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

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

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

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

Oil Update

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

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

Euro Zone Takes The QE Drug

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

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

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

Euro To Head Lower – Updated Chart

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

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

King Dollar

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

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

Canadian Dollar Update

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

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

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

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

Dropping Like Flies

There’s Gold In That Sewage Sludge!

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

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

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

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

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

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

Today’s Equity Markets

Asia

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

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

Europe

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

North America

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

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

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

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

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

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

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

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

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

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

Note:  Jon holds a share position in FMR.

Gold has traded between $1,280 and $1,308 so far today…as of 8:30 am Pacific, bullion is up $12 an ounce at $1,305…Silver is 26 cents higher at $18.37…Copper has fallen 6 cents to $2.57…Crude Oil has lost $1.27 a barrel to $46.51 on rising U.S. Crude inventories, while the U.S. Dollar Index has exploded by more than a full point following the ECB’s monetary gymnastics…it’s now at 93.81, overcoming resistance at 93…

SPDR Gold Trust, the world’s top Gold-backed ETF, saw outflows of 0.24% to 740.45 tonnes yesterday…meanwhile, though physical demand continues to be firm in China, Indian Gold importers were offering discounts of up to $16 an ounce versus London prices, the widest in 17 months, on weak demand and expectations of a duty cut according to a report from Reuters…

Gold surged above $1,300 yesterday for the first time in 5 months before backing off to close at $1,293, snapping the metal’s 7-session winning streak…that was a combination of healthy profit taking, given Gold’s $100 advance already in 2015, and some nervousness surrounding today’s ECB decision and Mario Draghi’s news conference.  As UBS commented, “A scenario where the ECB delivers a substantially larger package versus current expectations, and especially versus the UBS estimate of [€1 trillion], could potentially encourage Gold to overlook the euro impact and focus more on the ECB’s balance sheet expansion.”

Another view:  “There has been a perception that central banks have been losing control (our emphasis, bullish for Gold), with several changing policy unexpectedly, thus fueling demand for Gold,” Matthew Turner, a precious metals analyst at Macquarie Group Ltd., stated in an interview with Bloomberg.  “The ECB can restore calm today if its policy is seen as effective and commanding broad support.”

ECB Acts But Draghi Will Need A Bigger Torpedo

The ECB officially announced this morning that it will purchase euro zone countries’ government bonds, a landmark decision aimed at combating stagnation and stave off deflation in a region that has emerged as a top risk to the global economic recovery…how effective this program will be remains to be seen, and how many bullets does the ECB have left if this doesn’t work?…what the ECB is now finally doing could be too little, too late (in retrospect, it should have acted in 2008 when the Fed did)…

ECB President Mario Draghi said the ECB will buy a total of €60 billion ($69 billion) a month in assets including government bonds, debt securities issued by European institutions and private-sector bonds…the purchases of government bonds and those issued by European institutions will start in March and run through September 2016, Draghi said…

“The ECB decision is very important for my country, but decisive and crucial for the European economy,” Italian Prime Minister Matteo Renzi said in an interview with The Wall Street Journal, adding that it is “absolutely important in the future to give more power to the ECB.”

Loonie Tunes

If there was any doubt in some investors’ minds about how potentially serious and drawn-out the collapse in Oil prices could be, the Bank of Canada spoke loud and clear yesterday when it became the first central bank in the Group of 7 to cut interest rates in response to plummeting Oil prices, saying the shock will weigh on everything from inflation to business spending…

The decision by the central bank to cut rates for the first time since April 2009 caused the loonie to tumble to a new multi-year low, and John’s technical check-up on the loonie suggests it could ultimately hit the low 70’s before it finally hits bottom and reverses (we’ll be posting a fresh loonie chart tomorrow)…

“The Oil price shock increases both downside risks to the inflation profile and financial stability risks,” the central bank said in its statement, adding the cut is “intended to provide insurance against these risks” and support the adjustments needed to return the economy to full output…Governor Poloz said in a later news conference that the bank would take out more “insurance” if economic conditions warranted…

The central bank also reduced its growth forecast for the first half of this year to a 1.5% annualized pace, from an October estimate of 2.4%…inflation will slow to 0.3% in the second quarter, outside the central bank’s target range of 1% to 3%, the bank projected…

Optimistic Price Forecasts?

The central bank’s latest forecasts assume average benchmark Crude prices this year at $60 a barrel, down from an October assumption of $85 per barrel…but is even $60 a barrel an unrealistic expectation?…

Investment

Oil and gas investment will probably drop by about 30% this year and be little changed in 2016, the bank said, adding growth in Canadian energy exports will slow to 1% from 6% in 2014…current Crude prices mean “many projects” in Canada are now unprofitable, the central bank said…

Home sales in Calgary, the nation’s Oil hub, plummeted 24.6% in December from the previous month, the Canadian Real Estate Association said last week…that was the worst drop since the 2008 financial crisis…

The Bright Side

On the brighter side, the central bank said the lower Oil price will boost global growth, in particular in the U.S., Canada’s largest trading partner…that should raise Canada’s 2016 growth rate to 2.4%, higher than the October forecast of 2.3%, the bank said…in other words, some short-term pain will have some long-term benefits…the negative immediate impact of lower Oil prices will gradually be mitigated by a stronger U.S. economy, a weaker Canadian dollar, and the bank’s monetary policy response…

Today’s Equity Markets

Asia

China’s Shanghai Composite climbed another 21 points overnight to close at 3334..

What’s startling about this updated Shanghai chart from John is that the Chinese market still appears to have much higher to go, despite last year’s 53% climb…this implies the likelihood of lower commodity prices in general (Gold will probably be an exception) as the CRB has been moving determinedly in the opposite direction of the Shanghai since last summer…

Overbought RSI(14) conditions have unwound on this 3-month daily chart, and next measured Fib. resistance is 4021 – 21% above today’s close…

Europe

European equities were up significantly today (more than 1%) in response to the ECB decision and Draghi’s comments…

North America

The Dow has climbed 135 points through the first 2 hours of trading today…the TSX has shot up 150 points while the Venture, trying to gain traction above key resistance at 680, has added 3 points to 682…

Financing Window Opens For Gold Producers

It’s worth noting that the financing “freeze” for Gold companies is beginning to thaw…no less than 6 companies have announced bought deal offerings in the last couple of days: Romarco Minerals (R, TSX), Detour Gold (DGC, TSX), Osisko Gold Royalties (OR, TSX), Primero Mining (P, TSX), Asanko Gold (AKG, TSX), and Richmont Mines (RIC, TSX)…combined, these companies are raising a whopping $789.8 million…last week, Yamana Gold (YRI, TSX) unveiled a $260.2 million equity deal of its own, while Lydian International (LYD, TSX) tapped the market for $16.5 million…

The flood of financings coincides with a significant jump in the Gold price that has reignited investor enthusiasm for the sector…bullion is up almost 10% this month…

How long this financing window remains open is hard to say – hopefully long enough for some juniors with good projects to attract some interest as well…

Oil, Loonie Weakness Changes Dynamics For Certain Producers & Near Producers

Multi-year lows in Oil prices and the loonie (Gold is really taking off in Canadian dollar terms) are going to have positive and potentially transformational effects on certain producers and near-producers, especially those with open-pit operations where fuel costs are a major factor in cost structures…

