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Gold is firmer this morning…as of 6:10 am Pacific, the yellow metal is up $11 an ounce at $1,736…Silver has surged 47 cents higher at $33.81…Copper is up another 3 pennies at $3.65…Crude Oil is 26 cents higher at $96.80 while the U.S. Dollar Index has fallen more than one-third of a point to 79.99…

UBS believes Gold is poised to take a sharp turn higher ($1,850 within a month) amid growing expectations that the Federal Reserve is about to unleash a third round of quantitative easing…Friday’s ugly U.S. jobs report means there is now “a strong likelihood” of Fed action after its monetary policy meeting wraps up on Thursday, UBS analysts said in a note, and this “sets the stage for the continuation of the precious metals rally”…

Copper – What’s It Telling Us?

Despite a global economic slowdown and growing stockpiles at warehouses in China, Copper is looking very strong on the charts and prices are now at 4-month highs (another reason we are bullish at the moment with regard to the Venture Exchange which tends to follow Copper)…the metal has erased year-to-date losses of 5% seen in June to post gains of more than 5%, most of which has been added here in September thanks in large part to actions from the European Central Bank and speculation of QE3 from the Federal Reserve…given how the Canadian Dollar has been behaving over the past couple of months, as shown in our chart yesterday, it seems markets are anticipating higher inflation down the road which is bullish for Copper and all commodities and even equities – particularly if central banks are forced to keep interest rates at historical lows…given a choice, due to debt levels, Ben Bernanke and other central bank leaders would take inflation over deflation…

Below is an updated 2.5-year weekly chart that shows how Copper has broken out of a symmetrical triangle and appears ready to test resistance around $3.90 a pound…

Meanwhile, the stacks of Copper slabs inside warehouses in Shanghai continue to pile up as reported in an excellent Wall Street Journal article yesterday (the supply overhang is reported to have increased from 500,000 metric tons in June to 600,000 in July, vs. the approxmate 214,000 metric tons in London Metal Exchange warehouses)…for some, this is a warning sign that demand within China, the biggest buyer of the metal, is decelerating dramatically in what could be a troubling sign for the global economy…even if the added stimulus from around the world sparks rising economic activity, and demand for Copper, some analysts argue it could take months to whittle down the huge Copper surplus lingering in China’s warehouses…while that happens, demand for new Copper from Chinese buyers is likely to remain low…under the pressure of high inventories, “any rally in Copper prices based on expectations will likely not be sustainable,” analysts at Deutsche Bank wrote in an August note…however, it’s important to keep in mind that overall Copper stocks are lower this year than a year ago thanks to a 42% drop in Copper inventories at the LME, according to Scotiabank, while the International Copper Studies Group still expects a 237,000-ton deficit of refined copper in the world this year…many Copper bulls are also counting counting on Chinese government support for the power and housing sectors to help prop up the metal’s prices…

China Says It’s On Track To Meet 2012 Growth Target

China is on track to meet this year’s target for economic growth and the government is giving greater prominence in policymaking to stabilizing the economy, Premier Wen Jiabao said today…Wen, speaking at a meeting of the World Economic Forum held in China’s eastern port city of Tianjin, said he was confident of keeping the economy on a track of steady and relatively fast growth…his comments come after China’s President Hu Jintao warned over the weekend that the world economy is hampered by “destabilizing factors and uncertainties” and that the 2008/09 financial crisis is far from over…Hu promised that China would do all it can to foster a global recovery by “rebalancing” its economy…meanwhile, speculation is mounting regarding the health and whereabouts of the man expected to take the reins as China’s top leader in a matter of weeks as Chinese authorities keep their usual tight grip on information about the nation’s leaders…yesterday, authorities failed to explain why Vice President Xi Jinping, who hasn’t been seen in public since September 1, had missed another meeting with a visiting foreign dignitary, Denmark’s prime minister…rumors that all wasn’t well with the 59-year-old Jinping were sparked last week when he skipped a meeting with visiting U.S. Secretary of State Hillary Clinton at the last minute…the government declined to provide a clear explanation for that highly unusual move…the mystery adds to an already tense atmosphere ahead of a  once-a-decade leadership transition expected to kick into gear in a few weeks…

