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Gold has traded between $1,260 and $1,272 today after yesterday’s drop to begin the month of September…as of 8:15 am Pacific, bullion is up $2 an ounce at $1,268…Silver is up 2 cents at $19.16…Copper is down 3 pennies to $3.13…Crude Oil is up $1.29 a barrel to $94.17 while the U.S. Dollar Index has eased slightly at 82.91…

Bullion closed below strong support in the $1,270’s yesterday, so some additional weakness is certainly possible in the event there’s no immediate reversal…the next band of support, as shown in John’s chart Sunday, ranges from $1,240 to $1,260…

HSBC said today that it sees Gold trading in a range of $1,150 to $1,350 an ounce during the remainder of 2014 in a market “searching for a new equilibrium” with a number of offsetting factors…the bank left its 2014 average price forecast at $1,292 an ounce and listed 2015 and 2016 forecasts of $1,310 and $1,345…

“Gold is searching for a new equilibrium after last year’s price plunge, which ended the more than decade-long bull run,” HSBC said (our emphasis, there’s no evidence that the long-term bull run in Gold is over – only a decade-plus winning streak came to an end last year ).   “The massive Gold-exchange-traded funds (ETFs) outflows of 2013 – which were instrumental in driving prices lower – have largely abated. Another positive is that net long positions on the Comex are rebuilding. Other factors supporting prices are that mine production gains are plateauing, scrap supplies are down and central bank demand is steady.”

Conversely, expectations for dollar strength are likely to create headwinds for further rallies, HSBC said. Also, the tapering of asset purchases by the Federal Reserve and low global economic growth and inflation rates discourage a return of institutional investment, although these are already factored in by the market, the bank said…

ISIS and Gold

Gold has yet to react to the extremely dangerous situation unfolding with the strengthening of Islamic State (ISIS) and the potential major repercussions stemming from the magnitude and ferocity of this highly-funded terrorist organization which has essentially declared war on the United States and the West…there is only one way to defeat this kind of evil before it strikes domestically in the United States, Canada, Great Britain or elsewhere, and and it’s not going to be pretty…is there is a Western leader up to the task?…

Shockingly, or perhaps not so shockingly, President Obama was given detailed and specific intelligence about the rise of Islamic State as part of his daily briefing for at least a year before the group seized large swaths of territory over the summer, a former Pentagon official told Fox News…the official – who asked not to be identified because the President’s Daily Brief is considered the most authoritative, classified intelligence community product analyzing sensitive international events for the president – said the data was strong and “granular” in detail…the source said a policymaker “could not come away with any other impression: This is getting bad.”

Obama, unlike his predecessors who traditionally had the document briefed to them, is known to personally read the daily brief…the former Pentagon official, who has knowledge of the process, said Obama generally was not known to come back to the intelligence community with further requests for information based on the daily report…

Harper’s talk is cheap…a NATO plan to get its members to agree to significantly boost their military spending has been derailed by Canada and Germany before it could be even presented to alliance leaders tomorrow when they meet in Wales, according to news reports this morning…Canada is under pressure – mostly from the United States and Britain – to dramatically increase its defense budget over the next 10 years to meet the NATO benchmark of 2% of gross domestic product…according to the latest NATO figures, the Harper government spends 1% per cent of GDP on defense, just slightly ahead of financially-troubled Spain, the Slovak Republic, Hungary, Luxembourg, Lithuania, and Latvia…

U.S. Dollar Index Updated Chart

There appears to be little doubt, based on this 2.5-year weekly chart, that the U.S. Dollar Index is going to challenge the 83.5 to 84.5 resistance band – exact timing of that is uncertain but likely in the near future…if and when it’s trading in that resistance band, very overbought conditions will exist and a correction will ensue…the fact that Gold has held up as well as it has in light of the sharp rise in the greenback since the spring low is encouraging…

WTIC Updated Chart

Interestingly, Crude Oil is currently sitting at RSI(14) support on this 12-year monthly chart…decision time is drawing near (weeks, a few months?) for WTIC which has retraced after breaking out above a downtrend line and a symmetrical triangle last year…key support is $90, key resistance is $110…

Today’s Equity Markets

Asia

China’s Shanghai Composite rose to a 14-month high overnight, gaining another 23 points to close at 2289 thanks to stronger-than-expected economic data…HSBC’s China services PMI expanded at its strongest pace in 17 months in August while the government’s official PMI rebounded from July’s six-month low…also helping the Shanghai was Australia’s GDP for the April-June period which rose 0.5% on quarter, above expectations…

