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Check back later this morning for today’s Morning Musings.

1. Gold, which has declined for 6 straight weeks, is up $3 an ounce at $1,137 as of 7:00 am Pacific…outflows from global Gold ETFs have continued unabated for 26 consecutive trading days…total holdings are now at the lowest level since early summer, according to Commerzbank. “Friday saw holdings cut for the 26th day of trading in a row – in this case by 7.4 tonnes,” the bank says in its daily commodities report. “This puts total holdings in the Gold ETFs tracked by Bloomberg below 1,800 tonnes again for the first time since the beginning of June. Silver ETFs and Palladium ETFs likewise saw outflows.”

2. Millionaires are pouring into financial and industrial stocks and pulling back on tech and health care, which were their favorite sectors in the spring of this year, according to the latest CNBC Millionaire Survey, conducted shortly after the U.S. elections in November…37% percent of millionaires told CNBC that the election results will cause them to make major changes to investment choices, while 40% of millionaires said any tax cut will lead to increased investment in stocks…

3. Oil prices are steady around $52 a barrel this morning…Libya’s National Oil Co. has for now stopped the relaunch of production at Oil fields in the country’s west, Libyan officials said over the weekend, after a militia threatened to block the petroleum from reaching the market…the aborted restart is a blow for Libya’s Oil industry which has been counting on the country’s big western fields to kick-start its comeback…a pipeline that can transport over 400,000 barrels a day from two western fields had partly reopened last Wednesday but efforts to send that Oil to coastal ports are now off, Oil officials said…

4. The Venture will be trying to find a bottom in the coming days ahead of its typical pre-Christmas reversal…as of 7:00 am Pacific, the Index is down 6 points at 729…Radiant Technologies (RTI, TSX-V), which announced a deal with Aurora Cannabis (ACB, TSX-V) last week, has added 8 cents to 42 cents through the first 30 minutes of trading…also noteworthy in early trading is Gatekeeper Systems (GSI, TSX-V) which has hit a new multi-year high of 33 cents, while Purepoint Uranium (PTU, TSX-V) has added half a penny to 13.5 cents…on the TSX, cash and asset-rich Africa Oil (AOI, TSX) has broken out this morning with a 30-cent gain to $2.42 on news that the company has commenced drilling at Block 13T in Kenya (first well of a 4-well program)…

5. Canadian Overseas Petroleum (XOP, TSX-V) is the Venture’s volume leader and “big mover” this morning with nearly 80% of the company’s value wiped out on a 10-cent drop to just 3 cents as of 7:00 am Pacific…the company reported disappointing results from its Mesurado-1 well (ExxonMobil was the operator) in West Africa, and the well is being abandoned…it was the first well operated by ExxonMobil in offshore Liberia…

6.  Kootenay Silver (KTN, TSX-V) announced this morning that it has completed 7 holes along the Soledad Structure at its La Cigarra Silver Project in Mexico with drilling recommencing in January following a Christmas break…a total of 18 holes have been completed in the current program which started at the Ram structure and produced a new discovery…meanwhile, ongoing ground exploration has identified a new large Gold target that is associated with a contact skarn zone trending east-west for up to 1000 m…it may be the extension of the Navidad target that includes an untested Silver-Lead anomaly approximately 500 m east of the La Cigarra deposit…KTN is off 1.5 cents at 32 cents as of 7:00 am Pacific…

7. Drilling has started at Northern Vertex Mining’s (VNN, TSX-V) 100%-owned Moss mine Gold-Silver Project in Mohave county, Arizona…the planned 3,000-m drill campaign, which is running concurrent with the company’s ongoing Moss mine construction and development program, is the first phase of a multi-phase drill and resource expansion program designed to further expand existing resources…NEE is up a penny at 43 cents as of 7:00 am Pacific and has held relatively steady the last several months…

TSX Venture Exchange and Gold

A more hawkish than expected Federal Reserve, predicting 3 more rate hikes in 2017, put additional pressure on Gold Wednesday-Thursday with a drop below $1,150 that temporarily reversed the recent uptrend in the Venture.  For the week, the Index fell 14 points to 735 but remained above its November low of 717.  With tax-loss selling season ending shortly, the Venture is on the cusp of an historical period of seasonal strength that kicks in during the 2nd half of December and typically continues through the end of February.

