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Gold got off to a positive start for 2012 yesterday and is digesting those gains today…as of 6:00 am Pacific, the yellow metal is down $9 an ounce at $1,595…Silver is 64 cents lower at $29.07…Copper has lost 3 pennies at $3.48…Crude Oil, after surging yesterday, has slipped 86 cents to $102.10 while the U.S. Dollar Index is up half a point at 80.18…the Dollar Index faces resistance near current levels, however, with 80.40 a key area…any short-term pullback or consolidation will help support the equity markets including the Venture Exchange which often moves in the opposite direction of the greenback…John updates the U.S. Dollar Index chart below…

Interestingly, the Canadian Dollar closed above its still-declining 100-day moving average (SMA) yesterday for the first time since July…it will meet stiff resistance, however, at $1.01 – the declining 200-day SMA…

Dow futures are pointing to a slightly lower open after yesterday’s strong gains thanks to positive economic data out of the U.S. and China…

The TSX jumped 253 points yesterday to begin 2012 while the CDNX climbed back above the 1500 level for the first time since December 12…for hockey fans, this strong start to the New Year was tempered, of course, by Canada’s 6-5 loss last night to Russia in the Word Junior semi-finals in Calgary…the Canadians stormed back from a 5-goal deficit and nearly tied the game in the dying seconds…that drama was matched on the political front in Iowa where Mitt Romney defeated up-start Rick Santorum, a class act, by a scant 8 votes in the closest Republican primary or caucus vote in history…the Republican nomination is Romney’s to lose but it won’t be a cake-walk…normally, gaining back the White House should be a slam-dunk for the Republicans this year given the current “occupier” but no Republican has yet inspired the broad American electorate…

Greenspan Says U.S. Faces “True Revolution” In Choices

The United States faces a “true revolution” in the choices it will have to make to secure its fiscal future now that the welfare state has run up against a “brick wall of economic reality”, former Federal Reserve Chairman Alan Greenspan wrote in an op-ed piece in today’s Financial Times…”A political tsunami has emerged out of our past in the form of the Tea Party, with its ethos reminiscent of rugged individualism and self-reliance,” Greenspan wrote…”Cutting back on benefits that are ‘entitled’ is going to be a far harder political task than curbing federal discretionary spending…we have created a level of entitlements that will require a greater share of real resources to fulfill than the economy seems likely to be able to supply,” he stated…the same could be said of Canada, we might add, which will have to come to grips with escalating costs in the pension and health care systems…

January As A Market Barometer

Since 1945, a positive January in a U.S. election year has never missed in predicting a full-year gain for the Standard & Poor’s 500, going 8-for-8 and posting an average gain of 16%, well above its normal average, according to Sam Stovall, chief equity strategist at S&P…a negative first month, meanwhile, has predicted a full-year loss 56% of the time, with an average 3.9% decline…

Risks in China

China has uncovered 530 billion yuan (approximately $84 billion U.S.) worth of irregularities with local government debt, the National Audit Office said today…a report, published on China’s central government web site, reveals some of the problems investment analysts had believed to lay beneath the U.S. $1.7 trillion mountain of debt that local governments had amassed by the end of 2010…Chinese local government debt has come under scrutiny of late after some governments invested in questionable construction and industry projects…also, local governments are prohibited from directly borrowing funds, so many set up companies – so-called local government “financing vehicles” – to raise funds instead…the actions have ignited concern that these borrowings could lead to a wave of bad debt in the Chinese banking system…local government debt, weaker export growth brought about by a worsening external environment, and slowing investment growth caused by property market curbs, constitute the most significant risks to the Chinese economy this year according to the Bank of China…

Adventure Gold, Canada Rare Earths

Adventure Gold (AGE, TSX-V) announced the closing of a $1.75 million non-flow-through financing yesterday above the market price…the company issued 3,888,946 units at 45 cents per unit for gross proceeds of $1,750,026…each unit consisted of one common share and one-half of a common share purchase warrant (each full warrant entitles the holder to purchase one common share of AGE at 65 cents for a period of 24 months)…despite the financing, Adventure Gold closed down 2.5 cents yesterday at 40.5 cents…with its promising Pascalis-Colombiere Gold Property, which has a good chance of attracting interest from other companies including Richmont Mines (RIC, TSX), our outlook for AGE remains bullish…

We continue to keep a close eye on Canada Rare Earths (CJC, TSX-V) which fell a nickel yesterday to 56 cents…watch for RSI to hit support at 50…the overall chart pattern remains bullish, however, as John shows below…

Note: John holds a position in CJC (Jon and Terry do not)…

We’re in the process of finalizing a “strong play” short list as well as a “watch list” for the first quarter of 2012 and beyond, and we expect to reveal that by next Monday…