BullMarketRun.com

9:00 am Pacific

Gold and Silver are both exploding to the upside after a combination of events today including Bernanke’s speech which clearly laid the groundwork for more easing measures in the near future.  John will have updated charts over the weekend, but these are very bullish developments.

The Venture Exchange, after a normal technical pullback to its rising 20-day moving average, is powering higher and we’re anticipating a reversal to the upside next week in the 50-day SMA which should provide fresh fuel for a push through resistance around 1250.

Over the long weekend we’ll be coming out with a special report on Rainbow Resources (RBW, TSX-V) which delivered strong news this morning regarding its drill program at the International Silver Property.  The company has also suddenly closed a financing of nearly $1.1 million and granted over a million stock options above the market at 25 cents – very bullish signs.  Technically, RBW has successfully tested support at its rising 50 and 200-day moving averages and RSI(14).  With this morning news, we believe it’s well-positioned for a potential breakout next week through resistance at 25 cents.  RSI(14) has formed a bullish “W” pattern, similar to what was seen in late July just prior to a 50% move to the upside.

Gold is firmer this morning ahead of Fed Chairman Ben Bernanke’s speech and on new rumors the ECB has something big in the works for the euro zone…as of 5:30 am Pacific, the yellow metal is up $6 an ounce at $1,661…Silver is 26 cents higher at $30.70…Copper is up a penny at $3.43…Crude Oil has gained 66 cents to $95.28 while the U.S. Dollar Index has fallen over one-half of a point to 81.11 as it approaches a key support level…

ECB Rumor Lifts Markets

A rumor that Bundesbank President Jens Weidmann, one of the most strident holdouts against a potential European Central Bank (ECB) bond-buying plan, might resign swept through European markets on Friday…the rumor, which the German central bank declined to comment on, came after a German lawmaker from Chancellor Angela Merkel’s Christian Democratic Union party warned yesterday that Weidmann might go…European markets reversed sharply this morning, led by a rally in Italian and Spanish markets, following the speculation…Weidmann has stepped up the war of words with the ECB in recent weeks as plans by the central bank to start mass bond-buying to shore up Spanish and Italian bond yields looked more likely to come to fruition…he warned earlier this week that the bond-buying could become “addictive like a drug” (what would make him think such a thing?)…the ECB meets next Thursday and that’s what the markets will be turning their attention to today…

Bernanke In The Spotlight Today

The drum roll to Ben Bernanke’s speech in Jackson Hole has been getting louder all week, and the Fed Chairman is set to start speaking in less than two hours at 7:00 am Pacific at the Fed’s annual symposium in Wyoming…whether it’s disappointment or a hint that a further monetary boost to the economy is on its way, Bernanke’s speech has the potential of triggering a strong swing in either direction in markets across the board…

Traders and investors could be disappointed if they’re looking for something definitive from Bernanke today…some vague comments about the potential for additional easing measures are quite possible but Bernanke will likely want to keep his powder dry and pull the trigger at just the right time – probably not until after the November U.S. elections….given some of the clues of recent weeks, including minutes of the last Fed meeting, we don’t doubt that QE3, perhaps with a different twist than QE1 or QE2, is on its way but Bernanke and the Fed will want to review a slew of economic data in September…they’ll also want to see how the situation unfolds in the euro zone…however, just the anticipation of QE3 will help put a floor underneath the markets – so any sell-off today, should it occur, is likely going to be short-lived…

Wall Street Journal ace reporter Jon Hilsenrath, in an article last night, wrote that Dallas Fed President Richard Fisher expects the Fed chairman to deliver an academic commentary this morning on the costs and benefits of Fed action…”Investors,” Hilsenrath wrote, “are hoping for more than that…they want clear guidance about what the Fed will do next, though Jackson Hole hasn’t been a staging ground in the past for big policy pronouncements” (other than 2010 of course)…

A cost-and-benefit analysis from Bernanke would be interesting…we know QE has given the stock and commodity markets a boost…however, economists who have looked at the Fed’s bond-buying programs don’t see them producing big improvements in economic activity and some say the effects wear off over time…the Fed has purchased more than $2.3 trillion of bonds since 2009, yet the economy expanded at a paltry 1.7% annual rate in the second quarter of this year and unemployment was 8.3% in July, according to government data…Goldman Sachs chief U.S. economist Jan Hatzius estimates that a $500 billion bond-buying program would boost growth by 0.2% for a year and bring down the unemployment rate by 0.1%…Alan Sinai, chief economist at Decision Economics, estimates such a program would boost growth by 0.3% and bring down the jobless rate by 0.2%…

And The Real Fight Now Begins

Mitt Romney, whose business success has become his defining credential in a year of economic anxiety, accepted the Republican nomination for President last night and took aim at President Barack Obama as a failed steward of the nation’s balance sheet and its economy…Romney launched his fall campaign for the White House with a remarkably personal speech to the RNC and a prime-time TV audience, proclaiming that America needs “jobs, lots of jobs” and promising to create 12 million of them in perilous economic times…though Romney likely succeeded last night in improving his image among undecided voters, what he didn’t roll out was a specific plan or agenda to get America’s economy rolling again…defeating the “community organizer” should be a slam-dunk for a successful businessman who knows that government is the problem, not the solution, but Romney is going to have to do a better job of outlining his economic game plan and selling it to the American people…and time is running short…

