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Gold traded in a positive though tight range overnight but suddenly broke lower as traders decided this would be a “risk-off” day as euro zone concerns flared up…as of 6:00 am Pacific, the yellow metal is down $15 an ounce at $1,745 after dropping as low as $1,738, just $8 above an important support level…Silver is 13 cents lower at $33.61…Copper is off a nickel to $3.71…Crude Oil is $1.22 lower at $90.15 while the U.S. Dollar Index has rallied nearly one-quarter of a point to 79.90…

South African Strikes Curtail Gold Production

Strikes at South African Gold mines have shut about 39% of capacity as unofficial walkouts spread across the country in demand of above-inflation pay increases…AngloGold, the world’s third-largest gold producer, today said all of its South African mines have been halted…Gold Fields Ltd. also lost a metric ton, or about 32,000 ounces, of production after strikes at its KDC and Beatrix operations…

Central Banks Continue To Add To Gold Holdings

Data from the International Monetary Fund yesterday showed South Korea raised its holdings of Gold by nearly 16 tonnes in July, along with Paraguay, which raised its reserves in July from a few thousand ounces to more than 8 tonnes, continuing the trend among central banks to hold more bullion…according to the IMF’s international finance statistics report, South Korea added 16 tonnes of Gold to bring its holdings to 70.4 in July, meaning it has doubled its bullion reserves in the space of a year after being one of the largest purchasers of Gold in 2011…Paraguay raised its holdings by 7.5 tonnes to 8.2 tonnes two months ago…so far this year, central banks have added a net 262 tonnes to their reserves, compared with 203.39 tonnes in the first eight months of 2011…Turkey has added the most to its holdings, having raised its reserves by 100.2 tonnes in the first eight months of the year, followed by Russia, which has added 53.8 tonnes…private investors have also added to their holdings of Gold through exchange-traded funds backed by physical metal, which now hold a record 74.06 million ounces…”We still prefer to be buying Gold on dips and believe the break higher will eventually come,” stated Standard Bank analyst Walter de Wet in a research note…”But the futures market needs to lose some speculative length and the physical market needs to adjust to a higher price-range first”…

Behind The Scenes In The Gold Market

A bullion insider claims JP Morgan is accumulating huge volumes of physical Gold and Silver despite short positions against the precious metals on paper…according to Silver Doctors (www.SilverDoctors.com), renowned analyst Ted Butler alleges JP Morgan’s major reported short positions in Gold are held on behalf of a key government client – either the Federal Reserve or the Chinese, and that the storied financial institution is actually long on Gold and Silver bullion…metals investment guru Jim Sinclair further asserts that the bank’s short positions on paper for the precious metals would serve to facilitate their own furtive accumulation of bullion by dragging down prices…Silver Doctors substantiates these speculations by citing an industry insider who claims to have overseen the movement of 27 million ounces of Gold from HSBC vaults into JP Morgan’s possession…according to the confidential source, JP Morgan’s paper short position is a hedged trade offsetting the bank’s amassing of vast amounts of Gold and Silver billion in its own private vaults…

Today’s Markets

Asian markets were weaker overnight with the Nikkei losing 2% while China’s Shanghai Index fell to its lowest level in more than 43 months…the Index briefly traded below 2000 but managed to close above it in the final minutes of trading to finish at 2004…investors continue to fret about the health of the world’s second largest economy…it’s hoped that China’s leadership transition in mid-October will be the catalyst to get both the market and the economy moving in the right direction…European markets are off between 1 and 2% on continuing uncertainty over the euro zone debt crisis, with investors concerned over Spain’s reluctance to ask for a full sovereign bailout and 10-year treasury bond yields also hitting the 6% mark for the first time in a week…Spain unveils its 2013 budget and fresh austerity measures tomorrow amid growing protests…stock index futures as of 5:45 am Pacific are pointing toward a flat or slightly negative open on Wall Street after the S&P 500 suffered its worst day of the quarter yesterday…

Philadelphia Fed Bank President Slams QE3

The Federal Reserve may have to raise short-term interest rates “well before” the current guidance of mid-2015, Charles Plosser, president of the Philadelphia Fed Bank, said yesterday in remarks that spooked some traders…Plosser, a so-called hawk who is concerned about inflation, presented a sharp critique of the central bank’s decision earlier this month to launch a third round of asset purchases…he said that further easing wasn’t appropriate nor likely to be effective…In addition, the actions present “significant risks” to the Fed’s inflation fighting credibility…Plosser was relatively optimistic about the economy, forecasting 3% growth in 2013 and 2014…

Venture Exchange

In last Saturday’s Week-In-Review, we warned about the increasing likelihood of an immediate minor pullback in the Venture Exchange due to short-term overbought technical conditions brought on by a 15% advance in just two months…understanding and managing volatility is one of the biggest challenges investors face which is why technical analysis is so important – it takes the emotion out of equation, and gives you an all-important road map…over the last two days, the Venture has fallen 33 points and hopefully this hasn’t unnerved any of our readers because it’s a very normal, healthy drop – and one that we warned was likely on the way…it takes nerves of steel to buy into weakness but that’s when the big money is made…

