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Gold has traded between $1,150 and $1,165 so far today…as of 8:30 am Pacific, bullion is down $6 an ounce at $1,152…Silver is off 8 cents at $15.57…Copper is flat at $2.66…Crude Oil has tumbled $1.59 a barrel to $43.25 (see updated charts below), briefly dipping below $43 for the 1st time since March 2009, while the U.S. Dollar Index has retreated more than half a point to 99.68 after hitting 100 Friday for the 1st time since April 2003…

The major event for financial markets this week will be the Fed meeting commencing tomorrow with the release of its monetary policy statement Wednesday…economists and analysts will be looking to see if the Fed will remove the word “patient” in reference to its first potential rate hike since 2006…even if it does, the general consensus seems to be that the Fed won’t make its move until September at the earliest…however, the anticipation of a rate hike continues to drive speculation in the U.S. dollar which is now at a 12-year high, and a surging greenback runs directly counter to the Fed’s strategy of kick-starting inflation…the dollar’s rally over the past 8 months has been its fastest in at least 40 years, and that’s not healthy…to us, what the Fed says or doesn’t say about the dollar on Wednesday will be key…this particular meeting will be followed by a Janet Yellen news conference…she has an opportunity to put the brakes, at least temporarily, on the rising dollar…will she or won’t she?…

Increasingly divergent monetary policies between the U.S. and the rest of the world has created another major breakout (above 96) in the Dollar Index over the last 2 weeks, and the next Fib. resistance level is 106…the combination of a runaway dollar and Crude Oil tumbling into the mid-$30’s would almost certainly create significant stresses in the global financial system, particularly in emerging markets…just 1 of the growing problems is the number of foreign companies who issued U.S. dollar debt in recent years (in the trillions of dollars) but can no longer get easy access to U.S. dollars from their central banks or can’t afford the interest costs now that the greenback is much stronger than when the debt was issued…

Will Apple Help Revive The Allure Of Gold?

Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors, had these comments on Apple’s new watch as it pertains to Gold in his Weekly Investor Alert at www.usfunds.com:  “The new Apple watch could revive the allure of Gold for young consumers. Apple, which called Gold “uniquely luxurious” in its advertising, has a history of swaying consumer tastes. U.S., U.K. and Italian demand for wearables made out of Gold has been cut in half over the past decade, according to data from the World Gold Council, as shoppers favored white-colored metals such as Silver and Platinum. Apple’s status as the arbiter of cool means its new $10,000 Gold watch and yellow iPhones and MacBooks may entice consumers to buy Gold wearables and ornaments again.”

Oil Update

The Oil price needs to drop to levels where demand and supply can come into balance…over-supply and demand both remain a problem even with WTIC trading in the mid-$40’s…there is hope on the horizon for a sustained recovery in prices but likely not until sometime during the second half of the year…

In its monthly report released today, OPEC said that U.S. Oil output may start declining toward the end of the year, while the group did increase its global demand estimate for 2015 by 50,000 barrels a day to 92.3 million bpd, projecting that almost half of that demand growth will come from China and the Middle East…

However, current fundamentals and technicals do call for lower prices during the 2nd quarter…global inventories continue to rise, and another bearish factor is the imminent prospect of a nuclear deal with Tehran that could allow for more Iranian Oil exports…

WTIC attempted but failed recently to gain traction above important resistance around $50…the declining 50-day moving average (SMA), currently $49, continues to exert downward pressure on Crude prices and must reverse to the upside before a sustained recovery can be expected…that could take a few more months…

WTIC 2-Year Weekly Chart

WTIC Long-Term Chart:  Look Out Below!

As expected, WTIC staged a relief rally, jumping about 20% to alleviate unprecedented oversold conditions, and now it’s in the next wave down with the mid-$30’s as an obvious target (the 2009 low was $33.55) on a confirmed break below $45 support…

Evidence of a potential bottom will come when there’s a divergence between price and RSI(14)…in other words, a new price low that’s not confirmed by a new low in the RSI(14) – in TA, that’s a common signal to look for and that’s exactly what occurred in Crude when it bottomed in early 2009…

Gold Performance vs. Euro, Loonie & U.S. Dollar

An important point to keep in mind about Gold is that it’s performing well in every currency other than the U.S. dollar…in fact, even against the dollar, bullion has held up better than expected given the greenback’s most intense move to the upside in 4 decades…

Over the last 13 months, Gold is up 21% vs. the euro and 12.5% vs. the loonie…it’s down 6% in U.S. dollar terms, but that’s after a remarkable run by the greenback…

Today’s Markets

Asia

China’s Shanghai Composite hit a new 5-year high overnight, surging 75 points or 2.2% to close at 3449 on hopes for fresh stimulus measures…at the conclusion of the annual parliamentary session over the weekend, the Chinese Premier sounded a warning on the economy and said that Beijing has room and the tools to step in should growth falter and impact employment…

Europe

European markets finished significantly higher today…optimism over the German stock market just won’t stop – the benchmark DAX 30 index today broke above the key 12,000 mark for the 1st time ever and recorded its 26th record close already in 2015…

North America

The Dow is up 189 points through the first 2 hours of trading…in Toronto, the TSX has added 119 points as of 8:30 am Pacific while the Venture is off 3 points at 662…

