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Gold has traded between $1,197 and $1,209 so far today…as of 8:45 am Pacific, bullion is up $7 an ounce at $1,205…Silver is flat at $16.28…Copper has added 4 cents to $2.74…Crude Oil is off 51 cents to $56.20 while the U.S. Dollar Index is down slightly at 97.64…

New trading rules in China have put downward pressure on global markets today (see below), though the Venture is holding up well as it attempts to conquer resistance at 707…

Silver stockpiles in China have surged this year as the country’s slowing economic growth has weakened demand for the precious metal, according to a state researcher, though Silver impressively gained 6% vs. the U.S. dollar in Q1… inventory monitored by the Shanghai Futures Exchange almost tripled to 341.5 metric tons April 9, the highest in a year, from 122.8 tons in the final week of 2014, according to weekly bourse data compiled by Bloomberg…stockpiles on the Shanghai Gold Exchange, meanwhile, have more than doubled this year to 263.97 tons on April 3, exchange data show…

Oil Update

Technically, what we’re seeing in WTIC at the moment is the expected continuation of a counter-trend rally that showed signs of intensifying after strong support was building at the $50 level, combined with a reversal to the upside in the 50-day moving average (SMA)…

WTIC has established an uptrend line from the March low on this 6-month daily chart…as long as that uptrend line holds, WTIC has a chance to break into the mid-$60’s (note the position of the declining 200-day SMA) before it meets stiff resistance and the Saudis decide to intervene aggressively again to prevent the North American shale industry from staging a rebound…so this rally should be viewed with skepticism as the fundamentals (and the technicals) don’t support the kind of recovery witnessed following the lows of 2009…

Certain members of OPEC keep pumping Oil as fast as rabbits can breed in order to maintain and increase market share while putting the squeeze on North American operators…Saudi Arabia produced 10.3 million barrels per day in the month of March, a 658,000 barrel-per-day increase over the previous month…that’s the highest level of production in 3 decades for the leading OPEC member (keep in mind, the Saudis’ target is not only North American producers, but arch-rival Iran)…on top of the Saudi increase, Iraq boosted output by 556,000 barrels per day, and Libya succeeded in bringing 183,000 barrels per day back online…OPEC is now collectively producing nearly 31.5 million barrels per day, well above the cartel’s stated quota of just 30 million barrels per day…

U.S. Dollar Index Updated Chart

It hasn’t been a good week for the U.S. Dollar Index which appears to have put in a double-top reversal pattern…that’s positive for commodities and the Venture…momentum in the greenback is waning, at least for the time being, and the Dollar Index does seem to be in the process of an extended correction as we’ve been maintaining for the last month…

Key near-term support is 96…analysts at Bank of America Merrill Lynch calculate that the number of disappointing U.S. economic reports relative to positive surprises has been greater in recent months than at any point since the expansion began in June 2009, and any additional disappointing data in the weeks ahead will certainly put the greenback under more pressure…the long-term trend remains bullish, given last year’s important breakouts, but a significant consolidation after a huge run-up since last summer is overdue…

Today’s Equity Markets

Asia

China’s Shanghai Composite shot up another 94 points or 2.2% overnight to close at a new 7-year high of 4288 as bets of further stimulus continued to buoy risk appetite..however, futures point toward the possibility of a sharp pullback in the Shanghai on Monday after China’s securities regulator, after today’s trading session, issued its strongest warning yet about the country’s soaring equity markets and tightened rules on margin lending…the country’s 2 stock exchanges also announced measures that will ease restrictions on short-selling…

Europe

European markets were down significantly today, thanks to the news out of China and concerns over Greece…the country’s international creditors this week signaled they are losing hope Athens will do what is needed to unlock bailout funds before it runs out of money…however, Greek Prime Minister Alexis Tsipras told Reuters yesterday he was “firmly optimistic” his government would reach an agreement with its creditors by the end of April, despite friction over issues such as pension and labor reform…

North America

The Dow has tumbled 267 points as of 8:45 am Pacific…

Regardless of today’s drop, U.S. markets are being supported not only by very accommodating monetary policies, but record share buybacks which are helping to offset lingering worries about upcoming earnings reports…more than $100 billion in buyback authorizations were approved last month, according to Birinyi Associates, as corporate America continues to purchase its own shares at a record clip…based on that data, the total amount of buyback authorizations could reach $1 trillion this year, far surpassing the previous record set in 2007…this has been a strong underpinning factor for the market…March, in fact, was the third-strongest month ever for buyback plans, pushing the year-to-date figure to $257 billion or the highest dollar amount to a start of a year on record, according to Birinyi…

U.S. consumer prices increased for the 2nd consecutive month in March after falling through much of the winter, a sign that U.S. inflation may be stabilizing…

The CPI, which reflects what Americans pay for everything from sneakers to airline tickets, rose a seasonally adjusted 0.2% in March from a month earlier (in line with expectations), the Labor Department said today…that matched the increase the previous month, which was the biggest rise since June..excluding the volatile food and energy categories, so-called core prices also climbed 0.2%…compared with a year earlier, overall prices declined 0.1% while core prices have risen 1.8%…the Fed will be watching inflation numbers closely over the few months for evidence of an upward trend…

In Toronto, the TSX is off 46 points while the Venture is shrugging off weakness in the broad markets and is unchanged at 706…the Index tends to finish strong on Fridays, so a close above 707 resistance today would not be surprising…

Canadian retail sales ended a 2-month streak of deep declines in February, rising a better-than-expected 1.7% on stronger gas-station receipts and a pickup in activity at car dealerships…the February gain, the biggest in 8 months, was broad-based and represents one of the best showings to date among economic indicators for the 1st quarter – a period the Bank of Canada has said will show no growth due to the fallout from the decline in Crude prices…

Kootenay Silver Inc. (KTN, TSX-V) Update

Kootneay Silver (KTN, TSX-V) has a high-quality exploration play unfolding with its La Negra Silver discovery, contained within the Promontorio mineral belt…we all know how prolific Sonora is as a mineral region…the La Negra breccia discovery is situated approximately 6.5 km north of Kootenay’s flagship Promontorio Silver resource, and a 30-hole follow-up drill program commenced in late February with more encouraging results released just over 2 weeks ago…

