Gold has swung between $1,181 and $1,211 so far today as thin trading conditions near year-end continue to produce higher than usual volatility…as of 7:45 am Pacific, bullion is up $24 an ounce at $1,206…Silver is 58 cents higher at $16.40…Copper has rebounded sharply at $2.89…Crude Oil is up slightly at $53.78 while the U.S. Dollar Index has declined one-third of a point to 89.91…
General mistrust of the global economic and geopolitical situation appears to have given Gold tremendous support around the $1,180 area, despite falling Oil prices and a strong U.S. dollar, and could give bullion fresh momentum above $1,200 early in the New Year…steady physical buying out of China is also underpinning Gold – premiums in Shanghai were at about $4 an ounce today…
The Gold-to-Silver price ratio recently reached its highest level (76.04) since the beginning of 2009…it’s currently at 73.5…the ratio, which peaked at 83.73 during the financial crisis in 2008, has more than doubled since it bottomed in April 2011, primarily driven by a substantial decline in Silver…the recent peak could be a sign that Silver prices will start to gain some traction…typically, when the ratio is in decline, Gold and Silver usually both go up with Silver rising faster…the long-term ratio average is 60…
Today’s Equity Markets
Asia
Asian market were modestly lower overnight with the exception of China’s Shanghai Composite which finished relatively unchanged at 3167…
Japan’s Nikkei fell 279 points or 1.6% to close at a 2-and-a-half week low of 17451…
Europe
European markets are lower in late trading overseas with weak Oil prices and Greece topping the concerns…
North America
The Dow is down 60 points at 17978 as of 7:45 am Pacific…the December reading of the Conference Board’s consumer confidence index came in slightly lower-than-expected at 92.6.
the yearly growth in home prices across the U.S. continued to slow in October…the home price index covering the entire nation rose 4.6% in the 12 months ended in October, according to the S&P/Case-Shiller Home Price Index report released this morning…that’s down from 4.8% in September…curiously, housing demand has slowed significantly in recent months despite stronger job growth, a rebound in consumer confidence and falling gasoline prices…
The TSX is off 36 points while the Venture has added 2 points to 684…
Mining Companies Cringe As Chile Gives Boost To Unions
In a move that mining companies warn could result in further investment delays in an industry already reeling from higher costs and weak prices, Chilean President Michelle Bachelet – a socialist – is boosting union power to help “redistribute” the Copper riches that have made Chile the wealthiest country in Latin America…whenever left-wing politicians go down this road, they typically kill the goose that laid the golden egg…
Seeking to redress the balance of power in industrial relations more than 30 years after dictator Augusto Pinochet introduced a new labor code, Bachelet presented a bill on Monday that would make union leaders the sole authorized negotiators in wage bargaining and outlaw a company’s right to replace striking workers…
The labor proposals, along with raising corporate taxes to fund free education, are part of Bachelet’s campaign to narrow the worst income inequality among the 34 members of the OECD…business leaders fear that the economic model that has helped propel growth – low taxes, low spending, limited regulations and high savings rates – is being threatened…
Bachelet was President of Chile between 2006 and 2010, and was elected again in March of this year…
On the economic front, S&P/Case-Shiller house price index for October is scheduled to be released at 9 am ET. Economists expect the house price index to rise a seasonally adjusted 0.6% month-over-month.
At 10 am ET, the Conference Board is due to release the results of its consumer confidence survey for December. The consensus estimate calls for an increase in the consumer confidence index to 93 in December from 88.7 in November.