Against a backdrop of unprecedented easing measures by the Fed, combined with other central bank action around the globe, the Venture is well positioned in our view to enjoy its best quarter of the year in Q4 and finish the year in positive territory…that’s the big picture…what has us particularly excited is an imminent reversal of the 1,000-day moving average (SMA) to the upside, ending a four-year decline…this is an event that cannot be ignored…there is something going on that will lead to a powerful surge in junior exploration stocks in the months ahead – that surge is still in its very early stages…the Fed seems determined to ignite a “wealth effect”, devalue the dollar, lower unemployment and encourage at least a little inflation…of course that’s all hugely positive for Gold and Silver…this is also the kind of environment within which the Venture performs best, and the numbers back that up when one looks at how the Index has performed during previous “QE” programs…

If we’re right, and we’re convinced we are, then these occasional pullbacks in the Venture (mostly to the 10-and-20 day moving averages) are great opportunities to make money – just like they were during other historical uptrends…below is an updated chart from John that shows how the Venture simply just ran out of steam, temporarily, in its recent effort to push through the 1350-1365 resistance band…the overbought technical condition needs to be cleansed first and that process accelerated yesterday…this appears very similar to the August retracement that took the Index down to its 20-day SMA (currently just below 1290)…there is also strong support not far below that including the rising 50-day SMA…so this is not a time to be pushing the panic (sell) button…it’s time to be thoughtfully examining opportunities, just like you would after spotting some major sale signs in a mall…

Cascadero Copper Corp. (CCD, TSX-V)

One of many reasons we’re bullish on the Venture right now is the fact that so many individual stocks that have been languishing for months are starting to come to life…a great example is Cascadero Copper (CCD, TSX-V) which has seen a major increase in volume over the last few sessions…the company also impressively just finished raising $2.43 million, so some investors definitely want a piece of this action…we’ve mentioned CCD before…it has a tremendous portfolio of properties in Argentina where fears of resource nationalism have dissipated lately (Lumina Copper Corp., LCC, TSX-V, has been on fire in recent sessions)…Cascadero has two properties adjoining Lumina’s 1.8 billion tonne Taca Taca Cu-Mo-Au deposit – Francisco 2, where Lumina has drilled some nice intercepts within shouting distance of the boundary with Cascadero (Francisco 2 could be an extension), and Sarita Este where Cascadero in mid-August reported some high-grade Gold assays (up to 162.6 g/t Au) from geochemical sampling…CCD has a lot going on in Argentina, and the fact they’re reporting good results right next to Taca Taca is encouraging to say the least…looking out over the next few months, CCD has an opportunity to bust loose given the geological potential of its properties but investor patience is required…

GoldQuest Mining (GQC, TSX-V)

GoldQuest took a major hit yesterday for the first time since the company started reporting results from its Romero discovery in the Dominican Republic…the stock fell 60 cents to $1.23, crashing through its 50-day moving average (SMA) which it has consistently traded above over the last four months…results from three holes from the northern part of the IP anomaly at Romero fell short of market expectations (100 m @ 2.64 g/t Au and 0.33% Cu; 146.5 m @ 0.42 g/t Au and 0.74% Cu; and 110 m @ 0.59 g/t Au and 0.24% Cu)…current drilling is focused on the central and southeastern portions of the anomaly and the potential at depth, and this is where better results can be expected…mineralization continues to expand in all directions, and yesterday didn’t change the fact that Romero is still a world class discovery…assays are pending for five more holes while three are in progress…GoldQuest is no stranger to volatility and our hunch is that it will turn around sharply again at some point in October, but perhaps not before reaching oversold conditions which will open up some great opportunities…investors shouldn’t forget about Gold Standard Ventures (GSV, TSX-V) which plunged to $1.15 in mid-August on disappointing results from its Railroad Project in Nevada, and then proceeded to double to $2.40 in just over a month thanks to better results that came out September 18…

Below is an updated GoldQuest chart (6-month weekly) from John showing key support levels at $1.17 (the weekly EMA-20), $1.05 (Fib. 50% retracement level and the 100-day SMA), and 81 cents (Fib. 61.8% retracement level)…

Everton Resources (EVR, TSX-V)

The drop in GoldQuest yesterday brought some weakness into the other Dominican plays, though Everton Resources (EVR, TSX-V) closed unchanged at 10 cents…EVR, which just recently raised $1.6 million, has strong support around current levels including a rising 200-day SMA at 8.5 cents, half a penny above the financing price…the fourth quarter should be an active one for Everton which has some options to advance its promising DR land package…below is a 2.5-year weekly chart…

Note:  Jon holds share positions in EVR and GQC.