BullMarketRun.com

Gold has traded between $1,234 and $1,251 so far today as it hovers around $1,240 chart support…as of 8:30 am Pacific, bullion is down $12 an ounce at $1,237…Silver has retreated 31 cents to $18.63…Copper is 2 pennies lower at $3.11…Crude Oil hit a 17-month low this morning, near $90 a barrel, but has since reversed and is now up 61 cents at $92.28…the U.S. Dollar Index is flat at 84.23…the greenback has hit a 6-year high against the yen…

The Shanghai Gold Exchange will launch its international board on September 29 in the financial hub’s new free-trade zone, a widely anticipated move to open China’s tightly controlled Gold market to foreign capital…the board is China’s bid to deepen its influence over the global Gold market where China is the biggest producer and consumer but sees itself as lacking clout in pricing.  “This is our window to the world,” Shen Gang, the bourse’s deputy chief executive, said at an industry conference today according to a report in The Wall Street Journal…the yuan-denominated board will initially offer 11 contracts including physical Gold contracts of 100 grams and 1 kilogram…the Shanghai Exchange also plans to diversify into contracts for other precious metals including Silver and Palladium…

IEA:  Recent Slowdown In Oil Demand Growth “Remarkable”

Demand growth in the Oil markets will be more subdued than previously expected, according to the International Energy Agency, which has once again downgraded its projections for the rest of the year.  “The recent slowdown in demand growth is nothing short of remarkable,” the IEA stated in a new monthly report issued this morning.  “While demand growth is still expected to gain momentum, the expected pace of recovery is now looking somewhat more subdued.”

The IEA’s latest statistics show that demand growth has slowed to below 500,000 barrels per day in the second half of 2014 on a yearly basis, its lowest level in two and a half years, leading the organization to revise demand projections downwards for the third quarter. “U.S. production continues to surge, and OPEC output remains above the group’s official 30 million b/d supply target.” 

The euro zone was singled out for particular attention, with the IEA saying that the “macroeconomic malaise” experienced across much of Europe has been the dominant downside influence in terms of global demand…

Uranium Update

A new report by the International Atomic Energy Agency (IAEA) published today found that demand for uranium will continue to rise, despite declining market prices since the Fukushima Daiichi Nuclear Power Plant accident in Japan in March 2011 and lower electricity demand as a result of the global economic crisis…the Red Book, as the report is known, is a recognized global reference on uranium jointly prepared by the IAEA and the Nuclear Energy Agency of the Organization for Economic Cooperation and Development (NEA/OECD)…it found an increase in uranium supply, exploration and production…some 7% more uranium resources have been identified since the last report was published in 2012, adding almost 10 years to the existing resource base…

More than 20 countries around the globe produce uranium, with Kazakhstan, Canada and Australia as the largest producers, accounting for approximately 63% of world production…the reported growth in production is mainly driven by Kazakhstan, with smaller additions in Australia, Brazil, China, Malawi, Nambia, Niger, Ukraine and the United States…

Today’s Markets

Asia

Asian markets were mixed overnight…China’s Shanghai Composite slipped 7 points to close at 2312, reversing from a session high of 2343 – its best level since March, 2013…annual consumer inflation eased to 2% in August, slower than July’s 2.3% rise…producer prices, meanwhile, continued their deflationary spiral, dipping 1.2% after falling 0.9% in July, a tad worse than the 1.1% fall expected….

Japan’s benchmark Nikkei index closed at an eight-month high today, rising for a fourth straight session (120 points) as the yen traded above 106 against the greenback…

Europe

European markets were down modestly today as concerns regarding U.S. monetary policy weighed on the markets…

North America

The Dow is off 48 points as of 8:30 am Pacific…the TSX has reversed and is up 23 points while the Venture has fallen 6 points to 978…

Long-Term Gold Chart

Often it’s helpful to step back and examine the very “Big Picture” of a particular market, technically speaking, without the clutter of the day-to-day noise…this is what we’re doing this morning in Gold, both in terms of the action in the metal itself and how some producers are trading to see if this provides us with fresh insight into what could unfold over the short and longer term…

Below is a 20-year monthly Gold chart, going right back to the beginning of the Gold bull market that really began to intensify 13 years ago today when the world changed on 9/11 (despite President Obama’s assertion last night, we are not “safer” today but we’ll address that issue separately below)…

Three things that are particularly interesting about this long-term Gold chart:

1) Check out the uptrend support line in place since 2001 that the metal is now testing (very strong support at $1,200);

2) RSI(14), interestingly, has recently broken above a downtrend line that started in late 2011 after Gold hit its all-time high of $1,924 – such a development is typically an indication of a bullish reversal;

3) SS has also reversed to the upside and is now above its downtrend line.

