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7:00 am Pacific

The Venture is rallying with the broader markets out of temporarily very oversold conditions that emerged this week, while the 472 Fib. support has managed to hold on a closing basis after the Index dipped as low as 466 intra-day Wednesday.

Very curiously, despite the 11.7% drop from the January 5 high of 528, the Venture has shown continued slight buy pressure as demonstrated by the CMF(20).  That’s an unusual pattern during an intense sell-off.

Watch for a near-term move back up toward the top of the downtrend line and the Fib. level around 500.  From there, we’ll see which way the Index decides to move.

As of 7:00 am Pacific, the Venture is up 5 points at 480.

Gold has backed off modestly after yesterday’s jump when equity markets went into another tailspin…bullion has traded between $1,092 and $1,106 so far today…as of 10:00 am Pacific, bullion is down $6 an ounce at $1,095…Silver has retreated 8 cents to $14.07…Copper is up 3 pennies at $2.01…Crude Oil has rallied more than $1 a barrel to $29.78 while the U.S. Dollar Index is up one-tenth of a point to 99.30…

Citi Research has revised its 2016 average forecast for Gold up by 7.5% to $1,070 an ounce, commenting that safe-haven buying is supportive at the start of the year although a stronger U.S. dollar will still take a toll on the precious metal.  “Gold’s safe-haven rationale is back in vogue for the time being on fears of further China macro contagion, whipsaw equity markets and geopolitical issues in the form of rising Arabian Gulf tensions,” Citi said in a revised commodity outlook…

ECB President Mario Draghi signaled this morning that the governing council may provide more stimulus at its next meeting in March, noting that the outlook for inflation had weakened “significantly“…earlier today, the central bank left its key interest rates unchanged, even as low energy prices and concerns about China’s impact on the global economy threaten to derail the ECB’s efforts to bring inflation back to its target…

Speaking at a news conference, aiming to give the market a boost, Draghi said the stimulus measures undertaken by the central bank since June 2014 – and topped up most recently in December – had “strengthened the euro area’s resilience to recent, global economic shocks“…but he added that fresh declines in Oil prices suggest that the annual rate of inflation in 2016 is likely to be “significantly” below forecasts released just 1 month ago…

Hedge Funds Bullish On Stocks

Hedge funds have been “buying the dip” in the equity markets to start 2016, which isn’t a comforting sign given their track record…according to data from one major Wall Street firm, they’re accumulating shares at a very brisk clip…Bank of America Merrill Lynch’s clients were net buyers of $2.3 billion worth of equities last week, according to its client trading desk data.  “Net buying was chiefly due to hedge funds, who bought stocks for the 4th week in a row. Buying by this group was the largest since September 2010,” BofAML stated in a note to clients Tuesday…

About Resources & The Rise And Decline Of Nations

It has been just over 34 years since Mancur Olson, the late American economist, wrote The Rise and Decline of Nations…the premise of his widely acclaimed book is the longer a society enjoys political stability, the more likely it is to develop powerful special interest groups that erode economic prosperity…

Which brings us to today and the powerful special interest groups who have mushroomed over the last number of years in the United States, Canada, and elsewhere around the world, targeting Oil and other resource industries in the name of “saving the planet”…these groups, with a twisted ideology, are like a cancer, and that cancer has spread like wildfire…it’s also gradually killing economic prosperity…if it takes a politically incorrect Donald Trump to help stop this insanity, so be it…

One of many high-profile spokesmen for these special interest groups is actor Leonardo DiCaprio, a known Oilsands hater, who yesterday launched a ferocious attack on the world’s energy industry at the World Economic Forum in Davos…

Wow…fossil fuels need to be left “in the ground where they belong?”…our Creator knew we needed them – they currently account for about 80% of world energy consumption, and it’s a cheap and plentiful source of energy (the climate change fanatics might be starting to panic now that they see Oil under $30 a barrel – the “addiction”, as DiCaprio describes it, may only increase at these prices even in a slower global growth scenario)…

Trudeau Derides Canadian Resource Industry

Canadian Prime Minister Justin Trudeau wasn’t as direct as DiCaprio, but nonetheless gave a “coded” message regarding fossil fuels yesterday in Davos…ironically, it took an ultra-liberal, one who we’ve occasionally taken jabs at, to deliver the most effective rebuke to Trudeau’s rather stunning keynote speech yesterday at the World Economic Forum where he actually derided the Canadian resource industry, not to mention an ex-PM from Calgary who was a champion of it…

“My predecessor,” Trudeau arrogantly bellowed, “wanted you to know Canada for its resources.  I want you to know Canadians for our resourcefulness.” 

Calgary Mayor Naheed Nenshi, who was there for Trudeau’s speech, commented to reporters afterward, “I might not have used the same language that the Prime Minister used today.  We are still a resource-based economy. Our biggest export is still energy. And I do not see a path where that does not continue to be the case, so clearly we need to do what we can on market access…we also need to see action (on market access) from this federal government.”

