BullMarketRun.ca

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 has traded in a narrow range so far today after yesterday’s powerful move in the wake an historic aggressive QE3 program ushered in by the Federal Reserve which has also probably gone a long way toward assuring the re-election of Barack Obama…a couple of years from now, however, there could be one very nasty inflationary hangover…as of 5:45 am Pacific, the yellow metal is up $2 an ounce at $1,769 after climbing as high as $1,779 overnight…Silver has pulled back 20 cents at $34.48…Copper has surged 9 cents to $3.80…Crude Oil has gained $1.37 a barrel to $99.68 while the U.S. Dollar Index has tumbled again, falling one-third of a point to 78.91…as we’ve been mentioning, the Dollar is in huge trouble but that’s great news for commodities and the Venture Exchange which has a strong inverse relationship with the greenback…the Canadian Dollar, meanwhile, continues to surge as the market gets a whiff of inflation on the way…

Where could Gold go?…we have little doubt now that Gold is headed back up to $1,900 an ounce and may indeed hit a new all-time high during the fourth quarter…RSI(14) on John’s 4-year monthly chart below has a lot of room to support a strong move higher…Wave 1 of a new up motive phase has begun, and that ultimately means the Gold price will climb well beyond $2,000 an ounce (as far as Silver goes, John’s $78 Fibonacci target should seem may seem a little more plausible to some of readers now than it did a couple of months ago when Silver was languishing at $26 an ounce)…Gold’s first major challenge, of course, will be to overcome the 2012 high of $1,800 and then it must work through a resistance band all the way up to $1,920…everyone has to be patient as temporarily overbought conditions will need to be cleansed from time to time…not only has Helicopter Ben guaranteed that Gold is going much higher, but geopolitical events could also be helpful with increasing speculation that Israel is gearing up for a preemptive strike on Iran prior to the November U.S. elections…

Unlimited Money Printing

The Federal Reserve, frustrated by persistently high U.S. unemployment and the torpid recovery, has indeed launched an aggressive program to spur the economy through open-ended commitments to buy mortgage-backed securities and a promise to keep interest rates low for years…in the most significant of its new moves, the Fed said yesterday it would buy $40 billion of mortgage-backed securities every month and would keep buying them until the job market improves, an unusually strong commitment by the central bank…”We want to see more jobs,” Fed Chairman Ben Bernanke said at yesterday’s news conference when he explained the rationale for the Fed’s actions…”we want to see lower unemployment…we want to see a stronger economy that can cause the improvement to be sustained”…

Of course smarter fiscal and regulatory policies are the best instrument to spur U.S. job creation but whether those are likely to come anytime soon is a major question mark…Bernanke’s move yesterday should keep markets buoyant through the remainder of 2012 which also greatly increases the odds of an Obama election victory, and the make-up of the Congress will be critical in determining the direction of U.S. fiscal and regulatory policy…artificially low interest rates do nothing to encourage governments to reduce debt…

“This Is Monumental And Historic”

The Fed’s announcement sent investors piling into stocks, Gold, the euro and other assets seen as likely to benefit from the extra liquidity…the Dow soared to its highest level yesterday since December, 2007…commodity prices rose, highlighting the risk that Fed policies could be undercut by pushing up some household costs…“I think this is monumental and historic,” said Lord Abbett fixed income strategist Zane Brown…“I imagine the Fed is likely to come under considerable criticism for assuming that monetary policy can be effective in creating employment…that is the dual mandate, but I’m not sure people can prove a correlation between that and purchasing mortgage securities”…

The $40 billion monthly price tag on the bond-buying program is relatively small compared with the $1.25 trillion mortgage-bond buying program the Fed launched in March 2009 and a $600 billion Treasury bond-buying program it launched in November 2010…but the new effort has the potential to become very large…”If the outlook for the labor market does not improve substantially, the [Fed] will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ other policy tools as appropriate until such improvement is achieved in a context of price stability,” the Fed said in its statement yesterday…

Peter Schiff – Greenback To Go “Through The Floor”

The latest stimulus plans announced by the Federal Reserve is “disastrous” for the U.S. dollar, says long-time dollar bear Peter Schiff, warning that the greenback will go “through the floor” as investors dump the currency in favor of commodities like Gold and oil…“This is a disastrous monetary policy; it’s kamikaze monetary policy,” Schiff told CNBC Asia’s “Cash Flow”… “The Dollar Index is going to go down to 40, it might even go to 20 – I mean this is going to be in free fall at some point… ultimately there’s going to be a currency crisis”…according to Schiff, the Fed will not be able to produce a thriving U.S. economy by “debasing” the dollar, and printing more money is not going to solve the country’s problems…“What we actually need is less money printing, we need higher interest rates, more savings, more production, more exports and what the Fed is doing is inhibiting that from happening,” he said…Schiff, who has been a vocal critic of Fed’s stimulus measures, argues that instead of cheap money from the Fed going in to sectors of the economy like real estate, as it hopes, the money will be going into commodities…“The American economy depends on our ability to print money and trade it for what the rest of the world produces, but as the dollar is falling through the floor, nobody is going to want to trade their stuff for our rapidly depreciating paper,” Schiff added…

Today’s Markets

Asian markets powered higher overnight, bolstered by the Fed announcement, with China’s Shanghai Composite Index gaining 13 points to 2124…European shares are up between 1.5% and 2% this morning while stock index futures in New York as of 5:45 am Pacific are pointing toward a positive open on Wall Street…

Venture Exchange

Venture Exchange volume jumped yesterday to its highest level in a few months as the Index closed above 1300 for the first time since late May…we’ve stated this repeatedly recently but it’s worth mentioning again…a critical long-term moving average to keep an eye on is the 1,000 day SMA which is now guaranteed in our view to reverse to the upside within the coming weeks…this will end a four-year decline and what that could very easily mean, no matter how hard this might be for some readers to accept, is that the Venture is in the very early stages of a new bull market…back in May, June and July, mining and exploration stocks were radioactive…few people wanted to go near them and brokers were hiding under their desks, if indeed they were even showing up for work…that’s always the sign of a bear market bottom…at some point, the move up will rapidly accelerate…patience is required right now, though, with individual stocks and the market as a whole, as a lot of investors have been bruised badly over the last year-and-a-half…

A rising ride in the coming weeks and months will also not lift all boats…the companies that will move the most will be the smart ones that have worked hard this year to position themselves for better market conditions during the second half of the year…Rainbow Resources (RBW, TSX-V), though it has been consolidating over the last couple of weeks, is an excellent example…it is cashed up with a drill program in progress and two more on the way…that type of situation is what will often lead to trading and investment success in a better market as we’re seeing now…

