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November 8, 2019

7 @ 7:00

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1. Gold has traded between $1,474 and $1,456 so far today…as of 7:00 am Pacific, the yellow metal is off another $8 an ounce at $1,460…optimism (false optimism?) around U.S.-China trade talks has dented bullion’s safe-haven appeal the last couple of days…technical support is strong at $1,450 with a major floor of support at $1,400…Silver has also taken a hit, though it remains firmly in the grips of a primary uptrend…Silver is currently down 27 cents at $16.82…Copper is unchanged at $2.69 while Nickel and Zinc are both off slightly at $7.29 and $1.14, respectively…Cobalt is holding steady at $16.10CNBC reported this morning that an agreement between the United States and China to roll back existing tariffs as part of a Phase 1 trade deal faces fierce internal opposition in the White House and from outside advisers…the idea of a tariff rollback was not part of the original October “handshake” deal between Chinese Vice Premier Liu He and President Trump, according to CNBC sources…Chinese officials said earlier yesterday that tariff reductions had been agreed to, and a U.S. official confirmed that was the case…but there is a divide within the administration over whether rolling back tariffs will give away U.S. leverage in the negotiations…Canada’s energy sector is our country’s “family business”, says says Canadian Imperial Bank of Commerce CEO Victor Dodig, who adds that the family business has fallen on tough times and needs the country to come together to find a solution…while renewables are the fastest growing source of energy in the world, Dodig, in a thoughtful Globe and Mail piece yesterday (“The Trans Mountain Expansion Is National-Building, Pure And Simple“), wrote that the reality is that fossil fuels will remain an important part of the global energy mix for decades…he says what the world needs is greater access to responsible energy production…and as a world leader in responsible energy production, Dodig says we help neither ourselves – nor the planet – if we undermine our own ability to compete on the world stage…

2. Islamist extremists have forced Semafo (SMF, TSX) to halt operations at its Boungou Gold mine in eastern Burkina Faso as the fallout widens from one of the worst-ever terrorist attacks on employees of a Canadian company (Trudeau of course is silent on this)…Semafo says it’s suspending work at its mine in the West African country, a day after Islamist terrorists ambushed a convoy carrying its employees to the mine site…Burkina Faso’s President, Roch Marc Kabore, said 38 people were killed, increasing the previous day’s tally…more than 60 others were injured, and dozens are still believed to be unaccounted for after the attack, which occurred on a road 40 km from the mine site…“This is the deadliest incident targeting the mining industry, or any private businesses, in the Sahel since the 2013 In Amenas hostage crisis,” Vincent Rouget, an analyst at Control Risks Group, told Reuters…Sahel is the name for a region of western and north-central Africa that has a large concentration of mining operations…extremist groups, mostly Islamist insurgents, also proliferate in the area…the attack highlights the increasing security threat for citizens and companies in Burkina Faso…almost everywhere you look around the world, it’s becoming more challenging to operate a mine with threats from governments to environmental extremists to terrorists…

3. An unprecedented run has come to an end – the latest data from the People’s Bank of China shows that the central bank did not purchase any Gold in October, ending a consecutive 10-month buying spree…according to data released yesterday, the Chinese central bank’s Gold reserves held steady at 62.64 million ounces in October…however, since December, the central bank has bought 105.8 tonnes of Gold…some analysts have noted that the end of China’s consecutive Gold purchases has stopped as the country has started to make some headway in its ongoing trade battle with the Trump administration…China has been a significant player in the Gold market this year…according to the latest research from the World Gold Council, central banks (net Gold buyers for 10 straight years) have bought nearly 550 tonnes of Gold so far in 2019Gold in the current global environment is well suited to be an integral component of foreign reserves…

