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1. Gold has traded between $1,278 and $1,285 so far today, reaching a new 6-month high as the metal enjoys its best December in a decade…ironically, despite the strong finish to 2018 and a bright outlook for 2019 given a weakening U.S. dollar, bullion is set to record its 1st annual decline since 2015…the drop in 2015, however, was followed by a stellar 2016…as of 7:00 am Pacific, Gold is off $1 an ounce at $1,280…Silver is up 3 cents at $15.38…Copper and Nickel are off slightly at $2.71 and $4.82, respectively, while Zinc is up a penny at $1.15…Cobalt is unchanged at $25.17…Palladium has been the best-performing major precious metal for the 3rd year in a row…it’s up $6 an ounce at $1,246, taking its gain for the year to just over 18%…the key driver in this strength has been the growing demand from the auto sector with stricter pollution standards in China increasing the amount of Palladium used in auto catalysts…earlier this month, Palladium briefly surprised Gold for the 1st time since 2002…Crude Oil is 30 cents higher at $45.63 while the U.S. Dollar Index has fallen more than one-tenth of a point to 96.26…no major U.S. economic reports are on the calendar for today but will be later in the week after traders come back from the New Year’s holiday…the Institute for Supply Management’s manufacturing survey is scheduled for release Thursday and the Labor Department’s U.S jobs report will be released Friday…
2. Copper, Nickel, Zinc and Aluminum are down between 17% and 26% this year as concerns that weaker Chinese and global growth will require less metal overpowered the effects of supply shortfalls and dwindling stockpiles, which generally support prices…progress on the U.S.-China trade front would give metals a major boost in 2019…a lower U.S. dollar would also help…supplies are tight, with global Copper, Zinc, Nickel and Aluminum markets in deficit and only Zinc expected to see significant supply growth next year…inventories of Zinc, Copper and Aluminum in LME-registered warehouses reached decade lows this year, though they have recently picked up…time spreads have also tightened, with the cost of metal with nearby delivery dates creeping up relative to contracts for later delivery, suggesting traders are finding it tougher to secure the metal they need…
3. Activity in China’s manufacturing sector contracted for the 1st time in more than 2 years in the month of December amid a domestic economic slowdown and Beijing’s ongoing trade dispute with the United States…the Chinese National Bureau of Statistics said today that the official manufacturing Purchasing Managers’ Index (PMI) was 49.4 – lower than the 49.9 analysts expected in a Reuters‘ poll…the December reading was the weakest since February 2016…a reading above 50 indicates expansion, while a reading below that signals contraction…in particular, new export orders contracted for a 7th straight month…meanwhile, China’s official non-manufacturing PMI fared better at 53.8, slightly higher than the reading of 53.4 in November…the services sector accounts for more than half of the Chinese economy and the “bright spot” of the improved on-month expansion in December points to a rebalancing of the Chinese economy toward more consumption…
4. Western anger against the federal government’s attack on the Oil sector continues to build: Numerous rallies and truck convoys have been held across Alberta and Saskatchewan in recent weeks to protest against federal actions that are hurting the Oil industry and the Canadian economy, but that’s just the beginning of a broader campaign that will be unleashed in 2019 ahead of national elections…the groups Rally 4 Resources and Canada Action say a major convoy to Ottawa is planned to reach Parliament Hill on February 20, delivering a stern message to Justin Trudeau and the governing Liberals…meanwhile, by the spring, Alberta Conservative leader Jason Kenney, Trudeau’s worst nightmare next to Trump, is expected to easily defeat the NDP’s Rachel Notely to become the new Premier of Alberta…if elected, Kenney says, “I will call in the CEO’s of major Oil companies and tell them they’ve got to get in this game. I’ve got a new definition of ‘social licence’. If they want to develop our resources, they’d darn well better start fighting for the industry. I want to see more energy companies take the fight to these (anti-Oil) groups”…on his counter-attack theme, Kenney says the province has to look past the Trans Mountain approval to long-term environmental campaigns waged by radical groups in the United States…“There is a bigger, deeper strategic fight that we need to get into. We need to turn the tables. We need them to pick on someone else. The reason they decided to bully Canada is because they thought we were the weakest kid on the playground. They’ve never touched Venezuela, Saudi Arabia, the rest of them. No apology if this sounds bellicose, but it’s time we in Alberta actually fought back on a much higher level strategically against these organization like the Tides Foundation. This stuff is not happening by accident. That’s why I propose a fight-back strategy that involves a war room in the department of energy, well-funded, to respond in real time. We’ll set up offices in key media markets. What I’m proposing may not have immediate short-term results but, in the long run, if we don’t fight back these guys are going to win, and the industry will walk away, leaving massive wealth under the ground”…
