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Gold has fallen below $1,200 an ounce just in time (what a coincidence!) for thinner U.S. trading conditions the rest of the week due to Thanksgiving tomorrow…as of 11:15 am Pacific, bullion is down $22 an ounce at $1,190…it traded as high as $1,215 overnight but got whacked at 5:30 am Pacific, triggering stop-loss orders, on a report that showed new orders for U.S. manufactured capital goods rebounded much more sharply than expected in October (the report is not so strong when one delves into it)…the U.S. dollar immediately pushed to a new 14-year high, dragging bullion below $1,200 for the first time since early February and as low as $1,181…Silver has retreated 24 cents to $16.38…Copper has climbed another nickel to $2.59…Nickel has surged 12 cents to $5.22…Crude Oil is up slightly at $48.08 while the U.S. Dollar Index has added two-thirds of a point to 101.66…

Traders are now pricing in a 100% chance of a December rate increase, according to the CME Group’s FedWatch Tool…if the Fed doesn’t raise rates December 14, it never will…momentum traders will likely continue to push the U.S. dollar higher leading up to the Fed’s decision with next Dollar Index resistance at 103…however, with Gold also now in oversold territory, the set-up is for a December reversal in bullion…investors who are panicking and dumping their Gold stocks at the sight of the metal now under $1,200 are making the same mistake as those who bailed at the bottom of the Gold market around this time last year (also just ahead of a Fed rate hike)…

The Venture, a reliable leading indicator, continues to outperform Gold and the TSX Gold Index which is one of the best clues that Gold isn’t about to “fall out of bed” and is actually close to a bottom after a 12% drop from the night of the U.S. elections November 8…the Venture trading pattern since August shows a healthy corrective phase, nearing an end, within a confirmed new bull market…a continuing Venture bull market is also consistent with a sharp turnaround in Gold prices…with a rate hike expected to be out of the way soon, and the prospect of a worsening trend in U.S. budget deficits/debt, bullion will come back into favor…

Rumors of a looming ban on Gold imports in India continue…some Indian Gold traders have been placing bulk, short-term import orders on fears that Prime Minister Narendra Modi might act in the coming weeks against overseas purchases of the metal following his withdrawal of high-denomination banknotes as his fight against “black money” continues…the Indian government is consistently at war with its citizens over money and its control…

Holders of “black money” small bills have apparently been trying to wash their cash by trading it for bullion with reports suggesting Gold sellers have been reaping big profits from this desperation – charging up to 67% premiums to market price for Gold when buyers pay in small bills…Gold imports into India are already down sharply this year after the government moved on a variety of initiatives to reduce shipments into the country, so fears of a big drop in Gold if Modi takes further measures are exaggerated…India, however, is the world’s second biggest Gold buyer and it’s estimated that one-third of its annual demand of up to 1,000 tonnes is paid for in “black money” – untaxed funds held in secret by citizens in cash that don’t appear in any official accounts…

Copper Update

The Copper market has been in surplus for 7 of the past 10 years, so it’s encouraging that the International Copper Study Group (ISGS), an organization of Copper producing and consuming countries, recently stated that it expects world mine production to remain unchanged in 2017 after an estimated 4% increase this year…meanwhile, at a key industry conference in Shanghai last week, sentiment regarding Copper was very positive with reports of Chinese demand growth anticipated in the 3% to 5% range next year, largely due to sustained government stimulus policies…some analysts are now calling for a deficit in the Copper market as early as next year…China consumes nearly 50% of annual global Copper supply, so swings in either direction on the demand side in China can have a major influence on prices no matter what happens in the United States…

Below is an interesting update on global Copper production from an ICGS news release just 2 days ago:

“World mine production is estimated to have increased by around 5.8% (730,000 t) in the first 8 months of 2016 compared with production in the same period of 2015.  Concentrate production increased by 7.5% while solvent extraction-electrowinning (SX-EW) declined by 0.5%.  The increase in world mine production was mainly due to a 45% rise in Peruvian output that is benefitting from new and expanded capacity brought on stream in the last 2 years.  A recovery in production levels in Canada and the United States, expanded capacity in Mexico and a ramp-up in production in Mongolia, also contributed to world growth.  However, overall growth was partially offset by a 4% decline in production in Chile, the world’s biggest Copper mine producer, and a 7% decline in DRC where output is constrained by temporary production cuts.  On a regional basis, production rose by 7% in the Americas, 9% in Asia and 7% in Oceania but declined by 4% in Africa while remaining essentially unchanged in Europe.  The average world mine capacity utilization rate for the first 8 months of 2016 increased to 85% from 84% in the same period in 2015.”

Hottest Stock Market Right Now:  Saudi Arabia

If you think U.S. markets have been hot recently, take a look at Saudi Arabia’s benchmark Tadawul stock market index – it has gained more than 20% since the kingdom issued a record $17.5 billion of bonds last month…the Saudis opened the local stock market to international investors in 2015 and this year further eased the rules for foreign investments in listed companies…

Crude Oil Update

To keep their equity market hot, and to prevent another hit to their budget revenues, we’re certain the Saudis will pull out all the stops to make sure there’s an OPEC agreement next week to cut production…too much is at stake…a failure to reach a deal would not only weigh on Crude prices but also erode Saudi Arabia’s credibility as the leader of the cartel…this morning, Crude prices firmed after Iraq said it was willing to “shoulder responsibility” for some of OPEC’s planned production cuts (likely after some arm-twisting from the Saudis)…

Income from Oil sales accounts for more than two-thirds of Saudi Arabia’s budget revenues…to keep its economy ticking for now, $50+ Oil is what the Saudis really need…

Even if OPEC does find a way to cut, however, it may still find itself outmaneuvered by U.S. producers who have been waiting to ramp up output again when prices rise…this would act as a headwind against any price increases, especially if global demand doesn’t pick up…

Canopy Growth Corp. (CGC, TSX) Update

Just a week ago, medical marijuana stocks were on a “euphoric high”…then they got pummeled…circuit breakers that lit up like Christmas lights as cannabis stocks were surging were a tell-tale sign that a sharp correction was imminent…

The drop, however, has been within the normal confines of investor behavior as you can see on this chart for sector leader Canopy Growth (CGC, TSX)…

Extreme overbought RSI(14) conditions emerged recently when CGC spiked to $17.86 (just 67 cents below measured Fib. resistance), but the pullback has been quite normal with CGC retracing to a strong support zone ranging from $7.45 (Fib.) to $6.14 (Fib.)…the rising 50-day SMA, currently $6.46, falls within that range…

This morning, CGC tested the top of that support zone when it traded as low as $7.65 and then quickly reversed higher as shorts likely began to cover…going by this chart, we doubt the appetite for medical marijuana stocks has ended (even with Jeff Sessions as U.S. Attorney General)…

CGC is up $1.64 at $9.89 as of 11:15 am Pacific…

In Today’s Morning Musings…

1. CRB–commodities bull market–Venture bull market…

2. Probing Probe Metals (PRB, TSX-V)…

3. Northern Shield (NRN, TSX-V) takes aim at Sequoi – why they can’t afford to miss…

4. Daniel’s Den – technology analysts estimate the “hearables” market will be worth $16 billion by 2020…

Plus more…click here to read the rest of today’s Morning Musings and all BMR exclusive content, through a risk-free Pro, Gold or Basic package, or login with your username and password…