Though there are some uncertainties around Gold’s immediate fortunes, there are multiple sectors where speculative investors can make money in the days and weeks ahead.

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Gold has traded between $1,127 and $1,142 so far today, getting a lift over the past couple of hours from a report that a Chinese Navy ship has stolen an American underwater research drone in a South China Sea area contested by the Chinese and the Philippines (no Trump tweet yet, but we look forward to seeing one)…as of 10:30 am Pacific, bullion is up $7 an ounce at $1,135…Silver has recovered 20 cents to $16.15…Copper is off 4 cents to $2.56…Nickel has retreated 6 cents to $5.05…Crude Oil is 87 cents higher at $51.77 while the U.S. Dollar Index is off one-third of a point at 102.80…

Technically, Gold needs to hold $1,130 – $1,150 support and begin to show some strength rather quickly, as it is late today, or risk another breakdown that would take it to at least the $1,090’s…some positive action to end the week is encouraging, especially after the comments of respected HSBC analyst James Steel:

“The nature of recent Gold selling implies fresh shorting as well as liquidation,” said Steel.  “The selling may not yet be exhausted.  The bearish factors for Gold, namely a high U.S. dollar, rising yields and equities and risk-on investor demand appetite leave bullion clearly on the defensive.”

The heightened interest in stocks has been one of several reasons for Gold’s weakness…global equity funds received $21 billion (U.S.) in the past week – their 9th-biggest inflow ever – as investors embraced the “Trump trade”, while money flowed out of bonds for the 7th week in a row, Bank of America Merrill Lynch said today…the BAML figures, which track flows through Wednesday, showed overall equity inflows of $63 billion (U.S.) since Trump’s November 8 election victory, partially reversing the $151 billion outflows seen from January to October…the bulk of the latest gains came from an $18.5 billion rush into U.S. stocks, but European and emerging equity funds also saw inflows of $700 million and $1 billion, respectively, the data showed…

BAML added there are still “winter risk” worries about a potential sharp fall in China’s currency and another spell of outflows from the world’s second-largest economy…the yuan hit 8-and-a-half year lows to the dollar this week while local bond yields spiked, causing China’s central bank to aggressively intervene…

Quebec Premier’s Central Canada Focus

Western Canadians in particular should take note of the comments made by Quebec Premier Philippe Couillard yesterday at the official signing ceremony for a $1 billion hydroelectricity deal between that province and Ontario (of course how the climate change fanatics in those respective governments have handled energy issues is a horror story in itself)…

Anyway, Couillard, who has been a fierce opponent of the proposed Energy East pipeline designed to carry Crude from Western Canada, stated the following about yesterday’s deal with his Ontario counterpart:  “This is a historic deal, the first of its kind and the continuation of the resurgence of the influence of Central Canada” (our emphasis)…

Couillard, who endorsed Justin Trudeau’s recent high praise for Castro, is an entrenched member of the eastern/central Canadian establishment who also has interesting ties to Saudi Arabia (he once lived and worked there)…he resented the rise in power of Western Canada, fueled in part by the Oil boom, during the Harper era…it’ll be interesting to see how he handles Donald Trump, Western Canada’s “check” on eastern Canada’s politicians, who is going to put Oil at the centerpiece of his economic strategy…

