Gold has traded between $1,096 and $1,109 so far today…as of 8:45 am Pacific, bullion is down $7 an ounce at $1,098…Silver is up a nickel at $13.98…Copper has slipped 4 cents to $1.99…Crude Oil is down for a 6th straight session, $1.52 a barrel to $31.64, while the U.S. Dollar Index has gained one-third of a point to 98.61…
Silver has some catching up to do with Gold…the yellow metal is trading near a 2-month high and its current price buys 78.5 ounces of Silver, near the most since August…in the past 2 decades, the ratio has only been above that level on about 5 occasions, and never for more than 3 months…since the early 1970‘s, the ratio has averaged about 56, according to data compiled by Bloomberg…for the measure to decline, Silver would need to climb more or fall less than Gold…
“People have been looking to Gold for a safe haven, and that is what you will expect at this stage,” said Grant Sporre, an analyst at Deutsche Bank in London. “But pretty soon they’ll start looking at the relative-value trades, and that’s when you’ll see Silver perform.”
When the ratio peaked at almost 80 in August, Silver rallied 14% in the following 2 months…Gold added about 5% in the period…
China contagion is spilling over to Hong Kong banks…a key lending rate among Hong Kong banks made its biggest ever daily move today, jumping a whopping 939 basis points to a record high of 13.4%…Hibor – similar to its London cousin, Libor – was launched in 2013 and is set each day by quotes from 20 banks that are authorized to submit rates…it’s the rate used for trillions of Hong Kong dollars worth of mortgages and other lending rates in the city…Hong Kong’s Hang Seng index closed down 2.7%, falling under the 20,000 threshold for the first time since June 2013, while the HSCEI (Hong Kong Hang Seng China Enterprises Index) closed at a new 4+ year low of 8505…
Meanwhile, China’s equity markets took another dive for the second straight Monday to begin 2016…the Shanghai Composite tumbled more than 5% overnight to close just above the 3000 level (nearest Fib. support rests between 2700 and 3000 but this market has clearly broken down from a technical standpoint)…missteps by China’s authorities in handling their equity markets and currency have led to concerns Beijing might lose its grip (or has lost its grip) on economic policy as well…China will face great difficulty in achieving economic growth above 6.5% over the 2016-2020 period due to slowing global demand and rising labor costs at home, the China Securities Journal quoted a top state adviser as saying…
Although the trend toward a weaker currency should support Chinese exports, investors are concerned that any rapid downward adjustments to the yuan could spark a global currency war and would also be a sign that the world’s second-largest economy is slowing faster than expected…
OECD Sees Slowing Growth In U.S.
According to a report released today by the Organization for Econmic Co-operation and Development (OECD), economic conditions are actually stabilizing in China…the OECD’s outlook is for steady growth in the euro zone, while the U.S. and U.K. economies are losing steam…the Paris-based group said that its monthly leading economic indicator, which supposedly captures economic turning points, showed signs of stabilization in both China and Brazil…markets appear to be looking at things differently, however…
“In the United Kingdom and the United States, the CLI’s (Composite Leading Indicators) point to easing growth, albeit from relative high levels,” the OECD stated. “Amongst the major emerging economies, the CLI’s for China and Brazil confirm the tentative signs of stabilization flagged in last month’s assessment,” it said. “In Russia, the CLI anticipates growth losing momentum while the CLI for India signals firming growth.”
Though the OECD did not refer to this, one source of hope for the global economy this year and beyond is the Trans-Pacific Partnership (TPP) which, when ratified sometime in 2016, will eliminate 18,000 tariffs for 25% of global trade…
Photo Of The Day
View of Mount Kaketsa, the large pluton mostly on Garibaldi Resources’ Grizzly Property, from a ridge more than 10 km to the northeast (BMR photo). Kaketsa is believed to be the source of mineralized systems (deposits) that may exist on all sides of the fertile pluton in the prolific Sheslay district.
In today’s Morning Musings…
1. Updated chart for the struggling TSX…
2. NioGold Corp. (NOX, TSX-V) jumps 30% on a takeover…
3. A profitable intermediate high-grade Gold producer that should be on everyone’s radar screen…
Plus more…to view the rest of today’s Morning Musings, login with your username and password, or click here to gain full access to this and other exclusive BMR content and features…
what happened to the venture?? go to shovel some snow and come back and its tanking????
Comment by Jeremy — January 11, 2016 @ 11:27 am
The drop below the rising 20-day SMA at 512 induced some technical selling, Jeremy. As per our Week in Review report, what you want to see in an early uptrend is the short-term moving averages hold and continue to climb…512 didn’t hold today. We’ll see what tomorrow brings. Index likely range-bound between the 494 and 531 Fib. levels until the right moment comes for some traction – the key will be a flattening out and then a reversal to the upside in the 50-day, just looking at moving averages. Mondays do tend to be weak, today was a good example.
Comment by Jon - BMR — January 11, 2016 @ 12:46 pm
Jon, with all due respect, I don’t put to much faith in charts, “the market does what the market does” if you follow. Events like China for example, practically makes charting useless IMO.
