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1. Gold has traded between $1,274 and $1,288 so far today…as of 7:00 am Pacific, bullion has jumped $10 an ounce to $1,286 following the release of a blowout U.S. GDP number for Q1…China appears to be relying on Gold imports to meet the country’s demand for the precious metal, according to Commerzbank…analysts cite data from the China Gold Association, as reported by the Chinese news agency Xinhua, showing that the country produced just shy of 93 tonnes of Gold in the 1st quarter, which was 5.5% less than in the same period last year…however, Chinese Gold demand increased slightly to 287 tonnes year-on-year…“China is using imports to plug the gap,” Commerzbank says…Silver has added 10 cents to $15.05…Copper, Nickel and Zinc are all relatively unchanged at $2.90, $5.58 and $1.31, respectively…Crude Oil has slipped $1.27 a barrel to $63.94 with President Trump warning OPEC again that prices are too high…the U.S. Dollar Index has eased off more than one-tenth of a point to 97.98…
2. Staying strong: The U.S. economy has had a habit of starting the year out sluggishly, only to rebound in the spring and summer…this year appears different…despite headwinds like a prolonged government shutdown, a polar vortex and slowing global growth, the U.S. remained very resilient in the 1st quarter, growing more strongly than the final quarter of last year when it expanded at a 2.2% clip…this morning, the Commerce Department reported the U.S. economy grew at a significantly faster pace than expected in Q1 and posted its best growth to start a year since 2015…1st-quarter GDP expanded by 3.2%, well above the consensus estimate of 2.5%…the upside beat was helped by net trade (exports jumped while imports contracted sharply) and inventories which combined contributed almost 170 bps of the rise…personal spending was up 1.2%, just two tenths more than expected as an increase in spending on services and non-durable goods offset a decline in spending on durable goods…inflation remains subdued…the price index for personal consumption expenditures increased at a 0.6% pace in Q1, compared with 1.5% in the final quarter of 2018…core prices, which exclude food and energy, rose at a rate of only 1.3%…the prosperity cycle in the U.S. under Trump is gaining momentum, not losing momentum, with inflation under control…that means the Fed can keep interest rates on hold…
3. Chinese President Xi Jinping addressed some 40 world leaders today at the Belt and Road forum in Beijing, but his speech may have been aimed at a head of state not in the audience: President Trump…Xi spent a large portion of his speech addressing Chinese domestic reforms, pledging to address state subsidies, protect intellectual property rights, allow foreign investment in more sectors and avoid competitive devaluation of the yuan…all 4 are key issues the U.S. is addressing in trade talks with Beijing. “We will establish a binding enforcement system for international agreements,” Xi said, adding that China will standardize all levels of government in terms of issuing administrative licenses and market regulation, and also “eliminate improper rules, subsidies and practices that impede fair competition and distort the market”…Xi’s promises have been echoed by officials over the past few months and China has taken several steps to address U.S. concerns, including passing a new foreign investment law that bans forced technology transfers…trade negotiators led by U.S. Trade Representative Robert Lighthizer return to Beijing next week as both sides work toward a face-to-face meeting between Trump and Xi to ink a deal….