Canadians should ask, why would Couillard prefer to see this country import Oil from hideous regimes in the Middle East rather than consume all the ethical Oil it can from Alberta and Saskatchewan?…he loves getting “equalization” payments, though…in fiscal 2016-17, Couillard’s Quebec will once again be – by far – the biggest recipient of welfare payments from the rest of Canada – the province will get about $10 billion from the nearly $18 billion program…Quebec gets rewarded for corruptness and bad policies with taxpayers’ money from successful provinces, especially out west…makes sense, eh?…

A Disgrace:  Stalled & Cancelled Resource Projects In Canada  

On Tuesday we noted that a 4-month investigation by the Financial Post revealed that no less than 35 Canadian resource projects worth $129 billion in direct investment – mostly private money – are struggling to move forward or have been sidelined altogether because of opposition from environmental, aboriginal and/or community groups (and, we would add, because of a lack of political leadership)…we’re letting “activists” destroy jobs and wealth right across the country…the downside is adding up: slower growth, lower Canadian Oil prices, investment chill, less control over domestic resources, over-reliance on the U.S. market, regulatory gridlock…

Click here for a searchable database of stalled and cancelled resource projects in Canada…

Oil Update

In Today’s Morning Musings…

1. Evaluating the next move in Gold after a Fedslide…

2. A Venture “head fake” Wednesday and Thursday?…

3. Time to revisit this high-grade Gold play after an earlier and correct sell recommendation…

4. Daniel’s Den…a beaten-down Oil stock on the rebound…

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…

Check back later this morning for today’s Morning Musings.

1. Gold is up $3 an ounce at $1,131 as of 7:00 am Pacific, though the metal is still headed for its 6th straight weekly drop following Wednesday’s Fed meeting and a forecast of 3 rate hikes in 2017 (1 less than the incorrect 2016 forecast, of course, of 4 rate hikes)…after briefly rising above $1,375 an ounce in early July, Gold has given back nearly all of its gains on the year…at $1,131, bullion is just $70 away from wiping out all its gains on the year…if the metal were to finish 2016 in the red, it would mark the 4th straight year in which it has has logged a loss…the last time it experienced such a streak was 1988 to 1992, a slump that was followed by a powerful wave higher…

2. Producers in the Middle East are beginning to inform customers of upcoming supply cuts as part of a coordinated effort to drain a global Crude Oil glut…prices are up marginally this morning above $51 a barrel, restrained slightly by potential near-term production increases in Libya (not part of the OPEC deal) where operations have restarted at 2 key Oil fields…Libyan Oil production has returned to levels not seen since July 2015 after having dropped steeply since 2011…

3. More problems in China – this needs to be watched closely…the central bank extended hundreds of billions of yuan in emergency loans to financial firms today and ordered some of the country’s biggest lenders to extend credit as well, as it moved to ease a liquidity crunch and continuing debt sell-off…Chinese policymakers have been scrambling to curb capital outflows and spending foreign exchange reserves to support the yuan, now at an 8+ year low, after the Fed raised rates and the dollar hit 14-year highs this week…China’s foreign exchange reserves fell more than expected to a 6-year low of $3.05 trillion in November…the central bank continues to sell U.S. Treasury bonds in order to prop up its currency…that has led to Japan becoming the new #1 holder of U.S. debt…

4. The Venture this week has traded between its still-declining 50-day moving average (SMA), currently in the mid-750’s, and its rising 200-day SMA at 730…support below 730 is at the November 14 intra-day low of 717 followed by 708, the top of a major support band that stretches into the 660’s…the Index is flat at 731 as of 7:00 am Pacific while the Dow and TSX are both moderately higher…

5. Clean Commodities (CLE, TSX-V) and Skyharbour Resources (SYH, TSX-V) have signed a binding term sheet with an unnamed Uranium company that would provide the new partner with an option to acquire up to a 70% working interest in 52 sq. km of the 121 sq. km Preston Project adjacent to NexGen Energy’s (NXE, TSX) world class Arrow deposit…the partner would be required to spend up to $8 million consisting of cash payments ($700,000) to the companies and accelerating work programs ($7.3 million) over 6 years…

