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June 17, 2019

7 @ 7:00

Visit the BMR comments section throughout the day for updates and helpful information!

1. Gold has a traded between $1,332 and $1,344 so far todayas of 7:00 am Pacific, bullion is off $1 an ounce at $1,340 after Friday’s 14-month high…Silver is flat at $14.83…the Gold-Silver ratio remains at an historically high 90.4, meaning Silver has not been this undervalued relative to Gold since the first year of Bill Clinton’s first term…Copper is unchanged at $2.63…Nickel has slipped 6 pennies to $5.34 while Zinc is off 1 cent at $1.16…Crude Oil has retreated 36 cents to $52.15 while the U.S. Dollar Index has fallen one-fifth of a point to 97.40…the Fed meeting tomorrow and Wednesday is expected to be the biggest event for markets this week…there is also some data, including manufacturing and services PMIs on Friday, as well as housing starts tomorrow and home sales on Friday…Iran will surpass the internationally agreed limit on its low-enriched Uranium stockpiles in 10 days, the country’s atomic energy body said today…a spokesperson for the Iranian Atomic Energy Organization said that the country would increase enrichment levels to 20% – significantly closer to weapons-grade material – for use in local reactors, but emphasized that Europe still had a chance to rescue the 2015 nuclear deal if its remaining signatories found a way to shield the Islamic Republic from the crippling effect of U.S. economic sanctions…continued problems with Iran will help support Gold and Oil markets…

2. This speaks volumes – China has halted a dispute at the World Trade Organization over its claim to be a market economy, a panel of 3 WTO adjudicators said this morning, meaning Beijing must accept continued EU and U.S. “anti-dumping” levies on cheap Chinese goods…according to Reuters, 1 trade official close to the case said so much of the ruling had gone against Beijing that it had opted to pull the plug before the result became official…“They lost so much that they didn’t even want the world to see the panel’s reasoning,” the official said…without a WTO ruling in Beijing’s favor, the EU and United States can keep imposing duties on cheap imports from China while disregarding its claim that they are fairly priced…China had insisted that they treat it as a “market economy”, countering the view that the price of Chinese exports could not be taken at face value due to state interference in the economy…

3. The Federal Reserve, facing fresh demands by President Trump to cut interest rates, is expected to leave borrowing costs unchanged this week but it could lay the groundwork for a rate cut as early as next month…new economic projections that will accompany the U.S. central bank’s policy statement Wednesday will provide the most direct insight yet into how deeply policymakers have been influenced by the U.S.-China trade battle, Trump’s insistence on lower interest rates, and recent weaker economic data…analysts expect the “dot plot” of year-end forecasts for the Fed’s benchmark overnight lending rate – the federal funds rate – will show a growing number of policymakers are open to cutting rates in the coming months, though perhaps not as  as aggressively as investors expect or Trump wants…the Fed is also widely, though not universally, expected to remove a pledge to be “patient” in taking future action on rates, opening the door to a possible cut as early as next month…

4. The Dow is up 11 points through the first 30 minutes of trading…equities posted slight gains last week, adding to this month’s strong rally…the Dow is up 5.1% this month while the S&P 500 and NASDAQ have both advanced more than 4%…in Toronto, the TSX has added 30 points to begin the new trading week…the TSX Gold Index is up 1 point at 206 with key resistance at 211the Venture is flat at 588…the Venture has been holding up much better than the Canadian Marijuana Index which is off again slightly in early trading today and has tumbled more than 30% since March 19…the Marijuana Index lost another 34 points or 6.4% last week after declines of 2.6% and 10.3% the previous 2 weeks, respectively…normally, such a drop in the Marijuana Index would have translated into a big loss for the Venture…however, strength on the resource side has offset much of the weakness in cannabis stocks with the Venture down just 7.5% during the same 3-month period…Garibaldi Resources (GGI, TSX-V) continues to firm, up another 4 cents at $1.10 as of 7:00 am Pacific with drilling underway at Nickel Mountain…

