BullMarketRun.com

Gold, which has climbed for 5 straight sessions, has traded between $1,175 and $1,186 so far today…as of 9:30 am Pacific, bullion is off $2 an ounce at $1,181…Silver is also slightly lower at $16.05…Copper is off 2 pennies at $2.40…Crude Oil has edged 33 cents higher to $46.71 while the U.S. Dollar Index has added one-tenth of a point to 94.65…

China increased its Gold holdings by nearly 1% in September even as total foreign exchange reserves dipped, central bank data showed today…Gold reserves rose by nearly half a million ounces, or 14.9 tonnes, to 54.93 million ounces, or 1,708.5 tonnes at the end of September, the People’s Bank of China (PBOC) said…the central bank added 16.2 tonnes in August and nearly 19 tonnes in July…

Investor sentiment toward Gold has certainly improved…holdings in the world’s largest Gold-backed exchange-traded fund, SPDR Gold shares, rose another 5.1 tonnes yesterday to 700 tonnes, the highest level since mid-July…

Southeast Asia’s largest bank, DBS Group Holdings, is bullish on Gold entering next year even as it forecasts that the Fed will raise interest rates, albeit only gradually, beginning in Q1 with the cycle peaking at a lower level than earlier rounds.  “A gradual hiking path by the Fed, and the general view of eventually lower U.S. rates compared with previous cycles, are positive for the yellow metal,” said Manish Jaradi, senior investment strategist at DBS’s Chief Investment Office…the firm raised its view on Gold to neutral during the 2nd quarter of this year, and then turned overweight in mid-August…

In today’s Morning Musings…

1.  A Goldcorp-Gold comparative that provides some clues on where bullion is headed near-term…

2.  Breakouts above 200-day SMA’s  – what they may mean for Garibaldi Resources (GGI, TSX-V) and Kaminak Gold (KAM, TSX-V)…

3.  Integra Gold (ICG, TSX-V) keeps pushing higher, and adds some more dollars into its account…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold has traded between $1,176 and $1,193 so far, as bullion briefly moved into a resistance band starting at $1,190 and quickly reacted before bouncing back…as of 9:15 am Pacific, bullion is up $4 an ounce at $1,188…Silver is up 2 cents at $16.15…Copper has added a penny to $2.41…Crude Oil is off more than $1 a barrel to $45.33 while the U.S. Dollar Index has rallied one-quarter of a point to 94.20…the greenback’s overall technical condition continues to deteriorate, however…

Gold has confirmed a breakout above $1,160, new support, and now we’ll see if it can also remain at or above the 200-day moving average (SMA), currently $1,176…a strong band of resistance exists between $1,190 and $1,210, as John’s chart showed last night, followed by an even bigger hurdle around $1,225 – currently the top of a downsloping flag that has restrained Gold for the past 2-and-a-half years (Gold has consistently moved between support at the bottom of that flag and resistance at the top)…

The rally in the U.S. Dollar Index today (it’s off from its morning high) is nothing to get excited about – no different than any other bounce we’ve seen in recent months within a broader trend that is clearly negative…one of the big advantages for Gold, commodities and the Venture over the next several months, in general, will be a restrained U.S. Dollar Index thanks to a reversal in technical conditions from what existed at this time last year…

U.S. consumer prices recorded their biggest drop in 8 months in September as the cost of gasoline fell, but there was a slight pick-up in underlying inflation (the core CPI) according to the Labor Department today…the Consumer Price Index fell 0.2% last month after slipping 0.1% in August…however, in the 12 months through September, the core CPI increased 1.9%, the largest jump since July 2014, after rising 1.8% in August…the Fed tracks the personal consumption expenditures price index which is running well below the core CPI, and PCE inflation hasn’t hit the central bank’s 2% target in more than 3 years…

In a separate report today, the Labor Department found Americans’ inflation-adjusted weekly wages fell 0.2% in September…that’s not good news for the Fed, either…from a year earlier, real average weekly earnings are up 2.2%…

U.S. Debt Limit Draws Closer

Treasury Secretary Jack Lew said today that the U.S. debt limit will be exhausted November 3, a couple of days before previously estimated.  “At that point, we expect Treasury would be left with less than $30 billion to meet all of the nation’s commitments – an amount far short of net expenditures on certain days, which can be as high as $60 billion,” Lew said in a letter.  “Operating the United States government with no borrowing authority, and with only the cash on hand on a given day, would be profoundly irresponsible. As I wrote previously, we anticipate that a remaining cash balance of less than $30 billion would be depleted quickly,” he said.

