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Gold is trying to rebound, after weakness yesterday, and is up $1 an ounce at $1,601 as of 4:30 am Pacific…Silver is flat at $27.44…Copper down 2 cents at $3.35…Crude Oil has added 19 cents to $89.10 while the U.S. Dollar Index is off nearly one-fifth of a point at 82.89…

ECB – Will Draghi Back Up Words With Action?

All eyes this morning are on the European Central Bank…its rate meeting ends at 4:45 am Pacific followed by a press briefing at 5:30 a.m., one hour prior to the opening of markets in North America…expectations are running very high after Mario Draghi’s bold comments last week, and whether Draghi can follow-through on his words with concrete action to satisfy the markets is the question…a German newspaper reported this morning that the ECB is preparing “concerted action” with euro zone countries to bring down the borrowing costs of heavily indebted countries including Spain and Italy…according to the paper, the ECB would join forces with the region’s permanent rescue fund, the European Stability Mechanism or ESM, to coordinate the purchase of Italian and Spanish debt…under the plan, the ESM would buy bonds directly from the governments, while the ECB would buy them on the market…however, the newspaper added that the ECB would not announce an official decision on such a move today…it was more likely that Draghi would echo comments he made last week when he said the bank would do all it could to save the euro…one of the problems with the above plan is that the ESM cannot come into force until Germany approves it, and a German top court will rule on the ratification of the ESM September 12…

An important test of investor appetite for Spanish paper came today when Madrid auctioned 3.1 billion euros of 2, 4, and 10-year bonds…borrowing costs rose but demand was decent and this has helped the Spanish 2-year yield drop to 4.79%, down 14 basis points on the day…

Fed Hints At Near-Term Action

The Federal Reserve did pretty much as expected yesterday, raising hopes that it will act to boost the economy in September (following its Jackson Hole symposium) as it kept policy on hold but showed a strong bias toward further easing…the rate-setting FOMC forecast that it will keep interest rates low until late 2014 – dashing market hopes that it might extend that date into 2015 – and did not launch a new round of quantitative easing…however, the central bank said in its statement, “The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed“…translation: the Fed will move if growth and employment don’t pick up soon on their own…

Attention now shifts to events in coming weeks, including the Labor Department’s report Friday on July unemployment…the Fed didn’t have those figures, which officials watch very closely, at its latest meeting…then, on August 31, Bernanke returns to Jackson Hole, Wyoming, site of the central bank’s annual retreat and a backdrop for past Fed turning points…”We could have an event like we had back in August 2010 where he telegraphed [a second round of bond buying],” Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, told the Wall Street Journal…”That speech is going to be much more important than this statement”…

Kinross CEO Gets The Boot

Canada’s third-largest Gold company, Kinross Gold Corp., has abruptly replaced its chief executive officer, the second high-profile dismissal of a major Gold company president since June…while the TSX Gold Index is off more than 30% from its all-time high last summer, Kinross shares have taken a much more severe beating and are trading at about a third of their value of a year ago…the company said yesterday that J. Paul Rollinson, who was executive vice-president of corporate development, would replace Tye W. Burt as chief executive officer…Rollinson has also replaced Mr. Burt on the Kinross board of directors…the company cited “current market and industry fundamentals” among the reasons for the change, which comes amid investor discontent over a massive writedown at the company earlier this year…Burt took a gamble and lost when Kinross completed the largest acquisition in the company’s 19-year history in the summer of 20120 when it bought Red Back Mining Inc. for $7.1 billion…the deal won its possession of the massive undeveloped Tasiast Gold deposit in Mauritania, but it also brought headaches as the company was forced to write down $2.49 billion on the project (the biggest loss in its history) amid soaring costs and changing project parameters…

Today’s Markets

Asian markets were mostly mildly lower overnight while European shares are higher this morning…stock index futures in New York as of 4:30 am Pacific, prior to the ECB announcement, are pointing toward a positive open on Wall Street…

