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1. Gold is responding well to the prospect of fewer U.S. rate hikes next year, as confirmed by the Fed yesterday…as of 7:00 am Pacific, bullion is up $18 an ounce at $1,260 as the greenback hits a new multi-week low…technical weakness in the Dollar Index could intensify going into January, giving not only Gold but the broader commodity sector and the Venture a much needed lift…not only has ETF buying of Gold picked up, but Swiss customs data shows Asian buying has improved as well, a according to Commerzbank. “As the Swiss Federal Customs Administration reported this morning, Switzerland exported considerably more Gold again in November, especially to Asia,” the bank says. “Gold exports to India nearly tripled month-on-month, while exports to China and Hong Kong soared by just shy of 60%”…Silver has jumped 22 cents to $14.78…Copper has added a penny to $2.74 while Nickel and Zinc are steady at $4.94 and $1.18, respectively…Crude Oil continues its slide, down $1.60 a barrel to $46.57…the Dollar Index has retreated half a point to 96.50…one of the keys to an improving Venture and commodity sector is a lower U.S. dollar…notably, the greenback’s technical posture continues to deteriorate after a double whammy this week, capped off by yesterday’s Fed decision to scale back rate hikes for 2019…the central bank may not have been as dovish as many had expected or hoped, but Fed Chairman Jerome Powell has probably saved some bullets for Q1 in the event he needs them…meanwhile, earlier this week, the EU and the Italian government brought a cease-fire to tensions over Italy’s budget, agreeing on a compromise which has removed some of the downside risk for the European economy next year…in economic data released this morning, the Philadelphia Fed manufacturing index in December fell to a reading of 9.4, from 12.9 in November, to reach the lowest level since August 2016…any reading above zero indicates improving conditions…however, the index peaked in May with a 34.4 reading, one of several business sentiment indicators that have receded from lofty levels…
2. Credit Suisse looks for Gold prices to rise in 2019, listing an average Gold price forecast of $1,275 an ounce, followed by a further jump in 2020…supportive influences include a U.S. dollar that should peak and reverse course, declining bond yields, potential for more turbulence in the stock market, exchange-traded-fund inflows, and continued central bank buying, Credit Suisse said…in an environment of rising Gold prices, Credit Suisse sees opportunities on the stock side, especially in companies with lower cost projects…the bank cited signs of a peak in the U.S. dollar which is bullish for Gold and the commodity sector in general…“This is underpinned by a growing view that the Fed will be challenged to further raise interest rates without slowing down the economy, as well as concerns twin deficits are deteriorating,” Credit Suisse said. “Also, dollar bull markets typically don’t last more than 7 years and we are already in the 8th year of the current bull market”…further, real bond yields are potentially topping out, the bank continued…“A good sign for Gold investment demand is that fund flows for Gold ETFs have recently turned positive and we expect this trend to persist as other asset classes are volatile and appear less attractive”…
3. More evidence of the stupidity of governments: Zambia is pricing itself out of the global mining market with proposed hefty tax increases, the head of the local mining body said today, a further warning to investors rattled by the government’s efforts to squeeze more money from the sector (not the only place in the world where this is happening)…Africa’s #2 Copper producer plans to introduce new mining duties, replace value-added tax (VAT) with a sales tax and increase royalties, from January, to help bring down mounting public debt…mining accounts for more than 70% of Zambia’s foreign exchange earnings and companies operating in the southern African nation include First Quantum, Glencore and Vedanta Resources…“The proposed regime will result in over 58% of Zambia’s Copper producers being in a loss-making position at current prices,” stated Zambia’s Chamber of Mines’ President Goodwell Mateyo in a news conference today…the government estimates that mining tax revenues will rise to $1.3 billion next year following the tax increases, from $800 million this year…the chamber, however, expects revenues would rise to only around $840 million…
