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Gold is under some mild pressure to begin the new week but is holding above important support at $1,730…as of 5:55 am Pacific, the yellow metal is down $11 an ounce at $1,743…Silver is off 33 cents at $33.15…Copper is flat at $3.69 (Copper traders are the most bearish in four months – probably a bullish sign – on mounting concern that demand for industrial metals will weaken as growth slows from China to Europe)…Crude Oil is relatively unchanged at $91.73 while the U.S. Dollar Index has backed off from the 80 area once again and is now down one-tenth of a point at 79.68…

Today’s Markets

Asian markets were mixed overnight…Hong Kong rallied to a five-month high while China’s Shanghai Composite fell 6 points to 2099…European shares are higher this morning while stock index futures in New York as of 5:55 am Pacific are pointing toward a positive open on Wall Street…

China News

Market sentiment has been given a boost to start the week, thanks to benign inflation data from China which suggests scope for further monetary easing measures…China’s consumer price inflation eased to 1.9% in September from August’s 2%, while producer prices dropped 3.6% from a year earlier…further good news came from China over the weekend with customs data showing exports in September grew 9.9% from a year earlier, roughly twice the 5% rate expected…imports rose 2.4% year-on-year in September, in line with findings in the benchmark Reuters poll that had forecast a recovery from August’s surprise 2.6% annual decline.

Canadian Dollar Update

Just one reason why we’re so bullish on the markets is the action we’re seeing in the Canadian dollar…the way the dollar has behaved in recent months tells us that the trend is up for commodity prices and down for the U.S. dollar…this is good news for the Venture Exchange – the combination of a higher Canadian dollar and a lower greenback has always been positive for the Venture…below is an impressive monthly chart from John that goes back to 2007 and shows just how strong the trend is right now with the Canadian dollar…

Gold & Silver Chart Updates

As John outlined in his updated Gold chart posted Saturday, bullion has very strong support at $1,730 and the recent overbought condition has been cleansed…the COT structure at the moment, however, is not favorable for either Gold or Silver with commercials ramping up their short positions to high levels recently…that’s a cause for concern as the commercials are rarely on the wrong side of the short-term trade…about the only reason we can think of that would produce a more significant correction in the precious metals in the near future is a change in the dynamics of the U.S. elections…an Obama victory, which is somewhat less concern right now, would be more bullish for Gold and Silver (more of the same from the White House over the next four years) while markets would have to seriously ponder what a Romney victory could mean for Fed policy…Romney is more aggressive regarding deficit cutting and has vowed not to reappoint Fed Chairman Ben Bernanke when his term ends January 31, 2014…Obama and Romney debate for the second time tomorrow night…

Silver – Short-Term Chart

Silver continues to consolidate but is at support this morning as shown in John’s updated 9-month daily chart…RSI has fallen from overbought levels to previous support…

Silver – Long-term Chart

The long-term Silver chart continues to show Wave 5 progressing very well, though this doesn’t preclude the possibility of a near-term correction…RSI(2) in this 15-year monthly chart, however, can remain in an overbought state for an extended period as we’ve witnessed in recent years…John’s ultimate Fibonacci target (no timeline as yet) continues to be $78…the primary trend remains strongly bullish…

RBC – Two-Thirds Of Proposed Gold Projects Require $1,500 Gold To Generate IRR Of 20%

RBC’s precious metals team noted they are seeing evidence that suggests we may have reached a turning point where capital spending is curtailed and as a result we are seeing signs that inflation is easing in the mining space…capital estimates in 2012 are up 23% over 2011 and 40% over 2010 levels and now stand at $200 per ounce of Gold-equivalent production over the life-of-mine…RBC believes two- thirds of proposed projects require a Gold price of $1,500 per ounce to generate an after-tax IRR of 20% in the current cost environment…

Rainbow Resources’ (RBW, TSX-V) October Triple Play

Rainbow Resources (RBW, TSX-V) just delivered news within the past hour, and a wild few weeks appear to be in store for RBW with assay results pending from the International, and drilling starting at both Gold Viking in the West Kootenays and Jewel Ridge in Nevada…quickly, here are the highlights as we see them (we’ll review this morning’s news in more detail during the day in preparation for a story tomorrow morning):

1. Assays expected within 2-3 weeks for the International – 15 shallow holes drilled in Phase 1 with “drilling consistently intersecting the International vein system”…testing is for Silver, lead, zinc and Gold mineralization;

