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Gold is trading near its high of the day – up $6 an ounce at $1,328 – as of 8:00 am Pacific…it fell as low as $1,315 overnight...Silver is looking good, up 13 cents at $22.48…Copper is up 2 pennies at $3.29…Crude Oil has added 54 cents to $103.57 while the U.S. Dollar Index is down slightly at 79.87…

China’s net Gold purchases from Hong Kong continued at a brisk pace in August (above 100 tonnes for a 4th straight month) as strong demand for jewellery and bars continued…net Gold flows into China – excluding imports by Hong Kong from China – hit 110.505 tonnes in August, compared with 116.385 tonnes in July, data from the Hong Kong Census and Statistics Department showed…China does not publish Gold trade data…the numbers from Hong Kong – a main conduit for Gold into China – give the best picture of the country’s trade of the precious metal…Chinese demand has been very strong this year, somewhat offsetting record outflows from Gold-backed ETP’s…China’s net Gold imports from Hong Kong have totalled 744.818 tonnes for the first 8 months of the year…they hit a record high of 136.185 tonnes in March before slipping in April due to a supply crunch…

Debt Ceiling Issue

As concerns begin to build regarding the U.S. debt ceiling, the yield on 1-month Treasury bills has risen to its highest level since late last year – 0.16%, up about 14 basis points from where it was just a week ago and above the 0.03 percent yield on 3-month bills…

New York Times writer Andre Ross Sorkin made a couple of interesting points this morning regarding the debt ceiling issue:  “Nobody believes the country will actually exceed the debt limit — which is exactly why it might happen.  Here’s the perversity of Wall Street’s psychology: The more Wall Street is convinced that Washington will act rationally and raise the debt ceiling, most likely at the 11th hour, the less pressure there will be on lawmakers to reach an agreement. That will make it more likely a deal isn’t reached.”

Also with regard to the debt ceiling, ETF Securities stated today: “Political misjudgment on this issue would likely not just severely damage the U.S. economy and the longer term faith in the U.S. government’s commitment to repaying its debt, but also would likely have large negative reverberations across global financial markets and economies. With the price of Gold down about 22% this year and trading near its all-in cost of production, and the S&P 500 up nearly 19% and near its all-time high, some asset reallocation into Gold as a hedge against worst case debt scenarios and inflation temptations may be prudent.”

The Wall Street Journal reported this morning that top Wall Street executives are warning that any effort to pay interest on U.S. debt before other obligations such as Social Security, a strategy some lawmakers think would placate bond investors if the government breaches its borrowing limit, would pose severe risks to financial markets and the economy…in recent meetings with Republican lawmakers and Obama administration officials, chief executives of the nation’s largest financial institutions said putting some payments ahead of others would create insurmountable uncertainty for investors, drive up borrowing costs and cause market disruptions, according to people familiar with the meetings…

Rising Inflation Expectations?

Plenty of talk about deflationary pressures over the past couple of years, but check out the chart below from the Cleveland Fed that Frank Holmes commented on in his weekly Investor Alert at www.usfunds.com…according to a release by the Cleveland Fed, a recent increase in Fed implied inflation, measured by the spread between Treasury Inflation Protected Securities (TIPS) and similar maturity Treasury Notes, is signaling an imminent rise in inflation…such an event would certainly catch Gold bears by surprise…inflation expectations had been trending lower since late 2011 after Gold hit a high of just over $1,900 an ounce…is this just a short-term blip or the start of something more significant?…

Today’s Markets

The Shanghai Composite shrugged off the circus in Washington and posted a strong gain overnight – 24 points to close at 2198 – as trading in China resumed following the week-long Golden Week holiday…after a horrible June which coincided with lows of 859 and $1,179 in the Venture and Gold, respectively, the Shanghai is looking strong and appears to have started “Wave 5” of a 5-Wave Motive Phase after hitting RSI support at 50…

Japan’s Nikkei average erased early losses and closed 41 points higher at 13895…European shares were down modestly today…

In New York, the Dow is facing the prospect of its 11th losing session out of 14…as of 8:00 am Pacific, the Dow is off 61 points…over the last 13 sessions it has fallen 741 points or 4.7%…in Toronto, the TSX is relatively unchanged through the first 90 minutes of trading while the Venture is down 3 points at 945…