Alberta’s Fiscal Time Bomb

What hope is there for the United States or governments around the world to get their debt problems under control when Alberta, long-regarded as a bastion of economic conservatism, keeps spending money like a bunch of drunken sailors?…Alberta is veering toward a deficit as high as $3 billion this year, more than three times larger than expected, which underscores the fact that the province has a spending problem just like every other jurisdiction on the planet…the Big Lie from Finance Minister Doug Horner is that a shaky global economy is to blame, that Alberta’s bottom line for 2012-13 has been hammered by weak royalties from bitumen and conventional oil, and low land lease sales to energy producers…the truth is, Alberta continues to spend more than it should and the government made unrealistic resource revenue and economic growth forecasts (conveniently, just before an election)…people need to be told the truth – that they must expect less from government and accept more personal responsibility – but not even Mitt Romney has the guts to say that…

Today’s Markets

Asian markets were down overnight, led by Japan’s Nikkei Index which fell 1.7% to a four-week closing low (the Nikkei was down 2.5%  this week but was up 1.7% for the month, its best August performance since 2006)…China’s Shanghai Index closed down just 5 points at 2048 but it was another bad month for that market with the Index shedding another 2.7% in its fourth consecutive monthly loss…European shares, as mentioned, are rallying strongly this morning while stock index futures in New York as of 5:30 am Pacific are pointing toward a solid opening on Wall Street…

India’s Q1 Economic Growth Tops Expectations

India’s economy grew at a higher-than-expected 5.5 percent in the quarter ending in June, against analysts’ forecasts of 5.3%, government data showed this morning…economic growth in Asia’s third largest economy slipped to 6.5% in the 2011/12 fiscal year ending in March from an annual rate of 8.4% in the two previous fiscal years…

Shanghai Chart

The recent fall in Chinese equities is driven by weakness in the economy and poor corporate earnings growth, but does not yet suggest that investors are in panic mode, say analysts…China’s Shanghai Composite Stock Index has shed 15%  in the past three months and is down more than 6% year-to-date, making it Asia’s worst performing major stock market this year…it has also lagged its global peers such as the S&P 500, which is up more than 12%…market sentiment this week was hit by disappointing corporate earnings, especially from Chinese banks, which have seen a slowdown in profit growth…. first-half earnings this year have been the worst for Chinese companies in three years…in addition, property stocks have been hurt by local news reports of further measures to cool the sector…

Below is an updated chart from John on the Shanghai Index which appears ready for a turnaround…the Index is now resting at wedge support and RSI(2) is once again firmly in oversold territory…September should be a better month for this market, and that’s good news for global equities in general…

Copper Chart

The price of Copper is very much dependent on the health of the Chinese economy, and so far the price has been holding up amazingly well…John’s updated Copper chart shows a market that is very close to a decision point as trading is moving closer to the apex…note the RSI(14) up trendline that started late last year, and the intense selling pressure lately that has failed to break support for Copper…that selling pressure is now starting to abate…

Venture Exchange

As expected, the Venture Exchange found support at its 20-day moving average (SMA) yesterday and we’ll see if it turns the corner today after posting declines in each of the last four trading sessions…RSI has hit support at 50% while the SS(2,3) indicator has reached extreme levels, suggesting a reversal is close at hand…the Venture closed down 11 points yesterday at 1218…the 50-day SMA has flattened out at 1200 and provides additional strong support…

GoldQuest Mining (GQC, TSX-V)

A great opportunity in our view has opened up in GoldQuest Mining (GQC, TSX-V) which has fallen in six out of the last 8 sessions to yesterday’s close of $1.42…GoldQuest’s huge move since it was trading at a nickel just over three months ago has not come without some significant corrections along the way, so the recent 30% drop to cleanse a technically overbought situation should be viewed as a very normal and healthy technical development…what we’ve seen in recent days is distribution of the stock by speculators and accumulation by value investors…below is an updated 3-month daily chart from John that shows a rebound is likely imminent…

Note:  Jon holds a share position in GQC (John and Terry do not).

Gold traded in a narrow range overnight but has strengthened over the past hour…as of 6:00 am Pacific, the yellow metal is up $8 an ounce at $1,664 and appears to be forming a bullish pennant on the charts ahead of Ben Bernanke’s important Jackson Hole speech tomorrow…Silver has jumped 12 cents to $30.85…Copper is up 4 pennies to $3.46…Crude Oil is off slightly at $95.38 while the U.S. Dollar Index is off one-tenth of a point at 81.44…

Commodity Super Cycle Still Intact – Rogers

The commodity super cycle still has legs as supplies remain constrained, according to renowned analyst Jim Rogers…asked on Mineweb.com’s Gold Weekly podcast if the recent slowdown in many metal prices and a number of high profile comments about the end of the bull market, Rogers said, “this is nothing more than a blip…the bull market will continue until a lot of supply comes on stream and the problems since 2008 ensure not a lot of supply is coming on stream”…Rogers said, usually after eight or nine years of a bull market, companies begin to bring new sources of supply online…but, this time around, those that were beginning to think about new supply in 2008 were hit by the financial crisis and many such plans were shelved…this has continued into 2012 where a number of the world’s top miners, including the likes of BHP Billiton, are slowing expansion plans…”All these guys are delaying or suspending or cancelling new supply which is bullish…until the supply comes we’re not going to have an end to the bull market and, certainly in agriculture, my goodness, inventories are near historic lows, we have serious shortages of everything in agriculture developing, including farmers”…

