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Gold has traded between $1,308 and $1,330 so far today as it starts a new week on a positive note…as of 6:50 am Pacific, bullion is up $15 an ounce at $1,326…Silver is up 61 cents to $22.35 (see updated Silver charts at bottom of this morning’s report)…Copper is down 3 pennies at $3.25…Crude Oil has weakened by $1.78 a barrel to $102.06 while the U.S. Dollar Index is off nearly one-tenth of a point to 79.99…the Dollar Index hit an 8-week low last week (79.63) and has declined for 4 straight weeks…strong support is at 79…

In the summer of 2011, the prospect of a U.S. debt default sent Gold surging by more than $300 an ounce to an all-time high of $1,924…Gold has fallen out of favor with many investors this year, but it could easily regain its luster in the coming weeks depending on how things play out in Washington in this latest version of the debt ceiling battle…the partial U.S. government shutdown is in its 7th day but that’s just a minor irritant compared to the bigger issue of whether the government can keep meeting its debt obligations by the 3rd week of this month if the current standoff between Democrats and Republicans continues…what’s more complicated about this year’s negotiations is how Obamacare, a regulatory and logistical nightmare but President Obama’s signature legislation, is very much wrapped up in the debt ceiling debate…House Speaker John Boehner stood his ground yesterday alongside the most conservative Republicans in Congress, insisting that the House would not vote to finance and reopen the government or raise the nation’s borrowing limit without concessions from President Obama on the health care law…“The fact is, this fight was going to come one way or the other,” Boehner said on the ABC News program “This Week’, adding, “We’re in the fight.”

Gold Chart:  Technical Case For Move Into $1,500’s

There are obviously different potential scenarios for Gold this quarter but here’s one of them:  This chart from John shows how Gold could be in the early stages of a strong “C Wave” move from last week’s low of $1,277 which coincided with important Fibonacci support in the $1,270’s…this move could result in Gold climbing back up to the $1,500 – $1,550 area where it would then meet very stiff resistance as this level of course is where bullion broke down from in the spring…

Many North Americans have a tendency to think of the world in very limited terms, and underestimate important global developments…the pronounced shift in physical demand for Gold from West to East this year, from weak hands into safer hands, is a critical theme and has to be viewed as a very positive long-term development for bullion…China’s physical Gold buyers have largely replaced Western ETF investors as the primary underpinning of demand…in addition to encouraging its own citizens to accumulate Gold, the Chinese government itself has been aggressively stockpiling bullion – perhaps as a plan to back up its currency…Gold has clearly become a high priority for China’s economic development…

As Frank Holmes pointed out in his weekly Investor Alert (www.usfunds.com) over the weekend, in a recent publication titled “Gold: The Silk Road Redux,” Kitco CEO Ross Norman addressed the implications of Gold migration to the East…his main argument is that Gold migration from Western to Eastern hands may ordinarily be thought of as price neutral, but in fact that isn’t so…Asian buyers tend to purchase physical Gold as a form of long-term savings, and as such, they “do not sell when the price goes up, nor do they sell in a panic when the price drops,” Ross pointed out…to put it plainly, according to Ross, the “Chinese market is a lobster pot for Gold – easy in, difficult out – as the country has a strictly enforced non-export policy for Gold.”

The Chinese appetite for Gold continues unabated and the country will become the world’s top Gold consumer this year, overtaking India…

India Gold Imports Expected To Pick Up In Q4

India’s official Gold imports, which have been at a virtual standstill since August, are expected to pick up during the 4th quarter, according to the chairman of the All India Gems and Jewellery Trade Federation…“The Gold import is presently at a standstill, but it may pick up in the next 3 months ’till December to 150 tonnes and we expect total imports to touch 725 tonnes in FY’14,” stated Haresh Soni at the Bombary Bullion Association summit…the country imported 354 tonnes of Gold between April and September 2013, of which 118 tonnes came in April, 162 tonnes in May, 31 tonnes in June, 41 tonnes in July, and virtually nil in August and September…

In July, the Reserve Bank of India asked banks and dealers who import the precious metal to ensure that 20% of their imports were re-exported…due to the ambiguity on how the government expected them to meet such a requirement, banks and state-run trading agencies practically halted Gold imports since mid-August…at the same time, India banned the sale of Gold coins, medallions and dores without a license from the foreign trade office in an extreme effort to curb Gold imports…as a result, August imports of bullion fell 70% from July’s figure…clarification with regard to the government’s policies is expected to accelerate the flow of imports in Q4, albeit they’ll still be well below the blistering pace of April and May…India, which is about to lose its status this year to China as the world’s largest consumer of Gold, imports nearly all of the yellow metal it consumes…according to some estimates, Indian households are hoarding close to 20,000 tonnes of Gold worth some $1 trillion, representing nearly half of the country’s 2012 GDP…

