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Gold has shot back up above $1,200 an ounce as tensions have erupted in the Middle East with Saudi Arabia and a coalition of Arab partners launching “Decisive Storm” in Yemen…Saudi Arabia has pledged to contribute 150,000 soldiers and 100 war planes in the coalition that includes Jordan, Bahrain, Kuwait, Morocco, Qatar, Sudan, Pakistan and Egypt – all who so far have offered fighter jets or naval ships…as of 9:15 am Pacific, Gold is up $10 an ounce at $1,205 after reaching an intra-day high of $1,220…Silver is up 17 cents at $17.13…Copper has added 3 pennies to $2.81 while the U.S. Dollar Index has recovered slightly to 97.08…

Airstrikes are in progress against military bases held by Shiite Houthi rebels in Yemen as Iran – believed to be using the Houthis to seize control of that country – warned that Riyadh was taking a “dangerous step”…the decision by Saudi Arabia and the region’s Sunni monarchies to intervene in Yemen, on behalf of President Hadi who was forced to flee for his safety, raises the stakes in their rivalry with predominantly Shiite Iran, which has raged in Syria, Iraq and elsewhere in the region…

A statement today from Tehran’s Foreign Ministry spokeswoman Marzieh Afkham did not name Saudi Arabia but called the airstrikes an “invasion”…the statement went on to claim that the campaign would worsen the already deteriorating situation in Yemen…

U.S. national security strategy has failed in Yemen, not to mention elsewhere, and the consequences are beginning to pile up…in a joint statement issued by U.S. Senators John McCain (R-Ariz.) and Lindsay Graham (R-S.C.), “A country (Yemen) that President Obama recently praised as a model for U.S. counter-terrorism has now become a sectarian conflict and a regional proxy war that threatens to engulf the Middle East.” 

The conflict in Yemen won’t immediately change Oil’s current supply problem – Yemen is 39th on the list of world energy producers according to the EIA – but geographically and politically, it’s located in a very strategic part of the Middle East…and in order to export to Europe, Arab producers have to ship Oil past Yemen’s coastlines via the Gulf of Aden to get to the Suez Canal….

How the Iran-Saudi Arabia dynamic plays out in the coming weeks is going to be highly interesting to say the least…

Gold Tidbits

SPDR Gold Trust, the world’s largest Gold-backed ETF, continues to see outflows, though this could quickly change given geopolitical events…the fund’s holdings fell 0.2% to 743.21 tonnes yesterday…how physical demand holds up in the face of rising prices will be a key factor to watch…in China, Gold premiums, a good indicator of demand, have eased to about $2-$3 an ounce, compared with $6-$7 last week…

Only 3 emerging market central banks took advantage of weaker Gold prices in February and added to their reserves, according to the latest data from the International Monetary Fund (China not included)…Kazakhstan’s central bank was the biggest Gold purchaser, buying 2.6 tonnes and boosting its reserves to 196.1 tonnes…this was the 29th consecutive month that the central bank has added to its Gold reserves…also buying Gold in February were the Tajikistan and Malayasia central banks, which each increased their reserves by 0.6 tonnes…notably absent on the buy side for the second straight month was Russia, though the Putin regime did add considerable quantities of Gold to its reserves last year from April to December…Russia’s was the biggest Gold purchaser among central banks in 2014 (174.8 tonnes), according to data compiled by the World Gold Council…

U.S. Dollar Index 2+ Year Weekly Chart

The greenback is in a corrective phase which has the potential to extend a little deeper than most traders/investors may expect given the extreme overbought conditions that prevailed for more than 6 months as seen in John’s 2+ year weekly chart this morning…the first primary support band stretches from 93 to 96…

Keep in mind, the Dollar Index has experienced its fastest rise in more than 40 years, and the Fed gave some signals last week that such a powerful move over a short period of time was contributing to a slowing down of the U.S. economy and could threaten the Fed’s target of boosting inflation to the 2% level (a sharply higher dollar imports deflation)…

Long-Term U.S. Dollar Index Chart

The strength of the move in the greenback since last summer has been fueled in part by a major technical breakout above a symmetrical triangle that formed after the early 2009 high of just under 90 (the rise from the 2008 low to the 2009 high was 24%…by comparison, the jump from the May 2014 low of 78.93 to this month’s high of 100.71 was 27.6%)…

Overall, the Dollar Index is clearly in a new long-term bull market with the 120 level quite possible over the next year or two, but during this cycle there will be some significant corrections to unwind temporarily overbought conditions as we’ve also seen in Gold…historically, at times, the greenback and bullion have moved in tandem to the upside, though generally they’ve had an inverse relationship…