Oil Update
Oil prices continue their relentless slide on growing oversupply concerns…fueled by booming U.S. shale Oil production and reluctance from other major producers to cut output, the sell-off is now taking WTIC very close to the $50 support level which undoubtedly will be tested…even news of disruptions in Libya and an apparent scaling back of drilling rigs in the U.S. hasn’t been enough to allow Crude from falling to a 5-and-a-half year low…
Economics and politics are both at play here, with the Saudis very much the driving force (there may be disunity in OPEC but the cartel is far from dead with the Saudis firmly in control)…it seems they have a multifaceted strategy aimed at increasing market share, slowing the growth of U.S. shale production, and destabilizing Shia controlled rival political regimes closer to home – most importantly Iran, and Iran as we know also draws significant support from Russia…
Diane Francis, in her Financial Post column over the weekend, made these astute observations:
“This price drop is simply economic war waged by the Arabs against Iran and a shot across the bow in the Shia versus Sunni religious war underway in the Middle East. Iran is “Shia” oil and Gulf or Saudi oil is “Sunni” oil.
“The Saudis and Gulf States have engineered this price crash as a tactic in their war against Iran, its potential nuclear bomb and its proclivity to export terrorism across their neighborhood. This collapse in prices is cheaper than what they face in terms of military and other costs down the road if Iran is not solved.
“This cartel’s days are far from over and the Saudis and their Gulf allies are in charge. The Saudis produce 13% of oil worldwide and the United Arab Emirates, Iraq, Kuwait, Qatar, Oman and Bahrain account for another 12.48% for a total of 25.48% (all of the oil cartel members represent 45% of all production and 81% of all reserves).
“The Gulf States’ control is absolute because the governments own the stuff; they can act unilaterally unlike free enterprise nations; they have more of it than anyone else; they have gotten very rich over the decades and can finance themselves at lower prices and they have the lowest costs in the world so lower prices don’t mean losses.
“Few realize that fear grips the Gulf States and has led to a massive military buildup, for political and religious reasons.
“Almost all Middle Eastern and North African states are evolving in the opposite direction of Europe, having doubled – or even tripled – their defense spending in recent years,” according to a 2014 report by the European Union Institute for Securities Studies. “Six of the world’s top ten military spenders are now located in the Middle East and North Africa: all of the Gulf States, for instance, have tripled their spending since 2003.”
WTIC 6-Month Daily Chart
John’s long-term charts suggest that WTIC probably won’t bottom out even at $50 a barrel – ultimately, likely in the coming months, it could certainly test the 2008 low in the mid-$30’s…markets normally go to extremes in situations like this – the technical picture certainly favors that scenario…
A recent minor rally could only take WTIC to $58.53, and the base support that was forming at $55 seems to have given way…
On a positive note, the new lows we’re now seeing in WTIC aren’t being confirmed by RSI(14), and the intensity of the sell pressure is declining…this suggests that the $50 support may hold for now, and that we could see a stabilization in prices for a period of time prior to another potential selling wave early next year that could crash the $50 level and take Oil into the mid-$30’s in a worst-case scenario…
This is not a situation where we’re going to see a quick and sustained rebound in prices, given the extent of technical damage that has occurred and the bearish fundamental factors at play…
Copper Updated Chart
As expected, Copper has found strong support at $2.80 at the bottom of a downsloping wedge…near-term resistance at $2.90 and $3.05 based on this 2.5-year weekly chart…
The key for Copper entering 2015 is whether it breaks above or below this downsloping wedge…
Agnico Eagle Mines Ltd. (AEM, TSX) Update
The weak Canadian dollar and Oil prices at multi-year lows are a boon for certain Gold producers (Barrick will benefit less as it has hedged roughly half of its exposure to Oil for 2015 at significantly higher prices), but many investors haven’t seemed to pick up on that yet…
Agnico Eagle has taken a beating since its summer high of $45.71, but now appears to be on the rebound after holding strong support around $26.50…today it’s finally breaking above a downtrend line in place since August, and that has to be considered positive for the sector as a whole entering the New Year…
AEM is up $1.67 at $29.40 as of 7:45 am Pacific…
Richmont Mines (RIC, TSX) Update
Our favorite producer, offering exceptional leverage, continues to be Richmont Mines (RIC, TSX) which has had both earnings momentum and price momentum in its favor since the middle of last year…
This is an exceptionally rare chart in this industry at the moment, and Richmont remains well below overbought levels where it would make sense to lock in any short-term profits…this one’s a keeper, in our view, as it continues to climb an uptrend line toward the next Fib. resistance level which is $5…
RIC is up 19 cents at $3.67 through the first 75 minutes of trading today…
Probe Mines Ltd. (PRB, TSX-V) Update
Like Richmont, Probe Mines (PRB, TSX-V) is an excellent example of a stock that has consistently outperformed the price of bullion for an extended period…that has be one of the key factors in an investor’s stock selection – find a play that is outperforming the metal as well as its peers…Probe and Richmont both definitely fits within that description, and the other common denominator they have is properties in favorable jurisdictions (Ontario and Quebec)…
PRB is threatening to break out above resistance at $3…it’ll be interesting to see how that plays out over the next few trading days…buy pressure has replaced sell pressure, and PRB’s 50-day SMA is now rising decisively after reversing higher at the end of November as we pointed out at the time…
PRB is up 2 pennies at $2.99 as of 7:45 am Pacific…
Note: Jon holds a share position in RIC.
