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October 21, 2019

7 @ 7:00

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1. Gold has traded between $1,487 and $1,496 so far todayas of 7:00 am Pacific, bullion is up $2 an ounce at $1,492…the COT report for the week ending October 15 showed money managers dropped their speculative gross long positions in Comex Gold futures by nearly 18,000 contracts to 213,987…at the same time, short bets rose by 6,725 contracts to 38,200Gold’s net-long positioning currently stands at 175,787 contracts, down more than 12% from the previous week…Silver is up 27 cents at $17.78 as it tries to conquer resistance in the $17.70 – $17.80 range…a close above $18 would confirm a fresh breakout…Nickel has dropped another 11 cents to $7.37 while Copper, Zinc and Cobalt are all steady at $2.63, $1.13 and $16.10, respectively…the union of workers at BHP’s Escondida mine, the world’s largest Copper mine, will hold a day-long strike tomorrow in a show of solidarity with protests in Chile…several Chilean cities have been engulfed by days of riots, along with peaceful protests, after a hike in public transport costs…arson, looting and riots over the weekend left at least 7 dead….the unrest was some of the worst to hit the country in decades…Crude Oil has slipped 74 cents to $53.04 while the Dollar Index is unchanged at 97.28…White House economic adviser Larry Kudlow expressed optimism this morning about ongoing U.S.-China trade talks, and said that tariffs scheduled for December could be withdrawn if negotiations continue to go well…the talks, which are expected to continue with calls this week, were “looking pretty good”Kudlow said in an interview on Fox Business Network

2. Barrick Gold (ABX, TSX; GOLD, NYSE) says it has reached a deal to settle a long-running tax dispute (extortion by the government would be more accurate) between Tanzania and mining group Acacia, which Barrick bought in a $1.2 billion (U.S.) transaction approved by a British court last month…the tax deal includes the payment of $300 million to settle outstanding tax and other disputes, the lifting of a concentrate export ban, and the sharing of future economic benefits from mines on a 5050 basis, Barrick said in a statement yesterday…Barrick is definitely back in Tanzania,” President and CEO Mark Bristow told reporters in Dar es Salaam, Tanzania’s commercial capital, yesterday…“A true partnership can only be described when you have 50/50 and our joint venture with the government of Tanzania is exactly that – a committed partnership to develop Tanzania’s Gold assets for the benefit of all stakeholders,” said Bristow…a new operating company named Twiga Minerals will be formed to manage the Bulyanhulu, North Mara and Buzwagi mines after a review by Tanzania’s attorney general, the statement added…under the agreement, the Tanzanian government will also buy a 16% shareholding in each of the mines…

3. Corporate buybacks are “plummeting” as companies tighten their purse strings, and it could have a big impact on the market, Goldman Sachs warns in a note to clients…in the 2nd quarter, S&P 500 share buybacks totaled $161 billion, about 18% less than the 1st quarter, the firm found…the amount spent on buybacks year-to-date is down 17% year-over-year, although it is on track to be the 2nd highest total on record…Goldman anticipates that this trend will continue, noting that “early indications suggest 2nd-quarter weakness in buybacks may persist”…for 2019 the firm predicts that total buybacks will drop 15% to $710 billion, and in 2020 they see another 5% decline to $675 billion…share repurchases have been a key element during this bull market, which is currently the longest on record…by repurchasing shares, a company reduces the number of shares outstanding which also has the effect of lifting earnings per share figures…