Silver Short-Term Chart

Silver has been trading within a downsloping channel since near the end of January, and the test now it whether it finds support at the bottom of that channel where it’s currently resting…

The metal reacted in January at $18.50 (almost exactly at chart and Fib. resistance) and has been consolidating in recent weeks within this downsloping channel…a move outside of that channel – either up or down – would be technically very significant, so this is shaping up to be a key week…

RSI(14) has fallen below a previous support level and is now at 34%, a drop in half from late January…

In December, Silver finally staged a definitive breakout above a downtrend line that was in place since the summer (note how the downtrend line became new support that month)…this gave Silver the fuel it needed to test higher levels…

Silver Long-Term Chart

This 34-year monthly chart continues to give hope that Silver could be in the very early stages of 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 possible move are also not clear at the moment…

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 – though that doesn’t necessarily mean that the price can’t still trend higher…nonetheless, it would be encouraging to see this sell pressure begin to abate…it has eased off only very slightly in recent months…

 

TSX Venture Exchange and Gold

It’s revealing that since the beginning of September last year, when the Venture’s dive began, for every 1% gain in the U.S. Dollar Index, the Venture has fallen 1.7%.  So keep this formula in mind: Plus 1 = Minus 1.7.

Last week, the ratio between the 2 remained consistent as the Dollar Index gained 2.5%, for its first close above 100 since April 2003, while the Venture fell 3.5%, losing 24 points to close at 665.   When the greenback is strong, the Venture and commodities in general are under pressure.  When the Dollar is weak, consolidating or in a holding pattern, the Venture and commodities will behave much better.

Historically, the Venture and the Dollar Index have moved in opposite directions which is why it’s so important for the latter to cool off.   Just wishing that the greenback will slow down, however, doesn’t make it happen.  It has momentum on its side and has broken out of a long-term downtrend.  Next measured Fib. resistance is 106, and perhaps at that point the Fed will say enough is enough – at least for now.  There are some advantages to the U.S. in having a strong currency; however, at the moment the powerful greenback is moving the Fed further away from its goal of kick-starting inflation.

This will be an important week as the Fed gathers Tuesday and Wednesday.  Will it strike a hawkish tone or a dovish tone, or something in between, with regard to a potential rate hike in its fresh policy statement Wednesday?  We’ll have to wait and see.  One thing is certain – markets are typically volatile around Fed meetings and we’ve certainly seen increased volatility recently with 5 triple digit moves in the Dow over the last 6 trading sessions.  More triple-digit sessions are on the way.

Markets often move on anticipation and mystery.  Fed Chair Janet Yellen, not likely by design, has managed to create a lot of anticipation and mystery around a possible rate hike – an event that many current traders/investors haven’t yet seen in their careers.  Once the Fed gets this rate hike out of the way, whenever that may be, that’s when the Dollar Index will likely begin to correct in a major way.    That’s one school of thought, at least.  The savvy Ben Bernanke was able to keep the dollar in check.  Yellen hasn’t been able to do the same.

The Venture’s immediate challenge is to stay within a cluster of Fib. support, shown in John’s 4-month daily chart, that begins in the low 650’s.  The Index was not able to overcome resistance at 707, and the short-term moving averages (SMA’s) have turned negative after 8 down days out of 10 this month.  Crude Oil is threatening to hit new lows which is not helpful for the Venture either.  A turnaround could come mid-week if the Fed surprises the markets and traders suddenly flee the crowded dollar trade, if only temporarily.

Venture 4-Month Daily Chart

Venture 6-Month Daily Chart

This 6-month Venture chart shows how the Index has recently fallen below its 50-day SMA, currently 685, with the 50-day now starting to reverse to the downside.  That’s usually not a good sign.  On the positive side, sell pressure has backed off somewhat while RSI(14) is in a support area with the potential for a “W” formation.  Volatility is increasing, as demonstrated by BB Width, so the probability of a near-term sharp move in either direction has increased.

The coming week will be very important.

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 2.5-Year Weekly Chart

Gold briefly fell below $1,150 last week but support at the level held and bullion closed Friday at $1,158, a decline of $6 an ounce from the previous Friday.

What comes out of the FOMC meeting will be crucial in terms of determining whether Gold can reverse its current downtrend or falls further to test support as low as $1,100, the bottom of the downsloping flag.  Note that the RSI(14) on this 2.5-year weekly chart has bounced around within a 30% to 60% channel for the past year, and is currently at 38%.

Silver fell 29 cents last week to close at $15.64.  Copper added 4 cents to $2.66.  Crude Oil tumbled nearly $5 a barrel to $44.84, its lowest close since January 28, on more over-supply concerns, while the Dollar Index jumped by more than 2 points for the second straight week to finish at a new 12-year high of 100.18.

