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Gold has traded between $1,203 and $1,212 so far today…as of 7:45 am Pacific, bullion is up $2 an ounce at $1,210…Silver is 6 cents higher at $17.13…Copper is off a penny at $2.81…Crude Oil has added 57 cents to $58.56 while the U.S. Dollar Index has gained another one-quarter of a point to 95.55…yesterday’s gains in the Dollar Index marked the first significant bounce after a 5-week losing skid, but a major band of resistance now exists between approximately 95.5 and 97…the greenback began rising yesterday after an ECB official said the central bank would move up some of its planned asset purchases…the dollar later extended its advance after official data showed construction on new U.S. homes increased by 20.2% in April, the fastest rate since 2007…other U.S. economic indicators recently have not been so encouraging…

India’s government has unveiled draft rules for a program that aims to put Gold owned by households and institutions to productive use…while this program could help Asia’s 3rd largest economy meet demand for the yellow metal through local supplies and cut imports, which have been a major contributor to the country’s trade deficit, it’s critical to understand that the monetization scheme would be a key step toward making Gold an important part of the larger financial system in India and a fungible asset class…ultimately, this should drive further interest in the yellow metal…

The program, which has the support of the World Gold Council, includes encouraging Indians to vest the Gold in their possession with banks and earn interest on it…if successful, this would fundamentally alter the perception of consumers toward the precious metal and make them view it like they do any other financial savings instrument in a country where Gold traditionally has been hoarded in homes as a hedge against inflation and currency depreciation…

The WGC has been stressing the need for the introduction of a structured and customer friendly Gold monetization program as well as an India branded Gold coin as key policy measures, which will enhance Gold’s economic value…

Soma Somasundaram, managing director in Mumbai of the World Gold Council, stated:  “Demand for Gold in India is interwoven with culture, tradition, the desire for beauty and financial protection. It would be futile to control Gold demand knowing how much the passion for Gold drives savings itself. We believe the solution to meeting India’s enduring appetite for Gold lies not in restricting the import of Gold, but in making better use of the Gold that is already in the country, making it a productive fungible asset class like any other financial savings. The need of the hour is to re-engage all stakeholders to develop a coherent long-term ‘India Gold Policy’ that results in a robust infrastructure for Gold, drives standardization and transparency, encourages Gold-based investment products and supports the economic priorities of the country. With India at the center of the global Gold eco-system, it is imperative that we find ways of mobilizing and monetizing the 22,000 tonnes of Gold in Indian households to fund economic growth.”

Somasundaram believes the the new initiatives, especially the introduction of an Indian Gold coin which is now in the works, could begin to profoundly shape the behavior of future Gold buyers in that country…

Short 9-Month Daily Chart

Silver took off last week after breaking above a downtrend line, and raced right toward Fib. resistance just below $18 as expected…the top of that downtrend line (around $16.50) should now provide support as the metal digests its recent gains and prepares for another challenge of the important $18 area…

Economist Notes Possible Triggers For Next U.S. Recession

HSBC chief economist Stephen King said that historical trends show that recessions hit every 8 or 9 years and the last one in the U.S. ended 6 years ago…if history is any indication, the U.S. could be facing another recession in the next 3 years…what’s worse, he said, is that policy makers don’t appear to have the ammunition needed to fight another one…

King noted that there could be several triggers for the next recession; a collapse in “overvalued equity markets”, leading to an “implosion of demand”; a sizeable slowdown in the Chinese economy; systemic failures across the pension fund and life-insurance industries; and even a premature tightening of interest rates from the Federal Reserve…

“Whatever the likely cause of the next recession, the recovery seen so far has not enabled policymakers to replenish their ammunition; growth has returned but policy has not ‘normalized’, he said in his op-ed. “The U.S. economy is like a ship sailing across the ocean without lifeboats. Other nations are following in convoy behind. For all their sakes, we must hope to avoid recessionary icebergs.”

Today’s Equity Markets

Asia

A better-than-expected gross domestic product (GDP) for the first 3 months of 2015 helped Japan’s Nikkei outperform the region today as it gained nearly 1% to close at 20197…Asia’s 2nd-largest economy expanded an annualized 2.4% from the previous quarter, beating expectations for growth of 1.5%, indicating that Japan may be headed toward a path of steady growth…

China’s Shanghai pushed 31 points higher overnight to close at 4428…

Europe

European markets are mixed in late trading overseas…

North America

The Dow is up 18 points as of 7:45 am Pacific after closing at a new record high yesterday…investors will be closely scrutinizing Fed minutes from last month’s meeting when they’re released at 11:00 am Pacific today…the statement from that month removed all calendar references to the timing of a short-term interest rate hike…Chicago Fed President Charles Evans said today, according to a report from Reuters, that a rate hike is not likely to be appropriate until early 2016…

Long-Term Dow Chart

This updated long-term Dow chart from John suggests equity markets will continue to benefit from an accommodating Fed…next measured Fib. resistance on this 10-year monthly chart is 19033…note the support from the rising 200-day (blue line) and 500-day (red line) moving averages (SMA’s) since 2010…RSI(14) has formed another bullish “W” and is currently at 69% with room to push higher…the Dow has surged nearly 12000 points or a whopping 183% from its 2009 low…this can’t last forever but the Fed will likely keep the party going for a while yet…

In Toronto, the TSX is up 45 points as of 8:00 am Pacific while the Venture is flat at 695…Integra Gold (ICG, TSX-V) is this morning’s most active Gold junior after reporting more encouraging results from its Lamaque South Project in Val d’Or…hole TM-15–25 intersected the thickest interval ever reported from the Triangle area with 10.73 g/t Au over 16 m in the C4 extension zone…this zone contributed more than 30% of the ounces to the company’s previous resource estimate and has been expanded significantly with step-out holes intersecting high-grade mineralization over 200 m away in multiple directions…

ICG is up 2.5 cents at 30 cents as of 7:45 am Pacific on total volume (all exchanges) of more than 3 million shares…John’s most recent ICG chart (May 14) showed Fib. resistance at 30 cents, so ICG could be gearing up to overcome that in the near future…

TSX Updated Chart

The TSX is at a key juncture and must continue to hold a wedge support line, slightly below the 50-day SMA at 15168, that has been in place since the beginning of the year…RSI(14) has also been meeting resistance at 60% since late last year on this 2.5-year weekly chart…this market could swing either way – some answers should come soon…

Note:  John and Jon do not hold share positions in ICG.