hole (vs. two barren zones totaling 158 m in the previous hole)…a 202 m interval between 664 and 866 m returned 0.70 g/t Au and 0.40% Cu, not quite as spectacular as a 262 m intersection in UTD-003 (0.81 g/t Au and 0.49% Cu) but very respectable nonetheless…UTD-004 also returned the first meaningful molybdenum intercepts at Upper Tengkering…the 202 m interval in UTD-004 was 185 m to the east and 200 m deeper than the high-grade zones encountered in the second and third holes…assays are still pending for the final 475 m UTD-004…drilling of the 5th hole is expected to begin shortly…traders have done well on BG since November by buying into weakness and selling into strength…this is still a strong story given this morning’s news, and investors should expect continued volatility (and opportunities) in BG in the weeks ahead…BG is off 11.5 cents at 22 cents as of 7:35 am Pacific…

Corvus Gold Inc. (KOR, TSX) Update

Corvus Gold (KOR, TSX) reported drill results this morning from three additional holes along the northern extension of its Yellowjacket deposit at its North Bullfrog Project in Nevada, and one of those holes (NB-13-368) returned an impressive 33 m grading 4.14 g/t Au…it was 140 m along strike from previously reported NB-13-360 that intercepted 9.6 m grading 6.34 g/t Au…the high-grade Yellowjacket system has a current strike length of 600 m and remains open in all directions…importantly, assays from another 26 holes testing the strike extension of the Yellowjacket are pending…KOR is unchanged at $1.28 on light volume in early trading…

GoldQuest Mining Corp. (GQC, TSX-V) Update

Goldquest Mining Corp. (GQC, TSX-V) reported this morning that it has been granted the Descansadero concession, adjacent to its Romero Gold/Copper project, in the DR…the Company has also commissioned a 3,000 line km heli-borne geophysical survey covering its 100% owned Tireo Project, which includes the Descansadero concession and others that are under re-application…the geophysical survey is the first EM survey ever flown over this belt…the majority of the Tireo Volcanic Formation, on trend with Romero, has been unexamined to date…concurrent with the survey, the company has exploration crews completing focused mapping, sampling and ground magnetic surveys in high priority areas to help define drill targets…GQC is up a penny at 27.5 cents as of 7:35 am Pacific…

Mason Graphite Inc. (LLG, TSX-V) Chart Update

Mason Graphite (LLG, TSX-V) has been consolidating in recent days after more than doubling (51 cents to $1.07) between Christmas Eve and New Year’s Eve…below is an updated chart from John…two things are clear – a very strong support band exists between 50 and 60 cents, while LLG will meet resistance in the mid-80’s…it’s currently trading in between that range…overall, the trend remains bullish and this will be an interesting company to follow in 2014…

Madalena Energy Inc. (MVN, TSX-V) Chart Update

Madalena Energy (MVN, TSX-V) enjoyed a strong day yesterday, climbing 4 cents to close at 71 cents on total volume (all exchanges) of 5 million shares…intra-day, the stock hit a new 52-week high of 74 cents…it’s up another penny at 72 cents through the first hour of trading today…watch for a possible test of resistance around 81 cents, based on this 2.5-year chart from John, at which point MVN may need to consolidate…a significant gap is opening up between the current price and the rising 50-day moving average (58 cents)…

Contact Exploration Inc. (CEX, TSX-V) Chart Update

Another strong energy play we’ve been following is Contact Exploration (CEX, TSX-V) which is performing according to script after recently breaking out from a horizontal channel…from a technical standpoint, this is an excellent chart to learn from…note the strong uptrend support that’s also in place now – any pullbacks to that support should be good buying opportunities…CEX is up 1.5 cents to 34.5 cents as of 7:30 am Pacific…

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

Gold has traded between $1,219 and $1,233 so far today…as of 7:30 am Pacific, bullion is down $9 an ounce at $1,223 after a stronger-than-expected U.S. private employment report…Silver is off 41 cents at $19.44…Copper is flat at $3.34…Crude Oil is relatively unchanged at $93.54 while the U.S. Dollar Index is flat at 80.89…

Chinese Gold buying has noticeably picked up at the start of 2014, helped by softer prices and the approach of Chinese New Year holidays, according to traders and analysts (source: Kitco)…the premium in China rose to more than $20 an ounce earlier this week, about $10 higher than a week ago, though it eased slightly today…

Joni Teves, analyst with UBS, said volume on the Shanghai Gold Exchange has picked up significantly lately, with combined turnover for the two Gold contracts around 6-month highs…they reached 34 metric tons Monday and averaged 24 tons over the first few business days of 2014, compared to an 18-ton average in December, she said…

