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TSX Venture Exchange, Gold & Overall Markets

The Venture declined for a 3rd straight week, though the loss was limited to just 8 points while buy pressure (CMF) on the 2-year weekly chart actually increased slightly.  Support at the rising 100-day moving average (SMA) in the 760’s continues to hold, and that’s a key area to watch.

While the Venture has been in a consolidation phase since its mid-August high of 848, keep in mind that in each and every bull market year going back to 2003, the Index has climbed powerfully from its 3rd quarter close to year-end.  Will the anticipated gains in Q4 be spread out over October, November and December, or are we headed toward some sort of remarkable surge during the last half of December after a much anticipated final Fed meeting of the year?  Anything is possible, especially during an unpredictable and unconventional U.S. election season.

Today’s Week In Review and A Look Ahead includes the best performers on the BMR Top Opportunities List last week, led by upstart Garibaldi Resources (GGI, TSX-V) which came to life after releasing compelling new geological and geophysical data, with more likely on the way, from its Ni-Cu-Au E&L deposit in the Golden Triangle’s Heart of Gold Camp. 

Click here to read the rest of today’s Week In Review And A Look Ahead, and learn more about where the Venture is headed in the coming weeks, with a risk-free Pro, Gold or Basic subscription featuring a 100% money-back guarantee, or login with your username and password.

Gold has traded between $1,246 and $1,260 so far today…as of 8:45 am Pacific, bullion is down $4 an ounce at $1,254…Silver is off 7 cents to $17.39…Copper has slipped another penny to $2.12…Crude Oil has retreated 52 cents to $49.92 while the U.S. Dollar Index has jumped one-third of a point to 97.96…

Holdings of SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, rose another 0.28% to 961.57 tonnes yesterday…holdings have actually increased this month despite Gold’s 5% drop…

Demand for Gold in India, the world’s second-largest consumer, has picked up with the start of the festive season as expected…Gold discounts in India narrowed to the smallest level in nearly 9 months as a key Hindu festival, Dussehra, boosted retail demand at a time when prices have become much more attractive, slightly below 30,000 rupees per 10 grams…India celebrates the Diwali festival at the end of the month, so demand should remain strong through the balance of October…

Meanwhile, demand in top-consumer China reportedly rose after the week-long National Day holidays and premiums today were quoted around $4 an ounce against the international benchmark…

U.S. Economic Data + More Fedspeak

The University of Michigan’s Consumer Sentiment Index dropped to 87.9 this month, hitting its lowest level since September 2015…economists were expecting a reading of 92…this will likely lower GDP estimates for Q4…

In other numbers released this morning, U.S. retail sales rose 0.6% in September, matching expectations, but core sales grew by just 2.5% y/o/y, the slowest pace of gain since November 2015…meanwhile, the Labor Department said its PPI for final demand increased 0.3% last month after being unchanged in August…

Fed Chair Janet Yellen is scheduled to speak at a conference starting at 10:30 am Pacific…Boston Fed President Eric Rosengren, an FOMC member who has been hawkish recently, was interviewed by CNBC this morning and said it’s time for another interest rate hike as the economy is close to reaching both full employment and the Fed’s 2% inflation target…

China Watch

Stronger-than-expected Chinese inflation data released today eased some concerns about the health of the world’s 2nd-biggest economy…September producer prices in China rose for the first time in nearly 5 years, while consumer inflation also beat expectations, setting a positive tone for global equity markets to finish the week…

Canada’s Growing Deficit Problem

TD Bank is predicting the federal government’s deficit this fiscal year will be about $5 billion higher than the Liberal government predicted in its March budget…the bank says based on its calculations, the deficit is on track to hit $34 billion this year – a shocking turn of events after the Liberals a year ago actually inherited a small surplus and campaigned on running “modest” annual deficits of no more than $10 billion before balancing the budget again by the 4th year of their term…

TD says the higher-than-expected deficit would soak up the $6 billion annual cushion and then some that the government built in to its finances to protect against unforeseen events…over a 5-year span, the cumulative deficit is likely to be $16.5 billion higher than estimated in the last budget…

So Canada is back to structural deficits again in this new era of 1970’s-style Big Government…prepare for more tax hikes on top of the “hidden” one that came when the amount Canadians can contribute to their tax-free savings accounts on an annual basis was sharply reduced…