This is why we see a major change in fortunes for Gold Bullion Development (GBB, TSX-V) which is just 1 permit away from approval to commence a high-grade “rolling start” at its Granada Project near Rouyn-Noranda, Quebec…GBB, 1 of our old favorites, is now uniquely positioned for a dramatic recovery given the Oil-loonie dynamics and the potential for additional discoveries in the LONG Bars Zone…

The numbers speak for themselves…GBB could become a cash cow with fuel costs now 30% below estimates and a Gold price now nearly $200 CDN above the base case for the company’s high-grade (4+ grams) rolling production start at the open-pit Granada Project…prior to the collapse in both Oil and the Canadian dollar, GBB’s 3-year rolling start already featured robust economics with a pre-tax payback period of just 6 months and an IRR of 169.4% (Preliminary Feasibility Study, based on proven and probable reserves)…those are just some of the reasons we’ve turned so bullish on GBB, and other near-term producers…

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

Another company that stands to benefit from low fuel costs is Fairmont Resources (FMR, TSX-V) which recently received its Certification of Authorization to extract up to 300,000 tonnes annually of titano-magnetite aggregate from its Buttercup Property near Chicoutimi, Quebec…Fairmont is getting aggressive in terms of building a portfolio of potential producing properties, so we see plenty of upside potential here given a very modest current market cap of $2.8 million…

Technically, FMR is in the “sweet spot”, resting just above its rising 300-day moving average (SMA) after a healthy retracement from last September’s high of 30 cents…

FMR is up a penny at 17 cents as of 8:30 am Pacific…

Discovery Ventures Inc. (DVN, TSX-V) Update 

Discovery Ventures (DVN, TSX-V) has a high-grade Gold-Copper resource (Willa-Max in southeastern B.C.) with a robust Preliminary Economic Assessment (May 2014) giving an after-tax NPV of $55 million and an after-tax IRR of 412%…

This 3-year updated weekly chart is timely in the sense that DVN has formed a very strong base in the high teens in advance of what could be another powerful move to the upside, similar to patterns in 2012, 2013 and 2014…

DVN is off a penny at 19 cents as of 8:30 am Pacific…

Pure Gold Mining Inc. (PGM, TSX-V) Update 

Pure Gold Mining (PGM, TSX-V) is very active in the prolific Red Lake district with its 100%-owned Madsen Gold Project…in fact, the company holds 1 of the largest land packages in the Red Lake region including 2 past-producing mines, existing mine infrastructure, current mineral resources, and multiple highly prospective exploration targets in a geological setting analogous to other modern high-grade discoveries in the area…

The company’s winter drill program will be commencing by the end of this month as announced in PGM’s most recent news, January 8…

Technically, as shown in this weekly chart, the trend is encouraging which points to the possibility of an eventual sustained breakout above Fib. measured resistance at 34 cents…the 50-day SMA, currently at 29 cents, reversed to the upside this month…

Note:  John, Terry and Jon both hold share positions in GBB.  Jon also holds a share position in FMR.

Gold has traded between $1,285 and $1,306 so far today, reaching its highest level since August…as of 7:30 am Pacific, bullion has backed off to $1,287, a loss of $7 for the day…Silver, at $18.05, is still up 7 cents after nearly touching $18.50…Copper has rebounded and is now up 4 cents at $2.62…Crude Oil has climbed $1.38 a barrel to $47.85 while the U.S. Dollar Index has declined one-third of a point to 92.75, reacting at resistance as expected at 93…

Gold has posted 7 straight winning sessions (through yesterday), gaining 7.1% during that time…it’s up 9.3% in January (vs. a 29% jump in the TSX Gold Index this month)…holdings in Gold ETFs tracked by Bloomberg increased by 26.2 tons last Thursday and Friday combined – the highest inflows on 2 consecutive days since November 2011…

“Gold is not overbought for the past 60 trading days based on our quantitative model,“ stated Frank Holmes, CEO of U.S. Global Investors, in an interview on Kitco.com.  Holmes says last Thursday’s surprise decision by the Swiss National Bank to lift the cap on the franc vs. the euro was clearly a game-changer.  “This creates trepidation, this creates a lack of confidence (in central banks).  Gold is safe money.  It has always been safe money.” 

Yet another currency that is unravelling – Egypt’s pound has fallen to an historic low against the dollar…

Gold Updated Chart

Gold definitely has momentum right now but nonetheless faces strong resistance around $1,300…importantly, a confirmed breakout has occurred above Fib. resistance at $1,263 – so the $1,260 area is new support on any pullback to unwind temporarily overbought conditions that do exist according to our charts…

With the ECB meeting tomorrow – they’re expected to unveil a full-scale QE program – flash PMI’s on Friday and Greek elections Sunday, the potential is high for significant volatility across numerous markets over the coming days, not just Gold…

While Gold’s RSI(14) is at 73% on this 6-month daily chart, markets do tend to “overshoot” during periods of strong upside or downside momentum, which is why it’s very possible we could see Gold challenge resistance at $1,340 before the week it out…that’s merely 1 possibility…from short-covering to more ETF buying to further Chinese purchases (the Lunar New Year is just a few weeks away), there is plenty of potential firepower still on the sidelines to drive bullion higher…

However, keep in mind that Gold is also vulnerable to a sudden pullback – especially if it’s seen to be stalling around $1,300 – but within the context though of what is increasingly looking like a new bull phase in the metal after November’s low of $1,130…

Gold Stocks On The Move

One of the major themes we’ve been emphasizing over the last couple of months is how Gold stocks – in particular producers and near-term producers – tend to perform exceptionally well in a low Oil price environment…Canadian companies also benefit from a very weak loonie (the Gold price is rising even more dramatically in Canadian dollars)…

Among major North American Gold miners, Newmont Mining (NEM, NYSE), Kinross Gold (K, TSX) and Yamana Gold  (YRI, TSX) stand to benefit most from cheap Oil, according to analysts from Cowen and Company.  “By our estimates, for NEM, K, and YRI, every $10/bbl decrease in Oil price should lower operating costs by $28/oz, $38/oz, and over $23/oz, respectively,” they wrote.  Given the fact that Oil has plunged by more than $50 a barrel over the last 6 months, the savings these companies are going to make in 2015 will be substantial and will go right to the bottom line…

Broadly speaking, those companies more reliant on open-pit operations will enjoy the greatest benefits from the drop in Oil prices…and of course this doesn’t include just the major producers…

A 5-cent junior like Gold Bullion Development (GBB, TSX-V) could become a cash cow with fuel costs now 30% below estimates and a Gold price $150 CDN above the base case for the company’s high-grade (4+ grams) rolling production start at the open-pit Granada Project…prior to the collapse in both Oil and the Canadian dollar, GBB’s 3-year rolling start already featured robust economics with a pre-tax payback period of just 6 months and an IRR of 169.4% (Preliminary Feasibility Study, based on proven and probable reserves)…those are just some of the reasons we’ve turned so bullish on GBB, and other near-term producers…those investors who are giving away GBB for a nickel right now will be kicking themselves in fairly short order…they are completely missing the changing economic equation, not to mention the strong possibility of many more ounces to be discovered yet in the LONG Bars Zone…

Another near-term producer with great potential is Castle Mountain Mining Company (CMM, TSX-V) which also reported some spectacular assay results the other day (33.3 m grading 30.31 g/t Au)…CMM is advancing a multi-million ounce resource toward production at its Castle Mountain Project in San Bernardino…