4. Trudeau drives business to the United States: Strong growth in U.S. Oil field activity made up for declines on the Canadian side of the border as Precision Drilling (PD, TSX) beat analyst expectations with Q1 results yesterday…the Calgary-based driller reported a 23% increase in activity in the U.S. compared with the same period of 2018, while its Canadian operations declined by 33%, a trend that it said is continuing in the current quarter. “Of note in the quarter, only 36% of our company’s revenue was generated in Canada,” said CEO Carey Ford on a conference call…“This is the lowest percentage in the history of Precision, reflecting both the success of our investments outside of the Canadian market and the particularly weak industry activity experienced in Canada”…the Oil field services industry in Canada has been hit by lower producer spending plans this year, blamed on a shortage of investment capital, delays in building new pipelines and the current Alberta government production curtailments introduced by the NDP as a reaction to plummeting Canadian prices last year…this is Canada’s self-inflicted wound…
5. Does this come as any surprise?…the Trudeau government can’t guarantee it will have a decision on the proposed Trans Mountain pipeline expansion prior to the October election, Natural Resources Minister Amarjeet Sohi said yesterday at a “clean energy” announcement in Calgary…the deadline was pushed back to June 18 from May 22 on the recommendation of Indigenous communities and former Supreme Court justice Frank Iacobucci, who is advising the feds on the “consultation process” which the embattled and incompetent Trudeau government is hiding behind…the proposal to twin the existing Trans Mountain pipeline between Edmonton and Burnaby was first approved by cabinet in 2016…the Federal Court of Appeal rescinded that decision in August of last year because it said neither the environmental review nor the Indigenous consultations had been properly completed…meanwhile, sources say the Trudeau government is actively considering the idea of blocking the expansion of the Trans Mountain pipeline if Jason Kenney’s new Alberta government overturns a pledge by its predecessor to cap carbon emissions from the Oil sands at 100 megatons a year…the Liberal “logic” is that if there is no “climate change plan”, there can be no more pipelines – a commitment the Liberals believe may play well on B.C.’s Left Coast and Quebec where the party hopes it can pick up seats in the October election…
6. The Dow is 38 points lower after the first 30 minutes of trading as investors digest much better-than-expected Q1 economic growth…in Toronto, the Gold Index is pushing higher but the TSX Composite has slipped 47 points…the Venture, meanwhile, is flat at 608…Etruscus Resources (ETR, CSE) is one of the few exploration stocks to hit a new all-time high as it touched 50 cents in early trading…ETR is a newcomer in the prolific Eskay district and the first company in that region with boots on the ground in 2019…Benchmark Metals (BNCH, TSX-V) has enjoyed a strong week, up another 2 pennies in early trading at 26 cents…earlier this week the company outlined an aggressive 2019 exploration program at its Lawyers Gold-Silver Project within the Toodoggone district, located on the eastern extent of the prolific Stikine terrane, which also hosts the Golden Triangle…drilling will focus on infill, step-out and deeper drilling to expand the current resources at Cliff Creek and Dukes Ridge, as well as establish new resources at the Phoenix and AGB zones…Ernst & Young says Canada’s Gold output is set to grow by 6% this year, compared to a previous estimate of 2%…this improvement, EY analysts say, stems from increased exploration spending resulting in a strong buildup of the project pipeline in 2019…major projects slated to begin production this year include Newmont Goldcorp’s (NEM, NYSE) Borden Project in Ontario, Agnico Eagle’s (AEM, TSX, NYSE) Meliadine Project in Nunavut and Barrick’s (ABX, TSX; GOLD, NYSE) Hemlo mine in Ontario…“Improving market conditions are inspiring new confidence in the mining and metals sector and putting growth back on the boardroom agenda,” stated EY’s Jeff Swinoga…“To stay competitive in a transformed operating landscape, miners must develop bold strategies that accelerate productivity, improve shareholder returns and win investor confidence. The qualities that define long-term success aren’t the same as they once were”…
7. BMW will buy cobalt directly from mines in Australia and Morocco to ensure the metal purchased for its electric vehicles is sourced responsibly, according to the head of procurement at the German automaker…the measure comes as the London Metal Exchange carries out a supply-chain review to address concerns that Cobalt stored in its warehouses may be linked to child labor…the supply of the commodity, mostly mined in the Democratic Republic of Congo, faced scrutiny in recent years as humanitarian groups said it’s being produced in unethical conditions…the newly sourced metal will be used in BMW’s next generation of electric vehicles that will be built from 2020, Andreas Wendt said at a briefing in Paris this week…mines in Morocco and Australia “operate in line with our sustainability standards and there are no issues with working conditions such as child labor,” he added…
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