The “Big Picture” View Of Gold

Gold has traded between $1,150 and $1,162 so far today as it nears its 6th weekly drop out of 7…as of 8:45 am Pacific, bullion is relatively unchanged at $1,153…Silver is off 4 cents at $15.49…Copper is flat at $2.65…Crude Oil has tumbled $1.79 a barrel to $45.26 while the U.S. Dollar Index has gained nearly a full point to 100.16…

Gold is trying to snap a 9-session losing skid today, its longest since August 1973 according to Reuters…in a reflection of bearish sentiment, SPDR Gold Trust, the world’s largest Gold-backed ETF, fell 0.28% yesterday to 750.95 tonnes, the lowest since late January…the fund has not seen any inflows for 3 weeks but holdings are higher than they were at the end of 2014…

Platinum, which fell to its lowest since 2009 this week, is poised for its 7th weekly decline out of 8…

Russia’s central bank cut its key interest rate today by 1 percentage point to 14% in an attempt to support the economy, which is sliding into a brutal recession, brought on in large part by low Oil prices…the bank predicts Russia’s economy will shrink by between 3.5% and 4% this year…

Platinum, which fell to its lowest since 2009 this week, is poised for its 7th weekly fall in 8…

Oil Update

The Oil market’s recent rebound may not last, an influential energy watchdog warned today, as the U.S.’s ability to keep pumping more Crude has defied expectations and could set the stage for prices to hit new lows…in its closely watched monthly report, the IEA said U.S. Oil production was up 115,000 barrels a day in February, much of it going into bulging storage inventories whose capacity may soon be tested. “That would inevitably lead to renewed price weakness,” the report said…

Estimates are that China is saving over $60 million on its daily 12-million barrel import bill, or over $200 billion a year, following the halving in Oil prices since last summer…those savings approximate the recent investment initiatives announced by the government to strengthen ties with neighbors by building trade and transport links: $50 billion for China’s Asian Infrastructure Investment Bank, $40 billion for the Silk Road infrastructure fund and $10 billion for the New Development Bank, which Beijing is co-founding with Brazil, Russia, India and South Africa, plus $41 billion for a related contingency fund…

TSX Gold Index Updated Chart

A 52% surge in the the TSX Gold Index in just 3 months between early November and early February was followed by a more than 20% correction that may have ended this week…we’ll see…this 6-month daily chart shows the Index beginning to recover after landing at chart support at 150 Wednesday…sell pressure is in decline and the SS indicator, after hitting similar lows to those seen during the double bottom in the Index late last year, is starting to increase…it’ll be important for the 150 level to hold…

A further drop in Oil, should it occur, will be supportive of the Gold producers…

FTSE All-World Index Chart

The FTSE All-World Index (London Stock Exchange) covers a vast number of companies in nearly 50 countries, so it provides valuable insight into the state of global equities…

What’s important to note in this chart is how this Index appears to have reversed at the 275 level from an early March sell-off with a confirmed Morning Doji Star…importantly, the uptrend line from late last year remains intact…

RSI(14) has bounced up from previous support…note how the Index weakened after RSI(14) fell below its 2.5-month uptrend line…

Today’s Equity Markets

Asia

Japan’s Nikkei average surged to a new 15-year high overnight, climbing 239 points or 1.4% to close above 19000…China’s Shanghai Composite, meanwhile, gained 24 points to finish at 3374…

Europe

European markets were mostly slightly lower today…

North America

The Dow is down 255 points as of 8:45 am Pacific with investors uneasy about a rising dollar today…U.S. producer prices unexpectedly fell in February on weak trade margins, pointing to muted inflation pressures that argue against a possible June interest rate hike from the Federal Reserve…the Labor Department reported this morning that its PPI for final demand fell 0.5% after dropping 0.8% in January…it was the 4th straight monthly decline in the PPI…in the 12 months through February, producer prices fell 0.6%, the first drop since the series was revamped in 2009…economists polled by Reuters had forecast the PPI rising 0.3% last month and remaining unchanged from a year ago…

The TSX has fallen 153 points as of 8:45 am Pacific while the Venture has slipped 9 points to 665…

CDNX 2-Month Daily Chart

The Venture needs the U.S. Dollar Index to cool off, plain and simple, and Oil not to hit new lows…this 2-month daily chart shows a cluster of Fib. support between 654 and 681…the Index found support in the low 660’s in January, and that’s going to be a critical area to hold again this time around…

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

The possibilities for Cannabix Technologies (BLO, CSE) as a first-move in the marijuana breathalyzer market are tremendous in our view, which is why BLO remains our favorite speculative company in the non-resource sector…it’s up 250% already this year…

Technically, what’s going to be interesting through the balance of this month is how the current bullish pennant resolves itself (BLO is pushing right up against it right now)…the ideal “accumulation zone” on the pullback has been between 30 cents (CDN) and the upper 40’s, as John’s charting has shown, and the potential for another breakout increases significantly on a confirmed move above the pennant…

BLO is up a penny at 50 cents on the CSE as of 8:45 am Pacific (the chart below is based on U.S. trading as Stockcharts.com does not yet make charts available for CSE-listed companies)…

Fission Uranium Corp. (FCU, TSX) Update

There’s no denying the world class resource Fission Uranium (FCU, TSX) has outlined at its newly-named Triple R deposit in the Athabasca Basin – large, high-grade and relatively shallow…and a new high-grade zone is currently being delineated about half a km west of the Triple R deposit…at the right time, FCU is likely to be swallowed by a bigger fish, so for patient investors there is still plenty of potential upside here…

The breakout at the beginning of this year above the downsloping flag and Fib. resistance at $1.05 was significant…the 50-day moving average (SMA) – MA(10) on this chart – has crossed above the 200-day SMA – MA(40) – which has flattened out just below $1.10 and appears to be gearing up for a reversal to the upside…

