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Gold has traded in a narrow range so far today after yesterday’s powerful move in the wake an historic aggressive QE3 program ushered in by the Federal Reserve which has also probably gone a long way toward assuring the re-election of Barack Obama…a couple of years from now, however, there could be one very nasty inflationary hangover…as of 5:45 am Pacific, the yellow metal is up $2 an ounce at $1,769 after climbing as high as $1,779 overnight…Silver has pulled back 20 cents at $34.48…Copper has surged 9 cents to $3.80…Crude Oil has gained $1.37 a barrel to $99.68 while the U.S. Dollar Index has tumbled again, falling one-third of a point to 78.91…as we’ve been mentioning, the Dollar is in huge trouble but that’s great news for commodities and the Venture Exchange which has a strong inverse relationship with the greenback…the Canadian Dollar, meanwhile, continues to surge as the market gets a whiff of inflation on the way…

Where could Gold go?…we have little doubt now that Gold is headed back up to $1,900 an ounce and may indeed hit a new all-time high during the fourth quarter…RSI(14) on John’s 4-year monthly chart below has a lot of room to support a strong move higher…Wave 1 of a new up motive phase has begun, and that ultimately means the Gold price will climb well beyond $2,000 an ounce (as far as Silver goes, John’s $78 Fibonacci target should seem may seem a little more plausible to some of readers now than it did a couple of months ago when Silver was languishing at $26 an ounce)…Gold’s first major challenge, of course, will be to overcome the 2012 high of $1,800 and then it must work through a resistance band all the way up to $1,920…everyone has to be patient as temporarily overbought conditions will need to be cleansed from time to time…not only has Helicopter Ben guaranteed that Gold is going much higher, but geopolitical events could also be helpful with increasing speculation that Israel is gearing up for a preemptive strike on Iran prior to the November U.S. elections…

Unlimited Money Printing

The Federal Reserve, frustrated by persistently high U.S. unemployment and the torpid recovery, has indeed launched an aggressive program to spur the economy through open-ended commitments to buy mortgage-backed securities and a promise to keep interest rates low for years…in the most significant of its new moves, the Fed said yesterday it would buy $40 billion of mortgage-backed securities every month and would keep buying them until the job market improves, an unusually strong commitment by the central bank…”We want to see more jobs,” Fed Chairman Ben Bernanke said at yesterday’s news conference when he explained the rationale for the Fed’s actions…”we want to see lower unemployment…we want to see a stronger economy that can cause the improvement to be sustained”…

Of course smarter fiscal and regulatory policies are the best instrument to spur U.S. job creation but whether those are likely to come anytime soon is a major question mark…Bernanke’s move yesterday should keep markets buoyant through the remainder of 2012 which also greatly increases the odds of an Obama election victory, and the make-up of the Congress will be critical in determining the direction of U.S. fiscal and regulatory policy…artificially low interest rates do nothing to encourage governments to reduce debt…

“This Is Monumental And Historic”

The Fed’s announcement sent investors piling into stocks, Gold, the euro and other assets seen as likely to benefit from the extra liquidity…the Dow soared to its highest level yesterday since December, 2007…commodity prices rose, highlighting the risk that Fed policies could be undercut by pushing up some household costs…“I think this is monumental and historic,” said Lord Abbett fixed income strategist Zane Brown…“I imagine the Fed is likely to come under considerable criticism for assuming that monetary policy can be effective in creating employment…that is the dual mandate, but I’m not sure people can prove a correlation between that and purchasing mortgage securities”…

The $40 billion monthly price tag on the bond-buying program is relatively small compared with the $1.25 trillion mortgage-bond buying program the Fed launched in March 2009 and a $600 billion Treasury bond-buying program it launched in November 2010…but the new effort has the potential to become very large…”If the outlook for the labor market does not improve substantially, the [Fed] will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ other policy tools as appropriate until such improvement is achieved in a context of price stability,” the Fed said in its statement yesterday…

Peter Schiff – Greenback To Go “Through The Floor”

