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April 8, 2019

7 @ 7:00

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1. Gold has traded between $1,295 and $1,304 so far today…as of 7:00 am Pacific, bullion is up $an ounce at $1,301…holdings in the world’s largest Gold-backed ETF, SPDR Gold Trust, fell as much as 3% last week, the biggest weekly percentage decline since the end of November…however, Gold bulls were encouraged this morning with news that China added to its bullion reserves again last month…Silver has pushed 13 cents higher to $15.22…Copper has added 4 pennies to $2.94, getting a boost from news over the last 24 hours that China is ramping up stimulus measures by easing residency curbs in many of its smaller cities, increasing infrastructure spending, and introducing measures to encourage financing for small and medium-sized businesses…MMG said this morning that its Las Bambas Copper mine in Peru is expected to restore normal mining, production and transport operations after an indigenous village agreed to end a 2-month blockade of the mine…Nickel has jumped a dime to $5.99 while Zinc is steady at $1.35…Crude Oil prices have hit new 5-month highs…WTI, gunning for its 6th straight weekly gain, has shot up another 89 cents to $63.97…Oil prices are being driven upwards by OPEC’s ongoing supply cuts, U.S. sanctions against Iran and Venezuela, fighting in Libya as well as strong U.S. jobs data…the Dollar Index has fallen one-third of a point to 97.02…U.S. consumer sentiment for buying a home rose to its strongest in 9 months as a result of a robust jobs market and a decline in mortgage rates so far this year, according to data released this morning by Fannie Mae

2. China’s on a bullion-buying spree as Asia’s top economy expanded its Gold reserves for a 4th straight month, adding to investors’ optimism that central banks from around the world will press on with a drive to significantly increase holdings…The People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier, according to data on its website yesterday…in tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December…the latest data from the PBOC indicate that the country has resumed adding Gold to its reserves at a steady pace, much like the period from mid-2015 to October 2016 when it boosted holdings almost every month…should China continue to accumulate bullion at the current rate over 2019, it may end the year as the top buyer after Russia, which added 274 tons in 2018…central banks bought 651 tons of Gold last year, the 2nd highest annual total on record and up 74% from the year earlier, according to the World Gold Council

3. Global investors are snapping up high-risk bonds in Asia, especially those offered by Chinese property developers, in a sign that investors are increasingly more willing to take bigger bets…those debt securities, known as high-yield or junk bonds, fell out of favor for much of last year amid an escalating tariff fight between Washington and Beijing…China’s deleveraging campaign and the  strengthening U.S. dollar did not help, either…“Our biggest call this year has been Asian high-yield (bonds) and, particularly, Chinese property securities.  We still think they’ve got further to perform,” Hayden Briscoe, head of Asia Pacific fixed income at UBS Asset Management, told CNBC’s “Street Signs” recently…“We think the underlying dynamics are very, very different to last year when we were under pressure, in particular because the deleveraging phase in China is over,” he added…UBS is not the only money manager that has turned in favor of high-yield bonds issued by Chinese property developers…Neeraj Seth, head of Asian fixed income at Blackrock, told CNBC’s“Squawk Box” last week that “we’ve been positive on Chinese real estate high-yield debt for a good number of months now”…China’s stock market is on a roll this year as well, up 30% so far…

4. Giant mines currently under construction will churn out an additional 1 million tons of Copper through 2023, but that won’t be enough to fully close an expected gap between supply and demand in the next few years…industry analysts and executives descending on Santiago this week for the Cesco conference, one of the industry’s biggest events, are in bullish spirits: A key indicator of the market for Copper ore – known as concentrates – is pointing to the tightest market in more than 5 years, and banks and brokers such as Morgan Stanley and Macquarie Group rank the metal as one of their top picks…“We are looking at a classic resource cycle,” said Colin Hamilton, managing editor for commodities at BMO Capital Markets“No one has Copper coming now, when it is needed, but everyone has projects coming 2022-2023 – potentially after we’ve had to drive some substitution”Morgan Stanley, which late last month listed Copper as its top pick among metals in a quarterly report, said it expects the market will post a deficit of 406,000 tons this year and 187,000 tons in 2020…trade negotiations between China and the U.S. are likely to be at the center of conversations during this week’s gathering in Santiago…China is the world’s largest buyer of Copper and it consumed more than half of the estimated 23.5 million tons produced in 2018, according to Chile Copper agency Cochilco

