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Gold has traded between $1,145 and $1,153 so far today…as of 8:00 am Pacific, just 3 hours before a fresh and much anticipated Fed policy statement, bullion is unchanged at $1,148 an ounce…Silver is off a nickel at $15.48…Copper has fallen 7 cents to $2.56…Crude Oil is down nearly $1 a barrel to $42.50 while the U.S. Dollar Index (see this morning’s updated chart) is up slightly at 99.64, preparing for either an explosion through the 100 level or a “cooling off” period – depending on the Fed’s statement and Janet Yellen’s news conference that follows shortly thereafter…

SPDR Gold Trust, the world’s largest Gold-backed ETF, said its holdings dropped 0.4% to 747.98 tonnes yesterday…

Gold hit its lowest level yesterday in 4 months on speculation the Fed will drop the word “patient” from their forward guidance on interest rates, potentially paving the way for the first rate hike since 2006 as early as June…what’s more important to watch for today, in our view, is whether the Fed directly addresses the parabolic move in the greenback…Marc Faber, the man known as “Dr. Doom”, believes markets are in for a surprise as he predicts the Fed will not raise interest rates this year, pointing to dollar strength and recent disappointing economic data.  “The economy simply (is) not taking off, so I don’t see there will be interest rate increase,” he stated this morning on CNBC’s “Squawk Box”…

Others have a different take on what could unfold…

The Federal Reserve risks causing a 1937-style stock market slump when it finally moves to raise interest rates, one of the world’s most powerful hedge fund managers has warned…Ray Dalio, founder of the $165 billion hedge fund group Bridgewater Associates, said in a note to clients and followers, as reported by various media outlets, that he was avoiding large bets on the financial markets for fear that the Fed’s expected change of policy could have unintended consequences…

“Clearly the Fed has created expectations that it will tighten in either June or September, and such expectations are difficult to deviate from,” Dalio wrote.  “For those reasons, we expect a Fed tightening and are cautious about our exposures.  To be clear, we don’t know – nor does the Fed know – exactly how much tightening will knock over the apple cart. What we do hope the Fed knows, which we don’t know, is how exactly it will fix things if it knocks it over. We hope that they know that before they make a move that could knock over the apple cart.”

Dalio’s note emerged as Christine Lagarde, head of the International Monetary Fund, warned yesterday that U.S. rate increases could trigger instability in emerging markets, leading to a re-run of the Fed-induced “taper tantrum” of 2013…

Oil Update

Stored supplies of Crude Oil in the U.S. are at the highest level in about 80 years, according to the U.S. Energy Information Administration…concerns are mounting that Oil inventories could reach maximum storage capacity in some locations during the 2nd quarter, which could put further downward pressure on prices…

U.S. government data this morning showed inventories of U.S. commercial Crude rose for the 10th straight week ending March 13…

Copper:  Antofagasta Cautious Short-Term But Bullish Medium To Long-Term

Antofagasta, the large Chilean-based Copper mining group, said it’s “cautious” about the Copper market for the next 2 years as 2014 profit declined 30% because of lower metal prices.  “I am cautious on the short-term, this year and next,” CEO Diego Hernandez said in an interview on Bloomberg TV.  “From then on, Copper supply-demand will be very tight and I am optimistic on the medium to long-term.”

U.S. Dollar Index Updated Chart

The U.S. Dollar Index recently broke out above important resistance at 96…it’s now poised to surge powerfully through 100 if the Fed doesn’t immediately throw a lot of cold water on this fire…

What has occurred since last summer, as demonstrated in our 1-year daily U.S. Dollar Index chart, is one of the fastest moves in the history of the greenback, fueled by the anticipation of higher interest rates and increasingly divergent monetary paths being followed by the U.S. and the rest of the world…

The Fed’s strategy of trying to prepare the markets for a “normalization” of interest rate policy is endlessly driving speculation in the greenback which in turn is impacting commodity markets and causing other distortions and stresses in the global financial system…it’s like when investors are expecting great drill results from a junior exploration company – the stock price keeps running and the bullish trend remains intact until the actual results come out…at that point, the anticipation and mystery are over and the trend sometimes reverses violently, at least temporarily…

The dollar likely won’t settle down until a) the market comes to the realization that an expected interest rate hike is actually not going to happen, at least not until much later than originally anticipated; or b) the Fed finally makes its move, and the “sell on news” effect comes into play…