Meanwhile, analysts with HSBC, in a late-Monday research note to clients, said Indian authorities are reportedly in discussions on reducing the import duties on Gold and relaxing regulations limiting imports…while the rules have curbed official Gold imports, there also has been a substantial increase in smuggling…

Strong U.S. ADP Employment Report

U.S. private sector employment picked up in December as employers added 238,000 jobs, the most since November 2012, according to this morning’s much-anticipated ADP report…analysts were expecting a number between 200,000 and 215,000…job gains were broad-based across industries, most notably in construction and manufacturing…in addition, ADP revised November’s gain to 229,000 from 215,000…economists use ADP’s data to get a feeling for the U.S. Labor Department’s employment report which will be released Friday and covers government jobs in addition to the private sector…economists expect the government’s report to reflect that unusually bad weather conditions held back hiring last month, with non-farm employment rising by 190,000 jobs, compared with an increase of 203,000 in November…

Today’s Markets

Asia

Japan’s Nikkei average surged 307 points overnight or nearly 2% to close above 16,000…China’s Shanghai Composite closed relatively unchanged at 2044…

Europe

European shares are mixed in late trading overseas…euro zone unemployment data for November continued to show little sign of improvement…however, retail sales across the euro rose at the fastest pace in 12 years during November, boosting hopes that a revival in domestic demand may aid the currency area’s fragile economic recovery, and help minimize the threat of a damaging period of deflation…

North America

The Dow is off 51 points through the first hour of trading…the FOMC minutes will be released at 11:00 am Pacific and will be of particular interest given last month’s long-awaited announcement on tapering…investors will want to know whether policymakers were unanimous in their decision to scale back asset purchases by $10 billion to $75 billion per month, and whether further tapering looms in February…

In Toronto, the TSX is up 8 points as of 7:30 am Pacific while the Venture has added another 6 points to 956 as it inches closer to a key resistance area…the Venture has posted 10 consecutive daily gains…

Venture Multi-Year Monthly Chart

Below is a Venture monthly chart going back to 2001…one of the strongest clues that a turnaround is underway, that last June’s low of 859 was indeed an important bottom, is that the MACD line has reversed upward after being in decline for more than two years…previous recent critical turning points with this indicator were in late 2007 and early 2009…the SS indicator bottomed, it appears, in the spring of last year and what investors need to watch for now is a decisive cross of the %K above the 20% line…quite simply, this chart tells us that there’s a high probability that 2014 will be a turnaround year for the Venture…key resistance, of course, is in the 970’s, and a confirmed break above that will usher in a wave of fresh buying and renewed investor interest…exact timing of a potential breakout cannot be predicted but sometime during this first quarter is likely a safe bet…

Probe Mines Ltd. (PRB, TSX-V)

Probe Mines (PRB, TSX-V) continues to look strong…the company released assay results yesterday from the remainder of its 2013 drill program at Borden Lake…infill holes continue to show significant intersections of robust mineralization in the high-grade zone which has been expanded to more than 1 km in length and remains open to the southeast…meanwhile, grades continue to improve in the potential open-pit area to the northwest…PRB drilled a total of 218 holes last year (84,000 metres) which should build significantly on the last resource estimate (3.7 million ounces indicated, 600,000 ounces inferred)…the company is currently mobilizing four rigs to the property for a winter drill program that will focus on high-grade zone expansion and infill drilling…

Below is an updated PRB 2.5-year weekly chart from John…notice how PRB has significantly outperformed Gold since the spring of last year…there has also been a confirmed breakout above resistance at $2.20…PRB is unchanged at $2.43 as of 7:30 am Pacific…

Focus Graphite Inc. (FMS, TSX-V)

Focus Graphite (FMS, TSX-V) reversed in a major way after announcing December 19 that it had signed a off-take agreement for future production from its Lac Knife graphite resource in Quebec…the strategic agreement, for up to 40,000 tonnes per year of graphite concentrate and value-added products, is with an industrial conglomerate comprising heavy industry, manufacturing and technology companies located in Dalian City, Liaoning province, China…

Below is a 6-month daily FMS chart from John…importantly, the stock broke above a downtrend line Dec. 20 and climbed as high as 69 cents Dec. 30…since then, it has been unwinding a temporarily overbought condition…strong new support in the low 50’s…as of 7:30 am Pacific, FMS is up 3 pennies at 61 cents…a much better year appears to be shaping up for Focus Graphite.