Loonie Continues Bullish Advance

Rogers’ comments make perfect sense when one examines the commodity-sensitive Canadian dollar…the recent strength of the loonie has been overlooked…interestingly, the loonie’s 200-day moving average (SMA) has reversed to the upside since being in decline since last fall – the previous such reversal came in mid-2009 and ushered in a powerful advance in equities (there has been a close correlation between the loonie and the Venture Exchange)…below is an updated chart from John that shows a strengthening bullish trend which supports the case for weakness in the U.S. Dollar…

Today’s Markets

Asian markets were weak overnight, though China’s Shanghai Composite recovered from a 20-point loss to close unchanged at 2053…European markets have recovered slightly from their lows after a successful Italian bond auction…stock index futures in New York as of 6:00 am Pacific, meanwhile, are pointing toward a mildly lower open in New York…the U.S. economy grew “gradually” last month, as improving retail and other service-sector activity was weighed down by softening activity in manufacturing, according to a collection of anecdotes released by the Federal Reserve yesterday…the so-called Beige Book said activity expanded gradually in July and early August across most regions and sectors, compared to the previous assessment of “modest to moderate” growth…the report, based on information collected on or before August 20, showed 6 of the 12 Fed districts with “modest” growth and 3 with “moderate” growth…the previous Beige Book showed 3 districts growing at a “modest” pace and 5 growing at a “moderate” pace…

Some fresh U.S. economic data just came in at 5:30 am Pacific…jobless claims were unchanged last week, holding at a seasonally adjusted 374,000, according to the Labor Department…economists polled by Reuters had forecast claims dipping to 370,000 last week…the four-week moving average for new claims rose 1,500 to 370,250…meanwhile, the Commerce Department reported that consumer spending gained 0.4%  in July, climbing by the most in five months but in line with expectations, while income increased 0.3%…

Republican Convention – Romney Delivers Acceptance Speech Tonight

Paul Ryan launched a powerful attack on Barack Obama in his first major address as the Republican vice-presidential nominee last night, charging the president with abdicating responsibility for the economy and taking the nation on an “adventureless journey from one entitlement to the next . . . where everything is free but us”…Ryan’s speech included consistent references to hard work, initiative, and maintaining the American dream while he also skillfully managed to soften his image…his selection heralds the emergence of a new generation of Republican leaders willing to reshape the main pillars of a social safety net that has been in place since the 1960’s…Mitt Romney, meanwhile, delivers the most important speech of his career this evening as the Republican nominee for President, and it’ll be critical for Romney to connect with the American people in a way he has not been able to up to this point…

Obama Will Win Re-Election – Sorrell

The CEO of the world’s largest advertising company, Sir Martin Sorrell, told CNBC this morning that while he’s impressed with the Republican ticket, he believes Obama will win re-election in November “I still think President Obama, who is a superb campaigner, will win the election and I’m not sure it will be quite such a tight margin as people are predicting,” the WPP CEO stated…Sorrell said he found Romney’s choice of Paul Ryan as vice presidential running mate “very interesting” and a very positive one for business…cutting government spending and the deficit is the issue that Sorrell says could cost the Republicans the election, however, even though he believes the GOP is right to propose such cuts…“talking about deficit reduction in the way that the Republicans are is not a vote winner, it’s not a vote gatherer,” Sorrel said…

Venture Exchange

The CDNX shed 13 points yesterday to close at 1229 and a test of support at the rising 20-day moving average (SMA) of 1218 has to be considered a strong possibility as John has been indicating in recent charts…

Everton Resources (EVR, TSX-V)

The modest pullback in GoldQuest Mining (GQC, TSX-V), which we view as an accumulation opportunity, has cooled off the other Dominican Republic plays including Everton Resources (EVR, TSX-V) which just announced the other day it has completed a $1.6 million private placement through the issuance of 20 million shares at 8 cents per unit…each unit includes a full warrant for 24 months at 15 cents…while we’d rather have seen less dilution, the fact is that Everton is now in a much better financial position and can immediately proceed with completing its deal with Brigus Gold (BRD, TSX) to purchase Brigus’s remaining 50%  interest in the Ampliacion Pueblo Viejo II (APV), Ponton and La Cueva concessions in the Dominican Republic…the market didn’t seem to mind the pricing of the PP as Everton is holding up strong and has superb support around 10 cents in the immediate vicinity of its 200-day moving average (SMA)…we expect Everton to enter into a joint venture agreement, or agreements, in the near future (possibly with a major) to resume exploration at its DR properties…

Precipitate Gold (PRG, TSX-V)

The newest player on the DR stage is Precipitate Gold (PRG, TSX-V) which we were reluctant to chase after first mentioning it a couple of weeks ago around 40 cents…it climbed as high as 62 cents but has since pulled back sharply, and now it’s more interesting again…PRG closed at 38 cents yesterday and it’s likely going to continue to be a volatile play…its recent overbought condition has cleansed itself, however, and PRG now appears to be in a zone of support…in just 6 sessions, as John’s chart points out, the stock moved from a low of 23 cents to a high of 62 cents…in 7 sessions, it has retraced to the Fibonacci 38.2% level…as always, perform your own due diligence but this is a play that could perform very well over the balance of the year…PRG, which has approximately 30 million shares outstanding, completed a $2.2 million IPO at 40 cents and began trading on the Venture at the end of May…

Comstock Metals (CSL, TSX-V)

Comstock, which we’ve been writing about recently, enjoyed a powerful day yesterday – jumping 7.5 cents to close at 32 cents after announcing that it was cancelling a recently proposed $2 million financing at 25 cents “pending the release of new assay results recently received from the company’s follow-up trenching program on its QV claims in the White Gold district of the Yukon”…the news release went on on to state, “The company feels that the preliminary assay results from the QV trenches (released in late July) have changed its view of the project”…whether Comstock can get to the drilling stage in 2012 with this project is a major question mark, but there’s no question the trenching numbers were outstanding…this would be a safer play if there were a guarantee of near-term drilling, but below is an updated chart from John that shows there’s at least a technical case for higher prices…

Note: John, Jon and Terry do not hold positions in PRG or CSL.

