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Following Friday’s sell-off in precious metals, Gold has stabilized to begin a very important new week in the markets…as of 4:00 am Pacific, bullion is up $3 an ounce at $1,680 and has traded in a range between $1,671 and $1,682 so far today…Silver is unchanged at $30.91…Copper is off 2 pennies at $3.45 a pound…Crude Oil is flat at $84.87 while the U.S. Dollar Index is up more than one-tenth of a point to 80.75…

Gold fell through the $1,700 support level Friday but physical buying, short covering, and strong additional technical support between $1,640 and $1,670 should underpin bullion and provide a floor in the days ahead…the overall bull market remains completely intact, and bullion has always been a smart buy over the last decade whenever it has neared or dipped slightly below its 200-day moving average which currently sits at $1,666…sooner or later, the world will discover that bullion is more important than paper currency…November has also been Gold’s best month over the last 10 years, and its strongest 4-month stretch is consistently now through the end of February…

The Election, The Election, The Election…

In real estate, and in Gold exploration, it’s all about location, location, location…in the markets right now, it’s the election, the election, the election…markets hate uncertainty and the hope is that America charts a clear course come Wednesday morning…polls show a very tight race between President Obama and Republican challenger Mitt Romney going into tomorrow’s Big Day…while we’re cheering for a Romney win, partly for the fact that a Romney administration would make for a much improved business climate in the United States, our belief is that Obama will slither his way through like a snake in the grass and post a narrow victory (the positive side of this is that Gold should explode during a second Obama term)…he’ll then have another four years to continue his quest to change America, grow government and slow the rise of the oceans and heal the planet…Obama does appear to have a slight edge based on state polls in the critical battleground areas…given the sluggishness of the U.S. economy, with so many millions of people officially unemployed, and runaway government spending, defeating Obama should have been a slam-dunk for a Republican but Romney hasn’t exactly been a Ronald Reagan on the campaign trail…he’s a reluctant conservative with wavering views depending on the political winds…in a Canadian context, Romney most resembles Paul Martin…Obama, meanwhile, is another Pierre Trudeau, and Canada is still paying the price for Trudeau 30 years later…the lesser of two evils, in our view, is Romney but most Canadians (and most of the world) don’t see it that way…

Will There In Fact Be A Winner Tomorrow Night?

For the sake of the markets, we’re hoping there’s actually a clear winner tomorrow night…accusations of alleged voter fraud and shady voter registration practices are already flaring in a number of battleground states…conservative groups have sent squads of election monitors to polling stations in key states to watch for signs of improper voting as liberal groups prepare to push back, warning of intimidation and voter suppression…with such a tight race, it’s important to keep in mind that at least 18 states have automatic recount provisions on the books, including several – Ohio, Florida and Colorado stand out – sure to loom large in tomorrow’s voting…if either candidate wins by less than 0.5%, state law requires an automatic recounting of ballots…Ohio has a rule that if you request an absentee ballot but then decide to vote in person on Election Day, that vote is cast as a provisional ballot and not tabulated until later…the Wall Street Journal reports that in the key swing district of Hamilton County, which went for Obama in 2008 by 21,000 votes, nearly 20,000 absentee ballots hadn’t been returned by Friday…statewide, the figure topped 200,000, close to the Obama margin of victory four years ago…and all signs point to a far narrower margin in Ohio this year, no matter who wins…

Of course it’ll also be important to watch how things unfold in the Senate and the House, and at the moment it appears the Democrats could add slightly to their majority in the Senate while the Republicans may lose a few seats but still command a majority in the House…that kind of outcome would strengthen Obama’s hand, not to mention his ego…

