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October 1, 2019

7 @ 7:00

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1. Gold has traded between $1,458 and $1,472 so far today…as of 7:00 am Pacific, the yellow metal is at its high of the day at $1,472Gold slid to a near 2-month low in earlier trading but rebounded immediately after the release of disappointing U.S. manufacturing activity…the Institute for Supply Management confirmed that manufacturing contracted to its worst level since June 2009…President Trump quickly that tweeted that Fed Chair Jerome Powell and the central bank “have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected…They are their own worst enemies, they don’t have a clue…Pathetic!”…the September consolidation/correction in Gold did not represent a major change in positioning with technical charts still pointing to long Gold signals, according to TD Securities“A marginal chart signal prompted extremely skewed positioning to liquidate some length, but our positioning analytics suggest that this move is more likely to be tied to a minor shakeout in length than to a major change in positioning.  However, the combination of some 75 technical analysis trading signals suggests that 43% of signals are still tilted towards the long side in Gold.  In fact, chart signals in old present the most compelling case in a cross-asset basket of securities, with the yellow metal holding the crown for the highest absolute percentage of signals pointing long on a 60d moving average basis”Silver has rebounded 21 cents to $17.16…Nickel is 11 cents higher at $7.87…Copper has slid 5 cents to $2.54 while Zinc is off 2 pennies at $1.07…Cobalt has retreated 23 cents to $16.78…Oil prices have recovered modestly, up 47 cents at $54.54, on reports that output from the world’s largest Oil producers fell during the 3rd quarter, although a resumption in Saudi supply and demand concerns has kept a lid on gains…the Dollar Index has jumped another quarter point to 99.61…European stocks and the euro both suffered shaky mornings after euro zone manufacturing data showed the sharpest contraction in almost 7 years…Australia’s dollar tumbled after its central bank cut interest rates for the 3rd time this year…that also dragged the neighboring New Zealand dollar to a 4-year low…emerging markets are also in the firing line as the South African, Turkish, Russian, Indian and Mexican currencies all sink lower…The Globe and Mail reports that senior Canadian officials involved in economic and security issues have been meeting since July to discuss how Ottawa and Washington can secure access to minerals and metals such as Uranium, Lithium, Cesium and Cobalt in the context of cutting dependence on China…why it would have taken until July to have those discussions is a good question…

2. How can we allow this to happen given that Canada is a country so rich in natural resources?…Canada’s mining, quarrying and Oil and gas extraction sector, under relentless attack, dropped by 3.5% in July, the largest decrease seen since May 2016, according to new Statistics Canada data released this morning…support activities for those same industries slumped by 11.5%, the largest decline since December 2018…Oil and gas extraction (except Oil sands) fell 4.7%, the biggest monthly drop in a decade…as a result, Canada’s economy was unchanged in July, badly underperforming its neighbor to the south…Canada is setting itself up for major economic problems if it doesn’t get its act together with regard to the resource sector plus general productivity, investment, taxation and government spending issues…

3. World trade flows are set to increase at the weakest pace this year since the global financial crisis as tariffs rise and the global economy cools, the World Trade Organization (WTO) said today…the slowdown in exports has hit factories around the world…surveys of purchasing managers in Europe and Asia that were also released this morning pointed to deepening declines in manufacturing activity during September…in Germany, Russia and the Czech Republic, factories were operating at levels last seen in 2009…slowing growth has made it more difficult for central banks to reach their inflation targets and have inspired a wave of new stimulus measures from policy makers around the world…in the euro zone, figures showed the annual rate of inflation fell to its lowest level in almost 3 years in September – at 0.9%, inflation there is less than halfway to the ECB’s goal…

4. The Dow is up 55 points as of 7:00 am Pacific while the TSX has added 21 points…the Gold Index is up 1 point at 237 as it tries to snap a 4-session losing skid…a strong support band exists between 240 and 227…it was a disappointing last half of September for the Venture which has lost ground in 10 out of the last 11 sessions after a monthly high of 594 September 13…this has led to the most oversold conditions on the Index since late December…slumping cannabis stocks have been a major contributor to Venture weakness with the Canadian Marijuana Index losing a whopping 16% of its value last month…Strategic Metals (SMD, TSX-V), on a steady rise since the beginning of June, has hit a new 2-year high of 55 cents…a sign of the growing interest in Nickel – Noble Mineral Exploration (NOB, TSX-V) is the Venture’s early volume leader this morning after announcing the creation of “Canada Nickel Company” which will become a new public entity…Canada Nickel will own a 100% interest in the Crawford Nickel-Cobalt sulphide project in northern Ontario and will be led by Mark Selby who will be appointed Chairman & CEO…Noble Mineral, a major shareholder in MacDonald Mines (BMK, TSX-V), also announced a plan to complete a fully-subscribed $5 million private placement into Canada Nickel, subject to regulatory approval, to fund the cost of the Crawford Project consolidation and continue exploration and mineralogical work…

5. Kinross Gold (K, TSX) is putting future deals in Russia on hold after snapping up a development project in a country hit by Western sanctions…in July, Kinross acquired the undeveloped Chulbatkan asset from closely held N-Mining for $283 million (U.S.) in cash and shares…the acquisition will add 3.9 million Indicated ounces of Gold to Kinross’s books…foreign investment in new mining projects in Russia has grown scarce due to Western sanctions levelled after the 2014 annexation by Russia of Crimea from Ukraine…the deal with N-Mining does not breach any sanctions but still requires Russian approval…this follows a multi-year effort by Kinross boss Paul Rollinson to cultivate ties in Russia even as diplomatic relations with the West, including Canada, have soured…“If you own our stock, by definition you’re comfortable with Russia, but that doesn’t mean we want to go overboard,” said Rollinson…Russian operations accounted for one-fifth of 2018 revenue for Kinross…the miner has poured more than $3.5 billion (U.S.) into Russia since 1995, making it the biggest foreign investor in the country’s Gold sector…

