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Gold is taking a breather today after posting an 11% gain for the month of January entering today…as of 5:55 am Pacific, the yellow metal is off its lows but down $10 an ounce at $1,727…Silver, which has out-performed Gold this month, is off 62 cents to $33.37…Copper has pulled back 4 cents to $3.82…Crude Oil has lost 53 cents to $99.03 while the U.S. Dollar Index is up nearly half a point of a point to 79.37…

Paying For Iranian Oil In Gold?

Just one factor that could be contributing to Gold’s surge are rumors that India and China are secretly mulling paying in Gold for Iranian oil, and bypassing a European Union oil embargo on Iran, effective from July 1, 2012…the EU voted a week ago to ban oil imports from Iran…the move came after a defiant Iran announced earlier in January that it had launched a nuclear enrichment program at a well-protected underground facility near the city of Qom…the new EU sanctions are being seen as a way for the West to bring Iran to the negotiating table but any move by China and India, which together purchase more than one-third of Iran’s oil, to bypass the sanctions will not help the West’s position…India’s finance minister stated yesterday that his country will not cut back on oil imports from Iran…”It is not possible for India to take any decision to reduce the import from Iran drastically because, after all, the countries which can provide the requirement of the emerging economy, Iran is an important country amongst them,” India’s finance minister Pranab Mukherjee told reporters yesterday in Chicago…Iran exports 2.5 million barrels of oil per day, about 3% of world supplies…approximately 500,000 barrels go to Europe and most of the rest goes to China, India, Japan and South Korea…Western sanctions could make it harder for India to pay for the oil it gets from Iran…past sanctions have already delayed payments by Indian oil importers, who have had to scramble to find banks willing to handle transactions with Iran…India’s central bank governor D. Subbarao said last week that the current payment mechanism was “working fine,” though India was also “exploring other options,” which he declined to discuss….

Another EU Summit

EU leaders are meeting in Brussels today to sign off on a permanent rescue fund for the euro zone…Greek Prime Minister Lucas Papademos will be among them as negotiators in Greece race to secure a debt swap deal…a Financial Times report said that Greece had angrily rejected a German proposal to create a European budget “overseer” to monitor the country’s finances in return for a second bailout, further adding to investors’ anxiety today…a glimpse of hope for the debt-stricken region came in the form of a positive debt auction for Italy which saw its borrowing costs for long-term debt fall sharply…

China News

The Financial Times reported this morning that Western industrial companies have seen a slowdown in some markets in China as efforts to cool the world’s second largest economy have hit demand for capital goods and products linked to the construction industry…not all western companies selling in China have suffered from a slowdown in demand…Honeywell, which makes aircraft parts and controls, stated Friday that its sales in China were up 18% in 2011…Dave Anderson, the company’s chief financial officer, said sales growth for products linked to the residential and commercial property markets such, such as heating and air-conditioning equipment, had slowed but other markets such as aircraft and truck components were “doing very well”…consumer-oriented businesses are also still enjoying a boost from robust retail demand, as booming Chinese sales of Apple’s iPhone attest…China’s property slowdown has been a result of government policy intended to rein in house prices and curb inflation…

Today’s Markets

Dow futures are off 93 points as of 5:55 am Pacific…major European indexes are off just over 1% while Asian markets were also in the red today…the TSX Venture Exchange enters the final two trading days of the month up 9.7% for January…that’s better than the Nasdaq (8%), the TSX (4.3%) and the Dow (3.5%)…the Venture has even out-performed the TSX Gold Index (9.2%)…those numbers are another bullish sign for the Venture…John’s 10-year monthly chart shows the CDNX has likely started a powerful “Wave 3” advance that could ultimately take it to the highs of 2006 and 2007 within the next couple of years…

We’ve had some inquiries regarding Abcourt Mines (ABI, TSX-V) which has shown some share price strength recently, especially after Thursday’s news regarding its Elder Gold Property near Rouyn-Noranda…Elder is a former producer and a property we visited about a year ago…Abcourt is currently dewatering the mine and also expects to produce an updated 43-101 resource estimate by the end of March which could easily show a doubling or tripling of the 2009 number (216,000 all-category ounces at a cut-off grade of 3.8 g/t Au) given results from nearly 20,000 metres of drilling during 2010 and 2011…of course Abcourt also has a valuable Silver asset with its Abcourt-Barvue Property near Val-d’Or…what has been holding Abcourt back, in our view, is the market’s lack of confidence in the ability of President and CEO Renaud Hinse to unlock shareholder value…Abcourt recently appointed two new directors, however, from privately-held Canadian Royalties Inc. which should be viewed as a positive sign…last Thursday’s volume in Abcourt (5.7 million on all exchanges) was encouraging, and the chart is looking more favorable as John shows below…

Note: John, Jon and Terry do not hold positions in ABI.

Our favorite Rouyn-Noranda based company is Richmont Mines (RIC, TSX) which has outstanding management and a very bright future given its Wasamac deposit and two existing operating mines (the Island Gold Mine in Ontario and the Beaufor Mine near Val-d’Or)…Richmont broke through resistance around $12 Friday, closing at $12.42…we’ve written a great deal about Richmont over the past year and we’ve also interviewed CEO and President Martin Rivard…Richmont is profitable with a strong cash position and should achieve Gold sales of at least 100,000 ounces in 2012 with its Francoeur Mine expected to start commercial production by mid-year…Richmont’s chart doesn’t suggest a major breakout is pending just yet (there is also significant resistance at $13) but we do expect a strong move to a new all-time high this year…RIC is definitely a “keeper” for the long haul, especially for those who believe in $2,000 Gold…

Note: John, Jon and Terry do not currently hold positions in RIC.