4. The Gold market saw record inflows into exchange traded products during the 3rd quarter and it appears that trend has continued into the early start of the 4th quarter…in a report yesterday, the WGC said that global Gold-backed ETFs saw $1.9 billion of net inflows last month…“Flows were driven primarily across Europe and North America, increasing their collective Gold holdings by 44.4t to a new record high of 2,900t,” the report said...“Momentum in October flows reflect the trends in the 3rd quarter which saw total investment demand up 110% compared to Q3 2018…the WGC said that the increase in Gold-backed ETF holdings came as prices pushed back above $1,500 an ounce, increasing 2.9% on the month…for the year, Gold prices last month were up 18% and saw near all-time highs in every major G10 currency except for the U.S. dollar and Swiss franc…looking at regional inflows, the report said that European demand lend the way last month with European-listed funds seeing inflows of 31.3 tonnes last month, representing 67% of all inflows…Gold demand in Europe has been significant as investors have looked for safe-haven assets amidst growing economic uncertainty, ongoing turmoil surrounding Britain’s plan to leave the European Union and record level of negative bond yields…North American funds saw inflows of 13.2 tonnes in October…another growing trend in the marketplace is the popularity of low-cost gold-backed ETFs…the WGC said that low-cost Gold-backed ETFs in the U.S. have seen positive flows for 16 of the past 17 months and have increased their collective holdings by 55% so far this year…

5. No surprise the over-taxed, over-regulated, anti-Oil Trudeau economy shed jobs in October, a number that would have been far worse if it weren’t for a jump in public administration (government) positions…what an economic basket case Canada is turning into versus its neighbor to the south with a much smarter and effective approach to wealth and job creation at the federal level…Canada lost 1,800 net positions last month, Statistics Canada reported this morning, as employment declined in manufacturing and construction…the only real bright spot was that wages for permanent employees rose by 4.4%…the services sector gained 39,000 in October (public administration was a major contributor) but this was more than offset by a loss of 40,900 jobs in goods-producing sectors…

6. The Dow, having posted 6 triple digit gains in the last 10 sessions, has retreated 72 points on profit-taking as of 7:00 am Pacific…in Toronto, the TSX is up 22 points…the Gold Index has rebounded slightly to 235 despite a further drop in the metal price…very strong support stretches from the high 220’sSkeena Resources (SKE, TSX-V) is up another 6 cents at 70 cents (its best price in nearly 2 years) in early trading following yesterday’s release of a robust PEA for its Eskay Creek Gold-Silver Project…taking advantage of existing infrastructure from the past producing underground mine, one of the richest ore bodies ever discovered, the PEA envisions an open-pit averaging 3.2 g/t Au and 78 g/t Ag…after-tax NPV(5%) is $491 million (U.S.) with a 51% IRR and a 1.2-year payback period…the 8.6-year life-of-mine annual production is estimated at 236,000 oz Au and 5.8 million oz Ag at a CAPEX of only $233 million (U.S.)…success at Eskay Creek will benefit the entire Eskay Camp, including the Nickel Mountain Project just 10 miles to the southeast…the rebirth of Eskay Creek is a major development in Northwest B.C., just as the rebirth of the historic mining towns of Cobalt and Gowganda in in Northern Ontario is going to be a story of national interest fuelled by multiple initiatives from Canada Cobalt (CCW, TSX-V)…CCW is up on record high volume this week as the company prepares to execute imminently on several immediate/near-term plans enhanced by the closing of a game-changing deal to acquire the PolyMet facility in the town of Cobalt…

7. Canopy Growth (WEED, TSX; CGC, NYSE) founder Bruce Linton has been named Executive Chairman of U.S. cannabis company Vireo Health International (VREO, CSE; VREOF, OTC) headquartered in Minneapolis…the company says he will serve on the board of directors and work closely with Vireo CEO and founder Kyle Kingsley…Vireo, licensed in 11 markets, produces and sells cannabis and pharmaceutical-grade cannabis extracts…Linton was recently ousted from the co-CEO job (as well as Chairman) at Canopy in July after Constellation Brands said it was disappointed in the company’ s latest results…Linton told Yahoo Finance, “I am delighted to be joining Vireo, one of the most exciting cannabis companies in the United States with an impressive medical and scientific team developing the next generation of cannabis products.  We are confident Vireo can become a top U.S. producer and distributor of high-margin, proprietary products within the next several years and create unprecedented long-term shareholder value”VREO gained 20 cents on the news yesterday, closing at $1.55, and is up another 3 pennies at $1.58 as of 7:00 am Pacific

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