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As we mentioned this morning, a market will take the path of least resistance.  The grinding, consolidating action in the Venture Exchange over the last couple of months finally gave way to an event we’ve been predicting for a while – a move through resistance at 1200, the first time in 27 sessions the Index has closed above this level.  This is additional evidence that “sellers’ exhaustion” has occurred with the Venture and that bodes well for better days ahead.  The bearish trend has broken down significantly.

This morning, we showed you a 12-year chart from John that highlighted why the bullish case makes so much sense with the Venture at the moment.  Tonight, John has a four-month chart that should be music to everyone’s ears as the Venture has finally overcome resistance at 50 on the RSI.  Other indicators are looking strong as well.

Keep in mind that a rising tide over the next month or two, or even for the balance of the year, will not necessarily lift all boats.  Focus on the companies that have been the most active and are generating solid results and have either made a discovery or have an excellent shot at one – GoldQuest Mining (GQC, TSX-V), Rainbow Resources (RBW, TSX-V) and Comstock Metals (CSL, TSX-V) are just three situations we’ve been following.  Each has strong fundamentals and a powerful chart in its favor, and all three show potential for major moves over the short term (the next several weeks).

Welcome to our site, or at least the initial version of it!  BMR has been online for nearly three years and strictly through word-of-mouth we have built a loyal following. 

We’re continuing with our plans to ultimately build a very unique investment and money-management resource site that goes considerably beyond what we have now.  While we focus a great deal on the Gold and Silver markets and trends in the global economy, and of course the technical health of the TSX Venture Exchange (CDNX), an important component of this site will always be original research on undiscovered junior exploration companies or small producers, mostly in the Gold and Silver exploration space, that offer very real and significant upside potential. We are extremely selective in the companies we feature and put forward to investors – we prefer quality over quantity.  However, investors must understand that these are still highly speculative situations and entail considerable risk, volatility and unpredictability.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. Always perform your own due diligence and please read our disclaimer at the bottom.

We use a combination of fundamental and technical factors in determining the value and potential of a stock.  In terms of fundamentals we look for a company with a superb project supported by strong management.  Management must possess integrity, solid ethics and a determination to succeed and build shareholder value.

At BullMarketRun (BMR) we approach the handling of money from a biblical perspective and this is an important topic we will be sharing with our readers (and listeners) as the site continues to develop. The Bible teaches so much about money and how to handle it and invest it –  there are literally thousands of verses on how we should handle the money and possessions that God entrusts us with.  By examining the life of Jesus and reading the Word of God, we can all become fully equipped to be successful investors and handle money wisely.  If it’s the other way around –  if you’re a slave to money by being in debt for instance, or if you don’t respect the value of money and spend it foolishly –  you’re in trouble and you’ll never be blessed financially.  We have a God who thinks big – He created the universe – and He wants us to think big  in every area of our lives.  When we handle money from a Biblical perpective (His money that we have been given stewardship of) He will bless our financial decisions and an increase of tenfold or a hundredfold is always possible.  This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life.  It is the most important decision you’ll ever make.

God Bless,

Terry Dyer

Owner/Publisher, www.BullMarketRun.com

Disclaimer:

BullMarketRun.com (BMR) is completely independent from any companies it covers.  BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site.  We accept no advertising either.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company. We strongly recommend that you consult with a qualified investment adviser, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions. The stocks we cover, by definition, are highly speculative and potentially very volatile. Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks.  We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.  Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.

Forward Looking Statements:

All statements in BMR’s reports, other than statements of historical fact, may be forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.

Gold was under some mild pressure again overnight, falling as low as $1,589…as of 5:45 am Pacific, however, the yellow metal has recovered to $1,599 where it’s now even for the day…Silver is off its lows and is now down just 8 cents to $27.75….Copper is down a penny at $3.35…Crude Oil has slid 38 cents to $93.05 while the U.S. Dollar Index has gained just over one-tenth of a point to 82.67…

Today’s Markets

Asian shares ended lower overnight though overall volume was lighter than usual with no trading in South Korea or India due to public holidays…yesterday’s better-than-expected U.S. retail data discredited the argument that the U.S. economy is sliding rapidly toward recession, and raised questions about the likelihood of fresh Fed stimulus by next month…that’s an argument that will regularly go back-and-forth, however, and new data out this morning (New York manufacturing) was rather weak…China’s Shanghai’s Composite ended down 1.1% at 2119, its lowest close in two weeks…European markets are mildly lower in quiet trading today while stock index futures in New York are as of 5:45 am Pacific are pointing toward a slightly negative open on Wall Street…

