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November 6, 2019

7 @ 7:00

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1. Gold has traded between $1,490 and $1,483 so far today…as of 7:00 am Pacific, the yellow metal has added $4 an ounce to $1,487Gold suddenly tumbled to a near 3-week low of $1,479 yesterday, registering its biggest 1-day percentage drop since late September at 1.7%…some better-than-expected U.S. economic data and hopes of a detente in the U.S.-China trade battle boosted sentiment regarding the global economic outlook and pressured safe-haven assets like bullion and government bonds…investors now await new developments on the talks after reports that China is pushing President Trump to remove more tariffs imposed in September as part of a “Phase 1” trade deal…Silver backed off yesterday and again this morning but remains in a new uptrend channel on its short-term chart with strong support stretching from $17.50 to the $17.20’s…Silver off just 2 cents at $17.53 as of 7:00 am Pacific after successfully testing lower levels earlier…Nickel, Copper, Zinc and Cobalt are all relatively flat at $7.42, $2.67, $1.16 and $16.10, respectively…Crude Oil has gained 8 cents to $57.31 while the U.S. Dollar Index is down one-tenth of a point at 97.86…Saudi Arabia is set to push OPEC to make deeper production cuts by pressuring laggard members ahead of its state-run Oil company’s massive IPO, according to a Wall Street Journal report…the effort is aimed at bolstering Oil prices and reminding potential Aramco investors of Saudi Arabia’s considerable sway within OPEC…Nigeria has apparently agreed to improve compliance and lobby other African producers to follow suit…the U.S. non-manufacturing PMI rose to a reading of 54.7% in October, up from September’s 52.6%…the 2.1 percentage-point advance surprised the markets yesterday with consensus expectations calling for the index to come in at 53.5%…however, data released this morning wasn’t as encouraging – U.S. productivity for Q3 dropped by most since the 4th quarter of 2015 according to the Labor Department…

2. Jinchuan Group, China’s top Nickel producer, will feel some impact from Indonesia’s ban on ore exports, but will be able to plug the supply gap, partly by using its own mines, a company executive said yesterday…Indonesia, the world’s largest Nickel ore producing country, has left its biggest customers in China – mostly manufacturers of primary Nickel – fearing a raw material shortage after bringing forward a ban on ore exports…China’s imports of Nickel ore and concentrate from Indonesia in September rose to the highest monthly volume since at least 2016 at around 2.5 million tonnes, about 35% of its total imports of the commodity, official data showed…“Indonesia should have some impact,” Jack Zhou, general manager of Jinchuan Group Nickel Salts Co, told Reuters on the sidelines of the China International Nickel and Cobalt Industry Forum in Yichang…“But we at Jinchuan will be able to make up the deficit (from) our own ore assets and mines in Qinghai.  We can use all of that,” he said…Qinghai is a province in northwestern China that borders Jinchuan’s home province of Gansu…Jinchuan will produce around 180,000 tonnes of Nickel this year, more than last year…the “Big Picture” outlook for Nickel, however, remains exceedingly bright…the traditional production focus on stainless steel may prevent adequate supply of battery-preferential Nickel coming online even though this sector will eventually eclipse stainless steel demand at a time when reserves of high quality Nickel sulphide around the globe and are in decline…that’s why projects such as Nickel Mountain are so critical…

3. The price of Western Canadian Select Crude Oil is reeling as Canadian Oil producers struggle with the continuing shutdown of TC Energy’s (TC, TSX; TRP, NYSE) Keystone pipeline…barrels of WCS were trading at $35.09 late yesterday, down from $38.20 the previous Wednesday – the day after the Keystone pipeline spilled more than 9,000 barrels of Oil in northeastern North Dakota…the spill, which the company said was enough to fill half of an Olympic-size swimming pool, forced the shutdown of a main artery taking Canadian Oil from Alberta to refiners in the U.S. Midwest…the current price for Canadian Crude represents a >$22 discount to U.S. benchmark West Texas Intermediate prices, the most since December 2018, according to S&P Global Platts…”This underscores how Canadian energy is held hostage to just a small number of pipelines,” said Michael Tran, an energy analyst for RBC Capital Markets…for that, of course, we can thank a federal government that’s hostile to the Canadian Oil and gas sector…losing Keystone reduces the ability of producers to move 590,000 barrels a day out of Alberta…that has prompted executives, who have long complained about Canadian governments’ inability to get new pipelines approved, to scramble to fill the gap…a TC Energy spokesman said there is no word yet on when Keystone will be operating again…the company said on its website Monday that 200 people are working around the clock to fix the leak and clean up the spill…the company expects to dig up and extract the damaged section of pipe by the end of this week…though the pipeline is shut from Alberta to Oklahoma and Illinois, it remains open on its southern leg from Oklahoma to the Gulf Coast…