Gold has traded in a range between $1,663 and $1,671 so far today…as of 5:00 am Pacific, the yellow metal is down $3 an ounce at $1,663…Silver is off 27 cents at $30.63…Copper has lost 3 cents to $3.41…Crude Oil is 69 cents lower at $95.64 while the U.S. Dollar Index is up slightly at 81.44…

Gold Smuggling On The Rise In India

As Gold prices have hit the roof in India, an unprecedented increase in the smuggling of the precious metal is being witnessed…Indian authorities are seeing a spike in undeclared Gold being smuggled into the country…according to intelligence agencies, state Gold seizures at airports have risen almost 10-fold in recent months with the increase in the import duty on Gold, from 2% to 4%, announced by the then Finance Minister hailed as one of the main culprits…given the climbing price of the yellow metal (the rupee has declined considerably in value vs. the Dollar over the past year) and the delayed monsoon, bullion traders were expecting Gold imports to nosedive by 40% this year…the slump in imports is however being met through smuggling, spawning a revival in the trade, according to traders…data from the finance ministry shows that between April and June this year, the customs authorities have seized 200 cases of smuggled Gold worth $169 million, up 272% as compared to $46 million in the previous year from 20 registered cases…Gold smuggling was a thriving business in India in the 1980’s and 1990’s, during the Gold Control Act, but it reduced drastically after economic liberalization…

Today’s Markets

Asian markets were mixed overnight with China’s Shanghai Index taking another hit, falling 20 points to 2053…European shares are mildly lower today while stock index futures in New York as of 5:00 am Pacific are pointing toward a slightly negative to flat opening on Wall Street…economic data this morning includes another look at Q2 GDP (5:30 am Pacific) as well as pending home sales (7:00 am Pacific)…the biggest release of the day comes at 11:00 am Pacific when the Fed puts out its beige book on the economy, which is sure to be picked over for any discussion of employment…

All Eyes On The ECB & The Fed

The European Central Bank needs to employ “exceptional measures” at times to ensure its monetary policy can be effective but will act within its mandate to deliver price stability, ECB President Mario Draghi said in a newspaper opinion piece today…Draghi wrote in the piece for Germany weekly Die Zeit that fulfilling the price stability mandate “sometimes requires us to go beyond standard monetary policy tools”, when financial markets “are fragmented or influenced by irrational fears”…”We have to fix such blockages to ensure a single monetary policy and therefore price stability for all euro area citizens…this may at times require exceptional measures,” he wrote in the article, released in English by the ECB under the title: “The future of the euro: stability through change”…the ECB is working on the details of a new bond-buying plan aimed at tackling the euro zone crisis by lowering the crippling borrowing costs facing Spain and Italy…Draghi may detail the plan after the ECB’s Sept. 6 policy meeting (he has cancelled his trip to the Jackson Hole Fed meeting, raising hopes among some traders that he will make a major announcement next week)…however, next week’s ECB meeting comes ahead of some key political events in Europe including the proposal for an EU-wide bank supervisor from the European Commission, the German constitutional court ruling on the European Stability Mechanism, a Eurogroup meeting, and a much-awaited troika report on Greece by October…there’s speculation, therefore, that the ECB’s real commitments could be postponed until October to ensure more progress on crisis resolution from governments…

Meanwhile, market participants are also chewing over the prospects of additional easing steps by the Federal Reserve ahead of an important speech Friday by Fed Chairman Ben Bernanke at the central bank’s annual economic symposium in Jackson Hole, Wyoming…this follows disappointing U.S. consumer confidence data yesterday…consumer confidence in August fell short of expectations, dropping to the lowest reading since 2011, according to the Conference Board…so far this year, Bernanke has been more talk than action, so we’re expecting more of the same from him Friday (little or no fresh insight) which means the standard hint that the Fed will step up to the plate with new easing measures if and when necessary but nothing definitive at the moment…the U.S. equity market is also currently near four-year highs and the Fed traditionally acts only when the market begins to teeter…Bernanke may wish to keep his powder dry until later in the year – perhaps even as late as December – following the U.S. elections when the direction of fiscal policy will likely become more clear…

Venture Exchange

The CDNX fell for the second straight day yesterday, losing 5 points to close at 1242 – 2 points above the rising 10-day moving average (SMA) while the 20-day is sitting at 1215…the 50-day has flattened out at 1200 and potentially could begin to reverse to the upside by as early as sometime next week…so there is plenty of support in this market and investors just need to be patient in terms of a breakout through the 1250 resistance that John has outlined…below is an updated Venture chart showing that any weakness should be minor and short-lived as the primary trend at the moment remains bullish…

Rainbow Resources (RBW, TSX-V)