Venture Exchange – Long-Term Chart

Below is a fascinating monthly Venture Exchange chart from John that goes back a dozen years and shows how the Venture has been consolidating within a long-term support band (approximately 1150 to 1250) over the past two months which coincides with the Fibonacci 23.6% retracement level…a couple of things really stand out with this chart…first, take a look at the monthly RSI(14) which importantly is just now beginning to reverse to the upside…it has been at its lowest level since 2000 with the exception of the 2008 Crash…also, the CMF (Chaikin Money Flow) indicator is almost at its Crash low while the bearish -DI is now weakening after nearly touching its 2008 high…this paints a picture of a market that has bottomed out…the grinding, consolidating action we’ve seen over the past couple of months is very bullish and every investor desperate to sell out of fear has essentially sold…the last nervous nellie, so to speak, has left the room…any market will take the path of least resistance, which is why we believe the likelihood of an upside breakout far exceeds the possibility of a new low…the recent tightening of the Bollinger Bands suggests a sharp move will occur in the very near future…so stay tuned and don’t change the channel, as they say…the Venture closed at 1197 yesterday…it will begin to gain some traction once it can close above the 1200 level…

The Venture Exchange is very sensitive to movements in the commodities markets, and the recent strength in the Canadian and Australian currencies bodes well for commodities over this second half of 2012…the chart below shows how the Australian Dollar (vs. the Japanese Yen, black line) and the Canadian Dollar (vs. the U.S. Dollar, blue line) continue to perform well after bottoming out at the end of June…

Comstock Metals (CSL, TSX-V)

We’ve been tracking Comstock Metals (CSL, TSX-V) since late last month when it reported some really outstanding initial trenching results from its QV Project in the White Gold District of the Yukon (3.74 g/t Au over 75 metres with very consistent mineralization throughout)…the company also recently reported very encouraging soil sampling results…volume in the stock has been strong and the company also just completed a $1.3 million financing…with approximately 50 million shares outstanding, and the stock in all-time high territory, CSL could be in for a really strong September if it can continue momentum on the ground…technically, the CSL chart overall looks very powerful but the overbought RSI(2) suggests it may not be ready just yet for another explosion to the upside…keep a close eye on this one, however, as any weakness would have to be considered an excellent accumulation opportunity…

Gold Bullion Development (GBB, TSX-V)

It’s been a while since we’ve done a chart update on Gold Bullion Development (GBB, TSX-V) but the stock has been mentioned rather frequently recently in our comments section, so here goes…the stock has gained ground the last couple of trading sessions and the volume yesterday was the highest in several months as GBB gained half a penny on over 1 million shares (all exchanges)…as outlined by John below, a breakout requires a confirmed close above 11 cents while a strong band of resistance exists between 15 and 18 cents…we continue to have great confidence in the Granada Gold Property but GBB needs to show it can execute efficiently on the ground…requires some good news to rebuild confidence and gain some serious traction…

Note: Jon, John and Terry do not hold share positions in CSL.  Terry holds a position in GBB.

Gold traded as high as $1,618 this morning but has since retreated after U.S. retail sales figures and inflation data were released…as of 6:00 am Pacific, the yellow metal is down $14 an ounce at $1,596…Silver is 11 cents lower at $27.72…Copper is up 2 pennies to $3.36…Crude Oil had added 31 cents to $93.04 while the U.S. Dollar Index is up slightly at 82.48…

Today’s Markets

Asian shares were higher overnight while European markets are showing modest gains…stock index futures in New York are pointing toward a positive open on Wall Street…U.S. retail sales rose much more than expected in July – 0.8% – while producer prices climbed at the fastest pace (0.3%) in five months…

German Growth Exceeds Expectations But Euro Zone Still Contracts

The euro zone edged closer to recession after a resilient economic performance from Germany and France failed to stop the single currency bloc from contracting in the second quarter…gross domestic product in the euro area shrank 0.2% in the three months to June, compared with the previous three months when there was no growth, as the economies of Greece, Italy, Spain and Finland contracted sharply…robust investment and domestic consumption helped the German economy expand 0.3% in the second quarter, beating expectations of just 0.1% growth, while French GDP remained unchanged, avoiding a highly anticipated contraction…the Netherlands also outperformed forecasts, growing 0.2%…many bullish traders seem to consider the European figures to be just what they need…meek but not bad enough to spook the market. Better than expected, but not so much that they reduce the chances of more central bank help in coming months…