In Today’s Morning Musings…

1. Technical signals suggest the last half of October could be much better for the Venture…

2. Garibaldi Resources (GGI, TSX-V) finds large, distinctive massive sulphide signature south of historic E&L Ni-Cu-Au deposit…

3. Morumbi Resources (MOC, TSX-V) completes $19.5 million financing for acquisition of producing Zinc mine…

4. Why Pure Gold Mining (PGM, TSX-V) is up 500% this year and should continue its climb…

5. Daniel’s Den…update on one of our favorite Oil plays, TAG Oil (TAO, TSX), and why Globex Mines (GMX, TSX) might be in need of a shakeup…

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…

Gold has traded between $1,254 and $1,263 so far today…as of 10:00 am Pacific, bullion is relatively flat at $1,256…Silver is off 4 cents at $17.43…Copper has fallen 4 pennies to $2.13…Crude Oil is up slightly at $50.35 while the U.S. Dollar Index is off one-third of a point at 97.63 after trading above 98.10 overnight…the high dollar means the U.S. economy is once again importing deflation, the opposite of what the Fed wants to see, not to mention the negative affects the strong greenback has on the manufacturing sector as well as earnings of corporations with extensive international operations…

Minutes of the Fed’s September 20-21 policy meeting released yesterday offered nothing new as they showed several officials believed it would be appropriate to increase interest rates “relatively soon” if economic data were to support such a move…

World stock markets came under pressure today, thanks in part to a weak economic report out of China…the country’s September exports dropped 10% from a year earlier, far more than what markets had expected, while imports unexpectedly shrank 1.9% after an encouraging bump up in August…this also explains the weakness in Copper this morning…

First Oil & Gas IPO In More Than 2 Years

Investors flocked to the first initial public offering for a U.S. Oil and gas explorer in more than 2 years, another sign of a turnaround that’s building in the industry…Extraction Oil and Gas (XOG, NASDAQ), a Denver-based exploration and development company, sold 33.3 million shares late Tuesday for $19 apiece…the shares ended their first day of trading yesterday up 15%…

Bold “French” Prediction:  Gold Bull Market Is Fini! 

This will either emerge as one of the great “Gold calls” of all time, or one of the most foolish (likely the latter as Venture trading contradicts the forecast)…unprecedented investor demand that helped drive Gold prices almost 30% higher this year is expected to come to a halt as the market deals with higher global interest rates over the next 2 years, according to one French bank…Natixis’ precious metals analysts Bernard Dahdah (named the London Bullion Market Association’s top Gold forecaster in 2015) and Alomgir Miah said in a report yesterday that they see more headwinds for Gold and Silver in 2017 and 2018…the analysts said that they expect Gold to average $1,180 an ounce next year, with prices falling to an average of $1,100 in 2018…at the same time, they believe Silver prices will average $15.70 an ounce in 2017 and then $13.20 an ounce the following year…

The bearish forecast is based on the questionable assumption the Fed will hike interest rates 3 times next year (ironically, it was an interest rate hike last December – the first in nearly a decade – that brought Gold outs of its bear market)…

“For 2017 and 2018, we think that the biggest factor influencing the price of Gold is the expected path of U.S. interest rate hikes,” the analysts said. “Also, we do not expect further rate cuts by the European Central Bank or Bank of Japan as this is likely to damage their banking system, especially in the case of Europe.”

Natixis‘ economists are expecting to see the Federal Reserve raise interest rates by 25 basis points 3 times next year – June, September and December…

Although demand for Gold from physically backed ETPs has provided a substantial boost to prices, Dahdah and Miah expect the trend to reverse and for investors to become a source of supply of the metal.  “At current levels, the total amount held in physically backed ETPs is equivalent to roughly 60% of 2015’s mined output and 47% of that year’s total production. As we saw in 2013 when 850 tonnes of Gold exited physically backed ETPs, the effect on Gold prices can be very negative,” they concluded…

In Today’s Morning Musings…

1. Kinross Gold (K, TSX) to acquire 9.5% ownership of Nighthawk Gold (NHK, TSX-V)…

2. Southern Labrador Trough update…

3. Gold Standard Ventures‘ (GSV, TSX-V) North Dark Star deposit continues to grow…

4. What’s next for the TSX Gold Index?…

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…

Gold has traded between $1,249 and $1,259 so far today…as of 10:15 am Pacific, bullion is flat at $1,253…Silver has edged up 2 cents to $17.45…Copper is unchanged at $2.17…Crude Oil is 71 cents lower at $50.08 while the U.S. Dollar Index has jumped one-third of a point to 97.88…

