Archive for Commodities & Metals – Page 2

BRENT Analysis: OPEC + Decision on Cutting Production Entered into Force

By IFCMarkets

OPEC + Decision on Cutting Production Entered into Force

The decision of OPEC and independent producers to reduce oil production came into force. Will it lead to Brent quotes growth?

Under the OPEC agreement, the total reduction in oil production should be 1.2 million barrels per day. Of these, the OPEC share is 800 thousand barrels per day, and another 400 thousand must be provided by independent producers. In December, the production of the cartel has already decreased to 460 thousand barrels per day. Mainly due to this, last week, commercial oil reserves in the United States decreased by 4.5 million barrels. This numbers were announced by the independent American Petroleum Institute. According to official information from the Energy Information Administration, oil reserves in the US have grown. The next weekly records, that will be released on Wednesday, can significantly affect the dynamics of oil quotations. Another important influencing factor may be the outcome of the US-China trade negotiations, that will be held during January 7-8, 2019 in Beijing. The reduction of the intensity in mutual trade war can revive the global economy and increase the demand for oil.

Brent

On the daily timeframe, Brent: D1 has broken the downtrend resistance line upwards and adjusts upwards. Further growth of quotations is possible in the event of a reduction in world production and in case of an increase in demand.

  • Parabolic indicator shows a signal to increase.
  • The Bollinger bands have expanded, indicating a high volatility.
  • The RSI indicator is above the 50 mark. It has formed a divergence to increase.
  • The MACD indicator shows a signal to increase.

We do not rule out a bullish move if Brent exceeds its last maximum and 1st Fibonacci level: 59. This level can be used as an entry point. The initial risk limit is possibly below the last lower fractal, the minimum since August 2017 and the Parabolic signal: 50. After opening a pending order, move stop following the signals of Bollinger and Parabolic to the next fractal minimum. Thus, we change the potential profit / loss ratio to our advantage. After making a deal, the most cautious traders can switch to a four-hour chart and set a stop loss by moving it in the market direction. If the price overcomes the stop level (50) without activating the order (59), it is recommended to delete the pending order: internal changes occur in the market that were not taken into consideration.

Technical Analysis Summary

Position Buy
Buy stop Above 59
Stop loss Below 50

Market Analysis provided by IFCMarkets

A Golden (Long-Term) Opportunity

By Dan Steinbock

As global jitters are escalating with economic uncertainty and market volatility, gold looks more attractive. But there’s a big difference between its short- and longer-term prospects.

Those analysts who believe that fear has made a comeback argue that gold is benefiting as equities slide and investors are increasingly concerned about the economic prospects of the U.S., China, Europe and Japan. Yet, even at $1,290, gold still remains more than 30% behind its all-time high of $1,898 in September 2011 amid the U.S. debt-limit crisis.

Although U.S. dollar has not strengthened as much as anticipated, the Fed’s rising rates have contributed to the fall in gold prices. In this view, a reversal may be unlikely because the investor assumption is that the Fed will continue to normalize, though perhaps slower than anticipated.

In the postwar era, such tightening meant a strengthening U.S. economy and a stronger dollar. But at the time, American economy was not haunted by budget and trade deficits or a debt burden. Today, it suffers from both twin deficits and a massive $22 trillion sovereign debt burden.

In this view, the Fed’s normalization may not herald increasing stability, but contribute to instability and mixed signals in the U.S. economy. In that case, rising international uncertainty and volatility is likely to support an upward gold trajectory in the longer term.

Uneasy markets – and gold

Following the burst of the asset bubble in the U.S.(2008), Europe’s debt crisis (2010) and the U.S. debt-limit crisis (2011), markets plunged and gold soared until it peaked at almost $1,900 in September 2011. In the course of the past eight years, these fundamentals have not improved.

As central bankers in major advanced economies resorted to ultra-low interest rates and rounds of quantitative easing, markets tanked along with the oil prices, whereas gold soared. That period prevailed as long as central banks pushed cheap money and bought their multibillion dollar assets, while major advanced economies supported their ailing economies with large fiscal stimulus packages. It was great for gold but bad for equities.

The great reversal began with the Fed’s tightening in 2015, which boosted markets and strengthened the dollar, but penalized gold and oil, which both tanked. This phase accelerated significantly even before the Trump era with the expectation of the new administration’s deregulation, privatization and liberalization. Markets soared, gold lingered.

However, as Trump’s agenda became constrained by the Mueller investigation and investors grew concerned about tariff threats that became effective last summer, the mood became more volatile and the sentiment more uncertain. Today, Dow Jones remains more than 13% below its October peak (Figure).