6.  Argonaut Gold (AR, TSX) under pressure in early trading after announcing that the Mexican Environmental Authority has denied the Environmental Impact Assessment for the company’s San Antonio Project in Baja California Sur, Mexico…Argonaut is evaluating alternatives including legal options, the possible resubmittal of a revised MIA and continuing dialogue…the stock is off 18 cents at $1.83 as of 7:00 am Pacific…

7. Macarthur Minerals (MMS, TSX-V) announced this morning that the company has received renewed corporate interest in its two advanced Iron ore projects in Western Australia with recovery of the Iron ore price from its historic lows of $38 (U.S.) to $82 (U.S.) a tonne…MMS is unchanged at 6.5 cents as of 7:00 am Pacific…

Gold has traded between $1,123 and $1,144 so far today…as of 9:45 am Pacific, bullion is down $15 an ounce at $1,128…Silver has plunged 86 cents to $15.95…Copper is flat at $2.59…Nickel is off 8 cents to $5.08 while Zinc is unchanged at $1.27…Crude Oil is even at $51.00 a barrel while the U.S. Dollar Index has jumped a full point to 103.22…

BNP Parnibas on the greenback’s continuing surge:  “USD bullish momentum is building again but we would emphasize that markets are in many ways now pricing almost a best-case scenario for the USD in terms of fiscal and monetary policy.  And while the case for USD gains over the course of 2017 is sound, risks of a reversal in Q1 remain elevated – a break in the risk environment, external geopolitical events, or concerns about the new administration’s trade and FX policy are all possible catalysts.”

The brutal sell-off in Gold ETFs continues, aided by greenback strength…combined with weak physical markets in China and India, bullion is struggling to find support…Indian demand has suffered from a cash crunch in recent weeks due to Prime Minister Modi’s demonetization scheme, while China has limited imports into the world’s biggest Gold market as it grapples with a myriad of issues…updated Gold chart below…

Solar Panels, Plastics & Chemicals Are Demand Drivers For Silver

The use of Silver for photovoltaic cells and ethylene oxide will rise by roughly one-third from 2015 to 2020, according to a report issued today by the Silver Institute…photovoltaic cells are used to make solar panels, while ethylene oxide is used as a part of the production of plastics and chemicals…these two uses of the metal will collectively consume an average of 120 million ounces of Silver per year from 2016 to 2020, an increase of 32% compared to 2015, the Silver Institute said…

Chinese Bond Sell-Off

The big bond sell-off in China overnight forced the Chinese central bank to intervene in the short-term money market…the bond collapse adds to broader concerns about the Chinese economy, which likely grew at its slowest pace in more than 25 years in 2016, weighed down by a growing debt load and money-losing state-owned industries…

Higher interest rates in the U.S. will make it harder for China to manage its exploding debt (not that the Americans don’t have a debt problem of their own – the markets just aren’t paying attention to that now)…the Asian giant has increasingly relied on borrowing in order to keep growing while simultaneously trying to block capital from fleeing for more fruitful shores in America…the country has lost around $1.2 trillion of its foreign reserves, or around a quarter of its total, in the last 2 years as billionaires and average citizens transfer savings to the safety of overseas markets…

China’s $9 trillion bond market remains overwhelmingly driven by domestic investors despite some opening up to foreigners this year…

Updated Gold Chart

This Gold chart is very straightforward and shows how bullion’s slide has further to go if the metal can’t quickly reclaim support…

On this 1-year daily chart, you can see how Gold has fallen below downtrend support at $1,140…next stop, if buyers don’t step in very soon, is $1,094…

We’re seeing new price lows but not new RSI(14) lows which is positive – that sort of divergence often occurs when markets are in the process of putting in important bottoms…

The best thing for Gold would probably be something like a Brexit in reverse, a $100 washout to the downside over a day or two which would splatter enough blood and bring intense fear into the market for a final bottom…

There’s no major panic or “blood in the streets” yet with regard to Gold – that may have to happen, so be prepared…

In Today’s Morning Musings…

1. Extremes in the Dow – technical update…

2. What Canopy Growth (CGC, TSX) is telling us about the marijuana sector…

3. Sir, can I have some more Zeolite, please?…

4. Very bullish reading on a North American Oil producer…

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…

Check back later this morning for today’s Morning Musings.