Bond yields around the world rose today with the benchmark U.S. 10-year note yield near 1.79% after it briefly broke above 1.80% for the first time since early June…the 10-year German bund yield also rose to trade at 0.063% while Spain’s 10-year yield hit its highest level since July 25…higher Oil prices are raising the prospect of an inflation bump in the eyes of many traders…that reduces the value of already held bonds which leads to rising yields…in today’s Morning Musings, we’ll take a look at the relationship between Gold and the U.S. 10-year Treasury note…

Minutes from the latest FOMC meeting will be released at 11:00 am Pacific with traders looking for more insight into Fed thinking…

Government officials from major Oil producers, including Russia, are meeting in Istanbul this week to try to lay out more details of production cuts ahead of an official OPEC meeting in November…

Climate-change fanatics yesterday disrupted the flow of millions of barrels of Crude from Canada to the U.S. in a co-ordinated action that targeted several key pipelines simultaneously…activists in 4 states were arrested after they cut padlocks and chains and entered remote flow stations to turn off valves in an attempt to stop Crude moving through lines that carry as much as 15% of daily U.S. Oil consumption…the group posted videos online showing the early-morning raids…all in the name of “saving the planet”…

WTIC 6-Month Daily Chart

The overall Crude Oil pattern is very bullish…the only question is, how soon will there be a confirmed breakout above the neckline as shown in John’s 15-monthy weekly chart?…

It’s not wise to bet against an inverted head and shoulders pattern as well as newly-rising 50 and 200-day moving averages (SMA’s)…Crude Oil’s last major hurdle before gaining some serious momentum is the “neckline” and a band of resistance between approximately $50 and $52…

Oil bears have got it wrong…any modest pullback in Crude from current levels would likely be the final opportunity to get positioned before this market blasts through resistance…

Ivanhoe Mines (IVN, TSX) Jumps On Initial Resource Estimate For High-Grade Kakula

Robert Friedland’s Ivanhoe Mines (IVN, TSX) is up 17 cents to $2.35 as of 10:15 am Pacific after releasing an initial mineral resource estimate for the extremely high-grade Kakula discovery on the Kamoa Copper Project in the Democratic Republic of the Congo (DRC)…Kamoa-Kakula is a joint venture between Ivanhoe, Zijin Mining and the government of the Democratic Republic of Congo…Indicated resources for Kakula total 192 million tonnes at a grade of 3.45% Cu, containing 14.6 billion pounds of Copper at a 1% cut-off…Inferred Resources total 101 million tonnes at a grade of 2.74% Cu, containing 6.1 billion pounds of Copper at a 1% cut-off…

Kakula is the second major discovery on the Kamoa mining licence in the past 8 years…now, with the addition of Kakula’s resources, research by Wood Mackenzie – a prominent, international industry research and consulting group based in the U.K. – has independently demonstrated that the Kamoa-Kakula Project is the largest Copper discovery ever made in the history of mining on the African continent…in addition, research by Wood Mackenzie also shows that Kamoa-Kakula already ranks among the 10 largest Copper deposits in the world…

In Today’s Morning Musings…

1. The opportunity in Bengal Energy (BNG, TSX)…

2. Nighthawk Gold (NHK, TSX-V) drills 72.6 m grading 5.6 g/t Au at Colomac…

3. Updates on AMZ and LIO…

4. Daniel’s Den – Strategic Metals (SMD, TSX-V) very close to strong support…

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…

Gold has traded between $1,252 and $1,263 so far today…as of 10:00 am Pacific, bullion is down $3 an ounce at $1,256…Silver is off 12 cents at $17.49…Copper has slipped a penny to $2.18…Crude Oil has retreated 67 cents to $50.68 after hitting a new 1-year high while the U.S. Dollar Index has surged two-thirds of a point to 97.55 (resistance band between 97 and 98)…

The new dichotomy between the Gold futures market and Gold ETP’s is fascinating…SPDR Gold Shares (GLD, NYSE) saw its reserves grow by more than 11 tonnes on Friday to their highest levels since early July 2013…this occurred despite Gold futures dropping nearly 5% for the week in their biggest weekly percentage decline in more than 3 years…