Figure The Post-Crisis Decade: Gold and Equities, 2008-Present

Market forces behind upward trajectory

After its all-time high, gold has been seen largely as a weak asset until 2016, when it began to bounce, along with the Fed rate hikes. While it has advanced to $1,290, lingering uncertainty has resulted in fluctuations, which have effectively penalized further gains, yet prevented new plunges.

Market consensus tends to offer habitual reasons for gold’s upward trajectory. First, market volatility and economic uncertainty are back. Even Trump’s erratic tweets favor gold as a hedge against volatility, which boosts gold prices. And equity market volatility, as measured by the VIX, has tripled in just two months, after a long period of perceived calm.

Second, when a solid asset loses almost a third of its value, as gold did between 2011 and 2016, it becomes more cost-efficient. Gold’s average return is now more attractive.

Third, there’s the dollar story. Historically, a rapidly-strengthening dollar, typically boosted by rate hikes, has undermined gold’s gains. However, as the dollar has stabilized since early summer, downward constraints do not work as much against gold.

Finally, gold tends to be constrained by rising real rates (interest rates minus inflation). Since rising rates raise the opportunity costs of an asset that does not generate income, gold was expected to languish as the Fed would hike rates. But if real 10-year yields have peaked, as some argue, real rates may no longer pose a critical constraint to gold’s advances.

Secular strength in long-term

In the long-term, the picture may look different, however. It is the thriving U.S. economy and markets that keeps gold down. But have American fundamentals improved since 2011 debt-limit crisis? After all, today U.S. sovereign debt is twice as large as in 2011. And, according to CAPE (cyclically-adjusted PE ratio), equity valuations are almost twice as high as the historical norm – even amid the government shutdown.

Moreover, U.S. economy is no longer the key driver of global growth prospects; China and other large emerging economies are.

In long term, secular stagnation is set to broaden across the major advanced economies, which cannot be disguised by hyper-aggressive monetary policies, such as ultra-low rates, quantitative easing, or overpriced markets.

That’s one reason why several large emerging economies, which today fuel most of global growth prospects, and major oil exporters, are intrigued by the idea of re-coupling gold with a multilateral currency basket to avoid excessive exposure to U.S. denominated energy and commodity markets.

As China-supported One Belt One Road (OBOR) initiatives advance, U.S. dollar is being effectively sidelined by the yuan and other emerging-country currencies. Moreover, over time the OBOR is also likely to have a substantial impact on the gold market as it takes place in regions rich in mining resources and accounts for a vital share of global gold supply and demand.

Furthermore, there have been interesting shifts in gold reserves. While advanced economies, such as the U.S. and Germany, still own most global gold reserves, the U.S. has increased its gold holdings in the past decade only marginally, while Germany has been forced to cut its reserves. In contrast, China has tripled its reserves, while Russia has nearly quintupled its gold (after dumping billions of U.S. Treasuries), despite rounds of sanctions.

As some 90 percent of the physical demand for gold comes from outside the U.S., mainly from large emerging economies that are also fueling global growth prospects, gold is on the right side of the future.

(Based on an investor briefing on gold prospects amid new international uncertainty)

About the Author:

Dr Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and EU Centre (Singapore). For more, see http://www.differencegroup.net/ 

 

 

Natural Gas Through our $3.20 Target – What Next?

By TheTechnicalTraders.com

Our research team has been nailing the markets moves with our proprietary price modeling tools.  Our December 12, 2018 call that Natural Gas would collapse nearly 30% after reaching a price peak was a very bold call.  Who would have thought that predictive price modeling could be so accurate and could identify a move like this – or call for what is expected to happen next?

Back when Natural Gas breached the $4.60~4.80 range, our ADL predictive modeling system was suggesting a massive price anomaly was setting up.  These types of triggers are becoming more common as volatility in the general markets increases.  The ADL system suggested that a massive -30% downside price move would happen before the end of February 2019.

Now, as that trade has completed and our targets have been reached, we are alerting our followers that Natural Gas should begin to consolidate between $2.80 and $3.30 before attempting to rocket back above $4.00 near April or May 2019.  Read our original analysis of Natural Gas to learn why these moves provide an incredible opportunity for traders and visit TheTechnicalTraders.com to read up on our early 2019 market predictions.

Join our other members in making 2019 an incredibly successful year.  We believe 2019 will provide exceptional opportunities for skilled traders and we’ll be happy to share our proprietary research and analysis with you as a member of Technical Traders Ltd. You really don’t want to miss these moves and this incredible opportunity.  Think about it, one trade like this with a -30% selloff followed by a 24% price rally could make your entire year.  Imagine being able to find trades like this every week or month for success.  Visit TheTechnicalTraders.com and get ready to make 2019 a fantastic year of success no matter if we have a bull market or bear market.