4. The Trudeau government should be getting increasingly worried about the backlash that’s building in Alberta and elsewhere in the country over its disastrous National Energy Program…unemployed Oil workers have been staging weekly rallies across Alberta, and calls for a renegotiation of the province’s role within confederation have become more widespread and strident…yesterday, a pro-pipeline convoy with thousands of truckers blared its way through an Alberta town with a stern message for Trudeau: “We don’t need handouts”…2 days after Trudeau pushed his famous “optics” button again and announced an “aid” package for the province’s struggling energy sector, a weak attempt at showing he actually cares (he doesn’t, in fact he’s deliberately trying to phase out the Oil sands), Oil and gas workers demanded ACTION on the halted Trans Mountain pipeline – not loans…the quote of the week goes to Conservative leader Andrew Scheer: “Give a province $1.6 billion and you might feed them for a couple of weeks, but let them build a pipeline to get our energy to market and you can feed them for a generation”…if Trudeau, who of course is all-in on getting pot to market, really wanted to help the Alberta Oil sector and the broader Canadian resource industry, he’d revamp or rescind controversial Bill C-69 which was designed to ensure that another pipeline will never get built in this country – all investors have to read this crazy proposed legislation and realize how dangerous it is…Canadians should not be surprised at Trudeau’s stance toward the Oil sector and Western Canada – he learned a lot from his father whose economic policies also wreaked havoc on the country…
5. Sign of the times: Jujuy province in Argentina has proven to be not so friendly toward the mining sector, but it’s really embracing cannabis…Aphria (APHA, TSX) announced this morning that its subsidiary ABP SA has signed a Letter of Intent with the Argentine state-owned Cannabis Avatara Sociedad del Estado (CANNAVA) to enter into a co-operation agreement regarding the cultivation of cannabis that will expand the company’s strategic Argentine operations into the province of Jujuy…under the terms of the agreement, ABP is to establish a facility for the cultivation and processing of cannabis, as well as for the manufacturing of cannabis derivative products, including, but not limited to, cannabis oil…the company understands through CANNAVA, Jujuy will produce curative oils and medicines using cannabis sativa…“Aphria is strategically positioned to be among the first companies to produce locally, and eventually commercialize, its products in Argentina at much lower cost,” said Gabriel Meneses, Vice-President, Latin America and Caribbean, at Aphria. “We are proud of the relationship we have built with the Province of Jujuy after months of discussions and planning, and thankful for their support”…as Argentine legislation evolves, Aphria says it’ll be positioned to scale production in Jujuy, including making necessary investments to expand its footprint there and provide access to high-quality, low-cost medicinal cannabis…
6. The Dow is off another 119 points at 23,204 as of 7:00 am Pacific…very strong support exists between 23,000 and 22,000, the bull market uptrend line going back 10 years on the Dow’s long-term monthly chart…the TSX is up 48 points, thanks to strength in Gold stocks…the TSX Gold Index has rebounded 8 points to 180 after providing investors with an ideal buying opportunity yesterday…Kirkland Lake Gold (KL, TSX), our favorite producer, is up 94 cents at $33.40…New Gold (NGD, TSX), a turnaround story for 2019, is up 4 cents at $1.10 while Pretium Resources (PVG, TSX) has added 35 cents to $10.98…the Venture is flat at 542…the Index has fallen in 16 out of the last 20 sessions, losing 10% of its value during that time…nearly 20 years of Venture trading history, current sentiment levels and multiple charts indicate a sharp reversal out of extreme oversold conditions is imminent…
7. Tilray (TLRY, NASDAQ) is up 10% in early trading on news after the close yesterday that it has entered into a $100 million joint venture with beer brewer AB InBev to study cannabis-based beverages…the partnership is limited to Canada, and the companies will make decisions about commercializing the products in the future…the joint venture, in which both companies will invest $50 million each, will study non-alcoholic beverages containing THC, the psychoactive chemical compound in marijuana, as well as CBD, the non-active chemical…brewers have started dabbling in the cannabis space as interest grows and regulations ease…Constellation Brands, which sells Corona and Modelo in the U.S., has invested $4 billion in Canopy Growth (WEED, TSX; CGC, NYSE)…meanwhile, Heineken’s Lagunitas brand introduced a cannabis-infused drink in California this summer…
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Wow. Never thought I would be able to buy CCW shares under .40 again. Can’t see any fundamental reason for the selling, so I’ll take some of that.
Comment by DBReese — December 20, 2018 @ 12:34 pm