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Gold climbed as high as $1,274 overnight before backing off from that resistance area…as of 7:30 am Pacific, bullion is down $8 an ounce at $1,261…Silver is off 8 cents at $19.83…Copper is flat at $3.27…Crude Oil is up down slightly at $96.50 while the U.S. Dollar Index is up less than one-tenth of a point at 80.46…

Bullion has climbed for five straight weeks, its longest winning streak since September 2012, as stress in emerging markets has been contributing to a reallocation of assets toward safe havens…Gold’s immediate challenge is to overcome important resistance around $1,275 as shown in John’s chart this morning…while bullion has benefited from some short-covering so far this year, the potential for an explosive short “squeeze” clearly exists given the still very high level of short positions in this market…this will be a key week for Gold, especially with the FMOC meeting tomorrow and Wednesday…

Global mints are manufacturing bullion coins as fast as they can to meet climbing demand…purchases of bullion coins at Australia’s Perth Mint rose 20% this year through January 20 from a year earlier…sales by the U.S. Mint are set for the best month since April…

China’s 2013 Gold imports from Hong Kong more than doubled from the previous year to reach a record of more than 1,000 tonnes as a sharp fall in prices led to unprecedented demand…China imported about 1,158.162 tonnes from Hong Kong last year, compared with 557.478 tonnes in 2012, according to a Reuters report this morning…demand for Gold jewellery, bars and coins jumped as Gold prices fell 28% last year, the first annual decline after a 12-year bull run…net Gold flows into China climbed to 94.847 tonnes in December from 76.393 tonnes in November – a strong number to finish off the year…January’s figure could be even higher in the run-up to the Chinese New Year at month-end…

Gold sales by Japan’s biggest bullion retailers surged 63% to a five-year high in 2013…sales of Gold bars to local investors soared to 37.3 metric tonnes from 22.9 metric tonnes a year earlier…

Gold 9-Month Daily Chart

This 9-month daily chart paints a very clear picture of where Gold sits at the moment…once again, it’s up against long-term downtrend line resistance and chart resistance around $1,275…a move through this area would clearly accelerate short-covering and put the bears on the defensive…the ADX trend indicator has turned bullish (+DI/-DI crossover) and buy pressure has picked up significantly, but can the recent momentum continue and ramp up even more to push Gold through $1,275?…we’ll find out soon enough…

Will The Fed Blink?

Many analysts expect the Fed to announce another $10 billion cut in its monthly asset purchases on Wednesday, despite an unexpectedly weak December jobs report and the growing concern regarding emerging markets…during a speech in his hometown on January 14, Charles Plosser, President of the Philadelphia Federal Reserve but not a voting member of the FMOC, stated, “When we started QE…there were many economies and emerging markets and other places that were very critical of our policy. Now that we’re trying to stop it, they’ve been very critical of our policy.  We are aware of those things.  But the way the Fed thinks about it is, if the monetary policy that we have is the best for the U.S. economy, then that’s the policy that we ought to pursue because a strong U.S. economy would be good for most of the rest of the world.”

While many emerging market countries are suffering from capital outflows due to Fed tapering, they’re also hurting because of poor economic policies – Argentina being a classic example – and there’s nothing the Fed can do about that…as Warren Buffet famously said, “Only when the tide goes out do you discover who’s been swimming naked.”

Today’s Markets

Asia

Asian markets started the week on a rough note as emerging markets remained under pressure on fears over a tightening in U.S. monetary policy and credit conditions in China…the Shanghai Composite fell 21 points to close at 2033 while Japan’s Nikkei tumbled 386 points or 2.5%…

Europe

European markets are mostly lower in late trading overseas with the FTSE down 1.4%…

North America

After suffering its worst week (down 579 points or 3.5%) since November 2011, the Dow opened higher this morning but has since given up all those gains and is now down another 6 points through the first hour of trading today…Caterpillar Inc. (CAT, NYSE) posted a stronger-than-expected quarterly profit today as the world’s largest mining and construction equipment supplier aggressively cut costs to offset continued sluggish sales…

In Toronto, the TSX is off 120 points while the Venture has slipped 10 points to 957, 3 points below its 20-day moving average (SMA)…a wide support band exists between about 930 and 960, and the overall uptrend remains firmly intact…

Venture 3-Year Weekly Chart

Below is John’s updated 3-year Venture weekly chart…RSI(14) has pushed above all previous resistance levels encountered since the bear market began in early 2011 – we’ll see if the 50% RSI(14) level now acts as support…

Canada Zinc Metals Corp. (CZX, TSX-V)

Canada Zinc Metals Corp. (CZX, TSX-V) has been a strong performer in recent months and is certainly worthy of our readers’ consideration as 2014 progresses…CZX ran into long-term chart resistance last week and may need to digest its gains with a short period of consolidation, so John has outlined support levels in the event of a pullback…however, how much of a pullback could occur here is the big question…the stock has been very resilient since waking up last June and has seldom fallen below its 20-day SMA, currently at 49 cents…

Canada Zinc is a dominant landholder in B.C.’s Kechika Trough which hosts several known Zinc-Lead-Silver deposits including the company’s Cardiac Creek deposit which has a NI-43-101 resource…Cardiac Creek forms one of CZX’s two 100%-owned projects – the other is the Kechika Regional which holds significant exploration upside…CZX is unchanged at 54 cents as of 7:30 am Pacific…

CZX 3-Year Weekly Chart

Terrax Minerals Inc. (TXR, TSX-V) Update

Terrax Minerals Inc. (TXR, TSX-V) was one of our late December picks to “watch closely” in 2014…TXR just completed a $1.1 million financing at 45 cents and could certainly make some noise as it ramps up exploration at its Northbelt Gold Property which covers approximately 13 km of strike along the prolific Yellowknife Gold Belt…the property is on the northern extension of the geology that contained the Giant (7.6-million-ounce) and Con (5.5-million-ounce) Gold mines…the company has received some interesting results from the re-logging and re-sampling of old drill core in preparation for its own drill program…Virginia Mines Inc. (VGQ, TSX) added to its position in Terrax by taking down just over 20% of the private placement…

Below is a 13-month weekly TXR chart…the next major resistance is at last September’s all-time high of 69 cents…TXR is up 2 pennies at 58 cents as of 7:30 am Pacific…

Silver 6-Month Daily Chart

Silver Long-Term Chart Update

Note: John, Jon and Terry do not hold share positions in CZX or TXR.