Much higher Gold prices will be helpful for companies with substantial lower grade deposits like Spanish Mountain Gold (SPA, TSX-V), Probe Mines (PRB, TSX-V), Gold Canyon Resources (GCU, TSX-V), Gold Bullion Development (GBB, TSX-V) and others…

An area that should draw much more attention in the coming weeks and months is the Blackwater District, and we’ll be making a visit there in October…we’re very bullish on New Gold (NGD, TSX) which continues to develop a world class Gold and Silver resource, and there are a number of companies in the area that could do extremely well…just two we’ve been pointing out recently are Parlane Resource Corp. (PPP, TSX-V) and RJK Explorations (RJX.A., TSX-V)…both are expected to launch drill programs very soon…

Below is an updated chart for Parlane, and we thank those readers who submitted requests for Stockcharts to add Parlane to its list…Parlane is beginning to wake up but, again, patience is the key…a confirmed breakout would occur if PPP were to close above 15 cents today (resistance on the weekly chart) followed by a white candle on Monday…below is John’s 2.5-year weekly chart on Parlane which has to be viewed as another potential Blackwater-area takeover candidate for New Gold…you can accumulate it now or chase it later…

Newstrike Capital Inc. (NES, TSX-V)

Newstrike Capital (NES, TSX-V) came out with nice drill results the other day from its highly regarded Ana Paula Project in Mexico’s Guerrero Gold Belt…the chart is looking promising, as John shows below, and the 100-day SMA is flattening out and should reverse to the upside in the coming weeks…

Orko Silver (OK, TSX)

When Silver was trading in the mid-to-upper $20’s, we pointed out an opportunity in Orko Silver (OK, TSX-V) when it was trading around $1.20…it has since shot up to $1.80 but could be nearing a short pause as it faces strong resistance at the $2 level…OK has formed a classic “cup with handle” pattern as John shows below in a 6-month daily chart…

Chart Notes: John, Jon and Terry do not hold positions in NES or OK.  Jon holds a share position in PPP.

Gold has traded in a tight range between $1,728 and $1,737 so far today…as of 6:00 am Pacific, and just a few hours before the FOMC meeting concludes, the yellow metal is up $2 an ounce at $1,733…Silver is off a dime at $33.21…Copper is flat at $3.66…Crude Oil has gained 34 cents to $97.35 while the U.S. Dollar Index, which has hit a 4-month low this week, is unchanged at 79.67…

The price of Gold has climbed more than 2% so far this month (Silver has risen much faster) following a near 5% gain in August when central banks around the world appeared more willing to take up further stimulus measures to aid a frail global economy…yesterday, bullion hit its loftiest since late February at $1,746.20 after a German court ruling in favor of the euro zone rescue fund lent support to an already rallying market, anticipating increased money supply…the greenback, meanwhile, has taken a beating with the U.S. Dollar Index falling below a key support level…

The Fed winds down its two day meeting today with a statement at 9:30 am Pacific…it then issues revised economic forecasts at 11:00 am Pacific followed by a press briefing by Chairman Ben Bernanke…an exclusive survey by CNBC showed that more than three-quarters of the 58 money managers, strategists and economists who responded believe the Fed will announce a new program of quantitative easing, or asset purchases, after today’s meeting (historically, though, the Fed has acted only during periods of weakness in the equity markets)…another 86% believe the Fed will announce that it will purchase a mix of Treasurys and mortgage-backed securities when it does launch its third QE program…expectations for QE3 have been running high all summer with equity markets rising as a result…but a dismal August jobs report last Friday turned around even some non-believers… ironically, the CNBC survey showed a majority do not expect QE3 to help lower the unemployment rate…

U.S. Household Income Falls To Multi-Year Low

The income of the typical U.S. family has fallen to levels last seen in 1995, a long and pernicious slide that likely means it will be a generation before Americans regain the peak income levels reached at the end of the 1990’s…a report from the Census Bureau today said annual household income fell in 2011 for the fourth straight year to an inflation-adjusted $50,054…median annual household income – the figure at which half are above and half below – now stands 8.9% below its all-time peak of $54,932 in 1999, at the end of the 1990’s economic expansion…other measures of well-being in the report were more positive…the poverty rate, which had risen in the past four years, held steady in 2011, and the number and share of people without health insurance fell…the shift in health coverage is in large part due to more Americans getting covered by government programs such as Medicare…the report covers the second full year of the economic recovery…however, it doesn’t capture the income gains that, though slow, were notched in 2012…it also doesn’t reflect gains in assets, such as growth in the stock market or home values that, while still depressed, have started to inch up…

Wall Street Rooting For Romney But Anticipating Obama Victory

Wall Street appears to be planning for a victory by President Obama but hoping for one by Mitt Romney…in an unscientific poll, 46% of respondent to the September CNBC Fed Survey said they expect President Obama to win re-election…only 24% believe Republican Presidential Nominee Mitt Romney will get the job…but asked who they preferred, 53% of respondents picked Romney and just 18% chose Obama…for both categories, a third said they didn’t know or were unsure…the survey is used primarily to gauge both sentiment for future actions by the Federal Reserve and the outlook for economy and markets…it had 58 respondents, including top money managers, strategists and economists…”Like Europe, when it comes to our biggest needs we have tended to kick the can down the road,” said Robert Brusque of Fact and Opinion Economics, who favors Romney…”We need someone to kick us in the can to get us going in the right direction on a different road”…the latest campaign contribution numbers back up the CNBC survey…through August 21, data from OpenSecrets.org show 77% of campaign contributions from the securities and investment industries going to the GOP…in 2008, Democrats beat out Republicans in Wall Street fundraising by 58% to 42%…

Today’s Markets

Asian markets were mixed overnight with China’s Shanghai Composite declining 16 points to 2110…European shares are mixed as well this morning ahead of the Fed announcement…meanwhile, trading volumes in European stocks, despite the market rally, have sunk to their lowest levels in 12 years as the euro zone debt crisis has sapped the appetite for the region’s equities and money has headed elsewhere…stock index futures in New York are pointing toward a slightly negative open on Wall Street…the Dow hit a nearly 5-year high yesterday as it closed at 13,333…the Venture Exchange enjoyed a strong finish to the day yesterday, closing 8 points higher at 1283 on the best volume in nearly two months…

Venture Exchange vs. U.S. Dollar – Bullish Signs For The Venture

The Venture Exchange performs best during periods of U.S. Dollar weakness…this is another reason we’re bullish on the outlook for the Venture over the next several months at least, given the recent change in trend for the greenback…below is a 5-year weekly chart from John that shows this inverse relationship and how the Venture is just now beginning to break above a downtrend line relative to the U.S. Dollar that has been in place since early last year…this is hugely significant, and we expect this change in trend will become much more definitive in another month or so…

Comstock Metals (CSL, TSX-V)

