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August 17, 2016

BMR Morning Market Musings…

Gold has traded in a narrow range so far today between $1,340 and $1,347as of 9:45 am Pacific, bullion is down $2 an ounce at $1,344…Silver is off 18 cents at $19.53…Copper has slid 2 pennies to $2.16…Crude Oil has eased off 12 cents to $46.46 after a 4-session winning streak while the U.S. Dollar Index is up one-tenth of a point at 94.92

Holdings of SPDR Gold Trust rose 0.19% to 962.23 tonnes yesterday…

Comments from the RBC Global Equity Team in a report released yesterday:  “We believe that with the sharp rally in Gold price and equities in 2016, many Canadian investors continue to be underweight in precious metals and should consider rebalancing their portfolios in order to prevent further benchmark slippage.

“We continue to recommend companies with attractive margins, solid balance sheets, organic growth opportunities and a consistent operating strategy, and believe that investors should take advantage of any share price weakness to purchase Gold equities.” 

The RBC team also highlighted a few Gold and Silver miners which they say remain attractive, including Kinross, Newmont, B2Gold, Eldorado and Gold Fields

“Outperform-rated Gold and Silver with attractive implied returns include: ANG, GFI, KGC, NEM, ACA, BTO, DGC, EGO, POLY, DPM, GUY, NMI, PG, ROG, SAR, SLR, TXG, CDE and HOC,” RBC stated…

Today’s Fed Watch

The mainstream media is sure to make a big fuss from the release of Fed minutes later this morning (11:00 am Pacific) from the FOMC’s latest meeting when it continued to be certain of only one thing – its uncertainty…some Fed “hawks” yesterday were promoting the idea of a possible rate hike before the end of the year (they’re constantly playing games with investors), but that movie has had more reruns than the Wizard of Oz or Mrs. Doubtfire

New York Fed President William Dudley and Atlanta Fed President Dennis Lockhart have become like used car salesmen or Howe Street promoters…Dudley yesterday said a rate hike next month was possible, while Atlanta Fed President Dennis Lockhart said the U.S. economy was likely strong enough for at least one rate increase before the end of 2016, with two a possibility…both have been wildly off the mark for many months, yet the mainstream media continues to gives them a “free pass” and far more credibility than the Donald Trump they love to bash…

Simona Gambarini, a well-known analyst at Capital Economics, stated:  “We have to wait for the minutes of the meeting to have a better idea of when they will proceed with the rate hike.” 

No, Simona, how helpful have previous minutes been given that there has only been 1 rate hike from the Fed in a decade, despite its rhetoric – especially the last few years?…actions speak louder than words…the Fed has repeatedly slowed the pace of projected moves and as a result has become the Federal Reserve Who Cried Wolf

The Need For Structural Reform

Given some of the disturbing signs that exist in the Obama economy that are counter to the liberal narrative of an economy “gathering steam”, as we outlined yesterday, the Fed’s next major move may actually involve more “stimulus” as opposed to a rate hike…that’s when the dollar would fall over the cliff…

In fairness to the Fed, however, Washington needs to get its act together…

The current slow economic growth environment could turn into recession if Washington can’t break the political gridlock and step up with meaningful fiscal reform, Allianz Chief Economic Adviser Mohamed El-Erian told CNBC this morning…

El-Erian, the former Pimco co-CEO, correctly stated, “We have relied excessively on central banks because the response to the 2008 financial crisis was too cyclical minded.”  He believes quantitative easing and ultra-low interest rates have done all they can do, and the White House and Congress need to join the fight against stagnation by crafting sensible structural reforms…

The overhaul of the tax code must also include a reduction in U.S. corporate tax rates, currently among the highest in the entire world…high taxes destroy jobs and investment, so it’s no wonder the U.S. economy has been under-performing and can’t be weaned off the Fed’s bottle of stimulus…

In Today’s Morning Musings

1. Crude Oil update – bears got skunked again late last month…

2. An emerging Lithium-Cobalt play? – profit like the insiders!…

3. Almadex Minerals (AMZ, TSX-V) climbs again on more results from El Cobre…

4. Daniel’s Den – for a levered bet on Oil that offers technological upside, this one’s a winner…

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.

6 Comments

  1. GLD range bound for 9 trading days — $127.5 to $129 — we heading north or south of that next?

    Comment by Daniel — August 17, 2016 @ 11:01 am

  2. Jon, 2 weeks ago you advised to accumulate DVR as the chart indicated an imminent breakout. What is your position now that it seems to have fizzled? What’s going on or not going on with DVR?

    Comment by Dan1 — August 17, 2016 @ 11:56 am

  3. This was NRN’s presentation in May, before the VTEM results on Seqois property were released. Extremely informative presentation. Ian says what they could be looking at on the Huckleberry property alone could be in the range of a 100 million tonne plus deposit. He also states at the end that they believe they have a giant ore deposit. To sum it up, he says most past giant ore deposits were found suddenly or by luck, but this one because of all the data, rock textures plus rock assays – you can actually get a glimpse of a potential giant ore deposit and can see the freight train coming!

    http://www.northern-shield.com/content/mif-may-2016-northern-shield-resources-inc-nrn-ian-bliss

    Comment by Dan1 — August 17, 2016 @ 1:05 pm

  4. Still as bullish as ever, Dan1, but exact timing on these things can sometimes be tricky…because of the very tight share structure DVR could literally explode 30 cents higher in 5 minutes. Just be patient. There was much more to that news today than meets the eye, and I believe soon enough (probably starting in September after labor day now) DVR will be looking a whole lot better. Such a small public float….there’s only x number of shares available to a certain price, and it’s not much.

    Comment by Jon - BMR — August 17, 2016 @ 3:35 pm

  5. Jon: was this is healthy pullback today on the Venture?

    Comment by STEVEN1 — August 17, 2016 @ 5:24 pm

  6. Absolutely, Steven1….days like today are great. Anytime stocks go on sale during a major bull market, you gotta love it. Venture support is well-defined, downside very limited. Buying the dips has been the winning strategy since February and it’s going to continue to be for a while yet,

    Comment by Jon - BMR — August 17, 2016 @ 6:50 pm

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