As expected, KTN has been slowly gaining traction following a confirmed breakout above chart resistance and an ascending triangle…this bodes well for the balance of Q2 – significant gains could be in the works given how the fundamentals and technicals are matching up here…

This morning’s test of Fib. support at 44 cents should be viewed in the context of a primary uptrend with an attractive risk-reward ratio…

Equitas Resources Corp. (EQT, TSX-V)

A Nickel play readers may wish to investigate is Equitas Resources (EQT, TSX-V), a company that went through a restructuring late last year…it’s now preparing for a busy summer of exploration, and speculation should ramp up as a result…insiders control just over 50% of the 35 million shares outstanding…

The company’s key asset is the 25 sq. km Garland Nickel Property, 30 km south of the Voisey’s Bay mine…since the discovery of the Voisey’s Bay deposit in the early 1990’s, small parcels of Garland have been owned by 9 separate companies…this is the first time that this large property has been consolidated under 1 owner…after adding some technical and capital markets expertise, EQT has a decent chance of enjoying some success in the coming months…

Technically, a bullish bias is clearly evident in this 2+ year weekly chart – likely just a matter of time before an important breakout occurs above the 10-cent level…as always, perform your own due diligence…

Favorable Non-Resource Charts

As mentioned earlier this week, Cannabix Technologies (BLO, CSE, BLOZF, OTC) is showing signs of a potential near-term breakout above a pennant formation that started in February…the trading action has to be viewed as very bullish given the strong support that has formed above last year’s high, and the fact that pennants are continuation patterns that usually break out in the direction of the previous trend that started…BLO is up 1.5 cents to 44 cents as of 8:45 am Pacific…

VANC Pharmaceuticals Inc. (NPH, TSX-V) Update

VANC Pharmaceuticals (NPH, TSX-V) pushed above a short-term downtrend line this week and climbed to 60 cents before retracing to close at the 54-cent Fib. level yesterday…liquidity continues to be exceptional with average daily volume so far this month of nearly 5 million shares…

NPH is off 2 pennies at 52 cents as of 8:45 am Pacific…

Mezzi Holdings Inc. (MZI, TSX-V)

Another one for our readers’ due diligence…Mezzi Holdings (MZI, TSX-V) has pulled back to a strong support area, defined by Fib. levels and rising moving averages, after more than doubling to a new high of 26 cents last month…

MZI is unchanged at 18.5 cents as of 8:45 am Pacific…

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

Gold has traded between $1,194 and $1,210 so far today…as of 9:00 am Pacific, bullion is down $4 an ounce at $1,197…Silver has slipped a nickel to $16.25…Copper is up 3 pennies to $2.73…Crude Oil has retreated 77 cents to $55.62 after hitting a high today of $56.54, while the U.S. Dollar Index has slid half a point to 97.85…data yesterday that showed U.S. industrial output in March posted its biggest drop in more than two-and-a-half years was certainly dollar negative, and yet another sign that the Fed may have to wait until at least September before raising interest rates…

Gold bulls can draw encouragement from an ETF Securities report on precious metals for Q1 issued Tuesday…Mike McGlone, head of U.S. research at ETF Securities, wrote that Gold could surprise to the upside this year if indeed the greenback topped out in mid-March on interest rate expectations…he noted in the report that the correlation between Gold and fed funds futures is near historical highs…

“The Fed appears to have relatively little actual inflation ammunition to pull the trigger on rate hikes,” he said in an interview with Kitco News.   “If things keep going the way they are, it will be clear that the Fed won’t be able to hike rates…investors should be prepared for the potential volatility a Fed misfire might have on financial markets…the ECB misfired in 2011 and is now focused on quantitative easing…the risk of a Fed rate hike misfire is quite high,” he stated.

While McGlone is bullish on Gold in the current environment, he is even more positive on Silver…in the report he noted that Silver gained 6% in U.S. dollar terms in the 1st quarter…but even despite these gains, McGlone said Silver still looks relatively undervalued, and that current prices should continue to entice increasing demand for one of the best conductors of electricity…

Fed’s Fischer:  Economic Rebound Underway

Although the first quarter of the year was “poor”, an economic rebound is already underway in the U.S., according to Federal Reserve Vice Chair Stanley Fischer…the central banker acknowledged in an interview with CNBC today that most expect the Fed to raise interest rates sometime this year, but he attempted to assure markets that such a move would be incremental and steady…

“We expect that the markets look ahead somewhat, so I think – I hope – that they are taking into account that the Fed, at some point, is likely to raise the interest rate,” he said, adding that markets “can’t depend on the current situation continuing forever – or even probably – beyond the end of this year.”

The Federal Reserve says the U.S. economy was growing at a moderate pace from mid-February through the end of March, although the harsh winter, a strengthening greenback and weak Oil prices were having adverse effects on some industries…in its latest survey of business conditions around the country, the Fed says that 8 of its 12 banking regions described the economy as growing at either a moderate or modest pace with 2 others –  Atlanta and Kansas City – describing conditions as steady…the report said that demand for manufactured goods was mixed with the strong dollar affecting exports…the information included in the report will be used by Fed policymakers when they next meet on April 28–29…

Oil Update

The odds of a final nuclear agreement between Iran, the U.S. and other world powers continue to diminish every time Iranian President Hasan Rouhani speaks about the issue…yesterday, he accused the U.S. Congress of meddling in sensitive negotiations…

“What the U.S. Senate says, or what the U.S. House of Representatives want, or what the extremists in the U.S. are looking for, or what the U.S. mercenaries in the region say, it doesn’t have anything to do with our government or our people,” he said in a speech aired on state television yesterday…

Oh, really, Mr. Rouhani?…the U.S. Congress imposed sanctions on Iran and has an obligation, which it will carry out, to intensely review any nuclear agreement…

Iranian leaders keep insisting that international sanctions must be removed immediately upon completion of an agreement that would place limits on the country’s nuclear activities…

OPEC Sees U.S. Oil Production Declining During Second Half Of 2015

The booming growth in U.S. Oil supplies will end in 2015, OPEC said today, citing a significant cutback in the number of drilling rigs…in its closely watched monthly market report, OPEC said U.S. Oil supplies would grow to about 13.65 million barrels a day in this current quarter before leveling off and then beginning a slow decline during the 2nd half of the year…meanwhile, OPEC said demand for its own Crude would rise slightly to about 29.3 million barrels a day, while demand for non-OPEC supplies would fall by about 165,000 barrels a day…