4. The Dow is up 13 points as of 7:00 am Pacific…U.S. stocks will try this week to break the all-time highs set earlier in the year as a slew of S&P 500 companies get set to report earnings…about 120 S&P 500 companies, or around 24%, are scheduled to release their quarterly results this week…those companies include Caterpillar and Boeing, both of which are expected to report Wednesday morning…Amazon, Intel, McDonald’s and Chipotle Mexican Grill are also on deck for the week…it’s election day in Canada…one thing seems certain – at the very least, Prime Minister Trudeau will lose his majority…however, that raises the nightmare possibility of a potential Liberal-NDP alliance that could govern even if the Conservatives emerge with the most number of seats…the Venture, which snapped a 3-week losing skid last week, is up 1 point at 543Gatekeeper Systems (GSI, TSX-V), which won a significant contract last week, is up another 2 pennies at 21.5 cents…the stock is now at its best levels since early 2017…next significant resistance is in the upper 20’s…one of last week’s top performers, Antibe Therapeutics (ATE, TSX-V), has slipped a penny to 42 cents through the first 30 minutes of trading…ATE’s chart pattern remains very constructive, however, as it also does for Canada Cobalt (CCW, TSX-V) which is unchanged at 35 cents after an important breakout above 33 cents…Aben Resources (ABN, TSX-V) has slipped another 3 pennies to 8 cents on another round of weak drill results from its Forrest Kerr Project in the Eskay Camp

5. After being halted since the beginning of July due to a major transaction, Calibre Mining (CXB, TSXresumed trading today with the stock now on the TSX as opposed to the Venture…the company announced this morning that it expects Gold production of between 32,000 and 35,000 between mid-October and the end of December after completing the acquisition of the El Limon and La Libertad mines from B2Gold (BTO, TSX)…all-in-sustaining costs are expected to range from $950 to $980 per ounce (U.S.)…as of the transaction close October 15, Calibre has a strong balance sheet with approximately $45 million CDN in cash and a multi-asset production platform with significant near-mine, district-scale exploration potential…CEO Russell Ball stated, “As anticipated, we are processing higher grade ore from the El Limon Central pit.  In addition, at La Libertad processing of higher-grade ore from the recently developed Jabali Antenna open-pit commenced in the 4th quarter.  I am excited about the near-mine exploration opportunities at La Libertad, El Limon and the Pavon project.  Drilling has already commenced at the Buenos Aires target at La Libertad, with expansion drilling at El Limon Central scheduled to begin in early November”CXB, which now has 310 million shares outstanding, is trading higher at 65 cents in early trading…

6. Bets on rising U.S. Oil prices have hit a 9-month low, underscoring investors’ concerns that a slowing economy will dent demand for Crude at a time when the world is awash in Oil…notably, net bullish bets are at their lowest level since the week ended January 8 – the latest indicator that softening demand and strong production from the U.S. and other suppliers are souring investors’ outlook on Crude…the International Energy Agency recently cut its 2019 and 2020 Oil-demand forecasts, citing a lower outlook for growth, while downbeat manufacturing numbers from around the world and trade uncertainties keep a lid on Oil prices, despite escalating tensions in the Middle East that could threaten supply…low Crude prices, however, are also an economic stimulus and help keep inflation in check…

7. Of all the market-moving tweets these days, one in particular from Democratic Presidential hopeful Senator Elizabeth Warren is sending shivers through the Oil industry…“On my first day as President, I will sign an executive order that puts a total moratorium on all new fossil fuel leases for drilling offshore and on public lands,” she tweeted on September 6“And I will ban fracking – everywhere”…outlawing a technique that energy producers use to blast Oil and gas from shale formations would require legislation and spur a torrent of opposition from companies, investors and probably even state governments…substantial as those hurdles may be, they haven’t stopped analysts from running the numbers for investors and energy executives to see what might happen, if hydraulic fracturing were banned…they are particularly focused on Warren’s threat to choke off drilling on federal lands…Tudor Pickering estimates that if fracking were banned, Natural Gas prices in the U.S. would jump to somewhere between $9 and $15, up from $2.32 per million British thermal units on Friday…the firm figures that Oil, trading around $53 a barrel, would rise to the $80 to $85 range and could risk shooting to $150 during market shocks…entire Oil-field service companies would become obsolete…pipeline owners would suffer without replenishment, as existing wells peter out…the winners would potentially be Canadian shale drillers and big global operators like Exxon and Chevron, for which higher energy prices would offset losses on U.S. assets…

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1 Comment

  1. Hello BMR, I’m fairly new to the Ggi story. Been following some of your freebies so thank you for that. What do you think Steve’s strategy is for financing? Surely you’d think he’d prefer sp at higher levels.

    Comment by Donovan — October 21, 2019 @ 2:39 pm

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