Our favorite producer, Richmont Mines (RIC, TSX), announced a $30 million bought deal at $4 a share after yesterday’s close, and then increased that to $34 million this morning…this is a smart move by Richmont which didn’t really have to do a financing but this will give them a cushion and some flexibility in a year in which they will be incurring additional capital expenditures for the development of their Island Gold high-grade deep resource…

TSX Gold Index Updated Chart

The TSX Gold Index put in a double bottom in November-December and has cut through key Fib. resistance levels between 147 and 175 like a knife through butter…momentum could take the Index above 200 over the near-term, with a strong band of resistance between 203 and about 215 where rallies ended in 2013 and 2014…

Today’s Equity Markets

Asia

China’s Shanghai Composite soared 150 points overnight, or 4.7%, to close at 3323…yesterday’s economic data appears to have quashed fears of a hard landing, though managing a slowdown will nonetheless be challenging for Chinese authorities…

Japan’s Nikkei average slipped 86 points on a stronger yen to close at 17280…meanwhile, the Bank of Japan maintained its massive monetary stimulus and expanded a loan program aimed at encouraging banks to boost lending, signalling its resolve to achieve its ambitious 2% inflation target…

Europe

European markets are mixed in late trading overseas…

North America

Wall Street remains jittery ahead of tomorrow’s ECB decision…the Dow fell by over 100 points in early trading but is now down just 18 points as of 7:30 am Pacific…

Dow Updated Chart 

This 4-month Dow chart shows a lot of “indecision” in the market at the moment…it seems a major move, one way or the other, is imminent…of concern is how buy pressure declined rapidly since mid-November, turning into weak sell pressure, while the RSI(14) has remained below a downtrend line through all of January so far…stocks overall, however, have proven to be very resilient as aggressive buying has consistently come in on the dips thanks in large part to a very accommodating monetary policy…

In Toronto, the TSX is up 217 points on a surprise Bank of Canada interest rate cut (the loonie is getting hammered) while the Venture has added 3 points to 675 as of 7:30 am Pacific…

Venture Updated Chart

The balance of this week is critical for the Venture which is struggling trying to get back above its SMA(20) as shown on this 2-month daily chart…key resistance is 675–680 followed by 707…some Gold stocks are performing well, but the Index is hurting from the continued weakness in Oil…so investors have to be more selective than ever at the moment as it’s still too early in our view to go bargain hunting in the Oil and gas space…

Calibre Mining Corp. (CXB, TSX-V) Update

One Gold stock with continued strong potential over the coming months is Calibre Mining (CXB, TSX-V) which has found exploration success, on its own and with partners, in the prolific northeastern part of Nicaragua…

Overbought technical conditions last September/early October unwound in November and December, and the now-rising 50-day moving average (SMA) at 14 cents is providing new support…

This morning, Calibre announced final assay results from Phase 1 drilling at the Eastern Borosi Gold-Silver Project being financed by IAMGOLD Corp. (IMG, TSX) under an option agreement…5 Gold-Silver vein systems were tested over a combined strike length of 3 km through 40 drill holes (5,500 m), and drilling encountered high-grade zones on each of the structures…results included 5.07 m grading 13.44 g/t Au (GP14–028) and 2.76 m @ 26.48 g/t Au (GP14–030), testing the down dip portion of the Guapinol and Vancouver structures…

IAMGOLD was encouraged enough by the results to decide to launch a 5,500-m Phase 2 program to commence during this first quarter…

CXB is under some mild pressure on the news, down half a penny at 15 cents through the first hour of trading…

Cannabix Technologies Inc. (BLO, CSE, BLOZF, OTC) Update

Cannabix Technologies (BLO, CSE) continues to gradually move higher, overcoming 2 Fib. resistance levels this month and touching an intra-day 4.5-month high of 18 cents on the CSE yesterday…investor interest has been picking up, as expected, as the company draws closer to unveiling its marijuana breathalyzer prototype…

Below is a updated chart for BLO in U.S. currency (BLOZF on the OTC as Stockcharts.com does not yet provide charts for CSE listings)…buy pressure remains strong…next Fib. resistance is 19 cents U.S. while new support is at 14 cents U.S. (16 cents CDN)…

Note:  John, Terry and John each hold share positions in GBB.  John and Jon both hold share positions in BLO.

Gold has traded between $1,275 and $1,295 so far today…as of 8:30 am Pacific, bullion is up $12 an ounce at $1,292…Silver is 14 cents higher at $17.92…Copper is up 1 penny at $2.57…Crude Oil has shed $1.89 a barrel to $46.80…over the weekend, J.P. Morgan became the latest bank to slash its forecast for Oil prices this year…the bank cut its average Brent Crude price forecast for 2015 to $49 a barrel from $82, saying that Oil prices could trough in March at an average of $38 a barrel…the U.S. Dollar Index (see updated charts below) is up one-quarter of a point at 92.89…

Gold is trading at a 5.5-month high as uncertainty about Europe continues…nervous financial markets are focused on Thursday’s ECB meeting, at which the bank is widely expected to unveil a sovereign bond buying program, and a Greek election on Sunday, which polls suggest anti-bailout, far-left party Syriza will win…since the Swiss National Bank’s announcement last Thursday, when it lifted the cap on the franc vs. the euro, both Gold and Silver have reconnected with ETP investors…

A Reuters poll of money market traders regarding the ECB announcement later this week found the median expectation was for a package worth 600 billion euros, though most also felt that would not be enough to bring inflation up to target…indeed, many in the market would prefer an initial target of at least 1 trillion euros or, even better, an open-ended commitment to buy as much as necessary to get inflation higher…

China Growth Slows In 2014

China’s economic growth slowed to 7.4% in 2014 – not quite as bad as some analysts had feared – but it nonetheless represents a downshift to a level not seen in a quarter century…the slipping momentum in China, which reported economic growth of 7.7% in 2013, has reverberated around the world, sending prices for commodities tumbling and weakening an already soft global economy…

China’s economy grew 7.3% in the fourth quarter from a year earlier (slightly higher than expected), the National Bureau of Statistics said, buttressed by targeted moves to ease borrowing…but it continued to face a housing glut, soaring debt and overcapacity in many industries, factors likely to erode growth in 2015…

IMF Cuts Global Growth Outlook

The IMF has made the steepest cut to its global growth outlook in 3 years…expectations are diminished almost everywhere except the U.S., more than offsetting the boost to expansion from lower Oil prices…

The world economy will grow 3.5% in 2015, down from the 3.8% pace projected in October, the IMF stated in its quarterly global outlook released late yesterday…the Washington-based lender also cut its estimate for growth next year to 3.7% compared with 4% in October…

The United States was the only major economy for which the IMF raised growth projections…it downgraded its forecast for Canada’s economy, cutting growth estimates for 2015 by 0.1% to 2.3%, and for 2016 by 0.3% to 2.1%…Oil prices, which have retreated by more than 50% since last September, were cited by the IMF as the most important factor currently shaping its outlook…

“Global growth will receive a boost from lower Oil prices, which reflect to an important extent higher supply. But this boost is projected to be more than offset by negative factors,” the IMF concluded. 

