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Gold is firming up after successfully testing support yesterday at $1,730…as of 5:45 am Pacific, the yellow metal is up $4 an ounce at $1,741…Silver had added 17 cents to $32.87…Copper is up a penny at $3.70…Crude Oil is flat at $91.83 while the U.S. Dollar Index is off over one-quarter of a point to 79.40…

The Silver Love Trade In India

The launching of a 1 kilo Silver futures contract by India’s largest commodity bourse at the beginning of October has proven to be very popular…officials say retail investors have shown high interest in the new offering as it enables them to take delivery of a 1 kilo Silver bar at lower margins, as compared to the earlier 30 kilo bars…officials said the timing of the new offering was ripe…”We have the Navratri festival starting tomorrow (October 16), and given the beginning of the holy, pious period, many more investors are expected to get into Silver futures and also buy Silver coins to mark the occasion,” said Manikbhai Godhadia, bullion retailer, in a report from Mineweb.com…Navratri is a vibrant nine-night festival held in India to honour the Mother Goddess…a clay pot symbolizes the womb which is the source of life on earth…it is a prominent feature during Navratri celebrations across the country…women in vibrant and grand costumes dance around the pot which is filled with water, a betel nut and a Silver coin…a coconut is placed on the top of the pot…in this particular ensemble, only a Silver coin will do…on the occasion, people also exchange gifts and sweets and gifting a Silver coin engraved with the Mother’s image is considered highly auspicious…it is generally priced at a premium in the prelude to the festival, and it’s considered a valuable keepsake…

Canadian Household Debt Continues To Increase

Canadians have entered the debt danger zone that helped trigger real estate crashes in the U.S. and Britain…the Globe and Mail reports that the average household now has just 63 cents of disposable income for every dollar of debt, according to figures released yesterdday by Statistics Canada…that’s the highest ratio of debt to income ever recorded in Canada, and more inflated than the levels witnessed in the U.S. and Britain before their housing market collapses in the mid-2000’s…the rise in debt levels comes as Canada’s housing market is showing increasing signs of weakness, with more than half of major markets seeing sales drop 10% in September from a year ago and the average national price rising a scant 1.1% over the same period…in spite of tighter federal mortgage rules and repeated warnings from Bank of Canada Governor Mark Carney, debt levels continue to rise…

Today’s Markets

Asian markets were solid overnight with Japan’s Nikkei Index climbing 1.4% as investor sentiment improved thanks to an overnight rally in U.S. stocks that was fueled by better than expected earnings from Citigroup, the third-largest U.S. bank, and above-forecast retail sales data…Europe is strong this morning while stock index futures in New York as of 5:45 am Pacific are pointing toward a positive open on Wall Street…U.S. consumer prices rose in September as the cost of gasoline surged, posing a threat to consumers’ spending power although faster inflation looked unlikely to derail the Federal Reserve’s ultra-easy policy path…The CPI increased 0.6% last month, in line with analysts’ expectations and matching August’s reading, data from the Labor Department showed this morning…

U.S. Dollar Index Chart Update

The U.S. Dollar Index continues to look very weak, and that’s bullish in terms of the primary trends for both Gold and Silver and the Venture Exchange…the Dollar Index has rallied recently but John’s chart shows how it’s currently constrained by the EMA-20 and a downtrend line…RSI(14) on this 6-month chart is also at resistance…this lends strong credence to the view that the pullbacks we’ve just seen in Gold and Silver and the Venture may have run their course…

The Fearful Just Don’t Get It

Investors who have been selling Venture stocks in recent days, as opposed to “buying the dip”, out of fear the Index is ready to go into another free-fall is another great example of emotion trumping common sense which is why so many investors aren’t nearly as successful as they should be in this volatile speculative market…after a nearly 200-point advance since the beginning of August, and up against a resistance band recently beginning at 1350, a minor correction in the Index should not have been a major surprise…that’s what has occurred over the past five sessions with the Venture losing 62 points or nearly 5%…this is a healthy pullback and has created a situation where the RSI(2) is now at a level not seen since the end of June when the Venture bottomed out at 1154…the Index could still drop a little lower but the strong support levels give us a lot of confidence that this is a pullback to embrace…

Below is an updated chart from John that also shows very clear and strong support levels…given the RSI(2) situation, plus the rising 50 and 100 day moving averages (SMA’s), the Fibonacci support levels John has outlined beginning at 1274 have a lot of credibility and should hold…

Prodigy Jumps On Friendly Takeover

Prodigy Gold (PDG, TSX), one of our favorites over the past year, has agreed to a friendly, all-share takeover by Argonaut Gold (AR, TSX)  in a deal valued at $341 million…Prodigy owns the multi-Magino Gold Project in northwestern Ontario that features an indicated resource of more than 6 million ounces (223 million tonnes at 0.87 gram per tonne gold using a cut-off grade of 0.35 gram per tonne)…the combined entity will benefit from the strong operating experience and cash flow of Argonaut Gold and its ability to successfully advance the Magino Project…Prodigy shareholders will receive 0.1042 of an Argonaut Gold share and 0.001 cent in cash per Prodigy share, representing $1.08 per share based on AR’s 20-day volume-weighted average price, and a premium of 54% based on both companies’ 20-day VWAP’s as of October 12…the deal follows another takeover earlier this year involving a similarly-sized deposit in which Iamgold (IMG, TSX) bought up the Cote Lake project in Western Ontario for $608 million (or $505 million net of cash) through an all-cash takeover of Trelawney Mining and Exploration…

Probe Mines Ltd. (PRB, TSX-V)

Another prime candidate for a takeover is Probe Mines (PRB, TSX-V) which we’ve highlighted on many occasions, and Probe jumped a dime yesterday to close at $1.51 following the news on Prodigy…Probe has been enjoying great success in growing its Borden Lake deposit near Chapleau, Ontario, which is still open in all directions and has recently expanded to depths greater than 500 metres…Probe currently has four rigs on site and has drilled approximately 250 holes in total at Borden Lake, outlining a global indicated resource of 4,051,000 ounces of Gold averaging 0.71 g/t Au and an additional inferred resource of 1,796,000 ounces of Gold averaging 0.62 g/t gold, at a 0.3 g/t cut-off grade…

Below is an updated Probe chart (2.5-year weekly) from John…the next major resistance level is $1.70…Probe has performed very well over the past six weeks after bottoming out just below $1 over the summer…it has posted gains in 12 out of the past 14 sessions, so while it’s an attractive potential takeover candidate it’s also prone to a minor pullback in the immediate future with support at previous resistance levels of $1.40 and $1.20…

Rainbow Resources (RBW, TSX-V)

Rainbow Resources‘ (RBW, TSX-V) President David W. Johnston was in a very upbeat mood yesterday as we caught up with him during his brief visit to Vancouver…he had just been to the International Property where prospecting continues following completion of the Phase 1 drill program…with drilling at Gold Viking set to begin, and the Nevada Project proceeding to the drilling stage very quickly (at or before the end of the month), Johnston is very hopeful for a discovery at any one or a combination of the three properties…the vein system was consistently hit during drilling at the International, as reported yesterday by Rainbow, and initial results are expected soon…that vein system is known to host sections of massive galena which potentially could run very high in terms of Silver content…new information surfaced yesterday regarding Rainbow’s Jewel Ridge Property and we’ll be reporting more on that this week…we’re continuing to prepare a Rainbow article after yesterday’s lengthy news and our interview…

Calibre Mining (CXB, TSX-V) Chart

Note: John and Jon hold share positions in RBW.  John, Jon and Terry do not hold share positions in PRB or CXB.