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Gold has traded between $1,201 and $1,215 so far today…as of 8:00 am Pacific, bullion is flat at $1,210…Silver is up 14 cents at $16.57…Copper has added 4 pennies to $2.96…Crude Oil is off 85 cents at $67.53 while the U.S. Dollar Index has retreated more than half a point to 88.35 after some strengthening in the euro following a European Central Bank meeting and comments by Mario Draghi…

ECB President Draghi today said the governing council will decide early next year whether its current policies are sufficient to raise inflation toward its target, and noted the decline in Oil prices may make that objective more difficult to attain…outlining new, lower forecasts for economic growth and inflation over the coming 2 years, Draghi said that should the council conclude its policies aren’t sufficient to end a period of very low inflation, that would “imply altering the size, pace and composition of our measures.”

The ECB today left its key interest rates unchanged at record lows, reinforcing its position that borrowing costs cannot go any lower despite inflation weakening further below the bank’s target…the euro remained steady around $1.23 after the ECB left its main interest rate, the cost of borrowing at the central bank’s regular loans, at 0.05%…it also left its deposit rate at –0.2%, meaning banks continue to pay for parking excess reserves at the central bank…the ECB’s stimulus measures so far seem to be having little effect in terms of kick-starting the euro zone economy or stoking inflation…some top members of the ECB’s 24-member Governing Council have voiced openness to large-scale purchases of sovereign bonds, known as quantitative easing, and Draghi’s comments during his news conference today suggested the ECB may go in that direction early in the New Year…

Starbucks Turns To The Lure Of Gold

Starbucks is jumping on the Gold bandwagon over the Christmas holiday season…until January 5, U.S. and Canadian customers who participate in the “It’s a Wonderful Card Ultimate Giveaway” will have the chance to win an exclusive 10 karat Gold Ultimate Starbucks card…according to the company, the cardholders will be part of history as only 14 Gold cards will be made, “making it the most exclusive Starbucks card ever made.”  Each card, which will be engraved with the customer’s name, will be good for 1 free food or beverage item every day for the next 30 years, which works out to about $50,000 worth of Starbucks goodies…

Today’s Equity Markets

Asia

After years of estrangement, China’s small investors are rushing back into stocks, driving a rally that has made the Shanghai the top-performing major market in the world this year…Chinese stocks bolted higher again today to record their best 1-day gain since 2012, adding juice to a 7-month rally that has brought 1 of the world’s biggest markets back to life after years of dismal performance…this is all occurring in the midst of the slowest pace of economic expansion in more than 5 years…however, Beijing’s surprise move to cut interest rates last month has attracted fresh cash to the market, along with the opening of a trading link with Hong Kong that allows more stock investment by foreigners…

The Shanghai soared 121 points or 4.35% overnight to close at 2900, just 100 points below important technical resistance…the Shanghai has now leapfrogged India as the world’s top-performing index so far this year…the market has charged higher in 10 of the past 11 trading days, notching up record trading volumes this week and gains this year of 37%…meanwhile, Japan’s Nikkei average extended gains into a 5th session, tracking movements in the currency as the yen weakened to a new 7-year low vs. the greenback…

Europe

European markets are down significantly in late trading overseas due to disappointment over the outcome of the ECB meeting…

This should prove interesting – Russian President Vladimir Putin is due to deliver his annual Presidential address to the Russian Federal Assembly today…no doubt he’ll find ways to blame the West for his country’s problems…Putin’s speech will be keenly watched as Russia’s currency tumbles and the economy struggles on the back of the decline in the Oil price and sanctions on the Putin regime for its incursions into Ukraine…

North America

The Dow is down 83 points as of 8:00 am Pacific…fewer Americans filed for unemployment benefits last week, with jobless claims falling by 17,000 to 297,000, according to the Labor Department…non-farm payrolls for November will be released tomorrow…

The TSX is off 173 points while the Venture has fallen 8 points to 714 (next support around 710) as of 8:00 am Pacific…

Bank of Canada Governor Stephen Poloz says a broad and sustained economic recovery may finally be at hand…Poloz acknowledged yesterday that the economy is stronger than he thought, in large part because exporters are feasting on the resurgent U.S. economy and a lower Canadian dollar…as expected, the central bank kept its key interest rate unchanged at 1%, extending the longest period of rate stability since the early 1950’s.  “Canada’s economy is showing signs of a broadening recovery,” the central bank said in its final rate-setting announcement of 2014. “The hoped-for sequence of rebuilding that will lead to balanced and self-sustaining growth may finally have begun.”