The latest stimulus plans announced by the Federal Reserve is “disastrous” for the U.S. dollar, says long-time dollar bear Peter Schiff, warning that the greenback will go “through the floor” as investors dump the currency in favor of commodities like Gold and oil…“This is a disastrous monetary policy; it’s kamikaze monetary policy,” Schiff told CNBC Asia’s “Cash Flow”… “The Dollar Index is going to go down to 40, it might even go to 20 – I mean this is going to be in free fall at some point… ultimately there’s going to be a currency crisis”…according to Schiff, the Fed will not be able to produce a thriving U.S. economy by “debasing” the dollar, and printing more money is not going to solve the country’s problems…“What we actually need is less money printing, we need higher interest rates, more savings, more production, more exports and what the Fed is doing is inhibiting that from happening,” he said…Schiff, who has been a vocal critic of Fed’s stimulus measures, argues that instead of cheap money from the Fed going in to sectors of the economy like real estate, as it hopes, the money will be going into commodities…“The American economy depends on our ability to print money and trade it for what the rest of the world produces, but as the dollar is falling through the floor, nobody is going to want to trade their stuff for our rapidly depreciating paper,” Schiff added…

Today’s Markets

Asian markets powered higher overnight, bolstered by the Fed announcement, with China’s Shanghai Composite Index gaining 13 points to 2124…European shares are up between 1.5% and 2% this morning while stock index futures in New York as of 5:45 am Pacific are pointing toward a positive open on Wall Street…

Venture Exchange

Venture Exchange volume jumped yesterday to its highest level in a few months as the Index closed above 1300 for the first time since late May…we’ve stated this repeatedly recently but it’s worth mentioning again…a critical long-term moving average to keep an eye on is the 1,000 day SMA which is now guaranteed in our view to reverse to the upside within the coming weeks…this will end a four-year decline and what that could very easily mean, no matter how hard this might be for some readers to accept, is that the Venture is in the very early stages of a new bull market…back in May, June and July, mining and exploration stocks were radioactive…few people wanted to go near them and brokers were hiding under their desks, if indeed they were even showing up for work…that’s always the sign of a bear market bottom…at some point, the move up will rapidly accelerate…patience is required right now, though, with individual stocks and the market as a whole, as a lot of investors have been bruised badly over the last year-and-a-half…

A rising ride in the coming weeks and months will also not lift all boats…the companies that will move the most will be the smart ones that have worked hard this year to position themselves for better market conditions during the second half of the year…Rainbow Resources (RBW, TSX-V), though it has been consolidating over the last couple of weeks, is an excellent example…it is cashed up with a drill program in progress and two more on the way…that type of situation is what will often lead to trading and investment success in a better market as we’re seeing now…

Much higher Gold prices will be helpful for companies with substantial lower grade deposits like Spanish Mountain Gold (SPA, TSX-V), Probe Mines (PRB, TSX-V), Gold Canyon Resources (GCU, TSX-V), Gold Bullion Development (GBB, TSX-V) and others…

An area that should draw much more attention in the coming weeks and months is the Blackwater District, and we’ll be making a visit there in October…we’re very bullish on New Gold (NGD, TSX) which continues to develop a world class Gold and Silver resource, and there are a number of companies in the area that could do extremely well…just two we’ve been pointing out recently are Parlane Resource Corp. (PPP, TSX-V) and RJK Explorations (RJX.A., TSX-V)…both are expected to launch drill programs very soon…

Below is an updated chart for Parlane, and we thank those readers who submitted requests for Stockcharts to add Parlane to its list…Parlane is beginning to wake up but, again, patience is the key…a confirmed breakout would occur if PPP were to close above 15 cents today (resistance on the weekly chart) followed by a white candle on Monday…below is John’s 2.5-year weekly chart on Parlane which has to be viewed as another potential Blackwater-area takeover candidate for New Gold…you can accumulate it now or chase it later…

Newstrike Capital Inc. (NES, TSX-V)

Newstrike Capital (NES, TSX-V) came out with nice drill results the other day from its highly regarded Ana Paula Project in Mexico’s Guerrero Gold Belt…the chart is looking promising, as John shows below, and the 100-day SMA is flattening out and should reverse to the upside in the coming weeks…

Orko Silver (OK, TSX)

When Silver was trading in the mid-to-upper $20’s, we pointed out an opportunity in Orko Silver (OK, TSX-V) when it was trading around $1.20…it has since shot up to $1.80 but could be nearing a short pause as it faces strong resistance at the $2 level…OK has formed a classic “cup with handle” pattern as John shows below in a 6-month daily chart…

Chart Notes: John, Jon and Terry do not hold positions in NES or OK.  Jon holds a share position in PPP.