As we mentioned in Monday’s Morning Musings, Comstock Metals (CSL, TSX-V) is in breakout mode and is looking very strong now that the company has launched a drill program at its QV Project in the White Gold District in the Yukon…drilling is testing strong Gold enrichment discovered in trenches at the VG zone, including 3.31 g/t Au over 95 metres from trench QVTR12-06 and 3.77 g/t Au over 45 metres in QVTR12-15…the Gold mineralization occurs within lode quartz-carbonate veins, stockworks and breccias, as well as pyrite veinlets, fractures and disseminations, within a northeast-trending zone of strongly quartz-sercite-carbonate-altered felsic schists and granitic intrusives that has been defined over a minimum strike length of 390 metres, and is open to both the east and west…additional trenching and soil sampling are also being conducted in an effort to more closely define the limits of this Gold anomaly…continued speculation will keep CSL very active (and potentially volatile) but this one obviously could really power higher in the event that drilling confirms the trenching results…CSL climbed another 7 cents yesterday to close at 43.5 cents…below is an updated chart from John…

Kaminak Gold (KAM, TSX-V) – Technical Breakout

Kaminak Gold (KAM, TSX-V) has long been one of our favorites in the Yukon, and its chart is showing a confirmed breakout through a downtrend line that has been in place for a year…KAM closed up 12 cents yesterday to close at $1.94…

Prodigy Gold (PDG, TSX-V)

Prodigy Gold’s (PDG, TSX-V) Magino Gold Project in northern Ontario is coming along very nicely, and PDG is another excellent example of a stock that has recently broken out above a downtrend line…this occurred back on August 21 and PDG is up nearly 20% since then…yesterday, there was a hammer reversal with the stock touching its supporting EMA-20 and reversing higher to close at 72 cents…with a substantial resource at Magino, PDG should be a strong performer through the end of the year if Gold shoots higher as expected…

Note: John, Jon and Terry do not hold positions in CSL, KAM or PDG.

Gold is trending higher today…as of 5:45 am Pacific, the yellow metal is up $6 an ounce at $1,739 after climbing as high as $1,748…Silver is 22 cents higher at $33.70…Copper is up 2 pennies at $3.67…Crude Oil is flat at $97.20 while the struggling U.S. Dollar Index has fallen another one-fifth of a point to 79.73…

Rainbow Resources (RBW, TSX-V) Update – RBW Is Finding The International Vein System

The tone in David W. Johnston’s voice was very upbeat yesterday after BMR conducted a short interview with him following yesterday’s news release, and there’s no question he’s very pleased with how drilling has been proceeding at the International Silver Property where the company is aiming for a discovery…

“We’re hitting the vein system in every hole and that’s why we’re at 10 holes and counting,” Johnston declared…”As we’ve been stating all along, the International is an exceptional project that deserved to be drilled a long time ago if it weren’t for access issues…with Silver doing what it’s doing, we’re more excited than ever by the prospect of delineating a near-surface, high-grade deposit that can easily be extracted”…

Folks, the near-surface, high-grade nature of mineralization at the International has been well documented in historical reports and Rainbow’s own sampling has delivered impressive results as high as 33.5 ounces per ton…they are drilling right into the heart of an exposed quartz dominated structure featuring disseminated to massive galena, pyrite and sphalerite, so the fact these angled and vertical holes are actually intersecting the vein system gives us increased confidence that a discovery could be in the making…great-looking core of course doesn’t always translate into great assays, which is probably why Rainbow has been conservative in its statements so far as they continue to wait for results from the lab, but our interpretation of the news issued to date is that they are seeing the type of mineralization they were hoping to hit…

Between the International and other quality projects in the West Kootenays, and the soon-to-be-drilled Jewel Ridge Property in Nevada where Rainbow will be following up on a fabulous result (2.1 g/t Au over 40 metres near-surface), this is a company with exceptional potential…despite the recent market turnaround, there are few companies on the Venture with rising 50, 100, 200 and 300-day moving averages but RBW is one of them…

Parlane Resource Corp. (PPP, TSX-V) & RJK Explorations (RJX.A, TSX-V):  New Gold Takeover Targets?

“We Want To Control Everything In The Area” – New Gold Inc. Executive Chairman Randall Oliphant

Buried in the depths of New Gold Inc’s (NGD, TSX) web site is a very juicy piece of audio from a speech just the other day that clearly underscores some no-brainer opportunities for investors centered around the prolific Blackwater district in central British Columbia…as regular BMR readers know, we were very early to the Blackwater story (late 2009) and Richfield Ventures became a 10-bagger for some of our readers after it got taken out by New Gold just over a year ago…New Gold also swallowed up Silver Quest Resources and Geo Minerals, and then paid $6 million earlier this year to Gold Reach Ventures for its Auro and Auro South claims at Blackwater…

But New Gold, which has already built up a land position of 1,000 square kilometres in the area, is likely far from finished in terms of acquisitions based on comments made by Executive Chairman Randall Oliphant at the recent Bank of America Merrill Lynch 18th Annual Canada Mining Conference in Toronto…while he didn’t of course single out Parlane Resource Corp. (PPP, TSX-V) or RJK Explorations (RJX.A., TSX-V), it goes without saying that those two companies both hold very strategic and sizable land packages at Blackwater that have to be of strong interest to New Gold…

And both Parlane and RJK are gearing up for the start of drill programs – RJK is going back to its Blackwater East and Northeast properties, where it made an interesting Silver discovery earlier this year (3.3 metres near-surface grading 79 opt), and will also conduct initial drilling at its Blackwater West and Dave 2 properties…Parlane has a 10,000-metre drill permit in hand and is almost ready to begin tackling its very promising 14,000-hectare Big Bear Project strategically located between the Capoose and Blackwater deposits…Parlane has just 28 million shares outstanding with a current market cap of only $5 million…

New Gold has an incredible 18 rigs in operation at Blackwater where it has greatly expanded the resource since acquiring Richfield… recent assays demonstrate strong continuity of Gold mineralization as the resource continues to expand, particularly to the north and northwest…what’s especially interesting is that beyond the positive Gold-related results, recent assays have also returned some of the highest Silver grades found on the deposit to date…as a result, the inferred Silver grades have increased by 103% to 7.7 g/t when compared with the March, 2012, resource estimate…these results occur within a zone of higher grade Silver mineralization along the outer northwestern portion of the mineral resource…this zone offers excellent potential for expanding the Silver resource at Blackwater and is an area of strong exploration focus for the company…

Below are excerpts of Oliphant’s speech the other day (highlighted areas, our emphasis) – how long will it take for New Gold to take a run at Parlane and/or RJK?…