6. Sign of the times: Over the 3rd quarter of this year, the Global Economic Policy Uncertainty Index reached its highest level in 2 decades…the uncertainty index is now substantially higher than it was during the global financial crisis a decade ago…that lofty level of doubt reflects how U.S.-China trade tensions, Brexit and other considerations (including climate change alarmism) are crippling the ability of companies and investors to feel much certitude about what lies ahead…it also offers one explanation for the prevailing lack of conviction in markets…most major stock indexes finished the 3rd quarter close to where they started…in Toronto, the S&P/TSX Composite is 3.7% higher than it was one year ago…meanwhile, the S&P 500 benchmark has gained 5.7% while in London, the FTSE 100 has fallen 3.9%…the Venture, while it’s mostly flat for 2019, has fallen 21% from where it was a year ago…investors would love to find a place to run to, and Gold and certain precious metal stocks could be that place….Gold was the strongest performing major asset during the quarter despite a late September mini-correction…

7. As Canadian petroleum producers face capacity limits on export pipelines and legal challenges to build more, a Calgary-based company is testing a new way to transport Oil sands by rail and sea in shipping containers that gets around the contentious Oil tanker ban…Calgary-based Melius Energy melts pure bitumen, as the Oil sands are known, and pours it into shipping containers after removing diluting agents…when cool, the intermodal containers can be stacked on ships and trains and hauled to market…the company just completed its first test shipment of 130 barrels from Edmonton to Prince Rupert to China…“This is the first shipment – but Melius is prepared to commercialize today.  Currently they are working towards finalizing partnerships with several producers in Canada,” according to an emailed statement on behalf of the company…now Melius intends to scale up the technology of its Calgary-based partner BitCrude and develop supply contracts with Asian refineries…Melius President Nicole Zhang, a former pro golfer on the LPGA circuit, commented, “Establishing a transportation solution for Canadian energy that delivers tremendous value for local producers while satisfying the demand for our energy internationally is our priority”adding to the industry’s woes, the Trudeau government passed a law earlier this year banning Oil tankers from carrying more than 12,500 metric tonnes along the north B.C. coast…Alberta and petroleum producers have attacked the measure as blocking Canadian Oil from reaching international markets if a pipeline was built to the area (of course the Trudeau government also killed the proposed Northern Gateway pipeline, hampering Canada’s ability to ship Oil and gas products to Asia)…

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  1. Jon, I got a few more friends into GGI – quite impressive how this stock is holding up despite not being able to break this area of resistance – maybe we will get lucky to not only break this area but well into the high $2 or $3s.

    Comment by jean — October 1, 2019 @ 9:58 am

  2. This might help explain gold price action.


    Comment by Carl N — October 1, 2019 @ 10:48 am

  3. Hello BMR, what do you make of the Rhodium with GGI?

    Comment by Ricardo — October 1, 2019 @ 10:49 am

  4. The chart for CCW is looking much better, volume picking up. Perhaps October is the month? I did say months ago that the 4th quarter would be the time for it to move. Just thought that things would take longer than many thought and it would just be a somewhat lucky guess on my part if it did happen.

    Comment by Danny — October 1, 2019 @ 12:12 pm

  5. Comment on GGI?

    Comment by Derek — October 1, 2019 @ 2:15 pm

  6. Exceptional grades within the massive sulphides for not just Rhodium but Iridium, Osmium and Ruthenium, Ricardo…shows you how unique and rich the system is with 11 metals…if those rare metals ultimately figure into the equation, that would be a nice cherry on top…

    Comment by Jon - BMR — October 1, 2019 @ 4:11 pm


    GoGold Resources Inc. has released the assay results from hole LRGG-19-048, the latest hole completed on the San Juan area located 400 metres to the northwest of the Los Ricos Main mine area. Hole LRGG-19-049 was drilled at the northern end of the Main mine area.

    Hole LRGG-19-048 intersected 21.0m of the Los Ricos vein from 89.1 to 110.1m down the hole and averaged 3.33 g/t gold equivalent made up of 1.38 g/t gold and 145.9 g/t silver; including a 5.0m interval averaging 10.2 g/t gold equivalent made up of 4.36 g/t gold and 436.2 g/t silver. No historical underground workings were encountered in the hole.

    “We are encouraged with these new high grade assay results at San Juan. Hole 48 was drilled to test about 50m up dip from our San Juan discovery hole LRGG-19-030 and is quickly demonstrating the potential for near surface mineralization. We have now tested San Juan 200m down dip from surface and our drilling program will continue to focus on the extent of this newly discovered potential ore shoot down dip and along strike,” stated Brad Langille, President and CEO. “We’ve expanded our drilling program with the addition of a third drill rig.”

    The Company’s initial drilling program, which began in March, was planned for 10,000 metres of drilling. As of today, the drilling program has exceeded 8,700 metres, and the Company intends to continue drilling well past the 10,000 metre mark due to the strength of the results achieved to date. A third drilling rig was added to the project last week.

    Comment by Jon - BMR — October 2, 2019 @ 5:57 am

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