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Gold traded as high as $1,616 overnight…as of 6:45 am Pacific, bullion is off $5 an ounce at $1,608 in advance of the results of today’s Fed meeting…most observers agree, Chairman Ben Bernanke will likely keep the pedal to the metal – he is Wall Street’s best friend at the moment…Silver is down 7 cents to $28.84…Copper has gained 4 pennies to $3.44 after touching a 7-month low yesterday…Crude Oil has jumped 86 cents to $93.02 while the U.S. Dollar Index is off more than one-third of a point to 82.64…

Cyprus Turns To Russia

It appears Russia may come to the aid of Cyprus as the two countries continue negotiations after the Cypriot parliament rejected a bank deposit tax proposal Tuesday in return for receiving a bailout from its euro zone partners…time is of the essence, however, as Cyprus faces the imminent risk of a full banking meltdown and possible exit from the euro zone…banks remain closed…German finance minister Wolfgang Schäuble stated last night, “Cyprus is living with a banking sector with low taxes and favourable laws that is completely overdrawn and that makes Cyprus bankrupt…this business model is not sustainable”…Schauble is likely correct in his assessment (Cyprus is also a money laundering haven) but the fact the euro zone made the proposal it did, while also snubbing Russia which has a vested interest in Cyprus, has undermined some of the credibility it has built over the past year in handling the debt crisis…Athanasios Orphanides, former governor of the Central Bank of Cyprus, told CNBC this morning, “Confiscating profits in a banking system is not the way to deal with anything…if European governments do not want to continue to keep the European project together, then they keep forcing governments – in this case Cyprus – to look elsewhere”…

Updated Copper Chart

Consumption of metals has been lacklustre so far this year in China which accounts for 40% of global Copper demand…this has put pressure on the Copper price, driving it down to important support around $3.40…the key question is whether the $3.40 level will hold…John’s 3.5-year weekly chart below doesn’t give us a lot of confidence that it will given the fact that RSI(14) has broken below a trendline in place since late 2011…the trend is becoming more bearish…with Copper a leading indicator of the global economy, this is not a positive development as we approach the end of the first quarter of 2013…

Today’s Markets

China’s Shanghai Composite rallied 60 points or nearly 3% overnight, closing at 2317…markets are awaiting China’s HSBC Flash PMI data for the month of March tomorrow…European markets are significantly higher today while the Dow has gained 78 points to 14534 through the first 15 minutes of trading…the TSX has added 43 points while the Venture is up slightly at 1107…

U.S. Dollar Index Long-Term Chart

Below is a 20-year monthly U.S. Dollar Index chart from John that gives us confidence that the Index will ultimately bust through a resistance band between 83 and 84…next major resistance would then be 85…at that point, the greenback could go back into retreat but for now, at least, the bulls are in control…important bottoms in the Venture Exchange have occurred at tops in the Dollar Index, so this would suggest we will see a new low in the Venture but it may not occur until the Dollar Index is trading around 85…

Encanto Potash Corp (EPO, TSX-V) Update

Few stocks have been moving higher in this current Venture environment but Encanto Potash (EPO, TSX-V) has enjoyed a nice run recently, climbing from 23 cents last week to an intra-day high of 31.5 cents yesterday on volume of nearly 4 million shares…the company announced yesterday that the Muskowekwan First Nation potash mine project has been accepted by the federal government under the First Nations Commercial and Industrial Development Act (FNCIDA)…the act will enable the federal government to enact regulations that incorporate a provincial regulatory regime to govern commercial and industrial activities within a province…in addition to becoming the first on-reserve potash mine in Canada, the proposed Muskowekwan project is the first in Saskatchewan to utilize FNCIDA to regulate a project on reserve lands…once the project gets under way, it’s expected to generate approximately 1,000 construction jobs for the development of the mine and nearly 500 jobs once it is fully operational…in addition, the mine is expected to generate tens of millions in revenue royalties for the first nation annually…below is a 6-month daily EPO chart from John that shows technical resistance in the low 30’s…the stock is strong again in early trading this morning…

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