U.S. Dollar Index Updated Chart

Gold continues to advance despite continuing strength in the U.S. Dollar Index…the next key test for the Dollar Index is the 93 level which is Fib. resistance…

The Dollar Index has been on fire since the early summer of last year…the widest gap yet has also opened up between the current Index level and its 50-day SMA, so that does raise the risk of a near-term pullback to ease temporarily overbought conditions…

If the Dollar Index retreats, will Gold shoot even higher or drop in tandem with the greenback?…it’ll be fascinating to see where both bullion and the dollar close on Friday…

U.S. Dollar Index Long-Term Chart

Ultimately, the Dollar Index should test resistance in the mid-to-upper 90’s at the long-term downtrend line on this 34-year monthly chart…in a relative sense, Gold appears to have more upside potential than the greenback and may indeed emerge as the “ultimate” currency in the years ahead…

The Dollar Index is in an RSI(14) “danger zone” at the same time as it attempts to battle its way out of a long-term overall downtrend that started in the mid-1980’s…

Today’s Equity Markets

Asia

China’s Shanghai Composite Index rose 1.8% to 3173 overnight, bouncing back from its biggest drop in 6 years yesterday after regulators clamped down on margin trading which was one of the drivers of the market’s 53% rally last year…

Japan’s Nikkei surged 352 points higher, or 2%, to close at 17366…

Europe

European markets were generally modestly higher today…Reuters reported that Germany’s chancellor made a rare public intervention in the debate about money printing by the ECB yesterday, warning it was no substitute for economic reforms in the euro zone…

North America

U.S. markets are lower after yesterday’s Martin Luther King holiday…as of 8:30 am Pacific, the Dow is down 106 points…President Obama, true to form, will deliver another poke in the eye to Republicans tonight as he’s expected to unveil a plan for billions of dollars in tax increases and higher government spending in his State of the Union address…

In Toronto, the TSX is up 7 points, thanks to strength in Gold stocks, while the Venture has added 5 points to 678…technically, a close above 675 would be bullish for the Venture…

Castle Mountain Mining Company Ltd. (CMM, TSX-V) Update 

Castle Mountain Mining (CMM, TSX-V) reported a whopper of an intersection yesterday – 33.3 m grading 30.31 g/t Au, including 10.6 @ 94.04 g/t Au (from 101.4 to 134.7 m), in drill hole CMM-054 from Phase 2 drilling at its Castle Mountain mine in San Bernardino County…importantly, the hole was drilled in a previously untested area of the project…

The company stated that results from the campaign appear to have significantly expanded the un-mined, very-high-grade Lucky John zone along strike, and discovered a possible high-grade extension at depth…CMM is planning a follow-up drill program in an effort to build upon these results and the property’s existing resource…

Castle Mountain is a past producing heap leach Gold mine permitted for production…the most recent NI-43-101 resource estimate (November 2013) showed the property has over 4 million ounces of indicated and inferred resources, including a high-grade core of 2.5 million ounces (indicated) @ 0.94 g/t Au and 830,000 ounces (inferred), also @ 0.94 g/t Au…

The Preliminary Economic Assessment released in April of last year gave a base case of 176,000 ounces per year over 17+ years with a post-tax NPV of $352 million and an IRR of 20.1%, assuming an average Gold price of $1,300 (U.S.)…the company had over $6 million in its treasury at the end of September as it continues to work on a feasibility study for Castle Mountain…

CMM 2-Year Weekly Chart

CMM broke out strongly above its EMA(20) on this 2-year weekly chart yesterday, with the EMA(20) also reversing to the upside…the last time this EMA reversed higher, in the summer of 2013, CMM shot up from the mid-30’s to over $1 per share by early 2014…

A bullish crossover has occurred in the ADX indicator, so yesterday’s surge on significant news appears to mark the start of a new bullish trend…

CMM has pulled back slightly in a healthy retreat in early trading today, off 3 pennies at 47 cents, but this has potential to power higher in a hurry based on the current technical posture…

Doubleview Capital Corp. (DBV, TSX-V) Update

Doubleview Capital (DBV, TSX-V) appears to have drilled its best hole yet at the Hat Property in the Sheslay district, based on yesterday’s partial assay results from the first 220 m of HAT-23, and visual analysis of the rest of the core…the hole was drilled to a length of 650 m and then halted to allow crews to head home for Christmas…DBV expects to reactivate the camp in the near future, and it’s possible HAT-23 could be extended even deeper…

DBV hit a Gold-enriched section with strong Copper values as well beginning at a depth of 190.6 m…the question is, do the grades get even better beyond 220 m as the visuals suggest they might?…

So far, investors are taking a wait-and-see attitude but speculation could certainly build in the days ahead…technically, DBV has moved above its 50-day moving average (SMA) but key Fib. resistance is at 16 cents…

The chart holds some promise with a bullish “W” in the RSI(14) and steady accumulation since October as demonstrated by the ADX indicator, but DBV will need a surge in volume to gain traction…

Kaminak Gold Corp. (KAM, TSX-V) Update

Kaminak Gold reported infill drilling results this morning from Double Double, the highest grade of 4 Gold deposits being evaluated as a part of a continuing feasibility study at its Coffee Project in the Yukon…6,850 m of infill drilling from 47 holes was completed at Double Double in 2014 with the objective of verifying and upgrading the open-pit resources defined in the 2014 PEA from inferred to indicated…

Results at Double Double were highlighted by 6.10 m grading 32.78 g/t Au in drill hole 731 (from 39.62 to 45.72 m) while hole 393 returned 5 m grading 37.6 g/t Au (from 176 to 181 m)…true width is estimated at approximately two-thirds downhole length…

Kaminak is targeting the completion of its Coffee feasibility study by late 2015/early 2016…drilling this year will comprise continuing resource delineation infill, condemnation drilling of areas containing proposed mine infrastructure, and geotechnical and hydrological drilling…environmental and heritage baseline studies, and engineering studies into the optimal route and design of the access road, are also advancing as planned…all metallurgical sampling was completed in 2014, and composites are now at a lab undergoing leaching and other test work…

Technically, there have been numerous occasions since the spring of 2013 when Kaminak has attempted to breakout above the “neckline” as shown in this 2.5-year weekly chart…as a result, if and when that breakout does occur, it will be that much more significant…

KAM is giving it a try once again this week…as of 8:30 am, KAM is up 8 cents at $1.05…

Note:  John and Jon both hold share positions in DBV.  Jon also holds a share position in CMM.

Gold has traded in a tight range between $1,275 and $1,280, around a 4-month high, on this U.S. holiday to begin the new week…as of 7:00 am Pacific, bullion is down $4 an ounce at $1,276…Silver has retreated 7 cents to $17.71 (updated Silver charts are at the bottom of today’s Morning Musings)…Copper is off a nickel at $2.66…Crude Oil has slid 85 cents to $47.85 while the U.S. Dollar Index is down one-quarter of a point at 92.42…

Gold bulls have put the bears on the defensive after last week’s surge through critical $1,240 resistance, sparked by the Swiss central bank Thursday and its abandonment of a cap on the franc…there are more near-term potential developments that could keep a firm bid under bullion, though the metal does face technical hurdles at $1,300…

The euro zone will be in focus this week…expectations are high that the ECB will unveil a bond-buying stimulus package at its policy meeting Thursday…central bank credibility took a hit with the Swiss decision, so the ECB can’t afford to disappoint…meanwhile, the anti-bailout and far-left Syriza Party maintains a lead in the polls going into Greece’s general elections on Sunday…the euro zone appears to be on shaky ground, and this view is supported by a major change in the relative performance of Gold vs. the battered euro (see chart below) over the last 3 months…