Venture Exchange

Our main message this morning is that something is brewing with the Venture Exchange, as it appears to have reached the point of total sellers’ exhaustion…be prepared for a breakout to the upside in the near future as the bulls are regaining control after losing it in March…John’s latest chart shows a weakening bearish trend, a Bollinger Band squeeze, a bullish RSI pattern, and a market that’s trading above its EMA-20 for the first time in several months…while we have yet to see a major buying push, what does appear to have occurred is total sellers’ exhaustion…this is the opposite, of course, of buyers’ exhaustion at a top which is what occurred in early 2011…so there is no better time to be positioned in quality plays than right now in our view…it’s important to note that a rising tide will not lift all boats, however, so we strongly urge you to focus on the companies who have been the most aggressive and successful in this market since the spring and have exploration programs in progress – they will move the most (by far) in the coming weeks…a 20% rise in the Venture, should it occur, will result in 50% to 100% gains and better for numerous stocks…the last several months have been agonizing for many investors but now could be a great time to make some hay…

It seems certain now that selling pressure can no longer drive this market to new lows, and the next major move is to the upside…that’s what the Venture chart is telling us…yesterday’s action was a great example of how the bearish trend continues to weaken dramatically…on a day when Gold, Silver and Copper were all down, in addition to both the Dow and the TSX, the Venture Exchange climbed 6 points to 1197…once it pushes through 1200, the Venture can start to gain some serious traction…that’s the key level it needs to get above at this point…

Canamex Resources (CSQ, TSX-V)

The companies that will perform the best in a late summer/fall rally will be the ones that have been outperforming the market recently and are being aggressive with their exploration…investors will reward the companies that come out with excellent results – and we’ve seen several examples of that over the past few months when the Venture was really struggling…one situation – a volume leader – to keep a close eye on is Canamex Resources (CSQ, TSX-V) which just completed a nearly $3 million financing, one reason the stock has been in a consolidation phase after a huge run-up that was triggered by a powerful drill result (118 metres grading 4.08 g/t Au in Nevada)…patience is important with this one as another strong wave to the upside could follow in the coming weeks…below is an updated CSQ chart from John…

Newstrike Capital (NES, TSX-V)

The value of Newstrike Capital (NES, TSX-V), which has an outstanding Gold project (Ana Paula) in Mexico, has been chopped in half from its February high of more than $3 per share…it does appear to have bottomed out since late June and a rally back up to the rising 500-day moving average around $2 per share would be a 30% jump from yesterday’s closing price of $1.55…below is an updated NES chart from John…

Note: John, Jon and Terry do not hold positions in CSQ or NES.

Gold has traded in a narrow range overnight between $1,620 and $1,627…today we’re watching if Gold can confirm a breakout through resistance at $1,620…as of 5:30 am Pacific, the yellow metal is up $1 an ounce at $1,622…Silver, which outperformed Gold last week, is off 9 cents at $28.04…Copper is down 3 pennies at $3.35…Crude Oil is up 69 cents at 93.56 while the U.S. Dollar Index is down one-quarter of a point to 82.37…

We’re now in the midst of a period of seasonal strength for Gold and of course Gold stocks…March to July tends to be not nearly as strong as the August to December period with September and November typically being the best months of the year…below is a chart showing the average monthly returns for Gold over the the decade between 2002 and the end of 2011…

August, meanwhile is the hottest month of the year for Gold stocks – and that’s how this month is shaping up – based on the average monthly returns for the NYSE Arca Gold Bugs Index…

Silver – Beginning Stages Of A Powerful Wave 5 Move?

