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February 8, 2019

7 @ 7:00

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1. Gold has traded between $1,307 and $1,316 so far todayas of 7:00 am Pacific, bullion is up $an ounce at $1,314…of course the Chinese market has been closed this week for the Chinese New Year Holiday, taking some of the energy out of the Gold market but bullion nonetheless continues to hold up well with solid support at $1,300Gold holdings in global ETFs tracked by Bloomberg have been reduced by nearly 20 tonnes since the start of the month after they rose strongly in January (71.9 tonnes) for the 4th straight month…Silver has added 4 cents to $15.76 as it continues to grapple with key resistance in the $15.70’s…Nickel has slid 4 cents to $5.78…Copper is off a penny at $2.81 while Zinc is down 2 cents at $1.22…Crude Oil is up slightly at $52.69 while the U.S. Dollar Index, meeting important resistance, has retreated one-tenth of a point to 96.49…Canada’s job market began 2019 with an unexpected employment surge driven by jobs for youth in services and record private-sector hiring, a hopeful sign in an economy facing several other headwinds…employment increased by 66,800 in January, Statistics Canada reported this morning…that was driven by a 99,200 gain in services, which offset falling employment in goods producing industries…the gains were almost evenly split between full-time and part-time positions…

2. TD Securities says Gold appears to be in the process of creating a setup for a surge to the upside…“With traders’ hands still shaking following the December carnage in risk assets, interest is growing in the yellow metal.  We still think the macro story suggests we’re an inch too early for Gold to take off just yet, but we see a setup being created on the horizon for massive flow to the upside.  In fact, we estimate a break above the $1,335/oz range would lead to a significant round of long accumulation from the CTA (Commodity Trading Adviser) community”

3. Trade talks between the U.S. and China are so far apart that neither side has put anything in writing yet, The Wall Street Journal reported this morning…according to the WSJ, the two sides have not even drafted an accord specifying the matters they agree and disagree on…the U.S. and China are trying to meet an early March trade deadline…if a deal is not struck before then, U.S. tariffs on Chinese goods will increase, barring some sort of extension…the report comes just a day after White House economic advisor Larry Kudlow said there is a “pretty sizeable distance to go” before China and the U.S. reach a deal…Kudlow also indicated, however, that President Trump remains “optimistic” the two sides will conclude a trade agreement – exact timing, of course, is the big question…Trump, perhaps trying to exercise some leverage, said yesterday that he won’t be meeting Chinese President Xi Jinping before the crucial March deadline, news that put some pressure on equities…

4. The Dow is off another 181 points through the first 30 minutes of tradingin Toronto, the TSX is down 99 points, though Gold stocks are showing some strength, while the Venture has slipped 2 points to 613Amex Exploration (AMX, TSX-V) has surged to a new high in early trading, touching 67 cents on fresh buying ahead of more news…Amex continues to drill into high-grade Gold in the Eastern Gold zone (EGZ) of its Perron Project north of Rouyn-Noranda…earlier this week the company reported that drill hole PE-201924 cut 24 g/t Au over 5.85 m including 214.7 g/t over 0.65 m at a vertical depth of 235 m…meanwhile, PE201923 intersected 39.6 g/t Au over 0.75 m at a vertical depth of 135 m…this helps verify vertical continuity in the near-surface portion of the system…the zone has been intersected in the same section over a vertical distance of approximately 150 m, pierce point to pierce point, with a spacing varying from 25 to 50 m…in addition to these results, the company reports that the first 25 m step-out hole testing the lateral extent of the EGZ’s High Grade Zone has intersected visible GoldGoGold (GGD, TSX-V) reported Q4 production this morning of 325,148 Silver equivalent ounces…numbers should continue to improve this quarter…the company also showed net income of $8.2 million (U.S.) for the 3 months ended December 31 after closing the previously announced sale of a 2% net smelter return royalty which resulted in net proceeds and an equivalent pretax gain of $11.8 million

5. Great Bear Mining (GBR, TSX-V) hit a new high of $3.67 in early trading, thanks to a recommendation from Canaccord Genuity analyst Kevin MacKenzie…“While it still early days, we highlight the project’s comparable structural-geological setting, style of mineralization, and developing grade profile to that of many of the more established deposits within the camp.  While not definitive, we view these comparable elements as fundamental precursors for a potentially substantial discovery within the Red Lake camp.  Given the established milling capacity within the Red Lake camp (4,900 tpd), we highlight Dixie as a potential future acquisition target in terms of a near-surface, high-grade feed source.  While Dixie remains an emerging discovery, the associated potential synergies to multiple operators within the camp significantly de-risks the project’s development threshold, in our view.  We highlight Great Bear as a prospective investment for risk-tolerant investors”

6. Carmakers may have to consider investing directly in Cobalt mines to secure supply over the next 3 to 5 years, as demand for the metal used in rechargeable batteries is set to continue to ramp up according to Ford Motor Co.’s senior manager for energy storage strategy and research Ted Miller..speaking at a mining industry event in South Africa, Miller said the auto industry is now in an “awkward position” of actually driving the Cobalt price on the back of EV battery production needs…“I fully anticipate we’re going to keep a lot of pressure on that Cobalt production,” he said…Cobalt, and its related supply-side risks with the bulk of metal coming out of the Congo, makes it “a unique case” according to Miller…Ford, which plans to launch new electric cars as soon as next year, has been reducing the proportion of Cobalt it uses to lower its dependency on the metal and wants to collaborate at all parts of the supply chain, even down to the miners of the metal, he said…while the company doesn’t see the need to participate in mining, or have direct Cobalt offtake agreements, that could be re-evaluated in the future…“We’ve had ongoing discussions with suppliers of raw materials, processed material and even mining sources to ensure that customers ultimately get the vehicles they need,” he said…

7. Simon Moores, managing director, Benchmark Mineral Intelligence, testified before the U.S. Senate Committee on Energy and Natural Resources earlier this week…he was summoned by the Senate Committee to testify on the Lithium, Cobalt, Nickel and Graphite supply chains for energy storage…“Benchmark Mineral Intelligence is now tracking 70 Lithium ion battery megafactories under construction across 4 continents, 46 of which are based in China with only 5 currently planned for the United States.  When I gave my last testimony in October 2017, the global total was at 17,” Moores said…he added that these megafactories are being built almost exclusively to make Lithium ion battery cells using two chemistries: Nickel-Cobalt-Manganese (NCM) and Nickel-Cobalt-Aluminium (NCA)…“This means the supply of Lithium, Cobalt, Nickel and Manganese to produce the cathode for these cells, alongside graphite to produce battery anodes, needs to rapidly evolve for the 21st century”he presented a chart based on the assumption that all of these megafactories are built and run at 100% capacity utilization…“Under this scenario, Lithium demand will increase by over 8 times, Graphite anode by over 7 times, Nickel by a massive 19 times, and Cobalt demand will rise 4-fold, which takes into account the industry trend of reducing Cobalt usage in a battery,” Moores testified…

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1 Comment

  1. reading material: written testimony of Simon Moores here: https://www.energy.senate.gov/public/index.cfm/files/serve?File_id=9BAC3577-C7A4-4D6D-A5AA-33ACDB97C233


    Comment by Foz1971 — February 9, 2019 @ 1:17 pm

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