TSX Gold Index Update

Like the Venture, the TSX Gold Index is at a critical point…it’s pushing up against resistance, and the next several trading sessions should prove critical…

The Gold Index is now battling the 50% Fib. level on the 6-month daily chart below (based on trading as of 7:42 am Pacific today)…just 3 points above Fib. resistance, at 169, is the declining 50-day moving average (SMA)…buy pressure (CMF) is slowly increasing, the SS indicator shows momentum, while RSI(14) has formed a bullish “W” and could accelerate after crossing the 50% level…

For the Gold Index to pick up steam, bullion will have to get back above $1,200 and start pushing higher – that’s certainly a distinct possibility if the Dollar Index retreats further after possibly forming at least a temporary double top…tomorrow’s weekly close for Gold will be important…

The Gold Index was as high as 168 in early trading today but is now off 2 points at 165 as of 9:00 am Pacific…

Today’s Equity Markets

Asia

China’s Shanghai Composite roared nearly 3% higher overnight, climbing 110 points to close at another 7-year high of 4195…

Europe

European markets were down significantly today after mixed Q1 earnings reports and as Greece’s economic outlook deteriorated further…

North America

The Dow has rebounded modestly after falling as low as 18064 this morning…as of 9:00 am Pacific, it’s off just 18 points at 18095…

In Toronto, the TSX is off 89 points as of 9:00 am Pacific, while the Venture touched resistance at 707 and is now down 1 point at 704…patience is key…a breakout above 707 certainly appears to be in the works…

TSX Updated Chart

The current pattern in the TSX remains highly promising given the inverted head and shoulders with a bullish ascending triangle…a confirmed breakout above the neckline, which the Index is grappling with now, could ultimately send the TSX to significantly higher levels – at least 16750…it’s hard to imagine that happening without some strength in certain commodities…

Sheslay Fireworks On The Way?

Garibaldi Resources Corp. (GGI, TSX-V) Update

As Garibaldi Resources (GGI, TSX-V) continues to advance an important high-grade discovery in central Sonora State, with a follow-up round of drilling also commencing at La Patilla, the company has been carefully positioning itself for the highest possibility of a 1st hole “strike” at the Grizzly Project in the Sheslay district…rest assured, a discovery on Garibaldi’s ground – combined with the increasing success Doubleview Capital (DBV, TSX-V) is enjoying at the advanced Hat Project – could generate a wave of fresh interest in this emerging district that could dwarf that witnessed during the early part of 2014…more on this in the coming days…

In the meantime, John’s updated GGI chart shows an interesting “hammer” this week with the stock finding support at the bottom of a bullish downsloping wedge…readers should keep in mind, GGI tripled in value in just 2 months from December 2013 to February 2014 on the first big wave of interest in the Sheslay district…

The second wave, we believe, is just around the corner…

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

Doubleview Capital’s (DBV, TSX-V) hole #23 has an excellent chance of producing breakthrough results for the Hat and the Sheslay district as a whole, and assays from the remainder of H-23 are expected in the near future…the hole hit at least 3 zones of higher-grade Cu and Au porphyry mineralization…in addition, a much broader geological understanding of the Hat has developed over the past several months, especially since the addition of Pat McAndless as a technical adviser and Dr. Abdul Razique as the company’s senior geoscientist who was previously with Antofagasta….

If the Lisle zone is indeed just the southeastern tip of the Hat deposit, then this fundamentally changes the dynamics for the Hat – and the entire district for that matter…

Technically, DBV has been consolidating within a downsloping flag since last year…based on the improving fundamentals at the Hat, we see a growing likelihood of a near-term breakout above this flag…key resistance is 15 cents – a Fib. level and the 200-day moving average (SMA) on this 3-year weekly chart…

Foran Mining Corp. (FOM, TSX-V)

Readers may wish to perform their due diligence on Foran Mining Corp. (FOM, TSX-V) which has come to life since early March…the company’s flagship asset is the McIlvenna Bay deposit (a large Zinc-Copper-Gold-Silver VMS system) located in east central Saskatchewan, 65 km west of Flin Flon…the legendary Peter Lassonde, Chairman of Franco-Nevada (FNV, TSX), holds more than 10% of FOM after increasing his personal holdings last year…

McIlvenna Bay is one of the largest undeveloped VMS deposits in Canada, with indicated resources of 13.9 Mt grading 1.96% CuEq and inferred resources of 11.3 Mt grading 2.01% CuEq…late last year, Foran announced a positive PEA for McIlvenna Bay, with a pre-tax NPV of $382 million and an IRR of 22% (post-tax $263 million and 19%)…

Meanwhile, 2 weeks ago, the company reported high-grade results from the first of 6 winter holes drilled at its Bigstone deposit approximately 25 km southwest of McIlvenna Bay…BS-15–240 included 18.4% Zinc over 11.78 m (339 m to 350.78 m) from the Zinc zone, followed further downhole by separate intervals of 1.4% Copper over 10.59 m and 1.3% Cu over 8.47 m from the underlying Copper zone…

Technically, FOM has excellent possibilities as 2015 progresses, though a better entry point than yesterday’s 38-cent close is quite possible in the event of a pullback to cleanse temporarily overbought conditions…keep in mind, as well, that 6.4 million flow-through shares from a December financing (the company is in a strong cash position) are now free-trading…

FOM is off a penny-and-a-half at 36.5 cents as of 9:00 am Pacific…

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

Gold has traded between $1,188 and $1,198 so far today…as of 9:15 am Pacific, bullion is up $4 an ounce at $1,196…Silver has added 9 cents to $16.22…Copper is flat at $2.69…Crude Oil has hit a new high for 2015, surging more than $2 a barrel to $55.50, while the U.S. Dollar Index has backed off from its morning high and is now up slightly at 98.95 (see updated chart this morning)…

As expected, China’s economy started the year on a downbeat note with its slowest quarterly growth rate since 2009, pointing to a further loss of momentum for the world’s second-largest economy…the 7% 1st-quarter year-over-year growth rate marks a slowdown from 7.3% in the 4th quarter…it also puts more pressure on economic planners to ease fiscal and monetary policy even as they try to avoid excessive stimulus that could boost debt and fuel more overcapacity in real estate and heavy industry…

Additional data released today by China’s National Bureau of Statistics showed that growth in industrial production, fixed asset investment and retail sales in March decelerated…all came in below economists’ expectations…

The strong U.S. dollar will start to hinder growth in the country, according to analysts at Nomura in their just-released Global Economic Outlook Monthly Report…they expect the U.S. economy to grow below 3% in 2015, and eventually around 2% in 2016. “Although some of these near-term shocks will likely dissipate, we now believe the stronger dollar will have a notable negative impact on growth through trade in 2015,” they say. “In addition, we believe that there is still some way to go before the Oil and gas rig count reaches its nadir, which should produce a further drag on business capex in the first half of the year before starting to rebound in late 2015.”

