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November 25, 2019

7 @ 7:00

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

1. Gold has traded between $1,462 and $1,454 so far today…as of 7:00 am Pacific, the yellow metal is off $an ounce at $1,460…in 12 out of the last 15 years, Gold has dropped in value between November 25 and December 20…however, seasonal factors start working in Gold’s favor after that…Silver is 4 cents lower at $16.92…Nickel has lost 3 pennies to $6.57…Copper is unchanged at $2.65…since hitting a 3-and-a-half month high on November 7, Copper prices have fallen 3.8%…Zinc and Cobalt are both flat at $1.06 and $16.10, respectively…Crude Oil has retreated 20 cents to $57.27 while the Dollar Index is steady at 98.26Goldman Sachs has issued a report that says raw commodity prices will rise in 2020 and for the next decade due to a worldwide move to “decarbonize” the planet, including less investment in carbon-based industries…that scenario would lead to supply shortages of some key commodities, the report said…the best returns in 2020 will like come from Oil but the firm is also predicting $1,600 GoldU.S. national security adviser Robert O’Brien said Saturday that the so-called Phase 1 trade deal with China could happen by the end of the year, and emphasized that President Trump would not ignore ongoing protests in Hong Kong…“We were hoping to have (a Phase 1) deal done by the end of the year.  I still think that’s possible,” O’Brien told reporters at a security conference in Halifax…“At the same time, we’re not going to turn a blind eye to what’s happening in Hong Kong or what’s happening in the South China Sea, or other areas of the world where we’re concerned about China’s activity,” he said…meanwhile, the Chinese government’s top diplomat delivered a scathing attack against the United States at a G-20 meeting in Japan over the weekend…

2. This should prove interesting – Canada’s Q3 GDP reading will be released at the end of this week (we’ll see how it compares to the Trump economy)…last Friday, Stats Canada reported that retail sales for September lagged well behind the U.S. as they fell 1%…the Bank of Montreal’s senior economist, Robert Karcic, put it politely when he stated that the broader Canadian economy remains on pace for “slightly below potential growth in the near-term”meanwhile, the strike at Canadian National Railway is now into its 7th day, paralyzing shipments of Oil, aluminum, grain and consumer goods…Quebec has already warned it faces a looming propane shortage as the trains sit idle (Quebecers’ dreams of a world free of fossil fuels are quickly turning into a nightmare)…the Trudeau government has shown no signs it intends to legislate an end to the strike…the complacency and ignorance of Canada’s federal government when it comes to the economy is absolutely staggering…

3. President Trump’s national security adviser has issued a dire warning to Canada about Chinese telecom giant Huawei, saying Ottawa should reject the company’s plan to deploy its 5G network because the technology would be used as a “Trojan horse” to undermine national security…”When they get Huawei into Canada…they’re going to know every health record, every banking record, every social media post – they’re going to know everything about every single Canadian,” Robert O’Brien said at an international security conference in Halifax…“What the Chinese are doing makes Facebook and Google look like child’s play, as far as collecting information on folks”…he said the Chinese state could use data scraped from its 5G mobile network to “micro-target” Canadians with personalized texts aimed at undermining elections…the national security adviser, who was appointed to the job in September, says the fallout from such an intrusion into personal data would have an impact on Canada’s participation in the Five Eyes alliance, which includes the intelligence agencies in Australia, New Zealand, the United Kingdom and the United States…“The Huawei Trojan horse is frightening, it’s terrifying,” O’Brien said on the first full day of the Halifax Security Forum, which has attracted more than 300 delegates from government, the military and the academic community…“I find it amazing that our allies and friends in other liberal democracies would allow Huawei in…I’m surprised that there’s even a debate out there”

4. Kirkland Lake Gold (KL, TSX, NYSE) is buying Detour Gold (DGC, TSX) in an all-stock transaction for $4.9 billion, furthering an M&A spree in the Gold sector that will likely intensify over the coming months…the deal values Detour at $27.50 a share, a 24% premium to Friday’s closing price…Tony Makuch, Kirkland Lake CEO, commented, “The acquisition of Detour Gold is an excellent fit for Kirkland Lake Gold.  We have already taken 2 mining operations, Macassa and Fosterville, and transformed them into high-quality assets that generate industry-leading earnings and free cash flow.  The addition of Detour Lake provides an opportunity to add a 3rd cornerstone asset that is located in our back yard in Northern Ontario.  Detour Lake will provide the pro forma company with a 20-plus year mine life which provides unparalleled optionality and excellent growth potential for the benefit of all shareholders.  The management team at Detour Gold has done an exceptional job in making improvements and building momentum at the mine.  Once the transaction is completed, we will continue efforts to optimize current operations and commence engineering work to evaluate expansion opportunities at Detour Lake, which we anticipate could lead to significant production growth, improved unit costs and higher levels of mineral reserves and mineral resources”Detour Lake has current production of approximately 600,000 ounces per year with substantial growth potential…the deal adds 15.4 million ounces to KL’s mineral reserve base…KL investors only see dilution in this deal this morning – the stock has plunged $10 a share to $53.18 in early trading, touching its 200-day moving average for the first time since late last year, while Detour is up 80 cents at $23.01