Yesterday was a strange session for Rainbow Resources (RBW, TSX-V) which got knocked down on small orders during the final two hours hours of trading…in fact, the stock fell from 22 cents to a Venture close of 20 cents (it closed at 22 on ALPHA and in the U.S. market) on less than 10,000 shares in the final 3 minutes…this could have had something to do with month-end settlement, which was yesterday, or just some traders who decided the stock needed to test its rising 50 and 200-day moving averages at 19.5 cents which it did…in any event, it was bargain day yesterday as the overall chart remains bullish…we’re expecting a powerful September based on the strong technicals and events on the ground as the drill continues to turn…below is an updated RBW chart from John that puts yesterday’s shenanigans into perspective…a drill hole hit at the International, which we believe is a very strong possibility given positive indications so far about the obvious high-grade structure they’re drilling into, will send RBW north through its 52-week high in a heartbeat…

Note: John and Jon both hold share positions in RBW (Terry does not) with Jon adding to his position again yesterday.

Great Atlantic Resources (RBW, TSX-V)

Volume has been picking up recently in Great Atlantic Resources (GR, TSX-V), a play we’ve been keeping a relatively close eye on since early this year (our last update was just two days ago)…GR has a solid property portfolio in Atlantic Canada and strong management and leadership with Chris Anderson at the helm as President and CEO, so this is definitely a company we encourage our readers to become familiar with…

Note: John, Jon and Terry do not hold share positions in GR.

Gold has traded in a range of $1,658 to $1,667 so far today…as of 6:00 am Pacific, the yellow metal is essentially unchanged at $1,664…Silver is up 11 cents to $30.83 but is temporarily technically overbought as one of our charts pointed out yesterday…Copper is off 3 pennies at $3.43…Crude Oil is up 42 cents to $95.89 while the U.S. Dollar Index has fallen one-quarter of a point to 81.43…

Today’s Markets

Asian markets were mixed overnight with China’s Shanghai Index climbing 17 points to 2073, its best day in three weeks after yesterday’s sell-off that took the Index to its lowest close since March, 2009…European shares are down marginally this morning while stock index futures in New York are pointing toward a slightly negative open on Wall Street…the Venture Exchange lost 5 points yesterday to close at 1247…the rising 10-day moving average (SMA), which can be expected to provide strong support, is at 1237…

U.S. Dollar Index Chart – Bullish Implications For Gold, Silver & The CDNX

The greenback appears to be in some technical trouble which is ultimately bullish for Gold and Silver and the equity markets (the Venture Exchange tends to perform best in a weak Dollar environment)…there are two possible scenarios for the Dollar Index in our view, and both are negative…either it crashes through support or – more likely – it stages a near-term rebound but forms a head and shoulders top…below is an updated chart from John that helps explain this bearish outlook…

On the other side of the equation (supporting the case for a weaker U.S. Dollar) is a very powerful-looking long-term CRB Index chart…examine this closely, folks, because what it’s showing is that a Wave 5 move is underway in commodities which is not necessarily the standard view at the moment…check the SS (Slow Stochastics) pattern…

GoldQuest Mining (GQC, TSX-V)

The Monster at Romero got even bigger yesterday as GoldQuest Mining (GQC, TSX-V) reported results from four additional holes (LTP-94 thru 97) which included 235 metres grading 7.88 g/t Au (4.71 g/t Au using a 50 g/t Au cut-off) and 1.43% Cu 24 metres north of the discovery hole (LTP-90)…LTP-96, nearly 80 metres east of LTP-90, returned 188.5 metres of 3.14 g/t Au and 1.07% Cu…two other holes weren’t nearly as good but most companies would still love to report 79 metres of 2.33 g/t Au (LTP-97) or 102 metres grading 0.73 g/t Au (LTP-95)…hole 95 was drilled within a fault zone, and the deep drill rig that is on its way to Romero will be investigating potential mineralization on both sides of that fault zone…mineralization remains open in all directions at Romero as the company continues to drill step-outs within the 500 m x 300 m IP anomaly…Romero is a world class discovery by any measure and Big Money continues to position itself…yesterday’s market action was highly interesting…the stock, which closed Friday at $1.71, opened at $1.80 following the halt, ran up to $2 and then magically fell back down to $1.70 where Dundee crossed a mere 14 million shares which helps put a floor on the price…it seems there was an eager buyer to take out Goldfields‘ long-standing position in GQC and that has to be considered a bullish development…GoldQuest was not a core asset for Goldfields, and what a great way for a new player (or players) to get their hands on a big chuck of stock especially since GQC has not been doing any large financings up to this point…total volume for 1 hour of trading yesterday was 21.5 million shares (20.8 million on the Venture)…

The GoldQuest chart continues to look fantastic…in fact, yesterday’s activity – though nerve-wracking to some – confirmed Friday’s bullish move up, and the recent overbought condition has cleansed itself…one should underestminate the wisdom or power of Dundee…they have become a big player in this and they have some very sharp mining analysts who know how to size up a discovery…with 7 holes reported, it’s already very clear that GQC is sitting on a rich deposit – the extent of which will be better defined in the coming weeks and months…with the deep drill rig on its way, additional holes in the lab and a lot more step-outs to come, this story still has a lot of “legs” to it  at a time when Gold is in a new uptrend and the Venture is turning around…below is John’s updated GQC chart…as John has shown previously, GQC is underpinned by very strong technical support between $1.50 and $1.60…

