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Gold has been traded between $1,250 and $1,270 so far today…as of 7:45 am Pacific, bullion is up $8 an ounce at $1,264…Silver is 11 cents higher at $19.67…Copper is flat at $3.27…Crude Oil is off 61 cents at $97.79 while the U.S. Dollar Index is down one-tenth of a point to 80.56…

Excellent article this morning by Lawrence Williams at Mineweb (“Gold Flows And Their Huge Potential Market Impact”) which we strongly suggest readers check out at www.mineweb.com…Williams argues that a “severe supply imbalance” is building in the availability of physical Gold due to a shift in buying from west to east, and “If this flow continues at anything like the current rate – and there’s no evidence yet that it is slowing significantly – then the ensuing short squeeze on physical Gold could be devastating for that part of the Gold trade which is heavily short Gold.”

The central banks of Kazakhstan and Azerbaijan continued to increase their stockpiles of Gold in December, as the metal’s price dropped to six-month lows…Kazakhstan’s central bank raised its official Gold reserves 77,000 troy ounces last month, to 4.6 million ounces, according to data yesterday from the International Monetary Fund…Azerbaijan added 32,000 ounces to its now 644,000-ounce reserve which a year earlier had stood at almost nil…the central banks of Belarus and Ukraine were also active buyers last month, lifting their individual reserves by 28,000 ounces and 20,000 ounces, respectively…last month’s purchases appear to have been overshadowed, though, by a possible drop in the official reserves of Russia’s central bank, one of the largest owners of Gold…the central bank holdings of Russia, which has been a regular buyer of Gold in recent years, fell to 30.2 million ounces in December, according to IMF figures show…this number is at odds, however, with data from the bank itself, which last week reported end-of-year Gold reserves of 33.3 million ounces…

Fed Decision Later Today

All eyes are on the Federal Reserve today as it wraps up its two-day meeting with a policy statement at 11:00 am Pacific…this is Ben Bernanke’s last meeting as Fed Chairman, and he won’t be holding a news conference afterward…most analysts expect the Fed to announce another trimming of its bond-buying program but equally important is the language and the tone of the statement, including what the Fed says about the risks to its outlook…watch also for forward guidance regarding the Fed’s future intention for short-term interest rates…

The Potential Affect Of Rising Interest Rates On Government Debt – Bullish For Gold?

In an editorial published through Project Syndicate, Richard Cooper, a professor of international economics at Harvard University, and Richard Dobbs, director of the McKinsey Global Institute, wrote that from 2007 to 2012, the U.S. and European governments saved about $1.6 trillion because of lower interest rates…however, if interest rates were to return to levels seen in 2007 – certainly not an unrealistic expectation over the next couple of years – interest payments on government debt could rise by 20%…

Today’s Markets

Asia

Asian equity markets rebounded overnight after an aggressive rate hike from the Turkish central bank soothed worries over volatility in emerging markets…rate-setters in Turkey blindsided markets after an emergency meeting on Tuesday that concluded at midnight, by delivering a much larger rate rise than economists had expected…Turkey’s central bank raised its overnight lending rate to 12% from 7.75% in its first emergency meeting since 2011…the move is aimed at stemming the lira’s sharp declines and follows yesterday’s unexpected rate hike from the Reserve Bank of India…

China’s Shanghai Composite finished 11 points higher overnight to close at 2050…Japan’s Nikkei surged 404 points or 2.7% – its biggest gain in nearly 5 months, thanks in part to a weaker yen…

Europe

European markets, a little nervous entering today’s Fed decision, are generally down about 1% in late trading overseas…on the data front, the German GfK consumer climate survey for February surprised on the upside…the forward-looking index showed an uptick to to 8.2%, against expectations of 7.6%…this optimism should feed through into the real economy…

North America

The Dow is down 105 points as of 7:45 am Pacific…Wall Street is grappling with less-than-expected earnings outlooks today, and concern about emerging markets as it braces for the Fed’s next move on stimulus…

The TSX is 68 points lower as of 7:45 am Pacific while the Venture is off just 2 points at 957…

Venture 6-Month Updated Daily Chart

As we mentioned yesterday, the Venture’s 32-point slide Friday and Monday was very healthy from a technical standpoint…it was not a big volume sell-off, and it helped to unwind temporarily overbought conditions after a string of 19 positive days out of 22 during which time the Index climbed just over 10%…this market is full of strong support levels ranging from the mid 920’s, but it’s quite possible that yesterday’s intra-day 949 (just 3 points above the 61.8% Fib. support level) will mark the low of this mini-correction…

True Gold Mining Inc. (TGM, TSX-V) Raises Another $45 Million

True Gold Mining (TGM, TSX-V) is under some selling pressure this morning after announcing yesterday that it has arranged a bought deal financing at 40 cents for gross proceeds of $36.6 million…in addition, Liberty Metals & Mining Holdings LLC, a subsidiary of Liberty Mutual Insurance and the company’s largest shareholder, will inject another $8.5 million into True Gold by purchasing 21.2 million units at 40 cents to maintain its pro rata interest (19.9%)…the combined $45 million financing (could go a little higher if the overallotment option is exercised) will be used to allow the company to proceed with its proposed development and construction activities at its Karma Gold Project in Burkino Faso…

The financing is being carried out at a price where there should be strong new technical support for the stock – we’ll see if that holds today – after the recent breakout…below is a 2.5-year weekly TGM chart update from John…TGM gapped down to 39 cents at the open and is currently off 6.5 cents at 39.5 cents, on volume of more than 2 million shares, as of 7:45 am Pacific…

Reservoir Minerals Inc. (RMC, TSX-V) Update

Reservoir Minerals (RMC, TSX-V) continues to push higher following Monday’s news of an initial resource estimate for the high sulphidation epithermal zone (HSE) of mineralization within the Cukaru Peki Copper-Gold deposit in Serbia…the deposit forms part of the Timok Project, a joint venture between Reservoir and Freeport-McMoRan Copper & Gold Inc. (FCX, NYSE)…

The National Instrument 43-101-compliant inferred resource for the HSE zone is estimated at 65.3 million tonnes at an average grade of 2.6% Copper and 1.5 g/t Au, or 3.5% CuEq, containing 1.7 million tonnes (3.8 billion pounds) Copper and 3.1 million ounces Gold…the inferred resource estimate is reported above a 1% CuEq cut-off grade…

The inferred resource includes the high-grade massive sulphide (HGMS) domain containing an estimated 6.8 million tonnes at an average grade of 9.6% Copper and 5.9 g/t Gold (13.1% CuEq) at a 1% CuEq cut-off, and a significant proportion of the semi-massive sulphide domain containing 14 million tonnes at an average grade of 3.2% Copper and 2.7 g/t Au (4.8% CuEq) at a 3% CuEq cut-off…the underlying porphyry-type mineralization has not been modeled at this time due to the lack of drill data and geometrical understanding, and is not included in the resource estimate…

Quite simply, RMC and Freeport have a great deposit on their hands with strong upside potential to increase resources through infill drilling and the likelihood of extensions to the system…in addition, other areas of the Timok magmatic complex (100% held by Reservoir) are highly prospective for fresh discoveries…

Below is a 1.5-year weekly RMC chart from John…RMC is up 3 pennies at $5.94 on light volume as of 7:45 am Pacific…

Canada Carbon Inc. (CCB, TSX-V) Updated Chart

Note: John, Jon and Terry do not hold share positions in TGM, RMC or CCB.