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Gold has hit a 2.5-month low as the U.S. Dollar Index continues to push higher and equity markets remain strong…as of 8:15 am Pacific, bullion is down $22 an ounce at $1,265…Silver is off 31 cents at $19.15…Copper is up a penny at $3.17…Crude Oil is $1.73 a barrel lower at $94.23 while the U.S. Dollar Index has jumped one-quarter of a point to 83.02…a test of the 84 resistance area certainly appears to be in the cards…

The rally in the greenback, which is pressuring Gold, is being driven by expectations that monetary policy in the U.S. is set to follow a different path than that of other major economies over the coming months…the dollar keeps climbing against key currencies…the euro has fallen to its lowest point in a year, the yen is edging closer to its weakest level of 2014, and the pound is lurching lower…the European Central Bank, which meets Thursday, may further cut interest rates or undertake additional stimulus measures, including an asset-backed securities-purchase program, to prop up a sputtering economy and address deflationary concerns…yesterday, data showed manufacturing activity in the euro zone in August slid to its lowest point in almost a year…

Bloomberg reported this morning that the value of precious metals held by China’s biggest lenders surged 66% from a year ago as banks lease more Gold to customers because tighter borrowing rules make it harder to lend funds…China is seeking to rein in credit by raising borrowing costs and cutting off lending to sectors considered at risk of default amid a property slump and rising number of bad loans…that’s prompting banks to hold more precious metals as they expand their Gold-leasing business because it’s not subject to loan caps and is considered off-balance sheet lending…

How This Month Has Started For Gold May Not Be How It Finishes

As shown in this chart from www.usfunds.com, history reveals that September is Gold’s favorite month – though that may not seem like the case today…the historical out-performance of Gold in September relates to India’s festival period, which extends from late August to October…the widespread use of Gold in festivals as gifts, prizes and decorations has consistently fueled demand in September…we’ll see how that long-term trend plays out this time around…

Geopolitical Dynamics – Long-Term Bullish For Gold

Enemies of the West have been emboldened in part by a lack of leadership from Washington…this can only be Gold-bullish for the long-term, and the negative consequences will ultimately force Western governments to substantially increase their defense budgets – hampering efforts at reducing deficits and debt…

NATO members meeting this week in Wales are expected to create “a very high-readiness force” to deal with Russian aggression in Ukraine and other international conflicts, NATO Secretary General Anders Fogh Rasmussen said yesterday…in a speech on the NATO website, Rasmussen said the fighting force will be part of an overall Readiness Action Plan that “responds to Russia’s aggressive behavior – but it equips the alliance to respond to all security challenges, wherever they may arise.”

British Prime Minister David Cameron yesterday proposed sweeping legislation to combat the “scourge of extremism” amid the fast and powerful rise of the extremist group Islamic State…Cameron officially asked the House of Commons to agree to several temporary measures he proposed late last week, including the power to seize passports of suspected British jihadists leaving the country and controlling where they can move within the country…

The leaders of the U.S. House and Senate intelligence committees criticized President Obama over the Labor Day weekend for failing to decide yet on whether to hit Islamic State targets in Syria and urged him ahead of this week’s key NATO summit to take decisive action before the militant group attacks on U.S. soil.  “His foreign policy is in absolute free fall,” Michigan GOP Rep. Mike Rogers, chairman of the House Permanent Select Committee on Intelligence, told Fox News Sunday…

Criticism of President Obama’s apparent disdain for foreign leadership is coming not only from the Republican side but from some liberal Democrats as well…California Senator Dianne Feinstein, chairwoman of the Senate Select Committee on Intelligence, said in a separate interview Sunday that Obama is perhaps “too cautious” in his approach to combating Islamic State.  “This is a group of people who are extraordinarily dangerous,” she said on NBC’s Meet the Press.  “And they’ll kill with abandon.”

Today’s Equity Markets

Asia

Asian markets were mostly higher overnight, led by strong gains in China and Japan…China’s Shanghai Composite surged 31 points to close at 2265 – its highest level since June 2013 – while Japan’s Nikkei average climbed 192 points to finish at a 7-month high of 15669…Indian shares hit their second consecutive record high this week after data showed the economy’s balance of payments for the April-June quarter remained in surplus for the third straight quarter…

Europe

European markets were up slightly today…a euro zone producer price index for July showed an expected fall of 0.1% for the month…

North America

The Dow was down moderately in early trading today but has recovered most of those losses and is down just 4 points as of 8:15 am Pacific…the S&P 500, meanwhile, has hit another record high…the TSX is off 10 points while the Venture has retreated 5 points to 1019 as of 8:15 am Pacific…

Blackbird Energy Inc. (BBI, TSX-V) hit a new multi-year high of 40 cents this morning after announcing that it has added to its Montney land position…BBI is up 7.5 cents at 38.5 cents as of 8:15 am Pacific on total volume (all exchanges) of nearly 5 million shares…Big North Graphite Corp. (NRT, TSX-V) is up a penny at 8.5 cents…news out this morning that NRT is being acquired by Flinders Resources Ltd. (FDR, TSX-V) in an all-share transaction (9 million Flinders‘ shares in exchange for 81 million Big North shares)…

Kaminak Gold Corp. (KAM, TSX-V) Update

Kaminak Gold Corp. (KAM, TSX-V) released results this morning from more than two dozen drill holes from its 2014 Phase I exploration program at the Coffee Project in the Yukon…encouragingly, a $2 million Phase II exploration program has just been launched and is targeting primarily Kona North and other high priority Gold-in-soil anomalies proximal to the current resource…this is being carried out in conjunction with the recently commenced Feasibility Study…