U.S. Dollar Index

The U.S. Dollar Index staged a minor breakout Friday, scaring Gold bugs, but we’ve stated for quite a while that the Index’s greatest challenge would be to push through a stiff resistance band between 81 and 81.5…in fact, as John’s updated 2.5-year weekly chart shows, a move up to the 81 or 81.5 area may simply complete a bearish head-and-shoulders pattern…this theory, that the right shoulder is now developing, is supported by the divergences between the price, RSI and the MACD Histogram…the only hope in our view for the Dollar Index to bust through the 81.5 area is a Romney victory tomorrow night…otherwise, the greenback’s bearish trend should continue which has proven to be positive for precious metals and the Venture Exchange…

Silver Short-Term Chart

Silver recently has been behaving generally as expected, cleansing a seriously overbought condition that emerged during August and September…now is the time to really get bullish again regarding Silver with the RSI(14) on John’s 9-month daily chart at 33%…a very strong support band exists between $30.50 and $31, so the likelihood of a drop below $30 seems quite remote…

Silver Long-Term Chart

John’s 15-year monthly Silver chart shows a powerful “Wave 5” move is still very much intact, despite the recent weakness…in fact, you’ll notice that the RSI(2) indicator is now at 32%…ON EVERY OCCASION over the last three years after Silver reached overbought levels based on RSI(2), it rebounded and headed higher after finding support at or just above the 30% RSI level…

Today’s Equity Markets

Asian markets were down slightly overnight with China’s Shanghai Composite losing 3 points to finish at 2114…the Chinese Communist Party starts its 18th congress on Thursday, preparing for a once-in-a-decade leadership transition…hopes are high in some quarters that China’s new leadership will deliver stimulus measures to bolster economic growth, but those measures could prove to be quite modest…”We expect the new leaders to push ahead with the structural reforms and take modest measures to consolidate the stabilization in growth…however, investors expecting immediate and drastic changes in policy or another big stimulus package will likely be disappointed,” analysts at Barclays said in a report…European markets are down mildly this morning while stock index futures in New York as of 4:00 am Pacific are pointing toward a flat open on Wall Street…

Venture Exchange – Continued Bullish Signs

The Venture Exchange, which closed at 1310 Friday, has held up extremely well over the past month despite a significant drop in the price of Gold as well as weakness in the general equity markets…the Venture has been consolidating over the last 4 weeks but is down just 35 points or 2.8% during that time while Gold has lost nearly 6% of its value…the Dow is off 3.8% over the last 4 weeks while the Nasdaq has shed 4.9%…what this shows is how much sentiment has changed with the Venture…

In a bullish development, the Venture appears to have ended its under-performance vs. Gold which started in early 2011 as you can see in John’s 12-year comparative weekly chart below…during that period, the Venture lost 1311 points or 53% of its value – another massive drop after the 2008 Crash was still fresh in investors’ minds…take note of the Venture’s 1,000-day moving average (SMA) – it has reversed from a 4-year decline and that’s one of several reasons we’re so bullish on this market right now…in fact, though most brokers and investors don’t recognize it, the bear market is morphing into a new cyclical bull right before our very eyes…as we showed last week, the Venture is also very close to convincingly breaking above a down trendline, a falling wedge, in place since early 2011…