Holdings of the world’s largest Gold-backed exchange-traded fund, SPDR Gold Trust, climbed 13.7 tonnes to 730.89 tonnes on Friday, its biggest 1-day inflow in nearly 3-1/2 years…

LBMA’s top Gold forecaster over the years, Sharps Pixley’s Ross Norman, is bucking the analyst consensus with a $1,321 average Gold price forecast for 2015…Norman cites strong physical demand for the metal as well as the potential for investors to seek protection from currency debasement…

Oil Update

Iraq has announced record Oil production…Iraqi’s Oil Minister said yesterday that the country pumped 4 million barrels per day in December, its highest ever thanks to increased output from its southern terminals and a surge in supply from the north…

Gold 5-Year Weekly Chart

Expect Gold to test the top of a flag formation just above $1,300 in the very near future, a technical scenario that John first presented in November when bullion successfully tested the bottom of that downsloping flag at $1,130…

The breakout above the RSI(14) downtrend line suggests Gold is headed higher…

Gold vs. Euro

Gold is accelerating significantly against the euro and is up nearly 20% in euro terms since early November when it appears as if bullion indeed hit an important low…the October-early November plunge may have been a “head fake” and a final capitulation prior to the start of a new bull phase in the metal – time will tell…

Today’s Equity Markets

Asia

A rough start to the week for China’s Shanghai Composite which suffered its worst day in more than 6 years, tumbling 260 points or nearly 8%…the financial and property sectors were hit the hardest as Chinese regulators dealt investors a double whammy with a clampdown on margin trading and a tightening up in the country’s shadow-banking industry…

The rapid growth in the use of debt to purchase securities is the latest manifestation of China’s ongoing debt binge – a trend that started in the aftermath of the financial crisis…Bank of America Merrill Lynch says margin-trading levels in China are now at one of the highest levels in the world…

Today’s Shanghai sell-off came a day before the release of China’s fourth quarter GDP…tomorrow’s report is expected to show the economy grew 7.2% on year, according to a Reuters poll, down from 7.3% in the third quarter…

Japan’s Nikkei ignored the market turmoil in China and climbed 150 points overnight, recouping Friday’s 1% loss…the Nikkei is now back above 17000 after 3 straight weekly declines…

Europe

European markets are up strongly in late trading overseas…

According to analysts, markets have priced in a very high chance that ECB President Draghi will announce an expanded quantitative easing program later this week that includes the purchase of sovereign bonds…the market has high expectations that the ECB will deliver a robust package, so “Super Mario” faces the challenge of trying to either meet or exceed those expectations…

North America

Trading volumes will be a little lighter in Canada today due to the U.S. holiday…as of 7:00 am Pacific, the TSX is off 30 points while the Venture has added 5 points to 672…nice intersection reported this morning by Castle Mountain Mining (CMM, TSX-V) which cut 33 m grading 30.31 g/t Au in CMM–054 from Phase 2 drilling at its Castle Mountain mine…the hole was drilled in a previously untested area of the project…CMM is up 2 cents at 38 cents as of 7:00 am Pacific…

Goldcorp Inc. (G, TSX) Takes Over Probe Mines Ltd. (PRB, TSX-V)

One of our favorite exploration plays over the last couple of years is being taken over by Goldcorp (G, TSX)…Probe Mines (PRB, TSX-V), which has been developing the multi-million ounce Borden Gold deposit in northern Ontario, has entered into a definitive agreement with Goldcorp whereby Probe will be bought out in an all-share transaction valued at $5 per Probe share ($526 million)…in addition, Probe investors will receive shares in a newly-formed company…PRB closed Friday at $3.36 and is trading slightly above $5.00 minutes into this morning’s session…

Goldcorp views Borden as a highly strategic addition to its asset portfolio due to the deposit’s proximity to its Porcupine operation, which includes the large milling facility at the Dome complex…transporting ore to Porcupine would significantly reduce capital costs and permitting requirements compared to a stand-alone development while delivering higher-grade Gold production to Porcupine within a relatively short development period…

Probe shareholders may have preferred a takeover by Agnico-Eagle (AEM, TSX) which took a sizable position in PRB a couple of years ago…Goldcorp slid from nearly $60 a share in 2011 to a low of just under $19 late last year…hopefully their troubles are behind them…

Doubleview Capital Corp. (DBV, TSX-V) Update

As we had speculated, based on the unusual depth of the hole, the high number of core samples and some impressive core photos on the company web site, Doubleview Capital (DBV, TSX-V) has drilled into what certainly seems to be its best hole yet at the Hat Copper-Gold Porphyry Project in the Sheslay district…ironically, this comes exactly 1 year following the announcement of the original 2 discovery holes – HAT-08 and HAT-23 – that set DBV and the region on fire…

Partial assay results were just released this morning for HAT-23…this has the potential to turn out to be a stellar hole given that it is the deepest ever drilled in the entire district (650 meters) and in fact may not even be complete yet…DBV had to halt the hole in order to allow crews to leave for Christmas…

What’s different about HAT-23 is the Gold content…given some differences in this part of the Sheslay district, for months we’ve been speculating that the Hat is more likely a Gold-Copper porphyry as opposed to a Copper-Gold porphyry…importantly, each round of drilling at the Hat has produced better results, leading us to believe that they have yet to drill into the juiciest part of this large system…

Assays released by DBV this morning are for only the first 220.2 meters of HAT-23…according to visuals, as DBV stated this morning, mineralization appears to be even better further down…this 220.2 meter section of the hole has hit a Gold-enriched area beginning at 190.6 meters and carrying right through to 220.2 meters…this 29.6 meter interval graded 0.63 g/t Au and 0.36% Cu (0.82% CuEq)…that’s the highest Gold grade at the Hat for any intercept beyond 25 meters…

Based on the core photos, which show an abundance of pyrite and chalcopyrite, it’s reasonable to believe that HAT-23 could indeed be a game-changer for DBV…this hole has extended the northern boundary of the Lisle zone by 110 meters, so the volume of this deposit is increasing significantly along with the potential for this system to include a Gold-enriched zone…historically, prospectors in this area of the Sheslay found some high Gold grades (many grams per tonne) at surface, which obviously may have been the projection of something quite significant at depth…astonishingly, no drilling ever occurred to “connect the dots” until Doubleview’s initial program in 2013…

Mineralization in HAT-23 started at a depth of 63 m…a 152.28 m interval to the end of this first section graded 0.24 g/t Au and 0.25% Cu…assay results for the next section down to 400 meters are expected in the near future, so the market has plenty to speculate about in the coming days – especially since the core looks even better deeper down…

Gold Bullion Development (GBB, TSX-V) Update

Gold Bullion Development Corp. (GBB, TSX-V) is another step closer to the production stage at the Granada Gold Project near Rouyn-Noranda, Quebec, following Iamgold Corp.’s (IMG, TSX) receipt of an amendment to its Certificate of Authorization which allows for the processing of Granada ore at IMG’s Westwood mill…the news was reported late in the trading session Friday…

Gold Bullion’s proposed “rolling start” at Granada features robust economics with an average Gold grade in excess of 4 g/t as revealed in a Preliminary Feasibility Study last summer…the 3-year rolling start, with annual production around 25,000 ounces, is designed to lead into much higher production with the bulk of the LONG Bars Zone resource expected to be mined on site beginning in Year 4…

