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Gold has traded between $1,227 and $1,238 ahead of tomorrow’s start of the important FMOC meeting, the last for outgoing Chairman Ben Bernanke…as of 4:00 am Pacific, bullion is down $9 an ounce at $1,230…Silver (fresh charts below) is off 24 cents at $19.44…Copper is flat at $3.29…Crude Oil is 54 cents higher at $97.14 while the U.S. Dollar Index (see new chart this morning) has fallen one-fifth of a point to 80.00…

A December 6 Bloomberg survey showed 34% of economists believe the Fed will scale back QE this week, a jump from 17% who felt the same way last month…while the Fed will find comfort in the proposed U.S. budget agreement, there are likely more reasons than not for the Fed to keep its pedal to the metal…inflation is still running well below the Fed’s target level, recent improvements in the labor market are encouraging but really need to be confirmed in the months ahead, a U.S. debt ceiling battle is still looming early in the New Year, and emerging markets don’t want to see any tapering just yet from the Fed…

Gold has been showing resilience in the low $1,200’s and the start of Fed tapering has likely already been baked into the current price…hedge funds – notoriously on the wrong side of the trade at key points – are the least bullish on Gold at the moment than they’ve been since the yellow metal was trading at $700 in 2007…so we see strength in Gold going into year-end, due in part to possible short covering…as John’s chart yesterday showed, Gold has been trading within a downsloping wedge since mid-July and it’s currently resting near support with an encouraging RSI(14) trend…bullion does need to break above this downsloping wedge (aggressively through the low $1,300’s) at some point in the near future in order to put the bears on the defensive…the immediate resistance band Gold faces right now is between $1,260 and $1,280…

Tracking The Greenback

As Frank Holmes pointed out in his weekend Investor Alert at www.usfunds.com, the U.S. dollar will no longer be among the best performing currencies in 2014 according to Thomas Stolper, Goldman Sachs’ Chief Currency Strategist…“Stolper, who correctly predicted this year’s dollar weakness against the euro, is challenging the strong consensus built around a stronger dollar next year,” Holmes wrote. “According to Stolper, the dollar will continue to weaken, as any Federal Reserve tapering will be offset by interest rates being kept at about zero. In addition, Stolper is of the opinion that tapering is already priced in, and there seems to be no other source of dollar strength in sight. The dollar strength talk and expectation of higher interest rates has weighed heavily on Gold and commodity prices throughout 2013, and a reversal in consensus will likely result in Gold strength.”

U.S. Dollar Index 2.5-Year Weekly Chart – The Dollar is Doomed

The Dollar Index has performed according to script since breaking below a 2+ year uptrend in September…a technical event that appears increasingly likely, which should help both Gold and the Venture, is a near-term re-test of the 79 area, and an eventual breakdown below that key chart and Fib. support level…the 200-day moving average (SMA) is now in decline and the resistance that has built up between 81 and 82 is severe…the RSI(14) trend is also negative – at 44% on this 2.5-year chart, it still has further to go on the downside…dollar bulls are hoping for some help from the Fed this week, but we doubt they’re going to get it…

Today’s Markets

Asia

China’s Shanghai Composite and Japan’s Nikkei average were each down 1.6% overnight, likely reflecting anxiety over a possible Fed taper…the Shanghai shed 35 points, hitting a one-month low, to close at 2161…HSBC’s flash purchasing managers’ index (PMI) for December fell to 50.5, compared to 50.8 in November…still, the index was above the key 50 line for a fifth straight month…the Nikkei slid 250 points to finish at 15193, close to a one-month low…business sentiment in Japan among large manufacturers rose to its highest level in six years in the three months to December, the closely-watched Tankan survey showed…

Europe

European shares reversed early losses and have turned strongly positive…flash PMI figures released by Markit today showed that business activity for the euro zone as a whole in December was above expectations…

North America

Stock index futures in New York are pointing toward a strong open on Wall Street…