Critical Elements Corp. (CRE, TSX-V)

John’s most recent Critical Elements Corp. (CRE, TSX-V) chart in October showed a normal Fib. retracement had started that could take the stock as low as about 16 cents…indeed, CRE found a low on a closing basis at 15 cents and has recently been showing strength, finishing yesterday at 20 cents…technically, the key for Critical Elements is to push above a stiff resistance band between 24 and 25 cents…the RSI(14) and other indicators on this 2.5-year weekly chart suggest an attempt will be made to overcome that resistance…CRE continues to develop its Rose Tantalum-Lithium Project in Quebec, and recently reported improved recoveries of tantalum in metallurgical testing are highly encouraging…as always, perform your own due diligence…

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

Gold has traded between $1,225 and $1,246 so far today…as of 7:30 am Pacific, bullion is near its low of the day, down $11 an ounce at $1,227…Silver is off 46 cents at $19.72…Copper is flat at $3.33…Crude Oil is 17 cents higher at $93.62 while the U.S. Dollar Index is up one-quarter of a point at 80.89…

Gold is getting a push to begin the year from index rebalancing (the Goldman Sachs Commodity Index and the Dow Jones/AIG Commodity Index, for example, both raised their weightings for Gold and Silver for 2014 which has required these long-only funds to step in and buy)…

The big near-term test for Gold will be if it can overcome resistance around $1,275, as John’s chart showed Sunday, and then push above a downsloping wedge which would mean a strong move on impressive volume through $1,300…

Gold stocks, as measured by the TSX Gold Index, are beginning to look stronger but they still have important downward sloping trend lines to test from beneath…

Federal policymakers Eric Rosengren and John Williams will speak on the U.S. economy this afternoon…both are viewed as dovish regarding monetary easing and their speeches will be listened to with an ear to the December Fed policy meeting minutes due tomorrow…

Federal Reserve speakers continue to move the markets…yesterday, the Dow lost about 50 points as the Philadelphia Fed’s Charles Plosser, a hawk and a voting member of the FOMC, gave a speech in which he noted that the Fed must be prepared for a rapid tightening campaign, if needed…a little later in the day, the Dow rose modestly as Chairman Ben Bernanke, in his last major speech, said, “The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accomodation bodes well for U.S. economic growth in coming quarters.”

Janet Yellen’s confirmation as the next Chairman of the Federal Reserve was approved by the U.S. Senate last night…Yellen will become the first woman to lead the central bank in its 100-year history after the Senate voted to confirm her in a 56-26 vote…11 Republicans joined 45 Democrats to support her…no Democrats opposed her…

“With growth (in 2014) to the mid-3’s and potentially higher, you’re actually adding accommodation to the economy,” Joe LaVorgna, chief U.S. economist at Deutsche Bank, told CNBC yesterday. “Yes, you’re slowing the pace of the buying, but the balance sheet is still growing. It’s staggering to me. I just don’t see how they’re going to get out in a clean way.”

CRB Index Updated Chart

While the Venture has encouragingly overcome its downtrend line, the CRB Index has yet to do so…it’s currently constrained by the upper limits of the downsloping wedge (high 280’s) with strong support around 268…it closed yesterday at 277…

Today’s Markets

Asia

Asian markets were mixed overnight…China’s Shanghai Composite added 2 points to finish at 2047 while Japan’s Nikkei average slipped 95 points…

Europe

European shares are up modestly in late trading overseas…the euro zone’s deflation threat continues, however…the EU’s statistics office reported this morning that the euro zone zone’s annual inflation rate in December dipped to 0.8% from the 0.9% rate in November…the shock 0.7% rate recorded in October triggered the last ECB rate cut…

North America

North American markets are strongly in the green so far today…the Dow has climbed 115 points through the first hour of trading…the Commerce Department reported the trade deficit in the U.S. narrowed more than forecast as oil imports fell and exports rose, with the gap narrowing to $34.3 billion…

The TSX, looking to snap a 3-session losing skid to begin 2014, is up 100 points to 13596…the Venture, which has advanced for 9 straight sessions, is 2 points higher at 947…

Magor Corp. (MCC, TSX-V) Update

Magor Corp. (MCC, TSX-V) enjoyed its third-largest volume day ever yesterday, closing 2.5 cents higher at resistance at 50 cents on 370,000 shares…it climbed as high as 55 cents intra-day…MCC’s third quarter began in November with the video collaboration company enjoying its best quarterly start in history in terms of revenue…quarterly losses continue to be gradually trimmed, and the company could be on track to turn profitable later this year especially if current trials with its newly-launched Aerus cloud-based services prove successful…50 cents is a key level from a technical standpoint…a confirmed breakout on MCC would require back-to-back closes above 50 cents (refer to John’s chart yesterday)…MCC is quiet so far today with no trading through the first hour…no guarantees given the competitive arena, but Magor has some key advantages…we’ve stated all along – and continue to believe – that the potential of this tech play is truly phenomenal given the management team and its products which we’ve seen in action…Magor has been like a slow-moving train since turning public last spring but is finally picking up steam…let’s hope the momentum continues on both the business and market fronts…