The debt ceiling debate of course sets up another major potential showdown in Congress, just one more reason why the current economic/political environment for the Fed just isn’t conducive to initiating the first rate hike in nearly a decade…

Crude Oil Update

There are conflicting views on where Oil is headed…Goldman Sachs Group said in a note to clients last week that the recent Oil price rally isn’t supported by current supply-and-demand data. “We expect this rally to reverse and reiterate our forecast for lower prices for longer,” the bank’s analysts wrote…

Last week’s price rise, about 10%, was initiated by the large drop in U.S. Oil rigs in early October…U.S. Oil-directed rigs fell to a 5-year low of 614 a few weeks ago, according to Baker Hughes, and then to 605 on Friday…

Geopolitical developments also contributed to last week’s price jump, with market participants rebuilding an Oil-price risk premium attached to potential production outages in the Middle East…fighting in Syria (and Russia’s intervention there), plus attacks by ISIS on production facilities in northern Iraq – all of this has raised the risk of potential supply disruptions…

In emerging Asia, where economic concerns have risen, Oil demand has been resilient…in China and India, it rose by around 7% in August from a year earlier…however, some investors believe global demand is unlikely to offset increases in supply…the International Energy Agency (IEA) said earlier this week that it expects global demand growth of 1.2 million barrels a day next year, down from 1.8 million barrels a day this year…

WTIC 6-Month Daily Chart

This 6-month daily chart shows Crude trading between a gently rising 50-day moving average (SMA), currently $44.74, and a 200-day SMA that’s flattening out at $51…WTIC’s recent rally stopped right at the 200-day…a breakout above that important SMA, and its reversal to the upside SMA, would give WTIC fresh momentum…on the downside, a break below the September low of $43.21 would be bearish…

Today’s Equity Markets

Asia

China’s Shanghai Composite jumped more than 2% overnight to close at 3338…Japan’s Nikkei also had a good day, climbing back above 18000…

Europe

European markers finished solidly in the green today, generally more than 1% higher…

North America

The Dow is up 48 points as of 9:15 am Pacific…in Toronto, the TSX has lost 87 points while the Venture has pulled back 2 points to 555…

In today’s Morning Musings…

1.  If you think Canada’s going to go down a slippery slope Monday and elect a Pothead for a PM, we have a stock for you…

2.  What the TSX Gold Index needs to do to really bust out…

3.  An update on the bullish HGU…

4.  The one Canadian Gold producer every investor should own…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

The wind was at Gold’s back again today as fresh U.S. economic data – a sharp decline in producer prices as well as weaker than expected retail sales – allowed bullion to soar to a 3-and-a-half month high, bringing it within shouting distance of the psychologically important $1,200 level.

While Gold faces a strong near-term resistance band between about $1,190 and $1,210 (see John’s chart below), and will go through some consolidation to unwind any temporarily overbought conditions, the yellow metal clearly has a couple of important factors in its favor as 2016 rapidly approaches:

1) The Federal Reserve is losing credibility.  Rather than actually acting to raise rates when it likely had a window to do so last year, the Fed has “talked the talk” but has been unable to “walk the walk”.   Astute traders are now betting on no rate hike until at least the spring of next year given deflationary pressures and a slowing economy (U.S. Q3 growth may have been as little as 1% according to some estimates).  That pulls the floor out from underneath the U.S. dollar which went on a record run between the summer of last year and the spring of this year based on Janet Yellen’s persistent rhetoric regarding a near-term rate hike and inflation gradually making its way back to the Fed’s 2% target level.  Any rallies in the greenback are just that – rallies within a continuing downtrend that started last spring.

2) Geopolitics.  The great irony about Barack Obama is that this President actually won the Nobel Peace Prize (for what?) shortly after taking office in 2009, yet his consistent failures in foreign policy – from the Middle East to mishandling Vladimir Putin and an expansionist Russia – have helped make the world more dangerous than ever.  Putin and others are taking full advantage of Obama’s weakness on the international stage, and American’s declining influence, and this will only intensify during his final full year in office.  Few analysts are taking this into account, but we expect a risk premium to build into Gold during 2016 as “hotspots” flare up around the globe, Russia becomes even more aggressive, and terrorism unfortunately escalates.  The next President will inherit international chaos, worse than the problems Ronald Reagan had to fix after Jimmy Carter.

Gold 6-Month Daily Chart

Gold has confirmed a breakout above $1,160 which is now new support, as was demonstrated today.  Buy pressure has increased rapidly this month (bullion is up 5% already in October).  The rising 50-day moving average (SMA) is now $1,130, while the ADX indicator has changed remarkably since mid-July.  Gold’s biggest technical hurdle, as confirmed by John’s 2.5-year weekly chart, is to break out decisively above a downsloping flag which currently intersects around $1,225.

Taking all of the above into account, any surprises in Gold over the next several months are likely to be to the upside in our view.  All the more reason to be holding high-quality Gold producers and juniors.