Readers are advised to continue to keep a close eye on other key juniors in the Dominican Republic – Unigold Inc. (UGD, TSX-V), now arranging a $5 million financing, Everton Resources (EVR, TSX-V) and newcomer Precipitate Gold (PRG, TSX-V)…

Rainbow Resources (RBW, TSX-V) Update

After Friday’s news regarding encouraging early drilling indications from the International Silver Property, our instincts tell us something very positive is brewing at Rainbow Resources (RBW, TSX-V) which could be the catalyst that allows this play to break out to a new all-time high of 30 cents+…in addition, Rainbow continues to draw new followers and the latest example is technical analyst Clive Maund (www.CliveMaund.com) who featured Rainbow yesterday and sees a strong likelihood of a continued “robust advance”…RBW has been consolidating in a healthy way over the past several sessions which sets the stage for a potentially powerful move through the 24 to 27 cent resistance band that John, our technical guru, previously identified…accumulation and buying pressure have been impressive…on the ground, RBW is drilling into a known high-grade system and our interpretation of last Friday’s news is that they are hitting the vein structure they were hoping to…Moose Mountain Technical Services, the company’s geological consultant, is increasing the number of drill-site locations which us tells they’re gaining valuable new information with regard to this potential deposit…

RJK Explorations (RJX.A, TSX-V)

Yesterday, we pointed out what we see are some obvious opportunities in the rich Blackwater district of central British Columbia including RJK Explorations (RJX.A, TSX-V) which is expected to start drilling again next month…this morning, John has a 3-year weekly RJK chart that shows an important reversal in RSI(2)…based on this chart, it’s our strong belief that the support band will hold…RJK definitely appears to be in the very early stages of a new uptrend that should certainly gain momentum as September,

Note: John and Jon both hold share positions in RBW with Jon increasing his share position again yesterday (Jon also holds a share position in GQC and RJX.A).

Gold prices touched their highest since mid April overnight on expectations that the Federal Reserve could be set to unveil another round of monetary stimulus to combat weak growth…as of 7:15 am Pacific, the yellow metal is off $1 an ounce to $1,670 after climbing as high as $1,678…Silver, which was up 10% last week, briefly went above $31 an ounce but has since pulled back slightly…it’s currently up 17 cents at $30.99…Copper is unchanged at $3.46…Crude Oil is down $1.20 to $94.95 while the U.S. Dollar Index is off slightly at 81.59…as John showed last week, the greenback is technically oversold and could rally somewhat but a head-and-shoulders top appears to be forming on the charts…

Gold is poised to climb the most in two years as a bet against inflation as prospects of coordinated global central bank action continue to grow, according to a Bloomberg survey…bullion for immediate delivery may reach $1,800 an ounce by the year-end, extending gains this year to 15%…that’s the median forecast in the Bloomberg survey of 15 traders and analysts at a conference Saturday in Hyderabad, South India…that would be the biggest yearly gain since a 30% surge in 2010…Gold appears destined to gain ground for a 12th consecutive year…PIMCO boosted its Gold holdings to 11.5% of assets this week in its Commodity Real Return Fund, which comes on the heels of recent updates hat George Soros and John Paulson each significantly raised their respective stakes in Gold as well…

Anticipation regarding Friday’s Jackson Hole speech by Fed Chairman Ben Bernanke will likely give a healthy undertone to Gold the next few days, though the yellow metal is short-term overbought as shown by its RSI indicator…last week’s $55 an ounce jump took Gold through important resistance levels at $1,620 and $1,640 which now become support…it’s also now above its 200-day moving average (SMA) for the first time in half a year…

Gold has also moved above its 65-week moving average of $1,650…

Updated Silver Charts

Silver shot up nearly 10% last week ($2.73 an ounce) to $30.82 and has started a powerful “Wave 5” advance in our view…however, along the way to much higher levels it must pause for short periods from time to time to catch its breath and unwind overbought conditions…now is likely one of those occasions…as you can see on John’s 6-month daily chart, the RSI became overbought at the end of last week at 80%…this doesn’t mean it can’t become even more overbought in the coming days, but a modest pullback in the very near future is not only warranted but healthy from a technical standpoint…note how Silver is also once again rising faster than Gold…

On the long-term 15-year chart, Silver looks very powerful after completing Wave 4 at support at $26…on this weekly chart we expect Silver to get into an overbought condition for an extended period, similar to 2006-2007, 2008, and 2010-2011…

All Eyes On Bernanke

Speculation will be building over the next few days regarding Fed Chairman Ben Bernanke’s important Jackson Hole speech this Friday beginning at 7:00 am Pacific at the St. Louis Fed’s annual symposium in Wyoming…traders/investors are hoping for some new insight into what the Federal Reserve is thinking, including whether, when and how it might take further easing steps (the minutes of the last Fed meeting indicated a growing consensus on action)…however, it’s entirely possible Bernanke may not say much new as the Fed continues to weigh incoming economic data ahead of its September 12 meeting…among the data to released prior to Bernanke’s speech Friday will be reports on consumer confidence, pending home sales and personal income and spending…a revised reading on second-quarter gross domestic product is also scheduled for release…a valid point for Fed watchers is that looking back at every previous emergency bond buying scheme the Fed has done in the last decade, they’ve all occurred following a major plunge in the equity market…why would the Fed break the mold now, especially in a sensitive election year…

