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January 7, 2020

7 @ 7:00

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

1. Gold pulled back after yesterday’s fresh 7-year high in a healthy unwinding of temporarily overbought conditions, but the yellow metal remains on solid footing above the key $1,550 level…as of 7:00 am Pacific, Gold is up $4 an ounce at $1,569 after dipping as low as $1,559 overnight…UBS says the current backdrop is “quite supportive for Gold” and expects the metal to average around $1,600 an ounce this year…U.S. forces and Patriot missile batteries across the Middle East were on high alert overnight to possibly shoot down Iranian drones as intelligence mounted there was the threat of an imminent attack from Iranian drones against U.S. targets, according to media reports this morning…based on the intelligence, the U.S. is watching for potential attacks specifically against American locations in Iraq, Kuwait, Saudi Arabia, the United Arab Emirates and Jordan…meanwhile, cyberattacks, already seen as the top risk of doing business by executives, are likely to receive renewed attention – and spending – as tensions between the U.S. and Iran escalate…holdings of the world’s largest Gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.10% to 896.18 tonnes yesterday, their highest since November 27Silver is up 4 cents to $18.16 as it tries to gain traction above $18…base metals are relatively flat with Copper, Nickel and Zinc trading at $2.78, $6.26 and $1.05, respectively…Crude Oil has eased off 55 cents to $62.72 while the U.S. Dollar Index has rebounded one-third of a point to 96.97…a report from Eurasia Group says the “decoupling” of the American and Chinese technology sectors represents a risk to global investors in 2020…noting that the divide had already disrupted core areas such as semiconductors, cloud computing and 5G, they warn that 2020 could see the split impact the broader economy…some tech experts have speculated that a division between U.S. and Chinese technology could eventually lead to the creation of 2 separate Internets – one led by China, another by the U.S. – in a phenomenon dubbed the “splinternet”Eurasia also warns that the technology separation would provoke further political clashes between the U.S. and China…“The two sides will continue to use economic tools in this struggle – sanctions, export controls, and boycotts – with shorter fuses and goals that are more explicitly political,” analysts wrote…

2. Goldman Sachs is calling Gold a “better hedge than Oil” in the wake of heightened U.S.-Iran tensions…“While tensions in the Middle East have undeniably escalated with Iran reportedly committing to retaliating, we believe that the current risk premium embedded in Brent prices (through time spreads) is already elevated, with an actual supply disruption now necessary to sustain Oil prices near current levels of $69 (Brent) per barrel,” Goldman said in a research report yesterday…“History shows that under most outcomes, Gold will likely rally to well beyond current levels.  This is consistent with our previous research, which shows that being long Gold is a better hedge to such geopolitical risks”Goldman says the Oil market has effectively already priced in an outage of 800,000 barrels a day for 3 months or a 30% chance of a 2.7 million-barrel-per-day outage for 3 months…further, the aftermath of Abqaiq attack last September shows the market has “significant supply flexibility” when Brent is around $70 a barrel, even before shale production rises, suggesting “only moderate upside” in Oil from here…

3. The absurdity of the United Nations is once again on full display as a UN Committee “working to end racism” is urging Canada to immediately stop the construction of 3 major resource projects until it obtains approval from affected First Nations…the Committee on the Elimination of Racial Discrimination, which monitors a convention to end racial discrimination signed by countries including Canada, is calling for a suspension of the Trans Mountain pipeline expansion, Site C dam and Coastal GasLink pipeline…the committee, made up of 18 so-called experts, says in a written directive that it’s concerned by the approval and construction of the 3 projects without the free, prior and informed consent of impacted Indigenous groups…of course, significant impact benefit agreements have been reached with a majority of First Nations covering those 3 projects but that’s apparently not good enough for the UN whose recommendation would literally put many hundreds of Indigenous people out of work…the UN committee has previously demanded a halt to Site C, which is opposed by the West Moberly and Prophet River First Nations in northeast British Columbia (more than $230 million in Site C procurement opportunities have been committed to Indigenous companies and around 400 Indigenous people are currently working on that project)…however, this marks the first time the UN committee has called for a stop to the Trans Mountain and Coastal GasLink projects…the right to “free, prior and informed consent” to resource projects is part of the UN Declaration on the Rights of Indigenous Peoples, which Canada has adopted but not yet incorporated into law as Trudeau wishes to do…the B.C. government has become the first jurisdiction in North America to commit to adapt its laws to meet the aims of the UN resolution but has not yet amended legislation…

4. The Globe and Mail reported this morning that RCMP will be cleared by the end of this week to enforce a Supreme Court injunction against protesters who are opposed to TC Energy’s (TRP, TSX) $6.6 billion Coastal GasLink Pipeline Project…Coastal GasLink launched its court case against protesters in November 2018, arguing that defendants Freda Huson and Warner Naziel are the architects behind the Unist’ot’en camp located near Houston, B.C., and that Unist’ot’en is affiliated with Dark House, 1 of 13 Wet’suwet’en Nation hereditary house groups…on December 31, a B.C. Supreme Court judge extended an injunction against protesters, saying construction of the natural gas pipeline has been harmed by Wet’suwet’en blockades…Wet’suwet’en hereditary leaders will likely have until late Thursday or early Friday to remove any obstacles that would prevent workers from getting to their construction sites on one section of the route…enforcement of the injunction order gives the defendants 72 hours to remove any structures in the way…Canada cannot allow an outlier group of First Nations disobey court orders and disrupt a major resource project…