Trudeau made an amateurish sales pitch aimed at trying to rebrand the country away from resources to more of a “tech hub”, which also showed a lack of understanding that our huge resource industry itself has become much more technology-focused…resources and tech aren’t mutually exclusive as the Prime Minister suggested yesterday – they are, in fact, becoming increasingly interwoven…he could have made an extremely powerful argument along those lines yesterday but unfortunately missed the opportunity…

God has blessed Canada with entrepreneurs, innovators, hard working people, and an abundance of resources from Oil to Natural Gas to vast amounts of water, from Gold, Copper, Nickel and Uranium to huge reserves of timber, and much more…

The cornerstone that distinguishes Canada’s prosperity, even in the current commodity slump, is our incredible resource endowment – it gives this great nation a distinct advantage in the global marketplace…it’s estimated that approximately 2 million jobs, half of all merchandise exports and more than one-quarter of all capital investment are attributed to Canada’s resource industry…

Yesterday, of course, did not mark the first attack on a global scale on the Canadian resource industry by a Prime Minister named Trudeau…we should all remember who introduced the disastrous National Energy Program in 1980 that contributed to a Canadian recession, cost Alberta tens of billions of dollars and alienated almost all of Western Canada…like father, like son…

The current Trudeau didn’t have to downplay Canada’s resource rich economy yesterday to emphasize tremendous opportunities this country offers in other sectors, but he chose to nonetheless, while also telling everyone that his New Canada will be one in which the government sets the pace and “invests” in a different sort of a not-so-well-defined future (that approach hasn’t worked out so well in Ontario under the McGuinty-Wynne regimes, nor did Trudeau’s father succeed with Big Government in the 1970’s when enormous deficits and debt accumulated that we’re still paying interest on today)…

Now is actually the ideal time to look at ways to maximize Canada’s competitive advantage in the resource area…the extent of the downturn the last 5 years in commodities only means that the next upswing is going to be more dramatic than ever…history tells us that…yes, despite all the doom and gloom at the moment, another commodities boom is just around the corner…it will be driven by a tightening of supplies (even a scarcity of supplies in some cases) due to a prolonged period of decreasing exploration, and current pullbacks in development – thanks in part to special interest groups, climate change fanatics, and weak politicians…

In today’s Morning Musings…

1.  How much lower for Crude Oil?…

2.  Gold at $1,600 CDN – updated chart…

3.  Walker River Resources (WRR, TSX-V) firms on speculation…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold has traded between $1,091 and $1,111 so far today…as of 10:00 am Pacific, bullion is up $19 an ounce at $1,106…Silver has jumped 13 cents to $14.15…Copper is flat at $1.99…Crude Oil has fallen another $2 a barrel cents to $26.42 while the U.S. Dollar Index is off more than one-tenth of a point to 98.92…

As we warned last week, the Dow and the broader indices were about to fall off a cliff, dragged down by increasingly weak technicals and other factors including a growing loss of confidence in governments and central banks around the world – from Canada to China…Gold is benefiting as a result and has a chance to really take off to the upside…there is safety in these markets in profitable Gold producers, and two of our favorites are giving investors shelter from today’s storm – Richmont Mines (RIC, TSX) and Claude Resources (CRJ, TSX)…in today’s Morning Musings, we have a chart that shows how spectacularly these two companies have outperformed the TSX Gold Index over the last couple of years…with a 60-cent Canadian dollar on the way in 2016, thanks in part to government policies, RIC and CRJ will each enjoy another banner year…

The U.S. Federal Reserve has become too focused on questionable jobs figures, not seeing the bigger picture of the Oil market, the problems brought on by a record run in the dollar including a manufacturing recession and increasing deflationary pressures, plus heightened equity market risks, U.S. political upheaval, and geopolitical dynamics…watch what happens – Janet Yellen and the Fed will have to backtrack on their plan to continue to raise interest rates, and the market will be asking: “What kind of ammunition do you have to fight a possible near-term recession?”   

Are global central banks out of dry powder after a 20-year binge of balance sheet expansion, as David Stockman argues? (“It means there will be no printing press driven reflation of the financial markets this time around. And without more monetary juice it’s just a matter of time before a whole generation of punters and front-runners abandon the casino and head for the hills.”)

