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December 6, 2019

7 @ 7:00

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

1. Gold has traded between $1,481 and $1,460 so far today…as of 7:00 am Pacific, the yellow metal is off $14 an ounce at $1,461 on a knee-jerk reaction to a very strong U.S. jobs report…meanwhile, White House economic adviser Larry Kudlow just told CNBC that a U.S.-China Phase 1 trade deal is “close” as “intense” discussions continue, but President Trump is prepared to “walk away” if some conditions are not met…Silver is also under temporary pressure, off 33 cents at $16.60…the TSX Gold Index, however, is holding up relatively well, down less than 3 points at 245.18TD on Gold: “Loss-aversion will be a growing theme next year because real rates are subdued around the developed world, which will drive capital towards ‘safe assets’, which are scarce.  CTAs are eyeing a break north of $1,500/oz to add to their length.  We suspect that a break north of this range would kick-start the next leg of the yellow metal’s rally”...Palladium also looks good in the new year with prices potentially heading to $2,000, according to TD“Palladium continues to make new all-time highs as the ‘ESG’ trend is gathering steam, and will result in increasing emissions controls across the globe – 2020 will be the year in which the largest number of emissions legislation changes will be adopted, which will continue to increase loadings”…base metals are up modestly this morning…Nickel has added 3 cents to $6.05, Copper is 2 cents higher at $2.67 while Zinc is up slightly at $1.02…Cobalt remains unchanged at $16.10…Crude Oil is pushing to the upside, gaining nearly $1 a barrel to $59.38 on news that energy ministers from some of the world’s largest Oil producers have agreed to deepen recurring production cuts by an additional 500,000 barrels a day through March 2020…the Dollar Index has rebounded one-quarter of a point to 97.64…there are at least 2 Democrats in the U.S. House of Representatives with common sense…Rep. Jeff Van Drew of New Jersey says he plans to vote against all the articles of the Trump impeachment “unless there’s something that I haven’t seen, haven’t heard before”…he‘s warning Democrats to “be careful what you wish for” and he added that impeachment “is tearing the nation apart”…meanwhile, Minnesota Rep. Collin Peterson will also be voting against impeachment…“I don’t have an idea what they’re doing,” he said…House leader Nancy Pelosi, pushed by the radical far left in her party, is taking the Democrats on a suicide mission…more than 30 House Democrats in pro-Trump districts are in serious danger of being defeated next November as the House potentially flips from the Democrats to Republicans…

2. The Trump economy, unlike its Canadian counterpart weighed down by Trudeau’s anti-growth policies, was a job-creation machine in the month of November as non-farm payrolls surged to 266,000 while the unemployment rate fell to 3.5%, according to Labor Department data released this morning…those totals easily beat the Wall Street consensus…jobs growth was the best since January…the return of GM workers following a lengthy strike certainly helped, but even if you stripped that out of the equation the jobs gain was still well above 200,000…meanwhile, wages advanced a respectable 3.1% from a year earlier, slightly down from the prior month’s pace…the wage gains easily outpace tepid overall inflation but are still modest relative to other periods with historically low unemployment (retirement of highly paid baby boomers could be one of the factors)…

3. Why is it that the United States could post such robust job numbers in November while the Canadian economy suffered its biggest monthly job loss since the financial crisis?…the answer is quite simple, actually – Trump the businessman understands how an economy works, Trudeau the two-faced drama teacher does not…Stats Canada reported this morning that the Canadian economy LOST a staggering 71,200 jobs last month and the unemployment rate rose 4-tenths of a percentage point to 5.9% to its highest level since August 2018 when it hit 6%…the loss in jobs came as both full-time and part-time employment moved lower…the number of full-time jobs fell by 38,400 while part-time employment fell 32,800…the goods-producing sector lost 26,600 jobs in the month as the number of manufacturing jobs fell by 27,500 and the natural resources sector shed 6,500 positions…yes, another 6,500 jobs wiped out in the resource sector – part of that of course from Oil drilling rigs heading south to friendlier territory…

4. Yesterday’s Liberal Throne Speech means more of the same from the federal government when it comes to the West and the resource sector – in fact, Trudeau is doubling down on “fighting climate change” (that’s the overarching, #1 cause for this federal government) and his left-wing agenda…not surprisingly, Bloc Québécois leader Yves-François Blanchet said he would vote in favour of the Throne Speech because he saw opportunities to “make gains for Quebec”…he added that it was easier for him to vote in favour because there was nothing specifically about Oil in the speech (not a single word about the Trans Mountain Pipeline or the Oil and gas sector in general)…the Liberals only need the support of their leftist Bloc or NDP friends to get any House of Commons vote passed…Alberta Conservative MP Michelle Rempel vented her frustration on Twitter after the speech, “The ‘time continuum’ and ‘spaceship earth’ got more airtime and detail in Trudeau’s list of priorities for Canada than the workers in my province,” she wrote…

