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October 24, 2019

7 @ 7:00

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1. Gold has traded between $1,487 and $1,502 so far today, getting a lift within the past hour from a weaker than expected U.S. durable goods report…as of 7:00 am Pacific, bullion is up $an ounce at $1,498…for the 2nd time this week, Silver is attempting to overcome a key band of resistance between $17.70 and $17.80…a close above $18 would confirm a fresh breakout…Silver is currently up 20 cents at $17.73…durable goods orders in the U.S. fell 1.1% in September, their largest drop in 4 months…however, shortly afterward, IHS Market said its flash U.S. manufacturing Purchasing Managers Index for October rose to a reading of 51.5, up from September’s 51.1 and better than the consensus estimate of 50.7…at the same time, the firm’s service sector PMI reading rose in line with expectations to 51.0, up from September’s reading of 50.90…Palladium has jumped $21 an ounce to $1,746…Nickel is 12 cents higher at $7.63…Copper is steady at $2.64 while Zinc has added a penny to $1.15…Cobalt is unchanged at $16.10…Crude Oil and the Dollar Index are both up slightly at $56.04 and 97.57, respectively…the ECB has left its policy mix unchanged at President Mario Draghi’s final meeting today, amid tensions among top ECB officials over how to respond to the region’s economic slowdown…

2. Copper woes: Freeport McMoRan (FCX, NYSE) has reported a 3rd-quarter loss as Copper production was hit by lower output at its Peru mine and its move to underground mining at its giant Grasberg mine in Indonesia…the world’s largest publicly listed Copper miner warned earlier that production at Grasberg is expected to slip as it switches from open-pit mining to underground operations…Freeport said Copper sales were also lower in South America, dented by lower grades and recovery rates at its Cerro Verde mine in Peru…anti-mining protests in Peru had held up about $400 million in Copper exports from some of the country’s top mines for nearly 3 weeks in August…Freeport was among miners that were unable to ship Copper concentrates…meanwhile, demand for Copper, especially from top consumer China, has declined in the past year due to weakening global growth…the average price Freeport received for its Copper fell 6.4% in the 3rd quarter to $2.62 per pound…Copper production fell 14%…

3. Capital Economics is taking a very contrarian view of the metals markets for 2020, calling for Gold to retreat next year and finish 2020 around $1,350 (really?) while there will be a rebound in Copper (more believable)…“For much of this year, the price of Gold has benefitted from the economic uncertainty, heightened geopolitical tensions and declining U.S. rate expectations,” stated Caroline Bain, Chief Commodities Economist at Capital Economics…going forward, she says, investors will lose interest in Gold as risk appetite recovers amid a less dovish Federal Reserve, rebounding global economic growth, and waning consumer demand for the yellow metal…“Markets are still anticipating too many rate cuts from the Fed.  Meanwhile, a stabilization in government bond yields outside of the U.S. should halt the increase in the level of negative-yielding debt, reducing the investment appeal of Gold.  We expect a recovery in global economic growth over the course of 2020, which should spur a pick-up in investor risk appetite…a “star performer” among the metals next year, Bain contends, will be Copper…“We forecast that the price of Copper will rally.  Net-demand proxy suggests that growth in physical Copper demand, though subdued, is still outpacing supply.  Mine supply growth looks set to contract in 2019 and will probably remain weak in 2020.  We also expect demand to pick up gradually next year”

4. Tesla (TSLA, NASDAQ) shares popped the most in 6 years this morning, climbing about 20%, as the company posted a surprise profit for the 3rd quarter, easing investor fears that the electric car maker’s pursuit of growth and record production figures would come at the expense of the bottom line…the company said after the bell yesterday that it would continue to be profitable, but cautioned that new products could affect its margins…“We were able to make great strides in controlling our costs,” CEO Elon Musk said in a call with analysts…“Our operating cost is now the lowest level since Model 3 production started”Tesla’s revenue of $6.3 billion was in line with expectations but margins improved significantly as adjusted earnings per share were $1.86 vs. anticipated losses of 42 cents per share…the electric car maker also gave investors plenty to look forward to next year…it released a glossy 28-page investor update filled with photos from its new factory in Shanghai where Tesla said it has already started trial production runs…the company also said it was ahead of schedule on its long-awaited Model Y crossover, which it now expects to launch by next summer…at the same time, Tesla says it is planning to make a limited run of its Tesla Semi truck next year, and hopes to soon announce the location of its European Gigafactory where it aims to begin making electric vehicles in 2021

