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Gold has eased modestly today, trading between $1,304 and $1,317 following yesterday’s strong rally fueled by the tragic downing of a Malaysian airliner over eastern Ukraine…while all the facts surrounding this incident are not yet known, early evidence strongly suggests that Russian-supported separatists shot down with a surface-to-air missile what they may have mistakenly believed was a Ukrainian cargo plane…this is highly problematic for Russian President Vladimir Putin, whose fingerprints are all over the destabilization of Ukraine, and clearly heightens tensions in the area and between the West and Russia…

Meanwhile, Israeli Prime Minister Benjamin Netanyahu ordered the military today to prepare for a “significant expansion” of its ground operation against Gaza militants…Netanyahu said the military’s primary goal would be to destroy underground tunnels used by Hamas to attack the Jewish State…the announcement came hours after Israeli ground troops and tanks struck more than 100 terror targets in Israel’s first major ground offensive in Gaza in just over five years…

Our words on Monday are worth repeating – geopolitical hotspots and a current U.S. President more incapable at handling foreign policy than Jimmy Carter will help underpin support for Gold in the months ahead, and indeed could be a driver for higher prices…U.S. Senator and former Presidential candidate John McCain (R., Ariz.), in a recent CNN interview, said the world is “in greater turmoil than at any time in my lifetime.” Those are significant words from McCain who has always shown a strong pulse for global threats…

As Wall Street Journal reporters Jay Solomon and Carl E. Lee wrote last weekend, “A convergence of security crises is playing out around the globe, from the Palestinian territories and Iraq to Ukraine and the South China Sea, posing a serious challenge to President Barack Obama’s foreign policy and reflecting a world in which U.S. global power seems increasingly tenuous. The breadth of global instability now unfolding hasn’t been seen since the late 1970s, U.S. security strategists say, when the Soviet Union invaded Afghanistan, revolutionary Islamists took power in Iran, and Southeast Asia was reeling in the wake of the U.S. exit from Vietnam.”  Will this have implications for Gold and Oil? – absolutely…

It’s amazing that a Canadian Prime Minister’s immediate response to a major international incident showed “big picture” clarity – his words reflected a principled stance and were unequivocally clear, while the American President – supposedly the leader of the free world – wasn’t quite sure what to say at first…Stephen Harper stated yesterday, “While we do not yet know who is responsible for this attack, we continue to condemn Russia’s military aggression and illegal occupation of Ukraine, which is at the root of the ongoing conflict in the region.”  Bang-on.  Meanwhile, the best Obama had to offer was a classic Carterism:  “It looks like it might be a terrible tragedy.”  Hopefully he’ll speak more forcefully today, but he always seems to be a few steps behind and lacks a “feel” for America’s role in the world…Russia, as it has in the past, is taking advantage of a vacuum of leadership on the international stage – in this instance, a vacuum created by Obama’s disengagement from the world (that approach, in all fairness, has had plenty of cheerleaders on both the left and the right)…but the American President has also even had trouble managing relations with the country’s closest friends and allies including Israel and North American partners Canada and Mexico – not a good sign…if you can’t even handle things well with your friends, how can you effectively deal with your foes?…

As of 8:15 am Pacific, bullion is down $11 an ounce at $1,308…Silver is 32 cents lower at $20.84…Copper has declined 4 pennies to $3.16…Crude Oil is off 43 cents at $102.76 while the U.S. Dollar Index is up slightly at 80.61…

Investor and industrial consumption of Silver has advanced at a healthy pace in 2014, reflected in the Silver price increasing 5% as of July 15 from the beginning of the year in a report issued this morning by the Washington, D.C.-based Silver Institute (www.SilverInstitute.org)…building on an impressive 2013, investors continued to boost Silver holdings in the first half of 2014…Silver ETF’s backed added 7 million ounces of Silver bullion through June; in contrast, Gold ETF holdings dipped by 1.4 million ounces ounces over the same time period…U.S. Mint sales of American Eagle Silver Bullion coins maintained near record level sales, totaling 24.1 million ounces for the first six months of 2014, just shy of the the 25 million  sold in the first half of 2013…industrial demand for Silver in critical sectors, such as ethylene oxide production, has increased significantly in the first half of the year and is expected to increase 23% this year to 8 million ounces, according to Thomson Reuters…

