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Gold has traded in a narrow range between $1,091 and $1,100 as the Fed begins its 2-day policy meeting…as of 10:30 am Pacific, bullion is up $3 an ounce at $1,098…Silver has added 13 cents to $14.67…Copper has jumped a nickel to $2.40…Crude Oil has rebounded 78 cents to $48.17 while the U.S. Dollar Index has gained one-tenth of a point to 96.66…

The latest monthly CNBC Fed Survey still shows a majority on Wall Street forecasting that the first Fed rate hike in 9 years will come in September, but it’s a dwindling majority rife with defections to the later months of October and December…

HSBC strategists yesterday lowered their average annual Gold price forecasts for this year and next, warning that the yellow metal is likely to remain under pressure in the short-term and may “move within striking distance of $1,000“ an ounce before recovering…HSBC lowered its 2015 average annual price forecast to $1,160 from $1,234 and for 2016 to $1,205 from $1,275…among the reasons for Gold’s recent selloff, they stated, is the “drift towards Fed tightening and the associated U.S. dollar strength, low global inflationary pressure, weak Gold demand from India and China and market positioning and momentum.”

Silver “Underpriced” vs. Gold:  Silver Institute 

Despite the recent price weakness, there is still a lot of potential for Silver as the market continues to see broad-based demand, according to a report today from the Silver Institute which views the metal as “underpriced” vs. Gold…Silver also continues to see strong industrial demand…the Silver Institute noted that Silver use in the renewable energy sector is expected to increase 8% this year to 65 million ounces (the metal is a key component in solar panels) thanks to a big jump in U.S. solar installations…

“Additionally,” today’s report stated, “the Silver market is expected to be in a deficit of 57.7 million ounces in 2015, as supply contracts and physical demand grows. This would mark the third consecutive year that the market is in a physical deficit. When the market experiences an annual shortfall from mine supply, users must drawdown on above ground stocks, thereby tightening available supply.

“On the investment side, retail investor demand for the white metal has been sturdy in the first half of 2015, in what has been a challenging precious metals investment market. Through July 24, global Silver ETF holdings increased by over 4.7 million ounces in 2015, indicating that these investors likely have a more positive longer-term view of the Silver price.”

Oil Update

The world remains awash in Oil and that likely means prices need to head lower before there’s a better balance between supply and demand…

Oil giants have shelved about $200 billion (U.S.) worth of new projects since Crude prices began plunging last summer, according to a new report by consulting group Wood Mackenzie…according to the report, 46 major Oil and gas projects, containing 20 billion barrels of Oil equivalent of reserves, have been deferred…the largest affected country is Canada, where the development of about 5.6 billion barrels of reserves – almost entirely in the Oil sands – has been put on hold…Wood Mackenzie figured that the number of major Oil and gas projects globally that will be approved by companies in 2015 can likely be counted “on one hand”…

Technically, what occurred in WTIC between mid-March into May and June was a gigantic relief rally off the $43 low…this rally went all the way up to the declining 200-day moving average (SMA)…WTIC then went back into reverse, and some key support levels have been taken out…a “C” wave move is now in progress and this could easily re-test the March low or even take Crude into the mid-$30’s where it bottomed in early 2009…the worst-case scenario – one that no one is talking about – is $20…that could only occur if the global economy were to really tank…

CRB Index Long-Term Monthly Chart

The commodities rout has been blamed on multiple catalysts, including a stronger U.S. dollar and the prospect of Fed rate increases…the sell-off has also been tied to a weakening of growth in China, and oversupply in some markets such as Oil, Copper and iron ore, certainly due in part to slower Chinese buying…

Grains were hammered once again yesterday, as well, with corn down 4%…so commodity weakness is broad-based…

This 35-year monthly CRB chart shows an RSI(14) pattern quite similar to the one that emerged in 1999-2000…it does not appear that the CRB has hit bottom yet as the index is highly vulnerable to crashing below support at 200 which held in early 2009, and previously in 1986 and 1992-93…this would mean a test of at least the 180 lows which were followed by powerful moves to the upside…

The CRB Index is up 1.5 points to 204 as of 10:30 am Pacific…

Shanghai Composite Sinks Again, Chinese Authorities Investigating “Share Dumping” 

This is almost laughable…China’s securities regulator said today that it has launched an investigation into yesterday’s sell-off on the country’s stock markets (the worst single-day loss since 2007) as the rout in Chinese equities continued…in a transcript of a Q&A posted on its website, China Securities Regulatory Commission (CSRC) said it was “looking into incidents of share-dumping” on July 27…

That was indeed “share-dumping” – welcome to the real world, China – and perfectly legitimate dumping, at that…there’s also likely more to come as this is one of the most margin financed markets of all time…Chinese authorities are also contributing to a loss of investor confidence in the broader financial system in that country by their panic-driven actions that simply aren’t working, making matters worse…they’ve gotten caught up in a negative feedback loop…

