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July 5, 2019

7 @ 7:00

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

1. Gold has traded between $1,386 and $1,419 so far today, tumbling $24 an ounce to $1,391 as of 7:00 am Pacific following a stronger-than-expected U.S. jobs report…however, some market participants are overreacting to fears the Fed may not cut interest rates as expected later this month…Commerzbank looks for Gold to reach $1,500 by the end of 2019 in a research report released this morning…“Even if some short-term setbacks cannot be ruled out following the recent steep price rise, the environment for Gold remains positive,” Commerzbank stated…“The still-low interest rates and numerous political risks are likely to generate further investment demand and thus counterbalance the weaker physical demand in Asia.  In addition, our currency strategists expect a weaker U.S. dollar, as the Fed has significantly more scope for interest-rate cuts than the ECB”…Silver has shed 29 cents to $14.91 but has ample support at $15 and immediately below…Nickel is up 2 pennies at $5.57…Copper has retreated 2 cents to $2.65 while Zinc is also 2 cents lower at $1.17…Crude Oil has added 25 cents a barrel to $57.59OPEC output sank to a new 5-year low in June as a rise in Saudi supply did not offset losses in Iran and Venezuela due to U.S. sanctions and other outages elsewhere in the group, according to a Reuters‘ survey…OPEC pumped 29.60 million barrels per day (bpd) last month, the survey showed, down 170,000 bpd from May’s revised figure and the lowest OPEC total since 2014…the survey suggests that even though Saudi Arabia is raising output following pressure from President Trump to bring down prices, the kingdom is still voluntarily pumping less than an OPEC-led supply deal allows it to…OPEC renewed the supply pact at meetings this week…the U.S. Dollar Index has jumped half a point to 97.34 but faces strong resistance…

2. U.S. employers added jobs at an unexpectedly robust pace in June, easing fears of a hiring slowdown and showing a strong labor market could propel a domestic economy facing threats from abroad…224,000 jobs were added amid concerns that both the employment picture and overall growth picture were beginning to weaken…the unemployment rate edged up to 3.7% as labor force participation rose…economists surveyed by Dow Jones had expected non-farm payrolls to rise by 165,000 and the unemployment rate to hold steady at 3.6%…May’s initially reported growth of 75,000 had raised doubts about the durability of the record-setting expansion that began a decade ago (the May count was revised slightly lower this morning to 72,00o)…stock market futures ticked lower after the report as investors contemplated what the strong numbers might mean for expectations that the central bank will be cutting interest rates later this month in an effort to stave off a widely expected economic slowdown through the year…however, a rate cut very much still appears to be in the cards…

3The U.S. has to lift all the tariffs placed on Chinese goods if there is to be a trade deal, China’s Ministry of Commerce says…“If the two sides are to reach a deal, all imposed tariffs must be removed,” Ministry of Commerce spokesman Gao Feng stated yesterday…“China’s attitude on that is clear and consistent”…the 2 countries reached a truce in their year-long trade war last week at the G-20 summit in Japan…President Trump and Chinese leader Xi Jinping agreed to hold off on imposing new tariffs and start negotiations again…Trump also decided to ease his ban on American companies selling products to Chinese telecom giant Huawei….China said it would continue to buy U.S. agricultural products…however, Trump said after the G-20 meeting that the 25% tariffs currently imposed on $250 billion in Chinese goods will not be reduced…while the 2 nations reached an agreement, which was similar to the one at the G20- summit in Argentina at the end of 2018, there are still many sticking points including the issue of intellectual property that could deter a long-term deal…

4Canada has had its slowest start for company financings in 16 years, as federal government policies with regard to the resource sector – particularly Oil and gas – have helped chase investors away…Canadian companies raised about $12 billion ($9.2 billion U.S.) in equity and equity-linked financings in the first 6 months of 2019, 39% less than a year ago and the slowest 1st half since 2003, according to data compiled by Bloombergit was also the slowest of any 6-month period since 2003, except the $10.4 billion raised in the back half of last year…the slow start contrasts with that of the U.S., which had $117 billion (U.S.) in stock sales in the 1st half, the data show…while down 15% from a year earlier, it still marked one of the better 6-month periods in the U.S. in the past 4 years…by virtually every economic measure, the Trudeau economy is significantly lagging the Trump economy – Canada’s self-inflicted wound that needs to be fixed…how much longer will Canadians put up with mediocrity and under-performance?…

5.  The Alberta government has opened a new offensive in the war against Oil sands haters, announcing yesterday a public inquiry into the finances of environmental organizations, specifically on funding from foreign donors…such a move raises the stakes for environmental groups that could now be compelled to testify before the inquiry and face as yet unknown consequences – perhaps lawsuits, Kenney speculated – once the commissioner reports back to the legislature…“For more than a decade, Alberta has been the target of a well-funded political propaganda campaign to defame our energy industry and to landlock our resources,” Kenney told reporters in Calgary in announcing the inquiry…the United Conservatives have long promised a “fight back strategy” aimed at shellacking the critics of Alberta’s energy industry and supporting those who want to bolster it…so far, the plan has consisted of creating a war room to counter “misinformation” and using a litigation fund to support the legal battles of pro-energy industry indigenous groups…but yesterday, the government unveiled an ambitious program of investigating the non-profit and charitable groups that do environmental advocacy in Canada, with Kenney raising the spectre of “shadowy funding” that includes U.S. hedge fund billionaire and environmentalist Tom Steyer; LeadNow, a Canadian advocacy group, that Kenney said “took an active role” in the 2015 federal election in Canada; and the Pembina Institute, an Alberta-based organization advocating “responsible” resource development…“This brief summary of what we know amounts to a premeditated, internationally planned and financed operation to put Alberta energy out of business,” Kenney said…