Oil Update 

Oil prices continue to gain traction above $50 a barrel on favorable short-term technicals and some upbeat fundamental news this morning…

Stockpiles of U.S. Crude grew by only 1.3 million barrels in the week ended April 10, the EIA reported this morning…in the prior week, the agency reported stocks surged by nearly 11 million barrels, the largest build since 2001…total inventories stood at 483.7 million barrels, the highest level on record…

Meanwhile, the EIA, which advises industrialized nations on Oil policies, gave an upbeat note on demand this morning, saying it would rise by 1.1 million barrels a day this year…that would be a “notable acceleration”, it pointed out, on last year’s 700,000 barrels a day growth…the IEA’s estimates confirm several signs of demand growth that Oil analysts have pointed out in recent weeks…yet the agency also warned about continued over-supply problems…

“In some ways, the outlook is only getting murkier. That’s in part because the backdrop against which the adjustment is playing out is constantly changing…recent developments thus may call into question past expectations that supply and demand responses would tighten the market from mid-year on…the market re-balancing may still be in its early stage.”

Technically, WTIC has recently built strong support at the $50 level which is also the now-rising 50-day SMA…resistance at $54 is currently being tested…notably, RSI(2) is now at its highest level (95%) since February of last year on this 2-year weekly chart…such an extreme reading underscores the recent shift in sentiment with WTIC rallying 31% from its March low…that was the “easy money” to be made in the recovery from record oversold conditions…short positions would likely begin to rebuild significantly on a move toward the $60 level…

U.S. Dollar Index Update

Technically, one has to wonder if the dollar has put in a short-term “double top” as part of a corrective phase that started in mid-March…if it has, this would certainly be bullish for commodities and the Venture over the coming weeks…neither can afford a breakout by the Dollar Index anytime soon above last month’s 12-year high of 100.71…

Euro 7-Month Daily Chart

The euro has been the mirror image of the Dollar Index, and a big question is whether or not the euro can hold critical support at 105 and perhaps confirm a short-term double bottom in advance of a significant rally…the next several trading sessions should provide some clarity…on a few occasions since last month, the euro has failed to overcome stiff chart resistance at 110 which is also now the 50-day SMA…

Today’s Equity Markets

Asia

China’s Shanghai Composite cooled off overnight on profit-taking, falling 52 points to close at 4083…the expectation of continued stimulus measures, however, should keep this market buoyant…

Europe

European markets were up moderately today…the ECB left interest rates unchanged, amid early signs that the central bank’s recent massive bond-buying program launched last month is helping underpin growth in the 19-country currency bloc…today’s rate decision came amid signs that the euro zone is turning the corner after years of recession and stagnation…recent data from information services firm Markit showed that the region’s economy grew at its fastest pace in nearly a year in March…the bloc’s largest economy, Germany, is expected to have posted strong growth in the 1st quarter, based on consumption and trade figures…

North America

The Dow has added 60 points as of 9:15 am Pacific…

The manufacturing sector in the New York region turned negative for the first time since December, according to the latest data from the New York Federal Reserve…the general business conditions index in the Empire State manufacturing survey fell by 8 points to a reading of –1.2 in April, compared to March’s reading of 6.9…according to consensus estimates, economists were expecting to see a modest rise in the region’s manufacturing sector, forecasting a reading around 7.2…

In Toronto, the TSX has added 102 points as of 9:15 am Pacific while the Venture is up 8 points at 704 as it closes in on key 707 resistance…

The Canadian economy has stalled and won’t grow at all in the first quarter as the damage from the Oil price collapse hits hard and early, the Bank of Canada said this morning…but the central bank has opted to keep its key overnight lending rate at 0.75%, insisting that the rest of the year will be much better as lower interest rates filter through the economy and exports rebound…

Prime Minister Narendra Modi has arrived in Canada for a 3-day, 3-city visit, the first by an Indian Prime Minister to Canada in over 40 years…media reports say that a breakthrough agreement for India to buy Uranium from Cameco Corp. (CCO, TSX) is expected to will be unveiled today…

India’s growth story is expected to dominate the headlines in the years ahead with both the World Bank and the International Monetary Fund predicting robust expansion for Asia’s third largest economy on the back of free-market reform initiatives launched by the government and the impact of lower global Oil prices…the fact that India will overtake China as the world’s fastest growing economy by 2015–16 is well acknowledged…the World Bank in a report on South Asian economies said India’s economy is expected to accelerate to 8% in 2017–18 after a growth of 7.6% in 2015–16…in 2014–15, growth is expected to be 7.2%, the World Bank said in its South Asia Economic Focus Spring 2015 titled “Making the Most of Cheap Oil”…

North Arrow Minerals (NAR, TSX-V) Update 

North Arrow Minerals (NAR, TSX-V), looking very strong, hit a new multi-year high of 98 cents yesterday, just 2 pennies below the nearest measured Fib. resistance level…the company’s solid portfolio of diamond projects, overseen by an exceptional management team, are highlighted by Qilalugaq in Nunavut where positive initial results, including rare yellow-hued diamonds, were released in late February from a 1,500-tonne sample of kimberlite…

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

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)

Other important positive factors included the RSI(14) uptrend and the bullishness in the ADX indicator…

NAR’s uptrend line should provide continued support in the event of a pullback from the $1.00 Fib. resistance, though an immediate sharp breakout from this level is very possible given the stock’s current technical posture…

NAR is unchanged at 91 cents as of 9:15 am Pacific…

Eskay Mining Corp. (ESK, TSX-V) Update 

The intense accumulation in Eskay Mining (ESK, TSX-V) since the summer of 2013 has been quite amazing given the state of the markets, and there’s every reason to believe there has to be something significant in the works here, especially given an almost total absence of news…

