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Gold has softened after release of some positive U.S. economic data…as of 6:10 am Pacific, the yellow metal is down $11 an ounce at $1,669 after climbing as high as $1,685 overnight…Silver is down 34 cents at $31.15…Copper is up slightly at $3.61…Crude Oil is 87 cents higher at $95.11 while the U.S. Dollar Index is off its lows of the day, down one-tenth of a point at 79.74…

Germany To Repatriate Some Of Its Gold

The world’s second-biggest holder of Gold reserves, Germany, is planning to bring home some of its Gold held in New York and Paris – a move that some commentators are saying marks a breakdown of trust between the world’s major central banks…that could be reading more into the situation than actually exists, but time will tell….Germany stored so much Gold outside of the country due to the Cold War threat of the Soviet Union, but those dynamics of course have changed over the last couple of decades…the Bundesbank, Germany’s central bank, announced in a news release  yesterday that it plans to repatriate some of its Gold holdings from the New York Federal Reserve and the Bank of France…the release said the Bundesbank intends to move 300 tons of Gold from New York to Frankfurt by 2020, plus a further 374 tons from Paris…by 2020, it expects to hold 50% of its reserves in its vaults in Frankfurt, with the remainder split between New York and London…none will remain in Paris…Gold is therefore simply moving from one vault to another and will likely stay off the market which is the reason this news has not been a market-moving event for the the yellow metal…”With this new storage plan, the Bundesbank is focusing on the two primary functions of the Gold reserves: to build trust and confidence domestically (our emphasis, this is clearly a statement underlying the importance of Gold and its value) and the ability to exchange Gold for foreign currencies at Gold trading centers abroad within a short space of time,” the Bundesbank said…the Bundesbank said the complete withdrawal of its holdings from France is because the adoption of the euro means it is no longer reliant on Paris as a financial center in which to exchange Gold for an international reserve currency…

When Will the Bond Bubble Burst?

Last week there was an indication that the bond fund flows are starting to recede and revert back to equity funds which would be very bullish of course for the stock market and commodities…it was reported that during the week ended January 9, $22 billion flowed into long-term equity mutual funds and exchange-traded funds, according to data from Bank of America Merrill Lynch…this amount “was the second-highest amount on record,” according to CNBC…Bloomberg recently noted that, “Americans have missed out on almost $200 billion of stock gains as they drained money from the market in the past four years”…look for the trend you see in the graph below (U.S. mutual fund net flows) to start reversing in 2013…

Gold Stocks In U.S. Post-Election Years

Here’s another trend that’s interesting…historically, during post U.S. federal election years, the Philadelphia Stock Exchange Gold and Silver Index has seen significant gains…let’s hope for the same in 2013…interestingly, the turnaround has typically started during the second half of January and intensifies in February…

U.S. Economy Holds Up Despite “Fiscal Cliff” Media Hysteria

The U.S. economy withstood concerns about the “fiscal cliff” in December with the Federal Reserve’s business contacts reporting growth across the country…all 12 districts of the US Federal Reserve system reported moderate or modest growth according to the central bank’s latest Beige Book survey…the report is an encouraging sign that uncertainty about fiscal policy did not freeze overall economic activity and suggests the economy went into 2013 with some momentum…but there were still some indications that tax and spending decisions were weighing on sentiment…retailers reported a more pessimistic outlook for future sales because of “concerns that consumers will spend cautiously due to ongoing fiscal uncertainty”, according to the report…

The Labor Department reported this morning that the number of Americans seeking unemployment aid fell to a five-year low last week, a hopeful sign the job market is healing…but much of the decline reflects seasonal volatility in the data…in another piece of good economic news, home construction surged 12.1% in December to end the best year since 2008…

Today’s Markets

Asian markets were mixed overnight with China’s Shanghai Composite losing 25 points to close at 2285…European shares are slightly higher while stock index futures in New York as of 6:10 am Pacific are pointing toward a positive open on Wall Street…the Venture Exchange closed down 2 points yesterday at 1230 but on increased volume, thanks to the activity in Fission Energy (FIS, TSX-V) after Dennison Mines (DML, TSX) announced a deal with Fission that includes buying some of the junior’s assets for shares and a spin-out of the promising Patterson Lake South uranium property…

Edgewater Exploration (EDW, TSX-V) Updated Chart

Below is a very encouraging three-year weekly chart for Edgewater Exploration (EDW, TSX-V) which, as we pointed out recently, is certainly worthy of our readers’ consideration, especially now that the company has received the final ok from Spanish authorities for the Corcoesto Gold Project EIS (Environmental Impact Statement)…Edgewater is working on an updated resource estimate for Corcoesto (expected this quarter), and it should benefit from 45,000 metres of infill drilling (256 holes) completed since the previous estimate a year ago…classic “cup with handle” pattern on the chart as you can see below…

Northern Graphite Updated Chart (NGC, TSX-V)

The recovery in China has been helping some of the graphite stocks since they bottomed out around the middle of last month…NGC has been consolidating recently after a big run-up from a low of 58 cents to a high of $1.34 in just 17 trading sessions…the 20-day moving average (SMA), rising of course and currently at $1.13, has been providing support…below is an 18-month weekly chart from John that shows NGC could certainly power higher this quarter…

Kirkland Lake Gold (KGI, TSX) – Bottom Fishing Opportunity?

Kirkland Lake Gold (KGI, TSX) disappointed investors last month after issuing poor quarterly results and slashing its production forecast for the fiscal year…very similar situation to what occurred with Richmont Mines (RIC, TSX)…in situations like this, investors do tend to over-react and the stock becomes quite oversold…investors must be patient with a rebound, however…KGI dropped to a low of $5.11 intra-day December 13 and it has managed to hold above that level since…the chart is looking healthier and the next major resistance is $8 as John shows in the 2.5-year weekly chart below…

Note:  John, Jon and Terry do not hold positions in EDW, FIS or KGI.