Barisan Gold Corp. (BG, TSX-V)

Barisan Gold (BG, TSX-V) continues to look very healthy as 2014 begins…BG gained 3 cents Friday and another 4 pennies yesterday to close at 34 cents…there appears to be excellent support at the Fib. 27-cent level as demonstrated on the first trading day of the year…this could be a very interesting month for BG if speculation regarding drill results really ramps up and if indeed those results are as stellar as the last set that was reported November 5…

Below is a 2+ year weekly chart from John…RSI(14) is rising once again, after overbought conditions were cleansed significantly, while the overall trend remains bullish…as always, perform your own due diligence…as of 7:30 am Pacific, BG is off half a penny at 33.5 cents…

Contact Exploration Inc. (CEX, TSX-V)

Contact Exploration Inc. (CEX, TSX-V) is a promising Alberta oil and gas play very worthy of our readers’ consideration for 2014…the stock has staged a confirmed breakout above the 28-cent level (it traded in a horizontal channel between 18 and 28 cents from late 2012 to late 2013), so this is one to watch very carefully just from a technical point of view…below is a 2.5-year weekly chart from John…looks very strong…CEX is unchanged at 31 cents through the first hour of trading…

Starcore International Mines Ltd. (SAM, TSX)

A small producer we continue to like is Starcore International (SAM, TSX) which is showing an improving balance sheet as well as potential exploration upside at its San Martin Mine, 250 km northwest of Mexico City…the rising 20-day SMA at 19 cents should provide good support while the 50-day SMA has flattened out immediately beneath that at 18 cents…21 cents, where the stock is trading at so far this morning, is one resistance level as indicated in this updated 2.5-year weekly chart from John…

Note: John and Jon both hold share positions in BG.  Jon also holds a share position in MCC.

Gold has traded between $1,233 and $1,249 so far today…as of 7:30 am Pacific, bullion is up $3 an ounce at $1,241…Silver has also reversed from a slight earlier loss and is now 6 cents higher at $20.21 (see new Silver charts at the bottom of today’s Morning Musings)…Copper is off a penny at $3.32…Crude Oil, after falling nearly 5% last week, is relatively unchanged at $93.92 while the U.S. Dollar Index has retreated one-tenth of a point to 80.75…

Despite net Chinese Gold imports through Hong Kong falling below the 100-tonne level in November, Chinese net Gold imports for all of 2013 should easily exceed 1,100 tonnes…that is almost double the amount imported in 2012…according to figures from the Shanghai Gold Exchange, total 2013 Chinese Gold imports through Hong Kong and other routes may have been in excess of 2,000 tonnes…

China will hold its first state-supported Gold conference in Beijing in September of this year…the China Gold Conference and Exposition is being organized by the China Gold Association with support from the World Gold Council, the Shanghai Gold Exchange, and the Shanghai Futures Exchange…as Frank Holmes stated in his weekly Investor Alert (www.usfunds.com), “This could be a timely opportunity and a nice venue for China to make new announcements about Chinese Gold reserves and/or policy.  A substantial increase in China Gold reserves could have a dramatic effect on the Gold price.”

Turkey continues to import increasing amounts of Gold…the country’s bullion imports jumped 64% in December to 31.6 tonnes…the U.S. Mint started 2014 with strong sales of Gold coins…on January 2, there were 37,500 ounces of Gold coins sold, which is equal to 25% of all sales during January 2013…

Today’s Markets

Asia

Chinese shares sold off overnight following a weak services sector report…the Shanghai Composite finished down 37 points at 2046…meanwhile, profit-taking and a stronger yen contributed to a 382-point drop (2.4%) in Japan’s Nikkei average as it fell below 16,000 on its first trading day of the new year…the Nikkei ended 2013 with 9 straight winning sessions and a total 2013 rise of a whopping 57%…

Europe

European markets were generally slightly higher today…euro zone composite purchasing managers’ index (PMI) data showed that activity in the services and manufacturing sectors rose to 52.1 in December, up from 51.7 in the previous month…

North America

The Dow is up 29 points at 16499 as of 7:30 am Pacific…in Toronto, the TSX is down for the third straight session (off 15 points) to begin 2014…meanwhile, the Venture – which has enjoyed 8 consecutive winning sessions – has added another 2 points to 947…