Gold has hit a new 3.5-month high, trading between $1,164 and $1,180 so far today…as of 10:00 am Pacific, bullion is up $10 an ounce at $1,179…Silver has added 19 cents to $16.09…Copper is up 2 pennies at $2.41…Crude Oil is down 19 cents at $46.47 while the U.S. Dollar Index, continuing to suffer technical deterioration, has fallen another half a point to 94.21…

Gold is benefiting from weak U.S. economic data this morning and the growing realization the Fed may never raise interest rates under President Obama…the Commerce Department reported this morning that U.S. retail sales barely rose in September, edging up just 0.1% last month after being flat in August…economists polled by Reuters had forecast retail sales rising 0.2% in September after a previously reported 0.2% increase in August…excluding automobiles, gasoline, building materials and food services, retail sales slipped 0.1% after a downwardly revised 0.2% gain in August…these so-called core retail sales correspond most closely with the consumer spending component of GDP…

Meanwhile, U.S. producer prices in September posted their biggest decline in 8 months as the cost of energy products fell for a 3rd straight month, pointing to continued deflationary pressures…the Labor Department said this morning that its PPI fell 0.5%, the largest drop since January, after being unchanged in August…in the 12 months through September, the PPI fell 1.1% after declining 0.8% in August…it was the 8th straight 12-month decrease in the index…

Fed rate hike this year?…not a chance…U.S. growth continues to be restrained by poor fiscal policy out of Washington, the same failed Obama approach (the promised “change” which has delivered only bigger government) that Justin Trudeau wants to import into Canada along with a return to deficit spending (fiscal indiscipline) that merely equates to future tax hikes…of course, it was Trudeau’s father who as Prime Minister introduced 14 deficits in 15 years and drove the country over the fiscal cliff…hopefully Canadians will wake up in time before this pre-Halloween scare becomes a reality…as investors, our annual TFSA tax-free contributions are slated to be reduced in half under a Liberal government as Trudeau just doesn’t seem to like the idea of middle class Canadians building up a large tax-free savings account…rest assured, the day will come under the Liberals or a Liberal/NDP coalition when a “tax-free” account simply no longer exists…they will tax everything they can get their hands on…

Are Canada’s Days As An Energy “Super-Power” Over?

Interesting article by the Financial Post’s Claudia Cattaneo this morning who argued, among other things, that “Parochial, environmental and Aboriginal groups opposed to building the infrastructure essential for Oil and gas exports have drowned reasonable voices and are getting their way. The Canadian energy strategy produced by provincial premiers this summer is a measure of what politicians are willing to support: a mishmash of ideas to appease all interests, and not a single mention of the Oil sands.”

Chinese Inflation Slows

Chinese inflation slowed in September, adding to concerns about weakening growth in the world’s 2nd largest economy…the consumer price index rose 1.6% in September from a year earlier, compared with a 2.0% rise in August, data from China’s National Bureau of Statistics showed today…China of course is the biggest source of global demand for metals, and accounts for around 45% of global Copper consumption…fears about China’s economy were a major factor in the commodity price slump over the summer…support for Copper prices, however, should come from the supply side as senior companies curtail production…

In today’s Morning Musings…

1.  A Venture long-term chart that gives us great hope for the next 6 months…

2.  Discovery Ventures (DVN, TSX-V) gets aggressive under new CEO Dan Omeniuk…

3.  Another jump in Nevada Sunrise (NEV, TSX-V) – a more than 50% move in a week…

4.  Pure Energy Minerals (PE, TSX-V) in “perfect rhythm”, technically speaking…

5.  Equitorial Exploration (EXX, TSX-V) starts to stir…

6.  New Gold (NGD, TSX) as a great example of buying at the bottom of a downsloping channel…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Gold has traded between $1,151 and $1,168 so far today…as of 9:30 am Pacific, bullion is up $3 an ounce at $1,167…Silver has added 15 cents to $15.97…Copper is off 2 pennies at $2.39…Crude Oil is 62 cents higher at $47.72 while the U.S. Dollar Index has fallen one-fifth of a point to 94.71…

Not surprisingly, money managers increased their bullish bets in both Gold and Silver futures during the most recent reporting period (through last Tuesday), according to data compiled by the U.S. Commodity Futures Trading Commission…the rise in bullishness occurred as traders “all but eliminated the possibility” of a hike in U.S. interest rates during 2015, according to a research note from TD Securities…

Meanwhile, TDS has upgraded some of its Gold price predictions on expectations that the Fed will push back the start of monetary tightening…the firm has upped its average forecast to $1,135 an ounce for the current quarter, then $1,100, $1,125 and $1,175 for the next 3 quarters…

“A lower U.S. dollar and a drop in short-term rates suggest that the cost to carry Gold will not move higher, helping demand for Gold,” TDS stated.   “At the same time, those who were short could well be forced to cover their exposure in order to avoid losses.  In addition to these drivers, the market now only expects two hikes when the U.S. central bank does pull the trigger on rates. For these reasons, the Gold forecast has been upgraded for the next several quarters.”

Whenever the U.S. dollar and global economic data improve and a Fed hike becomes more certain, TDS believes Gold prices should slide lower toward $1,100 again.  “However, with only two hikes expected, we are projecting higher lows now than previously,” they added.

In today’s Morning Musings…

1.  The most reliable Gold chart you’ll find…

2.  The Fission–Dennison merger is off – a win for dissident Fission shareholders…

3.  More good drilling news from NexGen Energy (NXE, TSX-V)…

4.  Discovery Ventures (DVN, TSX-V) is looking strong, fundamentally and technically…

5.  Updated chart for Equitas Resources (EQT, TSX-V)…

6.  Why Copper bears could get a nasty surprise this quarter…

Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…

Go Blue Jays!

HAPPY THANKSGIVING!