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October 9, 2018

7 @ 7:00

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1. Gold has traded between $1,182 and $1,192 so far today after yesterday’s selling pressureas of 7:00 am Pacific, the yellow metal is down $2 an ounce at $1,185…Silver is off a nickel at $14.30…Copper is flat at $2.80…Nickel has added 4 cents to $5.70…Zinc is 2 cents higher at $1.21 while Cobalt is steady at $25.17…Crude Oil has gained 22 cents to $74.51…the Oil market mood remains strongly bullish, with fears growing that U.S. demands for an Iran Oil embargo could cause a significant supply shortfall…Iran’s exports during the first week of October were 1.1 million bpd, down from 2.5 million bpd in April…the U.S. Dollar Index has climbed one-quarter of a point to 95.91 as it attempts to overcome resistance around 95.50…the benchmark 10-year Treasury yield has fallen slightly after hitting a new 7-year high earlier in the session…

2. China must take strong stimulus measures to support growth, with the country in a “critical” period of stabilizing its economy, according to a commentary in the Global Times, a state-backed Chinese tabloid…in an English-language commentary, the Global Times wrote that China may not be able to overcome these pressures by simply continuing to fine-tune its economic policy…“In 2008, the Chinese government announced a 4 trillion yuan ($578 billion) stimulus package to fight the impact of the global financial crisis. Now, the Chinese economy is under even tougher pressure amid escalating trade friction.  Beijing must draw up strong stimulus policies to inject new momentum into the real economy”…the views in the newspaper, which is run by the ruling Communist Party’s official People’s Daily, do not necessarily reflect Chinese government policy…

3. The International Monetary Fund (IMF) appears to be under-estimating U.S. economic growth and resilience…the IMF today cut its global economic growth forecasts for 2018 and 2019, saying that U.S-China trade tensions are taking a toll and emerging markets were struggling with tighter liquidity and capital outflows…the new forecasts, released on the Indonesian resort island of Bali where the IMF and World Bank annual meetings are getting underway, show that a burst of strong growth, fuelled partly by U.S. tax cuts and rising demand for imports, was starting to wane…in an update to its World Economic Outlook, the IMF is now predicting 3.7% global growth in both 2018 and 2019, down from its July forecast of 3.9% growth…the downgrade reflects a confluence of factors, including the introduction of import tariffs between the United States and China, weaker performances by eurozone countries, Britain and Japan, and rising interest rates that are pressuring some emerging markets with capital outflows, notably Argentina, Brazil, Turkey, South Africa, Indonesia and Mexico…“U.S. growth will decline once parts of its fiscal stimulus go into reverse,” IMF chief economist Maurice Obstfeld said in a statement…“Notwithstanding the present demand momentum, we have downgraded our 2019 U.S. growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China’s retaliation”

4. The U.S. economy is poised for growth that’s better than the IMF projects, and there’s nothing on the domestic front that could knock it into a recession, according to one of the world’s most closely followed economists…Mohamed El-Erian, chief economic adviser for Allianz, told CNBC this morning that the U.S. economy is “in a good place in terms of growth, the U.S. economy is in a good place in terms of attracting capital”…that stood in some contrast to the IMF, which maintained its prediction of 2.9% growth for the U.S. this year, but reduced its 2019 American growth prediction from 2.7% to 2.5%…El-Erian says the IMF “is too pessimistic” about the world’s largest economy…“We’ve got three drivers of domestic demand all hitting at the same time: government spending – which is going to get stronger, not weaker – household spending, and business investment.  That takes the U.S. through the next couple of years at least, so it wouldn’t surprise me if we get 3% growth for this year and next year”El-Erian said that any disturbances to U.S. economic growth were likely to come from beyond its borders…

5. Kirkland Lake Gold (KL, TSX) has announced record quarterly Gold production of 180,155 ounces for the 3rd quarter of 2018, up 30% from the same period last year…production in Q3 exceeded target levels for the quarter driven by record quarterly production from Fosterville of 90,618 ounces as well as from the company’s Canadian operations, with Macassa, Holt and Taylor collectively producing 89,537 ounces…production for the first 9 months of 2018 totalled 492,484 ounces, with the company completing the 3rd quarter well positioned to achieve the improved full-year 2018 consolidated production guidance of over 635,000 ounces…the company had cash and cash equivalents totalling approximately $275 million (U.S.) at September 30, 2018, and will report Q3 financial results October 30th…on August 1, the company reported Q2 2018 net earnings of $61.5 million (U.S., 29 cents per share), cash flow from operating activities of $120.9 million and free cash flow of $60.7 million

6. Another high-grade producer continues to pile up cash as it forecasts a strong 4th quarterPretium Resources (PVG, TSX) added $48 million (CDN) to its coffers at the end of Q3 (cash position now $190 million) after producing 92,641 ounces of Gold an at average mill feed grade of 12.4 g/t Au (97.4% Gold recovery rate) at the Brucejack mine in the Eskay Camp…the stock has backed off on the news this morning (those numbers were off modestly from Q2) but the company predicts a robust finish to the year with Q4 production as much as 35% higher than Q3“We added $48 million to our cash on hand during the 3rd quarter, and are focused on sustaining long-term profitability,” said Pretium President & CEO Joseph Ovsenek…“We are on our way to meeting our Gold production guidance of 200,000 to 220,000 ounces of Gold for the second half of 2018

7. The Dow is off 32 points through the first 30 minutes of trading…in Toronto, the TSX is 53 points lower while the Venture is down 2 points at 704A.I.S. Resources (AIS, TSX-V) has received its long-awaited permit from authorities in Jujuy province in Argentina for drilling and other work at Guayatayoc Mina, with the permit for Guayatayoc III to follow soon…drilling to help prove up the Lithium model at Guayatayoc is expected to commence in November…on the CSE, Chemesis International (CSI, CSE) continues to show strength, up 7 cents at $1.92 (just 12 cents off its high)…GT Gold (GTT, TSX-V) is off a penny at 74 cents as of 7:00 am Pacific, but the stock has an excellent chance to break out of its recent trading range to the upside following completion of its financing while fresh drill results are expected shortly from Saddle North and Saddle South…

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