FCU is up 2 pennies at $1.57 as of 8:45 am Pacific…

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

Gold has hovered between $1,151 and $1,167 so far today…as of 8:15 am Pacific, bullion is flat at $1,154…Silver is up a dime to $15.57…Copper has jumped 4 cents to $2.65…Crude Oil is 52 cents lower at $47.65 while the U.S. Dollar Index hit the 100 level this morning but has since backed off to 99.07, down more than half a point from yesterday…

Gold should get some support from a pullback in the U.S. 10-year Treasury note yield…it’s trading near 2.07% following the release of some U.S. economic data…

China is in talks with the IMF for the Washington-based institution to add the yuan to its basket of reserve currencies, a top banking official said today as Beijing seeks a greater global role for the unit…it hopes the yuan (increasingly backed by Gold, by the way) will become part of the IMF’s “special drawing rights” (SDR) assets “in the foreseeable future”, said vice central bank governor Yi Gang…

At present, SDR’s are made up of only the U.S. dollar, the euro, the Japanese yen and the British pound…but Yi said China’s rise to become the world’s second-largest economy had made the yuan the world’s second-largest trade financing currency and the 6th most widely-used transaction currency…

Including the yuan in the SDR’s will “undoubtedly” make the IMF’s unit for “representative” of the global economic landscape, said Yi, who is also head of the State Administration of Foreign Exchange…

The big question is, how much Gold has China accumulated to help back its currency?…it hasn’t provided an update on that since late 2009…

More On The Surging Greenback

Further to John’s charts yesterday, below is another example of the tremendous run the U.S. Dollar Index has enjoyed…

In part, this is a Fed-induced Dollar move as the U.S. central bank continues to tease the markets about a possible rate hike…such a strategy of preparing the markets for a “normalization” of interest rates is driving speculators into the dollar, but a high greenback is also counter-productive to the Fed’s goal of kick-starting inflation…

Meanwhile, other central banks around the world, including Canada, have diverging monetary policies at the moment and have recently been cutting rates…the latest example is the Bank of Korea which surprised markets today by cutting its base rate for the 1st time in 5 months by 25 basis points to a record low of 1.75%…the move comes on the back of other rate cuts in the region, such as Thailand, India, Singapore and China, which have taken advantage of lower Oil prices to ease monetary policy in a bid to spur sluggish growth…of course the EU is now into full-blown QE and the euro is moving very close to parity with the dollar…however, despite the ECB’s best efforts, deflationary pressures in the euro zone continue to mount…

The Dollar Index is well into overbought territory on a technical basis with RSI(14) at its highest level (84%) since just before the dollar crash in 1985…that’s not to suggest we’re about to see a repeat of 1985 – that appears highly unlikely – but the dollar trade is getting crowded and the Fed can’t help but be concerned with an explosive greenback as they were with Gold in 2011…

What’s particularly interesting about the Dollar Index is that is has broken above a long-term downtrend line as you see in the chart below…keep in mind, however, that this is a monthly chart, so the current breakout could be a “false” breakout – a least at the moment…how the dollar finishes March will be critical…very strong support exists around the 96 level, so a pullback to that area seems likely to help cleanse overbought conditions…this would also act as a test of what should be new support at the top of the downtrend line…

It can certainly be argued that while there will be corrective phases in the Dollar Index, just like we saw in Gold during its 12-year long run, the dollar certainly appears to be in the midst of a new multi-year bull phase…

In the scope of 8 months, the dollar index has shot up more than 20% against other currencies, after going nowhere for almost a decade in a pattern that was very similar to the one between 1989 and 1997…companies from IBM to Harley-Davidson to Google to Coca-Cola to Proctor & Gamble have blamed the strong dollar for chipping away at their overseas profits…

20-Year Monthly Euro Chart

The importance of this chart is to demonstrate that the euro may have hit a temporary bottom at 105 today (it fell as low as 104.95, its weakest level since March 2003) which represents long-term chart support…RSI(14) is in deep oversold territory and also at previous support…

The latest weakness in the the euro has come as the ECB on Monday kicked off its long-awaited bond-buying stimulus program…ECB purchases have driven down bond yields in the euro zone, boosting the relative attractiveness of assets elsewhere and weighing down the currency as some investors shift their money outside the bloc…amazingly, almost 1.2 trillion euros worth of European government bonds (25% of total sovereign securities in this region) now sport negative yields…

Technically, the euro has been trading within a downsloping flag for the past 7 years…selling opportunities have come when the currency has pushed up against the top of that flag…conversely, buying opportunities have occurred at the bottom of the flag, and we’ll see if that holds true again…the euro appears ready for a rally which should give some near-term relief to commodities and the Venture…

Today’s Equity Markets

Asia

Japan’s Nikkei accelerated its upswing by finishing just shy of the 19000 level overnight…it gained 268 points or 1.43% for a new 15-year high…China’s Shanghai Composite surged 58 points or 1.8%…

Europe

European markets are mixed in late trading overseas…

North America

After declining 360 points the last 2 sessions, the Dow is on the rebound today with a gain of 190 points as of 8:15 am Pacific…U.S. retail sales fell for the 3rd consecutive month in February, reflecting bad weather in parts of the country, but also a sign of continuing caution among U.S. households despite an improving labor market and cheap gasoline prices…sales at retailers and restaurants decreased 0.6% last month to a seasonally adjusted $437 billion, according to the Commerce Department…retail sales fell 0.8% in January and 0.9% in December…