Eskay controls 40 sq. km surrounding the prolific past producing Eskay Creek mine, and they have some giant neighbors – Pretium Resources (PVG, TSX) and Seabridge Gold (SEA, TSX)…while it was in operation, Eskay Creek was the second richest deposit in North America and the 5th largest Silver producer in the world…

We can’t help but think there are some bigger companies looking at ESK’s land package for a potential deal…

Technically, a confirmed breakout above Fib. resistance at 15 cents would be significant…

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

Gold has traded between $1,182 and its 50-day moving average (SMA) at $1,201 so far today…as of 9:25 am Pacific, bullion is down $6 an ounce at $1,192…Silver is off a nickel at $16.20…Copper has fallen 3 pennies to $2.69…Crude Oil has surged $1.53 a barrel to $53.42 while the U.S. Dollar Index has fallen three-quarters of a point to 98.71…

Barclays says that gross longs in Gold, as revealed by the latest COT report ending April 7, are now at their highest level since Feb. 24 and gross shorts are at their lowest since early March.  “Short-term positioning suggests reduced scope for further short covering activity and at the margin, profit-taking is more likely,” they stated.

Global economic growth will climb only marginally this year vs. 2014 as slowing output in major emerging markets and a feeble expansion in rich countries prevent a more robust expansion, the International Monetary Fund reported today…emerging markets are on course for a 6th consecutive year of falling growth rates, led by a faster-than-expected slowdown in China, a steep contraction in Russia and a recession in Brazil, the IMF said in its World Economic Outlook released ahead of its semi-annual meetings…with sluggish recoveries in Europe and Japan and softer output in the U.S. as a stronger dollar weighs on exports, the global economy should expand by 3.5% this year, the IMF predicts…that forecast is up just 0.1% from last year’s expansion of 3.4%…

Oil Update

Crude prices are up today on expectations U.S. shale Oil output will record its first monthly decline in over 4 years, but analysts warned that the broader market remained oversupplied…the U.S. Energy Information Administration expects U.S. shale production to fall by 45,000 barrels to 4.98 million barrels per day in May from April…

OPEC, singling out the United States and Canada, published a stinging critique yesterday of Oil-producing countries that had refused to follow its lead over the last decade in holding back supply in an effort to boost prices…

“Today, operating purely through self-interest is quite simply frowned upon,” said the intergovernmental organization in a bulletin.  “Yet, when it comes to the supply of petroleum, there is a stubborn willingness of some non-OPEC producers to adopt a go-it-alone attitude, with scant regard for the consequences.”

OPEC said that its Crude output had been stable over the last 9 years, averaging 30 million barrels per day…by comparison, non-OPEC production “led by the U.S. and Canada” surged by 6.3 million barrels per day in the same period, the body said…

“In the past, OPEC has often shouldered the burden of ensuring Oil market stability alone. In the current situation, which should be of great concern to ALL, is it not time for this burden to be shared?” asked OPEC, which accounts for 40% of the world’s Crude Oil output…

Meanwhile, the Saudis reportedly jacked up their production to record levels in March…they’re clearly trying to maintain their market share and put the squeeze on marginal U.S. and Canadian shale producers…another issue the Saudis are concerned about, as Bloomberg reported in an excellent piece yesterday, is “peak demand” – at $60 to $70 a barrel, peak demand gets pushed back at least 5 more years to 2030, according to Bank of America Merrill Lynch commodities researchers…such a delay would be bad news for renewable energy companies and for anyone hoping to bend the demand curve lower – slowing or stopping the relentless rise of global Oil consumption that has transformed the planet since the first commercial deposit was developed in Pennsylvania in the early 1860’s…

Analysts at JP Morgan noted, “Geopolitical risk in Oil markets remains elevated. From a fundamental perspective however, supply from the Middle East is expected to remain high, with Saudi Arabia and Iraqi production on the rise.”

Today’s Equity Markets

Asia

China’s Shanghai Composite edged another 14 points higher overnight to close at 4136, a fresh 7-year high…China’s Q1 GDP will be released tomorrow…

Europe

European markets were mostly lower today ahead of tomorrow’s ECB meeting and news conference…the euro once again bounced off major support at 105 today…since the start of the year, the beleaguered currency has declined close to 13% against the greenback – a symptom of an increasingly significant rift between monetary policy in the U.S. and Europe…

North America

The Dow has added 52 points as of 9:25 am Pacific…the Nasdaq came within 3 points of the 5000 level in early trading before retreating modestly…

U.S. retail sales rose in March for the first time since late last year, as consumers bought automobiles and other goods, bolstering views that a sharp slowdown in economic growth in the 1st quarter may have been just temporary…the Commerce Department reported this morning that retail sales increased 0.9%…that was still slightly below expectations of a 1% jump but it was nonetheless the largest gain since March last year…it also snapped 3 straight months of declines that had been blamed on harsh winter weather…

A gauge of U.S. business prices rose in March for the first time since October, in line with expectations…the PPI for final demand, which measures prices that businesses receive for their goods and services, increased a seasonally adjusted 0.2% last month from February, the Labor Department said today…excluding the volatile food and energy categories, the index rose 0.2% as well…

In Toronto, the TSX is off 19 points while the Venture is unchanged at 696 as of 9:25 am Pacific…

Below is a 3-year weekly Canadian TSX sector comparative chart that shows a slow but improving trend for energy and mining issues since last last year…

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

John continues to track the extended pennant formation in Cannabix Technologies (BLO, CSE) with “decision time” approaching imminently…

Keep in mind, pennants are continuation patterns that usually break out in the direction of the previous trend that started…

What this chart is telling us is that BLO is well-positioned for another important move, probably to the upside, during the last half of this month…the potential catalyst for that is anyone’s guess but the company continues to make progress with its marijuana breathalyzer prototype and seems to have little trouble attracting positive media attention…

Below is a chart based on BLO’s OTC listing (CSE charts still not available)…RSI(14) has found strong support at the 50% level…

