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Gold has traded between $1,613 and $1,621 so far today…as of 4:40 am Pacific, the yellow metal is down $2 an ounce at $1,614…Silver is up 2 cents at $28.11…Copper is 3 cents lower at $3.38…Crude Oil is up slightly at $96.13 while the U.S. Dollar Index is up just over one-tenth of a point at 82.69…

Today’s Markets

Asian markets were mixed overnight with China’s Shanghai Composite dipping below 2100 to a three-year low before recovering modestly to close down 8 points at 2107…new data showed real estate prices rising in a majority of major cities which was viewed negatively by the market…Japan’s Nikkei, meanwhile, hit a three-month closing high for the second straight session as risk appetite remained robust and a softer yen provided support to recently battered exporters…European shares are mixed this morning while stock index futures in New York as of 4:40 am Pacific are pointing toward a slightly negative open on Wall Street…

Average investors continue to shun stocks which is viewed by some as a positive contrarian indicator…despite the fact U.S. stocks are close to their highest level in almost five years, volume on the New York Stock Exchange has hit 2012 lows in recent sessions and is about half of where it was for the same week a year ago…options volume is down about 11% while trading activity at the Chicago Mercantile Exchange is off 30% from its 2011 pace, according to financial services firm Keefe, Bruyette & Woods…fund flows have told a similar story…equity funds, including exchange-traded funds, lost another $6.3 billion last week while bond funds took in $3 billion, according to Lipper…stock funds lost $11.5 billion in the second quarter while bond funds gained a staggering $55.4 billion…the Dow has clocked six straight weeks of gains, making this one of the most disrespected rallies of all time…since the general public is typically often on the wrong side of the fence when it comes to the direction of the stock market (they pile in at the top in a state of euphoria and exit in fear at the bottom), the fact Fred and Wilma aren’t excited right now about equities is likely a bullish sign…however, it’s also fair to say that there are some important issues markets and companies need to address to instill greater confidence in the system by the general public…

Venture Exchange

The CDNX will try to build on a strong performance last week with the Index gaining 42 points or 3.4% to close Friday at 1233…the Venture surged past its EMA-20 resistance for the first time since the downtrend started in March…the 10-day moving average (SMA), currently just above 1200, should provide support during this new uptrend…check out John’s latest CDNX chart in yesterday’s Week In Review And A Look Ahead…

Long-Term Chart Reveals New Clues Regarding Gold

John has another amazing chart this morning that shows Gold could be ready for an explosive upside move based on a Bollinger Band squeeze (volatility indicator) that’s comparable to what was seen just prior to two other major advances in recent years, one in 2007 and the other in 2009…it’s very hard to examine this 10-year monthly chart and not come to the conclusion that Gold is in for a potentially powerful surge over the final four months of 2012…

More On Gold

Gold sentiment likely got a boost when recent filings showed billionaire John Paulson raised his stake in an exchange-traded fund tracking the price of Gold, leaving his $21 billion hedge fund with more than 44% of its U.S. traded equities tied to bullion…in addition, the $25 billion Soros Fund Management LLC portfolio also made a sizable increase in its exposure to bullion…the Soros Fund, based in New York, raised its existing weight by slightly more than 175% from the previous filing…and finally, investment funds in China soon plan on launching the country’s first batch of Gold exchange-traded funds, according to state-run Shanghai Securities…

Below are a couple of excellent charts from www.usfunds.com and Frank Holmes’ weekly Investor Alert…

Using the last 10 years of data, if you plot the 12-month rolling return, you can see that Gold has reached an extreme low, registering a -2 sigma…

The last time Gold reached this point was in August, 2008…you can see below the yellow metal’s significant climb after hitting that standard deviation low…

Rainbow Resources (RBW, TSX-V) Update

One of the best-looking charts on the Venture throughout this year belongs to Rainbow Resources (RBW, TSX-V) which, in determined fashion, continues to “move up the ladder” in a way that suggests at almost any point – especially with drilling now underway – it could explode higher…drilling started just over a week ago at RBW’s International Silver Property north of the historic Silver mining community of Kaslo in southeast British Columbia, and an exploration update is expected from Rainbow sometime this week…we have a great deal of confidence in how this project is being managed on the ground as it’s headed by respected veteran geologist Bob Morris of Moose Mountain Technical Services…the fact Moose Mountain also appears quite excited about the Fugro geophysical data for the International, showing clear potential for new discoveries well outside the originally identified 1.5-km-long mineralized structure, leads us to believe that there are many more chapters yet to be written in this highly interesting potential “discovery play”…geological engineer Jim Snell, who wrote a report on the International for privately-held Braveheart Resources in 2007, seemed to have a very good feel for the property after investigating it rather thoroughly beginning in 1998…”The structure as surveyed by Dawson (BCLS) in 1933 is exposed along a true strike for 4,000 feet and in the opinion of the writer, because it has the nature of a sill, it can be expected to continue for some unknown but possibly a considerable distance beyond the claim boundaries”, Snell stated…what’s also interesting is a historical report from a geologist for Kaslo Mines Corporation (Kaslo’s mining plans for the International in the early 1940’s were derailed by the American entry into World War 2) who indicated the International vein got much wider going “farther toward the southeast” from the Forgotten claims in the northern portion of the property where the initial high-grade Silver discovery was made…

