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February 7, 2020

7 @ 7:00

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

1. Gold has traded between $1,561 and $1,575 so far today…as of 7:00 am Pacific the yellow metal has reversed to the upside, $6 higher at $1,572…holdings of Gold by physically backed ETFs have risen for 12 consecutive business days, according to BMO Capital Markets…holdings continue to rise as “portfolio positioning retains a defensive hedge amid coronavirus concern,” BMO said…yesterday these holdings climbed by another 112,000 ounces, taking net purchases this year to 1.65 million ounces…analysts also cited World Gold Council data showing that 61.7 metric tons of Gold were added in January, over half of which were by European funds…“This asset allocation annuity continues to support Gold prices…despite a relative lack of traditional retail consumers,” BMO said…Silver is off slightly at $17.73…Palladium has fallen $46 an ounce to $2,182…Copper is down 4 cents at $2.56…Nickel has lost 12 cents to $5.76 while beaten-down Zinc has dipped below $1 to 98 cents…Crude Oil has retreated 69 cents to $50.62 while the U.S. Dollar Index is unchanged at 98.48the Democrats’ politicized impeachment strategy appears to have backfired big-time, and that has major implications for the markets through the remainder of 2020…new polling by Gallup reveals that President Trump’s approval rating is now at an all-time high of 49%…the poll was taken between January 19-26 while Trump’s impeachment trial was taking place…the Republican Party has also seen its approval rating skyrocket…51% of Americans now say they have a favorable view of the GOP – that is up from 43% in September and it’s the first time that a majority has expressed a favorable opinion of the Republican Party since 2005…on the other hand, only 45% say that they have a positive opinion of the Democratic Party – that is down slightly from September…this week we also learned that the Democrats, who are advocating unprecedented government intervention in the U.S. economy and of course a “Green New Deal” to “save the planet”, can’t even count their own votes in Iowa…

2. The globalist Trudeau Liberals appear to be gearing up for another blow against Western Canada and Oil and gas development in this country, all in the name of course of “saving the planet”…media reports say the government is preparing an “aid” package for Alberta in hopes of appeasing the province if the $20 billion proposed Frontier Oil sands mine is rejected by Cabinet later this month…as the mayors of Alberta’s 2 biggest cities were in Ottawa calling for fair treatment for the province, Reuters reported that approval for the project has become a major battle within the Liberal Party…“Rejecting Teck without providing Alberta something in return would be political suicide,” a source told Reuters…rejecting Teck, period, would be political suicide as it’ll be viewed as yet another attack against the West and Oil and gas development in this country by an economically incompetent federal government…it would create a Western backlash (and a backlash from North American and international investors) like the Liberals have never seen…options being considered in the “provincial aid package” include a cash injection to help clean up thousands of inactive Oil and gas wells abandoned by bankrupt companies…also under discussion is expanding the federal fiscal stabilization program that helps provinces deal with economic downturns…local infrastructure projects could also be in the mix…even the liberal Mayor of Calgary, Naheed Nenshi, urged the Trudeau cabinet to approve the mine and cautioned against an instinctual bias toward Eastern interests that would overlook the project’s benefits…“If this project is not one that the government can approve, then they should just admit that there’s a moratorium on all energy investment in Canada”…rejecting the project, which Teck says would eventually create 7,000 jobs, would be “a devastating signal for investors looking at Canada,” a spokesman for Alberta’s energy minister said…

3. This is long overdue: RCMP have arrested 6 opponents of a natural gas pipeline through northern B.C. after moving in yesterday and enforcing a court injunction around a key project worksite…it comes a day after the RCMP held a news conference pleding that officers would take a “light touch” when enforcing the B.C. Supreme Court order requiring that Coastal GasLink workers be given access to the area near Houston…the 6 who were arrested are more than just “opponents” and they belong in jail for an extended period – they are anarchists who refuse to respect the laws of the land (if you oppose these radical “First Nation” individuals you are labelled a “racist”)…their actions are illegal (in direct violation of a recent court order) and detrimental to the economy and the legal pursuit of resource development in this country…they want the United Nations to come to their defence…ironically, all of the elected First Nation groups along the pipeline route are in favor of the project, and are benefiting from it, so these anarchists/eco-terrorists are even hurting their own people…it’s time Canada stood up and took a very tough stand against this nonsense…