1. Gold is struggling again today in the wake of yesterday’s Fed rate hike…the actual hike was priced in but what Gold is really reacting to is the anticipation of 3 rate hikes next year instead of 2, as per the Fed’s “dot- plot”…however, the “dot-plot” has been known to be wildly off base…bullion is off $13 an ounce at $1,129 as of 7:00 am Pacific…if it can’t rebound quickly and hold the $1,130 – $1,150 area, next support is in the $1,090’s as we’ll show in a fresh chart in today’s Morning Musings…yesterday’s nearly 22 tonnes of outflows from Gold ETFs were the most pronounced on a single day since July 2013…the U.S. Dollar Index has surged to a 14-year high with key resistance at 104…a breakout above 104 could create a runaway dollar scenario and a quick, sharp spike down in Gold before a reversal kicks in…

2. Chinese authorities halted trading in key bond futures for the first time today as panicky investors sold the securities on concern that a long, credit-fueled bull market was coming to an end amid slowing growth, capital outflows and heightened government concern about asset bubbles…China’s 10-year and 5-year Treasury bond futures recorded their biggest ever drops in early trading, falling by 2% and 1.2%, respectively, prompting exchange authorities to suspend the securities…trading resumed only after China’s central bank injected around $22 billion (U.S.) into the short-term money market…the 10-year government bond yield, which rises when prices fall, hit a 16-month high of 3.4%, extending a sell-off in Chinese bond markets that began in late November and has accelerated this week…

3. The Dow is up 100 points at 19,892 as of 7:00 am Pacific…one of the biggest gaps ever has opened up between the Dow’s current price and its 50-day and 200-day moving averages (SMA’s)…the TSX has advanced more than 50 points in early trading but the Venture has slid another 8 points to 734, just above its rising 200-day SMA…

4. Clean Commodities (CLE, TSX-V) and Skyharbour Resources (SYH, TSX-V) remain halted, pending news…the companies are 50-50 partners in the Preston Uranium Project which is the largest and longest contiguous property portfolio adjacent to NexGen Energy’s (NXE, TSX) Rook 1 Project and trends nearly the full east-west property border covering multiple conductor corridors identified within the region…approximately $5 million has been spent on Preston with the most recent work featuring an airborne electromagnetic and magnetic survey that commenced at the end of October… 

5. Pretium Resources (PVG, TSX) has announced an increase in Proven and Probable reserves in the Valley of the Kings to 8.1 million ounces of Gold (15.6 million tonnes grading 16.1 g/t Au)…meanwhile, construction remains on schedule for the start-up of mining operations during the 2nd half of 2017…the 57-km transmission line is expected to be fully energized by early next year, ahead of when it is required for mine commissioning…approximately 30,000 tonnes of ore has been stockpiled in preparation for mill commissioning by mid-2017…PVG is hurting due to falling Gold prices and is off 81 cents at $9.68 as of 7:00 am Pacific…

6. Crude Oil prices are under mild pressure this morning on U.S. dollar strength but are expected to hold new support at $50 for technical and fundamental reasons…we’ll have a chart on Baytex Energy (BTE, TSX) in today’s Morning Musings…

7. Canadian Zeolite (CNZ, TSX-V) has stabilized after a dramatic run last week followed by a 2-day plunge from $1.95 to $1.10…CNZ, aiming to become the largest producer and processor of Zeolite and Zeolitic products for national and international markets, is up a penny at $1.21 as of 7:00 am Pacific…updated chart in today’s Morning Musings…