5. The Dow has jumped 123 points through the first 30 minutes of tradingCharles Schwab (SCHW, NYSE) announced plans this morning to buy discount brokerage rival TD Ameritrade (AMTD, NASDAQ) in an all-stock deal valued at $26 billion…the merging of the 2 biggest publicly traded discount brokers will create a mammoth with more than $5 trillion in client assets, $3.8 trillion from Schwab and $1.3 trillion from TD Ameritrade…the combined company will serve more than 24 million clients…in Toronto, the TSX is 29 points lower…Balmoral Resources (BAR, TSX) has pushed above key resistance in the mid-20’s, hitting a nearly 2-year high of 33 cents in early trading with results pending from Area 52 drilling next to Wallbridge Mining’s (WM, TSX) Fenelon Property…Balmoral will also have a powerful new neighbor in Kirkland Lake Gold through its buyout of Detour…the Venture, continuing to trade within a 540 to 520 support band, is up 2 points a 532Victoria Gold (VIT, TSX-V) reported this morning that excluding pre-development work, approximately 4.4 million tonnes of material has already been mined from the Eagle pit in the Yukon including approximately 2.2 million tonnes of ore…the mine plan is performing to expectations including the waste to ore strip ratio…ore Gold grade to the heap pad is on plan and early grade reconciliations continue to perform well between actual mining results and the published resource estimate…production to date is 10,400 ounces of Gold and 1,600 ounces of Silver…the company’s cash inflows and precious metal sales exceed cash operating costs and sustaining capital…Canopy Growth (WEED, TSX; CGC, NYSE) reported this morning that it has received its operating and secure storage licence from Health Canada for its 150,000 sq. foot beverage facility located at company headquarters in Smiths Falls, Ontario…the new facility is operational and will begin producing cannabis-infused beverages immediately…the beverage facility adds to the complement of cannabis production facilities in Smiths Falls including a regional distribution centre with automated excise stamp lines, an automated manufacturing facility, a state-of-the-art bean-to-bar chocolate factory, and a first-of-its-kind Visitors Centre…WEED is up 42 cents at $24.90 as of 7:00 am Pacific…the average cannabis stock is down by about 60% over the past 8 months, wiping out nearly $60 billion in market capitalization from a group of 90 Canadian and U.S. stocks…

6. Another  important reason for Gold to continue its upward primary trend: After climbing above $250 trillion in the 1st half of 2019, the amount of global debt that’s owed by governments, the financial sector and non-financial sector is now forecast to touch a record $255 trillion by year’s end, according to the Washington, D.C.-based Institute of International Finance (IIF)…this mind-boggling sum is the equivalent of 320% of total global economic activity – the highest level ever, according to the IIF…to put it another way, for every $1 that’s produced today, an additional $3.20 in debt is created and thrown atop the heap…this cannot be sustainable…higher debt levels have put tremendous pressure on central banks around the globe to keep monetary policy “loose” or “very loose”..

7. Choosing to go long Gold after the precious metal settles at a solid support level will pay off next year, according to TD Securities…even though the metal can weaken to as low as $1,425 in the short-term, the long-term picture is looking very supportive of prices reaching the $1,650 level, TD says in its 2020 outlook…“Our analysis still shows that $1,650/oz Gold next year is in the cards, once the weak longs get shaken out and as modest global growth assure a low rate environment and continued Fed monetary accommodation,” the bank’s strategists said…Gold’s major rebound will come in the 2nd quarter of next year, according to TD (historically, Q1 is Gold’s strongest quarter), triggered by further Federal Reserve easing, slower economic growth, and central bank Gold buying…“The likelihood that the Fed will deliver more monetary accommodation, central banks will continue to buy Gold at a record clip and investors demand in the metal to hedge against equity market volatility, weaker U.S. dollar and negative interest rates are all factors making us ready to go long – once the yellow metal firmly settles at technical support levels,” the strategists said…the bank’s outlook projects that the Fed will cut rates twice by mid-2020 in moves that will be mirrored by the European Central Bank…“U.S. economic numbers are likely to print quite weak in the coming months.  This should prompt markets to once again price in more Fed cuts.  Weaker U.S. growth should continue to keep fiscal deficits elevated.  This along with the potential of a Democratic win next election season implies that markets will worry about monetization via a modern monetary theory framework, which typically is remedied by Gold as a hedge”, TD concluded…

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1 Comment

  1. Another person on a tour of the parliament in Ottawa asked to remove his sweat shirt, and I just love the same sweat shirt in question,being worn by Alberta premier Kenny on national television at the coin toss of yesterday’s grey cup..???. Congrats to the bombers.. ??.

    Comment by Laddy — November 25, 2019 @ 3:04 pm

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