5. Osisko Mining (OSK, TSX) has cut more high-grade Gold at Windfall Lake…highlights from new infill drilling at the Lynx deposit, located immediately northeast of the main Windfall Gold deposit, include 132 g/t Au over 5 m; 51 g/t over 6.3 m; 56.2 g/t over 4.7 m; 106 g/t over 2 m; 82.9 g/t over 2.3 m; 85.3 g/t over 2 m; 36 g/t over 4.1 m; 23.4 g/t over 6.3 m; 63.6 g/t over 2.1 m; 59.3 g/t over 2.2 m; 37 g/t over 3.5 m; and 42.1 g/t over 3 m (true widths estimated at 80%)…Windfall Lake is located between Val-d’Or and Chibougamau in the Abitibi region…the mineral resource defined by Osisko, as disclosed in the Windfall Lake Technical Report and November 27, 2018, Lynx resource update, comprises 2,874,000 tonnes at 8.2 g/t Au (754,000 ounces) in the Indicated category and 10,352,000 tonnes at 7.1 g/t Au (2,366,000 ounces) in the Inferred category…

6. Westhaven Ventures (WHN, TSX-V) has resumed drilling at its 155 sq. km Shovelnose Gold Property near Merritt in B.C.’s southern interior…Westhaven completed 3,000 m of diamond drilling in 8 holes this past winter at Shovelnose…that program continued to return bonanza Gold grades, including the best hole ever drilled on the property (12.7 m of 39.3 g/t Au and 133.1 g/t Ag in SN1901) and confirmed the potential for mineralization in the south fault block with the successful intersection of a Gold mineralized vein zone in SN1907…in addition, recent property wide exploration, including geophysics, soil sampling, prospecting and mapping, has identified several new targets…the company has deployed a 2nd drill which will expedite defining and expanding the South Zone mineralization as well as drill testing prospective regional targets…Westhaven is planning on drilling 20,000 m at Shovelnose in 2019…since 2018 the company has completed 30 diamond drill holes for a total of 11,574 m in the newly discovered South zone…the limited drilling to date has located and traced substantial epithermal quartz veining over a strike length of 720 m and a vertical range of 320 m…the dimensions of this vein system remain to be determined and will require extensive drilling to test its full potential…the South Zone, as presently outlined, consists of two subparallel vein systems up to 490 m in length (Veins 1 and 2) and related zones of sheeted quartz veinlets…WHN is up 2 pennies at 65 cents as of 7:00 am Pacific

7. Canadian companies reluctant to reinvest excess cash are instead buying back their own shares at a furious pace…buybacks by companies on the TSX soared to nearly $50 billion in the 12 months up to the end of the 1st quarter…as a proportion of the whole stock market, that is around 50% higher than the previous record set a decade ago, according to a report by Ian de Verteuil, head of portfolio strategy for CIBC World Markets“It has taken some time, but C-suite executives in Canada appear to have found religion on buybacks,” he said…it is a devotion with a potential downside, however…while buybacks are a quick way to deploy extra cash, reward shareholders and support an undervalued stock, the corporate sectors in Canada and the United States have a poor record of timing buybacks, historically resorting to them most aggressively at market peaks…“Buybacks are a bull market phenomenon,” said Jason Mann at Edgehill Partners“Confidence is high, excess profits are high, but so are valuations”…however, for many Canadian companies, especially in the beaten-up energy sector, buybacks may make good sense at the moment…

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  1. Nice, that pic I just saw of the drill looks like quite the monster ( mountain eater) 2 or 3 of those going and they’ll Swiss cheese nickel mountain in no time.

    Comment by Laddy — June 17, 2019 @ 8:39 am

  2. It’s a monster, for sure, Laddy, but also consumes less fuel and less water…as the structural understanding of Nickel Mountain improves by the day (they are way ahead of where they were just a year ago), the key now is to pop as many holes into this system as possible using the best drill targeting techniques…doubling the output per day is a game changer, especially in a more cost-effective manner…

    Comment by Jon - BMR — June 17, 2019 @ 12:06 pm

  3. Agreed Jon, and I’ve heard that all the savings are going right back into the ground as per Jeremy. Good strategy to start this years program. They have the money, so use it…

    Comment by Laddy — June 17, 2019 @ 12:44 pm

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