“The resource continues to expand and this is probably the largest pure Gold discovery ever found west of Ontario…it’s not a well understood area…nobody knows where all this Gold came from…we have a Capoose property that’s 25 kilometers away, that’s already 800,000 ounces of Gold and 56 million ounces of silver…these deposits never seem to statistically happen in isolation where you have a 10 million ounce deposit, and nothing else around, whether it’s a 2 or 4 million or 5 million ounce deposit as well”…

“So what we’ve done is we’ve worked to try and increase our land position and we’re now up to about 1,000 square kilometers, because frankly the geologists don’t know what the source was of all this gold…we want to control everything in the area from the perspective of dealing with First Nations, of having complete flexibility of where we put tailing stands, waste, dumps, not having to lay that on other people’s ground…our drilling is remarkably aggressive this year…we’re going to drill about 250 kilometers of drilling…I read somewhere that this could be the most extensive drilling program going on in mining right now, but we’re both trying to upgrade our resource and also expand the size of it”…

“The cost of building Blackwater, we can fund internally with the cash flows that we have”…

“We just announced that we’re actually going to have a breakfast to bring out the preliminary economic assessment of Blackwater, here in Toronto, on September 20″…

“One of the calling cards of our company and one of the reasons why we thought that we wanted to get involved in Blackwater was our teams in British Columbia have an outstanding relationship with all the First Nations groups…in fact our local chief was at PDAC here in Toronto, about a year and a half ago, talking about the model that we have and he’d like to see it rolled out all across Canada…that’s made things a lot easier for us in dealing with First Nations in British Columbia…we already have, and they weren’t even required, letters of support, to support our multi-year exploration permits”…

Parlane has been firming up just recently on increased volume and is looking quite bullish on the charts with 50 and 200-day moving averages just reversing to the upside…it closed yesterday at 18.5 cents…RJK likely hit bottom in May at 8.5 cents and closed yesterday at 10.5 cents…

Germany’s Highest Court Clears Way For Euro Zone’s Permanent Bailout Mechanism To Go Ahead

Germany’s highest court Wednesday threw out attempts to delay the country’s ratification of the European Stability Mechanism and the so-called “Fiscal Pact” but placed strict conditions on expanding it beyond its foreseen limits…the ruling, which was broadly as expected, removes a major question mark over two crucial elements of the euro zone’s plan to manage its debt crisis…itt paves the way for the creation of a permanent bailout mechanism in the region that will be able to provide large-scale financial assistance to heavily indebted euro-zone economies…

Today’s Markets

Asian markets were higher overnight with the Nikkei climbing nearly 2% while China’s Shanghai Composite Index gained 6 points to 2127…European shares are up modestly this morning while stock index futures in New York as of 6:00 am Pacific are pointing toward a positive open on Wall Street…

The Venture Exchange closed up 4 points yesterday at 1275 and should respond well today to fresh advances in Gold and Silver and commodities in general…

It’s hard not be bullish regarding commodities when one examines John’s long-term CRB Index chart this morning…the Index appears to have started a powerful Wave 5 move that could take it well beyond the 2011 high…note that the RSI(14) is now above 50 while the Slow Stochastics indicator (%K) is rising rapidly…

Gold, CRB, Venture Exchange Comparative Chart

John has another interesting chart this morning, a 2.5-year weekly CDNX comparison with Gold and the CRB Index…note how both Gold and the CRB Index have recently broken above their downtrend lines while the Venture is stirring but still has some catching up to do, though we expect it will follow suit and break above its downtrend line in the coming weeks…

Euro Reversal – Bullish For Gold

The euro’s reversal has been confirmed on the charts, and that’s bullish for Gold and Silver and bearish for the U.S. Dollar…note how the euro, in relation to the greenback, has broken above a downtrend line in place since last summer…this is highly significant and strongly suggests the building blocks are coming together to tackle the euro zone debt crisis in a much more effective way…

Canadian Dollar Update

Given the renewed strength in the euro, and a powerful-looking Canadian Dollar, the outlook for the U.S. Dollar Index is rather grim to say the least…it’s also our expectation, though not our wish, that Barack Obama will get re-elected in November and the market’s perception of that result won’t be positive for the U.S. Dollar…Obama, of course, embraces Big Government and that means the Americans will simply kick the can further down the road as far as their debt problem is concerned, particularly if the Democrats also control at least the Senate or the House (or worse yet, both)…

The Canadian Dollar is strong in part because of Canada’s healthy fiscal position, relative to most other countries, and the continuing long-term bull market in commodities…a healthy loonie is also bullish for the Venture Exchange as the correlation between the two is quite high…

Richmont Mines (RIC, TSX-V) Chart Update

Richmont Mines (RIC, TSX) brutal 2012 decline has come to an end as shown in John’s chart below…

Note: John, Jon and Terry do not hold positions in RIC.

Gold is firmer this morning…as of 6:10 am Pacific, the yellow metal is up $11 an ounce at $1,736…Silver has surged 47 cents higher at $33.81…Copper is up another 3 pennies at $3.65…Crude Oil is 26 cents higher at $96.80 while the U.S. Dollar Index has fallen more than one-third of a point to 79.99…

UBS believes Gold is poised to take a sharp turn higher ($1,850 within a month) amid growing expectations that the Federal Reserve is about to unleash a third round of quantitative easing…Friday’s ugly U.S. jobs report means there is now “a strong likelihood” of Fed action after its monetary policy meeting wraps up on Thursday, UBS analysts said in a note, and this “sets the stage for the continuation of the precious metals rally”…

Copper – What’s It Telling Us?

Despite a global economic slowdown and growing stockpiles at warehouses in China, Copper is looking very strong on the charts and prices are now at 4-month highs (another reason we are bullish at the moment with regard to the Venture Exchange which tends to follow Copper)…the metal has erased year-to-date losses of 5% seen in June to post gains of more than 5%, most of which has been added here in September thanks in large part to actions from the European Central Bank and speculation of QE3 from the Federal Reserve…given how the Canadian Dollar has been behaving over the past couple of months, as shown in our chart yesterday, it seems markets are anticipating higher inflation down the road which is bullish for Copper and all commodities and even equities – particularly if central banks are forced to keep interest rates at historical lows…given a choice, due to debt levels, Ben Bernanke and other central bank leaders would take inflation over deflation…

Below is an updated 2.5-year weekly chart that shows how Copper has broken out of a symmetrical triangle and appears ready to test resistance around $3.90 a pound…

