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Gold, powered by expectations of aggressive central bank action to kick-start economies across the globe, climbed as high as $1,668 overnight after pushing through technical resistance in the $1,640’s yesterday…as of 6:15 am Pacific, the yellow metal is up $11 an ounce at $1,665…Silver, rising faster than Gold now to reverse a recent trend in place since the spring, is 74 cents higher at $30.57, just slightly above its 200-day moving average (SMA)…Copper is up a nickel to $3.49…Crude Oil has gained 22 cents to $97.48 while the U.S. Dollar Index is flat at 81.46…

Last night, we posted John’s updated short-term charts on both Gold and Silver…how Gold handles the $1,660 area today and tomorrow will be interesting to watch…however, all things considered, the yellow metal seems destined to run into the low $1,700’s – at a minimum – over the next few weeks, supported by highly probable central bank action from the ECB and the Fed as well as new potential monetary and fiscal measures from China…

Below is a long-term Gold chart from John (10-year monthly) that shows how the RSI(14) has reversed after nearly touching its 2008 low…there’s plenty of room for Gold to move higher over the remainder of 2012 before getting into overbought territory on the monthly chart…

The long-term Silver chart shows how RSI(2) has made a strong recovery after reaching oversold levels not seen since the 2008 Crash…based on historical patterns, the RSI(2) can be expected to move further into the overbought zone – a condition that could exist for an extended period…

Today’s Markets

Asian markets were in the green overnight while European shares are mixed this morning…stock index futures in New York as of 6:15 am Pacific are pointing toward a slightly negative open on Wall Street…the number of Americans filing new claims for jobless benefits unexpectedly rose last week, suggesting the labor market is healing too slowly to make much of a dent in the unemployment rate which is more ammunition for the Fed…the Venture Exchange closed up 6 points at 1246 yesterday…a convincing move on strong volume through the 1250 area – inevitable, we believe, but not necessarily immediately – would be another very bullish sign as the Index does face resistance just below 1250 at current levels…

Fed Moving Closer To Action

The Federal Reserve is set to ease policy unless there is a sharp change in economic data after the minutes of its August meeting, released yesterday morning, revealed a strong consensus for action…“Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery,” say the minutes of the rate-setting Federal Open Market Committee…that is an unusually clear statement of the FOMC’s views about future action and sets a tough condition for it to change course and keep policy on hold..payrolls data for August will be released shortly before the Fed’s September meeting (Sept. 12-13) but even if jobs growth is better, it is unlikely to amount to “a substantial and sustainable strengthening” in the pace of recovery…in another indication that the FOMC is ready to act, it discussed a range of tools with which to ease monetary policy further, including a possible third round of quantitative easing…under QE3, the Fed would buy more long-term assets…according to the minutes: “Many participants expected that such a program could provide additional support for the economic recovery both by putting downward pressure on longer-term interest rates and by contributing to easier financial conditions more broadly”…in a hint that the Fed might consider an open-ended program of asset purchases, in which it did not specify the total amount up front, the minutes say that “many” participants thought that any new program should be “sufficiently flexible to allow adjustments”…Fed Chairman Ben Bernanke speaks August 31 at the Fed’s annual Jackson Hole symposium where he’s expected to give strong clues as to the Fed’s plans for further easing as he did two years ago…

China Slowdown Continues

A preliminary gauge of manufacturing activity in China today sent another warning signal on the state of the world’s second-largest economy…the preliminary HSBC China Manufacturing Purchasing Managers Index fell to a nine-month low of 47.8 in August, compared with a final reading of 49.3 in July…a reading below 50 indicates contraction of manufacturing activity from the previous month, while one above 50 indicates growth…the preliminary August reading marks the 10th straight month the index has been in contractionary territory, signaling extended difficulty for manufacturers…this suggests that more monetary easing is likely from China in the near future as well as additional fiscal support to stabilize growth…

Euro Zone Recession Looms

The euro zone will almost certainly slip back into recession, according to surveys of business activity that highlighted how Germany’s economy is being dragged into the region’s crisis…an index of purchasing managers in the euro zone showed a seventh consecutive private-sector contraction…the “flash”, or preliminary, August figure for the bloc was broadly unchanged at 46.6 from 46.5 a month earlier but the decline in German output accelerated…Markit Economics, the compiler of the index, said the readings, on top of gloomy data in July, would be consistent with a fall of 0.5% or 0.6% in euro zone gross domestic product in the third quarter…euro zone GDP shrank 0.2% in the three months to June…

Mistango Resources (MIS, TSX-V)

Readers are advised to perform their due diligence on little-known Mistango Resources (MIS, TSX-V) which continues to deliver interesting results from its Omego Gold Project, 18 miles east of Kirkland Lake and 4 miles west of the former Kerr Addison Mine…results from six more holes from an open-pit area were released yesterday and included 1.5 g/t Au over 55 metres and 2.4 g/t Au over 19.5 metres…in addition, drilling is currently testing the down-plunge extensions of the Omega deposit and the Lake Zone where two shafts are already in existence…meanwhile, recent metallurgical testing provided very positive results including 99% recovery by gravity flotation…Mistango completed a $2.5 million financing with Queenston Mining (QMI, TSX) earlier this summer and Queenston now holds 41% of the 38 million MIS outstanding shares…Mistango jumped a nickel yesterday to 25 cents on volume of 122,000 shares…

GoldQuest Mining (GQC, TSX-V) Update

GoldQuest Mining (GQC, TSX-V) took a rather strange end-of-the-day hit yesterday and finished down 27 cents at $1.60…the decline during the last hour was likely magnified by stop-losses and high-frequency trading, and it’s also possible a fund just decided to take some profits off the table…the company has always been very guarded with drill data so it’s highly unlikely there was any kind of a leak in that regard…it’s important to point out that GoldQuest has been volatile in its incredible climb from under a dime to an all-time high of $2.03 on Wednesday…the stock dropped 23% over a two-day period in June and by more than 40% over a 17-day stretch that month…it also fell by 16% over two days in July…so while the 21% drop over the last couple of trading sessions is unnerving for some investors, it’s important to put it into proper perspective as normal trading activity for this stock…below is an updated GQC chart from John showing strong support around current levels…the EMA-20 is at $1.51…

Rainbow Resources (RBW, TSX-V) Update

The surge in Silver bodes extremely well for Rainbow Resources (RBW, TSX-V) which is focusing on its flagship International Silver Property at the moment, followed by another high-grade Silver target – the Gold Viking Property…Rainbow continues to trade impressive volume, which is drawing many new eyes to this intriguing play, and as John’s charts have pointed out, it’s just a matter of time before the stock plows through the 24 to 27 cent resistance band…the 100-day moving average (SMA) has flattened out and appears ready to reverse to the upside which should provide fresh fuel for another powerful advance…all other moving averages are in bullish alignment…news is expected very soon from RBW as drilling continues at the International…

Scorpio Mining (SPM, TSX)

A Silver producer to keep an eye on is Scorpio Mining (SPM, TSX) which has jumped 50% since trading as low as 53 cents a week ago (investors are waking up to bargains)…Scorpio became extremely oversold recently and could still climb quite a bit higher over the coming weeks, given the look of the chart, especially in a bullish Silver price environment…

Richmont Mines (RIC, TSX) Chart Update

When a stock becomes as oversold as Richmont became recently, you simply back up the truck and load up…Richmont has put in an important bottom at $3.30, and the stock jumped another 25 cents yesterday to close at $4.29…

Note: John and Jon both hold share positions in Rainbow Resources.  Jon also holds a position in GoldQuest Mining.