6. The Dow has slipped 144 points through the first 30 minutes of trading following the jobs report and yesterday’s 4th of July holiday…iToronto, the TSX is 91 points lower with the Gold Index retreating 7 points to 214…strong support at 211…pullbacks in the Gold Index (typically brief and shallow) have consistently been astute buying opportunities and that trend is not going to change…the Venture has backed off 3 points to 585ZoomerMedia (ZUM, TSX-V) zoomed out of the gate this morning after news yesterday, but was halted 16 minutes into trading pending company contact by the Exchange…the news was more than a little strange, raising plenty of questions, and the stock doubled in value on 3 million shares in early trading…Golden Predator (GPY, TSX-V) was halted with the company announcing that it has arranged $6.1 million in flow-through financings…Eric Sprott has agreed to acquire 5 million shares sold through the offering, which would increase his total ownership to 13 million shares of the company…no warrants are being issued…meanwhile, Continental Gold (CNL, TSX) has closed its previously announced non-brokered $25 million (U.S.) private placement with Eric Sprott through 2176423 Ontario Ltd. (a company he beneficially owns)…Newmont Goldcorp (NGT, TSX; NEM, NYSE) has until July 12 to exercise its right to maintain its pro rata ownership of Continental in connection with the closing this private placement…Garibaldi Resources (GGI, TSX-V), in the midst of a powerful new uptrend, is bucking the trend this morning…the company commenced 2019 drilling at Nickel Mountain with a series of exceptional targets a few weeks ago…assay results are expected to come a lot quicker this summer than last year…

7. Toyota Motor Corp. aims to get half of its global sales from electrified vehicles by 2025, 5 years ahead of schedule, and will tap Chinese battery makers to meet the accelerated global shift to electricity-powered cars…the change illustrates the breakneck growth in the electric vehicle (EV) market, which is transforming the auto industry, and is also an acknowledgment by Japan’s top car maker that it may not be able to meet demand for batteries on its own…Toyota is now faced with a higher-than-expected demand for cars that use batteries, rather than gasoline, Executive Vice President Shigeki Terashi told a briefing last month…also, increasingly stringent emissions regulations require more Lithium-ion batteries in the next 5 years than the automaker plans to produce, he added…“We consider ourselves as a maker of electric vehicle batteries, going back to when we developed the battery for the Prius,” he said, referring to the pioneering gasoline hybrid…“But there may be a gap between the amount of batteries we can produce, and the amount of batteries we may need”

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  1. Mr. Jon, are you still adding shares of CCW at these levels then? Do you think Mr. Frank updates shareholders soon now that we are finally in the 3Q?

    Comment by Jean — July 5, 2019 @ 11:18 am

  2. Seems like AIS is breaking out today on large volume today. As a long-term shareholder I have been more than frustrated with this one. But, now it looks like they are into some new things, which could help turn things around. They are developing some manganese projects which should give them some good cash flow in the near-term outlook. Thoughts anyone?

    Comment by Bryan — July 5, 2019 @ 11:39 am

  3. Jean, I believe we are going to hear from CCW shortly (huge Q3 coming up) and it’s similar now, technically, to GGI at 70 cents…

    Comment by Jon - BMR — July 5, 2019 @ 12:07 pm

  4. Why would AIS let the stock price go up? Perfect time to crush the momentum by announcing a private placement. Seems there are reasons that losers just keep on losing.

    Comment by Twaver — July 5, 2019 @ 12:52 pm

  5. I think you just have to manage time expectations with CCW. For me the big thing is the tailings permit, once they get that then things will heat up. But I also know the wheels of government can move really slow especially in the summer. If it happens soon then great but I think if you believe in CCW then just put your feet up, relax and be patient.

    Comment by Danny — July 5, 2019 @ 5:31 pm

  6. Thanks Brian for highlighting AIS. I was very encouraged with the volume today, and I’ve tried to understand the numbers from the manganese ops since a few days. Jon, your help to decipher this would be appreciated.

    They mention they target a 40,000 ton of MnO a month, but at a profit of close to 100USD a ton, that’s close to 4M$ a month…. can’t be right. Is there an impact on the % MnO that reduce the number?

    Again, for respect to the long term subscribers, could you do a small paragraph on this soon?



    Comment by rgiroux — July 5, 2019 @ 11:36 pm

  7. Twaver: i hear your frustration, but apparently it will close very soon, and if it is to get the first shipment going, then it is worth it. Relatively small dilution in order to get us out of the deep bottom…

    Comment by rgiroux — July 6, 2019 @ 8:06 am

  8. Have you seen the warrant situation and another PP done for AIS? Ugh. Just ugh. Terrible mgmt.

    Comment by flyinthruu — July 6, 2019 @ 8:16 am

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