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May 22, 2020

7 @ 7:00

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1. Spot Gold has traded between $1,726 and $1,744 so far today…as of 7:00 am Pacific the yellow metal is up $an ounce at $1,734 after yesterday’s healthy pullback…Spot Silver, which has climbed 15.2% this month, has added 10 cents to $17.22…Copper has slipped 5 cents to $2.37…Nickel is 6 cents lower at $5.55 while Zinc is flat at 89 cents…Crude Oil, which has enjoyed a strong week, has pulled back $1.18 a barrel to $32.74 while the U.S. Dollar Index has gained nearly half a point to 99.84…President Trump said yesterday “we are not closing our country” if the U.S. is hit by a 2nd wave of the pandemic later this year…“People say that’s a very distinct possibility, it’s standard,” Trump said when asked about a 2nd wave during a tour of a Ford factory in Michigan…“We are going to put out the fires. We’re not going to close the country. We can put out the fires. Whether it is an ember or a flame, we are going to put it out. But we are not closing our country”…those in Canada (and there are many, including economically illiterate Parliamentarians) who are rooting for the demise of this country’s Oil and gas sector need to have their heads examined at a time when Canada needs to muster every economic advantage it possibly can…according to the Canadian Energy Centre, an Alberta crown corporation, between 2000 and 2018 Canada’s Oil and gas production industry directly paid almost $240 billion to provincial governments and $66 billion to Ottawa…in addition, its employees paid another nearly $54 billion in federal and provincial taxes…according to Statistics Canada, from 2000 to 2018, the energy industries provided $65.9 billion in federal corporate taxes alone, more than banking ($60.9 billion), construction ($44.7 billion) and real estate ($44.6 billion)…

2. China’s Communist Party will impose a sweeping national security law in Hong Kong by fiat during the annual meeting of its top political body, officials said yesterday, criminalizing “foreign interference” along with secessionist activities and subversion of state power…the move is the boldest yet from Beijing to undercut Hong Kong’s autonomy and bring the global financial hub under its full control, as it works to rewrite the “one country, two systems” framework that has allowed the territory to enjoy a level of autonomy for the past 23 years…after steadily eroding Hong Kong’s political freedoms, Beijing signaled that the national security law will be a new tool that allows it to directly tackle the political dissent that erupted on Hong Kong’s streets last year…the months-long and sometimes violent protests began last June and fizzled out only over public health concerns related to the Wuhan COVID-19 outbreak…

3Holdings of Gold and Silver by global exchange-traded funds are continuing to rise…Bloomberg data show that ETFs have now posted Gold inflows for 20 business days in a row, with another 154,000 ounces going into vaults yesterday, meaning year-to-date gains of 20%, according to a note from BMO“Meanwhile, this is fast being caught by Silver, where holdings are now up 18% YTD after a 12.1Moz inflow yesterday. Silver tends to outperform when there is an expectation that the industrial cycle is past its worst, and of course when Gold is on an uptrend. Both are the case at present, plus we see signs of increased retail interest, which is crucial for Silver-price formation”

4. Clean Air (AIR, TSX-V) made its Venture debut this morning while also announcing that it has initiated a 10,000-m Phase 1 drill program on the Escape Lake Intrusion portion of its Thunder Bay North Project…Phase 1 drilling will consist of approximately 1520 holes of 500600 m each, nominally on 50-m centers designed to test the Escape Lake High Grade zone target discovered in 6 holes by the previous project operator…historical Escape Lake drilling data is being validated including relogging and resampling of selected core intercepts and QA/QC checks on original, certified analytical data…the target area is located at approximately 350450 m vertical depth and is open geologically…the objective of the program is to better define the full geological extent of the mineralized area as a precursor to future calculation of a mineral resource estimate…Abraham Drost, CEO of Clean Air Metals, stated: “After completing a $15 million financing in February, 2020 with a lead order by Mr. Eric Sprott…I am very gratified to be up and trading and commencing drill testing of the Escape Lake mineralized horizon. Mineralization at Thunder Bay North is preferentially enriched with the catalytic conversion pollution control metals Palladium and Platinum in a 1:1 ratio, with ancillary Copper and Nickel; metals powering the electric vehicle revolution”Clean Air is trading at 38 cents as of 7:00 am Pacific, nearly a double off the 20-cent financing price…