Regular readers know that we are strong Silver bulls at BMR – in fact Silver could easily outperform Gold in the year ahead even though the yellow metal could surge to a new all-time high, which is one reason we’ve been concentrating a lot on various Silver plays including of course Rainbow Resources (RBW, TSX-V) which is currently drilling for a high-grade, near-surface discovery in a prolific area – the West Kootenay region of British Columbia…

Below is another updated and fascinating long-term Silver chart from John that shows a powerful “Wave 5” move in the metal could now be underway (the $78 an ounce projection is based on Fibonacci analysis and has no time frame at the moment…we remind our readers that John correctly called the surge to $50 last year and the temporary top)…notice how RSI(2) recently bottomed – as predicted – and how support at $26 has been so strong…

Silver has definitely stabilized above key support at its September and December lows, and the Bollinger Bands (not shown in the above chart) have pinched in close in recent weeks (just like with the Venture Exchange) – a development that usually precedes a very significant move…in this case, that could mean an initial surge that carries Silver past important resistance beginning at $29 an ounce ($32 is also a key level)…

Recent COT reports show that big speculators (dumb money) have been exceptionally bearish on Silver recently – at levels reached only four times since the Silver bull market began a decade ago…Silver embarked on an impressive rally each time the big speculators were this bearish in the past – CLIMBING AT LEAST 70% – and there’s no reason to believe that this time should be any different…in addition, the current Gold-Silver ratio (58:1) from an historical perspective makes Silver that much more attractive at the moment…

A few interesting notes about Silver demand and supply (based on figures from the Silver Institute and Thomson Reuters GFMS, a leading research company based in London):  Global Silver mine production in 2011 was only 28% higher than it was in 2002 (761.6 million ounces vs. 594.5 million ounces) while net government sales have decreased from 59.2 million ounces in 2002 to 11.5 million ounces in 2011…fabrication demand is up only 4% from 2002 levels (though new uses for Silver are coming into play) but investment demand has exploded – from under 1 million ounces to 164 million ounces last year…a lot more people want to own Silver, and much of this demand is coming from Asia…this is what will help propel Silver much higher going forward…

It’s also interesting to point out that after a recently subscribed $200 million offering of new units by the Sprott Physical Silver Trust, and with the associated greenshoe being fully taken up by the underwriters, Sprott will be in the market looking to acquire some 8 million plus ounces of physical Silver to fulfill the mandate of the trust…when Sprott launched the Physical Silver Trust, securing 15 million ounces, it took a full three months before delivery of the metal was received and, according to Sprott, some of the delivery had not even been mined when the order was put in…

Venture Exchange – Seller Exhaustion?

Our assumption is – and the chart evidence supports this – that “seller exhaustion” seems to have set in with the Venture Exchange over the last couple of months…everyone who has wanted to sell – out of fear or simply because they’ve given up on this market – has likely sold, which means selling pressure can no longer take the trading to new lows…on the other hand, buyers aren’t exactly tripping over themselves at the moment to scoop up cheap shares but we do believe the “smart money” has been quietly accumulating (and that’s a view shared by some long-time and very successful traders/investors we’ve spoken to in recent weeks)…

A strong clue that a significant move in the Index is about to occur is contained in John’s latest CDNX chart that shows a tightening of the Bollinger Bands…the bear trend is definitely weakening, so a “BB Squeeze” does suggest to us that an upside breakout is imminent…a rising tide will not lift all boats…stick with the companies that have been aggressive this year in their exploration efforts with good results – companies with solid charts that will be in full stride as the turnaround gains traction…we have been following some of them closely over the last couple of months…

Huldra Silver (HDA, TSX-V)

Huldra Silver Inc.’s (HDA, TSX-V) Treasure Mountain Mine 30 kilometres northeast of Hope, British Columbia, could turn out to be a cash cow if Silver performs as expected over the coming months and beyond…we’ve mentioned Huldra on several occasions this year and it has continued to hold up well as it gets set to go into commercial production shortly…this past spring, the company received a mining lease and a B.C. Mines Act permit approving a mine plan and reclamation program for Treasure Mountain, along with an amended permit approving construction and operation of a processing plant (construction is expected to be mostly complete by the end of this month) at the company’s mill site in Merritt…the mine plan is for the removal of 60,000 tonnes per year of silver/lead/zinc from the underground mine and the transfer of mill feed to the Merritt facility, just over an hour’s drive to the north, for processing…the total NI-43-101 indicated resource is 33,000 tonnes grading 24.2 opt Ag, 4.16% Pb and 3.80% Zn, while the inferred resource is estimated to be 120,000 tonnes grading 27 opt Ag, 2.79% Pb and 4.36% Zn (using a 10 opt Ag cut-off) with opportunities for expansion…the tonnage is low but the high Silver grades should allow the company to mine between 1.5 million and 2 million ounces per year plus base metals (1.5-metre mining width)…Huldra currently has approximately 44 million shares outstanding after just completing a nearly $10 million financing…HDA closed last week at $1.34 and is currently testing triangle resistance as shown in John’s chart below…a confirmed break above this triangle would be a very bullish development…