Separately, a weekly labor-market report showed signs of continued improvement…jobless claims fell slightly more than expected, by 36,000 to 289,000, in the week ended March 7, the Labor Department said today…

The TSX is up 29 points as of 8:15 am Pacific while the Venture, after snapping a 7-session losing skid yesterday, is up 2 points at 671…not surprisingly, the Index is beginning to reverse higher with the Dollar Index perhaps starting to cool off…

North Arrow Minerals (NAR, TSX-V) Update

One of the top exploration plays on the Venture this year could indeed be North Arrow Minerals (NAR, TSX-V) which has pulled back to the 70-cent area after climbing to a 52-week high of 90 cents February 27 following release of very encouraging initial results from processing of its Qilalugaq Diamond Project bulk sample…more results are on the way…

We’ve been highlighting the fundamental and technical reasons behind a very bullish scenario this year for NAR which has a dynamic team capable of pulling off another world class diamond discovery…

Technically, there were 3 key reasons for the bullish call on NAR:

1.  The breakout above the downtrend line

2.  The breakout above the horizontal channel and Fib. resistance at 55 cents

3.  The reversal to the upside last month in the 50-day moving average (SMA) which is currently at 60 cents

Other important positive factors include the RSI(14) uptrend – RSI(14) is now at previous support – and the bullishness in the ADX indicator…

Given the very positive technicals and the bright prospects for both the Qilalugaq Project and the Pikoo Project (a 3,000 m drill program started there last month), NAR is poised for potential major success in 2015…the quality of the management team is a big factor giving investors an edge here…

This 8-month chart shows how NAR is currently resting at uptrend support and very close to Fib. support at 67 cents…this healthy pullback, precipitated by the Venture’s decline this month, will be embraced by astute investors…

NAR is up 2 cents at 72 cents as of 8:15 am Pacific…

Amarc Resources Ltd. (AHR, TSX-V) Update

In British Columbia, besides the Sheslay district and the recently announced important discovery at Kemess East by AuRico Gold Inc. (AUQ, TSX), investors should keep a close eye on Amarc Resources (AHR, TSX-V) which should garner increasing attention in the months ahead following its announcement November 24 that was overshadowed by the overall market turmoil at the time…

Volume has recently picked up in AHR, and the company has the funds to carry out a follow-up round of drilling…

In late November, Amarc reported highly encouraging results from an initial 9-hole drill program at the company’s IKE Project in the Cariboo region…this is an early-stage bulk-tonnage porphyry Copper-Molybdenum-Silver discovery in the heart of a producing area…all 9 holes intersected chalcopyrite and molybdenite mineralization from surface and over a broad area measuring 1,200 m east-west by 600 m north-south and to depths of approximately 500 m…

Interval highlights included 247 m grading 0.42% CuEq in IK-14-001; 234 m @ 0.43% CuEq in IK-14-002; and 308 m @ 0.41% CuEq in IK-14-006…these results, along with post-drilling geological, geochemical and geophysical surveys completed outward from the drilled area, indicate that the IKE porphyry system has the potential to host a significant resource…this is still early in the game and AHR can be expected to aggressively follow up on this discovery…

As we stated when the results were announced November 24, December would be a great time for accumulation of AHR following this news given tax-loss selling pressures and overall market weakness…indeed, AHR dipped as low as 6.5 cents but has since firmed up again…it has backed off slightly from a yearly high of 13 cents Monday…

John’s 3-year weekly AHR chart shows a “big picture” bullish trend with a confirmed breakout above the 10-cent level…buy pressure has recently replaced a long period of sell pressure…

AHR is up half a penny at 11 cents through the first 75 minutes of trading today…

Note:  John, Terry and Jon do not hold share positions in NAR or AHR.

Gold has traded between $1,146 and $1,165 so far today…as of 8:15 am Pacific, bullion is down $13 an ounce at $1,148…Silver has retreated 31 cents at $15.31…Copper is off a penny at $2.62…Crude Oil has slipped 54 cents a barrel to $47.74 while the U.S. Dollar Index continues to surge, up another full point to 99.52 (see updated charts below)…

Investors clearly seem to be preparing for a hawkish Federal Reserve monetary policy statement following the central bank’s meeting next week, which has driven the Dollar Index to a 12-year high and put downward pressure on Gold and commodities…at the very least, a “sell on news” scenario could unfold next week with the Dollar pulling back to cleanse temporarily overbought technical conditions (more on the Dollar Index below and its correlation well with the Venture)…in other words, the volatility leading up to next week’s Fed meeting may indeed create some very attractive buying opportunities for astute investors in select situations…

The head of commodities research at Capital Economics, Julian Jessop, stated in a report yesterday:   “To be clear, a stronger dollar, in isolation, will usually undermine commodity prices. But other factors can be more important and the implications for individual commodities may vary considerably.

“While the price of Gold has recently fallen back again, it has held up much better than the surge in the dollar might have implied. This illustrates the scope for individual commodities to decouple at least partially from the U.S. currency, reflecting specific fundamentals of demand and supply,” he added.

