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1. Gold has traded between $1,324 and $1,333 so far today…as of 7:00 am Pacific, bullion has gained $3 an ounce to $1,331…the Gold rally could have further to go if hedge fund managers ramp up their bullish bets after last year’s big short…money managers remain only modestly allocated to the metal, according to futures positions…“Reluctance lingers, and the risk is that with many market participants waiting to buy dips, there could be a lot of catching up to do if positive catalysts extend,” wrote Joni Teves, strategist at UBS Group…a series of higher highs and higher lows indicates that both Gold and Silver have quite a bit further to climb in 2019…Silver has added a penny to $15.90…Copper is pushing through the critical $2.90 level, up another 2 cents at $2.96…Nickel is up slightly at $5.84 while Zinc is flat at $1.24…Crude Oil has fallen 96 cents to $56.30 while the U.S. Dollar Index is off slightly at 96.44…in the week ahead, investors will be watching for February consumer confidence due tomorrow, 4th quarter GDP growth estimates on Thursday, and December core inflation on Friday…the consensus among most economists for U.S. GDP growth is 2% in the final 3 months of the year, down from 3.4% in the 3rd quarter…
2. President Trump said yesterday he would delay an increase in tariffs on Chinese goods set to take effect at the end of this week, citing “substantial progress” on issues including intellectual property and technology transfer after a weekend of talks…this gave the metals sector and equity markets another boost…in a tweet, Trump wrote that should progress continue, the U.S. would plan a summit with President Xi Jinping of China to “conclude an agreement” that would settle a year-long trade fight between the 2 nations…Trump’s tweets didn’t specify how long the extension of a trade truce would last or any date for a potential summit…U.S. tariffs on $200 billion of Chinese goods had been scheduled to rise to 25% from 10% on March 1…in recent talks, Beijing apparently offered to increase purchases of U.S. farm and energy products and services, ease restrictions on U.S. firms in financial services and auto manufacturing and improve protection of U.S. intellectual-property rights…
3. Trump remains determined to keep Oil prices (and therefore inflation and interest rates) in check…Oil turned sharply lower this morning, tumbling more than 2%, after Trump urged OPEC to lower the cost of Crude in an early morning tweet…“Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!”, he tweeted…the message comes 2 months into a fresh round of price-boosting production cuts from OPEC and other nations…the producers meet in mid-April to review the deal, which is scheduled to last through the first 6 months of 2019…last fall, as producers were hiking output in a strong Oil price environment, Trump surprised Saudi Arabia and the rest of OPEC by allowing some of Iran’s biggest customers to continue importing its Oil as sanctions snapped back into place, contributing to a sudden collapse in prices…Trump has made it clear through multiple actions and tweets, and even in a news conference last November, that he wants to keep Oil prices down in order to help maintain and accelerate economic growth…
4. 2019 will clearly be the year of M&A in the Gold sector…Barrick Gold (ABX, TSX; GOLD, NYSE) is going hostile in its bid to acquire Newmont Mining (NEM, NYSE) and create the world’s largest Gold producer by offering $17.8 billion (U.S.) for the company in an all-share deal…the offer raises the potential for a 3-way fight (Newmont is in the process of acquiring Goldcorp) and comes after Newmont’s CEO blasted talks about a takeover as a “desperate” and “bizarre” move by Barrick…the latter said it’s offering “at market” valuation of 2.5694 a share for each Newmont share…that implies that it’s valuing Colorado-based Newmont at $17.8 billion or $33.50 (U.S.) a share, an 8% discount to Friday’s close…Barrick President and CEO Mark Bristow said the deal would unlock more than $7 billion net present value (pre-tax) of real synergies, a major portion of which is generated by combining the 2 companies’ highly complementary assets in Nevada, including Barrick’s significant mineral endowments and Newmont’s processing plants and infrastructure…“The combination of Barrick and Newmont will create what is clearly the world’s best Gold company, with the largest portfolio of Tier One Gold assets and the highest level of free cash flow to drive future growth and support sustainable shareholder returns, run by a management team with an unparalleled record of delivering