Timing couldn’t be better for GBB with anticipated production this year coinciding with an improving Gold market, sharply lower fuel costs and a very weak Canadian dollar…these facts have turned us bullish on GBB for the first time since 2011…

What also has us excited, though, is the incredible exploration upside that we believe is still attached to the east-west trending LONG Bars Zone…less than 20% of this area has been systematically drilled, and clues at surface and from historical drill holes suggest the potential for higher grades and many more ounces…

Technically, GBB has aggressively broken out this month above a downtrend line in place for several months as you can see on this 6-month daily chart…the overall trend has taken on a bullish tone, so over the coming weeks we expect to see additional strength…

Fairmont Resources (FMR, TSX-V) Update

Like Gold Bullion, Fairmont Resources (FMR, TSX-V) is an emerging producer in Quebec and will benefit from potential near-term cash flow and lower fuel costs…FMR is in the aggregate space, and just recently the company received its Certificate of Authorization allowing for the extraction of up to 300,000 tonnes of titano-magnetite aggregate from the Buttercup Property near Chicoutimi…

With just under 18 million shares outstanding, and a coveted “CA” in hand, this is the type of junior that has the potential to deliver sensational value to shareholders through a simple business model…we expect they will be aggressive in assembling a portfolio of producing opportunities in Quebec over the next couple of years, as evidenced by the company’s recent acquisition of the Lac Bouchette Property…Lac Bouchette is a former silica producer with high grades from quartz…

Technically, FMR is in the “sweet spot” as it has retraced to its rising 300-day moving average (SMA)…this 3-year weekly chart confirms a bullish overall trend (ADX indicator)…FMR doubled in 2014, so it has been sharply out-performing the Index as a whole…

Silver Short-Term Chart

Silver in December finally staged a definitive breakout above a downtrend line that was in place since the summer on this 9-month daily chart…the December 1 dramatic move from an intra-day low of $14.15 to a close above $16 was technically highly significant…as expected, superb support was demonstrated around $15…

Last week, the metal pushed above resistance at $17.50…this breakout requires confirmation…Fib. levels to watch are $17.89 and $18.57…

Note how the downtrend line became new support in early December…RSI(14) continues to climb and appears headed above 70%…the immediate trend is bullish…

Silver Long-Term Chart

This 34-year monthly chart continues to give hope that Silver could be preparing for a powerful “Wave 5” move to the upside, though we caution that this could take some time to play out (if indeed this theory is correct)…the reasons for such a move are also not clear…for now, Silver is going along for the ride with Gold…

RSI(14) has bounced off previous long-term support which will need to hold along with key price support in the immediate vicinity of $15…

One note of concern on this chart is the sell pressure that has prevailed since the beginning of 2013, after a decade-long period of buy pressure…based on historical patterns, sell pressure could persist for a considerable time yet…

Note:  John and Jon both hold share positions in DBV.  Jon and Terry both hold share positions in GBB.  Jon holds a share position in CMM.

TSX Venture Exchange and Gold

The Venture failed to capitalize on a huge week in Gold and even the first weekly advance in Crude Oil in 2 months, as the Index slipped 20 points to close at 667 despite today’s 8-point rebound.  The Dow and TSX were also negative for this turmoil-filled week but weren’t down as much in percentage terms.

While it’s encouraging to finally see Gold moving in the Venture’s favor, the Index still needs a stabilization in Oil prices and a few company success stories to gain serious traction and snap back vigorously from a nearly 40% collapse between the beginning of September and the middle of last month.

There is hope, if for no other reason than the fact that highly extreme/unusual levels of bearishness and negativity were witnessed in December while the Venture sank to an all-time low of 637.   This may have represented the mirror image of the period of peak bullishness in early 2011.

Venture 2-Month Daily Chart

There are several positives in John’s short-term chart despite this week’s 20-point drop:

1.  RSI(14) is on the upswing at 40%;

2.  The Index held above 2 key Fib. support levels this week;

3.  Buy pressure is remaining steady;

4.  The 20-day moving average (SMA) continues to rise.

The Venture will need to build on today’s fresh momentum and push higher during the coming week.

Venture 9-Month Daily Chart

To quickly recapture momentum after a poor week, the Venture must finally break out above its downtrend line that goes back to September.  The Index closed at this resistance on the first trading day of the year and then immediately retraced.  The downtrend line is now just above 675.

Gold Bullion Development Corp. (GBB, TSX-V) Update

On Venture stocks that traded more than 1 million shares today, Gold Bullion Development Corp. (GBB, TSX-V) was the fourth biggest percentage gainer as it surged 33.3% on news late in the trading session that puts GBB a step closer to production at the Granada Gold Property near Rouyn-Noranda, Quebec.  Iamgold Corp. (IMG, TSX) has received approval on an amendment to its Certificate of Authorization for processing GBB’s ore at its Westwood mill approximately 40 km away.  That’s an important development and gives us added confidence that the long-awaited final mining permit for Granada will be granted in the near future.

Several weeks ago we alerted our readers to the potential of a major turnaround in the fortunes of Gold Bullion as it draws closer to finally becoming a producer.  Keep in mind, as well, that no more than 20% of the LONG Bars Zone has been systematically drilled, so the exploration upside remains huge while the company gears up for a high-grade “rolling start” on the production side.

Canadian Gold producers, and near-term producers like Gold Bullion, are beginning to benefit from 2 major new advantages – plunging Oil prices and a weak Canadian dollar.

Look what Gold has done in Canadian dollar terms since late last year.  In the case of GBB, fuel costs are currently 30% below assumptions in the Preliminary Feasibility Study (PFS) for the “rolling start” while Gold is now above $1,500 CDN vs. $1,400 CDN in the PFS.  Both Crude and the loonie are likely to remain weak for an extended period, and that would be a major boost for all Canadian producers.

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 carry out exploration or 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 eventually create a supply problem and therefore great opportunities in Gold and quality Gold stocks.  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.

Gold

The Swiss National Bank did Gold a big favor as it shocked the markets yesterday (damaging its credibility) by abandoning the franc’s cap 3.5-year cap against the euro currency.

Gold followed up last week’s strong performance by surging $57 to close at $1,280.  That included a $17 gain today when the U.S. Dollar Index rose significantly.  Indeed, the fact that Gold has performed as well as it has over the past 2 months (a 13% gain from the early November low of $1,130) despite a strong move in the Dollar Index is a very encouraging sign.  Physical buying out of China, leading up to the Lunar New Year February 19, is providing significant support as well.    Bullion is also attracting a safe haven bid with Islamist terrorism creating more global chaos, while weak Oil prices are fanning deflation and creating destabilizing effects in the world economy.

Gold 6-Month Daily Chart

Gold’s breakout above the critical $1,240 mark has been confirmed and by high volume which is very bullish.  RSI(14) is showing strong up momentum, suggesting bullion is likely to challenge stiff resistance at $1,300 during the coming week.

Holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by the metal, surged the most in nearly 5 years today.  Assets in the SPDR fund, which counts billionaire John Paulson as its largest investor, jumped 1.9% to 730.89 metric tons.  That’s the biggest gain since May 25, 2010.  For the week, holdings climbed 3.3%.