Markets seem to be paying little attention, but Russian tanks and heavy military equipment have crossed the Ukrainian border in the last few days in breach of the recent European-brokered ceasefire, according to a senior U.S. State Department official in a report carried by Reuters…

The Bank of Thailand made a surprise move to cut its interest rates today in the latest of numerous central bank moves this year to deflate their currencies and stimulate their economies…

U.S. Dollar Index – A Dominant Market Theme Since Last Summer

The Dollar Index broke out aggressively last Friday from important resistance at the 96 level, thanks to a better-than-expected U.S. jobs report that heightened investors’ expectations for a rate hike from the Fed as early as June or certainly during the second half of 2015…the consensus seems to be that the Fed will remove a barrier to raising short-term interest rates by dropping its promise to be “patient” before acting…we’ll see…

Keep in mind that Fed Chair Janet Yellen, in her recent testimony before Congress, stated that she wanted to be “reasonably confident” inflation will return to 2% before raising rates…the surging greenback is clearly counter-productive to the Fed’s goal of kick-starting inflation…the year-over-year change in the Fed’s favored measure of inflation – the Commerce Department’s personal consumption expenditures price index – has run below the central bank’s 2% target in 52 of the 68 months of the current expansion, including the past 34 consecutive months…the weakness in Oil prices is likely not just temporary, further restraining inflation along with the high dollar, and the greenback at current levels – on speculation the Fed will raise rates – certainly has the potential of slowing down any momentum that could be building in the U.S. economy…

Dollar Index 2.5 Year Weekly Chart

It’s becoming a crowded arena for traders/investors in the Dollar Index with the RSI(14) on this 2.5-year weekly chart remaining in overbought territory (above 70%) for 6 full months…this speeding train will eventually suddenly stop and go into reverse, the only question is when (perhaps when the news is out on the first rate hike)…

The Dollar Index has cleared 1 Fib. resistance level after another following its low of just under 79 in the 2nd quarter of last year, and the next measured Fib. resistance on this longer-term chart is 106…how soon it may get there is anyone’s guess, but strong support now exists at 96 and that’s where the rapidly rising 50-day moving average (SMA) is approaching…

Dollar Index 4-Month Daily Chart

The psychological 100 level for the Dollar Index is akin to the 5000 level for the Nasdaq…this shorter-term chart also shows Fib. resistance immediately underneath 100 at 99.89…RSI(14) is in overbought territory at 80%, so a near-term pullback does appear likely but perhaps not until the magic 100 level is touched…

Dollar Index-Venture Comparative Chart

The reason we focus so much on the Dollar Index is this: It can be argued that the Dollar Index is the single most important influence on the direction, near-term and longer-term, of the Venture Exchange…almost always, they move in opposite directions as demonstrated in this comparative chart…

A strong Dollar Index is negative for the Venture; a declining or stable Dollar Index is positive for the Venture…this pattern goes back to the Venture’s beginnings and has been clearly evident in just the last 6 months given the huge jump in the Dollar Index and the plunge in the Venture from above 1000 to below 700…

Quite simply, the Venture will gain some traction when the Dollar Index slows down…at the moment, the Dollar Index is approaching an important resistance area (100) while the Venture is holding key support…

Today’s Markets

Asia

Main indices in China and Japan were up slightly overnight…

Europe

European markets are generally strong in late trading overseas…the euro plunged to a near 12-year low against the greenback this morning (1.0561) and is now trying to stabilize…

North America

The Dow has gained 38 points as of 8:15 am Pacific…the TSX has added 74 points while the Venture is off a point at 668…

Walker River Resources Corp. (WRR, TSX-V) Update 

Softness in the overall markets always creates opportunities, and 1 special situation with exciting near-term potential as drilling gets set to begin is Walker River Resources (WRR, TSX-V)…Walker announced the completion of a financing March 4, which has also now been approved by the Exchange, so the next step is to drill some holes into high-grade targets at the Lapon Canyon Gold Property along the prolific Walker trend in Nevada…

There is no disputing the fact that there is high-grade Gold at Lapon Canyon – the only question is, how much?…in our view, the odds of drilling into impressive mineralization right off the bat have to be considered unusually good, especially given the bulls-eye targets that are apparent…this will help drive speculative interest in Walker through the initial drilling stage…as far as the broader picture is concerned, does Lapon Canyon have “legs” to it – can it truly develop into a significant early-stage discovery?…geologists we’ve spoken to as part of our due diligence believe it can…circumstances have come together to take this project to the next level…

Walker Lane is a structural belt that extends more than 700 km through western Nevada and into California…numerous major Gold and precious metals deposits have formed along this belt including of course the rich Comstock Lode, on the northwest part of this trend, which essentially made mining in Nevada…

As geologist Thomas Schuster pointed out, in an independent report last year on Walker prior to when he became a director of the company due to his excitement over the project, “The structure (faulting and fracturing of rock), alteration (color changes in rock), and quartz flooding at Lapon Canyon looks similar to what is seen at Comstock Lode.”