Discovery Ventures (DVN, TSX-V) – Slocan Valley Heats Up

A very interesting strong performer on the Venture over the past several weeks has been Discovery Ventures (DVN, TSX-V) which recently announced that it has signed a letter of intent to acquire an 80% interest in the Willa Gold-copper deposit in the Slocan Valley mining district, just 8 miles north of Rainbow Resources‘ (RBW, TSX-V) Gold Viking Property which is currently being drilled…last Friday, DVN reported that it has hired an independent consulting engineer to conduct a full site survey of the Willa project which is a subvolcanic breccia-hosted, Gold-Copper-Silver deposit…over $16 million was invested by majors and juniors from the 1980’s through about 2005 to develop the Willa deposit to its present status including extensive underground workings to access the mineralization…a 2005 technical report on Willa gave an all-category estimate of approximately 202,000 ounces of Gold, 17.4 million pounds of Copper and 345,000 ounces of Silver (historical, non-compliant*)…DVN believes that the current higher Gold and Copper price environment, combined with the possibility of the discovery of additional mineralization throughout the 50 sq. km property, makes this an attractive situation to re-visit…in addition, the general belief is that the area is much more receptive to exploration and mining now than it was in previous years…Discovery has pointed out that Willa is located in one of the most highly mineralized regions of B.C. for precious and base metals…since the late 19th century, the Slocan mining region has hosted more than 20 mining/milling operations and about 200 additional mines that have shipped ore to custom mills and smelters…(using a 3.5 g/t Au cut-off, the measured resource was estimated at 487,989 tonnes grading 6.77 g/t Au, 0.97% Cu, and 11.59 g/t Ag; indicated resource was estimated at 292,457 tonnes grading 5.31 g/t Au, 0.65% Cu, and 11.94 g/t Ag; inferred resource was estimated at 216,177 tonnes grading 6.55 g/t Au, 0.57% Cu and 7.32 g/t Ag)…

Interest in DVN has exploded from 634,000 total shares traded (all exchanges) in September to a whopping 13,727,741 shares (all exchanges, an average of 624,000 per day) in October with the stock rising from a low of 13 cents in September to a 52-week high of 31 cents last month when the Willa deal was announced…the stock closed Friday at 26.5 cents, giving it a market cap of $6.4 million with approximately 24 million shares outstanding…below is 2.5-year weekly chart from John showing a bullish overall trend but some near-term consolidation is possible with strong support in the low 20’s…the company has some other properties in British Columbia but the Willa opportunity is the most advanced…

Meanwhile, in another interesting development that shows how interest in the Slocan Valley area is beginning to build, International Bethlehem Resources (IBC, TSX-V), which previously worked on the Willa project, has granted Magnum Capital Corp. (MGK, TSX-V) an option to earn a 51% interest in certain claims near the Willa deposit including the “LH” area where a Gold discovery apparently was made in 1988 but was never followed up on due to market conditions…the deal between IBC and Magnum will constitute Magnum’s qualifying transaction, and begins with IBC drilling a hole in the immediate vicinity of that 1988 hole that went to a depth of 388 metres…rumor has it, that program may begin this week…

Huldra Mining (HDA, TSX-V)

Elsewhere in southern British Columbia, Huldra Mining (HDA, TSX-V) continues to aggressively move forward with production from its Treasure Mountain Property near Hope, the nearest operating mine to Vancouver…what was interesting on Friday is that HDA, despite the big drop in Gold and Silver prices and weakness across the equity markets, actually closed up 6 pennies to $1.46 – just 17 cents below its 2012 high…the commissioning of HDA’s 200-tonne-per-day Silver-lead-zinc mill in Merritt began August 7 and the company is currently testing the mill by processing a 5,000-tonne stockpile of mill feed from historical development work at Treasure Mountain…earlier this year, Huldra received a permit from the B.C. Ministry of Energy & Mines for mining and reclamation of up to 60,000 tonnes per year at Treasure Mountain…a NI-43-101 resource estimate from 2009, which was reviewed through an updated technical report on the property issued in June of this year, gave a total vein indicated and inferred resource of 4.5 million ounces of Silver, 10.4 million pounds of lead and 14.3 million pounds of zinc with mine workings open on strike and at depth for resource expansion…(33,000 tonnes in the indicated category grading 24.2 opt Ag, 4.16% Pb and 3.8% Zn at a cut-off of 10 oz/ton Ag, and 120,000 tonnes grading 27 opt Ag, 2.79% Pb and 4.36 Zn at the same Ag cut-off grade)…high-grade forgives all sins which gives Huldra an added advantage as it works through any potential glitches early on in the mining and production processes…substantial drilling has occurred since that estimate was put together, so the potential for upgrading and expanding resources has to be considered high…if Huldra can produce 60,000 tonnes per year, and it seems they’re on track to do so, it’s not hard to do the math and see that this company is going to start generating impressive cash flow with only 47 million shares outstanding and a current market cap of only $69 million…retail investors have not yet caught on to this story (Huldra has large institutional ownership, and Coeur d’Alene Mines recently increased its interest to just under 8% of the current outstanding shares)…

