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Gold is under pressure this morning on another “risk-off” day and as the U.S. Dollar continues to strengthen…as of 6:15 am Pacific, the yellow metal is down $18 an ounce at $1,559…Silver has retreated 52 cents to $26.62…Copper is 3 cents lower at $3.41…Crude Oil is off 89 cents a barrel to $84.92 while the U.S. Dollar Index has surged nearly one-third of a point to 83.73…

Merrill Lynch Bullish On Gold

Francisco Blanch, Head of Global Commodity & Multi-Asset Strategy Research at Merrill Lynch, told CNBC yesterday that he expects the Federal Reserve to initiate an asset-purchasing program of as much as $500 billion in the second half of the year which will drive Gold much higher…

“We think that $2,000 an ounce is sort of the right number,” Blanch said yesterday…“We believe that ultimately the Fed will be forced to do quantitative easing…if it happens in September, as our economists expect, we will get a rally sooner in Gold…if it happens after the election (in November), we will get the rally a little bit later…probably we will touch $2,000 an ounce sometime next year”…

Today’s Markets

Global stocks are on course to record a seventh consecutive day of declines as the latest batch of central bank monetary policy maneuvres fail to counteract worries about fading economic activity…the “herd” is running scared right now but that has to to viewed as a bullish contrarian sign…

The latest piece of disappointing economic news that has the herd on edge comes out of Australia, where employment unexpectedly fell by 27,000 in June…central banks have been busy trying to combat waning growth, but apparently not trying hard enough for some investors’ liking…

After last week’s stimulatory actions by the People’s Bank of China, the European Central Bank and the Bank of England, the past 24 hours or so have seen Brazil trim interest rates to a record low and South Korea deliver a surprise cut in borrowing costs… the Bank of Japan has also added more firepower to its asset purchase program – though a 1.5% fall for the Nikkei 225 suggests investors are unimpressed…but perhaps the issue most weighing on sentiment is the perceived reluctance of the U.S. Federal Reserve to adopt a more aggressive interventionist stance…the market seems to have inferred from the minutes of the Fed’s June policy meeting that the U.S. central bank would need to see more evidence that the world’s biggest economy is deteriorating further before it delivers QE3…previous QE programs have sparked rallies for “risk assets” so traders are throwing a bit of a tantrum as they now think they’re less likely to receive this “sugar rush” anytime soon – of course that sentiment could change tomorrow, next week, or next month…

Stock index futures as of 6:15 am Pacific are off their lows but are pointing toward a modestly weak open on Wall Street…weekly U.S. jobless claims came out 40 minutes ago and dropped more than expected which has helped to stabilize markets a bit…China is due to release the bulk of its second quarter economic data tomorrow…the Shanghai Composite Index bucked the trend today by climbing 10 points to 2185…

Stay Focused On The Big Picture

As investors in the speculative junior resource market, fretting over minute-by-minute and day-by-day trading moves is never good for one’s health and can also be destructive to one’s portfolio…there is so much bearishness at the moment, and so much money sitting on the sidelines, that what investors should be preparing for right now is a monster rally at some point during this second half of 2012 – it could begin next week or next month, who knows, but times like these are when fortunes are born…a very well known and successful 40-year trader (Venture Exchange, VSE) in Vancouver who we spoke with yesterday said he’s convinced the market is at or near a bottom, and now’s the time to be “holding on” and snapping up bargains for the big move to the upside that’s inevitably going to come…

One of many companies he’s looking at on the Venture is Dynasty Gold (DYG, TSX-V) which is trading at just 2.5 cents for a market cap of $3 million…the company has about $1.7 million cash in the bank and is looking for a project…one of its directors is Robert Galagher, President and CEO of New Gold Inc. (NGD, TSX)…for patient investors, DYG is definitely worthy of consideration and due diligence…below is a chart from John that shows DYG is simply sitting at support – it was as high as 16 cents last year…

John has a couple of charts showing interesting movements at the moment…Urastar Gold Corp. (URS, TSX-V) is working on a Gold project in Mexico and has climbed over 60% since touching a low of 18.5 cents near the end of last month…it’s definitely one for the “watch” list…URS closed at 30 cents yesterday (resistance) and a pullback to the EMA-20 area (24 cents) seems plausible and that could be a good entry point…as always, perform your own due diligence…

Another company with an interesting chart is Giyani Gold Corp. (WDG, TSX-V) which recovered by a dime yesterday to $1.25 after losing 25 cents the previous three trading sessions…WDG appears to be in the process of forming an inverted head and shoulders pattern…again, another company to put on the “watch” list – use the chart as a tool in your due diligence…

Note: John, Jon and Terry do not hold positions in DYG, URS or WDG.