Republican Convention

Mitt Romney enters the most important week of his political career dogged by a nasty tropical storm but hopeful it will pass in time for the Republican convention to give his presidential campaign the powerful lift it has been seeking all summer…with the current American president having about as much understanding of what makes the economy tick as most people do of nuclear physics, this election should be a slam-dunk for Romney…however, he has so far been unable to connect with the American people – especially in the way Ronald Reagan did in 1980 which helped sweep away another economically illiterate president, Jimmy Carter, and ushered in a new conservative movement…Obama campaigned on hope and change in 2008 but has instead taken America on a wrong-headed course, punctuated by divisive class warfare, that very much goes against the grain of American history yet he’s the one who calls Romney “extreme”…this election battle will be about the proper role of government in American society…at a time when the United States is saddled with a massive debt, and the failure of the European welfare state is more clear than ever, the ideas of limited government espoused by the American founding fathers should resonate more strongly than ever in the United States (and elsewhere for that matter)…interestingly, the Republicans are expected to use Stephen Harper’s Canada as a shining example of how lower taxes, less regulation and a commitment to free trade and a balanced budget can enhance competitiveness, productivity and overall economic growth…Romney is favored over Obama by many in the markets but is slightly behind the president in the polls…no American president has ever won re-election with an unemployment rate over 8%…

China’s Industrial Sector Shows Sharp Profit Drop In July

China’s industrial sector posted a sharp profit drop in July, offering a fresh sign that slackening domestic and external demand has further weighed on corporate earnings and reinforcing calls for more policy easing to underpin the slowing economy…China’s industrial profits dropped 5.4% in July from a year ago, quickening from June’s 1.7% decline and extending a slide into a fourth month as headwinds from slackening demand at home and abroad intensify…among the 41 industries tracked by China’s National Statistics Bureau, 25 sectors posted profit growth and 15 industries reported a profit drop in the first seven months compared with the year earlier period…one sector – oil refining, coke and nuclear fuels – experienced an outright loss…as China’s economic growth cooled to a three-year low, inventories swelled at consumer firms such as auto dealers, food makers, liquor companies and department stores, according to a Reuters analysis of balance sheets from 350 Chinese companies…

German Business Confidence Falls Again

German business confidence fell for the fourth straight month in August, signaling further weakness in the euro zone’s largest economy, a closely watched survey showed this morning…while the pace of decline slowed from the previous survey, its findings reflect that Germany isn’t immune to the general slowdown in Europe and outside Europe…”This could help Chancellor Merkel and ECB President Draghi convince the German people that more efforts to support the euro zone are necessary and in the best interests of Germany…

Today’s Markets

China’s Shanghai Composite fell to its lowest close since March, 2009, overnight as it shed 1.7% or 36 points to 2056…Premier Wen Jiabao’s comments, while on a visit to Guangdong over the weekend pledging new measures aimed at stabilizing export growth, were seen by some market watchers as diminishing the chances of Beijing reducing bank reserve requirements or cutting interest rates in the immediate future…the fact China’s industrial sector showed a sharp profit drop in July didn’t help matters…European markets are slightly higher this morning though trading volumes are thin due to a public holiday in the UK…the Dow and TSX are both off slightly as of 7:15 am Pacific while the Venture Exchange has slipped 2 points to 1250…

Venture Exchange

The CDNX is clearly in a new uptrend that should really begin to accelerate once the Index is able to push through its declining 100-day moving average (SMA) just below 1280…patience is required, however, as this may occur until some point in September which would allow the Index time to test support and unwind a temporary overbought condition…look for the rising 10-day SMA to provide support with any weakness short-lived…looking out over the next several months, a very bullish set-up appears to be forming…

Remarkable Activity At Blackwater – Watch RJK Explorations (RJX.A, TSX-V) and Parlane Resource Corp. (PPP, TSX-V)

An incredible exploration and development story is unfolding in central British Columbia where New Gold Inc. (NGD, TSX) is drilling its Blackwater deposit like Swiss cheese…NGD currently has 18 drill rigs in the area (they hold a 1,000 sq. km land package), 13 of them conducting resource delineation and infill drilling…the company is well on track to achieve its goal of completing 500 holes and 200,000 metres of drilling in 2012…what’s emerging is a massive Gold and Silver deposit…in mid-July New Gold reported total indicated and inferred 43-101 resources of 9.6 million ounces of Gold and 58.4 million ounces of Silver, breaking down as follows (supported by analytical data received from 417 holes totaling 147,619 metres):

• Indicated mineral resource: 230 million tonnes at an average grade of 0.96 g/t Au, containing 7.1 million ounces of Gold (and 34 million ounces of Ag) at a cut-off grade of 0.40 g/t AuEq;

• Inferred mineral resource: 98 million tonnes at an average grade of 0.77 g/t Au, containing 2.5 million ounces of Gold (and 24.4 million ounces of Ag) at a cut-off grade of 0.40 g/t AuEq;

A Preliminary Economic Assessment is expected to be completed in September…New Gold, of course, smartly got its hands on Blackwater just over a year ago when it took over Richfield Ventures which turned out to be a 10-bagger for some BMR readers as we aggressively started following that discovery story when it first broke in late 2009…New Gold has grown the resource substantially over the past year, and recent assays demonstrate strong continuity of Gold mineralization as the resource continues to expand, particularly to the north and northwest…what’s especially interesting is that beyond the positive Gold-related results, recent assays have also returned some of the highest Silver grades found on the deposit to date…as a result, the inferred Silver grades have increased by 103% to 7.7 g/t when compared with the March, 2012, resource estimate…these results occur within a zone of higher grade Silver mineralization along the outer northwestern portion of the mineral resource…this zone offers excellent potential for expanding the Silver resource at Blackwater and is an area of strong exploration focus for the company…over the last year, New Gold has also been busy consolidating its land position by taking over other companies in the area…

