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August 7, 2019

7 @ 7:00

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

1. Gold has scaled a new 6-year peak today, trading between $1,481 and $1,511as of 7:00 am Pacific, bullion is up $36 an ounce at $1,510 after an important breakout earlier this week through $1,450…U.S.-China trade tensions, global growth concerns and central bank easing around the world are all helping to drive this powerful move in bullion…Gold is also underpinned by inflows into ETFs and unprecedented central bank purchases…Gold’s chart momentum is also attracting a lot of new participants…Silver has soared 63 cents to $17.05…significantly, Silver has broken out above a long-term downtrend line on its monthly chart – this is a major development that we’ve been forecasting for months now…Nickel, which enjoyed a sharp run Monday, has retreated 15 cents to $6.64…Copper is steady at $2.56 while Zinc is off 2 pennies at $1.02…Crude Oil has fallen more than $2 a barrel to $51.55 while U.S. Dollar Index has shed one-quarter of a point to 97.37…euro zone government bond yields have slumped to record lows this week while Dutch 30-year and Irish 10-year yields turned negative for the first time…data from Germany this morning showed the steepest year-on-year decline in industrial production from Europe’s biggest economy since 2009, a contributing factor in Oil’s slide today…President Trump pressed his demand again this morning for the Federal Reserve to accelerate interest rate cuts, saying the U.S. central bank needs to keep pace with its global counterparts…“They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW,” Trump said in a series of early morning tweets…

2. Gold’s rally has room to run with Bank of America Merrill Lynch (BofAML) projecting that the yellow metal has the potential to reach $2,000 an ounce next year…a big supporter of Gold prices going forward will be the effects of “quantitative failure,” the bank pointed out…“Successive rounds of monetary easing have had a series of side effects.  Beyond falling rates, around $14 trillion of debt now has negative yields (including Germany’s 30Y Bund as of today).  This has been a key driver behind the recent Gold rally and with more easing to come, the dynamic will likely sustain a bid for the yellow metal,” BofAML stated.  “Successive rounds of easing have delivered less bang for the buck and markets are much less enthusiastic about further stimulus. Quantitative failure, under which markets refocus on elevated debt levels or the lack of global growth would likely lead to a material increase in volatility,” the bank said. “Such a sell-off may prompt central banks to ease more aggressively, making Gold an even more attractive asset to hold”

3. Following a decision earlier this week by the U.S. Treasury Department to label China a currency manipulator – the first such distinction since 1994 – officials in Beijing pegged the yuan at $6.9996 against the dollar today, the lowest mid-point setting in more than 11 years, and allowed the currency to drift below the $7 mark for the 3rd consecutive session…the move both indicates China’s need to weaken its currency in order to mitigate the affects of tariffs put in place by the Trump administration as well as Beijing’s insistence that it must be treated as an equal in trade talks with the world’s biggest economy…meanwhile, according to the latest Treasury data, the U.S. is now on a pace to generate $72 billion in tariffs annually, and could well hit the $100 billion mark Trump has touted if new 10% tariffs on $300 billion in untaxed imports from China take effect on September 1 as threatened…

4. Higher Silver prices will definitely help First Majestic (FR, TSX) going forward…the company released 2nd quarter financials this morning, showing a loss of $12 million (U.S.) in Q2 at a realized average Silver price of $14.80 per ounce…other notable numbers in the Q2 results: Pure Silver production was up 16% to 3.2 million ounces; Silver equivalent production was up 25% to 6.4 million ounces; Revenue was up 5% to $83.7 million, primarily due to a 13% increase in Silver equivalent ounces which was partially offset by a 12% decrease in Silver prices; Mine operating earnings were up 283% to $4.2 million; Cash costs were reduced by 10% to $6.84 per payable Silver ounce; AISC were reduced by 10% to $14.76 per payable Silver ounce; Strong balance sheet with $94.5 million in cash and cash equivalents…“In the 2nd quarter, our strong production results were mostly offset by lower Silver prices which impacted revenues, earnings and cash flows compared to the same quarter of the prior year,” stated Keith Neumeyer, President and CEO of First Majestic“Continued strong production from our San Dimas and Santa Elena mines, which together produced approximately 80% of the company’s total production, generated mine operating earnings of $4.2 million.  At Santa Elena, we are already seeing improvements in metallurgical recoveries following the installation of its new high-intensity grinding mill in the 2nd quarter.  This project has been a success and a great example of how new technologies are changing the mining industry”FR is up sharply in early trading, gaining $1.33 a share to $14.45

5. Skeena Resources (SKE, TSX-V) has started surface drilling at Eskay Creek…the 2019 Phase I drill program will initially focus on converting pit constrained Inferred resources to Indicated resources via infill in the 22, 21A, 21E and HW Zones…these zones have been prioritized for helicopter supported drilling such that the remaining drilling in the 21B Zone can be performed with ground transported drill rigs later this year…this initial phase of drilling at Eskay Creek will total approximately 15,000 m over 200 drill holes with average drilling depths of 75 m…hole spacings required for indicated resources varies by zone but will average 15 to 20 m between drill holes…a second drill rig will be mobilized to Eskay Creek in the coming weeks to accelerate the drilling schedule and may focus on exploration step-out holes to test for additional tonnage potential…the company also plans to mobilize a drill rig to the Snip Project on the western side of the Eskay Camp later this fall for a 5,000-m drill program targeting mineralization in the down plunge of the Twin Zone and in the 200 Foot Wall Zone…meanwhile, the Preliminary Economic Assessment Eskay Creek is currently being undertaken by Ausenco Engineering Canada in Vancouver and is scheduled for completion by the end of this quarter…it will include an assessment of an open-pit mining scenario followed by flotation and pressure oxidation of the concentrate for precious metal recovery with tailings deposition similar to historical operations…elsewhere around the Eskay Camp, Garibaldi Resources (GGI, TSX-V) is rebounding, up 11 cents at $1.41 as it bounces off its rising 50-day moving average (SMA), while Tudor Gold (TUD, TSX-V) has pushed above the $1 mark to its best levels since 2016