Chris Vermeulen

 

Investors Keep Explorer’s Gold Project Advancing But More Slowly

By The Gold Report

Source: Streetwise Reports   01/03/2019

A BMO Capital Markets report discussed the firm’s recent financing and changes to the development plan for its Nunavut asset.

In a Dec. 21, 2018, research note, BMO Capital Markets analyst Andrew Kaip reported that Sabina Gold & Silver Corp. (SBB:TSX; RXC:FSE; SGSVF:OTCPK) will use proceeds from its recent CA$28.1 million bought deal financing to advance its Back River project and for general corporate expenses. BMO resumed coverage on this name after the financing restriction period ended.

Kaip relayed that the “offering looks to have been well received” with the initial CA$20 million target increasing to $25.3 million and Zhaojin International Mining, to maintain its 9.7% interest, investing an additional CA$2.8 million. The financing was done at CA$1.20 per share with 23.4 million shares issued, representing 8% dilution on a fully diluted basis.

The financing amount plus existing cash and cash equivalents at the end of Q3/18 minus the company’s estimated Q4/18 expenditures of CA$20 million should leave Sabina with a total of $47 million on the balance sheet at year-end 2018, wrote Kaip.

BMO revised its forecasted 2019 capital outlay for Sabina to CA$35–40 million from its previous estimate of US$120 million, Kaip indicated. This is due to the explorer having to take a more “staged development approach to Back River” because of the fact “the window for procurement and a larger sealift in 2019 has now passed.”

This slower approach, Kaip explained, means the company has added 12 months to its development schedule, with the start of production now slated for 2022. It also means a bit more capital will be needed; BMO now estimates that to be CA$462 million versus CA$450 million. The delay, however, is positive, Kaip wrote, because it will allow Sabina “to complete detailed engineering and lock down key construction contracts with more certainty.”

Kaip noted this change drops BMO’s estimated net present value 5% on Sabina by 13%, or to CA$1.45 per share. Even at this share price, the stock is “attractively priced relative to peers.” Thus, BMO maintains its Outperform rating and its CA$2.50 per share target price on Sabina, whose current share price is CA$1.25 per share.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from BMO Capital Markets, Sabina Gold & Silver, December 21, 2018

IMPORTANT DISCLOSURES

Analyst’s Certification
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.

Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific Disclosures
Disclosure 1: BMO Capital Markets has undertaken an underwriting liability with respect to Sabina Gold & Silver within the past 12 months.
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Sabina Gold & Silver within the past 12 months.
Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to Sabina Gold & Silver within the past 12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Sabina Gold & Silver within the past 12 months.
Disclosure 6A: Sabina Gold & Silver is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services.

For Important Disclosures on the stocks discussed in this report, please click here.

( Companies Mentioned: SBB:TSX; RXC:FSE; SGSVF:OTCPK,
)

Nevsun Goes; Yields of Almost 10% Are Available with Other Stocks

By The Gold Report

Source: Adrian Day for Streetwise Reports   01/02/2019

Money manager Adrian Day offers some final words on Nevsun and advice on good dividend-paying stocks for the New Year.

Nevsun Resources Ltd. (NSU, NY, 4.39) has been purchased by Zijin Mining of China, which received over 89% of the total shares outstanding voting in favor of the acquisition. Our sell on Nevsun would have filled at $4.39, for a gain of 64%. (Our first tranche was sold for a gain of 1,387%.)

If you tendered your shares, the cash will be delivered to the depository within three business days (and should be in accounts a day or two later). If you did not tender and have not sold, Zijin’s offer is being extended by 10 days, so you can tender and receive the CA$6 per share price; if you tender during the extension, the funds will be delivered within three days after the end of the extension. There is very little difference between the CA$6 and current $4.39 in New York. So you can sell—Wednesday to push the tax gain into next year—or tender.

Yields of Almost 10% of Solid Companies
Both of the business development companies on our list—Ares Capital Corp. (ARCC:NASDAQ) (15.61) and Gladstone Investment Corp. (GAIN:NASDAQ) (9.30)—saw stocks down sharply on misplaced concerns about higher interest rates. As discussed previously, the vast majority of the companies’ loans are at floating rates, while their debt is mostly at fixed rates, meaning rising interest rates actually widen the spread. It becomes a concern only when higher rates start to affect the ability of the portfolio companies, to which they have lent, to repay loans. That is not a significant concern at present.

Ares, selling below NAV and with a current, fully covered yield of 9.99%, and Gladstone, at a 24% discount to NAV, with a monthly yield of 8.8%, and supplemental distributions bring it to almost 10%, are both strong buys.

