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Gold is taking a slight breather today after an impressive run since Thursday…as of 7:15 am Pacific, bullion is down $8 an ounce at $1,329…Silver, which has been out-performing Gold recently – a bullish sign for precious metals – is up a penny at $21.44…Copper is unchanged at $3.28…Crude Oil is off 50 cents at $105.61 while the U.S. Dollar Index is up one-third of a point at 81.82…

“There is a clear conflict between physical and speculative demand right now, but as things stand, China’s buying spree has been the bigger influence right now and has driven leveraged funds to cover shorts,” CNBC quoted Chris Weston, chief market strategist at IG Markets, who noted that if Gold moves above resistance around $1,350, it could immediately test the $1,370 level and then $1,400…

CNBC also reported that according to Barry Dawes, head of resources at Paradigm Securities, there’s a strong case for buying Gold, citing tighter supply in the physical market…“The physical demand for Gold is robust and we’re seeing premiums in Asia that you don’t see in other parts of the world,” Dawes said. “The physical market for Gold is now really tightening up and the shenanigans being played by hedge funds and bullion and investment banks may just be coming to an end”…

Gold-Silver Ratio

In terms of the trend in precious metals, it’s almost always a positive development when the Gold-Silver ratio is in decline…that’s what we’re starting to see right now…Gold has been performing a lot better lately, but Silver is taking the lead and that reflects money flow into precious metals…below is an updated Silver outlook from John, and near the bottom of the chart you can see how the Gold-Silver ratio importantly has broken above a downtrend on this 6-monthly daily…the ADX trend indicator has turned bullish for Silver as well, so we are looking at a change in the market here…Silver appears headed toward the $22-$23 resistance band over the near-term, but ultimately we expect a bigger move later in Q3 or Q4…major resistance will be around $26…

Discovery Plays

Even during this challenging year on the Venture, serious discovery plays – whether they’re graphite, uranium, Copper-Gold, etc., have been hot – and we expect that trend to intensify in the weeks and months ahead…if you can focus on the 10 to 15% of companies who have the ability – the geological expertise, management skill and financial resources – to find a major new discovery, you could make fortunes as that’s where the speculative money is going to be increasingly drawn to…new deposits of all sorts in safe jurisdictions are going to be required in the years ahead – yet there are fewer dollars being invested in that effort by a decreasing number of companies…that’s why we’ve been regularly mentioning situations like Zenyatta Ventures (ZEN, TSX-V), Fission Uranium (FCU, TSX-V) and Alpha Minerals (AMW, TSX-V), Colorado Resources (CXO, TSX-V), West Cirque Resources (WCQ, TSX-V), GoldQuest Mining (GQC, TSX-V), among others…

That’s also why we’re so bullish on the Sheslay River Valley area of northwest British Columbia because that’s where we see great possibilities for a major new discovery, and many independent prospectors and geologists agree with this after the extensive due diligence we’ve carried out over the past few months…you make money when you get ahead of the crowd…all the necessary ingredients exist with this situation – historical information, geological structures, the proven expertise, the financial resources…very shortly, Pete Bernier’s Prosper Gold (PGX, TSX-V) is expected to begin trading, armed with all the cash and expertise he and his highly qualified team need to begin to take the highly prospective Sheslay Copper-Gold Porphyry Project to the next level as we reported in a detailed update yesterday…average investors are asleep at the switch this summer and don’t even know this story exists…these same investors will be jumping on the bandwagon in due course…

Meanwhile, Garibaldi Resources (GGI, TSX-V) will be a major player in developments in the Sheslay River Valley with its massive 170 sq. km Grizzly Property contiguous to the western and southern boundaries of the Sheslay Project…our hunch is that Garibaldi is going to come out swinging as soon as Prosper Gold starts trading – why wouldn’t they?…they’re a smart and opportunistic group…all technical reports show that the Grizzly and the Sheslay are intimately connected geologically, though the Sheslay of course is much more advanced from an exploration standpoint…but the “blue sky” potential of both is huge, and Prosper Gold head geologist Dirk Tempelman-Kluit, who of course founded the multi-million ounce Blackwater deposit just a couple of years ago, has the advantage of a plethora of historical data at his disposal to help him immensely at figuring out the geological puzzle of the Sheslay and surrounding area…Garibaldi also has an exceptional geological team, one that convinced them of the value of the Grizzly well before Bernier came along…GGI has also created (and continues to create) shareholder value in Mexico where it identified and sold a property to NYSE-listed Paramount Gold and Silver, allowing Garilbaldi to not have to do a financing for more than 4 years…the Sheslay River Valley area is going to rapidly develop into an exploration hotspot, beginning almost immediately as we suspect that both teams – Prosper Gold and Garibaldi – are ready to deploy assets there…

