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It’s New Year’s Eve, and a Canada-Russia world junior hockey game is also on this morning, so trading will certainly be lighter than usual today as 2012 comes to a close…

Gold has traded between $1,659 and $1,670 so far on this final day of the year…as of 7:20 am Pacific, Gold is up $6 an ounce at $1,662…bullion will post its 12th consecutive yearly gain, though a modest 6% or so which will be the weakest annual performance since 2008…Silver is up 8 cents at $30.11…Copper is up 2 pennies at $3.59…Crude Oil has gained 30 cents at $91.10 while the U.S. Dollar Index is up slightly at 79.70…

CME Group is lowering margins on U.S. Gold futures early in the New Year…the “initial” margin on new speculative positions for the main 100-ounce Gold contract on the Comex division of the New York Mercantile Exchange will decline to $6,600 from $7,425 currently…the “maintenance” margin for existing speculative positions, as well as all hedge positions, will fall to $6,000 from $6,750…the changes go into effect after the close of business on Wednesday, CME Group said…the announcement, made late Friday, also lowered margins for the exchange operators’ other smaller-sized Gold contracts…

Silver Chart Updates

As usual each Monday morning, John has updated short-term and long-term charts for Silver which is clearly oversold at the moment…of course it could become a little more oversold, but this is really a time to be bullish – not bearish…we’re very excited about Silver’s prospects for 2013…

Silver Short-Term Chart

Silver Long-Term Chart

Today’s Markets

Despite the media’s “fiscal cliff” fear mongering, the Dow is down just 7 points as of 7:20 am Pacific…the TSX has gained 13 points while the Venture is flat at 1202…

The Over-Hyped “Fiscal Cliff”

It might be too much to expect a dysfunctional U.S. Congress (and White House) to come to an agreement by the end of today to solve the so-called “fiscal cliff”, but that “deadline” doesn’t really mean much anyway which is why the mainstream media’s handling of this issue has been so bizarre…in addition, the “fiscal cliff” is wrongly named – it’s no more than a gentle slope, at least in its beginning stages…if the automatic tax increases and spending cuts are allowed to take effect beginning January 1, you’ll of all of sudden see an incredible sense of urgency develop among lawmakers once the new Congress convenes Thursday…most politicians love to vote for a tax “decrease” and that’s what would begin to motivate Congress later this week…if there is no deal of some sort today, our prediction is that within 2-3 weeks most of the tax increases will be rolled back retroactively and a Washington that is still fiscally undisciplined will also reverse the needed spending cuts…the end result is that nothing much will have changed, except of course the debt ceiling which will have to be raised during this first quarter from the current $16 trillion…first and foremost, Washington has a spending problem that it simply doesn’t want to come to grips with…they can continue to kick the can down the road for now, but sooner or later the chickens will come home to roost…that’s when Gold and Silver will both be much higher…

China Skeptics Proven Wrong

China’s Shanghai Composite climbed 36 points overnight to finish 2012 with its first annual gain (3.2%) in three years…the Index also closed at its highest level since June 20…investors cheered good economic news and a plan allowing eligible securities houses, insurers’ asset management units and private equity funds to develop and manage mutual funds…China’s markets will reopen for the new year on Friday, January 4…

China’s economy has ended the year on a strong note after a gauge of its manufacturing sector rose to a 19-month high…the HSBC purchasing managers’ index for December climbed to 51.5 from 50.5 a month earlier, according to figures published this morning…in rising further above the midpoint of 50, the reading signalled an accelerated pace of expansion…although China is still set for sub-8%  growth in 2012, its weakest in more than a decade, momentum picked up noticeably in the fourth quarter thanks in part to an increase in infrastructure spending by the government…“Such momentum is likely to be sustained in the coming months when infrastructure construction runs [at] full speed and property market conditions stabilize,” said Qu Hongbin, HSBC chief economist for China…Hongbin forecast that economic growth could rebound to 8.6% in 2013 which would mark a relatively strong recovery for China despite a sluggish global economy…China has been able to rely on domestic demand to compensate for any external weakness…

China, by the way, has become home to what it says is the world’s longest high-speed rail line, a 2,298-kilometer stretch of metal bisecting the country between the capital Beijing in the north and the southern boom city of Guangzhou…the opening of the line on Wednesday was greeted with much fanfare in state media…the project signals that China hasn’t given up on its rail ambitions despite major setbacks…last year’s deadly train crash near the city of Wenzhou laid bare deep problems with China’s high-speed rail surge…China’s Ministry of Railways has also endured hits to its finances…but the new line will help China reach its goal of having 18,000 kilometers of high-speed railway by 2015…

The new Beijing-Guangzhou high-speed line takes just eight hours, a sharp reduction from the previous 20 on the still-operational old-fashioned track between Beijing and Guangzhou.