Today’s Markets

Asian markets were mixed overnight with China’s Shanghai Composite declining 14 points to 2121 after Friday’s powerful surge and some follow-up buying Monday…European shares, which rallied to 5-month highs last week, are also mixed this morning ahead of the German Constitutional Court’s decision tomorrow on the legality of a permanent euro zone bailout fund…stock index futures in New York as of 6:15 am Pacific time, meanwhile, are pointing toward a modestrly higher open on Wall Street…

The Venture Exchange’s 5-session winning streak was snapped yesterday with the Index retreating during the day after climbing as high as 1283 in early trading…it closed down 6 points at 1271 but remains comfortably above the rising 10 and 20-day moving averages which can be expected to continue to provide support during this new uptrend…

Rainbow Resources (RBW, TSX-V) Update

News from Rainbow Resources (RBW, TSX-V) has just crossed the wire – a brief exploration update coupled with the announcement that Rainbow will begin trading on the OTCQX beginning tomorrow…given the increased trading activity on the Pink Sheets in the last month or so, it’s obvious that new eyes in the U.S. are following Rainbow and that’s likely going to accelerate with the listing on the more popular and prestigious OTCQX…Rainbow also announced that 10 holes have now been completed at the International Silver Property and drilling continues, so that’s another very positive sign…RBW has been keeping its cards close to its chest with regard to drilling progress at the International…there have been a few clues that they’re hitting very favorable structure, but the company has been cautious in its statements which we’re interpreting as bullish…no matter how shiny the core might be looking, Rainbow it appears may have adopted the strategy of wanting to “over-deliver” and unleash a zinger to the market at the appropriate time…we also get the impression that other things are “cooking” in the West Kootenays given the statement that there is “intense drilling and prospecting activity throughout our 17,000-hectare land package”…this would include the 13,000 hectare Big Strike Project (8 properties make up this project including the International) and the 4,000-hectare flake graphite project…so what exactly is happening, besides the ongoing drilling/exploration at the International and the pending drill program at Gold Viking?….for now RBW is keeping everyone guessing…the news release concluded with an encouraging update regarding the Jewel Ridge Property in Nevada where drilling is expected to commence soon…Rainbow has some fabulous drill targets to choose from at Jewel Ridge, including the immediate area around Greencastle’s stellar hole in 2004 that returned 40 metres grading 2.1 g/t Au…

Technically, RBW is resting perfectly at support after a 2.5-cent decline yesterday to 20 cents – the rising 200-day moving average which represents a very attractive entry point…the 50, 100, 200 and 300-day moving averages are all rising, confirming the overall bullish trend…over the past 9 sessions, the stock has traded mainly between a low of 20 cents and a high of 23 cents, while RSI(14) has drifted down to previous support at 44…up-day volumes have exceeded down-day volumes over the last 7 trading days…when a stock falls 10% in a single day, and not on great volume, and lands on very strong support, that’s not a time to get nervous or bearish if you’re a successful investor – that’s an opportunity to take advantage of…too many investors make the mistake of getting distracted by the minute-by-minute trading in a lot of different stocks, not just RBW (their moods rise and fall with prices), and they lose sight of the bigger picture…they also fail to fully understand volatility which is normal of course in the junior resource market especially…but if you can’t understand it, you can’t manage it…at some point in the near future, we expect RBW to blast through resistance around 25 cents and then the party’s on…

GoldQuest Adds Deep Drilling Rig, Expect Dominican Plays To Heat Up Again

Big Daddy has arrived in the Dominican Republic…deep drilling has started at GoldQuest Mining’s (GQC, TSX-V) Romero discovery as the company has just announced the addition of this third rig which is capable of drilling to a depth of 700 metres…a dozen holes have now been completed at Romero (results have been released for 7 which all ended in mineralization) with three more in progress…it’s quite possible GQC will discover even richer Gold and Copper grades at depths below where it has been unable to drill up until now…

Technically, GQC is showing new bullish signs after a very healthy pullback to a zone of strong support…

The other Dominican plays we’ve been following are all looking very attractive from a technical standpoint after a short and normal consolidation period as John outlines below…

Everton Resources (EVR, TSX-V)

Unigold Inc. (UGD, TSX-V)

Precipitate Gold Corp. (PRG, TSX-V)

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