Silver surged 7.6% this week, closing up $1.26 an ounce at $17.78 (updated charts Monday morning).  Copper remains under pressure as it lost another 18 cents this week to finish at $2.61.   Crude Oil (WTIC) snapped a 7-week losing skid, closing at $48.69 for a gain of 33 cents, while the U.S. Dollar Index gained half a point to close at 92.64.

 

Gold is off $3 an ounce at $1,260 as of 8:30 pm Pacific after blasting through key resistance at $1,240 this morning (this is another rare evening edition of BMR Market Musings due to an extended site visit)…Switzerland’s central bank caught markets by surprise and triggered some turmoil today after it unexpectedly scrapped a cap on the franc-euro rate, underscoring growing concerns about global economic prospects…Silver is up 11 cents tonight at $17.07…Copper has added 2 pennies to $2.61…Crude Oil is up slightly at $46.57 while the U.S. Dollar Index has gained one-tenth of a point at 92.21…

Trust in central banks took a hit today with the decision by the Swiss National Bank which caught markets completely off guard (for some investors, that meant huge losses – leveraged investors and asset managers were substantially short the Swiss franc according to CME data as of last week)…just a month ago, on December 18, when it cut interest rates into negative territory, SNB President Thomas Jordan had repeated a pledge to buy foreign currencies in unlimited quantities to enforce the cap with “the utmost determination”…when central banks start losing credibility, all heck can break loose…

Interventions to continually enforce the cap, introduced in September 2011, had swollen the SNB’s balance sheet massively (in December the central bank aggressively bought euros to maintain its minimum rate)…today’s action appeared to be an attempt to move ahead of the risk that the ECB announces full-blown QE as early as next week, which would put additional pressure on the euro…a rising franc, meanwhile, will most certainly have consequences for the Swiss economy…

We are in uncertain times, and that’s when Gold’s “safe haven” status can really come into focus…bullion closed more than $30 higher today and is on track for its biggest weekly percentage gain in a year…in euro terms, Gold hasn’t been this high since the spring of 2013…in tonight’s Musings, we have 2 new Gold charts plus an interesting Gold-Oil comparative…

Global Growth “Too Low, Brittle And Lopsided”: IMF Director

Two problems stemming from the 2008 financial crisis – heavy government borrowing and high unemployment – still pose challenges to the global economy and require bold action, the head of the International Monetary Fund said today…Christine Lagarde, IMF managing director, said that cheaper Oil and strong U.S. growth aren’t enough to counter those threats…

“We believe that global growth is still too low, too brittle and too lopsided,” she said in remarks before the Council on Foreign Relations…Europe and Japan potentially face years of slow growth and ultra-low inflation, she said, while the U.S. “is the only major economy that is likely to buck that trend this year.”

Today’s Equity Markets

Asia

Japan’s Nikkei is under pressure tonight, down over 400 points or 2.5% on the final trading day of the week…China’s Shanghai Composite, however, is up 35 points at 3371 as of 8:30 pm Pacific…

Europe

Major European markets were sharply higher in Thursday trading on the news from the SNB, but nearly $100 billion was knocked off the value of Switzerland’s stock market as the Swiss Market Index suffered its biggest 1-day fall since 1988 – it closed 9% lower…

North America

The Dow fell 106 points today, its 5th straight daily decline…tomorrow, data from the Labor Department should show the U.S. is well on its way to joining the Deflation Club in December…economists expect a drop in the headline consumer price index from the previous month which would bring the year-over-year pace to its lowest since the fall of 2009 when the economy was climbing out of recession…

The TSX was cushioned by a sharply higher Gold Index today but still lost 43 points to close at 14042…the Venture, meanwhile, fell 1 point to 659 despite bullion’s big move…producers and near-producers benefited the most by the yellow metal’s breakout…

Cannabix Technologies Inc. (BLO, CSE) Update

Cannabix Technologies (BLO, CSE; BLOZF, OTC) is our “Golden” non-resource play…it’s a first-mover in marijuana breathalyzer technology, and we have a high level of confidence that the upcoming Cannabix Breathalyzer prototype will create a powerful new dynamic for this company in the market…

Technically, there is no question that momentum is building in BLO as demonstrated by the RSI(14), rapidly increasing buy pressure, and the ADX trend indicator…

Below is the U.S. chart for Cannabix (CSE charts are not available yet on Stockcharts.com)…the 50-day SMA has been rising since late December, while the 100-day (not shown on this chart) has flattened out and is now beginning to reverse higher as well…this is the “sweet spot”, perhaps a final chance for investors at current levels in advance of another potential breakout as suggested by the technical posture here…

Gold Short-Term Chart

Gold’s breakout above the Fib. 50% level today was confirmed by high volume…

Gold bulls should hope for a strong weekly close Friday, ideally above the next Fib. level which is $1,263…RSI(14) is showing impressive up momentum and therefore will likely push above the 70% level in the immediate future…chart resistance is at $1,290 and $1,340, so the $1,300 area is where Gold does face a major challenge…

Gold Long-Term Chart

Two critical “takeaways” on this 20-year monthly Gold chart:

1.  Support for Gold has held at the uptrend line going back to the start of the bull market in 2001;

2.  Gold last year broke above a multi-year RSI(14) downtrend line and is now moving sharply higher.

Goldman Sachs took a beating on the Swiss Franc today, and it ought to be very concerned about its bearish position on Gold…

Gold-Oil Comparative Chart

Historically, Gold and Oil have tended to dance together…that relationship has been broken, temporarily at least, as bullion has stepped out boldly on its own…

Gold hasn’t performed this well against Oil in a relative sense in 20 years…expect this trend to continue as bullion benefits from the destabilization effects of extended depressed Crude prices…

TSX Gold Index Updated Chart

The key level to watch on the TSX Gold Index is 175…some producers are enjoying the triple-whammy benefit of higher bullion prices, a low Canadian dollar and plunging Oil prices (it doesn’t get any better)…

Richmont Mines (RIC, TSX) Update

Our favorite producer remains Richmont Mines (RIC, TSX) which shot up 49 cents today to $4.09 on the jump in Gold and some very positive news, including higher than expected 2014 Gold production of 95,208 ounces…

Richmont’s Island Gold Mine and the high-grade deep resource there will continue to transform this company over the next couple of years after a very profitable turnaround year in 2014…

Next measured Fib. resistance on this 4-year weekly chart is $5…

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

 

Gold is up $2 an ounce at $1,231 as of 7:30 pm Pacific (this is a rare evening edition of BMR Market Musings due to a site visit today – Thursday’s Market Musings will be posted in the evening as well)…Silver is relatively flat tonight at $16.81…Copper is up a nickel at $2.61 (see updated Copper chart below)…Crude Oil is 37 cents lower at $48.11 while the U.S. Dollar Index is up slightly at 92.14…

The usual Gold-Oil correlation has broken down with bullion benefiting from the potential destabilization effects of Oil prices below $50 a barrel…we have 2 updated Oil charts tonight with 1 of them showing a possible scenario for the unthinkable – $20 Oil, which we haven’t seen since 2002…

The drop in Copper is disconcerting and suggests the global economy may not be on such a stable footing…indeed, the World Bank, citing stagnation in Europe and Japan and a slowdown in China, has downgraded its forecast for global growth this year…it now predicts the world economy will expand 3% in 2015, up from 2.6% in 2014.  “The recovery has been sputtering in the euro area and Japan as legacies of the financial crisis linger…China, meanwhile, is undergoing a carefully managed slowdown,” the bank said yesterday in the first of its twice-yearly Global Economic Prospects reports for 2015…stronger growth in the U.S., aided by plunging Oil prices, is expected to help offset weakness elsewhere around the globe…