Today’s Markets

Asia

Asian markets were mostly lower overnight, though China’s Shanghai Composite bucked the trend with a gain of 22 points to close at 3682…

Europe

European markets were down significantly today on concerns over the Middle East and Greece…airline stocks were also under pressure following reports that the crash of Germanwings A320 may have been a deliberate act…

North America

The Dow is off 10 points as of 9:15 am Pacific…Federal Reserve policymaker Dennis Lockhart said today that economic growth in the first quarter looks very soft and that a rate hike should come in the middle of the year or later…

In Toronto, the TSX is down 39 points after nearly 3 hours of trading…investment in Canadian Oil plays has peaked and will not reach 2014 levels for at least another 5 years, according to new report from the Conference Board of Canada released yesterday…the report downplays the possibility of a quick recovery in the Canadian Oil-patch, where cumulative employment, investment and revenue numbers have dropped along with Oil prices…the think tank is now forecasting further drops in all of those metrics, and is predicting lower overall activity until 2020 at the earliest (unless, of course, events in the Middle East spin out of control and supplies there are significantly disrupted)…

The Venture is flat at 677 as of 9:15 am Pacific…it has posted 5 winning sessions out of 6 after declining in 10 out of the first 12 trading days this month…Noront Resources (NOT, TSX-V), this week’s big mover, climbed as high as 67 cents in early trading today and is currently up 3 pennies at 62 cents…another Nickel play that’s gathering momentum is International Montoro Resources (IMT, TSX-V) which is up half a penny at 8.5 cents as of 9:15 am Pacific…drilling is commencing imminently at the massive Pecors anomaly at IMT’s Serpent River Project east of Sudbury…

Doubleview Capital’s (DBV, TSX-V) geological crew is back on the Hat Property in the Sheslay district, preparing for the next phase of drilling as reported this morning…first, they will be examining core from the widest chalcopyrite-pyrite zone in H-23 (from about 402 m to at least 520 m)…the hole (through 400 m) has already produced the highest Gold-Copper grades to date in drilling at the Hat…

Increasing volume and a potential breakout looming in Cannabix Technologies (BLO, CSE)…BLO is up 2 pennies at 46 cents as of 9:15 am Pacific…

Venture Updated Chart

Key Venture resistance to watch is 680…that’s a Fib. level and the still-falling 20-day SMA…a confirmed push through 680 will add fuel to the fire…

The NOT Factor

Historically, as we’ve pointed out previously, Noront Resources (NOT, TSX-V) has been a useful leading indicator for the Venture, and NOT has surged this week after news Monday and a confirmed technical breakout…overall, it has been a very strong performer since bottoming in December around 25 cents…we can only conclude that this move by NOT has to be considered a positive sign for the Venture going into Q2 and the balance of the year…

Below is a long-term NOT–Venture comparative chart…

North Arrow Minerals Inc. (NAR, TSX-V) Update

North Arrow Minerals (NAR, TSX-V) is an excellent Canadian discovery opportunity for 2015 given the prospects for the company’s diamond projects, specifically Qilalugaq and Pikoo…highly encouraging initial bulk sample results from Qilalugaq sent NAR northward recently, while a 3,000 m drill program began about 6 weeks ago at Pikoo in Saskatchewan…

Technically, there are 4 key “takeaways” regarding John’s updated 8-month NAR daily chart…

1.  The current uptrend support line (“accumulation” zone is in the 70‘s)

2.  The breakout in January above the downtrend line

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

4.  The reversal in January to the upside in the 50-day moving average (SMA) which is now at 65 cents…

NAR is off 2 pennies at 80 cents as of 9:15 am Pacific…

Integra Gold Corp. (ICG, TSX-V) Update 

Integra Gold Corp. (ICG, TSX-V) continues to make significant progress with its high-grade Lamaque Gold Project in Val-d’Or…the pace of activity is impressive…since the beginning of the year, Integra has completed 19,811 m of diamond drilling in 46 holes with 8 drill rigs as part of its 50,000 m 2015 winter drill program on several key targets…of this drilling, approximately 11,668 m in 21 holes has been completed at the Triangle deposit where 5 rigs are active…initial results from Triangle were released Tuesday and included numerous high-grade intercepts including 14.79 g/t Au over 10 m in TM-15-02…

In John’s most recent ICG chart in December, he pointed out how the stock had managed to hold important support in the 15-17 cent range and was likely due for a new uptrend after bottoming at 14 cents in early November…

ICG has performed exceptionally well so far this year and a confirmed breakout has occurred above the Fib. 30-cent resistance level…this remains an important play to keep a close eye on through the balance of 2015…

Note:  John, Terry and Jon do not hold share positions in NAR.  Jon holds share positions in DBV and IMT.