Mason Graphite Inc. (LLG, TSX-V) Update

Last week we pointed out that Mason Graphite (LLG, TSX-V) was looking very bullish technically and appeared poised to finally break out of a downsloping channel in place for most of this year…confirmation regarding that is still required but it looks as if that could come today…LLG is also drawing on a couple of big names – Larry King and fund manager and media commentator Jim Rogers – to attract a wider audience to its story…the company posted 2 video interviews on its web site (www.MasonGraphite.com) this morning featuring President and CEO Benoit Gascon, 1 with King and the other with Rogers…LLG is advancing its flagship Lac Gueret Project in northeastern Quebec and is working on an updated NI-43-101 resource estimate…

King and Rogers may very well give LLG the kick that it needs to accelerate a reversal in the stock that we first pointed out last month…as of 8:00 am Pacific, LLG is up 3 cents at 49.5 cents on volume of over half a million shares…it has been as high as 52 cents this morning…

Azincourt Uranium (AAZ, TSX-V) Update

Azincourt Uranium (AAZ, TSX-V) provided an update this morning on its PLN Project in the Athabasca Basin, a JV with Fission Uranium (FCU, TSX-V) which is the operator…a VTEM Max survey has identified a new north-south trending conductive basement package in northern PLN…this represents the possible extension of the Saskatoon Lake Conductor system which hosts the Shea Creek uranium deposits…a ground EM survey (20 km grid) is planned for central PLN, while a 10.5 km ground EM survey is planned for southern PLN to target a prospective trend parallel to the PLS discovery trend…a 2500 to 3000-metre diamond drilling program is scheduled for winter 2014 on existing and some newly generated targets in the central and southern PLN project area…AAZ, which has just 28 million shares outstanding, closed at 22 cents yesterday…10 million shares from a private placement at 15 cents earlier this year become free-trading October 19…

Allied Nevada Gold Corp. (ANV, TSX) Turning The Corner?

Allied Nevada Gold (ANV, TSX and NYSE) reported record quarterly production from its Hycroft Mine in the 3rd quarter as processing operations improved significantly…Hycroft churned out 52,198 ounces of Gold and 184,070 ounces of Silver in the 3rd quarter, and the company believes it’s on track to achieve full-year production and sales guidance of 175,000 to 200,000 ounces of Gold and 900,000 to 1.1 million ounces of Silver in 2013…ANV, which traded as high as $31 at the beginning of this year, jumped 28% yesterday to close at $5.00…the company expects to provide 3rd quarter financial results during the week of November 4…

Adventure Gold Inc. (AGE, TSX-V)

One the survivors of the 2+ year Venture bear market, and a company that will ultimately thrive again in our view, is Adventure Gold (AGE, TSX-V) which has all the ingredients – management and geological expertise, working capital and solid financial backers, and very prospective properties – to succeed long-term…over the past few months the stock has been showing signs of bottoming out in the low-to-mid teens as shown in John’s 15-month weekly chart…as always, perform your own due diligence, but this is the time to be excited about companies like this…

Magor Corp. (MCC, TSX-V)

We don’t often write about technology plays on BMR, but Magor Corp. (MCC, TSX-V) is a company with a simple story, powerful people behind it and a software solution that should drive impressive revenue and earnings growth over the next couple of years…Magor, which is boosting its treasury with a 25-cent financing that’s expected to close in the coming days, is gearing up for an imminent full launch of its Aerus cloud-based visual collaboration solutions…the company has been successful at securing service trials from more than 20 carriers and solutions integrators across the globe aimed toward deploying Aerus into their markets…approximately half of these opportunities, according to the company’s September 27 news release, are large Tier 1 and Tier 2 carriers…these contracts are expected to transition Magor into a recurring revenue model that will bring significant predictability into the company’s cash flow going forward…

Below is a 6-month daily chart from John (Magor has only been trading since March when it raised $6 million in an IPO at 60 cents)…the final 3 months of 2013 should be turnaround time for this company whose President and CEO is Mike Pascoe, well known for his ability to build shareholder value in the telecommunications sector…

Note: John, Jon and Terry do not hold share positions in LLG, AAZ, ANV or AGE.  Jon holds a share position in MCC.