This chart shows an extremely powerful Dollar Index trend that’s going to be hard to stop…next measured Fib. resistance is 106…RSI(14) is in overbought territory at 79% but could easily remain around that level for a couple more months at least…exceptionally strong support exists at 96, so traders still see the risk-reward ratio as very favorable with the Dollar Index at 100, especially if the Fed keeps signalling it wants to start raising rates…

More “Bibi” For Obama

Despite the best efforts of the Obama administration, Benjamin Netanyahu has won a 4th term as Israel’s Prime Minister, with his conservative Likud party seizing a decisive and unexpected 5-seat advantage in parliament over the main opposition Zionist Party…Netanhayhu should have little difficulty in cobbling together a majority coalition over the next couple of weeks, and his re-election will certainly complicate the efforts of President Obama to secure his goal of a “nuclear agreement” with Iran that many believe will actually make it easier for that regime to become a nuclear-armed state…

On another note, President Obama will be facing increasing questions from both Democrats and Republicans over the role in the Israeli elections of the American non-profit OneVoice Movement…the group received $350,000 from the State Department and allegedly violated its tax-exempt status when it began backing the virulently anti-Netanhayhu Victory 15 campaign which was advised by former Obama campaign aides including his top field organizer, Jeremy Bird…

As Canadian-born Senator Ted Cruz (R-Texas) stated, also noting Obama’s well-known adversarial relationship with Netanhayhu, “What does it say about the President of the United States when he’s more concerned about undermining and attacking the Prime Minister of Israel than he is standing up to the mortal threat a nuclear Iran poses?”

Today’s Markets

Asia

Markets in China and Japan hit new multi-year highs overnight as monetary policies in both countries continue to fuel rising stock prices…the Shanghai Composite jumped another 2% (74 points) to close at 3577 while the Nikkei average added 107 points to finish less than 500 points shy of the 20000 level…

Europe

European markets are mixed in late trading overseas…

North America

The Dow is off 67 points as of 8:00 am Pacific…the behavior of the markets over the final 2 days of the week, not today’s “knee-jerk” instant reaction to the Fed statement and Yellen’s subsequent comments, will be the best guide as to what may unfold over the coming weeks and in Q2…

The TSX is down 25 points as of 8:00 am Pacific while the Venture is flat at 659…key Venture Fib. support is in the low 650’s…

NioCorp Developments (NB, TSX) Update

NioCorp Developments (NB, TSX) has really gained momentum since it moved from the Venture and started trading on the TSX March 9…

Technically, John’s call on the breakout last month above 80 cents was bang-on with NB soaring as high as $1.90 last Thursday before a quick retracement to previous Fib. resistance (now support) at $1.13…

On February 23, NioCorp released an updated NI-43–101 resource estimate for its Elk Creek Niobium deposit…as a result of positive indications from the company’s continuing metallurgical testing and development program, Titanium (TiO2) and Scandium (Sc) were added to the mineral resource statement…both of these metals can be recovered with simple additions to the existing process flowsheet, according to NioCorp, and would provide additional revenue streams that would complement the planned production of Ferroniobium…the company is currently assessing these prospective revenue contributions, and plans to announce the results of a preliminary economic assessment for the project shortly…

This updated 2-year weekly chart shows Fib. measured resistance at $1.73 and RSI(14) at 73%, continuing to follow an uptrend line…whenever a stock breaks out of an extended horizontal pattern, as NB did after pushing through 80 cents, the possibility of an explosive upside move increases substantially…

NB is up 13 cents at $1.47 as of 8:00 am Pacific…

Agnico Eagle Mines Ltd. (AEM, TSX) Update

This Agnico Eagle (AEM, TSX) chart is interesting as it shows an ongoing bullish trend despite the approximate 10% drop in Gold and the 20% decline in the TSX Gold Index since the beginning of February…

If AEM can hold around current levels in the mid-$30’s (Fib. support coinciding with a still-rising 50-day SMA), then this would be a sign that Gold stocks could surprise investors with an imminent or near-term sudden reversal after a 6-week downtrend…

AEM is down 59 cents at $35.31 as of 8:00 am Pacific…

Richmont Mines (RIC, TSX) Update

On the “razor’s edge” is Richmont Mines (RIC, TSX), our favorite producer, which entering today’s Fed statement is resting exactly at its uptrend support line that has held since last summer (great buying opportunity each time it has hit this line)…like with AEM, the action in Richmont over the next couple of sessions – can it hold this uptrend line? – will be a valuable clue as to the near-term direction of Gold stocks…

RIC is off 2 cents at $3.73 through the first 90 minutes of trading…

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