Below is a 2.5-year weekly HDA chart from John that shows the stock is currently at Fibonacci resistance and at the top of a symmetrical triangle, raising the possibility of an imminent breakout…with RSI(14) at just 59%, there is ample room for a move higher before temporarily overbought conditions set in…HDA is an intriguing emerging small producer that could really explode in a rising Silver market…as always, perform your own due diligence…new management, led by Ryan Sharp, took over Huldra in 2010 and has really transformed this company…

Lincoln Mining (LMG, TSX-V)

As regular BMR readers know, we are very bullish on mining and exploration-friendly Nevada where a number of juniors have been very successful this year…just one more reason why we’re so excited by Rainbow which not only has great prospects in the southeast B.C. but is currently drilling smack-dab in the middle of over 4 million ounces of NI-43-101 Gold reserves and resources along a prolific portion of the Battle Mountain-Eureka trend…

Another emerging situation in Nevada for our readers to consider and perform their due diligence on is Lincoln Mining (LMG, TSX-V) which climbed 2.5 cents Friday on its biggest volume day of the year, 560,000 shares as the stock closed at 8.5 cents…Lincoln has completed some interesting transactions recently including a private placement and a convertible debenture with a full-service mining contractor – Procon Mining and Tunnelling Ltd. – out of Vancouver…in addition, Lincoln also just recently signed a binding letter of intent with another company for an option to earn a 100% interest in the Bell Mountain Property, 95 miles southeast of Reno, and is also working toward putting its advanced-stage Pine Grove Property in western Nevada into production after a positive PEA was received late last year…

Lincoln has well over 100 million shares outstanding but at 8.5 cents, the market cap is still quite modest and the players involved appear to be serious about making things happen in Nevada…below is a chart from John that shows how LMG has broken above a down trendline in place since early 2011…this is an interesting play and we’re looking forward to tracking its progress…

Alliance Mining (ALM, TSX-V)

Speaking of interesting plays, there has been a volume explosion in Alliance Mining (ALM, TSX-V) and for good reason…on Thursday of last week, Alliance announced that it has signed a binding letter of intent to acquire claims over a nearly 50 sq. km area in Mexico’s prolific Uruachic district…some of these claims are contiguous to ground held by Fresnillo PLC and Agnico-Eagle Mines (AEM, TSX)…if you’re not familiar with Fresnillo or this particular area of Mexico, we suggest you check into it…the Uruachic mining camp lies directly in the centre of the several hundred kilometre trend of important past producers and new discoveries that characterizes the Sierra Madre Occidental…this historic trend has produced roughly 40 million ounces of Gold and up to 2 BILLION ounces of Silver over the last 400 years…for a small up-start junior like Alliance to ink a deal for a such a significant land package, which puts them within just four kilometres of Fresnillo’s huge Orisyvo discovery (9+ million Gold ounces), has us thinking that there could be some very powerful new forces at work behind the scenes with this company…in fact, Alliance announced August 9 that Ian Gordon was added to its Advisory Board and the renowned analyst is known to have strong ties with Eric Sprott…Sprott loves the Uruachic area as Sprott Asset Management holds a major position in Golden Goliath Resources (GNG, TSX-V) and of course Agnico-Eagle…one of Alliance’s properties straddles the southern border of the Las Bolas Gold-Silver Property that Agnico-Eagle has just finished drilling, and results from that will be interesting to see…Alliance has also assembled an attractive portfolio of properties in Arizona, so this appears to be a company with an aggressive game plan that could emerge as a big winner in 2013…ALM has just 28 million shares outstanding for a market cap of just $3 million based on Friday’s 11-cent closing price…

Note: John holds a share position in RBW.  Jon holds share positions in RBW, HDA and ALM.