5. The Dow has fallen 135 points as of 7:00 am Pacific…in Toronto, the TSX is up 6 points in early trading while the Venture, on track for its 7th straight weekly gain, has added 3 points to 535…the Venture is locked in a powerful uptrend channel (next Fib. resistance in the 580’s followed by 740) and any minor pullbacks toward the supporting EMA-8 (currently 520, slightly above the now-rising 200-day EMA) should be embraced…Fiore Gold (F, TSX-V) is up in early trading after announcing net income of $2.9 million (U.S.) for Q2, thanks to Gold production of 12,085 ounces (38% increase over Q1 2020)…the company has also strengthened its balance sheet with net working capital of $28.7 million as of March 31Sona Nanotech (SONA, CSE) has engaged MRIGlobal, a leading applied scientific research organization, to provide analytical and clinical validation for Sona’s COVID-19 rapid detection, point-of-care antigen test which will be used for submission to Health Canada for regulatory approval and the FDA for emergency use authorization (EUA)…the project work is taking place at MRIGlobal’s Kansas City laboratories and will assess Sona’s test using live SARS-CoV-2 virus following its past, successful internal evaluation using gamma irradiated virus…Sona has received expressions of interest for tens of millions of its COVID-19 lateral flow test kits and has secured non-binding letters of intent for 4.7 million of its tests, subject to test performance parameters and pricing…the company has begun technology transfer activities with secured manufacturers and expects to begin taking deposits on LOI’s and expressions of interest following the completion and publishing of the validation results…on the financing front, Transition Metals (XTM, TSX-V) – with properties on trend with Clean Air’s Escape Lake/Thunder Bay properties – has announced a $1.2 million PP (hard dollar and flow-FT) while Eskay Mining (ESK, TSX-V) plans to get more aggressive in the Eskay Camp this summer with the company announcing a $2 million PP (hard dollar and FT)…

6. Stocks have become detached from reality due to recent interventions from central banks into the bond markets, according to analysts at Bank of America…in a research note this morning, the Bank of America Securities division highlighted the frequently asked question of why equity markets appear to be so divorced from economic reality with risk assets rallying at a time when 38 million Americans have filed for unemployment…BofA Chief Investment Strategist Michael Hartnett set out a number of key reasons for this unmooring of stocks, the first of which was the emergence of “fake markets…Government and corporate bond prices have been fixed by central banks…why would anyone expect stocks to price rationally?”, Hartnett said…central banks have deployed a total of around $4 trillion of asset purchases over the past 8 weeks, and the global equity market cap has surged by $15 trillion…in the same period, central banks have been buying $2.4 billion per hour of financial assets, which Bank of America strategists expect will fade to $608 million in the coming weeks…however, with 2,215 out of 3,042 global stocks remaining in bear markets, more than 20% down from their all-time highs, Hartnett said this market rally should be seen in the context of the $30 trillion collapse in February and March…the rally has been concentrated in growth-focused tech names, and the market cap of the FAAMG (Facebook, Amazon, Apple, Microsoft, Google) stocks now exceeds that of the entire euro zone equity market…historically, Hartnett pointed out, bear market rallies in 1929, 1938 and 1974 saw an average rebound of 61% from their respective lows, following an average 49% fall…this would take the S&P 500 to 3,180 points by the end of this rally…the index closed at 2,948.51 yesterday…

7. Let’s stay home and trade stocks!…what else is there to do in a nation full of lockdowns and stimulus checks?…CNBC’s Maggie Fitzgerald wrote that securities trading has been one of the most common uses of U.S. government payments issued to ease the economic strain of the pandemic…individuals earning between $35,000 and $75,000 annually increased stock trading by 90% more after receiving their stimulus checks, according to software and data aggregation company Envestnet Yodlee…Americans earning $100,000 to $150,000 annually boosted trading by 82%…the money was supposed to be for necessities, but perhaps for many Americans, taking it to the stock market was like running to the racetrack to try to win the rent money…at least, the market had their backs…the Dow and S&P 500 are up nearly 35% from their March lows…

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  1. Jon: Paragraph 6 of today’s 7 @ 7:00 (May 22) is of major interest to me and I am unable to find the BOA note you referenced. I am not a BOA customer. Is there a way you could shoot me a link or (even better) a copy? This morning’s SONA news made me smile. Thanks – Bill

    Comment by William — May 22, 2020 @ 9:00 am

  2. With sona having expressions of interest of 10s of millions of orders when those eventually turn into LOI and then deposits what can we assume of a valuation basis? Share structure is great. $25 per kit average? What would the valuation be x2, x3? I am seeing a much much higher stock price…we know there will be more than 10s of millions of orders when this goes live.

    Comment by George — May 22, 2020 @ 10:12 am

  3. I am guessing that G6 Materials has run into a slight delay. Have you guys heard anything in the background?
    Also, go Sona go……
    Thanks in advance, and have a great weekend.

    Comment by Frank — May 22, 2020 @ 6:55 pm

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