Gold has traded between $1,320 and $1,331 so far today…as of 9:30 am Pacific, bullion is down $6 an ounce at $1,322…Silver is off 22 cents at $18.81…Copper is flat at $2.09…Crude Oil is 18 cents higher at $46.06 while the U.S. Dollar Index is off nearly one-tenth of a point to 95.19…
Fed speakers will dominate today’s market headlines as investors continue to evaluate the possibility of a rate hike at next week’s meeting, though the media’s obsession with this issue is becoming tiresome (no matter what happens September 21, the “Big Picture” doesn’t change)…coming up at about 10:15 am Pacific, Fed dove Lael Brainard is scheduled to give a speech at the Chicago Council on Global Affairs with the topic expected to be about the economic outlook/monetary policy implications…if Brainard, a close ally of Yellen, sounds hawkish, then the speculation regarding a potential rate hike will heat up even more…Brainard’s speech was not announced until Friday, a surprise that unnerved the markets on an already shaky day…
This morning, at an event in Atlanta, Regional Fed President Dennis Lockhart, a voting FOMC member, said he would encourage a “serious discussion” of a rate increase next week. “In its fundamentals, the economy seems to be chugging along, not stalling out,” he said. “I see full-year growth in 2016 coming in a little below 2%, just shy of the growth rate we’ve seen, on average, over the 7-plus years of recovery.”
After today, Fed officials can’t give speeches (communications blackout) until after the September 20–21 FOMC gathering – thank goodness!…
Don’t Fear A Rate Hike!
Since the Brexit referendum, the Gold price has averaged around $1,339 an ounce, just slightly above current levels…the game between the bulls and the bears ahead of the upcoming Fed meeting is still being played out…for those who fear a rate hike, remember what happened after the Fed increased rates for the first time in a decade last December – with the news out of the way, Gold quickly turned higher and the greenback headed lower, setting up a powerful new Gold and Venture bull market starting in early 2016…the Fed has very few, if any, rate hikes left in its arsenal before the next recession sets in when they may be forced to adopt negative interest rates…continue to accumulate Gold stocks!…
Odds ‘n Ends
Hedge funds and money managers hiked their net long position in COMEX Gold contracts to a 9-week high in the week ending September 6, and they also raised a bullish stance in Silver, according to the latest COT data…meanwhile, SPDR Gold Trust said its holdings fell 1.12% to 939.94 tonnes on Friday…
Klondex Jumps On True North Announcement
Good news this morning from two of our favorite Gold producers…Klondex Mines (KDX, TSX) has made a positive production decision at its underground True North Gold mine in Manitoba…initial annual production will be between 45,000 to 60,000 Au oz with all-in sustaining costs of $950 to $1,050 CDN…annual capital expenditures will be $15 million to $25 million…
Meanwhile, Richmont Mines (RIC, TSX) has made a positive revision to its 2016 operational guidance estimates driven by significantly better-than-expected performance from the Island Gold mine in northern Ontario…company-wide 2016 Gold production guidance has increased to between 98,000 and 106,000 ounces, from 87,000 to 97,000 ounces, supported by a substantial jump in output from the Island Gold mine…in addition, all-in-sustaining costs have dropped to between $1,230 and $1,335 CDN per ounce from $1,275 to $1,390 CDN…
Richmont’s Island Gold mine is exceeding production estimates for 2016.
Nevsun Introduces Dividend Reinvestment Plan
Nevsun Resources (NSU, TSX) announced this morning that it intends to introduce a dividend reinvestment plan (DRIP)…the DRIP will allow shareholders to reinvest their cash dividends into additional common shares, and at a discount to the market place…participation in the DRIP will be optional and will not affect shareholders’ cash dividends unless they elect to participate in the DRIP….Nevsun has a strong balance sheet, no debt and pays a peer leading quarterly dividend…
Oil Update
OPEC today estimated that Oil output in 2017 from its non-cartel rivals would grow more quickly than it originally estimated, pointing to a larger surplus than previously forecast…
U.S. Crude drillers have added more rigs for a 10th straight week which suggests that certain producers can operate profitably around current levels…
Energy was the best performing sector in the markets last week, increasing by 1.5% vs. an overall decrease of nearly 2% for the S&P 500, thanks to Saudi-Russian cooperation and a large drawdown in stockpiles of U.S. Crude…
Chesapeake Energy (CHK, NYSE), which has taken dramatic action recently to get its capital structure into better shape for the future, was the best-performing energy stock for the week, increasing 22%…
Harvest Natural Resources (HNR, NYSE), our special situation buy recommendation September 1 at 61 cents, has climbed another 10 cents this morning to 75 cents on volume of more than 700,000 shares…
How Was Your Weekend?
Probably a lot better than Hillary Clinton’s…two indelible Hillary images were seared into American voters’ minds between Friday night and Sunday morning – a “basket of deplorables” (Hillary’s characterization of at least 50 million Americans) and a wobbly Presidential candidate being whisked away by her handlers and stumbling into a van wearing just one shoe after a “medical” episode that cut short her visit to a 9/11 ceremony (her doctors now say she has pneumonia)…both images may change how November 8th turns out and that in turn may have a big impact on the markets…
Hillary’s “basket of deplorables” was a reference to “half of Donald Trump’s supporters” which essentially means at least 50 million Americans – “the racist, sexist, xenophobic, Islamophobic – you name it”, Clinton told members of the LGBT community at a campaign fundraiser (the insult, nor surprisingly, has kicked off a “deplorables” merchandise boom for Trump supporters)…
Clinton later gave a half-apology for her remarks that disparaged a wide swath of hard-working, warm-hearted and patriotic Americans, but the damage was done…it was also an example of Hillary using her own intolerance, her own bigotry, to garner support from a group of people who have had to endure intolerance for centuries (ironically, many individuals in the LGBT audience cheered and applauded Clinton’s “basket of deplorables” remarks but the mainstream media didn’t want to touch that hypocrisy)…
Meanwhile, Hillary’s “fainting” episode yesterday has rekindled debate about just how healthy she really is, and her unfortunate “stumble” was an appropriate symbol of a possible turning point in her campaign…
Markets will start paying serious attention to the election after the first debate September 26, but Hillary is losing momentum and there’s no known playbook to defeat Trump as 16 other Republican candidates discovered during the primaries – no matter how negative they got or how much money they spent…
In Today’s Morning Musings…
1. Another way to evaluate Gold producers…
2. Updated charts for Silver, the TSX Oil & Gas Index, and the Venture…
3. Daniel’s Den – cheap Oil is an illusion based on energy “in” vs. energy “out”…
Plus more…click here to read the rest of today’s Morning Musings and all BMR exclusive content, through a risk-free Pro, Gold or Basic package, or login with your username and password…
