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Gold has traded in a range between $1,568 and $1,590 so far today…the $1,590 level constitutes the next important resistance as we showed in our most recent Gold chart, and indeed bullion has reacted at that level…as of 7:40 am Pacific, Gold is off $15 an ounce at $1,570…Silver has retreated 34 cents to $27.61…Copper is down a penny at $3.43…Crude Oil is 34 cents lower at $93.86 while the U.S. Dollar Index is up slightly at 82.43…

Gold-Selling Boom In Japan

Will Japan’s current Gold-selling boom eventually turn into Gold-buying if policy makers succeed in their goal of ending 15 years of deflation and sparking a new round of inflation?…while Gold prices have softened globally, the declining value of the yen against the dollar in recent months has made the precious metal worth a lot more in Japan as reported in an interesting article in the Wall Street Journal this morning…as a result, Japanese families are now scrambling to dig out Gold objects from closets and jewelry boxes…they’re selling these items to metals dealers to convert their passive assets into cash for everything from vacations to children’s allowances…”The smart money is on buying Gold” rather than selling, said Mark O’Byrne, research director at Gold dealer GoldCore in Dublin…”Given the BoJ’s determination, there’s no doubt you’re going to get 2% inflation, and there’s a risk it might be much, much higher…for those who are prudent, diversifying into Gold makes sense”…it will indeed be interesting to see what the long-term impact on Gold might be given the extraordinary measures being undertaken by the Bank of Japan…

Goldman Sachs Lowers Gold Price Target – Again

For the second time in six weeks, Goldman Sachs has downgraded its 2013 price target for Gold in a commodities report issued this morning…”Despite resurgence in euro risk aversion and disappointing U.S. economic data, Gold prices are unchanged over the past month, highlighting how conviction in holding Gold is quickly waning”, said Goldman Sachs analysts Damien Courvalin and Jeffrey Currie in the note…the analysts cut their year-end Gold forecast to $1,450 per ounce from $1,600…they also see Gold falling to $1,270 by the end of 2014…”With our economists expecting few ramifications from Cyprus and that the recent U.S. slowdown will not derail the faster recovery they forecast in the second half of 2013, we believe a sharp rebound in Gold prices is unlikely…given Gold’s recent lackluster price action and our economists’ expectation for higher U.S. real rates, we are lowering our U.S. dollar-denominated Gold price forecast once again…as a result, we recommend closing the long COMEX Gold position that we first initiated on October 11, 2010, for a potential gain of $219 per ounce, with the risk reversal overlay expired on March 25…while there are risks for modest near-term upside to Gold prices should U.S. growth continue to slow down, we see risks to current prices as increasingly skewed to the downside as we move through 2013″, the analysts stated…

Fed Minutes Show Concerns (Again) Over Central Bank’s Aggressive Monetary Stimulus

Minutes from the most recent Fed meeting, released this morning, suggest that members have grown increasingly concerned that things could get messy if the Fed continues its policies too far into the future…among those concerns are instability to the financial system, and a sudden rise in interest rates and inflation…”In particular, participants pointed to possible risks to the stability of the financial system, the functioning of particular financial markets, the smooth withdrawal of monetary accommodation when it eventually becomes appropriate, and the Federal Reserve’s net income”,  the March meeting minutes state…”Their views on the practical importance of these risks varied, as did their prescriptions for mitigating them”…Fed officials are clearly engaged in a debate about whether to begin winding down an $85 billion per month bond-buying program after mid-year…the minutes showed that “all but a few” Fed officials agreed at the central bank’s last policy meeting that they wanted to keep the program going “at least through mid-year”…but after that, officials had a wide range of views about how they might proceed…

Chinese Trade Data Questioned

How much trust can we put into government numbers coming out of China?…that’s a question that’s popping up again after the release of some bizarre Chinese trade data this morning…China unexpectedly swung to a trade deficit in March, as imports surged after a holiday-induced lull, following strong surpluses in recent months…here are the numbers…the country posted a trade deficit of $884 million for March, after reporting a $15.25 billion surplus in February, according to data from the General Administration of Customs…for the first quarter as a whole, China reported a trade surplus of $43.07 billion, compared with a surplus of just $660 million in the first quarter of 2012…exports from China increased 10% last month from the same month a year earlier, compared with a 22% increase in February, while imports surged 14.1% in March, compared with a year-on-year drop of more than 15% the previous month…what’s particularly confusing is that China’s exports to its separately administered territory of Hong Kong grew a whopping 93% in March from the same month a year earlier, the fastest growth since March, 1995, even as exports to the EU fell 14% and exports to the U.S. dropped 6.5%…total exports to Hong Kong of $48.4 billion in March were almost double the $26.8 in Chinese exports to the U.S. – China’s second-largest export market – last month…according to a report in this morning’s Financial Times, there is strong evidence that many exporters are faking orders in order to take advantage of government tax rebates for exports…some analysts have also suggested that local governments are pressuring exporters to book future orders so they can show good figures out of their jurisdictions to please China’s newly-installed leaders…in the three months until the end of February, China’s customs reported $95 billion in exports to Hong Kong but the independently-administered customs authorities in Hong Kong reported less than $59 billion in imports from mainland China, almost all of it for re-export to other countries…

