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January 8, 2020

7 @ 7:00

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1. Gold shot up as high as $1,612 as Iranian missiles flew over Iraq last night, targeting military bases housing U.S. and coalition targets…there were no U.S. casualties in what seemed like a symbolic response for domestic Iranian consumption after the Trump administration took out Quds Force Gen. and terrorist Soleimani last week…Trump, who is scheduled to address the nation at 8:00 am Pacific (11:00 am EST), has so far shown restraint after last night’s Iranian aggression, temporarily de-escalating the situation…as of 7:00 am Pacific, Gold is down $2 an ounce at $1,572…strong new support at $1,550…Iranian Supreme Leader Ayatollah Ali Khamenei vowed further retaliation for the U.S.’s targeted killing of Soleimani, hours after last night’s attacks in Iraq…“Last night, they were given one slap,” he said in a speech broadcast live on state television…“Such military actions are not enough as far the importance of retaliation is concerned.  What’s important is that their corruption-creating presence should end”…Iraqi security forces said 22 surface-to-surface ballistic missiles fell on sites housing U.S. and coalition forces, including 2 that didn’t explode, but there were no casualties…Iran has about 2,000 of these missiles, partly paid for by the flawed Obama-led nuclear deal with Iran that gave the rogue nation and the world’s leading sponsor of state terror access to tens of billions of dollars…meanwhile, was Iran responsible for the downing of a Ukraine plane on its territory last night?…Ukraine has refused to rule out that the Boeing 737 that crashed in Iran and killed all 176 on board, including dozens of Canadians, was struck by a missile…asked at a briefing in Kyiv if the plane could have been downed by a missile, Ukraine’s Prime Minister Oleksiy Honcharuk refused to rule it out, but cautioned against speculation until the investigation concluded…Silver, which ran up as high as $18.93 last night, is now off 7 cents at $18.30…however, strong new support now exists at $18…base metals are firming up with Copper, Nickel and Zinc trading at $2.79, $6.33 and $1.09, respectively…Crude Oil has eased off 71 cents to $61.99 while the U.S. Dollar Index has added more than one-tenth of a point to 97.15…U.S. private payroll growth ended 2019 on a strong note with companies adding 202,000 positions in December in another sign of a healthy labor market, according to a report this morning from ADP and Moody’s Analytics…the total was well above the 150,000 consensus estimate from economists surveyed by Dow Jones and sets the stage for the government’s official count that will be released Friday…economists expect the Labor Department’s tally to show a gain of 160,000

2. Not surprisingly, inflows into exchange-traded products ended a record-breaking year on a strong note, according to the latest data from the World Gold Council (WGC)…in its monthly report, the WGC said that global Gold-backed ETF’s saw net inflows in December of 13.8 tons valued at $486 million…the increase came as prices rallied 4%, pushing back above critical resistance at $1,500 an ounce…according to the WGC, European investors led the way last month, investing $67 million in funds in France, Germany and Switzerland…looking at 2019 as a whole, the WGC noted that Gold holdings hit a new record level of nearly 2,900 tons in the 4th quarter…in total, global holdings for the year increased by 400 tons…North American Gold ETFs accounted for nearly half of all inflows in 2019, the WGC figures show, thanks to growing geopolitical tensions and the first Federal Reserve rate cuts in a decade…along with increased investor interest, the WGC also noted that global central bank demand also helped add to Gold’s bullish lustre last year…looking ahead, analysts at the council said that they expect investor demand to remain robust through 2020

3. Federal spending under Prime Minister Justin Trudeau has reached record highs, just as a new report warns that Canada is sitting on a “demographic time bomb” that will see spending on a rapidly aging population rocket…Liberal spending on public programs reached $9,066 per person in 2019, the highest in Canadian history when adjusted for inflation, according to a report by the Fraser Institute…the spending increase comes as the Trudeau government continues to expand various social programs through increased childcare benefits and higher pension plan contributions, among other things…Jason Clemens, executive vice-president of the Fraser Institute, said higher spending risks putting Canada into a difficult fiscal position that could take years to climb out of, particularly considering an aging demographic and projections of slower economic growth…