Maybe I just don’t I understand charts but instead let the stock and/or index pricing the “talking”…
Comment by Jeff — January 11, 2016 @ 12:54 pm
TA is an essential tool in any investor’s toolbox, Jeff – combining the fundamentals with the technical side of the equation is really critical, with broader markets or of course individual stocks…you bring up a good example with China…the breakdown below support at 3400 on the Shanghai clearly signaled that something isn’t right – more trouble on the way…Oil’s breakdown below its long-term uptrend support last year was a huge red flag as well, and that’s when John first warned about the possibility of $50 Oil, then $20 Oil…there are countless examples of how basic use of TA can save you money or make you money…
Comment by Jon - BMR — January 11, 2016 @ 1:31 pm
Gezz, China, India, Japan, whichever, they have nothing to do with what’s going on, it’s the us dollar plain and simple, you cannot have 60 % of world tradable currencies devaluating and expect the world to go around, yellen and her gang of bafoons are very very concerned about the appreciation of the dollar, the fed minutes from the last 2 years , the dollar has been mentioned maybe 1or 2 times , fed minutes from this last one in December ,the dollar was mentioned no less than SEVEN times, clearly hiking rates will backfire on the US, unless the dollar dives soon, back to zero next fed meeting. Done with my rant….
Comment by Tombc — January 11, 2016 @ 2:15 pm
Tom- Well said!! You are 100% right!!
Comment by Jeff — January 11, 2016 @ 2:58 pm
Jeff – if TA didn’t work, it wouldn’t exist. News releases of coarse could and do alter TA when they come. Cash is king in bad times.
Comment by dave — January 11, 2016 @ 3:03 pm
Dave – I hear you pal. What’s the latest your hearing on EQT?? Have you moved yet??
Comment by Jeff — January 11, 2016 @ 3:43 pm
Tom, I agree, either the dollar drops or the fed backtracks on the rate hike, either scenario is bullish for gold
Comment by Sameer — January 11, 2016 @ 5:01 pm
Jon, what ever happened to the interview with Regoci? Weren’t you going to share it with your subscribers?
Comment by Dan1 — January 11, 2016 @ 6:30 pm
Yes we are, Dan, it’s coming…
Comment by Jon - BMR — January 11, 2016 @ 7:11 pm
EQT- Wednesday
Comment by murf — January 11, 2016 @ 8:28 pm
Jon, what did you think of the news from ELT today? It looked positive but ELT ended up selling off after. Tough market right now!
Comment by Danny — January 11, 2016 @ 9:15 pm
Anyone care to comment on what happened with Argonaut Gold yesterday? Curious if now might be a good time to get in. Seems like a solid company overall.
Comment by LAJ — January 12, 2016 @ 4:26 am
They’re struggling, LAJ, losing money…demonstrates the importance of high-grade (and not a “complex” deposit of the Rubicon variety)…how is AR going to make things work? I don’t know…there are much better producers to choose from.
Comment by Jon - BMR — January 12, 2016 @ 5:36 am
Rubicon Minerals delisted, Duluth Metals torpedoed, Comstock Mining is garbage headed for 0.0’s, Freeport MCM headed for 1-2 per share on $20 oil, Noront Resources are they still in conflict with the tribe? Let’s hope GGI doesn’t pull an EQT.
Comment by ConcernedCitizen — January 12, 2016 @ 5:37 am
The case of the vanishing gold deposit, amazing what happened with Rubicon but that’s just an example of bad management. They still have some money in the till which is their only advantage right now, but that may not last for long.
Great drill results from Pretium this morning: 494.91 grams per tonne gold uncut over 21.00 m including 20,287 g/t Au uncut over 0.50 m.
Richmont has exceeded guidance with 98,000 ounces produced in 2015.
Fresh support on Gold is $1,080 according to John’s latest chart.
Not just a discovery but a deposit on the way for GGI IMHO.
Comment by Jon - BMR — January 12, 2016 @ 5:44 am
Jon, quite right. Lawsuits are costly, kiss that money goodbye. Buhbye Rubicon.
Comment by ConcernedCitizen — January 12, 2016 @ 5:57 am
You’re right, CC, that’s sort of what I was referring to. It won’t last long. It’s interesting that they were advised of certain issues from the Ministry in early September of last year, shortly after a Canaccord analyst hiked Rubicon to a speculative buy, but that wasn’t disclosed to the market until early October when it was also announced that the CEO had fled out the door. Those were the first signs of major trouble.
Comment by Jon - BMR — January 12, 2016 @ 6:10 am
TSX Gold Index at Fib. support (132), ideal new entry point for HGU around $17 (chart this morning) and from its 50-day SMA ($16.50). CRJ and RIC also very attractive on this pullback.
Comment by Jon - BMR — January 12, 2016 @ 7:41 am
when will it be time to just simply admit that the market and all the people in it are toast… never to return.. volumes on the V are anemic, everything is in the tank, no logical reason for things to come out especially after the largest expansion period since WWII..
the glass half empty mindset is that there will never be the level of resource requirements ever again that was needed in the past 20 years..
Some guy last night on CTV news – an economics prof – said that the economy has changed as of now. it isnt the same economy as it was 2 years ago.. it has changed forever..
what that means to me is that our power play due to our resources is over.. we are on the penalty kill now for a very long time..
from one extreme to the other.. comments?????
Comment by Jeremy — January 12, 2016 @ 9:52 am