value,” he said…Bristow added that a Barrick/Newmont deal is a logical and long overdue imperative for shareholders that would be far superior to Newmont’s proposed acquisition of Goldcorp with expected Barrick/Newmont annual synergies 7.5 times larger than the quoted annual synergies for the Newmont/Goldcorp transaction…a Barrick/Newmont merger would result in an estimated 14% uplift in Newmont’s current NAV per share, offering Newmont shareholders an investment in a company of a much higher quality with a better asset base, significant liquidity, a strong balance sheet and a proven management team…on Friday, Newmont announced that its $10 billion deal to purchase Goldcorp is moving forward after the latter obtained an interim plan of arrangement, throwing cold water on the idea that Newmont is interested in a merger with Barrick…a deal with Barrick, however, would be attractive to some Newmont shareholders due to the companies’ interests in Nevada and how a merger could lead to substantial cost savings through shared operations…about 25% of Newmont’s stock is owned by U.S.-based BlackRock and Vanguard…
5. The Dow, riding a 9-week winning streak, is up 150 points after 30 minutes of trading…in Toronto, the TSX is 42 points higher…the Venture, trying to overcome nearest Fib. resistance at 623, is up a point at 624…Azimut Exploration (AZM, TSX-V), which has the ability to deliver some high-grade Gold numbers this year, was halted pre-market, pending news…iMetal Resources (IMR, TSX-V) has further expanded its maiden drill program at Gowganda West into March after completing the first 5 holes…the 4th and 5th diamond drill holes at Gowganda West extended the first 3 holes 50 m to the north and 50 m to the south…core from those holes will be logged in the coming days, but an additional review of the first 3 holes further supports a widespread hydrothermal system with abundant fine-grained pyrite, pervasive silicification, quartz-carbonate veining and very distinctive Timiskaming-like red jasper conglomerate…this package within a sedimentary basin is considered to be an ideal host for Gold…Johan Grandin, iMetal’s President and CEO, commented, “First-ever drilling at Gowganda West is off to a highly encouraging start. What we observed at surface in our successful sampling program is being intersected at depth, and that’s what’s most exciting. We look forward to continuing the drill program into March”…
6. Chemesis International (CSI, CSE), which hit a new high of $2.13 earlier this month, is under pressure in early trading after announcing a non-brokered private placement of up to $5.8 million (CDN) or 3,152,174 units at a price of $1.84 per unit (each unit = 1 share and 1 share purchase warrant with each warrant exercisable for another share at $2.50 for 2 years)…the Offering will be led by New York based Global Emerging Markets and participation from Canadian institutional investors…“The funds are intended to be utilized as working capital for our operations within our state-of-the-art extraction facility in California,” stated Chemesis CEO Edgar Montero…“We believe this financing will allow us to capture greater market share by increasing our oil production, developing additional proprietary product formulations and expanding our distribution infrastructure throughout California. The company sees tremendous growth potential within California, and believes it can expand to meet future demands”…CSI has pulled back on the news, down 22 cents at $1.82 through the first 30 minutes of trading…Khiron Life Sciences (KHRN, TSX-V) also dipped after announcing its recent financing but quickly bounced back to new highs…
7. GoldSpot Discoveries (SPOT, TSX-V) is unchanged at 55 cents in its 3rd day of trading on the Venture…SPOT is a technology company that leverages machine learning to reduce capital risk, while working to increase efficiencies and success rates in resource exploration and investment (unique in its space, and a favorite of Frank Holmes)…U.S. Global Investors, in connection with the completion of Goldspot’s qualifying transaction, carried out a strategic investment in the company…U.S. Global has exposure to 7.1 million shares of GoldSpot, or approximately 8% of outstanding shares of the company (GoldSpot closed a $7.56 million equity financing on February 1)…in connection with the investment, Holmes, CEO and Chief Investment Officer of U.S. Global, a leading mutual fund and asset management firm, has agreed to serve as a director of GoldSpot and has been appointed the independent Chairman of the Board of Directors of the Company…
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