Gold Updated Chart

Gold’s current technical posture suggests that the metal is gearing up for another leg higher…this would catch many investors off guard, as overall sentiment toward Gold remains negative despite Monday’s dramatic move that many pundits seem to be shaking off as an insignificant “anomaly”…

There are several important takeaways regarding this 1-year weekly chart…

1.  Take note of the “True Strength Index” at the bottom of this chart – it is ideally positioned for a near-term bullish crossover, similar to the situation that occurred at the end of last year/beginning of 2014…

2.  RSI(2) divergence with price – RSI(2) has been in an overall uptrend since bottoming in September despite Gold’s fall to a multi-year low in early November…if the current trend continues, expect RSI(2) at some point to push into overbought territory for an extended period as it did 3 times earlier this year…

3.  -DI appears to have peaked at the same time as Gold bottomed around $1,130…

4.  We’ve seen a consistent string of white candles on high volume over the past several weeks…

5.  Gold seems to have enough energy to push through key resistance at $1,220 which would bring in a wave of fresh buying – the $1,220 level is the top of a downtrend line that bullion may overcome shortly…

TSX Gold Index Updated Chart

Gold producers are looking bullish as well based on this 6-month daily TSX Gold Index chart…accumulation since early November has been robust…

Once the Gold Index overcomes a key band of resistance between 155 (the 50-day moving average, SMA) and 160, the race is on to higher levels which ultimately could mean a challenge of the 200-day SMA currently at 182 (don’t look at just the producers in the TSX Gold Index, search for profitable smaller producers with earnings momentum such as Richmont Mines, RIC, TSX)…

WTIC Updated Chart

The possibility of $50 Oil at some point in 2015 certainly can’t be ruled out given the current supply glut which is not expected to ease anytime soon despite the nearly 40% drop in prices since the early summer…in addition, it’s clear the Saudis are going after market share as they continue what’s likely to be a long-term price war against North American shale producers…today, the Saudis slashed their January prices in both the U.S. and Asia…the Saudis are low-cost producers and they’ve used the good times in Oil to build up huge foreign exchange reserves – they can easily survive an extended period of weak prices…however, they might be underestimating the resolve and entrepreneurship of many U.S. shale players…

While some major technical damage has been inflicted on WTIC, starting with the breach of long-term uptrend support, oversold conditions have clearly emerged during this 4th quarter which ultimately could lead to a rally into the $70‘s…the bearish trend for now appears to have peaked, but Crude will have its challenges in 2015 (and will likely see new lows) with a chart like this…

December Bottom-Fishing Opportunities

Radius Gold Inc. (RDU, TSX-V)

Radius Gold (RDU, TSX-V) became a great bargain in December of last year, and we anticipate the same will hold true this time around…RDU closed at 6.5 cents yesterday for a market cap of just under $6 million, though the company reported a working capital position of $10 million (including $3.2 million in cash) as of September 30…Radius, led by Simon Ridgway, is focused on Gold and Silver opportunities in Central America, Mexico and Idaho…

This 10-year monthly chart shows RDU is sitting very close to long-term support at 6 cents…that level also represents the top of the downtrend line that RDU broke out from at the beginning of this year…it’s not unusual to see a retest of the downtrend line which is what is occurring now…

GoldQuest Mining Corp. (GQC, TSX-V)

The International Speculator has given up on GoldQuest Mining (GQC, TSX-V) but we haven’t…GoldQuest has been around a long time and has some valuable assets…the company is also still armed with a net cash position of more than $5 million, so they won’t be disappearing anytime soon…historically, GoldQuest has always been a smart speculative buy under a dime for patient investors who are looking for potentially huge leverage on a “whopper” of a drill hole…2014 has been a disappointing one in terms of exploration results for GQC in the DR, but they still have many exceptional targets that have yet to be tested…

On John’s 10-year monthly chart, you can see that GoldQuest’s long-term support band is between 6 and 8 cents…that’s an inexpensive lottery ticket with a great chance of paying off big-time at some point during 2015…as always, perform your own due diligence…

Note:  Jon holds a share position in RIC.