India and China could account for potentially all of 2013’s global new Gold production…

If you haven’t read it yet, we suggest you check out a recent excellent article by Jan Skoyles – “Uncovering China’s Rush For Gold“:

http://www.resourceinvestor.com/2013/10/03/uncovering-chinas-rush-for-gold

Global Economic Recovery Back On Track: Tiger Index

The latest update of the Brookings-Financial Times Tiger Index shows that the global economic recovery is back on track, although it remains slow and unsteady…the recovery is being borne along by surging business and consumer confidence in advanced economies, and stabilization in the growth of emerging markets…however, it may be premature for policymakers to declare victory as the recovery is still tenuous and just a shock or 2 away from turning into another slump – a point not lost on Ben Bernanke and the Federal Reserve…the earliest the Fed will look at potential “tapering”, our view, is at its December meeting – and they may very well wait until sometime in 2014…so much for Goldman Sachs’ insistence that tapering would begin by September, which was a key factor underlining their argument last spring for weaker Gold prices…

Today’s Markets

Japan’s Nikkei average hit a 1-month low overnight, falling 171 points to close at 13853…markets in China resume tomorrow after a week-long holiday…European shares sank to 4-week lows today as concerns grows over the U.S. political stalemate…

The Dow, which has declined in 9 out of the past 12 sessions, is off 113 points through the first 20 minutes of trading today after a moderate rally Friday…the TSX is up 8 points while the Venture has backed off from resistance at 955 – down 5 points at 950…the Venture has excellent support, however, and has also shown a tendency recently to strengthen during the week…

Gold Standard Ventures Corp. (GSV, TSX-V)

Gold Standard Ventures (GSV, TSV-V) reported some interesting results from its Railroad Project in Nevada last Wednesday…the 1st hole drilled by GSV at a target (Bald Mountain) 1500 metres southwest of North Bullion intercepted Gold and Copper mineralization in oxidized material – the most significant Gold oxidized mineralization found to date in the northern Railroad Project area…RRB13-1 intersected 56 metres grading 1.56 g/t Au (between depths of 206.4 m to 262.5 m) including an interval of 7.3 metres grading 5.66 g/t Au…below this Gold intercept, RRB13-1 returned a separate zone of 23.3 m of 0.40% Cu…historically, the Central Bullion area where Bald Mountain is located has been known primarily as a base metal and Silver camp…assays are pending from another hole drilled 1200 m SW of RRB13-1, while a 3rd hole 600 m south of RRB13-1 will commence shortly…the Railroad Project hosts 6 miles of the Bullion Fault Corridor within the prolific Carlin belt, adjacent to Newmont Mining Corp.’s (NMC, TSX) Rain and Emigrant mines near Elko…the North Bullion deposit, which was essentially a blind discovery with no surface indication, remains open in all directions…

Below is a 2.5-year weekly GSV chart from John…notice the bullish “W” pattern in the RSI(14) and how the stock closed at a down trendline in place since last year…a double bottom reversal appears to have occurred here…GSV is up 2 pennies at 72 cents as of 6:50 am Pacific…

Canada Carbon Inc. (CCB, TSX-V) Updated Chart

Canada Carbon Inc. (CCB, TSX-V) showed strong support at the 20-cent level as expected Friday…intra-day, CCB fell as low as 18.5 cents before rebounding to close up 2 pennies at 24 cents…strong support should persist at the 20-cent level (this could consolidate for a while longer) which is also the 50-day rising moving average (SMA)…CCB has been a volatile stock – certainly not for the faint of heart – but pullbacks over the last several months have presented excellent buying opportunities for short-term traders…CCB is unchanged at 24 cents after the first 20 minutes of trading today…

Madalena Energy Inc. (MVN, TSX-V) Updated Chart

Madalena Energy (MVN, TSX-V) continues to be a strong performer…it has doubled since late June and hit a fresh 52-week high last week on strong volume…over 28 million shares have traded over the last 8 sessions…Madalena released encouraging results a week ago from a 3-day production test of its Ostracod oil well in the Paddle River area of west-central Alberta, and it expects to bring this horizontal well on stream this month…

Below is a 2.5-year weekly chart from John…strong support in the low-to mid-40’s…MVN is down 2 pennies at 48 cents as of 6:50 am Pacific…

Updated Silver Charts

Short-Term Silver Chart

Long-Term Silver Chart

Note: John, Jon and Terry do not hold share positions in GSV, CCB or MVN.