5. What else can Canadian governments screw up?…financiers who helped give birth to the pot boom fear that ill-conceived federal and provincial government policies will doom Canada to second-tier status in cannabis…“The ultimate global winners will be the cannabis companies with the best products, brands and distribution,” said Neil Selfe, an adviser to Canopy Growth (WEED, TSX; CGC, NYSE) and other cannabis companies…he added, “On all fronts, the lack of regulatory planning has handicapped Canadian producers”…when the Trudeau government started down the path of legalizing cannabis for recreational use, one of its key goals was the elimination of the black market…however, the period since the end of prohibition on October 17, 2018, has been riddled with growing pains, most notably a national cannabis shortage that almost immediately led to reduced opening hours at some provincially run stores, the sale of some independent stores to bigger chains, and a pullback of retail licensing in Ontario and Alberta…the shortage means legal producers are capturing just a fraction of the overall market for pot as the black market continues to thrive…while Canadians spent $5.9 billion on marijuana in the final 3 months of 2018 on an annualized basis, only 20% was spent on legally produced cannabis…

6. The Dow is off 153 points after the first 30 minutes of trading to begin the new week, pressured by declines in Boeing and General Electric, as Wall Street digested strong gains from the previous week and looked ahead to the start of the corporate earnings season…in Toronto, the TSX has slipped 44 points while the Venture has bucked the trend, adding 2 points to 623, thanks to higher commodity prices…Silver Bull Resources (SVB, TSX-V) has received the appropriate drill permits from the Mexican government and has commenced an initial 8,000-m surface drill program at its Sierra Mojada Project, targeting a series of sulphide extensions at depth to the main deposit, as well as a series of never-before-tested targets within the wider area…the drill program is conducted under the joint venture option with South32…in October of last year, Silver Bull announced an updated NI-43101 resource on the significant oxide mineralization already defined at Sierra Mojada…Lorraine Copper (LLC, TSX-V) shareholders have overwhelmingly approved the company’s merger with Sun Metals (SUNM, TSX-V)…the arrangement should be completed within the next week…

7.  New Gold (NGD, TSX) announced this morning that it produced 123,263 Gold-equivalent ounces in Q1 (79,398 ounces of Gold, 136,513 ounces of Silver and 19.5 million pounds of Copper), putting it on track to meet annual guidance of 465,000 to 520,000 Gold equivalent ounces…the New Afton mine in southern B.C. delivered another strong quarter with Gold equivalent production of 60,986 ounces (17,841 ounces of Gold and 19.5 million pounds of Copper)…the company ended the quarter with available liquidity of approximately $418 million, which includes $130 million in cash and cash equivalents and $288 million available under the credit facility, which secures the implementation of the short-term operational plan…“We are encouraged by the progress made at Rainy River during the 1st quarter as we re-position the operation for efficient and sustainable mining,” stated CEO Renaud Adams…“Concurrently, we continue to prioritize the completion of the remaining construction and the optimization of the life of mine plan in order to position the operation to deliver free cash flow starting in late 2020.  The New Afton mine reported another strong quarter of operating results as the team further advanced the development of the C-zone.  We are particularly encouraged with the organic growth potential of the D-zone with the first hole of the exploration drilling program intersecting 140 metres of mineralization located 360 metres below the C-zone” (assays pending)…NGD is up 2 cents at $1.20 as of 7:00 am Pacific

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  1. Good article on the pot scene, slowly but surely proving my point.. still getting my top notch bc p Kush from a long time friend for 3 bucks a gram.. why would I buy it at a store. Ludicrous.!!

    Comment by Laddy — April 8, 2019 @ 1:56 pm

  2. What’s up with NRTH?

    Comment by flyinthruu — April 9, 2019 @ 7:32 am

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