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Gold held steady overnight but has dipped during the last half hour…as of 5:50 am Pacific, bullion is down $13 an ounce at $1,650 after climbing as high as $1,667 overnight…Silver is 50 cents lower at $30.77…Copper is off 2 pennies at $3.84…Crude Oil is down 77 cents at $104.16 while the U.S. Dollar Index is up slightly at 78.86…

Central banks continue to be strong buyers of Gold…they purchased no less than 49.8 metric tons in March according to statistics released by the International Monetary Fund…the three largest buyers were Mexico, Russia and Turkey…the total for the first quarter was 55.1 tons…last year, central banks bought 439.7 tonnes of Gold, the largest annual increase in almost five decades, and this doesn’t count significant purchases that remain unreported…a recent survey of central-bank reserve managers predicted that the most significant change in their official reserve holdings over the next 10 years will be their intentional accumulation of Gold…net official Gold accumulation should not only continue but will likely expand in 2012 and for years to come…with China and Russia leading the pack, a growing number of central banks, under-weighted in Gold and over-weighted in dollars and euros, will join the line to buy Gold…

Bob Hoye of Institutional Advisor published a report Friday titled “Gold Consolidation Approaching an End“…the report shows that the relative strength of mining shares to the price of Gold bullion is at extremes only seen five times in the past 100 years…the report also notes that, historically, investors should look to the junior tier names to exhibit the greater price action relative to their senior peers…

John has two very interesting 10-year weekly charts charts this morning showing Gold‘s performance relative to both the TSX Gold Index and the Venture Exchange…what these charts tell us is that the gap between the stocks and Gold is indeed at historic levels – so something has to give…

Gold vs. TSX Gold Index

Gold vs. Venture Exchange

At the moment, Gold appears to be gearing up, in the near future, to bust through resistance as shown on the chart below…a reverse head-and-shoulders pattern is quite obvious on the Gold chart as John has been pointing out in recent weeks…going back over the last decade, Gold has also consistently found support at its 300-day moving average (SMA) which also happens to be the right shoulder low…Gold‘s March-April swoon could indeed be over, and the oversold Gold stocks, which almost seem to have been factoring in a major breakdown in the Gold price, could be in for a spectacular rise as the year progresses…

Prodigy Gold (PDG, TSX-V)

Prodigy Gold Inc. (PDG, TSX-V) released results this morning from just over 11,000 metres of diamond drilling completed at its Magino Mine Gold Project since March…highlights from the 43 holes, part of a 60,000 metre drill campaign, include 261.2 metres grading 1.19 g/t Au in drill hole MA12-290 (including 67 metres grading 1.84 g/t Au), 125 metres grading 1.37 g/t Au in drill hole MA12-264 and 109 metres grading 1.48 g/t Au drill hole MA12-257…nearly all the results are in-fill and resource expansion drill holes within and below the main portion of the Magino Gold deposit…they confirm continuity within previously drilled Gold mineralization at both shallow and deeper portions of the deposit and also expand the known Gold system to depth…Prodigy plans on releasing an updated 43-101 resource estimate for Magino in June…

IAMGOLD’S (IMG, TSX) proposed acquisition of Trelawney (TRR, TSX-V) was an important development Friday and underscores how undervalued some of the juniors are…interestingly, IAMGOLD was one of the few companies to make an acquisition when Gold stocks plummeted in late 2008 through early 2009…many producers are now sitting on record cash levels and this should result in more takeovers as the year unfolds…

Gold Canyon Resources (GCU, TSX-V), developing a multi-million ounce resource at its Springpole Project in Ontario, is another great example of a solid junior whose share price hit ridiculous levels last week when the Venture Exchange fell as low as 1363 – a 20% correction from the February 29 2012 high of 1696…recent extreme RSI levels suggest an important low for GCU was put in last week…

Note: John, Jon and Terry do not hold positions in GCU.