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Gold is threatening today to close above an important resistance level ($1,672)…as of 5:30 am Pacific, the yellow metal has surged $13 an ounce to $1,681…Silver is up 8 cents to $31.16…Copper is off a penny at $3.61…Crude Oil is off 46 cents to $93.68 while the U.S. Dollar Index has gained one-tenth of a point to 79.64…

London Bullion Market Association (LBMA) Survey Calls For $1,753 Average Gold Price In 2012

The average predictions from the LBMA panel of experts for 2013 for the four precious metals are as follows:

Gold – average 2012 price – $1669;  Average forecast for 2013 – $1753 (up 5.1%)

Silver – average 2012 price – $31.15;   Average forecast for 2013 – $33.21 (up 6.6%)

Platinum – average 2012 price – $1552;  Average forecast for 2013 – $1682 (up 8.4%)

Palladium – average 2012 price $644.33;  Average forecast for 2013 – $744.03.  (Up 15.5%)

Today’s Markets

Japanese shares surged to multi-year highs overnight, with the Nikkei average gaining 78 points to close at 108979 on rising expectations that strong political pressure will prompt the Bank of Japan to deliver bold monetary easing measures…meanwhile, China’s Shanghai Composite jumped another 14 points to 2324, a 6.5-month high after yesterday’s aggressive 3% move…below is an updated Shanghai chart from John…we called for a big move in this market as soon as it broke above a nearly two-year down trendline (the Venture Exchange has been following a similar pattern as the Shanghai, though it hasn’t yet broken above its downtrend line- very close)…a much healthier Shanghai Index, as we’re seeing now, has to be considered bullish for commodities and global equities in general…

European shares are flat as of 5:30 am Pacific…stock index futures in New York, meanwhile, are pointing toward a modestly negative opening for the Dow…the Venture Exchange hit a high of 1247 in the first half hour of trading yesterday before reversing and closing down 10 points at 1230…the 1240 level continues to provide strong resistance but the “big picture” pattern, as John showed yesterday, strongly suggests this level will be overcome in the near future….the overall trend has changed in our view after a brutal market slide that began in March, 2011, but investor patience is critical with this “slow moving train” at the moment…the Venture is currently resting at its 10-day moving average (SMA) while the rising 20-day SMA provides secondary support just above 1210…

U.S. Debt Ceiling Debate – And Gold

The U.S. debt ceiling issue is heating up and the narrative around it has to considered bullish for Gold…over the years there has been a close correlation between the price of Gold and an increase in the debt ceiling…

President Obama was in his usual combative form yesterday as he talked about numerous issues, including the U.S. debt ceiling, during the final press conference of his first term…he said Republicans should not expect a “ransom” in the form of spending cuts for agreeing to increase the debt ceiling…“(Republicans) will not collect a ransom in exchange for not crashing the American economy – the full faith and credit of the United States of America is not a bargaining chip,” he said…Federal Reserve Chairman Ben Bernanke also weighed in to the debate during a speech at the University of Michigan’s Gerald R. Ford School of Public Policy…he said it was vital for Congress to raise the debt ceiling to avoid a potential default, calling it one of the “critical fiscal watersheds” coming up for the government in the next few weeks…

The Republicans say deep spending cuts must be part of any debt ceiling deal, with some of the party’s members in Congress considering allowing the government to shut down, or for the U.S. to delay paying its debts…after the deep recession and subsequent response, on top of deficits accumulated under George W. Bush, the federal government now borrows about 40 cents for every dollar it spends…there appears to be little hope the current administration is serious about significantly changing that trend given the fact that Obama’s agenda from Day One has been to increase the role of government in Americans’ lives (counter to reducing spending) and he has so far been very effective at doing that from Obamacare to other initiatives…

Democratic leaders in the Senate have already given President Obama the green light to attempt to sidestep Congress and take executive action to avoid a default if no agreement is reached to raise the borrowing limit…“We believe you must be willing to take any lawful steps to ensure that America does not break its promises and trigger a global economic crisis – without congressional approval, if necessary,” said Harry Reid, Dick Durbin, Chuck Schumer and Patty Murray, the party’s top brass in the upper chamber, in a letter to the president on Friday as reported by the Financial Times…the move could raise pressure on the White House to consider creative action in the event that lawmakers fail to forge a compromise on lifting the country’s debt ceiling of $16.4 trillion by the end of next month…among the solutions that have been floated are a presidential invocation of the 14th amendment of the constitution – which says the debt of the U.S. “shall not be questioned” – in order to continue borrowing…the White House could also simply decide tax and spending laws take precedence over the debt ceiling constraints if they are in conflict, and keep spending money…Obama yesterday, however, stated, “There are no magic tricks here…there are no loopholes…there are no easy outs…there’s one way to deal with it, and that is for Congress to authorize me to pay for those items of spending that they have already authorized”…the next couple of months are going to be interesting indeed…

Richmont Mines (RIC, TSX) Updated Chart

There is strong fundamental and technical evidence that Richmont Mines’ (RIC, TSX) worst days are behind it after the stock crashed last year from a high of $13 to a low of $2.69, thanks in large part to the fact that the company’s planned production at the Francoeur Mine went bust with the operation being shut down…Richmont is currently trading right around book value and all the bad news seems to be behind it…its flagship Island Gold Mine in Ontario is performing well and resources are increasing there…rising Gold prices will help Richmont immensely, and new CEO Paul Carmel appears to have the company back on track with a sharper focus on project return…”The potential addition of Monique to Richmont’s operating mines is consistent with our strategy to increase the mine life and resources of our Quebec asset base by bringing on additional sources of ore for our Camflo mill,” Carmel stated in a news release last week…”Each additional source must fulfill investment return criteria established by management, and we continue to evaluate other potential asset acquisitions that fit this strategy”…

Below is an updated Richmont chart from John that shows a lot of promise…notice how the share price recently broke above the EMA-20 and has stayed above that level for three straight sessions…RIC closed up a dime yesterday at $3.26…

Alexco Resource Corp. (AXR, TSX)

The worst appears to be over as well for Alexco Resource (AXR, TSX) Corp. which has formed a nice basing pattern in recent months…among other projects, Alexco owns and operates the Bellekeno Silver mine, Canada’s only operating primary Silver producer and one of the world’s highest-grade Silver mines with a production grade of up to 1,000 g/t…AXR’s 100-day SMA is just beginning to reverse to the upside after being mostly in decline for over a year-and-a-half…below is a 1-year weekly chart from John…

Note: John, Jon and Terry do not hold positions in RIC or AXR.