Meanwhile, the stacks of Copper slabs inside warehouses in Shanghai continue to pile up as reported in an excellent Wall Street Journal article yesterday (the supply overhang is reported to have increased from 500,000 metric tons in June to 600,000 in July, vs. the approxmate 214,000 metric tons in London Metal Exchange warehouses)…for some, this is a warning sign that demand within China, the biggest buyer of the metal, is decelerating dramatically in what could be a troubling sign for the global economy…even if the added stimulus from around the world sparks rising economic activity, and demand for Copper, some analysts argue it could take months to whittle down the huge Copper surplus lingering in China’s warehouses…while that happens, demand for new Copper from Chinese buyers is likely to remain low…under the pressure of high inventories, “any rally in Copper prices based on expectations will likely not be sustainable,” analysts at Deutsche Bank wrote in an August note…however, it’s important to keep in mind that overall Copper stocks are lower this year than a year ago thanks to a 42% drop in Copper inventories at the LME, according to Scotiabank, while the International Copper Studies Group still expects a 237,000-ton deficit of refined copper in the world this year…many Copper bulls are also counting counting on Chinese government support for the power and housing sectors to help prop up the metal’s prices…

China Says It’s On Track To Meet 2012 Growth Target

China is on track to meet this year’s target for economic growth and the government is giving greater prominence in policymaking to stabilizing the economy, Premier Wen Jiabao said today…Wen, speaking at a meeting of the World Economic Forum held in China’s eastern port city of Tianjin, said he was confident of keeping the economy on a track of steady and relatively fast growth…his comments come after China’s President Hu Jintao warned over the weekend that the world economy is hampered by “destabilizing factors and uncertainties” and that the 2008/09 financial crisis is far from over…Hu promised that China would do all it can to foster a global recovery by “rebalancing” its economy…meanwhile, speculation is mounting regarding the health and whereabouts of the man expected to take the reins as China’s top leader in a matter of weeks as Chinese authorities keep their usual tight grip on information about the nation’s leaders…yesterday, authorities failed to explain why Vice President Xi Jinping, who hasn’t been seen in public since September 1, had missed another meeting with a visiting foreign dignitary, Denmark’s prime minister…rumors that all wasn’t well with the 59-year-old Jinping were sparked last week when he skipped a meeting with visiting U.S. Secretary of State Hillary Clinton at the last minute…the government declined to provide a clear explanation for that highly unusual move…the mystery adds to an already tense atmosphere ahead of a  once-a-decade leadership transition expected to kick into gear in a few weeks…

Today’s Markets

Asian markets were mixed overnight with China’s Shanghai Composite declining 14 points to 2121 after Friday’s powerful surge and some follow-up buying Monday…European shares, which rallied to 5-month highs last week, are also mixed this morning ahead of the German Constitutional Court’s decision tomorrow on the legality of a permanent euro zone bailout fund…stock index futures in New York as of 6:15 am Pacific time, meanwhile, are pointing toward a modestrly higher open on Wall Street…

The Venture Exchange’s 5-session winning streak was snapped yesterday with the Index retreating during the day after climbing as high as 1283 in early trading…it closed down 6 points at 1271 but remains comfortably above the rising 10 and 20-day moving averages which can be expected to continue to provide support during this new uptrend…

Rainbow Resources (RBW, TSX-V) Update

News from Rainbow Resources (RBW, TSX-V) has just crossed the wire – a brief exploration update coupled with the announcement that Rainbow will begin trading on the OTCQX beginning tomorrow…given the increased trading activity on the Pink Sheets in the last month or so, it’s obvious that new eyes in the U.S. are following Rainbow and that’s likely going to accelerate with the listing on the more popular and prestigious OTCQX…Rainbow also announced that 10 holes have now been completed at the International Silver Property and drilling continues, so that’s another very positive sign…RBW has been keeping its cards close to its chest with regard to drilling progress at the International…there have been a few clues that they’re hitting very favorable structure, but the company has been cautious in its statements which we’re interpreting as bullish…no matter how shiny the core might be looking, Rainbow it appears may have adopted the strategy of wanting to “over-deliver” and unleash a zinger to the market at the appropriate time…we also get the impression that other things are “cooking” in the West Kootenays given the statement that there is “intense drilling and prospecting activity throughout our 17,000-hectare land package”…this would include the 13,000 hectare Big Strike Project (8 properties make up this project including the International) and the 4,000-hectare flake graphite project…so what exactly is happening, besides the ongoing drilling/exploration at the International and the pending drill program at Gold Viking?….for now RBW is keeping everyone guessing…the news release concluded with an encouraging update regarding the Jewel Ridge Property in Nevada where drilling is expected to commence soon…Rainbow has some fabulous drill targets to choose from at Jewel Ridge, including the immediate area around Greencastle’s stellar hole in 2004 that returned 40 metres grading 2.1 g/t Au…

Technically, RBW is resting perfectly at support after a 2.5-cent decline yesterday to 20 cents – the rising 200-day moving average which represents a very attractive entry point…the 50, 100, 200 and 300-day moving averages are all rising, confirming the overall bullish trend…over the past 9 sessions, the stock has traded mainly between a low of 20 cents and a high of 23 cents, while RSI(14) has drifted down to previous support at 44…up-day volumes have exceeded down-day volumes over the last 7 trading days…when a stock falls 10% in a single day, and not on great volume, and lands on very strong support, that’s not a time to get nervous or bearish if you’re a successful investor – that’s an opportunity to take advantage of…too many investors make the mistake of getting distracted by the minute-by-minute trading in a lot of different stocks, not just RBW (their moods rise and fall with prices), and they lose sight of the bigger picture…they also fail to fully understand volatility which is normal of course in the junior resource market especially…but if you can’t understand it, you can’t manage it…at some point in the near future, we expect RBW to blast through resistance around 25 cents and then the party’s on…

GoldQuest Adds Deep Drilling Rig, Expect Dominican Plays To Heat Up Again

Big Daddy has arrived in the Dominican Republic…deep drilling has started at GoldQuest Mining’s (GQC, TSX-V) Romero discovery as the company has just announced the addition of this third rig which is capable of drilling to a depth of 700 metres…a dozen holes have now been completed at Romero (results have been released for 7 which all ended in mineralization) with three more in progress…it’s quite possible GQC will discover even richer Gold and Copper grades at depths below where it has been unable to drill up until now…

Technically, GQC is showing new bullish signs after a very healthy pullback to a zone of strong support…

The other Dominican plays we’ve been following are all looking very attractive from a technical standpoint after a short and normal consolidation period as John outlines below…

Everton Resources (EVR, TSX-V)

Unigold Inc. (UGD, TSX-V)

Precipitate Gold Corp. (PRG, TSX-V)

Note: John and Jon both hold share positions in RBW and EVR.  Jon also holds a share position in GQC.