4. This should prove interesting – a pair of proposed Natural gas projects in B.C. and Quebec will serve as the testing ground for Trudeau’s new environmental assessment regime, an expanded review process that is almost certain to hamstring major projects…both the Gazoduq pipeline, a key feature in a $14 billion plan to export liquefied Natural gas from Saguenay, Quebec, and Cedar LNG, an export facility proposed for construction in Kitimat, B.C., will be subject to regulatory changes introduced under Bill C-69…they are among 4 initial projects that will fall under the new review process, which came into force in August….the Gazoduq pipeline would tie into an existing Natural gas pipeline system in Ontario and run 780 km east to the Saguenay Fjord, where GNL Québec is proposing to build a liquefaction facility…from there, roughly 11 million tonnes per year of liquefied gas would be shipped down the fjord and into the Saint Lawrence River, eventually reaching overseas markets (the LNG facility itself, Énergie Saguenay, is being reviewed under the 2012 rules)…Équiterre, the radical advocacy group cofounded by newly-elected Liberal MP Steven Guilbeault who is likely to play a key role in a Trudeau cabinet, is vehemently opposed to the facility and has gathered 40,000 signatures in a bid to stop its development…as these lunatics campaign to “save the planet”, they think nothing of killing Canadian jobs and prosperity…

5. The Dow, in all-time high territory, is relatively unchanged as of 7:00 am Pacific…the Dow’s year-to-date gain now stands at nearly 18% after rallying 3.3% in the past month…the S&P 500 is up more than 22% this year after surging 4% in the past month…corporate profits have been largely solid this earnings season as 75% of S&P 500 companies to report thus far have topped analysts’ expectations, FactSet data show…in Toronto, the TSX has added 37 points…the Gold Index has rebounded 1.5 points to 240 after weakness yesterday…its overall technical posture remains very positive…higher Gold prices helped boost Newmont Goldcorp’s (NGT, TSX; NEM, NYSE) revenues up by 57% in the 3rd quarter but it still wasn’t strong enough to meet earnings expectations…Q3 adjusted net income for the world’s largest Gold miner was $292 million or $0.36 per diluted share, up compared to $175 million or $0.33 per diluted share in the prior year quarter…however, the earnings number was a slight miss…the Venture is steady at 539Canada Cobalt (CCW, TSX-V) is the early volume leader as interest intensifies in multiple CCW initiatives in the Northern Ontario Silver-Cobalt Camp, including a potential new high-grade Silver discovery less than 2 km from +60 million ounces of historical production as crews prepare to follow up on 189 oz/ton Ag over a core length of 3.1 m at depth in the Nipissing diabase…Wallbridge Mining (WM, TSX) is unchanged at 67 cents while neighbor Balmoral Resources (BAR, TSX) is up a penny-and-a-half at 23.5 cents…Bee Vectoring Technologies (BEE, TSX-V) is still buzzing, up 4 cents at 47 cents…the Financial Post reported this morning that Canadian cannabis producers and extractors are sitting on a massive stash of unfinished inventory that is growing so quickly that some analysts are concerned it could precipitate a price crash in the burgeoning industry…since January of this year , the amount of unfinished inventory of dried cannabis has nearly tripled, reaching a staggering 328,000 kilograms at the end of August…this compares to roughly 118,000 kilograms 8 months earlier, according to Health Canada data…

6. New Gold (NGD, TSX, NYSE) has reported a net loss of $25 million (U.S.) or 4 cents per share for Q3, though all-in-sustaining costs (AISC) for the year are expected to achieve the low end of annual guidance of $1,330 to $1,430 (U.S.) per Gold equivalent ounce…“The company has delivered another quarter of improving operational and cost performance from both assets as we continue to advance our short-term operational plan and reposition the company for long-term success,” stated CEO Renaud Adams…“The quarter over quarter improvement in our performance has underpinned the completion of a strategic equity financing during the quarter, which allowed us to reduce our debt position by $100 million and strengthen our balance sheet.  We will maintain our diligent focus on completing substantially all remaining construction projects at Rainy River in order to reposition the asset for efficient and sustainable mining, as we continue to advance C-zone development at New Afton.  We continue to advance our updated life of mine plans for Rainy River and New Afton, which are expected to be released in mid-first quarter of 2020 and provide a path forward that is premised on maximizing profitability and shareholder value creation”

7. Investment demand is once again proving itself to be the dominant force in the Gold market as demand for Gold-backed exchange traded products (ETFs) saw its strongest quarter in 3 years according to the latest research from the World Gold Council…in its quarterly Gold Demand Trend report, the WGC said that inflows into ETFs between July and September totaled 258.2 tonnes, the largest increase since the 1st quarter of 2016…the WGC added that September saw ETF Gold holdings rise to a record level of 2,855 tonnes, surpassing the previous peak set in 2012…in total, the global Gold market saw modest demand growth of 1,107.9 tonnes (t) in the 3rd quarter, the report said…a 2nd pillar of strength in the Gold market during the 3rd quarter was continued central bank demand…the WGC said that central banks purchases in the 3rd quarter totaled 156 tonnes, up 12% for the year…

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1 Comment

  1. I see that ETR finally has some bids. Any chance that thier assays are coming back from the lab perhaps? any chance that tax loss selling will drop this further ?

    Comment by david — November 6, 2019 @ 11:25 am

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