4. According to a Financial Post report this morning, senior RCMP officers are in contact with First Nations protestors opposed to the $6.6 billion Coastal GasLink pipeline, trying to negotiate a way for construction work on the project to resume in north-central British Columbia…“Our priority is to engage with CGL, Indigenous communities and government to facilitate a resolution without police enforcement,” RCMP Cpl. Madonna Saunderson said in a statement, adding that the force’s senior commander “has already been in direct contact with representatives of all these stakeholder groups, including the Hereditary Chiefs”…over the weekend, a breakaway group of hereditary Wet’suwet’en chiefs that oppose the natural gas pipeline (the elected chiefs and councils of the Wet’suwet’en support the project) actually asked the RCMP to “refrain from interference” with regard to their now illegal protest (the RCMP are just doing their job if they have to enforce a B.C. Supreme Court judgement and protect a company from those who are breaking the law)…the project is linking gas fields near Dawson Creek to the $40 billion LNG Canada export project in the community of Kitimat…

5. Discovery Metals (DSV, TSX-V) has drilled 34.7 m grading 617 g/t AgEq (200 g/t Ag, 3 g/t Au, 2.9% Pb and 1.6% Zn),including 3.7 m @ 2,524 g/t AgEq, in one of its first 4 diamond drill holes completed at its flagship Cordero Project in Chihuahua state, Mexico (Discovery acquired Cordero through the acquisition of Levon Resources) in  August 2019…results released this morning are part of a 30,00035,000 m Phase 1 drill program that Discovery plans to complete in 2020…the focus of Phase 1 is to 1) delineate, expand and then re-domain areas of higher-grade mineralization within the existing Cordero resource; and (2) test new high priority targets outside the current resource, including targets on the large 35,000 hectare property package that surrounds Cordero…Taj Singh, President and CEO, stated, “These first results from Cordero are very encouraging and support our thesis that within the very large resource area exists a shallow, higher-grade component that could redefine the Project entirely and vastly improve its economics.  The presence of higher-grade Gold in the most strongly mineralized areas is also positive.  Cordero has many attractive features: open-pittable, good metallurgy and excellent surrounding infrastructure.  We look forward to completing the exploration in 2020 required to re-scope and optimize this very exciting property”…results from the other 3 holes were highlighted by 61.6 m @ 42 g/t Ag and 0.39 g/t Au; 94.3 m @ 47 g/t Ag and 0.27 g/t Au; and 59.9 m @ 37 g/t Ag and 0.06 g/t Au…DSV is up a penny at 61 cents in early trading…

6. The Dow is 24 points higher after the first 30 minutes of trading in the wake of last night’s events in Iraq…the TSX is up 29 points while the Venture is off 1 point at 584…a strong new Venture support band stretches from 580 to 560Benchmark Metals (BNCH, TSX-V) has discovered a new and broadly mineralized zone at its Lawyers Project, just 50 m east of the known mineralization at Cliff Creek…results from Benchmark’s drill hole 19CCDD025 include high-grade and bulk-tonnage intercepts comprising 2.09 g/t Au and 87.8 g/t Ag or 3.19 g/t AuEq across 36.3 m core length, including 11.8 g/t Au and 513.2 g/t Silver or 18.24 g/t AuEq across 3.23 m core length…BNCH, at a new multi-year high, is up a penny at 47 cents…Kootenay Silver (KTN, TSX-V) has drilled 7.45 m grading 650 g/t Silver within 39.9 m grading 159 g/t at its Columba Silver Project in Mexico…the overall strike length of the F Vein has increased to 700 m…KTN is off a penny at 31 cents…more assays are pending (108 of 111 samples) from Canada Cobalt (CCW, TSX-V) after the first 3 samples from the first wedge hole at the company’s Castle East discovery returned 1,476 oz/ton Silver (51,583 g/t) over 0.60 m within 1.5 m grading 605 oz/ton…drilling is now being carried out from surface…

7. 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…

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