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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…