TSX Gold Index Updated Chart

Some bullish signs are appearing in the TSX Gold Index which has been basing in a 6-week horizontal channel…the biggest near-term challenge for the Index will be to work its way out of a long-term downtrend line, and just above that is a still-declining 200-day moving average (SMA) as you can see in John’s 18-month weekly chart below…so the Gold Index has some serious work to do…it’s ahead 2 points at 163 as of 7:30 am Pacific…

Updated CDNX 3-Year Weekly Chart

One of the most impressive features of the 3-year weekly Venture chart is the gradually rising RSI(14) trendline…what we’ll be watching for now is whether the RSI(14) can overcome resistance around the 50 level…

Strong accumulation continued in the final quarter of last year based on the Chaiken Money Flow (CMF) indicator…the Index finally broke above a long-term downtrend line in October which has become new support as evidenced since then…key resistance for the Venture to overcome, of course, is in the 970’s…for the first time since 2011, the Index is now trading slightly above its 200-day moving average (SMA)…much more significant would be a reversal to the upside in the 200-day which conceivably could occur later this quarter…

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

Big North Graphite Corp. (NRT, TSX-V) made a big move following our eAlert last Tuesday morning, climbing by as much as 67% in just 3 trading sessions when it got as high as 10 cents intra-day Friday before finishing the week at 8.5 cents…NRT is currently producing amorphous graphite in Sonora State, Mexico, so they’re “walking the walk” as well as talking the talk…more interestingly, though, Big North recently announced a Letter of Intent to acquire a 100% interest in a private company that owns the past producing El Tejon flake graphite mine in southern Mexico (Oaxaca State)…this open-pit mine was operated up until 2002, first by the Mexican government for many years and then privately, before it was shut down due to low prices…if Big North can rekindle the flame at El Tejon, Mexico’s only past producing flake graphite mine, this play could really heat up…record volume in NRT last week – very bullish…

As John’s 2.5-year weekly chart shows, previous resistance at 6 cents is now new support…there’s also support at 7.5 cents…this is a strong-looking chart with many favorable aspects to it, so patient investors with a position below a dime have a chance to do extremely well…as always, perform your own due diligence…NRT traded as low as 7.5 cents in early trading but is now even for the day at 8.5 cents as of 7:30 am Pacific…

Garibaldi Resources Corp. (GGI, TSX-V) Updated Chart

Garibaldi Resources (GGI, TSX-V) is up 60% since the beginning of December as it edges closer toward a major technical breakout…several fundamental factors (La Patilla drilling, Tonichi and Iris Projects, Grizzly Property) are converging to create the dynamics necessary for a push through critical resistance at 15 cents…with a strong management group, a healthy financial position and a basket of properties with serious exploration upside, GGI is a compelling opportunity at current levels…and a huge advantage for GGI is its tight share structure with no warrant “overhang” – no significant dilution in this stock for nearly 5 years, and some royalty income to boot…hardly any companies on the Venture can make the same claim…

John’s updated 3.5-year weekly chart shows a bullish flag formation and an RSI(14) breakout above a trendline…should be a positive week for GGI…as of 7:30 am Pacific, the stock is unchanged at 13.5 cents…

Magor Corp. (MCC, TSX-V) Update

Magor Corp. (MCC, TSX-V), a video collaboration company that started trading on the Venture last March after raising $6 million, has gained the most (28.4%) so far of any of the 20 opportunities we highlighted December 24…Magor does appear to be gaining some traction in terms of its business model after enjoying the best start to any quarter in the company’s history in terms of revenues in November…MCC’s Aerus cloud-based services are currently in service trials, and the success of that launch will obviously be critical…an experienced management team with a proven track record gives Magor a decent chance of becoming profitable later this year and building value for shareholders…technically, the stock is looking a lot healthier these days…the breakout above resistance at 40 cents is encouraging…the 50-cent level is the next major hurdle…volume and overall investor interest should accelerate on any confirmed move through 50 cents…as of 7:30 am Pacific, MCC is unchanged at 47.5 cents…

Silver Short-Term Chart

Silver Long-Term Chart

Note: John and Jon both hold share positions in GGI.  Jon also holds a share position in MCC.

TSX Venture Exchange and Gold

The Venture has strung together 8 consecutive winning sessions for a total gain during that period of 57 points or 6.4%.  The 3-year weekly chart we’ve been tracking regularly over the last few months (fresh update tomorrow morning) gives irrefutable proof in our view that the bears are exhausted and have lost their control over this Index.  It is safe to declare, then, as we’ve been suggesting, that the Venture bear market is finally over after a total decline of 1606 points or 65% from the early March 2011 high of 2465 to the late June 2013 low of 859.  The period of consolidation since the beginning of last summer has been very encouraging and has laid the groundwork for a sustainable advance. Overwhelmingly bearish sentiment peaked and that’s when turnarounds typically occur (in contrast, extreme bullish sentiment peaked in late 2010/early 2011).