CDNX 3-Year Weekly Chart

We’ll see if the Venture today can reverse an interesting trend since late October…the Index has declined on seven consecutive Mondays (it has also posted gains on six consecutive Fridays)…below is John’s updated 3-year weekly chart that we’ve been tracking consistently the last few months…the downtrend line which served as powerful resistance for more than two years (the Venture finally overcame this barrier in October) continues to provide support, a very encouraging sign…we have every reason to believe that this will continue, especially since we’re very close to entering a period of seasonal strength for the Index – mid-late December plus January and February…any weakness the first two or three days this week will likely be the last gasp of tax-loss selling, a great opportunity to pick up bargains in advance of what we expect will be a strong finish to the year…despite the 5% drop this month, the Venture’s CMF indicator is showing significant accumulation…shares are moving from weak hands into strong hands…

Madalena Energy Inc. (MVN, TSX-V)

One energy play that we have been consistently putting forward in recent months continues to look very strong entering 2014…Madalena Energy (MVN, TSX-V) hit a new 52-week high of 68 cents Friday, the first of three Fib. resistance levels John has shown…below is an updated 2.5-year weekly chart…Madalena is very active with a large land base of over 150 net sections (100,000+ net acres) in the Paddle River area of west-central Alberta with increasing production and reserves on three horizontal plays…the company also has very attractive assets in Argentina where it’s focused on the multi-billion barrel potential of three large blocks within the “sweet spot” of Argentina’s prolific Neuquen basin…as always, perform your own due diligence…

Garibaldi Resources Corp. (GGI, TSX-V) Update

Garibaldi Resources (GGI, TSX-V) last Wednesday announced impressive channel sampling results and the start of drilling at its La Patilla Gold Property in Sinaloa State, Mexico…upon a detailed review of the assay results (up to 28.4 g/t Au) and the geological maps released by the company, we’re in the midst of preparing a special report that we’ll be posting later this week…the numbers are solid and suggest a potentially robust volcanic package featuring a mineralized breccia and stockwork system in strongly fractured rhyolite and andesite…this property has never been previously diamond drilled, and artisanal miners have had success finding high-grade Gold…between La Patilla, pending assay results from a recent hole completed at the Locust target at the company’s Tonichi Project, and an anticipated “big overview” picture from GGI that should provide very interesting fresh insight into the Grizzly Property in northwest B.C., investors should have plenty to chew on and speculate about in the coming weeks…we’re also checking into reports that Carlos Slim’s Minera Frisco is carrying out an extensive drill program to follow up on a discovery at its Venus Property contiguous to the eastern border of GGI’s Iris Project which is strategically located next to two operating mines (Pinos Altos and Ocampo) in Chihiahua State…GGI has drill-ready targets at Iris…

Xmet Inc. (XME, TSX-V)

We’re blessed with some astute readers at BMR, and some of them found a gem in Xmet Inc. (XME, TSX-V) which has rocketed from 1.5 cents at the beginning of November to Friday’s close of 14.5 cents…volume Friday totaled 7.4 million shares (all exchanges)…the geological and structural features of XME’s claim blocks appear to be similar to nearby Zenyatta Ventures’ (ZEN, TSX-V) Albany hydrothermal graphite deposit…

Below is a 3.5-year weekly XME chart from John at the request of some readers (Fib. levels, of course, aren’t price targets, just theoretical levels based on Fib. and technical analysis)…a long-term resistance band exists between 15 and 17 cents, while the first Fib. retracement level is 10 cents…expect continued volatility but this will be interesting to watch…

Silver Short-Term Chart

Silver has been testing support around $19.50, and the RSI(14) pattern on this 6-month daily chart is encouraging – suggesting that this support will hold…

Silver Long-Term Chart

Historically, Silver has been a terrific buy anytime RSI(14) levels on this 13-year monthly chart have been this low…has a “Wave #1” started?…

Note: John and Jon both hold share positions in GGI.