Kingsmen Creatives Ltd. (KMEN:SI) (0.50) announced a new collaboration with Hasbro to bring toys—from the Transformers to My Little Ponies—to life with Toybox, a “multi-brand life carnival” in Asia, commencing in February in Singapore. The contract is another example of how Kingsmen is the partner of choice in Asia. With a single-digit p/e, 5% yield and strong balance sheet, Kingsmen is a buy.

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

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Disclosure:
1) Adrian Day: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Nevsun Resources, Gladstone Investment and Ares Capital. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: Nevsun Resources, Ares Capital, Gladstone Investment and Kingsmen Creatives. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports (including members of their household) own securities of Nevsun Resources, a company mentioned in this article.

( Companies Mentioned: ARCC:NASDAQ,
GAIN: NASDAQ,
5MZ:SI,
NSU:TSX; NSU:NYSE.MKT,
)

Oil Is At The Mercy Of Financial Markets

By OilPrice.com

Oil prices regained more ground on Wednesday, pushed higher after equity markets rebounded from an initial selloff at the start of 2019 trading.

The price gains are not entirely convincing. WTI and Brent posted strong gains, each up more than 3 percent by midday in New York, but come largely after U.S. equity markets shook off an earlier bout of pessimism.

In fact, the trajectory and health of the global economy has moved to the top of the list in terms of variables exerting influence on oil prices. On any given day, stock prices offer a clue into investor sentiment in this regard. “Energy markets are following lockstep with what the equity markets are doing here, and I think that’s going to continue to be the case,” Brian LaRose at ICAP Technical Analysis, told Reuters.

There were not a ton of new indicators to offer further insight into what to expect in early 2019. The most recent piece of data came from China’s factory activity, which showed a contraction in December for the first time in two years – not exactly a positive signal.

“The manufacturing survey data out of China this week is particularly negative for crude oil, as it goes to the heart of the key demand center for the market,” said John Kilduff, a partner at Again Capital Management, according to Reuters.

On the other hand, just a few days ago, President Trump and Chinese President Xi Jingping apparently had a lengthy phone conversation in which they made progress on the trade front. Xi told Trump in a that he had “hopes that both teams can meet each other halfway and reach an agreement beneficial to both countries and the world as early as possible,” according to Xinhua. Trump followed that up in a tweet, stating that a “deal is moving along very well,” one that covers all subjects. “Big progress being made!” Trump said.

A thaw in the trade war could relieve one of the global economy’s major headwinds for 2019.

Oil traders also took heart in news that Saudi Arabia is following through on major oil export reductions. In December, Saudi Arabia slashed oil exports by roughly 500,000 bpd, according to Bloomberg. However, it could be some time before these cuts show up in the inventory data.

“Inventory draws as a result of cuts by OPEC+ may not be so easily visible for a while but avoiding a steep inventory increase in H1 2019 is what the market needs to see,” Bjarne Schieldrop, chief commodities analyst at SEB, said in a statement. There will be a several-month lag before the OPEC+ cuts start to be felt by the market. Oil producers have to first lower output, then there will be a corresponding effect on inventories.

However, the cuts may not be large enough to induce large reductions in storage levels. Instead, inventories may merely “stabilise,” Schieldrop said. On top of that, the IEA reports OECD inventory data on a two-month lag, so data for January won’t be available until March. However, one month’s worth of data may not tell us much, so the market may have to wait until April or May to get a sense of how the OPEC+ cuts are affecting the global supply balance.

Still, the cuts could put a floor beneath oil prices. “A bottoming for the oil price during Q1 2019 seems like a fair bet with higher oil prices thereafter,” Schieldrop said.

There will also be a lag in terms of a potential shale drilling slowdown in response to lower prices. During the last downturn, the reaction from the rig count data came at least six weeks after major oil price movements. As such, the recent meltdown in oil prices, which began back in October, may only now start to show up in the weekly rig counts.

At the same time, the EIA just released monthly U.S. oil production data, showing a jump in output in October to 11.537 million barrels per day (mb/d), up from 11.458 mb/d a month earlier. It was another solid increase in output, although to be sure, it was a fraction of the monthly increases for much of 2018.

Oil traders are still awaiting more definitive clues about the supply/demand balance, but volatility is likely to stick around for a while. In the short run, oil prices will likely follow global stock markets up or down on any given day until the fundamentals reveal a more discernable pattern.