4. U.S. employers added a robust 225,000 jobs in January, much more than expected, and the jobless rate was 3.6%, signs that the U.S. labor market is positioned to fuel economic growth in 2020…wages increased 3.1% from a year earlier, a touch higher than December’s annual rise of 3% and the 18th consecutive month of gains 3% or better…economists surveyed by The Wall Street Journal had forecast job growth of 158,000, an unemployment rate of 3.5% and year-over-year wage growth of 3%…January’s payroll gain points to a continued healthy labor market in a U.S. economic expansion now in its 11th year…over the past 3 months, the U.S. economy added an average 211,000 jobs…strong jobs growth and solid but not runaway wage growth will be positive for stocks through the balance of 2020

5. The Dow has retreated 208 points after a 4-session winning streak…the major averages hit new record highs yesterday, boosted by China’s decision to halve tariffs on $75 billion worth of U.S. products…in Toronto, the TSX has lost 64 points…the Gold Index is up another point at 263…the Venture, meanwhile, is off 1 point at 577…technically, the Venture continues to look healthy and it’s just a matter of time before a key breakout occurs above the critical mid-580’sVenture volume averaged 140.6 million shares last month, up slightly from December but down about 7% from January last year…the total value of financings in January was up 24% from the previous month and up 59% from January 2019…yet another Venture company that thinks nothing of doing a cheap, dilutive financing that makes no sense and only a weak and lazy management team would allow – Fremont Gold (FRE, TSX-V) has increased its previously announced $1 million at financing at 6 cents, with a full warrant at 10 cents, to $1.47 million (24 million shares and 24 million warrants)…this destroys what was a fairly attractive share structure prior to the PP as only 54.3 million shares were outstanding…Canaccord Genuity’s Canadian capital markets revenue dropped 42% in the last 3 months of 2019 compared with the previous year, driven by a sharp decline in cannabis underwriting work…the Canadian Marijuana Index has fallen another 7 points to 183, its lowest level since October 2016

6. Another sign of the times in the struggling cannabis sector: Aurora Cannabis (ACB, TSX, NYSE) CEO Terry Booth is stepping down and the company is laying off hundreds of employees…the announcement came just days before Aurora is due to report quarterly earnings…the layoffs will eliminate 500 full-time-equivalent staff, including 25% of corporate positions…the company also announced that it expects to take a $740 million to $775 million writedown on goodwill, and an impairment charge of between $190 million and $225 million…the moves are another sign of the reversal in the fortunes of Canada’s cannabis industry…Booth has led Aurora since 2013, overseeing the Edmonton company’s stunning transition, through a series of acquisitions, into Canada’s 2nd largest cannabis company by sales and third largest by market capitalization…over the past year, however, Aurora has struggled to live up to the expectations it set in the lead-up to the legalization of recreational marijuana…sales growth has faltered, and the company continues to burn through cash at a rapid rate…in November, it announced that it was stopping construction on 2 new facilities, including a 1.6-million sq. ft growing operation in Medicine Hat…Booth will remain on the Aurora board…Aurora’s stock has lost 80% of its value over the last year, a stunning decline for the 2nd largest pot producer in the country, a company that was once worth more than $10 billion…the licensed producer has been struggling with consecutive revenue declines, a high monthly burn-rate, soaring debt and depleting cash resources, having never struck a deal with a large multinational conglomerate that could have at least salvaged much of its short-term cash issues…

7. Canada’s government should fund initiatives like a proposed $1.6 billion project that would provide power and fiber optics to the country’s remote north and spur new business, said a Gold mining executive yesterday…Canada’s Infrastructure Bank on Wednesday signed an MOU to assess the project, which needs federal investment to get built and would run to Nunavut from Manitoba…“This has to be looked at as nation building,” said Agnico Eagle (AEM, TSX, NYSE) CEO Sean Boyd in an interview…Agnico, Canada’s largest Gold producer, runs 3 Gold mines in the Kivalliq region and is Nunavut’s largest private employer…“A big part of that funding has to come from the federal government to not only build the power line to benefit the current communities, but to look at it as a way to finally open up an area which has tremendous potential,” he said…Nunavut is a vast Arctic region – the size of Mexico – with a population of 36,000 mostly Inuit that separated officially from the Northwest Territories 20 years ago…though rich with mineral deposits, it suffers from a dire lack of infrastructure and all electricity is produced by diesel generators…electricity production for the territory consumes 55 million litres (15 million gallons) of diesel each year, and Agnico Eagle’s Nunavut sites require 80 million litres (21 million gallons)…“As we’re considering major projects and as we make new discoveries in the north, which we believe will be there, we need a cost structure that allows you to build those into meaningful businesses,” Boyd said…

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