Gold is off slightly this morning after Friday’s very strong push…as of 5:40 am Pacific, the yellow metal is down $5 an ounce at $1,730…there is resistance around the $1,730 area, so this is where Gold could take a short breather before resuming its upward climb…Silver is 11 cents lower at $33.57…Copper is up another 4 pennies to $3.62…Crude Oil is down 18 cents to $96.24 while the U.S. Dollar Index has regained one-tenth of a point and is trading at 80.34…

John’s calls on Gold and Silver have been remarkably accurate, so bulls have reason to smile brightly and confidently at his latest long-term charts that show much higher levels are in the works for our favorite metals in the months ahead…

Gold

Gold has started a powerful new wave that could have three major impulses to it with the first impulse carrying bullion up to the $1,900 level, right around its all-time high, by year-end…on the four-year monthly chart below, you’ll see that the 5-wave up motive phase that started in 2009 resulted in a doubling of the Gold price in just over two years…the first wave of a new motive phase commenced in the $1,550’s, so ultimately we’re looking for Gold to go well beyond the $2,000 level…RSI(14), currently at 61%, still has plenty of room to move higher…it bottomed and found support just above 50 in May…the +DI indicator has made a significant turn higher for the first time in a year, another very bullish sign…Gold’s move of course won’t be straight up – there will be bumps and minor periods of consolidation along the way, but have faith in the primary trend…fundamentally, several catalysts could trigger this explosive new phase in Gold – aggressive central bank monetary action around the globe, U.S. Dollar weakness, Obama and Democratic success in November’s U.S. elections, geopolitical conflict (Israel-Iran, for example), inflationary pressures, investment demand and the continued strong appetite of the Chinese to grow their Gold reserves…

China’s Gold Imports From Hong Kong Up 345% In 2012

Mainland China’s Gold imports from Hong Kong rose sharply by 98.84% year-on-year to 75.84 metric tons in July this year, according to the latest export data released by Census and Statistics Department of the Hong Kong government (China doesn’t publish such data)…the country exported 38.14 metric tons of Gold to China a year earlier…it was the first rise in China’s Gold imports after three months of slightly lower imports….shipments were a record 103.64 metric tons in April…according to the government data, China’s Gold imports from Hong Kong advanced sharply by 344.87% year-on-year to 458.628 metric tons in the first seven months of this year compared to 103.09 metric tons a year earlier…China, therefore, has imported nearly as much Gold from Hong Kong in the first 210 days of 2012 as the total official holdings of the European Central Bank (502.1 tons)…so it’s rather amusing that China, through the IMF, still wants the world to believe that total Chinese official holdings are just 1040 tons (double the ECB’s) when it has imported half this amount through just the first seven months of this year…

Silver

Silver has also started a powerful new wave and readers will recall how we used this 15-year monthly chart to recently call the bottom in this market around $26…on a short-term chart, Silver is critically overbought and thus requires at least a brief rest in the very near future…however, as you can see in the 15-year monthly chart below, Silver has a lot of room to travel on the upside with a Fibonacci target of $78 (no timeline just yet)…history also shows that it can also remain overbought on the long-term chart for extended periods…quality Silver stocks – producers as well as good exploration plays – could potentially skyrocket…

Soros Tells Germany To “Lead or Leave” The Euro Zone

George Soros has issued a passionate plea to the German government to lead the euro zone out of recession by boosting growth, creating a joint fiscal authority and guaranteeing common bonds, or itself leave the currency union to save the future of Europe…“Lead or leave: this is a legitimate decision for Germany to make,” the billionaire financier and philanthropist said in an interview with the Financial Times…“Either throw in your fate with the rest of Europe, take the risk of sinking or swimming together, or leave the euro, because if you have left, the problems of the euro zone would get better,” he added…”It is entirely dependent on Germany’s attitude…if they insist on a policy of austerity, of reinforcing the current deflationary stance, and they won’t budge from that, then in fact it would even be better for them in the long run (to leave)”…Soros, a strong supporter of European integration but an outspoken critic of Germany’s euro zone crisis management since 2010, praised the latest move by the European Central Bank to return to buying euro zone government bonds as “a more powerful step than the previous ones…it will have an effect,” he said…“It could even lay the groundwork for an eventual solution…But it is a stopgap, not a solution”…

Investment Set To Decline Sharply In Peru’s Mining Industry

Peru’s mining industry will invest 33% less than previously expected next year as social unrest delays projects, according to the country’s National Society of Mining, Petroleum & Energy…miners including Aluminum Corp. of China and HudBay Minerals will invest about $4 billion next year, compared with $6 billion planned previously and down from $7.2 billion this year, according to a presentation by the industry group…“We’re worried by what’s happening,” the group’s President Pedro Martinez said…“If investment continues to be scared away, many mines will reach the end of their productive lives and there will nothing we can do about it,” he added…

Today’s Markets

Asian markets were relatively quiet overnight with China gaining 7 more points to close at 2135 after Friday’s powerful move…China’s exports grew at a slower pace than forecast last month while imports surprisingly fell, underlining weak domestic demand as the global economic outlook dims…other economic indicators released yesterday showed a general slowdown in the Chinese economy had continued into August…data pointed to falling factory output and investment, and slightly rising inflation which could narrow the scope for greater monetary stimulus if it were to become a trend…Chinese fixed asset investment grew strongly in August, underscoring the importance of infrastructure spending to economic growth…weakening trade figures are a major concern for China, where export-oriented industries employ an estimated 200 million people and the economy is already expected to expand at its slowest rate in 13 years…at the start of the year Beijing set a target of 10% growth in overall trade but with year-to-date growth of just 6.2% by the end of August, that target appears to be in jeopardy…

European shares are essentially unchanged this morning…French industrial production was much stronger than expected in July, gaining 0.2% month-on-month vs. an anticipated decline of 0.5%…it’s an important week in Europe with investors focused on Wednesday when the Dutch elections are held, officials from the group of international lenders known as the troika meet in Greece and the German Constitutional Court decides on the legality of the proposed permanent euro zone bailout, the ESM, after 37,000 Germans lodged complaints against the move…the troika have already told the Greek government that its latest budget cuts must be revised…

Stock index futures in New York as of 5:40 am Pacific are pointing toward a slightly negative open on Wall Street after the S&P 500 and the Nasdaq enjoyed their best weeks in three months last week, climbing 2.23% and 2.6% respectively…Friday’s market action, driven by a much lower-than-expected non-farm payrolls number for August, clearly showed that investors are now expecting QE3 from the Fed following this week’s FOMC meeting Wednesday and Thursday…if the past is any indication, Fed action might clear the way for the rally to keep rolling…in 2010, the Dow Jones Industrial Average rose 11% between Bernanke’s late-August hint that another bond-buying program was coming and its November 3 announcement…by the time the Fed program ended in March, 2011, stocks had gained another 11%…

The Venture Exchange has climbed for 5 straight sessions and closed Friday at its highest level in three months, 2177…the 60-day moving average (SMA) is about to reverse to the upside for only the fourth time since the end of the 2008 Crash…the previous occasions were early 2009, the late summer of 2010, and early this year which turned out to be short-lived…