That’s a significant statement from someone who should know…we have great respect for Schuster who’s a successful independent geologist and mining analyst based out of Vancouver with a broad range of industry contacts…

We did our own due diligence on Walker about a year ago, in part through discussions with President and CEO Michel David, but timing is everything…with the claim package assembled, drill permits now in hand and money in the till to move forward, Walker should be able to generate some near-term excitement as the geological team appears to have an excellent early understanding of the steeply dipping cross fault structures that strike in an east-west direction across this past producer…these faults are heavily sheared and altered with abundant silica, and they vary in width from 60 m to 300 m…

In this Google Earth view, you can see, among other features, the 3 historical adits…typically, in situations like this, the old-timers left a lot behind…given the overall structure of this system, which is more understood and much more extensive than what previous explorers and miners realized, the door is wide open for Walker to intersect potential high-grade mineralization down-dip of the old mine workings…

Below is a close-up look at the old workings at the Lapon Canyon Gold mine…we caution that this is an historical report, but notice how a 1985 sample from the end of Tunnel A was reported to assay 20.6 opt Au (Gruenwald, 1994, National Instrument 43–101 report dated Feb. 15, 2004, by Dr. J.H. Montgomery, P.Eng., and N. Barr, BSc) as reported by WRR March 27, 2014…

This makes for a highly prospective initial target zone…

Walker River will clearly be drilling into structures considered extremely favorable for hosting high-grade mineralization…given WRR‘s current market cap of less than $2 million, the risk-reward ratio is attractive, to say the least, and we’ll be following this story closely in the weeks ahead…the market needs some excitement and Walker is in an excellent position to leverage its geological knowledge of Lapon Canyon into a high-grade hit of significance…

WRR is unchanged at 3.5 cents as of 8:15 am Pacific…

Noront Resources Inc. (NOT, TSX-V) Update 

Noront Resources (NOT, TSX-V) has performed well recently and this stock historically has been a reliable leading indicator for the Venture, so that’s an encouraging sign that perhaps March will end better than it has started for the Venture…

One can’t look at Noront without considering the state of the Nickel market…prices of Nickel hit their lowest levels in more than a year last week, suggesting it’s just another metal suffering from weaker Chinese demand growth and a strong dollar…but a Wall Street Journal report this morning stated that many traders and analysts think the long decline in Nickel’s price is reaching an end, as China’s drive to produce more of a substitute product – Nickel pig iron (NPI) – shows signs of cracking…NPI is commonly used in China as a cheaper alternative to pure Nickel for producing stainless steel…

Technically, NOT is looking stronger than it has in a while…the downtrend that started last summer ended in mid-December, and the stock is now trying to make a clear break above resistance in the mid-40’s…the overall “Big Picture” pattern suggest that NOT could be in the early stages of a long-term turnaround, and that has to be considered positive for the Venture…

NOT is off a penny at 45 cents as of 8:15 am Pacific…

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

Gold dipped as low as $1,153 overnight before bargain hunters stepped in…as of 8:20 am Pacific, bullion is down $5 an ounce at $1,162…Silver is flat at $15.72…Copper is off 4 cents at $2.64…Crude Oil is 40 cents lower at $49.60 while the U.S. Dollar Index has added more than half a point to 98.41…

In a research note published yesterday, UBS stated:  “Prices below $1,200 could well be what is needed right now to encourage more activity across physical markets and aid a recovery towards the psychological level.”

Mineweb’s Lawrence Williams sees the growing potential of a global Gold supply deficit within a year as he wrote in a piece yesterday (www.mineweb.com):

“The latest SGE withdrawals suggest Chinese Gold demand for the first two months of the year will likely have come in at between 410 and 420 tonnes, fairly similar to 2014 when total withdrawals from the exchange came to 2,102 tonnes for the full year. Global new mined Gold production for the same period will have been around 480 tonnes and global scrap supplies, based on GFMS/World Gold Council estimates, around 180 tonnes, so China on its own has been consuming around 85% of global new mined supply and nearly two-thirds of the total global Gold supply (including scrap) given sales out of the Gold ETFs have been negligible, or even negative, so far this year. With other Asian and Middle Eastern nations in particular tending to be strong Gold consumers, notably India, we would reiterate our view that global Gold supply is heading for a potential deficit, and perhaps a substantial one, in 2015.”

Understanding Gold’s Movements In Canadian Dollars

For additional perspective, it’s helpful to look at Gold not just in U.S. dollar terms…

Gold in Canadian dollars has declined $170 an ounce or 10.4% since its late January high, through yesterday, but keep in mind that this was after a powerful run of nearly 30% that started in early November…basically, what we’ve seen is a very normal 50% retracement of the November-December-January advance…

Very overbought conditions emerged by mid-January as resistance was tested around $1,625…an “unwinding” of those conditions has been occurring over the last 6 weeks with the Gold price in Canadian dollars expected to find support around $1,450…yesterday’s close was $1,469…

Just below chart support at $1,450 is the rising 200-day SMA at $1,415…a test of the 200-day is certainly possible, but the bottom line is that Gold is looking quite healthy in Canadian dollars and that’s good news for Canadian Gold producers and near-term producers…

Richmont Mines (RIC, TSX) Update

Speaking of producers, our top Canadian play remains Richmont Mines (RIC, TSX-V) which also smartly took advantage of the strength in Gold prices recently to complete a $38.5 million financing (bought deal) by issuing 9.6 million shares at $4 per share (no warrants)…

Richmont was already in a healthy financial position but will use the additional funds to accelerate the development of the higher-grade resource extension at its Island Gold mine in northern Ontario…