5. The Dow has shot up 286 points through the first 30 minutes of trading…in Toronto, the TSX has gained just 125 points while the Venture has slipped a point to 536…Eric Sprott, one of Kirkland Lake Gold’s (KL, TSX, NYSE) top 3 shareholders, now says he intends to vote for KL’s all-stock acquisition of Detour Gold (DGC, TSX)…initially undecided, Sprott said he came around after studying up on Detour and reflecting on Kirkland’s plans to boost performance at the struggling low-grade miner…Kirkland says it can materially increase Detour’s production over the next few years, and slash its costs…“I think it would be a pretty good cash-generating machine,” Sprott said of DetourKinross (K, TSX) says it’s selling its remaining shares of Lundin Gold (LUG, TSX) for $150 million (CDN)…Lundin Gold is developing the rich Fruta del Norte Gold Project in Ecuador…the mine is expected to produce 310,000 ounces Gold per year at an all-in-sustaining cost of just $583 (U.S.) per ounce…Kinross sold Fruta del Norte to Lundin Gold in 2014 for $240 million…buyers of Kinross‘ remaining 9.2% interest in Lundin Gold include Newcrest Mining and the Lundin Family TrustEskay Mining (ESK, TSX-V) actually halted its stock yesterday for news that it had closed a non-brokered private placement that raised hard dollars totalling $402,000 (3.35 million units at 12 cents per unit) and flow-through of $40,000 (250,000 units @ 16 cents per unit), notable only for the fact it’s the smallest raise of any company in the district this year…

6. Great Bear Resources (GBR, TSX-V) is significantly expanding its continuing drill program at its flagship Dixie Project in the Red Lake district of Ontario, from 90,000 m to 200,000 m…the company will be adding additional drill rigs beginning in January…the expanded program remains fully financed with a 2020 budget of $21 million, and the company has the ability to further augment the program with cash on hand…Great Bear currently has $31 million in cash and an additional ~$10-million of in-the-money warrants for a total potential cash position of approximately $41 million…the expanded Dixie exploration program will continue year-round and has a $21 million budget…drilling will focus on 1) Known Gold zones at the LP fault, Hinge zone, Dixie limb and North fault; and 2) Additional new targets across the 22-km strike length of the Dixie Property…higher-capacity drill rigs have been mobilized to the property to increase production rates at shallow depths and to allow penetration of up to a depth of 2,000 m as may be required…Chris Taylor, President and CEO of Great Bear, commented, “We are about to undertake one of Canada’s largest Gold-focused exploration drill programs in 2020, as we expect to have completed over 200,000 m of drilling by the end of next year.  It’s remarkable to think that when our drilling began 2 years ago, the Hinge zone and the multiple zones along the LP fault were still waiting to be discovered.  As we enter 2020, over 80% of the Dixie Property remains to be explored.  With over $30 million on hand, more and larger drill rigs, and the knowledge we’ve gained through our ongoing successes, we can now further accelerate that discovery process.  We anticipate 2020 will mark our most exciting year to date”…

7. Alberta’s new pro-energy government approved a new project by Grizzly Oil Sands yesterday – unbelievably, this Grizzly was in hibernation for 6 years as that’s how long this approval has taken thanks to the previous NDP government and the Progressive Conservatives before them…it’s a small example of a big problem in terms of what’s wrong with Canada right now – this country’s inability to push projects forward in a timely manner…the May River Project approximately 130 km southeast of Fort McMurray would produce 12,000 barrels a day in a first phase before eventual output of about 80,000 barrels a day, Grizzly President Serge Bisson confirmed…“Approval like this is extremely material for our company and allows us to move forward with our business,” Bisson said, noting the 6-year wait has been excruciating…”We’re very excited about the development opportunity here”

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  1. 7 @ 7, but 3 are just busting Trudeau’s chops. Reads more like a politics blog.

    Comment by Gojira — December 6, 2019 @ 8:48 am

  2. Government(s) and the resource sector are inextricably intertwined, Gojira…you can’t ignore one while looking at the other…decisions made at the federal level have directly impacted the junior resource sector in this country including the Venture, which goes to our mandate which includes covering political trends that impact the resource sector and equity markets…Kitco interviewed Kevin O’Leary the other day, directly discussing Trudeau – why do u think Kitco would do that?…it’s very relevant to the stocks and opportunities we follow…

    Keep in mind, the last time the Venture was over 1,000 was in 2014 when the Oil and gas sector was red-hot and a pro-energy fed. govt. was in power…the Oil price drop has certainly hurt the sector since then, but compounding the problem have been government policies in this country, particular under Trudeau…a lot of the wealth that was created in the Oil and gas sector flowed into mining/exploration deals…that missing ingredient now is another reason the Venture is near its all-time lows…an Oil and gas sector that’s hurting in Canada is not good for the overall resource sector…fortunately there are some individual standouts that are helping to keep things alive and moving forward on the resource side…this “market within a market” will certainly continue until a broader healing occurs…

    Comment by Jon - BMR — December 6, 2019 @ 9:25 am

  3. I am no fan of Trudeau but also no fan of Trump. What a lot of people don’t seem to mention is that the US is running massive deficits right now. People just don’t seem to care about deficits anymore, I guess it’s not sexy to talk about.

    Comment by Danny — December 6, 2019 @ 12:02 pm

  4. Well, don’t forget Canada when it comes to massive deficits, and what do we have to show for it, absolutely nothing, ohhhh wait, the pot industry, which will be a massive failure. Just give it a little more time….

    Comment by Laddy — December 6, 2019 @ 1:55 pm

  5. What do we have to show for it? Not much here in Alberta that’s for sure. That was pretty clear in the last election.

    Comment by Danny — December 6, 2019 @ 6:08 pm

  6. That’s exactly my point Danny, we’ll just have to focus on making money, and grab profits when it feels right for you, not what other people think..

    Comment by Laddy — December 7, 2019 @ 11:15 am

  7. Laddy, agree, the focus should be on making money and making good decisions as the rest of this crap is out of our control.

    Comment by Danny — December 7, 2019 @ 2:12 pm

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