Rainbow Resources (RBW, TSX-V)

In southeastern B.C., Rainbow Resources (RBW, TSX-V) has commenced drilling at its International Silver Property where the company is pursuing a high-grade, near-surface deposit…the province’s next Silver discovery could very easily come from the International which has never been previously drilled despite strong historical data and highly encouraging prospecting results from Rainbow and Braveheart Resources Canada Inc. (the private company acquired by Rainbow last fall) since 2007…what really jumped out at us late last week, however, was Fugro airborne survey information released by Rainbow that shows excellent potential for a huge expansion of the mineralized trend (from 1.2 kilometres to 7 kilometres)…while drilling is underway, at a known high-grade exposed structure, RBW prospectors and geologists will be checking out half a dozen high-priority areas well beyond the area that is currently being drilled…it seems others are now waking up to the opportunity in Rainbow as a respected U.S. newsletter writer (Jeb Handwerger) picked up on the story at the end of last week…RBW has a lot going for it (Silver, Gold and flake graphite) but everyone’s attention at the moment is squarely focused on the International, and for good reason – drilling into massive galena is typically a recipe for success…below is an updated RBW chart from John which now shows a “Wave 5” Fibonacci level (RBW is currently in Wave 3)…

Cap-Ex Ventures (CEV, TSX-V)

Cap-Ex Ventures (CEV, TSX-V) reported solid initial results this morning from a minimum 15,000-metre drill program within the Greenbush Zone at its Block 103 iron ore property in Labrador…twelve holes intersected intervals ranging from 64.0 to 216.4 metres of 26.7% to 30.2% total iron all on a single, 2,050-metre-long drill line (located just over 1 kilometre southeast of line one)…consistent grades and thicknesses of iron ore bode well for the first NI-43-101 resource estimate for a portion of the Greenbush Zone expected by the end of the year…

Copper Market Holding Up, Thanks To China

Copper bulls waiting for a magic bullet from China to shore up the metal’s price have been left disappointed…recent data from China – specifically industrial production and import data – continue to point to sluggish demand in a market dogged by high inventories…but analysts say the high stockpiles – about one to two million metric tons of Copper are estimated to be sitting in China’s warehouses – pale in comparison to China’s continued appetite for the metal widely used in the production of electrical wires, roofing and plumbing and industrial machinery…“That has to be put in context that over the next 5 years, China will probably consume 50 million tons of copper,” Andrew Keen, Head of Metals and Mining Equity Research for Europe, the Middle East and Africa with HSBC, told CNBC Asia’s “Squawk Box” this morning…“So there is a major strategic shortfall in the copper market from a Chinese perspective and those warehouses are really part of that longer-term solution…we don’t think it’s a big problem for the copper market going forward”…China consumes about 45 to 50% of global Copper demand and makes up only 8% of supply, Keen added, meaning that the market for the metal is “structurally” tight…

Today’s Markets

Mainland China stocks tumbled this morning, with the Shanghai Composite Index off 33 points or 1.5% to 2136, leading Asia markets lower, on some investor disappointment Beijing officials didn’t ease monetary policy over the weekend…adding to pressure on the downside, Bank of America Merrill Lynch this morning cut its 2012 growth estimate for China to 7.7% from 8%, which comes on the heels of similar moves by other brokerages…the investment bank also cut estimates for third and fourth quarter expansion, citing constraints to further policy easing…European shares are mixed this morning while stock index futures in New York as of 5:30 am Pacific are pointing toward a flat to slightly positive open on Wall Street…