Phase I drilling successfully identified shallow, predominately oxidized Gold-bearing structures within the Kona North zone including a 28-m intercept returning 3.55 g/t Au from 14 downhole in CFD376 …drilling also extended mineralization 900 m along strike on the Supremo T3 trend and intersected high-grade Gold mineralization at Cappuccino…

Four diamond drill rigs and two RC percussion drills are now turning on the property, undertaking resource delineation infill, condemnation, geotechnical, hydrological and metallurgical drilling…KAM is off 2 pennies at 99 cents as of 8:15 am Pacific…

Venture 3-Year Weekly Chart Update

This 3-year weekly Venture chart remains irrefutably bullish…

1. Note how the RSI(14) recently tested support at its trend line and is pushing higher again;

2. The Venture has been out-performing Gold for more than a year and the divergence between the two is increasing – this is always a positive sign for the Venture and an indication that we’ve seen the bottom in Gold prices…

3.  A bullish reversal has occurred in the SS indicator for the Venture – the short-term trend and the primary trend are both pointing north.

As John’s 6-month daily chart showed Sunday, there is minor resistance at 1027 and 1039 en route to the March high of 1050, and the Index reacted at the 1028 level in early trading today…

Discovery Ventures Inc. (DVN, TSX-V) Update

Discovery Ventures (DVN, TSX-V) has climbed more than 50% since John’s 23-cent breakout call in early June…what’s driving DVN, which released more news this morning regarding its Willa Property in southeastern B.C., is the powerful combination of this high-grade Gold-Copper deposit and the company’s acquisition of the Max mine and mill facilities 135 km to the north…a lot of exploration money has been poured into the Willa over the years, though parts of it surprisingly are still very much under-explored…the historical resource, while high-grade, only makes sense to mine if the right mill solution exists…the fact that DVN has got its hands on a nearby modern facility for only $6 million changes everything as one can see by reading the Preliminary Economic Assessment for the Willa-Max Project released at the end of May…the estimated very low cap-ex for this project is a huge advantage, and the local area is in search of jobs and a boost in economic activity…while there is no shortage of steps the company still has to make to put the Willa into production, systematically they’ve been making all the right moves in our view – this also shows in the share price…they also have their eye on expanding resources at the Willa – plenty of undiscovered potential exists there…deposit grades of around 6 to 7 g/t Au and nearly 1% Cu aren’t easy to find these days…

DVN is unchanged at 38 cents as of 8:15 am Pacific…

Catalyst Copper Corp. (CCY, TSX-V)

Keep an eye on Catalyst Copper (CCY, TSX-V) which announced a management shake-up and a 30-cent private placement last Friday, subscribed for by the three new heavyweight directors – Richard Warke, Frank Giustra and Ian Telfer…

CCY jumped 14 cents Friday on the news to close at 49 cents…this 8-month chart shows an unconfirmed breakout from an ascending triangle…note the uptrend support line in place since the beginning of the summer…with the likes of Warke, Giustra and Telfer, patient investors could be rewarded handsomely with this new “catalyst”…CCY is unchanged on light volume as of 8:15 am Pacific…

Boxxer Gold Corp. (BXX, TSX-V) Update

Boxxer Gold (BXX, TSX-V) announced the closing last Friday of an over-subscribed private placement with the company raising $620,000 at 4 cents…on August 18, BXX broke out above a long-term downtrend line after announcing very encouraging “visuals” from the first hole completed at the company’s DOK Project (JV’d with Continental Precious Minerals Inc. – CZQ, TSX) – immediately south of the Sheslay district…

While the visuals from this first hole look promising, the likelihood of a lengthy economic intersection right off the bat is quite remote in our view…we would define success for BXX and CZQ as finding a trail of mineralization that they can follow, one that warrants additional drilling…

Boxxer has more paper (over 300 million shares O/S) than any shredder could handle, but BXX is worth keeping an eye on in the event there’s a pleasant surprise out of DOK, plus the company has some other interesting projects on the go including one in Idaho that we suggest readers take a look at…

Below is a 3-year weekly BOX chart…the technical set-up is intriguing with very strong support at 3 cents and a band of resistance between a nickel and 7 cents…one advantage of so many shares outstanding is liquidity for investors – especially if something big unfolds…BXX is off half a penny at 4 cents as of 8:15 am Pacific…

Silver Short-Term Chart Update 

This 6-month daily chart shows how extreme RSI(2) conditions in Silver persisted for most of June with a necessary and healthy unwinding of that overbought situation in recent weeks…however, RSI(14) is now back at 74% (entering today) and previous Fib. support between $19.50 and $20.00 has become resistance…Silver has fallen more than 10% from its July 10 peak just above $21.50 an ounce…support around $19 really needs to hold – it would be surprising if it didn’t…

Silver Long-Term Chart Update 

This 11-year monthly chart better illustrates the strong support Silver has at $19…the metal broke out above one important downtrend line in the second quarter, and that’s also what’s providing support at $19…RSI(2) closed last week at 30% – note the higher lows in this indicator over the past year…

Also note how the SS is moving up from a low bullish “W” while the ADX indicator shows the growing potential for a bullish +DI/-DI crossover this quarter or by year-end…bottom line – Silver is sluggish but continues to look highly attractive around current levels…

Note:  Jon holds a share position in DVN.