There are still some hurdles for the Venture to cross, however, and keep in mind that a rising tide will not lift all boats.  Selectivity is going to continue to be very important – so focus on the companies that are very active on the ground, have healthy balance sheets, strong management teams, superior properties, attractive share structures, and an aggressive communications strategy.  Healing and cleansing of this market will continue throughout 2014.  The strong will not only survive but many will thrive.

The Venture has poked its head slightly above its 200-day moving average (SMA) for the first time since 2011.  A reversal to the upside in this SMA will be critical, and the possibility of that occurring later this quarter (mid-February perhaps) is very real.  The 100-day, in the 930’s, is now beginning to rise and should provide strong support.  The Venture last week also overcame chart resistance at 915 and 925 which now becomes fresh support as well.  The Index closed Friday at 945 for a gain of 26 points for the shortened week, on top of the 31-point advance the previous week.

The key hurdle for the Venture to cross is the very stiff resistance in the 970’s (precise timing of such an important breakout remains uncertain, though it’s merely a question of when in the coming weeks, not if in our view).  Once this is cleared, look out – the bears will be scurrying like chickens from a fox.  Another attempt to push through this resistance could certainly come as early as this week given the current strong up momentum in the RSI(14), a bullish +DI/-DI crossover and a reversal from sell pressure to buy pressure in this 9-month daily chart from John.

The Seeds Have Been Planted (And Continue To Be Planted) For The Next Big Run In Gold Stocks

There’s no better cure for low prices than low prices.  The great benefit of the collapse in Gold prices in 2013 is that it forced producers (at least most of them) to start to become much more lean in terms of their cost structures. Producers, big and small, have started to make hard decisions in terms of costs, projects, and rationalizing their their overall operations.  Exploration budgets among both producers and juniors have also been cut sharply.  In addition, government policies across much of the globe are making it more difficult (sometimes impossible) for mining companies to put Gold (or other) deposits into production, thanks to the ignorance of many politicians and the impact of radical and vocal environmentalists (technology has made it easier for groups opposing mining projects to organize and disseminate information, even in remote areas around the globe).   Ultimately, all of  these factors are going to create a supply problem – think about it, where are the next major Gold deposits going to come from? On top of that, grades have fallen significantly just over the past decade.

It doesn’t take a rocket scientist to figure out that the next huge bull market in Gold stocks is just around the corner due to demand-supply dynamics, much leaner producers who will suddenly become earnings machines, and a junior market that will be healthier simply because a lot of the “lifestyle” companies sucking money out of investors will simply disappear or get taken over by individuals or groups who are actually competent and serious about building shareholder value.   A healthy “cleansing” in the market has been taking place.  As this continues, more and more seeds are being planted for an incredible future move in well-managed Gold producers and explorers that could make the dotcom bubble look like a tea party.  As for the juniors, focus on the small universe of companies that have the ability to execute both on the ground and in the market.  Companies that are strong financially, have superior exploration prospects, competent management and clean share structures.

Gold

Gold is in rally mode as 2014 begins, and a near-term test of resistance around $1,275 appears to be in the cards.  For the week, Gold climbed $24 an ounce to close at $1,238.  This 9-month daily chart from John is encouraging in that it shows a double bottom reversal pattern.  However, while we’re confident the Venture has found its low, we’re not convinced that Gold has just yet.  There is no inconsistency in that view.  The Venture has proven to be a reliable leading indicator and peaks and bottoms in this Index historically have preceded peaks and bottoms in the metal – 2011 being a great example when the Venture high occurred six months prior to Gold’s spectacular move above $1,900.

Overall, we believe Gold will surprise to the upside in a volatile 2014 after suffering its worst year (a 28% decline) since 1981.  Too many U.S. money managers are parked in the bearish camp.  Accumulation by China has been relentless.  We expect a pick-up in demand from India this year, and the heavy selling of Gold ETP’s should certainly abate.

Silver jumped 73 cents last week to close at $20.15.  Copper fell 2 pennies to finish at $3.33.  Crude Oil got hit hard on supply concerns, falling nearly $5 a barrel to $95.44.  The U.S. Dollar Index gained half a point to close at 80.87.

