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July 16, 2019

7 @ 7:00

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1. Gold has traded between $1,407 and $1,417 so far todayas of 7:00 am Pacific, bullion is off $5 an ounce at $1,409…Silver is now breaking out, jumping 21 cents to $15.57…a quick move to the $16 level appears to be in the works…ETFs have been posting heavy inflows in recent weeks and their buying will likely continue to accelerate…Nickel, on a tear, is up another 14 cents to $6.26 (see below)…Copper is steady at $2.72 while Zinc is a penny higher at $1.12…Crude Oil has added 29 cents to $59.87 while the U.S. Dollar Index has strengthened one-third of a point to 97.29…U.S. manufacturing output accelerated in June, climbing for the 2nd straight month, thanks in large part to increased production of motor vehicles and parts…the Federal Reserve says manufacturing production rose 0.4% last month, above the 0.2% expected by analysts in a Reuters‘ poll…the June numbers were stronger than the 0.2% growth seen in May, which had been the first growth of 2019 after several months of manufacturing declines or unchanged conditions…U.S. import prices fell by the most in 6 months in June, pulled down by declines in the costs of petroleum and other goods, suggesting imported inflation remains subdued…the Labor Department says import prices dropped 0.9% last month, the biggest decrease since December…the European Union’s antitrust chief is planning to open a formal investigation into Amazon (AMZN, NASDAQ) in the coming days, Bloomberg reports…the investigation itself does not come as a surprise, as the EU’s Competition Commissioner had already launched a preliminary probe into Amazon in September and was expected to announce whether a full probe would take place…the preliminary investigation focused on how Amazon uses data on its 3rd-party merchants that sell through Amazon…China is the great defender of the multilateral trading system, according to Chinese commerce minister Zhong Shan…he told the communist controlled “People’s Daily”, in a propaganda piece published yesterday, “The U.S. side has provoked economic and trade frictions against us and violated the principles of the WTO.  It is typical of unilateralism and protectionism.  We have to uphold our warrior spirit in firmly defending national and people’s interests in defending the multilateral trading system”

2. Nickel prices surged to their highest in 11 months today, propelled by buying from speculators and industrial consumers worried about potential future shortages…a key ingredient in batteries for electric vehicles (EVs), Nickel could be subject to increasingly heavy demand with an expected shift from diesel and petrol cars in the coming years…“We’ve been hearing about consistent strong Western consumer buying as the main driver of the price, probably related to EV Nickel hedging requirements,” said Nicholas Snowdon, metals analyst at Deutsche Bank in London…current estimates peg the future supply situation as less critical than forecasts from a year ago, but industrial buyers remain nervous about availability, Snowden said…“The balance has softened from a sizeable deficit to close to balance.  But it’s not a sudden swing back to significant surplus and ample availability, so I think there’s still a concern over making sure that you have enough raw materials”…as Nickel prices push through key technical levels, buying from speculators has extended the rally as commodity trading advisers’ (CTA) momentum kicks in…CTA funds often base trading decisions on chart patterns and technical levels…prices of Nickel, mainly used in the stainless steel industry, have also been boosted by worries of restricted ore supplies from major producer Indonesia because of a planned 2022 export ban…LME nickel has been the best-performing base metal this year with gains of 31% while most other base metals have fallen…

3. Never underestimate the American consumer: American shoppers increased their spending more than the so-called experts expected in June, despite a drop in gasoline prices, wrapping up a solid quarter for the resilient U.S. consumer…retail sales, a measure of purchases at stores, at restaurants and online, rose a seasonally adjusted 0.4% in June from a month earlier, the Commerce Department reported this morning…the June rise exceeded economists’ forecast for retail sales to increase by only 0.1% last month…4 consecutive months of rising retail sales suggests consumers remain a deep reservoir of strength for the U.S. economy…from a year earlier, retail sales were up 3.4% in June, and sales in April and May both logged in at 0.4%…consumer spending is the main source of demand in the U.S. economy, fuelling more than two-thirds of economic output…better-than-expected retail sales growth last month will feed into the broader pace of economic growth for the 2nd quarter…

4. Another reason Gold is at record highs in many currencies – falling interest rates have fuelled a fresh borrowing bonanza in the 1st quarter of 2019 with emerging market debt soaring to record highs and the global debt stock bulging by $3 trillion (U.S.), according to a report just released by the Institute of International Finance (IIF)…debt owed by governments, companies, financial institutions and households across developing economies soared to $69.1 trillion (U.S.) or 216% of GDP from $68.9 trillion a year earlier….debt-to-GDP ratios had risen at the fastest pace in Chile, Korea, Brazil, South Africa, Pakistan and China over the past year, the IIF found…“The persistent economy-wide increase in EM borrowing continues to feed into higher contingent liabilities for many sovereigns,” IIF deputy director Emre Tiftik wrote in a note…“Growing reliance on short-term debt leaves many emerging markets exposed to sudden shifts in global risk appetite,” Tiftik said, adding some $3 trillion of emerging market bonds and syndicated loans are coming due through end-2020 – a third of which were U.S. dollar denominated…across developed markets, the 1st quarter increase was chiefly driven by a buildup in government debt, which added $1 trillion…Finland, Canada and Japan have seen the biggest increase in debt-to-GDP ratios over the past year while some euro area economies, notably the Netherlands, Ireland and Portugal, have continued with deleveraging…