Quartz intrusion and replacement of the country rock appears to be what has formed a potential deposit at the International, and now it’s up to the downhole tools to define what’s there…we know there’s high-grade material at the International (20, 30, 40 ounces of Silver per ton, plus very high lead values) and encouraging vein widths based on historical information and Rainbow’s sampling…early indications of the continuity of the mineralization along strike and at depth is what the current drill program is expected to reveal…a rich Silver find would obviously have a dramatic impact on Rainbow’s market capitalization which currently sits at $8.7 million…it’s interesting to note, for comparison purposes, that Huldra Silver’s (HDA, TSX-V) Treasure Mountain deposit near Hope, BC (Treasure Mountain is soon going into production with mill feed being trucked to Merritt, just over an hour away) contains a 43-101 indicated resource of 33,000 tonnes grading 24.2 opt Ag, 4.2% Pb and 3.8% Zn, and an inferred resource of 120,000 tonnes grading 27 opt Ag, 2.8% Pb and 4.4% Zn using a 10 opt Ag cut-off (like the International, plenty of galena, sphalerite and pyrite)…the property is in a very remote location, vein widths are narrow, tonnage is low but grades are high for this underground operation…Huldra has a market cap of $60 million, 7 times that of Rainbow which also has several other projects in its portfolio including a promising Gold property in Nevada…we like Huldra, especially in a rising Silver market, but a good case can be made that RBW’s International Property has greater potential and intriguing near-surface opportunities…

Below is John’s latest Rainbow chart after Friday’s strong close of 24.5 cents…the stock finally appears to have overcome key resistance at 24 cents which should become new support (20 cents was previous resistance and then support)…

RJK Explorations Ltd. (RJX.A, TSX-V)

Another Silver (and Gold) situation we’ll be keeping an eye on in British Columbia in the coming weeks is RJK Explorations (RJX.A, TSX-V) which is exploring in the rich Blackwater district in the central part of the province…that’s of course where Richfield Ventures made a huge discovery and got taken out last year by New Gold Inc. (NGD, TSX)…RJK has been in “quiet mode” over the last couple of months after reporting results from the first phase of drilling at its 9,200-hectare Blackwater East and Northeast properties…while the market may have been looking for Gold, what it got instead from one hole was an impressive Silver drill result of 79.04 ounces per ton over 3.3 metres (at a depth between 79 and 82.3 metres)…with no new drilling until September, any excitement over that result was somewhat muted and the stock has gradually drifted down to a very strong support area (it closed Friday at 10 cents)…with drilling expected to resume within a few weeks, to follow-up on that Silver intersection, RJK can be expected to begin a climb back up in the very near future…the company holds a large overall land package in the prolific Blackwater area and much of it has yet to be systematically explored…we’re impressed with how the company has taken blind, completely overburden-covered exploration targets with unmapped and unknown geology to what now may be the early stages of an important discovery…so this is definitely a situation to watch closely and be on top of…

Wildcat Silver (WS, TSX)

John’s chart last Thursday was bang-on for Wildcat Silver (WS, TSX) which gained 18% the last two trading sesions…it closed Friday at 94 cents, just below its declining 100-day moving average…once WS is able to overcome the resistance band between 95 cents and $1, which seems inevitable given the quality of the company’s deposit in Arizona and Silver’s primary trend, then the stock could really gain some traction…notice how it made a rapid advance in early 2011 when Silver last exploded…

Prodigy Gold (PDG, TSX-V)

Prodigy Gold (PDG, TSX-V) has reported a more than 50% increase in its Gold resource at its 100% owned Magino Gold Project in northern Ontario with the release of an updated NI-43-101 resource calculation this morning…Magino now contains an indicated resource of 5.8 million ounces (203 million tonnes grading 0.89 g/t Au) using a cut-off grade of 0.35 g/t Au while the inferred resource is 300,000 ounces (10.3 million tonnes at a 0.35 g/t Au cut-off)…the new estimate includes the results from almost 68,000 metres of core drilling completed at the project since mid-September, 2011, in addition to 151,900 metres of previous drilling…Prodigy closed Friday at 59 cents for a total market cap of approximately $180 million,, so each ounce in the ground at Magino is valued at about $30…important resistance on PDG is at 60 cents where the declining 100-day moving average (SMA) currently sits…PDG has not traded above its 100-day since the end of February…the stock is strongly supported, however, by its rising 500-day SMA in the mid-50’s…

Castle Resources Inc. (CRI, TSX-V)

A company very worthy of our readers’ immediate due diligence is Castle Resources (CRI, TSX-V), another British Columbia opportunity with a growing Copper resource near Stewart…over the last two years, CRI has outlined 1.3 billion pounds of Copper (plus, notably, 15 million ounces of Silver) in the indicated and inferred categories, with four rigs on site at the moment conducting expansion drilling over an area of robust mineralization (the South Zone) that has extended the strike of the current resource by over 600 metres to the south of the historic Granduc orebody…Granduc is a past producer that operated for over 13 years in the 1970’s and 1980’s…the stock is beginning to wake up after plummeting from a high of just over 60 cents in February to a low of 17 cents when the Venture hit bottom at the end of June…below is a 2.5-year weekly CRI chart from John that shows a recovery appears to be underway…

Focus Graphite (FMS, TSX-V)

Graphite plays have been struggling lately, well off their spring highs…looking at the big picture for Focus Graphite (FMS, TSX-V), one of our favorites, it has been trading in a symmetrical triangle for 17 months and has successfully tested support no less than 13 times…below is a 2.5-year weekly chart from John that shows a continuation of the trend is likely for now…

Note: John and Jon hold share positions in Rainbow Resources.