Bullish speculative interest in Gold dropped to its lowest point in 4 months according to the latest COT readings based on trading in the week ending last Tuesday, though contrarians will interpret that bullishly…

Speaking to reporters in Sydney, Australia, Chicago Fed President Charles Evans said today that he “could be fine” with raising U.S. interest rates in December, but that he would prefer to see how the economy and inflation progressed before deciding…Fed watching will continue throughout the week…FOMC minutes will be released tomorrow while Janet Yellen has a speech slated for Friday that could shed more light on the Fed’s next potential move…traders have priced in a 70% chance that the Fed will hike rates at a December 13–14 meeting, up from 66% early Friday, according to CME Group’s FedWatch tool…

The Indicator That’s Being Ignored

It’s important to point out that the Conference Board’s U.S. leading economic indicator (LEI) is approaching zero, a level that historically has separated mid-cycle slowdowns from recessions (perhaps that was one reason Bank of America Merrill Lynch warned clients last week of a potential recession in the U.S. as early as next year)…in the last 3 decades, the LEI bounced off the zero level on 4 occasions…in all 4 cases, a policy response was required to reverse the downtrend…strangely, the Fed is signaling that another rate hike is coming despite the fact the LEI is as weak as it is now…when annual growth in the LEI drops decisively below zero, the U.S. economy heads into a full-blown recession…

Oil Update

Global Oil supply could fall in line with demand more quickly if OPEC and Russia agree to a steep enough cut in production, but it’s unclear how rapidly this might happen, the International Energy Agency said today…Oil prices received a boost yesterday after Russian President Vladimir Putin said his country is ready to join a proposed cap on Oil output by OPEC members…

The IEA said global demand growth has continued to slow after hitting a 5-year high of 2.5 million bpd in the 3rd quarter of last year, to a 4-year low of 800,000 bpd in Q3 this year, due to “vanishing OECD growth and a marked deceleration in China”…

Philippine Government Says It Will Revoke Mining Company’s Newly-Issued Environmental Permit

Here’s a major lawsuit in the making, and another indication of the hostility mining companies are now facing in the Philippines – the country’s radical new government says it will cancel the environmental permit of a Nickel miner that just began operations this year…the issue with the mine is that it sits between Mount Hamiguitan, a UNESCO World Heritage Site, and Pujada Bay, a marine protected area, said Environment and Natural Resources Secretary Regina Lopez who calls its approval “madness”…

“The ECC (environmental compliance certificate) was reviewed and as far as I know it will be cancelled,” Lopez told Reuters…the ECC “should have never been given,” she declared…so a mining company goes through the drawn-out process of obtaining an ECC in the Philippines, only to have a new government revoke the permit…

In Today’s Morning Musings…

1. Alix Resources (AIX, TSX-V) doubles on Lithium news out of Mexico…

2. Orex Exploration (OX, TSX-V) completes $1.5 million financing to make Goldboro Gold Project “shovel ready” by the end of next year…

3. CRB chart demonstrates underlying strength in commodities…

4. Silver tries to regain its footing after last week’s big drop – key levels to watch…

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…

It’s Thanksgiving in Canada, a very special day to “serve” and to share with friends and family.  In particular, no matter what challenging circumstances we may each face at the moment, it’s a day to reflect on all the blessings we do enjoy in our personal lives and to be grateful for each and every one of them.  Having an “attitude of gratitude” every day of the year, not just at special times such as this, is critical. Many of us may not feel as “rich” as we were even just a couple of months ago, given the turmoil in the markets, but we challenge everyone to think of richness not just in financial terms.

As Canadians, we can also of course be thankful for living in such a magnificent country with the freedoms and blessings that so many people around the world simply do not have.

God has called us to live generous lives and to be a blessing to others.  From all of us at BMR, Happy Thanksgiving!

To our American friends, who celebrate Thanksgiving next month, happy Columbus Day!  This day remembers Christopher Columbus’ arrival to the Americas on October 12, 1492.

Canadian stock markets are closed today.  U.S. stock markets are open (the bond market is closed) though trading volumes will be lighter with the Columbus Day holiday.  Our regular BMR Morning Musings resumes tomorrow but check back later today as we’ll have another separate piece for subscribers.