Link to article: https://oilprice.com/Energy/Energy-General/Oil-Is-At-The-Mercy-Of-Financial-Markets.html

By Nick Cunningham of Oilprice.com

 

 

Gold Soars As Risk Sentiment Worsens On Weak US/China Data

Article By Orbex.com

Gold

The yellow metal had another bumper session this week, trading up to levels not seen since mid-2018, as the US Dollar weakened further. Despite the Fed having raised rates for a fourth time in 2018 at its last meeting in December, gold prices have since enjoyed a strong rally on expectations that the Fed will now pause its hiking program.

Weaker US data for December has added further bearish pressure to USD. In the first readings for December, both consumer confidence and IHS market manufacturing printed below expectations falling to 36-month and 15-month lows respectively. The data highlights the diminished outlook for US economic activity over 2019 which has lead to a resurgent appetite among gold traders and investors looking to use gold for its safe-haven status. At the Fed’s December meeting it lowered its dot plot forecast for 2019 from 3 hikes to 2 hikes.

forex gold

Gold prices are now firmly back above the broken bullish trend line from 2015 lows and are fast approaching structural resistance at the 1295.29 – 1304.36 region where we have confluence between prior highs and lows. Above here, the focus will be on a retest of the key 1366.80 – 1375.87 level which has been the high over the last four years.

 

Silver

Silver prices this week displayed a strong correlation with gold, rocketing higher as the yellow metal took off. While equity price declines can sometimes have a dampening impact on silver due to its uses in an industrial capacity, this week, the lower US Dollar helped light a fire under silver, taking it back up to mid-2018 levels.

forex silver

After stagnating for months near the main support of 1396, silver prices have since exploded higher and broken back above the key 15.1800 – 15.5700 level resistance, confirming a bullish shift in momentum. Prices are now fast approaching the 16.2267 region where we have confluence between a raft of prior swing lows and the long-term bearish trend line from 2016 highs.

Copper

Despite the weaker US Dollar, copper prices came under significant pressure this week, trading down to their lowest levels since H1 2017 as a combination of factors turned sentiment bearish.

Firstly, weak economic data out of the US and China fuelled fresh fears about the negative impact of the ongoing trade war between the world’s two largest economies. The Caixin Manufacturing PMI in China fell into contractionary territory in December exacerbating fears of a slowdown in China. Secondly, Apple downgraded its revenue outlook for the first time in 20 years due to reduced Chinese demand, further compounding fears about the outlook for the world’s largest consumer of copper.

forex copper

The sell-off in copper this week has seen price breaking down below the 2018 low of 2.582 and also through the sloping neckline of the large head and shoulder pattern which has formed over the past two years, signaling further downside to come. The next two support levels to watch are the 2.467 level and 2.292 level.

Iron

forex iron

Despite the heavy sell-off in copper and the broader negative sentiment linked to fears over a slowdown in China, iron ore prices have bucked the trend and traded higher this week. The main driver behind the moves is the short-term factors which are supporting iron such as the strong demand for coal linked to the peak winter fuel season as well as stimulus hopes which are keeping speculative traders poised for further upside. With Chinese data highlighting weakness, traders are banking on a fresh fiscal boost by the government which should translate into demand through increased infrastructure spending.

Iron ore prices are now just 3% down on the year after being as low as – 25% a few months ago. There is some interim resistance in the 71 – 72 region from prior swing highs and lows but the next main resistance to watch is the 76 level where price peaked on its last main rally.

Article By Orbex.com

Tax-Loss Buying Candidate Kutcho Copper Completes 2018 Drill Program; FS Scheduled for Q2/19

By The Gold Report

Source: The Critical Investor for Streetwise Reports   12/31/2018

The Critical Investor explains why he sees this company as a “solid buying opportunity.”

1. Introduction

Although Kutcho Copper Corp. (KC:TSX.V) remains under the radar of most it seems, it doesn’t seem to lose a lot of time, and continues doing the heavy lifting in order to advance its flagship project, the Kutcho high-grade copper-zinc project in British Columbia, Canada. Backed by a financial package arranged with Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE), Kutcho completed its 2018 drilling and exploration campaign at the end of October as planned (winter break), and is processing all data now. A Feasibility Study (FS) is planned for the end of Q2, 2019. The company’s blockchain initiative MineHub isn’t shelved either, and management intends to publish a news release with current developments and partner names within a few weeks from now.

All presented tables are my own material, unless stated otherwise.

All pictures are company material, unless stated otherwise.

All currencies are in US dollars, unless stated otherwise.

Please note: the views, opinions, estimates or forecasts regarding Kutcho’s performance are those of the author alone and do not represent opinions, forecasts or predictions of Kutcho or Kutcho’s management. Kutcho has not in any way endorsed the information, conclusions or recommendations provided by the author.