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, the long-term bull market in Gold has been 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, has had a huge impact on bullion.  Despite this year’s drop, the fundamental long-term 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, a Fed balance sheet now at $4 trillion and still expanding, money supply growth around the globe, massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand (especially from China), emerging market growth, geopolitical unrest and conflicts…the list goes on.  However, deflationary concerns around the globe and the prospect of Fed tapering had a lot to do with Gold’s plunge during the spring below the technically and psychologically important $1,500 level, along with the strong performance of equities which drew money away from bullion.  June’s low of $1,179 may have been the bottom for bullion – only  time will tell.  Given the high level of bearishness that exists in this market at the moment, it’s probably safe to say that if Gold hasn’t seen its low yet, it’s at least very close to a bottom (within 10% to 15%).  We do, however, expect new all-time highs as the decade progresses and inflationary pressures finally kick in around the globe after years of ultra-loose monetary policy.  There are many reasons to believe that Gold’s long-term bull market is still intact despite this major correction from the 2011 all-time high of just above $1,900 an ounce.

Venture Update

After a 24% decline in 2013, preceded by similar losses in 2011 and 2012, the Venture Exchange is giving strong signals that 2014 is going to be a “turnaround year”.  In fact, the 3-year weekly CDNX chart that we’ve been tracking closely is downright bullish.

While many investors have been crying the blues about the junior resource sector in recent months, with some even giving up on this market entirely (a contrarian sign of an imminent reversal), the “smart money” has been accumulating high-quality issues – some of which could produce spectacular gains in the weeks and months ahead if the Venture remains on its current course.  Selectivity will be key.  As the Venture continues to heal and cleanse itself, in the midst of the early stages of a new uptrend, we’re sure to see an increasing number of rollbacks and even more issues (“lifestyle” companies predominantly) that simply disappear.  Good riddance.  The strong will survive and many of those will ultimately flourish.

Given the underlying bullishness of this chart, we have every reason to believe the Venture is on track for a major technical breakout through the 970’s, though exact timing of course is uncertain.

Key “takeaways” from John’s updated 3-year weekly CDNX chart:

• Note how the Venture in late October finally broke above a long-term downtrend line which since then (importantly) has held as support.  The Index is now accelerating to the upside after successfully testing that support again in December in an environment of a falling Gold price and tax-loss selling pressures;
• Note the impressive RSI(14) uptrend in place since the beginning of last summer.  This is different than anything witnessed with regard to the RSI since the Venture bear market began in early 2011;
• Note how the Venture is now outperforming Gold for the first time since 2011, another very positive sign (for both the Venture and Gold).  The Venture topped out in March, 2011, six months ahead of Gold’s high.  Likewise, the Venture (a reliable leading indicator) may do the same in reverse – in other words, it likely found a bottom in late June, 2013, perhaps 6-9 months ahead of a final low in Gold yet to come;
• Note the strong accumulation in the Venture since the beginning of July as shown by the CMF indicator – evidence of “smart money” accumulation.

The Venture closed above two chart resistance levels – 915 and 925 – to finish 2013 and is now resting just very slightly below its 100 and 200-day moving averages.  This is the closest the Venture has been to moving above its 200-day SMA since falling below it in early 2011.  The 100-day is beginning to reverse to the upside.  The 200-day could do the same later this quarter.  A critical resistance band exists between these moving averages and the 970’s.  Once the Venture is able to overcome the latter hurdle, it’s off to the races.

Investors who focus on companies with healthy balance sheets, clean share structures, strong management and geological teams, superior properties, and an overall determination to build shareholder value, have a unique opportunity at this particular time to take positions in stocks that could easily double or triple even in just the first six months of the year.

Check our Dec. 24 posting at BMR as we presented 20 special situations for our readers’ due diligence – one of those, Garibaldi Resources Corp. (GGI, TSX-V), has several immediate potential catalysts (see below) that could blast this stock out of the 2014 starting gate this month.  We’ll be going into more detail on other companies on that list in the days ahead, and potential new opportunities as well.

Garibaldi Resources Corp. (GGI, TSX-V)

Garibaldi has more than doubled since we first introduced it to our readers last June.  With a plethora of opportunities in B.C. and Mexico, from high-grade Gold to Copper to graphite, a strong working capital position (more than $3 million) and a skilled, focused management team, Garibaldi’s run is just beginning in our view.  As always, perform your own due diligence.  It’s one of the few juniors that’s had virtually no dilution in its stock since 2009.  This is management’s only deal (another rarity), and the company is even generating royalty income from a pilot coal program that has strong upside potential with graphite possibilities as well.