BLO is off a penny at 44 cents on the CSE as of 9:25 am Pacific…

VANC Pharmaceuticals Inc. (NPH, TSX-V) Update

Another non-resource play that’s attracting considerable attention is VANC Pharmaceuticals (NPH, TSX-V) which is also interesting from a technical perspective given how it’s attempting to break out above a short-term downtrend line and Fib. resistance at 54 cents…a bullish “W” has formed in the RSI(14), and the rising 50-day SMA is providing excellent support after acting as resistance through most of January and February…

Continued momentum here will depend on whether there’s a confirmed breakout, on a closing basis of course, above the downtrend line and the Fib. resistance…NPH climbed as high as 57 cents in early trading but is now unchanged at 53 cents as of 9:25 am Pacific…

Tinka Resources Ltd. (TK, TSX-V) Update

Zinc is one of the most promising metals for 2015 given bullish supply-demand dynamics…a play in this space that has the potential of rebounding as the year progresses is Tinka Resources (TK, TSX-V)…yesterday,the company announced that it has arranged a financing up to $7 million at 21.5 cents per unit…

International Finance Corp. (IFC), a member of the World Bank Group, is expected to subscribe for nearly two-thirds of that private placement…upon closing, IFC will become an insider of the company holding approximately 14.1% of Tinka on an undiluted basis…

As you can see on this 1.5-year weekly chart, TK broke out above a downtrend line late last year…support is very strong at 18 cents with Fib. resistance at 26 cents…

TK is up a penny in light trading at 22 cents as of 9:25 am Pacific…

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

There’s lots happening in British Columbia…we do expect the Sheslay district to heat up profoundly with the potential for near-term new discoveries…not only of course is Doubleview on the cusp of a major breakthrough, but Garibaldi Resources (GGI, TSX-V) has already kicked off its 2015 exploration season at the Grizzly which will lead to first-ever drilling – and we know what their success ratio is like on drill holes elsewhere…

Further south in the Cariboo region, meanwhile, Amarc Resources (AHR, TSX-V) is garnering increased attention as predicted following its announcement in late November that was overshadowed by the overall market turmoil at the time…

Volume picked up significantly in AHR last month, and the company secured the funds through an insider loan to carry out a follow-up round of drilling…AHR traded as low as 6.5 cents in December and hit a new 52-week high of 18 cents March 19…

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…AHR can be expected to aggressively follow up on this discovery…

John’s 3-year weekly AHR chart shows a “Big Picture” bullish trend with a confirmed breakout above the 10-cent level early this month with a recent confirmed breakout above Fib. resistance at 15 cents…buy pressure has recently replaced a long period of sell pressure…

Below is an updated 3-year weekly chart for AHR which is unchanged at 16.5 cents as of 9:25 am Pacific…the odds appear to favor AHR overcoming the 15-cent resistance and moving toward the next Fib. level…

Copper Mountain Mining Corp. (CUM, TSX) Update

Copper Mountain Mining Corp. (CUM, TSX) released production results this morning for the 1st quarter of 2015 from its Copper Mountain mine located in British Columbia’s southern interior…the mine produced 18.4 million pounds of Copper, 7,800 ounces of Gold and 80,300 ounces of Silver in Q1…the mill averaged 93.2% operating time for the quarter and a total of 2.9 million tonnes of ore was milled (35,650 tpod) at an average grade of 0.345% Copper…

Recent improvements to mill throughput have given management confidence that the mine is on schedule to meet its 2015 Copper production forecast of 80 million pounds at a total average cost of U.S. $2.00 per pound net of precious metal credits based on an average mill throughput rate of 37,500 tpd for the year and a mill feed grade of 0.33% Cu…however, the company will be hard-pressed to make money at current metal prices after losing $22 million in 2014 despite average realized U.S. prices on metal sales of $3.11 for Copper, $1,266 for Gold and $19.08 for Silver…

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

Gold has traded between $1,196 and $1,206 so far today…as of 8:00 am Pacific, bullion is down $9 an ounce at $1,198…Silver has retreated 16 cents to $16.32…Copper is off 2 pennies at $2.73…Crude Oil is up 37 cents a barrel to $52.01 while the U.S. Dollar Index flirted with the 100 level this morning before pulling back…it’s currently up one-fifth of a point at 99.56…

Holdings in exchange-traded products (ETPs) backed by bullion saw the largest increase in more than 6 weeks on Friday when Gold jumped more than $10 an ounce to close the week on a positive note…however, Gold is under some mild pressure this morning with the greenback gaining ground for the 6th straight session…a slew of U.S. economic reports are slated for release tomorrow through Friday, so this will be an important week for currencies and commodities with considerable volatility likely…

Goldman Sachs says that in response to the multi-year commodity price correction, Gold miners globally have cut capital expenditures by as much as 52% since year-end 2012…they forecast that this will drive a 7% decline in production by 2018 from today’s levels…

Zinc – A Metal To Watch

Zinc is enjoying its strongest rally in 8 months as inventory declines have added to concerns that supplies will be tight as mines shut…stockpiles monitored by the London Metal Exchange fell last week to the lowest since February 2010…declines for inventories mean that there will be less of a supply cushion as China’s MMG Ltd. this year closes its Century mine, which is responsible for 4% of the world’s Zinc output…

Morgan Stanley estimates that by 2017, more than 1.2 million metric tons of annual mined supply will be taken out of production…that’s more than the U.S. uses in an entire year…prices are rebounding from a 2-quarter slump that was driven by concerns over demand in China, the world’s top consumer…banks including BNP Paribas SA and Goldman Sachs are forecasting the metal will perform well this year…

Meanwhile, Robert Friedland’s Ivanhoe Mines (IVN, TSX) this morning reported an 85-m section of 49% Zn in hole KPU071 as underground drilling continues at its high-grade Kipushi Copper-Zinc-Germanium-Lead and precious-metals mine in the DRC…

“Our underground drilling program at Kipushi is continuing to deliver exceptionally high-grade intercepts in several target areas, while leading to an improved understanding of geology and structural controls on the mineralization,” stated Friedland in this morning’s news release.  “While the world’s biggest Zinc mine in Australia is winding down operations due to depletion of its ore, the timing to look at bringing Kipushi back into production couldn’t be better. Kipushi hosts the richest Zinc-Copper deposit in the world, with many drill intercepts in the (historic) Big Zinc zone recording grades between 40% and 60% Zinc.”