5. The Dow is up 206 points as of 7:00 am Pacific on the final trading day of the year, thanks to growing optimism surrounding trade talks between the U.S. and China…over the weekend, President Trump tweeted that he had a “very good call” with Chinese President Xi Jinping to discuss trade and that “big progress” was being made…in Toronto, the TSX is up 51 points after the first 30 minutes of trading…Largo Resources (LGO, TSX), Nevsun Resources (NSU, TSX), Wesdome Gold Mines (WDO, TSX), Kirkland Lake Gold (KL, TSX), SSR Mining (SSRM, TSX) and North American Palladium (PDL, TSX) have been the top 6 performers among mid-cap miners with a minimum market cap of $500 million on the TSX over the past year, according to Kitco…the Venture, emerging out of a nasty downtrend, has added 4 points to 556…technical indicators point to a continued rebound in January…the Venture is now above its 10-day moving average for the first time since early November…the Gowganda area of northeast Ontario is a hot spot to watch as the calendar flips into January as intense exploration activity is expected to define new discoveries for Canada Cobalt (CCW, TSX-V) and iMetal Resources (IMR, TSX-V)…
6. After 2 years of official delays and months of logistical confusion, the Democratic Republic of the Congo finally held its long-awaited election yesterday (official results are expected within a week) but there are growing doubts that the vote will fulfill the government’s pledge of a peaceful transfer of power…an independent poll, released just days before the election, found that opposition candidate Martin Fayulu was far ahead of the ruling party’s candidate, Emmanuel Ramazani Shadary…the poll found that Fayulu was favoured by 47% of respondents, with Shadary at just 19%…but the logistical chaos could make it easier for Joseph Kabila’s crooked government to rig the vote, ensuring the ruling party’s continued grip on power…this, in turn, could provoke an eruption of violence among frustrated opposition supporters across the country…nearly half of voters said they were likely to protest in the streets if the election is rigged, according to the poll by the U.S.-based Congo Research Group…Kabila came to power amid crisis in 2001 at the age of 29 following the assassination of his father…while he pacified the country’s west, especially around the capital of Kinshasa, his legacy for the vast majority of Congolese will be defined by corruption and conflict, with millions displaced by continued fighting and most living in extreme poverty…6 out of 7 Congolese live on less than $1.25 U.S. a day…meanwhile, Kabila and his cronies have benefited from Congo’s vast natural resources, including the highly lucrative mining of Cobalt (the Congo supplies more than 60% of the world’s Cobalt)…the NGO Global Witness estimates that $750 million U.S. in state mining revenue went missing in just 3 years…New York University’s Congo Research Group documented the Kabila family’s vast business empire of more than 80 companies from mining to farming, to banking to telecommunications and airlines with hundreds of millions of U.S. dollars in revenues…unsurprisingly, 74% of Congolese polled by the research group said they had a negative view of Kabila…
7. After years of hype (“Download a feature film in seconds!”), 5G is finally making its U.S. debut…the service providers – AT&T, Verizon, T-Mobile and Sprint – all plan to have mobile 5G live in select cities by the first half of 2019 (this month, AT&T flipped the switch in a few cities, including Atlanta and Charlotte)…phonemakers Samsung and LG have promised new 5G-compatible handsets as well…Apple, however, will likely hold off for another year or so…the new networking standard isn’t just about faster phones, though…reduced lag between devices and cell towers will enable better augmented and virtual reality, smart-home experiences and even self-driving cars…but just like the rollout of past network technologies, you may not want to buy 5G gear just yet – it will take time for the kinks to be worked out…
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