Which brings us to RJK Explorations (RJX.A, TSX-V) and Parlane Resource Corp. (PPP, TSX-V)

RJK, which holds ground contiguous to the Blackwater deposit, made an interesting Silver discovery of its own a couple of months that went unnoticed due to market conditions at the time…what they hit was 3.3 metres, near-surface, grading a whopping 79 ounces per ton…follow-up work (detailed ground magnetics, IP surveying and MMI soil sampling) was completed after that vertical discovery hole was reported…the interpretation is that the mineralized intersection occurred at the brecciated-fault contact between felsic volcanics to the southwest and sediments to the northeast…detailed ground magnetic surveying in the area also indicates a prominent northwest/southeast-trending structure which may represent the extension of this mineralized fault contact…a second round of drilling is just around the corner (in September) which should provide more answers and generate some considerable excitement in the process…after touching a yearly high of 26.5 cents in early March, RJK fell as low as 8.5 cents in June and last week successfully tested that low…we believe a sharp recovery could be in store over the coming weeks as the company resumes drilling…there is no question they are in a prolific area and could also be New Gold’s next takeover target…another situation in the area to watch closely is Parlane Resource Corp. (PPP, TSX-V) which has already been permitted for 10,000 metres of drilling at its Big Bear Project comprising 14,000 hectares at Blackwater…Big Bear is considered highly prospective for the discovery of epithermal, subvolcanic porphyry and transitional mineralization…like RJK, Parlane likely also to be on New Gold’s list of potential additional acquisitions…more on both RJK and PPP during the week…

Great Atlantic Resources (GR, TSX-V)

In addition to RJK and PPP, another opportunity below 15 cents that is very worthy of our readers’ due diligence is Great Atlantic Resources (GR, TSX-V) which we’ve mentioned on a few occasions over the past number of months…GR enjoyed a nice volume surge on Friday and is gearing up for a busy balance of 2012…with a market cap of just $4 million, GR has an attractive risk-reward ratio and was a John Kaiser picks in one of his recent Bottom Fishing Reports…below is an updated 2.5-year weekly GR chart from John…

Levon Resources (LVN, TSX-V)

In response to a reader’s inquiry, below is an updated chart for Levon Resources (LVN, TSX-V) which hit cash value at 30 cents just recently.  Levon is certainly a candidate for a recovery over the balance of the year…

Note: John, Jon and Terry do not hold positions at this time in RJK, PPP, GR or LVN…

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So far, so good for Rainbow Resources (RBW, TSX-V) – our British Columbia “discovery play” – which is intersecting highly deformed quartz-mica schists (mineralization host) in early shallow drilling at its International Silver Property in the prolific West Kootenay region.    With just a few hours left in Friday’s trading session the company provided its first update on the recently started drill program ((it was a light volume day on the Venture, the news didn’t have much time to circulate).  The stock was trading off a penny at 23 cents before the news came out, but finished even for the day at 24 cents after a flurry of late buying swallowed up virtually everything that was offered through 24 cents.   The update was very matter-of-fact and businesslike, which impressed us, and signed off by Bob Morris from Moose Mountain Technical Services – RBW’s geological consultant.  Morris is highly respected in the industry and often errs on the conservative side.  This gave the news even greater credibility and what we found particularly interesting is that Moose Mountain has decided, at this early stage, to expand the number of drill site locations.  This is an important signal to the market, we believe, that Moose Mountain likes what it sees so far.

The accumulation in Rainbow over the last few weeks has been impressive, and the chart pattern is pointing to the strong possibility of a powerful breakout once the .24-.27 cent area is cleared.  The stock successfully tested its EMA-20 Friday and what’s really interesting at the moment is that its 100-day moving average (SMA) is just beginning to reverse to the upside (the 50, 200 and 300 are all rising) which should add fresh fuel to the fire.  Rainbow has significantly outperformed the Venture this year (a gain of 45% vs. a loss of 14.5% for the CDNX year-to-date).  With the Venture in an apparent new uptrend, John’s Fibonacci levels for RBW seem very reasonable (his Fib. levels for GoldQuest were remarkably accurate.  With RBW’s modest current market cap of $8.5 million, a major hit at the International would obliterate those Fib. levels).

GoldQuest Mining (GQC, TSX-V)

Some investors were thrown into a state of panic last Wednesday when GoldQuest suddenly plunged from an intra-day high of $1.92 to an intra-day low of $1.55 before closing at $1.60.  This could only be considered as a very normal pullback, very similar to the retracements witnessed in June and July.  GoldQuest had become temporarily overbought, so some profit-taking kicked in.  As simple as that.  The support zone held between $1.50 and $1.60.  Given results to date, GoldQuest is sitting on a major discovery in the Dominican Republic and for that reason is a “keeper” in our view.  Who knows where this stock could go in a stronger overall market through the balance of the year if stellar drill results continue to pour in.

GoldQuest perked up Friday, closing at $1.71, and the overbought condition has cleansed itself with RSI now at previous support.  A higher close Monday will confirm a new bullish wave is underway.

Note:  John and Jon both hold share positions in Rainbow Resources with Jon adding to his position Friday (Jon also holds a share position in GoldQuest).