6. The Dow has tumbled 508 points through the first 30 minutes of trading…the 10-year Treasury yield has slid to its lowest level since 2016…the benchmark 10-year Treasury yield dipped below 1.6% after starting August above 2%…the move further narrowed the yield curve, a widely watched recession indicator…the spread between the 10-year rate and the 2-year is at its lowest level since 2007 at less than 8 basis points…in Toronto, the TSX is off 29 points despite another big jump in the Gold Index which is now at 260, its highest level in nearly 3 years…the Venture has jumped 4 points to 599Eskay Camp stocks are in the green this morning…further north, GT Gold (GTT, TSX-V) has hit a new 9-month high of of $1.21 in early trading while Brixton Metals (BBB, TSX-V) is up a penny a 28 cents…Klondike Gold (KG, TSX-V) is following up on yesterday’s advance with a gain of 3.5 cents to 44.5 cents…KG announced yesterday that drill hole EC-19267 cut 1,009 g/t Au with 1,035 g/t Ag over 1 m (104 to 105 m) in a wider interval that graded 404 g/t Au and 415 g/t Ag over 2.5 m…this is a new discovery 25 m below the known Nugget zone mineralization and remains open…more assay results are pending…

7. Pure Gold Mining (PGM, TSX-V) has closed a $90 million (U.S.) project financing package with Sprott Resource Lending Corp…the financing will fully fund the costs to develop an underground mine at Pure Gold’s Madsen Gold Project in the Red Lake Camp…the financing comprises a credit facility for $65 million and a $25 million callable Gold stream…with the project now fully funded, the company has also announced that its Board of Directors has approved a “decision to construct” for the Madsen Red Lake mine…with approximately $90 million (CDN) in the treasury on closing of the first tranche of this financing, and a recent project agreement signed with Wabauskang First Nation and Lac Seul First Nation, the company will immediately commence development activities with a goal of first Gold pour by the end of 2020…additionally, the financial flexibility provided by this financing and the recent equity raise of $47.5 million (CDN) will allow Pure Gold to continue to pursue a growth strategy, with exploration drilling expected to continue through the balance of the year…

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  1. GGI – Lot of fuel for the fire if it is ever ignited; 1.1 million new short shares as of the latest reading. Seems like Regoci could come up with something nice to say about the drilling to date.

    Comment by Marshall — August 7, 2019 @ 9:44 am

  2. Hi Jon have you been able to talk to frank recently? Share price is looking to be breaking support at .275 and you are saying new highs coming for CCW. Doesn’t look good in my opinion. John how does CCW look on your charts?

    Comment by Tycoon777 — August 7, 2019 @ 11:04 am

  3. Tycoon777, smart money (including my own) is accumulating CCW from fools who are spending far too much time in chat rooms, and obsessed with every trade, so I hope they give up some more…they will be sucked dry and very soon the show begins…this reminds me so much of GGI when it was trading in the 70’s and the whining was intense…the chart, therefore, is fantastic in terms of the upside trajectory and the rising 1,000-day SMA should be one of your key technical clues…can’t believe how some investors who should know better get so negative at EXACTLY the wrong time!…human nature…if you really understand human nature you can make a fortune in this business…

    Comment by Jon - BMR — August 7, 2019 @ 11:21 am

  4. Well Mr. Jon, SAM didn’t want ggi shares but apparently smart retail do…

    Comment by Jean — August 7, 2019 @ 11:34 am

  5. Ok, thanks for quick response. This business can definitely be frustrating at times.

    Comment by Tycoon777 — August 7, 2019 @ 11:44 am

  6. Jon, I am sure you can understand the frustration with CCW. Silver is surging while CCW is flirting with 52 week lows and Frank has been awfully quiet. I hope it’s the smart money buying and not the smart money selling. The comparison with GGI is irrelevant in my opinion, two totally different plays.

    Comment by Danny — August 7, 2019 @ 12:05 pm

  7. Sure, and that’s part of my point, Danny – frustration and impatience are emotions that lead to a lot of mistakes in the market…if you recall, this is exactly what unfolded in the spring of 2018 when a bunch of frustrated investors gave their CCW paper away at 20 cents, and I hope they make my day and do it again…the stock quickly more than quadrupled…when I say this is going to new highs, I do not say that lightly – I’ve been on the property, I know the underground and the Gold system to the east…

    Comment by Jon - BMR — August 7, 2019 @ 12:09 pm

  8. Serious EOD buying on GGI…I’d consider that smart money…

    Comment by Jean — August 7, 2019 @ 1:22 pm

  9. According to the nervous nellies, Jean, the 40% drop in the share price, and no news yet, meant Garibaldi has come up empty so far at Nickel Mountain…

    Comment by Jon - BMR — August 7, 2019 @ 2:50 pm

  10. Talk of a Indonesia export ban sends nickel soaring. . Hang on to your hat folks.

    Comment by Laddy — August 7, 2019 @ 7:51 pm

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