Japan GDP Growth Slows

Japan’s economy grew by just 0.3% in the second quarter, much lower than expected, as weak exports and industrial production dragged down a surge in public investment in the areas affected by the March 2011 earthquake disaster…preliminary data today indicated annualized growth of 1.4 per% between April and June, a significant fall from the upwardly revised 5.5% between January and March, and well short of the 2.3% growth rate anticipated by economists…while quarterly growth of 0.3% in the second quarter is better than many other developed nations around the world, it shows that the world’s third-largest economy has struggled to shake off the effects of a high yen and faltering growth in key export partners such as China and the European Union…although few foresee any Japanese recession for now, the findings may put additional pressure on the already hard-pressed government and central bank to do more to bolster the recovery…solid growth is considered essential for the nation’s policy priority of raising taxes to mend its battered public finances…

TSX Venture Exchange and Gold

Not much changed with the Venture over the past week, a shortened 4-day trading period due to the Monday holiday, other than the fact the Index slowly continues to gather internal strength.  The Bollinger Band squeeze, as shown in John’s chart, suggests that a significant move will likely occur within the very near future.  Our belief, based on the technicals and the bullish chart patterns in Gold and Silver, is that the Venture will stage a breakout to the upside after “crawling along a bottom” for the past couple of months.  Helping this cause would be continued good exploration results.  We’ve seen several companies report excellent holes recently as well as other promising data, including of course GoldQuest Mining (GQC, TSX-V) with its Romero discovery in the Dominican Republic.

The Venture was up a very modest 4 points for the week, closing Friday at 1191 which puts it 2 points above the EMA-20 resistance.  RSI(14) is also now at resistance, so the market has to decide rather quickly which direction it wants to go.  A convincing move through the 1200 level is the sign we’re looking for to confirm that a new uptrend has started.

ECB, Fed Action

The Venture will respond well to strong action from the ECB and the Fed, and both central banks are expected to make a lot more noise in September.  Since July of last year, the ISI (International Statistic Institute) has reported that 228 stimulative monetary and fiscal policy moves have been initiated around the globe but what we’ve witnessed so far has perhaps only been the warm-up act.  Historically, we’ve also arrived at Gold’s peak performance period of the year. Based on 10 years of data, Gold bullion has historically increased 2% in August and 4% in September while Gold stocks have often fared much better.  So the “backdrop” looks promising for the Venture, and we already know that a lot of cash is sitting on the sidelines waiting to pile in.  A rising tide will not lift all boats initially, so it’s important to focus on the best quality situations.

Gold

It was a good week for Gold as the yellow metal gained $17 an ounce to close at $1,621.  Gold’s ability recently to hold the $1,600 level has been encouraging, and the key resistance it needs to overcome is between $1,620 and $1,640.  We’re convinced a breakout will occur but exact timing is anyone’s guess – likely, it would seem, by early September. Below is John’s updated Gold chart which offers a lot of encouragement – the recent break above the “neckline”, and a subsequent successful test of support at that level, was highly significant.  This is a great-looking chart:

Silver is also looking strong.  It gained 34 cents last week to close at $28.13 (resistance at $29).  In our Morning Musings tomorrow, John will once again update his long-term Silver chart.  Copper added a penny to $3.38.  Crude Oil gained another $1.47 a barrel to $92.87 while the U.S. Dollar Index added one-quarter of a point to close Friday at 82.55 (Gold lately has been ignoring strength in the greenback which is very bullish).

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, Gold is being driven by both the Fear Trade and the Love Trade.  The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, is having a huge impact on Gold.

The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, governments and world leaders in general, an environment of historically low interest rates and negative real interest rates that won’t end anytime soon (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), money supply growth, massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on.  Massive central bank intervention appears increasingly likely to prevent a breakup of the euro zone and to kick-start the global economy.  It’s hard to imagine Gold not performing well in this environment.

Gold has been under slight pressure overnight but has bounced off its lows…as of 6:05 am Pacific, the yellow metal is down just $2 an ounce at $1,615 after falling as low as $1,603…Silver is 35 cents lower at $23.79…Copper is off 4 pennies to $3.37 after some weak Chinese economic data…Crude Oil is down $1.30 a barrel to $92.06 while the U.S. Dollar Index is up one-tenth of a point to 82.76…

It has been a little while since we’ve looked at Silver – below is an updated chart from John that shows some steady progression.  Patience is the name of the game.  The EMA-20 is rising and now provides support, just one of several positive indicators.  A major breakout at some point during this third quarter – the next six weeks – appears highly probable…