GGI’s Potential January Catalysts:

La Patilla

Ongoing drilling at La Patilla in Sinaloa State (Mexico) could lead to a discovery given the extent of near-surface mineralization (high-grade channel samples over significant widths and up to 38 g/t Au) outlined over parts of a breccia and a vein/stockwork system.  Geology, infrastructure, and local community support are all very favorable factors.  Artisanal miners have been productive at La Patilla for many decades, so Gold has already been extracted from there.  This property, never previously diamond drilled, has a great chance at being a winner.  It’s an easily manageable project for a company of GGI’s size and resources.  They’ve also already pulled off two coups with this property – by acquiring it at just the right time (on excellent terms) when Gold was collapsing in the spring, and by negotiating a long-term deal with the local community to advance La Patilla prior to when drilling commenced.  Wise management moves.

Iris Project

Carlos Slim, the richest man in the world (worth more than $70 billion) according to Forbes Magazine, is taking direct aim at a Gold discovery (Venus) within just a few hundred metres of Garibaldi’s strategically located Iris Project in Chihuahua State, Mexico.

Carlos Slim, the world's richest man, controls Minera Frisco which has a producing Gold mine and an exploration discovery bordering GGI's drill-ready Iris Project.

Slim controls Minera Frisco which is carrying out a large exploration program at its Venus Property, contiguous to the eastern boundary of Iris.  There are two significant producing mines within just a couple of km. Garibaldi has “hot spots” on Iris that are now drill-ready.  The fact that Slim is in the middle of the picture here creates all sorts of possibilities, including a great market story, that could have important ramifications for GGI.

Tonichi Project

Gold, Cu-Au porphyry, Silver, coal, graphite – wide assortment of mineral opportunities with numerous targets throughout this large Sonora State land package and some assays pending.  GGI is also generating royalty income – pure profit – from a successful pilot coal program that has a chance to expand beyond coal to graphite. As Garibaldi reported in late September, “Sonora coal districts are favorable exploration targets for microcrystalline graphite deposits”, and the company has identified a “graphite zone” with more information including assay results pending.  We believe the coal is very high-grade, or there are massive amounts of it, given the royalty income GGI is earning.  Most microcrystalline graphite deposits are formed by contact or regional metamorphism of coal beds or other highly carbonaceous sedimentary rocks.  There’s clear potential for an imminent “graphite surprise” from GGI.

Grizzly Property

The Grizzly in the heart of the Sheslay Valley region is Garibaldi’s B.C. flagship property and a potential company-builder just by itself.   Multiple Cu-Au porphyry targets have been outlined over 15 km from Grizzly West to Grizzly Central, and an anticipated major update on this important project could come this month.  With the Grizzly, GGI controls the largest land position among juniors in the Sheslay Valley which could easily develop into B.C.’s hottest exploration camp in 2014.

Updated GGI Chart:

There are few companies on the Venture with such a favorable chart.  Not only are GGI’s moving averages in positive alignment, but a bullish flag has formed in recent months following a breakout above a long-term downtrend line.  The flag is underpinned by excellent support from a rising 200-day SMA and the 300-day which has flattened out (ending a decline) and appears ready to reverse to the upside.  Plenty of room for RSI(14) to move higher.  Explosive possibilities here.  Once the 15-cent level is cleared, GGI will run faster than a cheetah.

Given the recent increasing buy pressure, and based on similar patterns we’ve seen previously in other stocks, watch for a potential near-term breakout above the flag formation which should be accompanied by a major increase in volume.  The next Fib. level is 24 cents (not a price target, just a theoretical level based on Fib. and technical analysis).

To conclude, we’ll leave today’s last words on GGI to another writer and publication – Investor’s Digest of Canada has just come out with a very positive piece on GGI for its subscribers.  “The company has already scored some impressive successes, while husbanding the potential to morph into a much more compelling story,” stated Mike Kachanovsky.  “For speculative investors who want some action in the junior mining sector, Garibaldi is one name that deserves a look.”

Gold Chart Update

With Gold having suffered its worst annual loss – almost 30% – since 1981, investor sentiment regarding bullion is at multi-year lows.  From a contrarian standpoint, that’s encouraging to see.  After 12 consecutive yearly increases, a much-needed correction was both necessary and healthy.  We may not have seen the low in Gold yet but if we haven’t, it’s not far off, and a new uptrend could easily begin at some point during 2014. At the moment, a significant gap has opened up between the current price and the downsloping wedge, so conditions for a near-term rally certainly appear to be in place with a current trading range between the June low and about $1,300.  John’s 9-month daily chart also shows a possible double bottom reversal pattern.  In the big scheme of things, Gold’s long-term bull run remains intact and much higher prices should be expected by mid-decade.

Best wishes for a happy, peaceful and prosperous New Year from the team at www.BullMarketRun.com.  We’ll be posting our Week In Review And A Look Ahead on Sunday, followed by the resumption of our daily Morning Musings Monday.

Note: John and Jon both hold positions in GGI.