Another positive for Silver is growing global semiconductor sales…according to the Semiconductor Industry Association, semiconductor sales were up 8.8% May from a year ago…this increase is encouraging for Silver demand because the metal is used extensively in electronic products that contain semiconductors…semiconductor sales in the first quarter of the year totaled $78.5 million globally, the highest first quarter total on record…

Today’s Equity Markets

Asia

Asian markets held up quite well overnight despite events in Ukraine…China’s Shanghai Composite erased early losses and edged 3 points higher to snap a two-session losing skid and finish the week at 2059…Japan’s Nikkei average fell 155 points…

Europe

European markets were mixed today…

North America

The Dow is up 85 points as of 8:15 am Pacific after yesterday’s sell-off, triggered by the shooting down of the Malaysian airliner…

Fascinating investigative report just released by Bloomberg Businessweek that reveals details of a 2010 Nasdaq cybergrenade that never detonated…Russian hackers managed to slip a “digital bomb” into the Nasdaq – one with the potential to sabotage the stock market’s computers and wreak havoc on the U.S. economy…although it had been reported previously that hackers had snooped around the Nasdaq’s computer network, specific information about the attack had remained secret until this week…

The TSX has gained 55 points while the Venture is up 3 points at 1009 as of 8:15 am Pacific…Highbank Resources (HBK, TSX-V), one of our favorites, has hit a new multi-year high of 34.5 cents in heavy trading this morning…it’s up 4.5 cents at 32.5 cents as of 8:15 am Pacific…Pine Cliff Energy (PNE, TSX-V), meanwhile, is this morning’s runaway volume leader, up 22 cents at $1.60 after announcing a major deal yesterday with a senior Oil and gas producer…

TSX Gold Index Updated Chart

Gold producers fared well yesterday but have given up some of those gains in early trading today…however, the TSX Gold Index appears to be inching closer to a potential major breakout if you examine this 15-year monthly chart from John…

The key “takeaway” regarding this chart is how the Gold Index is threatening to push above a long-term downtrend line…the key level is 210 – a confirmed breakout above 210 would likely lead to a powerful immediate surge higher, perhaps to Fib. resistance in the mid-250’s…the overall bearish trend that emerged in 2012 as shown by the ADX indicator has been weakening significantly and a bullish +DI/-DI crossover could be in the works for this second half of 2014…

The Gold Index is down 4 points at 198 as of 8:15 am Pacific…

Abcourt Mines Inc. (ABI, TSX-V) Update 

Abcourt Mines’ (ABI, TSX-V) Elder Mine near Rouyn-Noranda, Quebec, continues to inch toward commercial production…the company has done an excellent job in systematically advancing this project in a very cost-effective, low-risk manner…

Technically, what’s very interesting is that ABI has finally broken out above a downsloping channel in place since 2012…the trend is your friend, and the trend is certainly in ABI’s favor now as you can see in this 2.5-year weekly chart…

ABI is off half a penny at 7.5 cents as of 8:15 am Pacific…

Condor Resources Inc. (CN, TSX-V) Update 

Condor Resources (CN, TSX-V) is an excellent example of what can happen to a stock (or an Index) when it breaks above a long-term downtrend line, as CN did earlier this month following results of drill results from its Soledad Project in Peru…the market is anxiously awaiting additional results (in particular from deep hole SDH-012) which will no doubt determine the stock’s next major move…

CN has been encountering resistance in the mid-teens, as expected, and no one has a crystal ball with regard to upcoming results – certain systems can be geologically quite complex, so a patient wait-and-see approach makes sense in this case…the overall technical posture is certainly bullish and that’s an encouraging sign…as always, perform your own due diligence…

CN is off half a penny at 14.5 cents as of 8:15 am Pacific…

Contact Exploration Inc. (CEX, TSX-V) Update

Traders and investors should love a chart like this – it has been so predictable, and there’s every reason to believe the trend will continue…

Calgary-based Contact Exploration (CEX, TSX-V) has been a stellar performer this year and remains one of our favorite junior oil and gas plays…CEX’s 50 and 100-day SMA’s, currently at 42 and 39 cents respectively, have been close supporting moving averages since the summer of last year…a breakout has occurred above measured Fib. resistance at 38 cents, with the next Fib. resistance at 54 cents (not a price target, just a theoretical level based on Fib. and technical analysis)…

At 41 cents as of 8:15 am Pacific, CEX is hugging the bottom of the upsloping channel – an exceptionally strong area of support…

Note:  John, Terry and Jon do not hold share positions in ABI, CN or CEX.