We don’t underestimate the capacity of central banks to become even more creative which could have a very positive impact on Gold…

Weak U.S. Economic Data Today

Consumer prices in the U.S. decreased by a seasonally adjusted 0.1% during December, the Labor Department reported this morning…the core index for CPI, excluding the volatile food and energy sectors, was up 0.1% – the smallest increase in this index since August…

Meanwhile, the Commerce Department announced that U.S. housing starts fell 2.5% to a seasonally adjusted annual rate of 1.15 million units during December…building permits – important as an indicator of future construction activity – fell 3.9%…

In today’s Morning Musings…

1.  The level the S&P 500 must hold but probably won’t…

2.  The Short Canada Trudeau Trade (HXD, TSX) jumps another 15%…

3.  Searching for bargains – Columbus Gold (CGT, TSX-V) has plenty of fundamental strengths…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold has traded between $1,081 and $1,096 so far today…as of 9:00 am Pacific, bullion is down $3 an ounce at $1,086…Silver is up 17 cents at $14.08…Copper has added 2 cents to $1.98…Crude Oil has slipped 23 cents to $29.19 while the U.S. Dollar Index is flat at 99.14…

China’s 4th quarter GDP curiously came in exactly in line with estimates, but today’s numbers merely confirm the pronounced deceleration in the country’s growth in 2015 which was an extension of a multi-year slowdown that shows little signs of abating…the growth rate, released by the government overnight, moderated to 6.8% for Q4 and and 6.9% for 2015…the annual pace was the weakest in a quarter century, and the quarterly level posted its lowest reading since the financial crisis…

Mark Faber, known as “Dr. Gloom”, told CNBC in an interview this morning, “We have this colossal debt bubble in China ($1.5 trillion) and in my opinion this will have to be deflated through either huge losses in the banking sector or losses in the bond market for investors.  In addition to that, we have essentially a stock market bubble, which now is being deflated.”

A major slap in the face to Canada this morning, though entirely understandable given Prime Minister Trudeau’s foolish declaration that the country is going to withdraw from the air war against ISIS by pulling out its CF-18 fighter jets in the near future…in a highly unusual development in Canada-U.S. relations, the United States has excluded Canada from a high-level meeting tomorrow of what it calls “significant contributors” to the American-led coalition in order to step up the fight to defeat the Islamic State terrorists…it’s an almost unprecedented snub of Canada by U.S. officials, and the Liberal government has no way of “sugar coating” this…the meeting of defense ministers from the U.S., Britain, Germany, France, Italy, Australia and the Netherlands is set for tomorrow in Paris…no invite for Canada’s Harjit Sajjan…Trudeau is tone deaf to the dangers of Islamist terrorism – ample evidence for that including his awkward handling of the Paris attacks late last year and his comments this past weekend when he referred to Friday night’s barbaric terrorist attacks in Burkina Faso as “acts of violence” that he was “saddened” by (not outraged, but “saddened”)…he has no instincts for foreign policy…these attacks by al Qaeda killed 6 Canadians…

Fresh U.S. Deficit And Debt Concerns

Gold has traded between $1,087 and $1,094 on this U.S. holiday…as of 10:15 am Pacific, bullion is flat at 1,089…Silver is up 3 cents at $13.94…Copper had added 2 cents to $1.98…Crude Oil, after 10% declines each of the past 2 weeks, is off another 48 cents at $28.94 while the U.S. Dollar Index has gained one-fifth of a point to 99.10…

Investors added to holdings in Gold exchange-traded products for the 6th time in 7 days Friday…assets rose 4.4 metric tons to 1,489.1 tons, the highest level since the start of December, according to data compiled by Bloomberg…

China will release GDP figures for the 4th quarter of 2015 tomorrow, along with industrial output data, amid rising concerns about the health of the country’s economy, which in turn has reverberated through global markets…China’s economy grew 6.9% in real terms in the first 3 quarters, official data show (if you believe the numbers)…that’s in line with the government’s full-year target of “around 7%” but would be the slowest full-year growth since 1990…

Meanwhile, China’s foreign-exchange reserves posted their biggest monthly drop on record in December, reaching their lowest level in nearly 3 years as capital flows out of the world’s second-largest economy accelerated…

U.S. Recession Odds Increasing?

The chances of a recession in the U.S. are at their highest levels since the fall of 2011, according to the most recent CNBC Fed Survey…the survey also showed recession fears rising for the 6th straight time among respondents, and are now sitting at 28.8%…one fairly reliable recession indicator, the spread between the 2-year and 10-year bonds has weakened to about its lowest level since the last recession…but it tends to signal recession at zero…so at 118 basis points, it’s softer, but the alarm bells aren’t going off just yet…while U.S. manufacturing is contracting and corporate profits are weakening, the consumer is still relatively strong and consumer spending accounts for about 70% of economic growth…

However, a recession in the U.S. has occurred about every 5 years, on average, since the end of WWII…it has been 7 years since the last one…

Is The World Now Really A “Safer Place”?

U.S. Secretary of State John Kerry, among others, declared over the weekend how “the world is now a safer place” after international inspectors “confirmed” that Iran had completed the necessary steps in a deal to restrict its nuclear program…however, the Islamic Republic, which just recently violated a United Nations ban by conducting precision-guided ballistic missile tests capable of delivering a nuclear warhead (this is a regime that simply can’t be trusted), now has a very dangerous weapon in its hands thanks to the West – tens of billions of dollars in cash that it can now access to pursue its destabilizing agenda in the Middle East…