Uh, GGI going in the wrong direction here, it can lift off any day please.
Comment by dave — December 30, 2014 @ 10:57 am
GGI- I am a little worried because it seems their strategy has changed with regards to the financing and where they plan to spend the money. Why no assays from Rodadero since Aug 5th, only pics? You can’t tell me they haven’t received assays since Aug. Drilling has been shallow so don’t take long to assay. Hope I am wrong and we see spectacular assays from Rodadero.
Comment by Dan — December 30, 2014 @ 12:41 pm
Dan, you’re forgetting that GGI’s investment in PZG is up 51% in just 8 trading sessions, which is certainly an important corporate development. Also, we know there are bigger fish looking at Rodadero. So there could be positive things going on behind the scenes, just as there were at PZG while it dropped to 74 cents Dec. 16 and we were encouraging readers to load up (2 days later, $1.14). GGI hasn’t disappointed all year – I don’t think they’re about to anytime soon, so let the traders play their games to shake some loose apples off the tree and keep the faith.
Comment by Jon - BMR — December 30, 2014 @ 1:11 pm
GGI also changed their minds regarding the use of the financing they raised. My guess is that they will release assay results in the new year and update us with an overview of all their plans for the next few months.
Comment by Tom UK — December 30, 2014 @ 1:14 pm
I agree with Dan. The action today with the close could spark a panic sell off. If that happens it could take a while to recover back to .20
Comment by dave — December 30, 2014 @ 1:26 pm
I completely forgot about PZG. It is probable funds for Rodadero could come from the proceeds of the sale of PZD shares. Or like you said Jon, bigger fish entering the scene. Hope to hear something on Rodadero early in 2015.
Happy New Year!
Comment by Dan — December 30, 2014 @ 1:30 pm
Dan, what I’m saying is, GGI has had nothing but positive news all year along, with some pleasant surprises along the way, so I am strongly of the opinion that this trend will continue. This is buy time. Enough said.
Comment by Jon - BMR — December 30, 2014 @ 2:15 pm
Well said Jon.nice to see the metals and the venture somewhat bouncing back,let’s hope this continues into the new year.
Comment by Tombc — December 30, 2014 @ 2:17 pm
GGI – Insider Sells two days in a row. Albeit Dec 29th was a small amount but today’s wasn’t $6000 insider sell.
Company Name : Garibaldi Resources Corp.
