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Gold, which was struggling to recapture the $1,240+ level, has fallen below its 50-day moving average (SMA) this morning but Gold stocks are holding up well nonetheless…bullion has traded between $1,220 and resistance at $1,240 so far today…as of 9:20 am Pacific, it’s down $10 an ounce at $1,224…Silver is off a nickel at $16.85…Copper is unchanged at $2.54…Crude Oil is back below $50 a barrel at $49.59 while the U.S. Dollar Index is up one-third of a point at 95.08…keep in mind that declining Oil prices and a rising greenback are bullish for Canadian Gold producers in particular…the loonie has fallen to 79 cents this morning, so Gold is actually flat today in Canadian dollars…

Gold producers with cash on hand are on the hunt for mining assets while they’re still cheap – not as cheap as they were a few months ago, mind you, but still very attractive by historical standards and perhaps a lot cheaper than they’ll be a year from now…those companies who minimized borrowing during Gold’s bull run (more than $30 billion in debt was racked up over the last decade or so) are in the best position now to scoop up mines and deposits from rivals with weaker balance sheets, according to executives at the Investing in African Mining Indaba conference in South Africa, the biggest such gathering on the continent…

Bloomberg reports that already, $2.7 billion in deals have been announced or completed this year within the industry, including Monday’s $1.1 billion offer for Rio Alto Mining Ltd. (RIO, TSX) by Tahoe Resources (THO, TSX)…it’s an early leg up on the $10.5 billion in deals last year…watch some high quality juniors with valuable assets get swallowed up with increasingly frequency this year as well…we’ve seen evidence of this as well – juniors with strong balance sheets are even targeting other juniors…

Shift In Thinking At The Fed?

Federal Reserve officials are debating a historic shift in 1 of its core economic gauges that could lead the central bank to move even slower than now thought once it lifts its rates from rock bottom levels…according to a report from Reuters this morning, interviews with half a dozen current and former Fed policymakers and staff reveal a growing belief that the  economy can produce far lower levels of unemployment without stoking inflation…this concept is being built into Fed models and becoming increasingly entrenched in the central bank’s views…

That shift may not delay the timing of the Fed’s first rate increase, still expected in mid-year…but it does offer Chair Janet Yellen a good reason to move at a snail’s pace from then on to bring as many people as possible back to work and attempt to drive inflation back up to the Fed’s 2% target…

Updated Gold Chart (USD)

Below is a 1-year daily chart that tracks 3 important moving averages (50, 100 and 200) as well as a few other technical indicators for Gold including RSI(14)…

What’s apparent is that buy pressure is in decline as the retreat in bullion continues after it recently hit the top of a downsloping flag (see chart posted last Saturday in our Week In Review)…the 100-day SMA has flattened out at $1,217…below that, there is of course strong support at the $1,200 level which ultimately could be tested in the near future…

What will be critical to watch in the coming days is if the RSI(14) can hold previous support at 45%…it recently vaulted into overbought territory when Gold pushed slightly above $1,300, so the retracement up to this point can certainly be considered normal…

TSX Gold Index Updated Chart

The TSX Gold Index surged by just over 50% between early November and the beginning of this month, so a minor pullback at the very least was not surprising…buy pressure remains steady in the producers, unlike in Gold itself which is experiencing a drop-off in buy pressure at the moment…technical support on any further pullback in the TSX Gold Index should be particularly robust in the mid-160’s where the rising 50-day SMA coincides with the Fib. 50% level (166)…

Richmont Mines (RIC, TSX) Update

For a multitude of reasons stated over the last number of months, Richmont Mines (RIC, TSX) remains our favorite producer (Gold Bullion Development Corp., GBB, TSX-V, another company with roots in Rouyn-Noranda), is our favorite near-term producer)…

With a loonie on a downward spiral and not expected to bottom out until it reaches the low 70‘s, Canadian producers and near-producers are at a distinct advantage as the Gold price has clearly broken out above $1,450 CDN as shown in John’s chart yesterday…

Richmont has smartly taken advantage of the recent resurgence in Gold stocks by completing a $38.5 million financing at $4 per share on a bought deal basis…this was smart money buying into a bright future for RIC…the company is in a tremendous financial position as it advances its producing Island Gold Mine in northern Ontario to access impressive high-grade impressive high-grade material at deeper levels…

Richmont has been following an uptrend line on this long-term weekly chart since the early summer of last year, so there’s every reason to believe this bullish primary trend will continue…any pullbacks along the way have presented investors with excellent opportunities…

RIC is off a nickel at $3.95 as of 9:30 am Pacific…

Today’s Equity Markets

Asia

China’s Shanghai Composite gained another 16 points overnight to close at 3158 while Japan’s Nikkei was down slightly, finishing at 17653…

Europe

European equities ended slightly lower today ahead of the meeting of euro zone finance ministers in Brussels to discuss a solution to Greece’s soon-to-end bailout program…

North America

The Dow is down 34 points as of 9:30 am Pacific…

There are indications the Dow has considerably higher to go after the recent and healthy 1,000 point pullback…overall, it has been tremendously resilient and the 200-day SMA has provided rock-solid support…importantly, RSI(14) has brokem above its short-term downtrend line – this has to be construed as bullish…equities should continue to perform well…

The TSX is up 44 points as of 9:30 am Pacific, despite weakness in Gold and Oil, while the Venture is flat at 691…

The Noront Indicator

We mentioned a few weeks ago that Noront Resources (NOR, TSX-V) has been a reliable leading indicator for the Venture in recent years…in other words, when NOT is in an uptrend, this is usually a sign that all’s well with the Index…when NOT gets tied up in knots and starts a downtrend, that’s usually an early warning that the Venture is about to head south…

What does the “Noront Indicator” tell us now?…

Noront is in an obvious uptrend, perhaps the early stages of one given the recent reversal to the upside in the EMA(20) and the potential confirmed breakout above Fib. resistance at 40 cents…in addition, RSI(14) at 60% is showing strong up momentum after forming a bullish “W”…

This meshes well with the Venture’s continuing bullish indicators…

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