2. Update

The Kutcho Copper project appears to be managed very timely and professionally, but the markets fail to recognize what exactly is being done here. With a profitable (post-tax IRR of 28% @$2.75/lb copper, @$1.10/lb zinc) project that has a post-tax 2017 PFS NPV8 of C$265M, which is 18 times bigger than its current market cap, Kutcho deserves better instead of this chart in my view:

61.jpg
Share price over 1 year period

As mentioned in former analysis, the share price indeed went down last week at the peak of tax loss selling, as expected, and one seller even brought down the stock to C$0.20 by then, which was a golden buying opportunity in my view. CEO Sorace didn’t like the cheap pricing of the last few months at all, and had a shareholder rights plan adopted by the Board of Directors (BoD), shareholders and the TSX Venture. According to the accompanying news release, this is what it was about:

“The SRP has been adopted to ensure, to the extent possible, that all shareholders of the Company are treated fairly and equally in connection with any unsolicited take-over bid or other acquisition of control of the Company, and that the Board is provided with adequate time to consider and evaluate such a take-over bid or other acquisition and, if appropriate, identify, develop and negotiate any value-enhancing alternatives. Furthermore, the SRP will allow the Board to pursue, if appropriate, other alternatives to maximize shareholder value and to allow additional time for competing bids to emerge.”

In short, it gives management and BoD time and options to fight a hostile takeover attempt. Such an attempt isn’t unrealistic, as there are very few economic copper deposits around, and the outlook for the metal is still very robust.

The copper price remains side-ranging at US$2.68/lb Cu, as trade war concerns seem to dominate commodity demand, and zinc trades at US$1.16/lb Zn. The fundamentals for copper are still very strong for the next three years, with a 5-10Mt deficit expected by 2021. Zinc is developing/behaving differently, as it is less fragmented as a market, warehouse inventories have impact, smelters have even more impact on pricing and basically control the zinc market anyway.

Whereas competing base metal prices are falling left and right as far as profitability of their projects is concerned, the Kutcho project isn’t losing any profitability at the moment as the base case metal prices were almost set at today’s prices. It is very rare to see this happening for a base metal project these days, and shows the strength of its economics. Updating of tonnage is on its way and will likely be a significant improvement regarding the current 10.4Mt. Improving recoveries of copper and zinc, higher metal prices and further optimization of, for example, mine plan and opex could help economics even more. As the Canadian dollar loses strength toward the US dollar as the Canadian economy is dependent on the dropping oil price, FX effects might help as well in the future.

In the meantime, Kutcho has been busy on all fronts.

3. Exploration results

Kutcho’s 2018 drill program involving nearly 11,000m (7,000m of geotechnical drilling and 3,850m of infill/expansion, both at the Main Zone and Esso) has been completed at the end of October of this year, and the FS data collection has been completed mid October, all according to plan. Metallurgical results are expected in February 2019.

I would like to highlight a number of assays and sections from a series of news releases involving the 2018 drill program. For a better understanding, here is a 3D model of the three deposits: Main, Sumac and Esso:

48.jpg

Looking at the orebodies in a bit more detail, the plan and 3D section including drill holes are represented like this (taken from the 2017 PFS):

78.jpg

And as a reminder, here is a table that indicates the increased tonnage at Main by lowering the cut-off grade from 1.5% Cu to 1.0% Cu:

20.jpg

The 2017 Main Zone Reserves figure shows 8.1Mt @ 2.59% CuEq, but in my view this is likely to increase towards a pretty conservatively estimated 11Mt figure after using the lowered cut-off. The Esso resource figures stand at 2.3Mt @4.05% CuEq Probable Reserve, the Esso M&I resource stands at 2.4Mt @ 4%, so there was hardly any dilution when converting from resources to reserves at Esso so far. Therefore, total Probable Reserves are likely going to 13.4Mt just based on this data.

The Sumac Inferred Resource stands at 4.8Mt @1.7%CuEq.

Let us have a look at the results.

First of all there was a very strong infill intercept on Esso:

75.jpg

This intercept can be seen here:

63.jpg

Infill intercepts don’t look spectacular but they are also adding tonnes as they can fill in areas that are outside the existing circles of influence of the current resource estimate. Such a hole is capable of adding 40–50kt, for example.