5. Thanks to a careful review of historical data, Great Bear Resources (GBR, TSX-V) has discovered the new high-grade Yuma Gold zone at its 100%-owned Dixie Project in the Red Lake district…like the recently discovered Bear-Rimini zone, Yuma is also hosted by the “LP Fault”, an 18-km-long Gold-bearing deep-seated crustal structure at Dixie…an historic drill hole (DC-1207) completed in 2007 is a 1.4-kilometre step-out to the southeast along the LP Fault from Great Bear’s Bear-Rimini discovery hole DNW-011, and was the only other hole to be drilled to-date into the footwall of the LP Fault…the final meters of DC-12-07 intersected silicified volcanic rocks visibly similar to those which yielded high-grade Gold at the Bear-Rimini discovery…lower-grade Gold mineralization was also intersected higher up the hole within the LP Fault, as was also the case in the Bear-Rimini zone…Great Bear’s geologists noted sparse fine visible Gold within strongly silicified felsic volcanic rocks towards the end of DC-12-07, where the company projected the Bear-Rimini zone’s on-strike Gold mineralization could occur…past operators had recorded this interval as un-mineralized and it had not been sampled…Great Bear sampled the previously uncut core, which assayed 5.5 m of 4.1 g/t beginning at 193.5 m downhole, including 2 m  of 10.6 g/t and including 0.5 m of 36.9 g/t…the historical hole had been terminated prematurely…2 historical drill holes were subsequently re-entered and extended by Great Bear…both holes intersected similar silicified geology to drill hole DC-12-07 and assays are pending…Chris Taylor, President and CEO of Great Bear said, “This is the cheapest discovery hole we’ve ever had, since the high-grade visible Gold interval was sitting unreported for 12 years in drill core stored on the property”

6. The Dow is flat through the first 30 minutes of tradingGoldman Sachs (GS, NYSE) beat Wall Street’s expectations for 2nd-quarter results today with outperformance in its investment banking and trading division...so far, just over 5% of S&P 500 companies have reported calendar Q2 results, according to FactSet…of those companies, more than 85% have posted better-than-expected earnings…in Toronto, the TSX is down 16 points while the Venture is flat at 579 as of 7:00 am PacificBrixton Metals (BBB, TSX-V), which soared 80% yesterday on some stellar drill results from its Thorn Project in Northwest B.C., is up half a penny at 24 cents on strong volume in early trading…it pushed as high as 27 cents shortly after the open before retreating to 20 cents on profit-taking…the long-term chart shows a breakout on record volume (volume is one of the best indicators of all) above a downtrend line going back to 2016Brixton also has the wind at its back from higher Silver prices…Garibaldi Resources (GGI, TSX-V) has eased off slightly after hitting a new 9-month high of $1.73 during trading yesterday…technically, very bullish chart dynamics (similar to 2017) suggest big things are in the works at Nickel Mountain…Great Bear (GBR, TSX-V) is up 28 cents at $4.80 on this morning’s news as it rapidly approaches the $5 level for the first time…Adventus Mining (ADZN, TSX-V) touched an all-time high of $1.16 in early trading…ADZN and Salazar Resources (SRL, TSX-V) are well-positioned for a strong 2nd half of 2019 as they make further progress with their VMS play in Ecuador…

7The Trump administration has raised national security concerns about Facebook’s (FB, NASDAQ) plans to launch a cryptocurrency as a growing chorus of U.S. and international officials voiced resistance to the tech giant operating its own digital money…“Many players have attempted to use cryptocurrencies to fund their malign behavior.  This is indeed a national security issue,” Treasury Secretary Steven Mnuchin said in remarks at a news briefing yesterday…should Facebook develop its digital coin, called Libra, to “have a payments system correctly with proper (anti-money-laundering safeguards), that’s fine,” Mnuchin said…but, he cautioned, “They’ve got a lot of work to do to convince us to get to that place”…Mnuchin’s remarks came just a day before Facebook executive David Marcus is set to take the hot seat in a Senate Banking Committee hearing…testimony that Marcus prepared for the panel sought to quell worries, similar to those already voiced by President Trump and Fed Chairman Jerome Powell, about Facebook’s foray into crypto and its potential impact on global currencies and central banks…meanwhile, Trump tweeted this morning that that the administration will “take a look” at Google following statements just made by billionaire tech investor Peter Thiel…“Billionaire Tech Investor Peter Thiel believes Google should be investigated for treason,” Trump said…“He accuses Google of working with the Chinese Government.  A great and brilliant guy who knows this subject better than anyone!  The Trump Administration will take a look!”

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