2. Drilling starts this week at Gold Viking where Rainbow is targeting an impressive anomaly (1,400 metres by 320 metres) in the central portion of this property (geochemical and airbornes line up exactly) which is contiguous to the past producing Ottawa Mines (2 million ounces at an average grade of over 60 ounces per ton Ag plus Gold, lead, zinc and copper)…recent grab sample assays from Gold Viking have returned Gold values up to 10 g/t;

3. Nevada Surprise – is Rainbow already sitting on a deposit?  Rainbow reported this morning that not only will it start drilling Jewel Ridge within the next two weeks, focusing on the past-producing Hamburg Pit where an historical result (2004) returned a stellar 2.1 g/t Au over 39.6 metres near-surface, but the company has acquired “vast amounts” of historical data that is leading to a reinterpretation of the potential of this property which is situated right in between 4+ million ounces of Gold (Ruby Hill + Lookout Mountain)…this is the most detailed information Rainbow has provided to date on Jewel Ridge…it is a treasure chest of details (with much more to come it appears) including:

“Gold mineralization at the Hamburg Pit occurs within the Hamburg Dolomite and at the contact with the overlying Dunderberg Shale…Gold values are present throughout the Hamburg Dolomite which appears to be at least 200 metres thick…northeast trending faults host higher-grade grade gold mineralization“…

“Geochemical signatures at Jewel Ridge are also similar to those reported at both Ruby Hill and Lookout Mountain”…

Below are some historical drill results from the Hamburg Pit area that we just copied from Rainbow’s news this morning:

Hole	From (m)	To (m)	Length (m)	Grade (Au)
N8423	42.7	61.0	18.3	2.53
N8422	54.9	79.2	24.4	1.16
N8414	30.5	36.6	6.1	4.11
HRC-13	79.2	120.4	41.1	0.56
HRC-11	94.5	134.1	39.6	2.10
HRC-4	15.2	33.5	18.3	0.76

Rainbow’s plan is to extend the shallow pits at Jewel Ridge at depth (to 200 metres which is still ideal for open-pit mining) and this is how Timberline Resources (TBR, TSX-V) is rapidly building its Lookout Mountain Project resource immediately to the south and on the same geological structure (Timberline is trading much higher volumes recently – it trades mostly on the AMEX – and is up 50% since mid-September)…

Rainbow is more attractive than ever in our view with a hot property in Nevada, in addition to the 13,000-hectare Big Strike Project in southeast British Columbia which not only hosts the International and Gold Viking past producers, but another half dozen properties that also hold discovery potential…with two drill programs underway imminently, and results pending from the International, trading in RBW should be quite vigorous not only in the days ahead but through the remainder of the year…

Rainbow, which was first listed just last year on the Venture, continues to show that it’s progressing with its business plan and that’s what helps make us so comfortable with this play…there is consistent forward movement and plenty to speculate on which attracts investor interest…

B.C.’s Blackwater District

As prolific as Rainbow’s West Kootenay region is, investors need to keep focused on the Blackwater camp in central British Columbia which features perhaps the most aggressive drill program in the entire world at the moment…New Gold (NGD, TSX) is reported to have at least a dozen rigs in action right now as they continue to work on upgrading and expanding their resource of nearly 10 million ounces of Gold and 60+ million ounces of Silver…juniors with drill programs in progress are RJK Explorations (RJX.A) and Troymet Exploration Corp. (TYE, TSX-V)…Parlane Resources (PPP, TSX-V) has announced its intention to commence at 2,000-metre drill program shortly…

Just recently, RJK started drilling into the guts of an interesting silver discovery the company made last spring that went relatively unnoticed by the market – 3.3 metres, near-surface, grading 79 ounces per ton…after following up on this property, RJK will move south and tackle its highly prospective Blackwater West Property that includes a 350-metre-wide-north-south-by-600-metre-long open-ended anomaly that we’ve been told by veteran geologists has rarely ever been seen in this camp…

BMR will be heading to the Blackwater district in the very near future to report on what is believed to be the largest Gold discovery ever in Canada west of Ontario…new takeovers by New Gold can’t be ruled out, especially after recent comments by Executive Chairman Randall Oliphant…

Below is an encouraging updated chart on RJK which closed Friday at 14 cents…

Aurcana Corporation (AUN, TSX-V) Chart Update

Note:  Both John and Jon hold share positions in RBW and RJX.A.