What the CSRC should be investigating is the government’s direct manipulation of Chinese equity markets to the upside since last year…government cheerleading of the markets, aided by the Communist Party-controlled China Daily newspaper which was strongly advocating stock ownership, kept intensifying as the Shanghai Composite and the smaller Shenzhen Index continued to rise (the Shanghai jumped 51% from the beginning of 2015 through June, and 134% in the past year, while the Shenzhen soared 109% this year and 173% over the past 12 months)…since the beginning of 2015, the China Securities Depository & Clearing Co. estimated new investors were opening up an average of 170,000 brokerage accounts a week…the bulge in revenue for securities firms was so big that it helped to offset weakness in other industries, keeping economic growth at an unexpectedly strong 7% for the 2nd quarter…

Now, of course, the “wealth effect” strategy has gone into reverse and Chinese authorities are scrambling to fix the problem – this includes even threatening to prosecute short-sellers, cancelling public offerings of stock and prohibiting major shareholders from selling their stakes for 6 months…the government also mandated its main pension fund for civil servants to invest up to 30% of its assets in stocks, or up to 900 billion yuan ($145 billion)…what the WSJ’s Lingling Weithe pointed out in an article this morning is that the rescue effort is missing 1 feature found in markets elsewhere: a senior figure stepping forward to stop the panic…

It’s true that the vast majority of Chinese wealth rests outside of the stock market…the share of households that participate in the market is believed to be just under 9%, well below the one-third or more of households in the U.S. and other Western markets that own stocks…however, the chaos in China’s equity markets, and how government authorities have responded to it, has done some damage to the China brand…in addition, the market sell-off – especially if it gets worse – is another brake on economic growth in that country plus there are spillover affects globally…

Keep in mind as well that, as USA Today reported this morning, the 144 China-based stocks with primary listings on major U.S. exchanges have erased nearly $40 billion in U.S. paper wealth since the Shanghai Composite peaked on June 12…

Technically, the Shanghai remains in serious trouble…a “C” wave to the downside appears to have commenced following the predicted “B” corrective wave to resistance around 4055…3400 is key support…if that level is breached, and odds are that it will be, then the Shanghai will quickly test the 3000 level…

Today’s Equity Markets

Asia

The Shanghai Composite traded down as much as 5% overnight but recovered to finish 1.7% lower (off 63 points) at 3663…Japan’s Nikkei closed essentially unchanged…

Europe

European markets were up moderately today…the U.K.’s GDP grew by 0.7% in the 2nd quarter, according to preliminary official data, meeting expectations…

North America

After 5 straight losing sessions totaling 659 points or 3.6%, the Dow is up 173 points as of 10:30 am Pacific…U.S. consumer confidence for July came in at 90.9, missing expectations and posting a decline from June’s read…the U.S. homeownership rate continued to decline in Q2, hitting a 48-year low (63.5%), according to estimates published by the Commerce Department this morning…

In Toronto, the TSX is up 64 points as of 10:30 am Pacific while the Venture, which has declined for 9 straight sessions, is flat at 582…

TSX 6-Year Monthly Chart

Commodity weakness has taken its toll on the TSX…the concern with this 6-year monthly chart is the breakdown of support at 14150, the increasing down momentum (SS) and the decidedly bearish trend as indicated by the ADX…the Fib. support band between 12830 and 13144 could ultimately be challenged…

Tribute Pharmaceuticals Canada Inc. (TRX, TSX-V) Update

Speculators continue to have an appetite for certain non-resource plays on the Venture, and this includes Tribute Pharmaceuticals (TRX, TSX-V) which appears to have conquered Fib. resistance at $2.09…overbought RSI(14) conditions that emerged in June were cleansed during the healthy pullback to $1.70…

TRX is unchanged at $2.19 as of 10:30 am Pacific…John called this one on the breakout from the pennant formation in June…

Pure Energy Minerals (PE, TSX-V) Update

Pure Energy Minerals (PE, TSX-V) resumed trading at 9:30 am Pacific after announcing a maiden resource estimate for its Clayton Valley South Lithium Brine Project…Clayton Valley is strategically located halfway between Reno and Las Vegas in one of the oldest mining areas in Nevada…

The just-released inferred resource estimate for the project outlines 816,000 metric tonnes of Lithium Carbonate Equivalent (LCE), present as “easily-extractible brine in 2 aquifers (Main Ash Aquifer and Lower Aquifer System),” the company stated, its 8,000 0acres of claims..the claims comprised 3 contiguous blocks and overlie a deep basin structure…significantly, the zones that host the brines appear to extend much deeper into the basin and extend laterally throughout the entire claim area…

The next stages of drilling will test the depth and potential extension of the deposit as well as new zones recently discovered from Pure Energy’s seismic reflection survey…

Technically, PE has been trading within a strong overall uptrend since last year as shown in John’s updated 2.5-year weekly chart…note the bullish ascending triangle…the 50 and 200-day SMA’s have converged at 25 cents…

PE is off 2 pennies at 26 cents as of 10:30 am Pacific…

Note:  John, Terry and Jon do not hold share positions in TRX or PE.