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Gold has been steady overnight, trading in a range between $1,689 and $1,698…as of 6:15 am Pacific, the yellow metal is down $2 an ounce at $1,691…Silver is up 8 cents at $32.18…Copper is unchanged at $3.47…Crude Oil is flat at $96.48 while the U.S. Dollar Index is up slightly at 81.29…the Dollar Index, as John has shown on some recent charts, is near critical support levels…there is plenty of fodder ahead this week that could trip up the greenback including Thursday’s ECB meeting and Friday’s U.S. jobs report…we’ll see what happens…

Priced in euros, Gold posted its highest close of 2012 last Friday after Fed Chairman Ben Bernanke left the door open for a further round of quantitative easing in a highly-anticipated speech at Jackson Hole…

Gold inventories held in ETFs have been on the rise with nearly 38 tons of accumulation in August just in the U.S.’s most widely traded product, marking the biggest inflow since November…Gold held in ETFs now exceeds Italy’s national reserves of Gold which are the third largest in the world…

A move by Gold this week through $1,700 seems highly probable with the next major resistance at $1,730 as John’s charts have been showing…given the right dynamics (aggressive global central bank action combined with an Obama victory in November), Gold certainly has a good chance of challenging its all-time high by year-end…

Silver, meanwhile, continues to look even better than Gold in terms of potential percentage gains…below is John’s updated long-term Silver chart that shows Silver is now at the beginning of a powerful Wave 5 move that should allow it to continue to rise even faster than the yellow metal…the RSI(2) indicator, which helped us to identify the recent bottom in Silver, can be expected to remain in overbought territory for a considerable period given historical patterns…for the near-term, expect Silver to meet resistance at $32.50 but the new support band (shown in John’s Saturday chart) is $30.50 to $31.00…

Silver has been rising much faster than Gold since the beginning of August which supports an old truism that when Gold is on the up, Silver outperforms (although the reverse seems to be true on a downturn)…respected Silver analyst Ted Butler describes Silver’s out-performance as a “multiplier effect” and is convinced that the current broad Gold:Silver price ratio of around 50:1 (52.8:1 as of this morning) which has now mostly been in place for a number of years, will not continue, with the ratio coming back down – in part because the amount of Silver available for investment is far smaller than the amount of Gold…add into that Silver’s big industrial usage element, where much is completely consumed and not recycled, and Butler feels there is a recipe for further considerable advances in Gold’s less costly sibling…“If you are considering the purchase of precious metals at this time, Silver is the one to buy…it is rarer than Gold in investment quantities yet priced as if it were more than 50 times as plentiful…considering the massive quantity of Silver that can be bought for the same dollar amount as compared to Gold, the biggest potential multiplier effect Silver can have may be on one’s financial health and wealth”…

Draghi In The Spotlight This Week

ECB chief Mario Draghi was reported to have told a closed hearing of the European Parliament that the central bank could buy government bonds with maturities of up to three-years from euro zone countries such as Spain that have been grappling with high borrowing costs…the ECB meets on Thursday against a backdrop of heightened expectations that it will now take decisive steps to get on top of a debt crisis in the region and restore confidence in the beleaguered euro…while the idea of the central bank stepping buying bonds from troubled euro member states is not new, details of the kind of bonds it will buy is and the suggestion that the ECB will buy debt with a short duration is a positive sign…

Troubles Continue in Spain

Interest rates paid by companies in the euro zone’s weaker economies have surged, highlighting the bloc’s fragmentation as the ECB loses control of borrowing costs…the Financial Times reports this morning that ECB data today showed Spanish small businesses face the highest bank borrowing costs in almost four years while interest rates paid by German rivals are at record lows…the sharply diverging interest rates have put southern European companies increasingly at a competitive disadvantage to their northern European rivals…meanwhile, the flight of capital from Spain is now worse than what Indonesia, one of the hardest hit countries during the Asian financial crisis, experienced in the late 1990’s, according to analysis by Nomura…on a three-month rolling basis, portfolio and investment outflows from Spain totaled 52.35 of the country’s gross domestic product (GDP), (that’s) more than double the outflows from Indonesia, which reached 235 of GDP at the time of the Asian crisis…

More Weak Manufacturing Data from Euro Zone & Asia

Manufacturing downturns gripped Asia and the euro zone in August, surveys of purchasing executives showed, in the latest sign of weakness in the global economy…new orders dwindled in the euro zone, suggesting the outlook for the 17-nation economy remains poor, while activity in China’s manufacturing sector – the engine for much of Asia’s economy – shrank at the fastest pace since the depth of the global financial crisis…the HSBC manufacturing Purchasing Managers’ Index (PMI) for China fell to 47.6 from July’s 49.3, the lowest since March 2009, figures released today show…in the 17-nation euro zone, the manufacturing PMI remained below 50 for a 13th month, though the contraction was less deep than in July, according to data company Markit…the August index was 45.1 compared with 44 in July…

China Weighs Timing Of More Stimulus

The Chinese Communist Party’s flagship newspaper, which provides a window into the thinking of Chinese leaders, urged officials today to save much of their pro-growth ammunition for the future, giving cover to Beijing as it faces growing pressure to do more to stimulate China’s slowing economy…in an editorial, the People’s Daily called for authorities to build up an inventory of policy measures that could be used to rekindle growth…but it said officials should use the downturn to first address long-standing ills such as economic imbalances and industrial overcapacity…it also said that while the world’s second-largest economy faces the risk of even slower growth because of the euro-zone crisis, China’s economic fundamentals remain healthy…”We not only have to make preparation for coping with short-term and sudden shocks, but also need to make long-term plans,” it said…the editorial suggests any major stimulus efforts may be delayed until China embarks on a once-a-decade leadership change later this year…

Today’s Markets

Asian markets eased overnight on concerns over weakening regional and global economic activity, but expectations of more stimulus from central banks and hopes for progress in tackling Europe’s debt crisis lent support…China’s Shanghai Index fell to its lowest close (2044) since March, 2009…European shares are modestly lower this morning while stock index futures in New York as of 6:15 am Pacific are pointing toward a flat opening on Wall Street…historically, September has been the worst month of the year for the Dow…over the last dozen years, the Dow has fallen an average of 2% in September…however, gains have been posted in five out of the last seven Septembers…

Venture Exchange

The Venture Exchange rallied strongly on Friday, along with Gold and Silver, and the key resistance level to watch right now is 1250…given the general technical posture of the Venture at the moment, including the fact its 50-day moving average (SMA) is about to reverse to the upside, the likelihood of an imminent breakout through the 1250 area has certainly increased…the Index closed Friday at 1241…

Below are a series of individual company charts from John, for our readers’ due diligence, that are looking bullish as the new trading week begins…

Rainbow Resources (RBW, TSX-V)

GoldQuest Mining (GQC, TSX-V)

Levon Resources (LVN, TSX)

Brixton Metals Corporation (BBB, TSX-V)

Golden Predator (GPD, TSX)

Panoro Minerals (PML, TSX-V)

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