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Gold has hovered between $1,151 and $1,167 so far today…as of 8:15 am Pacific, bullion is flat at $1,154…Silver is up a dime to $15.57…Copper has jumped 4 cents to $2.65…Crude Oil is 52 cents lower at $47.65 while the U.S. Dollar Index hit the 100 level this morning but has since backed off to 99.07, down more than half a point from yesterday…

Gold should get some support from a pullback in the U.S. 10-year Treasury note yield…it’s trading near 2.07% following the release of some U.S. economic data…

China is in talks with the IMF for the Washington-based institution to add the yuan to its basket of reserve currencies, a top banking official said today as Beijing seeks a greater global role for the unit…it hopes the yuan (increasingly backed by Gold, by the way) will become part of the IMF’s “special drawing rights” (SDR) assets “in the foreseeable future”, said vice central bank governor Yi Gang…

At present, SDR’s are made up of only the U.S. dollar, the euro, the Japanese yen and the British pound…but Yi said China’s rise to become the world’s second-largest economy had made the yuan the world’s second-largest trade financing currency and the 6th most widely-used transaction currency…

Including the yuan in the SDR’s will “undoubtedly” make the IMF’s unit for “representative” of the global economic landscape, said Yi, who is also head of the State Administration of Foreign Exchange…

The big question is, how much Gold has China accumulated to help back its currency?…it hasn’t provided an update on that since late 2009…

More On The Surging Greenback

Further to John’s charts yesterday, below is another example of the tremendous run the U.S. Dollar Index has enjoyed…

In part, this is a Fed-induced Dollar move as the U.S. central bank continues to tease the markets about a possible rate hike…such a strategy of preparing the markets for a “normalization” of interest rates is driving speculators into the dollar, but a high greenback is also counter-productive to the Fed’s goal of kick-starting inflation…

Meanwhile, other central banks around the world, including Canada, have diverging monetary policies at the moment and have recently been cutting rates…the latest example is the Bank of Korea which surprised markets today by cutting its base rate for the 1st time in 5 months by 25 basis points to a record low of 1.75%…the move comes on the back of other rate cuts in the region, such as Thailand, India, Singapore and China, which have taken advantage of lower Oil prices to ease monetary policy in a bid to spur sluggish growth…of course the EU is now into full-blown QE and the euro is moving very close to parity with the dollar…however, despite the ECB’s best efforts, deflationary pressures in the euro zone continue to mount…

The Dollar Index is well into overbought territory on a technical basis with RSI(14) at its highest level (84%) since just before the dollar crash in 1985…that’s not to suggest we’re about to see a repeat of 1985 – that appears highly unlikely – but the dollar trade is getting crowded and the Fed can’t help but be concerned with an explosive greenback as they were with Gold in 2011…

What’s particularly interesting about the Dollar Index is that is has broken above a long-term downtrend line as you see in the chart below…keep in mind, however, that this is a monthly chart, so the current breakout could be a “false” breakout – a least at the moment…how the dollar finishes March will be critical…very strong support exists around the 96 level, so a pullback to that area seems likely to help cleanse overbought conditions…this would also act as a test of what should be new support at the top of the downtrend line…

It can certainly be argued that while there will be corrective phases in the Dollar Index, just like we saw in Gold during its 12-year long run, the dollar certainly appears to be in the midst of a new multi-year bull phase…

In the scope of 8 months, the dollar index has shot up more than 20% against other currencies, after going nowhere for almost a decade in a pattern that was very similar to the one between 1989 and 1997…companies from IBM to Harley-Davidson to Google to Coca-Cola to Proctor & Gamble have blamed the strong dollar for chipping away at their overseas profits…

20-Year Monthly Euro Chart

The importance of this chart is to demonstrate that the euro may have hit a temporary bottom at 105 today (it fell as low as 104.95, its weakest level since March 2003) which represents long-term chart support…RSI(14) is in deep oversold territory and also at previous support…

The latest weakness in the the euro has come as the ECB on Monday kicked off its long-awaited bond-buying stimulus program…ECB purchases have driven down bond yields in the euro zone, boosting the relative attractiveness of assets elsewhere and weighing down the currency as some investors shift their money outside the bloc…amazingly, almost 1.2 trillion euros worth of European government bonds (25% of total sovereign securities in this region) now sport negative yields…

Technically, the euro has been trading within a downsloping flag for the past 7 years…selling opportunities have come when the currency has pushed up against the top of that flag…conversely, buying opportunities have occurred at the bottom of the flag, and we’ll see if that holds true again…the euro appears ready for a rally which should give some near-term relief to commodities and the Venture…