5. Nighthawk Gold (NHK, TSX) has released drill results from seven holes (2,676 m) recently completed within high-grade Zone 3.5 and the southern area of Zone 3.0, part of the Colomac Gold project centrally located within its Indin Lake Gold Property in the Northwest Territories…highlights include 105 m (45 m true width) grading 1.35 g/t Au, including 34.50 m of 2.38 g/t, extending mineralization an additional 60 m to depth in Zone 3.5…this zone is located within the southern portion of the Colomac Main sill and represents one of the better-defined higher-grade areas…current drilling focused on expansion and infill drilling in areas within Zone 3.5’s down-plunge extension to the north and testing the underexplored southern region of Zone 3.0 located immediately north of Zone 3.5results to-date have confirmed that the mineralized sill shows a distinct widening to depth at Zone 3.5, and that a similar expansion of the deposit’s host rock (the mineralized top of the sill) to depth may exist for upwards of 3.5 kilometres of strike to the north…Dr. Michael Byron, President and Chief Executive Officer said, “Previous drilling confirmed that the well mineralized stratigraphic top of the sill (which faces east) at Zone 1.5 and the northern part of Zone 2.0 resembles a wedge form that widens significantly to depth.  Recent drilling has now confirmed that the top of the sill also appears to broaden exponentially to depth at Zone 3.5.  Additional drilling over the 3.5 km of sill that separates these two areas is expected to continue to confirm a universal widening of the mineralized portion of the intrusion to depth.  Should this hold true, Colomac may become a much larger Gold deposit and a stronger prospect for resource development with accelerated growth potential, as some areas have already shown expansions at depth to upwards of 3 times its near-surface true width”NHK is up a nickel at 52 cents as of 7:00 am Pacific

6. The Dow is 83 points lower through the first 30 minutes of trading as geopolitical concerns persist…the TSX, helped by rising Gold stocks, is up 31 points while the Venture has added 1 point to 583…a strong new Venture support band stretches from 580 to 560K92 Mining (KNT, TSX-V) is pushing higher after reporting that its Q4 production exceeded budget by 30%…23,646 ounces Gold equivalent were produced for the quarter at its Kainantu mine in Papua New Guinea…production for 2019 was a record 79,838 ounces of Gold or 82,256 AuEq ounces, compared with production of 47,237 ounces AuEq for 2019…mining operations in Q4 continued to focus on Kora North and comprised cut-and-fill stope mining from the K1 vein at the 1170, 1205 and 1125 mRL levels as well as development tonnes from the K2 vein on the 1225 mRL level…Skeena Resources (SKE, TSX-V) has hit a new high of 81 cents in early trading…Cannabix Technologies (BLO, CSE) has nearly doubled in value in recent sessions…this morning the company announced improvements in a critical component of the company’s FAIMS system as it continues to make headway in developing the Gold standard of marijuana breathalyzers…

7. Probe Metals (PRB, TSX-V) has commenced 2020 drilling at Val d’Or East…90,000 m are planned, one of the largest programs in the region this year, of which 55,000 m will focus on resource expansion, 20,000 m on infill drilling, and 15,000 m on exploratory drilling…3 drills are currently active on the property with another drill to be added next month…additional geophysical and geochemical surveys are planned to expand the limits of exploration within the company’s district scale land package to focus on new discoveries…advanced metallurgical, environmental and geotechnical work will continue to characterize potential development scenarios for the growing Gold resources…David Palmer, President and CEO of Probe, stated, “We anticipate another pivotal year for the project as we expand on the successes achieved during 2019.  The project has grown rapidly since our first exploration programs in 2016, doubling the Gold resource in successive estimates, yet we have still only scratched the surface for exploration.  In the past three years we have explored less than 5% of the area of the project and have already delivered a multi-million ounce resource with multiple new discoveries.  We believe we have confirmed our initial hypothesis that the Val-d’Or East area has the potential to host deposits on a scale similar to west Val-d’Or, which has produced more than 30 million ounces of Gold.  Our goal in 2020 is to continue unlocking ounces in this under-explored half of one of Canada’s most productive mining districts.  We will be working hard for our shareholders in 2020 as we continue to establish the Company as one of the preeminent Gold explorers in Canada”

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  1. The UN? Really? I won’t continue about the UN , there would be way too many bleeps. Merry Christmas to all my Ukrainian friends.

    Comment by Laddy — January 7, 2020 @ 12:41 pm

  2. dont look now .. gold over 1600 … iran retaliated… oh boy….

    Comment by Jeremy — January 7, 2020 @ 4:26 pm

  3. Uh oh…. this could end up really bad for everyone…

    Comment by Phil — January 7, 2020 @ 4:34 pm

  4. It’ll end up bad for Iran, Phil…

    In the meantime, Gold and Silver are taking off and that means Gold and Silver stocks are the best place to be right now…

    Comment by Jon - BMR — January 7, 2020 @ 4:41 pm

  5. Ya, except I worry about Russia stepping up to back Iran. Possible? Then what?

    Comment by Phil — January 7, 2020 @ 4:43 pm

  6. Putin is no dummy, so he’ll be careful. The Iranian regime also needs to be careful because they could ultimately face a major backlash from their people, particularly the younger generation, who have seen their economy grind to a halt the last few years – confrontation with the United States is only going to make things worse for the general population…that’s how uprisings begin and regime change occurs…Iran can be strangled with massive sanctions, more than are already in place, and critical infrastructure can easily be destroyed with precision weaponry without 1 U.S. solider stepping foot into Iran…

    BMR Evening Alert around 7 to 9 pm Pacific, including fresh Gold and Silver charts…the Trump twitter account could be pretty active overnight, or maybe deafening silence until a “disproportionate” military response?..

    Comment by Jon - BMR — January 7, 2020 @ 4:50 pm

  7. Thanks. I appreciate your insights.

    Comment by Phil — January 7, 2020 @ 5:03 pm

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