Oil Update

The number of rigs exploring for Oil in U.S. acreage fell by the steepest in a month, according to Friday’s latest figures from Baker Hughes, after 2 weeks of thin declines, though this has no immediate impact on production which continues to edge slightly higher (should top out during the 2nd half of the year, most analysts believe)…there are now 53% fewer rigs compared with a peak of 1,609 in October…the count has declined for 18 straight weeks and is at a level last seen in December 2010…

WTIC still rose 5.3% last week despite the biggest jump in U.S. inventories since 2001 and news that Saudi Arabian output had reached a record high…then, of course, there’s the situation with Iran…

Oil, Iran & Obama

President Obama, not surprisingly, is lashing out at the many critics of the “framework” nuclear deal with Iran that has his fingerprints all over it…the Oil market is now correctly assuming that this controversial and ill-advised attempt at a “rapprochement” with an untrustworthy regime that’s imposing its influence (often along sectarian battle lines) in the Middle East, and remains a major threat to Israel, is likely to fail, especially if the U.S. Congress flexes its muscles on this issue the way it wants to…so the fears of large amounts of Iranian Oil adding to an already significant global over-supply problem, anytime in the coming months, are ill-founded – with or without an accord, actually, given a host of complexities around the issue of sanctions and the ability of the Iranians to get their Oil quickly to market…

In case you missed it, Obama made these comments (directed at opponents of the framework deal with Iran) Saturday at the end of the 2-day Summit of the Americas:  “When you start getting to the point where you are actively communicating that the United States government and our Secretary of State is somehow spinning presentations in a negotiation with a foreign power, particularly one you say is your enemy (our emphasis and an interesting choice of words, has the President found a “friend” in Iran?), that’s a problem.”

One only has to look at how Obama has handled the Keystone Pipeline issue, consistently spinning outright false statements and half-truths about both the project and Canadian Oil, not to mention a mountain of other matters from Obamacare to Benghazi to ISIS to Yemen to trading 5 terrorists for an American deserter, to know that this President has actually perfected the art of “spinning”…fortunately, a majority of Americans can now see through that, based on poll after poll, and they’ve elected a Congress to keep him in check, though Obama remains defiant…he’s in for a rocky ride over the final 21 months of his Presidency…

The Senate Foreign Relations Committee is set to debate tomorrow on amendments to legislation calling for Congress to have a say on the nuclear agreement…

Gold Plays “Capture The Flag”:  2.5-Year Weekly Chart

This is one of the very best charts to understand the overall pattern that continues to define how Gold is trading…it gives a very clear “Big Picture” view of the ups and downs in bullion over the last 2 years, and where the support and resistance levels are…

Gold continues to consolidate within a downsloping flag with back-and-forth moves between the top of the flag and the bottom of the flag since 2013…in addition, RSI(14) has bounced between a low of 30% and a high of 60% – currently, it’s almost right in the middle at 48%…

It wouldn’t be surprising if Gold is now in the midst of another run toward the top of the flag, and a 4th attempt in the last year to break above it…in each case, a bullish cross in the SS has occurred (just like we’ve seen recently) prior to a major move to the resistance…

At some point (timing is uncertain), Gold will either “capture the flag”, so to speak, and accelerate to the upside beyond $1,300, or it’ll break below the bottom of the flag and perhaps test the $1,000 level as part of a capitulation event (Gold’s long-term monthly chart shows that the main uptrend from the 2001 low is still intact)…

China & India Dominate Global Gold Demand

Precious metals consultancy GFMS last week released its annual analysis of the Gold market (Gold 2015)…they contend that further downside in prices is relatively limited ($1,100 perhaps), and that geopolitical conflicts have the potential to cause bullion to surprise to the upside…GFMS is forecasting a 2015 average Gold price of $1,170 per ounce, increasing to $1,250 next year…they place China as the world’s #1 consumer of Gold, slightly ahead of India (this excludes banking activity, otherwise China would be the runaway leader) with the two of them accounting for nearly 50% of global demand…

Keep in mind that GFMS, and the WGC (World Gold Council), calculate the ‘consumption’ numbers below as being made up only of jewellery, technology and investment demand…banking activity is excluded which, for example, helps explain why Shanghai Gold Exchange delivery figures are significantly higher than consumer demand…

Today’s Equity Markets

Asia

China’s Shanghai Composite keeps soaring…it added another 87 points or 2.1% overnight to close at a new 7-year high, 4121…unexpectedly bad trade data heightened hopes of further stimulus…

Japan’s Nikkei closed essentially unchanged at 19905…

Europe

European markets were mixed today…

North America

The Dow is up 20 points through the first 90 minutes of trading…

The first big wave of Q1 earnings reports hits the market this week, with major banks and financials like J.P. Morgan, Wells Fargo and American Express, and other blue chips like Intel and Johnson & Johnson…

A handful of Fed officials are also speaking this week, most importantly Fed Vice Chairman Stanley Fischer who will attend the IMF spring meeting Wednesday and Thursday…

In Toronto, the TSX has added 22 points as of 8:00 am Pacific while the Venture is off 2 points at 697…

Canada Readies For Modi

Narendra Modi comes to Canada this week, marking the first bilateral visit to this country by an Indian Prime Minister since Indira Gandhi touched down in Montreal 42 years ago…the National Post’s Brian Hutchinson wrote an excellent article a few days ago about how Modi has inspired entrepreneurs even here in Canada, including Calgary-based tycoon Bob Dhillon who identified Modi years ago as India’s best hope for economic reform (he has already met with Modi several times in India…

“I’m shortening my trip to China this week just to get to the state dinner with Modi and (Prime Minister Stephen) Harper in Vancouver,” said the President and CEO of Mainstreet Equity Corp. (MEQ, TSX) which has a $1.3-billion real estate portfolio. “Modi brings something not seen before in my lifetime. He’s pro-business, pro-foreign investment, he has a successful track record. He’s a rock star. I support him, absolutely.”