Last Updated: December 30, 2014
Date
Symbol
Insider
Buys
Volume
Insider
Sells
Volume
Insider
Buys
Value $
Insider
Sells
Value $
Insider
Buys
Transaction
Insider
Sells
Transaction
Currency
12/30/2014
GGI
0
33,500
0.00
6,030.00
0
6
CAD
Comment by Dan — December 30, 2014 @ 4:17 pm
Interesting, Dan. Innocent until proven guilty, of course, but I have to chuckle at the thought – the mere possibility – that this could have been the reappearance of the infamous Brent Petterson who we have highlighted in this space before for his rather bizarre trading behavior which we first revealed in the summer of 2013. As far as GGI is concerned (he trades in other companies), he has been very quiet in recent months, perhaps due to the fact we kept the spotlight on him and his trades through TD. TD didn’t show as selling 33,000 today, but ANON did during a 1.5 hour period. In fairness to Brent at this point (he is a nice guy), we can’t be 100% certain right now that this was him – if it was, perhaps he discovered he overspent a little bit at Christmas, but it would be a very bullish sign for the stock because every instance in which Brent has sold, right up through the spring of this year, GGI has almost immediately gone right back up to even higher levels. He’s my contrarian buy signal. While I was personally buying GGI around a nickel to 6 cents in June or so of 2013, I found out through the insider reports that I had probably purchased at least 200,000 shares from him but that didn’t deter me in any way, thankfully. He just needed the money at the time, and later on, like others in the market.
Comment by Jon - BMR — December 30, 2014 @ 5:44 pm
Selling and weakness in GGI today is a concern when you would think it would be going up in speculation of news coming. But then again, you have to realize it can be a fool doing the selling. But you have to stop and ask yourself where GGI stands in the rosy picture of things. Lets go back and look at the news release of GPR on 10-30-14. NOW lets look at the news release on GGI of 05-14-14. GGI hit a bigger bonanza and GPR has 2 and a half times more shares outstanding. Granted, GPR is a producer, and GGI is just a baby. But you have to buy a baby new clothes every year because they grow so fast. GGI doesn’t have 2 majors walking thier property to shoot marbles in the dirt. Personaly, I don’t think the market has caught onto GGI yet, this is evident by the lack of volume. But look out when they do.
Comment by dave — December 30, 2014 @ 7:36 pm
Dave, Dan: We did a quick check last night on the reported “insider” sell of 33,500 GGI yesterday as reported on the TMX daily insider buys/sells. Keep in mind, that same-day information is not official and in some cases has later been proven to be incorrect. Anyway, the last confirmed insider activity on GGI was a buy at 29 cents (25,000 shares) in late August by the CFO. We were able to touch base with President and CEO Steve Regoci last night who was able to confirm that Brent Petterson did not sell any GGI this week, and hasn’t according to official insider reports since the spring of this year, and he’s simply not aware of any insider sales. Not that it’s a big issue – we’re talking a small amount of shares here – but just wanted to clarify things. As I mentioned in my post, innocent until proven guilty – Mr. Petterson appears to be off the hook this time.
Comment by Jon - BMR — December 31, 2014 @ 3:22 am
I checked Canadian Insider this morning and it does not show an insider sell. I have always heard that the tsx site could show wrong information but Canadian Insider was always the most accurate. It shows an insider buy at .30 back at the end of August.
Comment by dave — December 31, 2014 @ 6:08 am
Dave, you won’t see it on Canadian Insider until the next morning after. Just click on the tab called “Marker” and you will see it. It appears on TMX.com the same day but not until later in the evening.
Filings by Transaction Date
Filings by Filing Date
Filings by Insider
Marker
Biz Brief
Markers (TSX Insider Summaries) for GGI on December 30, 2014
[?]
Marker Correction
Trading Date
Ticker
Insider Volume
Average
Buy Price
Average
Sell Price
Buy
Sell
Net
Dec 30/14
GGI
33,500
-33,500
$0.180
Comment by Dan — December 31, 2014 @ 7:10 am
Dave’s point, Dan, and it’s true, is that the same-day insider reports are usually but not always 100% accurate, and they also don’t indicate “who”…everything becomes official when insiders file the transactions, and sometimes that can show up within a couple days at canadianinsider.com…
Comment by Jon - BMR — December 31, 2014 @ 7:43 am