You don’t think Tempelman-Kluit is almost salivating at the fact that no less than 85% of Firesteel’s 23 holes at the Star target, beginning in 2004, bottomed in strong mineralization and that the average length of those holes was only 174 metres? (check Prosper Gold’s PowerPoint presentation)…and the Star is just 1 of several advanced mineralized porphyry zones at the Sheslay…this is a geologist’s dream…in northwest B.C., you often hit the real juicy stuff when you drill deeper…

An important “heat engine” – Mount Kaketsa – driving mineralizing fluids in the Sheslay River Valley originates on Garibaldi’s property and extends onto the southwest corner of the Sheslay, with “spectacular alteration” reported on parts of Kaketsa (technical reports)…important Copper-Gold occurrences in the northwest corner of the Grizzly have been reported (BC MINFILES), yet this area has yet to be followed up with a proper drill program…

Technically, Garibaldi continues to show amazing underlying strength with the Grizzly coming out of hibernation…from both a short-term and long-term perspective, there are few charts on the Venture at the moment as strong as GGI’s…

Don’t forget about Firesteel Resources (FTR, TSX-V) in the Sheslay play as they would still hold 20% in the project with Prosper Gold…they have other important assets, too, in the Iskut area…

Fission Uranium (FCU, TSX-V) Updated Chart

Speaking of discoveries, what a day yesterday for both Fission Uranium (FCU, TSX-V) and Alpha Minerals (AMW, TSX-V) as they reported more outstanding results from their Patterson lake South discovery in Saskatchewan…last week, John gave our readers a heads-up that a near-term move through its $1.10 resistance by Fission was increasingly likely based on technical considerations…the new Fib. level given (not a price, but a theoretical level based on Fib. analysis) was $1.38…FCU blasted through $1.10 resistance yesterday and closed at $1.18 on total volume (all exchanges) of 15 million…below is an updated 4-month daily chart…FCU is unchanged at $1.18 as of 7:15 am Pacific…

Azincourt Uranium Inc. (AAZ, TSX-V)

Azincourt Uranium (AAZ, TSX-V) is certainly worthy of our readers’ due diligence, and we’re happy to report that StockCharts.com has finally added AAZ to its database, thanks in part to our efforts and those of some of our readers…Azincourt has an option to acquire up to a 50% interest in Fission’s Patterson Lake North Project (PLN), considered an “important core holding” by Fission and totaling 27,400 hectares…a summer exploration program with a budget of just over $500,000 will assist in identifying and prioritizing drill targets for an anticipated 2014 winter program…

Below is a “big picture” view of AAZ from a technical perspective through a 15-month weekly chart…since April, the stock has been trading in a horizontal channel primarily between 20 cents and 33 cents…it closed yesterday at 23.5 cents…AAZ closed a $1.5 million financing in June at 15 cents and currently has 27 million shares outstanding…

Today’s Markets

The Dow is down 56 points through the first 45 minutes of trading today…a gauge of U.S. consumer spending rose in July at its fastest pace in 7 months…the U.S. government is posting the strongest revenue since before the recession, buoyed by higher tax rates and a slowly improving economy, leaving the federal budget on track for its narrowest deficit in five years…revenue from October to July, the first 10 months of the government’s fiscal year, totaled $2.287 trillion, the Treasury Department said yesterday…that’s up approximately 14% from a year earlier…meanwhile, government spending is down slightly, largely due to across-the-board cuts called the “sequester” that went into effect March 1…

Overall, the government is still spending well more than it collects, albeit at a slower pace…the budget deficit for the 10 months reached $607.42 billion, 38% narrower than a year earlier…the CBO (Congressional Budget Office) estimates a deficit of $642 billion for the fiscal year ending September 30, compared with $1.087 trillion a year earlier and the smallest gap since 2008’s $458.55 billion shortfall…while the short-term deficit and debt issues have improved, Congress will still have to raise the debt ceiling later this year, likely between mid-October and mid-November…and Washington still has to get its spending under control, especially when it comes to entitlement programs, in order to address long-term structural debt issues that could easily spiral out of control….deficits and the debt are still projected to rise sharply over coming decades as an aging population and health-care cost inflation boost spending on government benefit programs such as Medicare…

TSX, Venture, Asian Markets

The TSX is up 17 points as of 7:15 am Pacific while the Venture has declined 2 points to 923…

Asian markets were higher overnight, led by Japan’s Nikkei average which climbed 348 points of 2.5%…news of possible corporate tax cuts helped boost sentiment…China’s Shanghai Composite edged 5 points higher to close at 2106…

Below is a 2.5-year weekly chart for the Shanghai…occasionally we look at the Shanghai chart because history has shown there is a strong correlation between this Index, the Venture Exchange and Gold…the technical posture of the Shanghai at the moment is quite bullish, another reason we’re expecting a good run by the Venture and Gold before this 3rd quarter is over…

Note: John and Jon both hold share positions in GGI.