5. Agnico Eagle Mines (AEM, TSX) is hiking its quarterly dividend by 40% after posting net income of $76.7 million (U.S.) or 32 cents per share, for the 3rd quarter of 2019 (adjusted net income was $87.5 million or 37 cents per share)…through the first 9 months of 2019, Agnico Eagle has reported net income of $141.5 million, or 60 cents per share, vs. $67 million in net income over the same period in 2018“With record performance at several of our operations and the ongoing ramp-up of our 2 new mines in Nunavut, we achieved record quarterly Gold production in the 3rd quarter of 2019, stated CEO Sean Boyd…As expected, this strong result, combined with the completion of the extensive construction spending program in Nunavut, resulted in the generation of substantial free cash flow in the quarter.  With the expectation of growing production and strong free cash flow generation, we are in a good position to continue to invest in our project pipeline, improve our financial flexibility and grow our dividend” 

6. The Dow is off 55 points as of 7:00 am Pacific…the TSX, getting a boost from higher Gold prices, is up 46 points…Imperial Metals (III, TSX) is off slightly at $1.85 after announcing that 3rd quarter production at the Red Chris mine was 19.5 million pounds Copper and 8,419 ounces Gold, an 11% jump in production from the previous quarter this year…Imperial completed the sale of a 70% interest in Red Chris to Newcrest Mining (NCM, ASX) in mid-August…not surprisingly, Newcrest is waiting no time in making things happen as they prepare for major changes in the mining system at Red Chris…4 drill rigs are currently active at Red Chris and 2 more will be added during this 4th quarter…drilling will test the upside of the East zone, Main zone and Gully zone, and a number of regional targets…at the East zone, a deep infill resource definition drilling program is in progress to provide additional geological, metallurgical and geotechnical data to support studies for future underground operations…a new step-out exploration drilling program is searching for additional zones of high-grade mineralization within the main mineralized trend…drilling is also being conducted in the Gully zone to follow up previous high-grade intercepts…the Venture has gained 1 point to 544…it’s a high-grade market – Tudor Gold (TUD, TSX-V) has slipped 8 cents to 56 cents after releasing long intervals of low-grade Gold mineralization at its Goldstorm Project in the Eskay Camp, including 336 m @ 1 g/t in GS-1952 (including 87 m @ 2 g/t)…this week’s high-grade winners, Skeena Resources (SKE, TSX-V) and Wallbridge Mining (WM, TSX), are slow out of the gate this morning but are trending higher, while Canada Cobalt (CCW, TSX-V) continues to look strong technically and fundamentally ahead of anticipated high-grade numbers from the Castle mine and property…Blue Moon Zinc (MOON, TSX-V) has received all regulatory approvals for its strategic joint venture and related equity financing for the Blue Moon Polymetallic Zinc-Gold-Copper-Silver Project with Australian-based Platina Resources, originally announced in late August…in conjunction with closing, the company issued Platina 6 million common shares for gross proceeds of $300,000 which was issued at a 100% premium to the MOON market price…Platina has been actively preparing drilling at Blue Moon which will target both exploration and development opportunities at the deposit in an historic mining community in northern California…Platina can earn up to a 70% interest in the Blue Moon Project by contributing up to $11 million in the joint venture and making property payments of up to $750,000MOON is trading at 2.5 cents for a market cap of $2.75 million

7. Score Media & Gaming (SCR, TSX-V, “theScore”) reported a $9.4 million loss in fiscal 2019 ending August 31, but 4th quarter revenue was a record $6.4 million while the growing company secured a $10 million (U.S.) private placement that included Penn National Gaming, North America’s largest regional gaming operator, and a $40 million (CDN) strategic investment from a fund managed by Fengate Asset Management to accelerate growth and development of theScore’s media and sports betting businesses…theScore Bet is live and taking bets in New Jersey, capping one of the most significant quarters and fiscal years in our history,” said John Levy, Founder and CEO of theScore“Not only did we successfully launch our new sports betting platform in the fast-growing New Jersey sports betting market, but we also secured market access rights for an additional 11 states via a highly-coveted partnership with Penn National Gaming.  Along with New Jersey, this provides us with potential market access to offer mobile sports betting to about 30% of the U.S. population.  We continue to explore strategic opportunities to bring theScore Bet to as many states as possible and are well capitalized to execute on our vision following the $40 million strategic investment by Fengate.  It was also a record Q4 for advertising revenue in our media business, powered by strong direct sales deals in the U.S. and Canada, while records were also broken for Q4 engagement on our sports app as well as consumption of our esports and social content. The continued growth of our media business, combined with our unique and differentiated entry into the sports betting space, puts us in a strong position as we enter fiscal 2020″SCR is unchanged at 63 cents in early trading…

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