Japan’s Nikkei average reached a 7-month high, lifted by a weaker currency as the yen hit an 8-month low against the greenback…

Europe

European markets pushed strongly higher today amid the possibility of a “cease-fire” between Russia and Ukraine.  “Mutual understanding was achieved concerning the steps which will enable the establishment of peace,” the Ukrainian presidential press office said on Wednesday, following a telephone conversation between President Petro Poroshenko and Russia’s Vladimir Putin…surely, the Ukrainians can’t be that naive to trust Putin…

North America

The Dow has gained 58 points as of 8:15 am Pacific…the TSX is up 32 points while the Venture has added 3 points to 1014…

Venture 6-Month Daily Chart

As investors, we should not allow days like yesterday, with both the Venture and Gold under pressure, to distract us from the highly encouraging “Big Picture” for the Venture which is clearly evident in the long-term weekly chart which we presented again yesterday…

Keep focused on the primary trend for the Venture which is up – the 3-year weekly chart has not steered us wrong over the past year – while keeping an eye on the short-term chart which highlights near-term support and resistance levels…

Below is an updated 6-month daily chart…you can see that yesterday the Index reacted at chart resistance at 1027 and retraced to Fib. support at 1010…additional superb support is at 1000…at 53%, RSI(14) is hovering around support…keep in the mind that the Venture has put in a series of higher lows throughout the year, the last one being 990, so another low between 1000 and 1010 makes sense…

Pullbacks like yesterday aren’t to be feared in a market like this – they should be welcomed by investors…selectivity as always is key, especially now – we’re in a “selective” bull market at this stage…

Blackbird Energy Ltd. (BBI, TSX-V) Update

Our most recent chart update on Blackbird Energy (BBI, TSX-V) was last Thursday when John made note of a bullish “W” formation in the RSI(14) and the possibility of a breakout above the 30-cent resistance level…Friday, BBI closed at 32 cents on strong volume and followed that up with a 6.5-cent surge yesterday on 12.3 million shares (all exchanges) to close at 38.5 cents (the intra-day high was 40 cents)…the company announced the acquisition of more ground in the Alberta Montney…

Technically, BBI’s challenge now is to overcome measured Fib. resistance at 42 cents…it’s off a penny at 37.5 cents as of 8:15 am Pacific…as always, perform your own due diligence…

Houston Lake Mining Inc. (HLM, TSX-V)

A company worthy of our readers’ due diligence is Houston Lake Mining (HLM, TSX-V) which broke out above a long-term downtrend line earlier this year, retraced to new support, and then powered higher again beginning in early August…after hitting a multi-year high of 16 cents yesterday, chances of a minor pullback have increased, so “chasing this” is likely not the wisest strategy…this could, however, be a very interesting longer-term play with near-term potential as well depending, of course, on results…

Yesterday, HLM released results of two infill drill holes from its 2014 Phase II, 9-hole diamond drill program on the Pakeagama Lake pegmatite in Ontario…PL-011-14 intersected 1.68% lithium oxide (Li2O) over 104 m from 9.1 m to 104.7 m…PL-011-14, meanwhile, included a 12.8-m-wide high-grade lithium zone averaging 4.01% Li2O from 35 m to 47.8 m…results from 7 more holes are pending…

HLM President Trevor Walker stated, “These results with particular focus on the UIZ (high-grade) intercepts not only confirm grade from our maiden resource calculation but should increase the zone’s tonnage. These features of size and grade, combined with the pegmatite’s low inherent iron (less than 0.1 per cent iron oxide [see June 11, 2014, press release]) give HLM the confidence in its potential ability to economically produce a technical-grade quality spodumene product and/or concentrate that could appeal firstly to the established specialty glass and ceramics segment of the lithium market.  This could be possible in contrast to many others, who would require a sizable capital investment in order to remove and produce a low-iron product. We are pleased with these results and look forward to releasing pending assay results in the near future from the remaining drill holes on our phase II diamond drill program.” 

Bellow is a 10-year monthly HLM chart…note the sudden increase in buy pressure after dominant sell pressure since late 2007 (on the daily chart, look for support at the rising 10 and 20-day SMA’s, currently at 13.5 and 12 cents, respectively)…HLM is off half a penny at 15 cents on light volume as of 8:15 am Pacific…

Note:  John, Terry and Jon do not hold share positions in BBI or HLM.