Canadian Dollar Strength Bodes Well For Venture, Commodities

For the past few months we’ve been pointing out the strength in the Canadian Dollar which was telling us that commodity markets were NOT about to collapse in the second half of 2012 as some pundits were suggesting…that strength continues which is also very positive for the Venture Exchange which tends to perform well when the loonie is healthy and the greenback is weak…below is an updated Canadian Dollar chart from John…interestingly, support in 2011 and 2012 held at the 1000-day SMA (in the 95 cent area) which had flattened out but is now steadily rising again…with such a positive outlook for the Canadian Dollar, the greenback appears to be in serious trouble…

Comstock Metals (CSL, TSX-V)

As we stated recently, the key for Comstock Metals (CSL, TSX-V) to keep momentum going was to be able to launch a drill program at its QV Project in the Yukon preferably by sometime in September and that’s exactly what they’ve been able to do…CSL announced the start of drilling late during Friday’s trading session, and the stock responded by climbing 8 cents to 36.5 cents on total volume (all exchanges) of 1.7 million shares…the drilling program is designed to test strong Gold enrichment discovered in trenches at the VG zone, including 3.31 g/t Au over 95 metres from trench QVTR12-06 and 3.77 g/t Au over 45 metres in QVTR12-15…the Gold mineralization occurs within lode quartz-carbonate veins, stockworks and breccias, as well as pyrite veinlets, fractures and disseminations, within a northeast-trending zone of strongly quartz-sercite-carbonate-altered felsic schists and granitic intrusives that has been defined over a minimum strike length of 390 metres, and is open to both the east and west…additional trenching and soil sampling are also being conducted in an effort to more closely define the limits of this Gold anomaly…below is an updated CSL chart from John that shows the stock breaking out after a 3-week consolidation…the 42-cent Fibonacci level is where one can expect some resistance or another pause, but CSL is in all-time high territory and could obviously really erupt if drilling confirms the trenching discovery…this will be an interesting play to watch over the next couple of months…

John has charts on three producers this morning, two that continue to roll right along and another that is trying to emerge from a deep sell-off that was probably overdone…one reason we like New Gold Inc. (NGD, TSX) so much is that the market in our view just hasn’t yet fully caught on to the significance of its growing resources (Gold and Silver) at its Blackwater Project in central British Columbia…readers should perform their own due diligence on this and also check out two Venture plays in the Blackwater district that are also being overlooked at the moment – Parlane Resource Corp. (PPP, TSX-V) and RJK Explorations (RJX.A, TSX-V)…we’ll have more on them later in the week…

Below is an 8-year monthly chart on New Gold that shows the potential for a double from current levels based on Fibonacci analysis…NGD closed Friday at $11.10…the rising 50-day SMA around $10.40 would likely be an excellent entry point on any minor pullback…once NGD clears a resistance band between $12 and $14, look out…

Argonaut Gold (AR, TSX)

Mexico-focused Argonaut Gold (AR, TSX) has been a tremendous performer since its inception nearly three years ago, and appears to have started Wave 1 of a new bullish motive phase…be patient as AR needs to overcome resistance at the $10 level…

Richmont Mines (RIC, TSX-V) took a beating over a 5-month period this year (late February through the end of July) but the selling was overdone as the stock was driven down very close to RIC’s book value…with all the bad news likely behind it (and the news wasn’t horribly bad to begin with), RIC is now on the rebound and higher Gold prices would help this company immensely…

Note: John, Jon and Terry do not hold positions in CSL, NGD, AR or RIC…

TSX Venture Exchange and Gold-Silver

It was another stellar week for the Venture Exchange which busted through resistance at 1250 and climbed another 2.9% or 36 points to close Friday at 1277.  Since August 1, the Venture is up nearly 8% vs. a 5.6% gain for the TSX and a 2.2% advance in the Dow.  This kind of out-performance by the Venture is encouraging and points to the beginning of a rekindling of the speculative fever that is so important to this market.  With an apparent easing of the euro zone crisis, and QE3 now seemingly guaranteed to be on its way as early as next week when the Fed meets Wednesday and Thursday, we have what could be the “Perfect Storm” for the Venture to stage a powerful advance through the remainder of the year with the rising 10 and 20-day moving averages providing strong support. There is a lot of cash still sitting on the sidelines and of course Gold and Silver, and commodities in general, are looking extremely bullish.  The Venture’s 300 and 1,000-day SMA’s are each parked at 1500 which seems like a reasonable target for the Index (a 17% climb from current levels) over the next couple of months.  Fresh discoveries would certainly add fuel to the fire, and a lot of drill results will be coming out between now and the end of October.

Keep in mind the Venture often goes against the trend of the U.S. Dollar, and Friday was a critical day in the currency markets as the Dollar Index broke below key support at 81.  With QE3 on the way, along with the likelihood in our view of an Obama victory in November due to the Republicans’ inability to sell the conservative message, the greenback is in SERIOUS trouble.  That’s Venture bullish and commodity bullish.

John’s updated 4-month daily chart for the Venture shows a couple of near-term resistance areas that will be interesting to watch – 1280 and 1310.  Volume is beginning to pick up, and buying pressure has risen significantly.  The 1250 area is now strong support.

The ECB acted Thursday to address liquidity and confidence issues in the marketplace with an unlimited bond buying program, China is injecting some fiscal stimulus into its economy, while the Fed appears likely to act next Thursday on an additional round of quantitative easing given Friday’s weaker than expected employment numbers out of the United States.  Non-farm payrolls grew a meager 96,000 and payrolls for the prior two months were revised down by 41,000. This was a poor report and well below analysts’ estimates.  It’s also a condemnation of current American fiscal and regulatory policy.   Both Democrats and Republicans have to accept responsibility for that.

Gold

Gold reversed violently to the upside yesterday as soon as the weak U.S. jobs number was released as traders and investors came to the realization that QE3 became virtually a done deal.  Bullion closed up $34 for the day and $43 for the week at $1,735.  At some point in the very near future, Gold is going to have to take a short breather to at least partially unwind overbought conditions.  Given all the technical and fundamental factors, however, a powerful move to a new all-time high by year-end cannot be ruled out.  In fact, a number of analysts have just raised their year-end forecasts for Gold prices. A quick survey: J.P. Morgan is calling for Gold to close the year at $1,800; Goldman Sachs says $1,840; Bank of America Merrill Lynch is suggesting $2,000 in the event of QE3, and one Citigroup analyst is calling for Gold to reach $2,500 by the end of the first quarter of next year, and even higher in the event of geopolitical conflict.

Below is a 6-month daily Gold chart from John that shows how important the move above the neckline and downtrend line was near the end of July, as we pointed out at the time.