The Venture Exchange looked strong yesterday as it closed at its high for the day (1190) despite losses in Gold and Silver and in the broader equity markets…

Rainbow Resources Inc. (RBW, TSX-V) Update – Chart Turns Very Bullish

The drill permit for Rainbow Resources‘ (RBW, TSX-V) International Silver Property is expected today or tomorrow, given guidance from the B.C. Ministry of Mines as uncovered by one of our astute readers nearly a week ago…yesterday, Rainbow firmed up on a surge in volume and closed at 20 cents – its highest closing price since mid-May…technically, the stock is showing tremendous strength and its 50-day moving average (SMA) has just reversed to the upside to go along with rising 10, 20, 200 and 300-day moving averages…this bodes well for a potential powerful move in August with drilling expected to get under way this month at the International…

Below is an updated 1-year weekly RBW chart from John…notice how RBW, like GQC and a handful of others, are significantly outperforming the CDNX…

GoldQuest Mining (GQC, TSX-V)

GoldQuest Mining (GQC, TSX-V) gained 12 cents yesterday to close at $1.40, a more than 20-fold increase since our write-up in late May just prior to the company’s announcement of a major discovery at its Escandalosa (Las Tres Palmas) Project in the Dominican Republic…the fact Dundee Securities stepped up to the plate so quickly on a $10 million+ financing the other day, immediately after release of GQC’s latest assay results, is evidence that there’s still a great deal of potential upside…the chart is powerful and the next Fibonacci level John is looking at is $1.95…

Comstock Metals (CSL, TSX-V)

Discoveries will be rewarded in this market, so continue to keep a close eye not only on GoldQuest and Rainbow, but also on Comstock Metals (CSL, TSX-V) which recently reported an outstanding trench result (3.74 g/t Au over 75 metres) from its QV Project in the heart of the White Gold District in the Yukon…mineralization consists of quartz veins, stockwork, silicification and weak brecciation, accompanied by minor pyrite…the property features a 1.8-kilometre-long Gold-in-soil anomaly…Comstock’s trenching results compare very favorably with the initial trench results from Kinross‘ White Gold deposit 15 kilometres to the south of the QV Project and from Kaminak Gold’s (KAM, TSX-V) Coffee Project…with a just-completed financing, Comstock has approximately 55 million shares outstanding…

Huldra Silver (HDA, TSX-V) Chart Update

Great Panther Silver (GPR, TSX) Chart Update

Note: John holds a share position in Rainbow Resources.  Jon holds share positions in Rainbow and GoldQuest Mining.  Terry does not hold share positions in any of the above.

Gold traded as high as $1,620 overnight, in advance of today’s Fed announcement, but came under some pressure following release of a stronger-than-expected ADP private sector jobs report for July, showing the U.S. jobs market could be improving after three sluggish months…however, the ADP report has often deviated sharply from the government report…the Labor Department releases July’s job numbers Friday…as of 6:00 am Pacific, the yellow metal is down $9 an ounce at $1,606…Silver is off 73 cents at $27.27…Copper is down a penny at $3.40…Crude Oil has gained 34 cents to $88.40 while the U.S. Dollar Index is relatively unchanged at 82.66…

U.S. Raises Pressure On ECB

The United States raised pressure on euro zone leaders to take decisive action to solve the region’s debt crisis, notably by lowering troubled members’ borrowing costs, on the eve of a crucial European Central Bank meeting tomorrow…Treasury Secretary Timothy Geithner said the euro zone must take steps including “bringing down interest rates in the countries that are reforming and making sure those banking systems can provide the credit those economies need”…he made the comments in an interview with Bloomberg Television recorded in Los Angeles on Tuesday, a day after he flew specially to Germany to meet Finance Minister Wolfgang Schaeuble and ECB President Mario Draghi…the interview was broadcast this morning…

What Will The Fed Do?