AuRico Gold-Alamos Gold To Merge

M&A activity continues to ramp up in the Gold sector…AuRico Gold (AUQ, TSX) and Alamos Gold (AGI, TSX) announced this morning that they are merging, a deal that will create a new intermediate producer featuring the Young Davidson mine in Ontario (AuRico) and the Mulatos mine (Alamos) in Sonora State…in addition, a new company to be named AuRico Metals Inc. will be created to hold various assets including AuRico’s Kemess Project in north-central British Columbia…

TSX Breakout:  2-Year Weekly Chart 

The TSX continues to look very bullish with the strong possibility of a new all-time high in the works…the Index confirmed a breakout Friday above chart resistance at 15250 which is now new support…

As shown in this 2-year weekly chart, a bullish inverted head-and-shoulders pattern is forming within an ascending triangle…the next key technical event to watch for is a confirmed breakout above the neckline which is now being tested…

Venture Run To 750 On The Way?  3-Year Weekly Chart

The Venture’s immediate challenge is to clear resistance at 707 where the Index has reacted on two occasions since the beginning of the year…

Overall, the pattern revealed by this 3-year chart is favorable for a potential sudden acceleration to Fib. resistance around 750 – obviously the 707 area has to be dealt with first…

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

Non-resource issues have been leading the Venture higher, but one of the shining lights in the exploration sector last week was Castle Mountain Mining (CMM, TSX-V) which climbed more than 50% to close at 51 cents…the market responded well to the news last Tuesday of the appointment of Dr. David Adamson as CEO to replace Fraser Buchan, while Castle Mountain also recruited Ian Cunningham-Dunlop as Vice-President, Exploration…this certainly strengthens the management team…

We alerted our readers to CMM on the morning of January 19 when the company reported some impressive high-grade drill results from its advanced Castle Mountain Project in southern California…CMM took off from the upper 30’s and climbed as high as 55 cents that day – the 200-day SMA at the time – before consolidating at slightly lower levels…

Results are pending from a follow-up drill program that commenced at the end of January…concurrent with the announcement of management and board changes last week, CMM is also completing a $2 million financing at 35 cents which it expects to close within a week or so – the new management team and incoming board members are subscribing for nearly half of that financing…

Technically, CMM should have strong new support in the mid-40’s while key resistance remains at the previously identified 59-cent Fib. level on this 2-year weekly chart…a solid company made even more interesting with last week’s news…

CMM is off 6 cents at 45 cents as of 8:00 am Pacific…

Silver Short-Term Chart

Silver got a boost recently when it broke out of a short-term downsloping flag that was in place since late January…the metal found support at the bottom of that flag during the middle of last month which was critical, setting the stage for a move higher…

Following the brief pullback from the late March high of $17.41 to unwind temporarily overbought conditions, Silver is showing potential for a strong 2nd half of April…

A key area to watch over the near-term will be the first of 4 Fib. resistance levels on this 9-month daily chart – $17.86…

Notice how the RSI(14) recently unwound from its high in March to support at 40%, and is now attempting to push above the 50% level…

The metal reacted in January at $18.50 – almost exactly at another key resistance level – and then went into a consolidation phase within the downsloping channel…we were waiting for a move above or below that channel, and it came immediately after the Fed policy statement…

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

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…

Note:  John, Terry and Jon do not hold share positions in any of the above-mentioned companies.

TSX Venture Exchange and Gold

The Venture confirmed a breakout last Monday above 680 resistance, and the next key area now within shouting distance is 707 where the Index reacted January 2 and February 27.  Volume picked up as the Venture posted its 4th straight weekly advance, climbing 16 points to close at 699.  Non-resource issues led the way; however, it’s worth noting that late Friday morning, there was an announcement of another takeover of a junior active in Mexico.  Agnico Eagle Mines (AEM, TSX-V) is acquiring Soltoro Ltd. (SOL, TSX-V) in a mostly all-stock deal valued at approximately $32 million (a spin-off company will also be created).  Soltoro holds ground in Jalisco State contiguous to the El Barqueno deposit which AEM acquired after recently buying out Cayden Resources for more than $200 million (without a NI-43-101 resource).  Mexico is a jurisdictional “hot spot” at the moment, and it’s reasonable to expect more deals for companies and projects there in the coming months.

Venture 4-Month Daily Chart

John’s updated 4-month daily shows how the Index is now taking direct aim at the 707 chart and Fib. resistance.  The 680 level was successfully cleared, RSI(14) is rising rapidly and appears poised to move into overbought territory for a period of time, while the ADX indicator confirms the bullish trend at the moment is very strong.  The possibility of a significant breakout to a new yearly high this coming week certainly exists (next measured Fib. resistance after 707 is 750), especially if the U.S. Dollar Index gets pushed back after 5 straight days to the upside.

Venture 6-Month Daily Chart

The Venture broke loose from its 50-day SMA last week which is also now rising gently.  In addition (not shown on the chart below), the Venture has pushed above its 100-day SMA for the first time since last summer.

Buy pressure (CMF) needs to pick up again in order for the Venture to overcome resistance at 707 and then take an immediate run toward 750.  This will require some fundamental factors to come into play – not just technical strength – to convince more investors to come back into this market.

As we noted last week, it’s interesting how the 680 area has held as support on a monthly basis through December, January, February and March, despite December’s weakness and the more than 10% pullback in Gold that started near the end of January.  Each month, the Index fell below 680 but recovered and regained that level –  the 2008 Crash low – by the end of the month.

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.

The “Big Picture” View Of Gold

Gold’s performance Friday was encouraging as new support at $1,200 held for the week despite a strong move by the U.S. Dollar Index.  RSI(14) on this 6-month chart corrected to the 50% level last week and has started climbing higher again, following an overall uptrend since the early March low.  The $1,200 support needs to hold.  For the week, Gold closed up $5 an ounce at just above $1,207.

Gold’s problem is a cluster of Fib. resistance between $1,217 and $1,264.  Bullion needs to conquer that wall.  Based on the current chart pattern, it will probably make an attempt to do so in the near future – a run to at least $1,240 this month seems probable.  The direction of the volatile greenback, and the equity markets, will figure prominently in the equation for Gold in the coming days and weeks.   Momentum, of course, is a magnet for money in the markets, and most investors/traders will gravitate toward what’s in motion to the upside.

Silver fell 27 cents last week to close at $16.48 (updated Silver charts in Monday’s Morning Musings as usual).  Copper gained 2 pennies to $2.75.  Crude Oil, despite getting banged down nearly 7% in Wednesday’s session, ignored President Obama’s ill-advised “framework” nuclear deal with Iran and added $2.63 a barrel to $51.77, while the U.S. Dollar Index recovered just over 2.5 points to close at 99.35.