Weak Chinese Economic Data Likely To Draw Immediate Additional Stimulus Measures

Expect more action from the Chinese to give their economy a fresh jolt…export and import growth slowed markedly in China last month, flashing warning signals about both the domestic and the global economy (July is normally a weak month in China, however, so August and September data will be critical to watch)…coming on the heels of weak industrial production data for July, the trade figures underlined China’s sluggish start to the second half of the year and were seen as making it more likely that the government would intensify its measures to stimulate growth…exports rose 1% year-on-year in July, a six-month low and down from an 11.3% pace in June…imports were up 4.7%, dipping from June’s 6.3% pace and pointing to a slackening in China’s appetite for commodities…since late last year China has been easing monetary policy by slashing reserve requirement ratios (RRR) for banks three times…the country’s central bank has also cut interest rates twice this year to bolster an economy that has slowed for six consecutive quarters…some analysts believe, given this latest economic data, that another cut in the RRR could come as early as this weekend…China has taken steps on the fiscal side as well in recent months, including a ramping up of infrastructure projects…we’ll see if that intensifies in the coming weeks…

Japan Doubles National Sales Tax

Governments are money-sucking monsters and the latest example that no amount of money is ever enough, unless the monster is tamed, comes from Japan where the Japanese parliament today approved a doubling of the nation’s sales tax to 10% by 2015…Japan is one of the world’s most quickly aging nations and for years politicians have looked to the sales tax to rein in the country’s mountainous debt load – double its gross domestic product – and help finance its ballooning social welfare spending…they have finally succeeded, but of course the wiser alternative would have been to deny the government that additional revenue and reduce expenses instead…as the euro zone has shown us – and there are other excellent examples including Quebec – governments around the world need to shrink in size, not expand, or they will simply go bankrupt…no one (not even Mitt Romney) is selling that message effectively on the world stage and telling the people the truth – that citizens must exercise more personal responsibility and expect less from government, not more…

Today’s Markets

Asian markets were mildly lower overnight with China’s Shanghai Composite falling 5 points to close a positive overall week at 2169…European shares are modestly lower this morning while stock index futures in New York as of 6:05 am Pacific are pointing toward some weakness on Wall Street to begin the trading day in North America…the Venture Exchange climbed 7 points yesterday to 1193, putting it above its EMA-20…confirmation of a new Venture uptrend in our view would be a close above the 1200 level…

Rainbow Resources (RBW, TSX-V) Chart Update

Rainbow Resources (RBW, TSX-V) staged a powerful intra-day reversal yesterday, falling to support at 20 cents early in the day and then recovering – following very positive news – to close at the high of the day (23.5 cents) on total volume (all Canadian exchanges) of over half a million shares…with drilling slated to begin at the International Silver Property this weekend, expecting trading in Rainbow to continue to be very robust…John’s updated chart shows strong and increasing buying pressure…

Great Atlantic Resources (GR, TSX-V)

In addition to chasing down Rainbow’s President for an interview, BMR attended an excellent investor presentation put on by Great Atlantic Resources (GR, TSX-V) at Traders Restaurant in Vancouver yesterday…we’ve mentioned GR several times in recent months and we strongly believe it’s a situation our readers should be watching closely…the company has assembled a powerful package of early and advanced-staged exploration projects in Atlantic Canada – mostly New Brunswick which was ranked by the Fraser Institute earlier this year as the world’s #1 mining jurisdiction…President and CEO Chris Anderson is a bright leader and successful entrepreneur who is on the right track in our view to turn GR into a major success story…we’ll be interviewing Anderson in the near future…trading at just a dime with only 40 million shares outstanding, the risk-reward ratio with GR is attractive to say the least…John Kaiser recently initiated coverage on the company in his Bottom Fishing Report…

Richmont Mines (RIC, TSX)

Speaking of bottom fishing opportunities, one probably exists right now in Richmont Mines (RIC, TSX) which is trading right around book value at $3.70 a share…the stock was above $12 in February before some disappointing news regarding its Wasamac Project (a lower than expected initial estimated IRR) and its Francoeur Mine…however, RIC remains in a strong financial position with solid projects and all the bad news appears to be priced into the stock…the company is also on the acquisition hunt for another quality property at the right price…technically, extreme oversold conditions exist based on RSI(2) and other indicators in this 3.5-year monthly chart from John…Richmont will need time to turn the corner but investors with a longer-term view could do extremely well on this one around current levels…

Note: John and John both hold share positions in RBW.