A senior leader of Al Qaeda’s Yemen branch has claimed responsibility for last week’s attacks on French weekly Charlie Hebdo in a video statement today, saying the organization financed and planned the operation…

Russia’s Economy Minister Alexei Ulyukayev said today that the chances of the beleaguered country’s credit rating being downgraded to junk were “pretty high”,  according to the Interfax news agency…

Crude Oil Update

Crude Oil rebounded in today’s session, surging nearly 6% for its biggest daily gain since June 2012 as traders with expiring options bought back futures…the price jump occurred despite data showing that U.S. Crude stocks rose much more than expected in the last week, so this is not a rally investors should have much confidence in…

Between November 1985 and March 1986, the price of Crude plunged by 67%…between June 2014 and this week, Crude prices fell by 57% and appear almost certain to head lower…after the mid-1980′s bust, it took nearly 2 decades for Oil prices to rebound to pre-bust levels and remain there…that’s not likely to happen this time, but a quick rebound like we witnessed following the financial crisis is probably not in the cards either…1 of several objectives the Saudis appear to have is to significantly curtail U.S. shale production but that’s going to take time…

Current fundamentals are being reflected in weak prices with Crude supply overshooting demand by as much as 2 million barrels a day…at some point, supply and demand will come into balance but that won’t be due to any cuts by the Saudis and their Gulf allies who are determined to maintain market share…

WTIC 2-Year Weekly Chart

At a very minimum, Crude seems destined at some point during the first half of this year to test the next long-term support around the $35 level…a rally out of current extreme oversold conditions makes sense, to be followed by new lows given the bleak fundamental picture plus the technical breakdown that has occurred over the last several months…

WTIC 19-Year Weekly Chart

The extent of oversold conditions on this 19-year monthly chart is without precedent over the last 2 decades, meaning a major seismic shift has taken place in this market…the process that could ultimately play out here could lead to $20 Oil, a level not seen since 2002…

Copper Updated Chart

Heavy selling in Asia overnight Tuesday sent Copper prices to a 5-and-a-half year low, but the metal is rebounding modestly tonight…a Hong Kong-based commodities analyst, quoted in a Wall Street Journal article, summed up Copper’s dive this way:  “What is happening with Copper is really a financial positioning play. They just look at one big asset falling, which is Crude Oil, and they get skittish about everything else.”

Global growth concerns and technical selling are also weighing on Copper…as shown in this long-term chart, RSI(14) has fallen below previous support since 2011…sell pressure is also intensifying while the ADX trend indicator is becoming more bearish…

Next major support is around $2.25, the long-term uptrend line stretching back to 2002…

CRB Index Updated Chart

Lower Oil and Copper prices are suggested by the latest bearish-looking CRB chart which doesn’t give comfort at this point that it has found a bottom yet…a test of the 2009 low around 200 appears to be in the cards…

Today, however, the CRB reversed during the trading session and closed just above the top of the support band stretching from 200 to 220…

Today’s Equity Markets

Asia

Asian markets are strong in early Thursday trading with China’s Shanghai Composite up 13 points as of 7:30 pm Pacific while Japan’s Nikkei has surged 246 points or 1.5% to climb back above the 17000 level..

The Reserve Bank of India (RBI) tonight surprised markets by cutting its key repo rate by 25 basis points to 7.75% after an unscheduled monetary policy meeting…the move comes a day after government data showed wholesale price inflation in December rising 0.11% from the year-ago period, much lower than the 0.6% rise forecast by economists, on the back of plunging Oil prices and stabilizing food costs…

Europe

European markets were down sharply today, spooked in part by the drop in Copper…

The possibility of full-scale quantitative easing by the ECB received a boost today when the top European Court backed a similar program “in principle”…the European Court of Justice (ECJ) said that the Outright Monetary Transactions (OMT) bond-buying program, commonly seen as a predecessor to QE, was compatible with treaty provisions and was in line with European Union law, as long as certain conditions are met…

North America

The Dow tumbled 187 points today, the first time in 3 months the Index has declined for 4 straight days…

U.S. sales at retailers and restaurants decreased a seasonally adjusted 0.9% in December from a month earlier, the Commerce Department reported this morning…that was below expectations and the largest monthly decline since January 2014…

The TSX fell 103 points today while the Venture dropped another 11 points to close at 660, still within the 654–680 support zone…

It was a wild ride today on no news for Doubleview Capital (DBV, TSX-V) which shot up to 16 cents in early trading before being knocked down to 8 cents on a sell order from 1 trading house late in the session…DBV finished the day at 8.5 cents on total volume (all exchanges) of 382,000 shares…the drop in the share price simply doesn’t jive with the very good looking core photos from HAT-23 posted on the DBV web site…it’s also difficult to comprehend that DBV’s very skilled technical team would drill a hole to 650 m without observing apparent strong mineralization…this really is the best-looking core DBV has encountered to date at the Hat, so we’re not spooked by today’s strange trading…

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

As expected, bottom-fishers got a bargain in GoldQuest Mining (GQC, TSX-V) during December when the stock traded as low as 7 cents…it was a disappointing 2014 for GQC, but the company does have exceptional geological prospects in the Dominican Republic and enough cash ($6 million in working capital as of September 30) to make another drilling discovery…historically, GQC has experienced some incredible sudden moves to the upside on impressive drill hole results in the DR…will history repeat itself in 2015?…

This year is off to a better start for GQC…the company has been granted some important additional concessions adjacent to its Romero deposit, and drilling will commence shortly…the stock closed 2014 at 9.5 cents and climbed as high as 15 cents on the 4th trading day of the year…

Technically, GQC is looking healthier now that it has broken above a sharp downtrend it has been mired in since since late June…this pullback from the recent high of 15 cents is likely a strategic entry point for those investors willing to bet on GQC regaining some of its old magic…

GQC closed at 11.5 cents today…

Columbus Gold Corp. (CGT, TSX-V) Update

A junior that has held up impressively well over the last several months is Columbus Gold Corp. (CGT, TSX-V) which continues to make progress with its Paul Inard Project in French New Guiana…yesterday, the company released results of 8 additional holes of resource development drilling for its Montagne d’Or Gold deposit, and they included a 13.3 m section grading 7.2 g/t Au within a broader interval of 46.2 m @ 2.36 g/t Au in MO-14–187…the 8 holes showed strong continuity of mineralization at the west end of the deposit with the potential to expand the resource in that direction…

More than 25,000 meters of Phase 2 drilling was completed in early November at Montagne d’Or with all expenditures financed by London-listed NordGold (the world’s 13th largest Gold producer) as part of a $30 million exploration and development program pursuant to which they can earn a 50.01% interest in the project by completing a bankable feasibility study by no later than March, 2017…the deposit is presently defined over 2,500 m x 400 m and to an average depth of 250 m from surface, so a significant open-pit operation is being targeted here…

An updated resource estimate, combined with concurrent comprehensive metallurgical tests and a preliminary environmental assessment, is on target to support the completion of a Preliminary Economic Assessment on Montagne d’Or by the spring of this year…

CGT closed at 47.5 cents today and has broken out above Fib. resistance at 45 cents and a downtrend line in place since last spring…

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