The “line in the sand” for Gold is really that Fib. retracement level of $1,185 which coincides with very strong chart support…

TSX Gold Index 3-Year Weekly Chart

Despite an unusually rough September so far (a nearly 10% drop), the TSX Gold Index is behaving quite normally based on this 3-year weekly chart:

1) The Index has retraced to its rising 200-day moving average (SMA) – slightly below it, actually – and is within a whisker of an uptrend line in place all of this year (additional downside potential appears limited);

2) It’ll be interesting to see if RSI(14) will reverse now that it has touched its uptrend support;

3) Buy pressure has actually been increasing during this low-volume correction.

Euro Chart Update

Gold struggles when the euro is weak, but this chart shows how the euro has become quite oversold (RSI is at 22%) and is rapidly approaching strong support at 128 on this 2.5-year weekly chart…a little more weakness in the euro is likely but a turnaround is not far off…

Geopolitics Cannot Be Ignored

Muslin extremism, embodied by the expanding ISIS terrorist group, represents an unprecedented global security threat and a direct threat against the national security of the United States and North America…the geopolitics of this situation – how it is handled by the American President and other international leaders – cannot be ignored by investors (it certainly won’t be ignored by us) as the potential ramifications for equity and commodity markets are profound in our view…

Last night, President Obama, knowing his declining poll numbers and leading from behind yet again, announced a significant escalation in the U.S. military campaign against ISIS in a televised address that was met with both tentative relief and reservations from Republican lawmakers…many expressed concern that the President’s plan (at least he has some sort of a “strategy” now) is not going far enough…it’ll be interesting, to say the least, how this all plays out in the coming weeks and months on Capitol Hill…

Remarkably, President Obama, clearly a reluctant warrior, spent the first minute of his speech last night bragging about how effective his administration has been at fighting terrorism (“we have consistently taken the fight to terrorists who threaten our country”) and that “America is safer” as a result today, ironically the 13th anniversary of 9/11…

The reality is that what consistently has occurred over the last several years is that this President has been disengaged from foreign policy and has grossly underestimated the growing threat of ISIS, which he even dismissed as a “JV” team earlier this year…he has overruled his national security team and even his former Secretary of State (Hilary Clinton) on action against ISIS in Syria and has allowed this Islamic terrorist group (he actually stated last night that ISIL is “not Islamic”) to flourish under his watch…he framed his argument not as a war against ISIS or a war against terrorism but as a “counter terrorism” mission with comparisons to American action in Yemen and Somalia…as Republican Senator John McCain stated after the President’s speech last night, “I don’t know any human being who agrees” that America is “safer today”…the world, in fact, is a more dangerous place than it has been in decades, due in part to a vacuum of American leadership on the international stage…we predict that the first political fallout of President Obama’s foreign policy failures will be a switch in Senate control this November from the Democrats to the Republicans, giving Republicans control of both houses of Congress entering the final two years of what will likely be a very rocky ride for the Obama Presidency…how this will impact the markets remains to be seen…

Two Producer Charts Provide Encouragement For Gold Sector

Agnico Eagle Mines Ltd. (AEM, TSX) Update

Agnico Eagle Mines (AEM, TSX) bottomed in the mid-$20’s last fall, climbed as high as $46 July 29 and has since corrected to its rising 200-day SMA and strong Fib. support…buy pressure remains strong…our prediction is that many investors will be chasing AEM (and the sector in general) at significantly higher prices in the not-too-distant future…this is a classic buying opportunity…

Imperial Metals Corp. (III, TSX-V) Update

The Vancouver Sun, among others, has done its best to malign Imperial Metals (III, TSX) over the Mount Polley tailings dam failure, though Imperial certainly hasn’t done itself any favors in the way it has handled this unfortunate accident…

Anyway, situations like this – bad press, weak markets – often present opportunities for investors as the “fear factor” comes into play and drives prices into deeply oversold territory…not surprisingly, the time to be bearish regarding Imperial was when everyone was bullish on the stock during the first quarter…it climbed to nearly $19 a share and extreme overbought RSI(14) conditions emerged…now we see the opposite…

As the saying goes, be fearful when others are greedy, be greedy when others are fearful…

Note:  John, Terry and Jon do not hold share positions in AEM or III.