Fitch Downgrade Is A Warning Over Credit Buildup In China

Fitch Ratings Inc. has lowered one of its key ratings on China’s government debt, in one of the most prominent warnings to date over a credit buildup in the world’s second-largest economy…the downgrade applies only to China’s yuan-denominated debt, which is primarily traded domestically – not the foreign-currency debt that it issues in international financial markets, so there was no impact on global financial markets due to this decision announced late yesterday…nevertheless, as reported by the Wall Street Journal this morning, this is the first outright downgrade in years of debt that is widely seen as buffered by China’s vast foreign-exchange reserves, highlighting a growing perception that massive lending by China’s banks, as well as shadowy non-bank lenders that operate under little regulation, could seriously disrupt China’s economic recovery…the country has seen rapid credit expansion as a result of Beijing’s stimulus in 2008-09 to counter the global crisis, with the stock of bank loans to the private sector hitting 135.7% of gross domestic product at the end of 2012, the third-highest of any Fitch-rated emerging market, the ratings agency said…total credit in the economy including various forms of “shadow banking” activity may have hit 198% of GDP by the end of last year, up from 125% at the end of 2008…the stimulus measures in 2008-2009 helped Chinese growth rebound but at the cost of weighing down local governments and banks with potentially bad debt…

Today’s Markets

The Dow has hit another new all-time high this morning…as of 7:40 am Pacific, it’s up 84 points at 14757..more significantly, the S&P 500 has finally broken its all-time intra-day high of 1576.09 (October 2007) and is currently up 11 points at 1580…the TSX is up 44 points while the Venture has pulled back with softness in commodities today…through the first of trading, the CDNX is down 8 points at 1047…Asian markets were mostly higher overnight with Japan’s Nikkei average adding 96 points to 13288…China’s Shanghai Composite was flat at 2226…European shares are up significantly today as the Italian treasury raised its targeted 11 billion euros ($14.36 billion) at an auction this morning with 1-year debt yields falling to their lowest since January…

Updated Dow Chart

The Dow has now surpassed John’s Fibonacci target of 14723…buy pressure remains very strong, and the question is at what point will a correction set in with technical conditions as overbought as they are right now…

HXD Updated Chart

This S&P/TSX 60 double-short ETF gives us some valuable insight into the possible near-term direction of the TSX…it recently met resistance, as predicted, around $8.40 but should find support near the $8 mark (it traded as low as $8.02 this morning)…this translates to immediate TSX resistance just below 12600 or at the 100-day moving average (SMA)…

CRB Updated Chart

Commodities are soft today but there are some hopeful technical signs in the CRB Index (2.5-year weekly chart)…note also how the Slow Stochastics indicator has given a CDNX “sell signal” each time it has either crossed, or nearly touched, the 80 level over the past couple of years…February was the latest example…currently this reading is outside that “danger zone” at 30…

Deveron Resources (DVR, TSX-V)

An interesting deal was announced after the market closed yesterday as Deveron Resources Inc. (DVR, TSX-V), which started trading just over four months ago after completing a $750,000 IPO, has acquired a stake in privately-held Boreal Agrominerals Inc. which owns and operates a carbonatite quarry near Sudbury, Ontario from which it produces and sells a product called Spanish River Carbonatite “SRC”…this is a powerful organic-certified fertilizer that features apatite, biotite and calcite – the ABC’s of agrominerals…SRC is perfectly suited for organic as well as conventional farming enterprises…the product has also passed the various Ontario and British Columbia Ministry of Environment tests which are required to have it included as a compost amendment at various major landfill/composting sites and as a soil amendment in those jurisdictions where parks, playing fields, lawns, forests and gardens are being legislated as chemical free…Deveron’s initial stake in Boreal (www.borealagrominerals.com) is just 6%, but the tone of the release leads us to believe that their game plan is to own a much bigger piece of this potential cash cow…Boreal is sitting on what appears to be a very significant deposit…if they’re successful in selling this product, then Deveron is off to the races…DVR currently has just 11.8 million shares outstanding and Greencastle Resources (VGN, TSX-V) owns most of them, making for a very tight public float…