Further drilling at Esso delivered an extension at depth, indicating a new high-grade stringer zone, although of relatively limited size and grade. My estimate about this is that it could add 300–500kt if it extends over a length of 200–300m alongside the edge of the current deposit. A table with highlights of Esso and Main drilling looks like this:

76.jpg

Drill hole KC18-225-W1 can be seen here in this section:

77.jpg

Together with these Esso results, numerous Main assays showed great continuity of mineralization, as can be observed, for example, in this section, and will undoubtedly add tonnage:

64.jpg

The next set of reported results indicated further confirmation of continuity and high grade, as can be seen in the following table and section:

73.jpg

66.jpg

The confirmation of the high-grade parts of Main is nice to have, but not very important, as most assays are spread out evenly for copper, with a coefficient of variation (CV) of 0.9, which is very good. Usually, a CV of 2.0 is a base level, and values above 5 are seen as risky. The solid distribution can be observed in this chart taken from the 2017 PFS:

79.jpg

It is good to see the Main Zone seems to hold up well for higher-grade mineralization though. For illustration purposes, the distribution of high-grade pods looks like this:

80.jpg

The next set of results on Main indicated an extension of mineralization of 50m down dip, along strike over a 250m distance, represented by hole KC18-282:

71.jpg

As can be seen in the next section, it is a thin extension and probably the end of the mineralized orebody, but still capable of adding 250–500kt:

72.jpg

Further stepout drilling at Main at depth confirmed the earlier mentioned 250m wide extension of 40–50m along strike, for example by KC18-285, and other holes like KC18-277 that didn’t intercept economic mineralization at 25–30m further along strike from the last mineralized hole indicated the boundary at depth for Main, in my view, limiting further potential at depth. Here is the table:

70.jpg

Here are the sections, indicating KC18-277 and KC18-285:

69.jpg

70.jpg

Of course, it is never easy to guesstimate as a non-geologist what the additional tonnage could be without all results and the necessary software at my fingertips, but in my view an estimated 13.4Mt after lowering the cut-off could be increased by a conservatively estimated 0.5–1Mt expansion, and another 0.5–1Mt because of infill drilling. The upcoming resource update could therefore show larger Reserves, to the tune of an estimated 15Mt, which will result in an increased NPV8, of course.

4. DCF analysis, estimated economic potential

When I would use my estimated 15Mt scenario, for other assumptions an 80% Zn recovery rate, a 1.25 exchange rate, a US$2.75 base case copper price and a fixed US$1.10 Zn price, a 2,500tpd throughput scenario for a LOM of 18 years, and a 4,500tpd throughput scenario for a LOM of 9 years, this could be the resulting, hypothetical sensitivity table:

81.jpg

I am curious if Kutcho can come close to my estimated 15Mt or even higher. This is below my initial estimate of 20Mt, but it is already a deeply undervalued play, as an after tax NPV8 of C$265 million based on just 10.4Mt is 18 times current market cap as mentioned. C$314 million is 21 times market cap, and C$361 million is 24 times market cap. You just don’t see such numbers involving solid projects around very often, if ever.

5. Conclusion

Kutcho Copper is priced as if there are serious issues, but there seems to be none, as permitting is going smoothly with very good working relationships with the First Nations, and drill results at the very least seem to confirm PFS mineralization so far.

It puzzles me, it puzzles management, which felt it could do no else than protecting the company with a shareholder rights plan, as Kutcho wasn’t set up to let it go early on the cheap. When mining sentiment turns, this company should be one to benefit, as in my opinion its fundamentals are among the strongest of all mining projects out there. As the stock seems to have bottomed out during tax loss selling season in mid-December, I see Kutcho Copper as a solid buying opportunity.

59.jpg
Kutcho project

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter on my website http://www.criticalinvestor.eu to get an email notice of my new articles soon after they are published.

The Critical Investor is a newsletter and comprehensive junior mining platform, providing analysis, blog and newsfeed and all sorts of information about junior mining. The editor is an avid and critical junior mining stock investor from The Netherlands, with an MSc background in construction/project management. Number cruncher at project economics, looking for high quality companies, mostly growth/turnaround/catalyst-driven to avoid too much dependence/influence of long-term commodity pricing/market sentiments, and often looking for long-term deep value. Getting burned in the past himself at junior mining investments by following overly positive sources that more often than not avoided to mention (hidden) risks or critical flaws, The Critical Investor learned his lesson well, and goes a few steps further ever since, providing a fresh, more in-depth, and critical vision on things, hence the name.

The Critical Investor Disclaimer:
The author is not a registered investment advisor, currently has a long position in this stock, and Kutcho Copper is a sponsoring company. All facts are to be checked by the reader. For more information go to www.kutcho.ca and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

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4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Wheaton Precious Metals, a company mentioned in this article.

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Is This the Start of a Silver Bull Market?

By The Gold Report

Source: Clive Maund for Streetwise Reports   12/31/2018

Clive Maund provides a technical analysis on silver and explains why he believes recent movements could be the “opening shot of a a major bull market.”