Silver continues to race along at an even faster pace than Gold, smashing through important resistance at $32.50.  As we’ve been mentioning for a number of weeks now, Silver is in the early stages of a Wave 5 move that ultimately should take it well beyond its previous all-time high around $50 an ounce.  Silver gained $1.94 for the week, closing Friday at $33.68.  Copper made an impressive move, posting its biggest weekly gain in 10 weeks, as it surged 15 cents to close at $3.58.  Crude Oil was off slightly while the U.S. Dollar Index fell below its 200-day SMA, as well as critical support at 81, by dropping sharply on Friday and closing at 80.16.  It was off by more than a point for the week.

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 is now taking place 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 turned on a dime as soon as a much weaker than expected U.S. jobs report came in at 5:30 am Pacific time…expect the Federal Reserve to unveil QE3 at its meeting next week (Wednesday and Thursday) after employment growth remained weak in August with just 96,000 new positions created – far below the 125,000 that were expected…as of 5:45 am Pacific, Gold is up $24 an ounce at $1725 after falling as low as $1,689…Silver has reversed by nearly $1.50 an ounce and is now up 66 cents at $33.37…Copper has surged 6 cents to $3.54 (very good sign)…Crude Oil is up 27 cents at $95.80 while the U.S. Dollar Index is in trouble – it’s down three-quarters of a point at 80.39, falling below critical support…

Today’s Markets

Asian markets were sharply higher last night with China’s Shanghai Composite Index soaring nearly 4% to 2128…while yesterday’s news regarding the ECB bond buying program was certainly a factor in the jump, the rise was fueled largely by the fact that Chinese regulators had given the go-ahead to 30 infrastructure projects, adding to 25 rail projects already approved this week, the official China Securities Journal reported this morning…the report estimated that the total amount of investment projects approved this week was above $157 billion – a sign that China is taking measures to stimulate its economy…this sparked a rally in Chinese machinery stocks which contributed significantly to the overall surge in Chinese equities…

The reversal in the Shanghai Index is for real – below is a chart from John that was completed after yesterday’s trading and doesn’t include the overnight surge…notice how the Index has reversed out of oversold conditions right at important support levels…it’s reasonable to suggest we’re about to see a sharp rise in the Shanghai that will, at a minimum, test the resistance at the top of the downsloping wedge (which is what it did earlier this year) now around 2300…

A deluge of data is due out of China on Sunday (inflation, factory output, fixed-asset investment and retail sales for August) that could confirm investors’ worst fears that a downswing in the world’s second-largest economy has stretched into a seventh straight quarter…the inflation number will be a key one to watch…if there’s an awkward combination of rising prices while growth in exports and factory output wilts, Beijing will face a policy dilemma: relax policy and risk an inflation spike, or stand still and risk a continued slowdown in activity…

North American Markets

U.S. Stocks closed at multi-year highs yesterday with the S&P 500 (1432) ending at its best level since before the collapse of Lehman Brothers…the rally was broad, with more than three-fourths of stocks listed on both the New York Stock Exchange and Nasdaq ending higher…materials, financials and industrials – groups tied to the pace of economic growth – led with gains of more than 2%, giving the Dow (13292) its biggest daily gain in two months and helping the Nasdaq (3136) advance to its highest level since 2000…stock index futures as of 5:45 am Pacific are pointing to a flat to slightly higher open this morning on Wall Street…

Venture Exchange

The Venture Exchange plowed through important resistance yesterday, climbing 12 points to close at 1258…this puts the Venture just slightly above its still-declining 100-day moving average (SMA) for the first time in over five months…what really jumps out at us, though, is that the 1000-day SMA has flattened out at 1500 after a steady four-year decline and seems to be on track to reverse to the upside early in the fourth quarter…historically, such a reversal has only been witnessed at the start of a bull market…

Below is John’s updated short-term Venture chart – volume and buying pressure need to continue to increase, but we believe both will gradually build as the month unfolds…RSI(14) on this 4-month daily chart bounced off support at 50, as predicted, and is now at 64 which is still below the overbought range…

TSX Gold Index

There are very encouraging signs in the TSX Gold Index which has broken above a down trendline in place all of this year as you can see below in John’s 2.5-year weekly chart…note the recent surge in buying pressure, after months of selling pressure, and how the +DI is about to cross up over the -DI and the ADX…this is unquestionably a bullish chart…on Monday, we’ll take a look at a couple of the best-looking producers…

ECB Decision And Its Impact On The Dollar

The European Central Bank’s (ECB) much awaited announcement yesterday that it would buy sovereign bonds in a new program to ease the euro zone debt crisis should help the battered euro reclaim at least some of its clout (which is bullish for Gold), according to analysts…the euro (1.2692 is now at a two-month high against the greenback after the ECB unveiled new and possibly unlimited steps to buy the bonds of those euro zone countries that have faced painfully high borrowing costs this year…ECB President Mario Draghi said the central bank would buy bonds with maturities of up to three years once those euro zone countries in need of help agreed to strict conditions to improve the state of their finances…

So how are things looking for the U.S. Dollar right now in light of the ECB announcement and possible new easing measures from the Federal Reserve?…John’s updated U.S. Dollar Index chart shows a support band that is now being broken…a clear down trendline is in place with a possible head and shoulders top that suggests the Index could plunge to at least 78 (this would be hugely bullish for Gold)…we’re also anticipating an Obama re-election victory in November (Dollar bearish, Gold bullish) if for no other reason than the fact that Mitt Romney just doesn’t seem to be able to sell the Republican message and connect with the American people…

Obama’s Nomination Speech

President Obama was right about at least one thing last night as he accepted the Democratic Presidential nomination:  “On every issue, the choice you face won’t be just between two candidates or two parties…“It’s a choice between two fundamentally different visions for the future”…Obama called on Americans to rally around an economic recovery plan based on shared sacrifice and the “bold, persistent experimentation” that Franklin Roosevelt employed during the Great Depression, which reflects Obama’s faith in government and reliance on an institution that needs to shrink in size – not expand – simply based on the fact it’s carrying a $16 trillion debt…Margaret Wente of the Globe and Mail hit the nail on the head regarding Obama in an article yesterday in the Globe and Mail:  “Mr. Obama dwells in the world of the technocratic elites, who believe that a government with enough smart people and smart policies can solve all our problems (this is a cherished Canadian myth, and one reason we relate to him)…I suspect Mr. Obama knows no more about ordinary people than Mr. Romney does…like immense wealth, the White House tends to isolate a person…Mr. Obama is surrounded by people who tell him he walks on water – and, by most accounts, he believes it…but his greatest problem is that he doesn’t seem to know the old order is finished…he seems to think that all he needs to do is tax the rich, wait it out and soon the good times will return…that’s not a vision, or a plan…it’s a fantasy”…