While most market observers do expect the Fed to launch another QE program during the second half of this year, Fed Chairman Ben Bernanke is likely to do little more than keep the door open to more easing when the Fed winds up its meeting this afternoon…the Fed statement could be tweaked somewhat to highlight their ongoing concerns and readiness to do more, but one step Bernanke may take today is to extend the time frame for the Fed’s extraordinary low rate policy into mid-2015 from 2014…there’s a greater chance of significant Fed action at the beginning of September, on the heels of their Jackson Hole symposium, when Bernanke and his crew will have much more economic data to review in addition to more information at hand regarding the euro zone and its progress or lack thereof…

High Expectations For ECB Meeting

Expectations are higher for tomorrow’s ECB meetings, thanks in large part to Mario Draghi’s comments last week when he stressed the ECB will do “whatever it takes” to save the euro…Draghi has proposed actions such as further bond purchases, rate cuts, and a new Long-Term Refinancing Option (LTRO), which allows the ECB to lend to euro zone banks at very low interest rates…the market wants to see some “shock and awe” from the ECB which sets up the possibility of a disappointment…tomorrow will be a very important day…

Hopeful Signs In China

There are encouraging signs behind the latest economic data out of China…while China’s Purchasing Managers’ Index fell to 50.1 in July from 50.2 in June, after adjusting for seasonality the reading shows that the manufacturing sector is actually improving thanks to the slew of stimulus measures implemented by the Chinese government…in addition, a drop in the index of inventories of finished goods may mean that de-stocking has ended, which implies that any pick-up in demand (stimulus-driven) should translate to higher output…indeed, a final reading of the HSBC PMI (a private survey) in July, also released today, showed output firming up for the first time in five months…the HSBC PMI rose to a seasonally adjusted 49.3, its highest level since February, little changed from the earlier flash estimate of 49.5 and higher than 48.2 in June…the central committee of the Chinese Communist Party signaled yesterday that stable economic growth will be a key priority for the rest of the year…

Shanghai Composite Chart

China’s Shanghi Composite Index gained 20 points overnight to close at 2123, rebounding from a 41-month low the previous day…the market was boosted by comments by an official of the country’s securities regulator encouraging companies with strong capital to buy back shares…

Below is a China chart from John prior to the strong overnight move, showing the market has very strong support around 2100 but is constrained on the upside by a downsloping wedge…with the Chinese economy expected to show clear signs of a pick-up by September, the upside potential of this market likely outweighs the downside risk which has to be considered positive for commodities and global equities…

Today’s Markets

China led the way on Asian markets overnight, while European shares are mostly higher this morning…stock index futures in New York as of 6:00 am Pacific are pointing toward a modestly higher open on Wall Street…

Venture Exchange

One long-time and very respected broker we spoke to yesterday in Vancouver believes the Venture Exchange has likely seen the bottom at 1154, and any strong upside move should kick in by late August/early September…volumes are low right now which reflects the fact that many traders and investors are at the beach or the golf course instead of their desks…

The Venture closed at 1183 yesterday, right at its 10-day moving average (SMA)…

Arian Silver (AGQ, TSX-V)

Arian Silver (AGQ, TSX-V) has taken a tumble in these difficult markets in recent months, but John’s 2.5-year weekly chart below shows that RSI(2) recently hit an extreme low while strong technical support for the stock exists at 16 cents…the company’s San Jose Project in Mexico holds over 100 million ounces of Silver in the indicated and inferred categories, and this is a situation that definitely provides some leverage in a bullish Silver price environment over the balance of the year…

Puma Exploration (PUM, TSX-V)

A company worthy of our readers’ due diligence is Puma Exploration (PUM, TSX-V) which is working on a very interesting Silver-Gold-lead-zinc project in New Brunswick (Nicholas-Denys) that could host a series of deposits over a 10-km strike length…the chart for Puma is favorable with very strong support at 25 cents, a penny above the rising 500-day moving average (SMA)…

Note: John, Jon and Terry do not hold positions in AGQ or PUM.