The last update was wrong. Silver was expected to drop with the stock market, but instead it held its ground and then broke higher last week. The reasons for this misinterpretation, both for gold and silver, are set out in the latest Gold Market update, and will not be repeated here.

On the 6-month chart we can see that while gold continued to advance in December, albeit incrementally, silver continued to be restrained by the resistance at the upper boundary of what is now clear is a Double Bottom base pattern, until several days ago when, under increasing positive influence from gold, it broke clear above it. Since it has arrived at resistance at its falling 200-day moving average it is entitled to take a rest here, if it feels so inclined, and consolidate or perhaps react back a little. This breakout bodes well for the longer-term and may well be the opening shot of a major bull market.

Although silver’s action of the past few weeks may look like no big deal on the straight silver chart, it looks a whole lot more impressive on the chart for silver relative to the stock market. This chart shows that silver was a helluva lot better place to be in recent weeks than the stock market. This chart also implies that silver is going to continue to perform well as the great broad stock market bear market unfolds, in marked contrast to what happened in 2008, for reasons that are set out in the latest Gold Market update, that apply to both gold and silver.

In light of this break higher, the 10-year chart for silver also looks a whole lot better than it did just a short while ago. This is because silver appears to be starting to ascend away from the 2nd trough of a much larger Double Bottom, within which the much smaller Double Bottom shown on the 6-month chart is embedded.

Note that the latest COTs are not included in this update because they have been delayed by the Christmas holidays, and will become available early this coming week.

Now we will look at a most inspiring chart which shows that, regardless of near-term fluctuations, if you invest in the precious metals sector here, you will have the deck heavily stacked in your favor. The PM sector has been about the only one that hasn’t become a bubble in recent years, and the way things are shaping up, it could wind up being the only sector that becomes a bubble while most everything else is dropping through the floor.

This chart is the one showing the silver to gold ratio which recently reached a 24-year record extreme as shown by the 20-year chart for this ratio below, which alone is a sign that the sector is close to a bottom and also that a major new bull market is likely to start before much longer.

Extreme low readings for this ratio have occurred three times in the past 20 years, each time leading to either a bull market or a big rally. The low reading in mid-2003 lead to the bulk of the 2000’s precious metals sector bull market. The low reading in 2008 lead to the big post 2008 crash recovery in the Precious Metals (this time gold and silver DO NOT look set to drop with the market, because of the more negative outlook for the dollar), and lastly the low reading early in 2016, when PM stocks were crazy cheap, lead a big rally into July of that year. The ratio has just been below that low.

Finally, it is worth taking a sideways look at the 20-year chart for the platinum over gold ratio, which reveals that platinum is astoundingly cheap compared to gold—at a 20-year plus record low. What is all the more surprising about this situation is that it exists at a time when the world’s biggest platinum producer by far, South Africa, which produces about 70% of it, is going to the dogs, as the country is run by zealots who appear to be intent on taking the same ruinous road as Zimbabwe after Mugabe took control. The bullish Falling Wedge visible on this chart implies that platinum is going to break higher soon and probably outperform both gold and silver as all three metals embark on major bull markets.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

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CliveMaund.com Disclosure:
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.

Uranium Company Decides to Advance Athabasca Project

The Energy Report

Source: Streetwise Reports   12/27/2018

A ROTH Capital Partners report considers this Canadian firm’s news a positive development.

In a Dec. 19 research note, analyst Joe Reagor reported that Denison Mines Corp. (DML:TSX; DNN:NYSE.MKT) intends to advance Wheeler River, its Athabasca Basin uranium project, into the permitting phase, beginning with an environmental assessment.

“We view this as a positive step towards eventually developing the project,” he added.

The forecasted budget for moving forward in 2019 is $10.3 million. Denison has committed to funding its part, about 90% of the total.

Reagor noted that a potential near-term, “significant positive” catalyst for the uranium explorer/developer is the receipt of successful results from in situ recovery testing for the Phoenix deposit, where it intends to do wellfield and pilot plan testing.

Permitting activities, including the economic assessment, will not likely move the stock in 2019—but could in subsequent years, indicated Reagor.

ROTH’s valuation on Denison remains the same, as do its Buy rating and $1.40 per share price target. The energy company’s share price today is about $0.63.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from ROTH Capital Partners, Denison Mines Corp., Company Note, December 19, 2018

Regulation Analyst Certification (“Reg AC”): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

ROTH makes a market in shares of Denison Mines Corp. and as such, buys and sells from customers on a principal basis.

Shares of Denison Mines Corp. may be subject to the Securities and Exchange Commission’s Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.

ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.

( Companies Mentioned: DML:TSX; DNN:NYSE.MKT,
)