Any weakness in Richmont, brought on by a softening of Gold prices, is an opportunity in our view given the very bullish prospects for this company due primarily to what’s unfolding at the Island Gold mine…Richmont’s net earnings in fiscal 2014 were 18 cents per share…the company reported Gold sales of 94,500 ounces, revenues increased 47% over 2013 while operating cash flow jumped 689%…powerful fundamentals are underpinning Richmont which could easily break out to new all-time highs over the next year or so…

Technically, RIC has been following an uptrend line in place since the second quarter of last year…that support is being tested again now…we’ll see if it holds…if not, there are additional layers of support…the 200-day SMA of course also continues to rise and it’s currently just below $3…

RIC is up a penny at $3.69 as of 8:20 am Pacific…

RIC 4-Year Weekly Chart

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

Our recent visit to northwest Quebec’s Cadillac Trend (we have another one coming up) convinced us that the most undervalued opportunity is Gold Bullion Development (GBB, TSX-V) which is just 1 permit away from getting the green light to put the Granada Gold mine into production…GBB’s advantage is its high-grade “rolling start”, ore (proven and probable reserves) grading several grams per tonne that will be extracted from open-pits and trucked to IAMGOLD Corp.’s (IMG, TSX) Westwood mill a short distance down the “Golden Highway”…the after-tax payback period on the 3-year rolling start is estimated at just 8 months (CAPEX is minimal relative to most start-up operations), and that’s based on a projected Canadian Gold price of $1,400 an ounce and Oil prices at $1.30 per liter…the economics make sense with this…

What sets GBB apart on the Cadillac Trend is the size and grade of its open-pit resource, and of course the potential to substantially increase that resource as the LONG Bars Zone remains open in all directions for expansion…particularly interesting is the new discovery potential going west where higher grades also seem to be present…the potential going west was overlooked back in 2010–2011 following the discovery to the east of the past producing pits…

It’s important to keep in mind with GBB that given the increased number of mergers and acquisitions in the sector recently, it has to be considered a potential target for a larger company – especially with the production stage more imminent…GBB’s current market cap of $12 million is well below where it should be when one compares this company to its peers in Quebec…

We’ll have more as the week progresses on GBB including additional comments from an interview with President and CEO Frank Basa…

Technically, GBB remains in good shape on this 10-year monthly “Big Picture” chart…a very important breakout occurred last year above the long-term downtrend line, sell pressure is in decline, and the ADX indicator supports a continuing positive trend…

GBB is unchanged at 4 cents as of 8:20 am Pacific…

Oil Update

The potential of even lower Oil prices is bullish for Canadian Gold producers, especially those with open-pit operations, and WTIC could soon re-test support around $45 if it’s not able to gain traction above strong resistance at $50…this area also includes the 50-day SMA…

Significantly, the U.S. industry has not slowed its high levels of Oil production despite OPEC’s best efforts to curb drilling with lower prices…the U.S. has pumped more than 9 million barrels a day since early November, and last week it produced a multi-decade high of 9.32 million barrels…industry output has not been at such a level on a sustained basis since the 1970’s, and U.S. crude supplies are reported at their highest levels in 80 years…

The U.S. rig count continues to drop – the market has taken some encouragement from this recently – but there’s not a strong correlation between those numbers and actual production levels…

WTIC 2 Year Weekly Chart

Today’s Equity Markets

Asia

Wow…wholesale prices in China continue to be entrenched in deflation…they fell 4.8% in February, above estimates of a 4.3% drop, and this was after a 4.3% decline in January…

The Shanghai Composite fell 15 points overnight while Japan’s Nikkei average lost 125 points or less than 1%…

Europe

European markets are down significantly today with investor sentiment impacted by weakness in Oil and uncertainty surrounding negotiations with Greece regarding reforms tied to its emergency financing…

North America

The Dow has fallen 184 points as of 8:20 am Pacific…the continued strength of the U.S. dollar – it’s at a 12-year-high – has become a concern for the market…

In Toronto, the TSX is off 148 points as of 8:20 am Pacific while the Venture has slid 4 points to 677…

Visible Gold Mines (VGD, TSX-V) Updated Chart

Visible Gold Mines (VGD, TSX-V) continues to show strength as drilling progresses at its 167 Project that comprises a whopping 1156 mining claims covering 611 sq. km in northern Quebec…it’s located approximately 320 km north of Chibougamau in the James Bay region in the heart of Plan Nord territory…road construction gave VGD some early clues that this area holds great promise for potential Gold mineralization and deposits, so it’ll be interesting to see if any of these holes connect…this is exciting grassroots exploration that could result in some important new discoveries…

VGD remains firmly within an upsloping channel on this 9-month weekly chart, and may have started “Wave 5” in a move that commenced last September at 6.5 cents…

VGD is up a penny at 18.5 cents as of 8:20 am Pacific…

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

Cannabix Technologies (BLO, CSE), an impressive first-mover in the marijuana breathalyzer space, has initiated internal testing of the alpha version of the breathalyzer prototype in advance of releasing a beta version for trial testing with external organizations…

Technically, as you can see on John’s U.S. 5-month daily chart, BLO continues to consolidate within a bullish pennant after a big run-up last month that took it to an all-time high of 77 cents…the “accumulation” zone is marked in yellow – that’s a strong support band that runs from 23 cents U.S. into the mid-30’s, or from 30 cents CDN to 47 cents CDN…

BLO is off half a penny at 40.5 cents on the CSE as of 8:20 am Pacific…

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