Today’s Equity Markets

Asia

Japan’s Nikkei accelerated its upswing by finishing just shy of the 19000 level overnight…it gained 268 points or 1.43% for a new 15-year high…China’s Shanghai Composite surged 58 points or 1.8%…

Europe

European markets are mixed in late trading overseas…

North America

After declining 360 points the last 2 sessions, the Dow is on the rebound today with a gain of 190 points as of 8:15 am Pacific…U.S. retail sales fell for the 3rd consecutive month in February, reflecting bad weather in parts of the country, but also a sign of continuing caution among U.S. households despite an improving labor market and cheap gasoline prices…sales at retailers and restaurants decreased 0.6% last month to a seasonally adjusted $437 billion, according to the Commerce Department…retail sales fell 0.8% in January and 0.9% in December…

Separately, a weekly labor-market report showed signs of continued improvement…jobless claims fell slightly more than expected, by 36,000 to 289,000, in the week ended March 7, the Labor Department said today…

The TSX is up 29 points as of 8:15 am Pacific while the Venture, after snapping a 7-session losing skid yesterday, is up 2 points at 671…not surprisingly, the Index is beginning to reverse higher with the Dollar Index perhaps starting to cool off…

North Arrow Minerals (NAR, TSX-V) Update

One of the top exploration plays on the Venture this year could indeed be North Arrow Minerals (NAR, TSX-V) which has pulled back to the 70-cent area after climbing to a 52-week high of 90 cents February 27 following release of very encouraging initial results from processing of its Qilalugaq Diamond Project bulk sample…more results are on the way…

We’ve been highlighting the fundamental and technical reasons behind a very bullish scenario this year for NAR which has a dynamic team capable of pulling off another world class diamond discovery…

Technically, there were 3 key reasons for the bullish call on NAR:

1.  The breakout above the downtrend line

2.  The breakout above the horizontal channel and Fib. resistance at 55 cents

3.  The reversal to the upside last month in the 50-day moving average (SMA) which is currently at 60 cents

Other important positive factors include the RSI(14) uptrend – RSI(14) is now at previous support – and the bullishness in the ADX indicator…

Given the very positive technicals and the bright prospects for both the Qilalugaq Project and the Pikoo Project (a 3,000 m drill program started there last month), NAR is poised for potential major success in 2015…the quality of the management team is a big factor giving investors an edge here…

This 8-month chart shows how NAR is currently resting at uptrend support and very close to Fib. support at 67 cents…this healthy pullback, precipitated by the Venture’s decline this month, will be embraced by astute investors…

NAR is up 2 cents at 72 cents as of 8:15 am Pacific…

Amarc Resources Ltd. (AHR, TSX-V) Update

In British Columbia, besides the Sheslay district and the recently announced important discovery at Kemess East by AuRico Gold Inc. (AUQ, TSX), investors should keep a close eye on Amarc Resources (AHR, TSX-V) which should garner increasing attention in the months ahead following its announcement November 24 that was overshadowed by the overall market turmoil at the time…

Volume has recently picked up in AHR, and the company has the funds to carry out a follow-up round of drilling…

In late November, Amarc reported highly encouraging results from an initial 9-hole drill program at the company’s IKE Project in the Cariboo region…this is an early-stage bulk-tonnage porphyry Copper-Molybdenum-Silver discovery in the heart of a producing area…all 9 holes intersected chalcopyrite and molybdenite mineralization from surface and over a broad area measuring 1,200 m east-west by 600 m north-south and to depths of approximately 500 m…

Interval highlights included 247 m grading 0.42% CuEq in IK-14-001; 234 m @ 0.43% CuEq in IK-14-002; and 308 m @ 0.41% CuEq in IK-14-006…these results, along with post-drilling geological, geochemical and geophysical surveys completed outward from the drilled area, indicate that the IKE porphyry system has the potential to host a significant resource…this is still early in the game and AHR can be expected to aggressively follow up on this discovery…

As we stated when the results were announced November 24, December would be a great time for accumulation of AHR following this news given tax-loss selling pressures and overall market weakness…indeed, AHR dipped as low as 6.5 cents but has since firmed up again…it has backed off slightly from a yearly high of 13 cents Monday…

John’s 3-year weekly AHR chart shows a “big picture” bullish trend with a confirmed breakout above the 10-cent level…buy pressure has recently replaced a long period of sell pressure…

AHR is up half a penny at 11 cents through the first 75 minutes of trading today…

Note:  John, Terry and Jon do not hold share positions in NAR or AHR.