Archive for Metals

Gold to see a wave of volatility due to Powell’s testimony and USD inflation?

By Admiral Markets

Source: Economic Events November 13, 2019 – Admiral Markets’ Forex Calendar

Today, the recent volatility in Gold could find a new trigger when the US inflation rate is published, and Fed chairman Jay Powell testimony on the economy before US Congress in the afternoon.

After the Fed cut came as expected, rates by 25 basis points on October 30, but didn’t deliver any significant further impulses or signs in regards to future monetary policy steps. The “data dependent” part in the Fed statement left market participants speculating that the Fed won’t deliver any dovish hints or a looser monetary policy announcement in the next few months.

“Obviously”, because in the first days of November 10-year US-Treasury yields took on bullish momentum, gaining over 20 basis points while Gold dropped significantly below 1,500 USD.

With expectations among market participants of another Fed rate cut by 25 basis points in December dropping to around 5%, indicating that such a step is very unlikely, so the bullish outlook for Gold darkened a little.

But, if US core inflation comes in below the expected rate of 2.4% and in addition to that Jay Powell’s remarks in front of the US Congress later that day raises fears around a rather sooner than later darkening US economic outlook, the yellow metal could make back at least some of the recent losses.

Still, only if Gold bulls succeed in breaking above 1,520 USD, another test of the current yearly highs around 1,557 USD would be possible, currently the mode seems short-term bearish.

Nevertheless, the overall technical picture on a daily time-frame looks still solid, didn’t significantly darken after the drop below 1,500 USD, but instead brings now a potential mid-term long trigger around 1,440/450 USD into play:

Source: Admiral Markets MT5 with MT5-SE Add-on Gold Daily chart (between August 14, 2018, to November 12, 2019). Accessed: November 12, 2019, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of Gold fell by 1.7%, in 2015, it fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, meaning that after five years, it was up by 6.4%.

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Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter “Analysis”) published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

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  3. Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter “Author”) based on the Author’s personal estimations.
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By Admiral Markets

What to Do NOW in Case of a Future Banking System Breakdown

By Money Metals News Service

The banking system may not be as sound we’ve been led to believe. It continues to get propped up through central bank interventions, which strongly suggests it wouldn’t be able to stand on its own.

Last Thursday, the Federal Reserve injected another $115 billion into financial markets via “temporary operations.” The Fed is targeting the repo market in particular, through which banks lend to each other on an overnight basis.

For some reason, banks have grown weary of committing liquidity to each other in what should be one of the safest lending markets on the planet.

Perhaps they are being overly cautious. Perhaps they (or one in particular) are simply being opportunistic.

After all, the liquidity shortage in the repo market led to a massive deluge of subsidized liquidity from the Federal Reserve and the launch of what is effectively a new phase of Quantitative Easing. When something goes wrong in the financial system, banks win.

JPMorgan Chase may have triggered the whole mini-crisis by moving more than $130 billion of excess cash out of the pool of reserves. That created a domino effect that tightened overall liquidity in the interbank lending market.

Former Congressman Ron Paul proffers another explanation:

“One cause of the repo market’s sudden cash shortage was the large amount of debt instruments issued by the Treasury Department in late summer and early fall. Banks used resources they would normally devote to private sector lending and overnight loans to purchase these Treasury securities.

This scenario will likely keep recurring as the Treasury Department will have to continue issuing new debt instruments to finance continuing increases in in government spending.”

Regardless of the cause, if the Fed had not intervened millions of people with holdings in bank accounts and money market funds could have seen their wealth diminish or even disappear.

Although Jerome Powell and company have apparently stabilized the repo market (for now), questions remain about systemic risks in the financial system.

Critics of fractional reserve banking have long noted that it renders banks inherently vulnerable to bank runs.

Prior to the Federal Reserve System backstop and FDIC “insurance” for deposits, banks had to maintain much larger equity cushions. Some backed deposits dollar for dollar. Today major banks are so highly leveraged, they may only have 5 cents in reserve for every dollar of deposits.

A plunge in their capital value, a major economic downturn, or a crisis event that triggered mass withdrawals could render most banks insolvent. Since major banks have been deemed “too big to fail,” the government and the central bank would stand ready to bail them out.

But what if the authorities fall so far behind the curve that the whole financial system one day collapses on itself?

That came dangerously close to happening in 2008. Had the Fed let one more iconic financial institution go the way of Lehman Brothers, all the big banks may have quickly followed suit. Customer deposits would have been frozen until the authorities figured out how to bail out or bail in the banks on an unprecedented scale.

Money market funds should maintain a stable value even during severe downturns in stock or bond markets. In practice, they could be vulnerable to a “black swan” event that hits the financial system in a way nobody expects.

Run on the Banks

When such an event occurred in 2008, some large money market funds “broke the buck” – at least temporarily – and failed to maintain their promised stable value. Money market assets held via a brokerage account or mutual fund are generally not insured.

Treasury-only money market funds can be held to minimize credit risk.

They hold only short-term U.S. Treasury bills. During a credit crunch, Treasuries would theoretically be the safest, most liquid IOUs to hold – especially since the Federal Reserve has now committed to purchasing T-bills on a monthly basis.

Of course, T-bills aren’t guaranteed to preserve purchasing power. They are instead virtually guaranteed to lose purchasing power over time versus inflation.

Holding hard assets outside the banking system is therefore a must if you want to protect against the risks to the financial system as well as the currency that underpins it. Gold and silver are the ultimate money and could become premier “growth” assets during a monetary crisis.

The last thing you’d want to do with your precious metals is get them tied up inside the banking system.

Safe-deposit boxes at banks are generally not suitable for precious metals storage. Some banks have policies that explicitly prohibit storing gold bullion. Regardless, your gold would be at risk in the event the bank goes under or gets raided by government agents.

We’re not here suggesting that you immediately liquidate and close all your bank accounts. Going unbanked would be an awful inconvenience for most people. Instead, just be sure you hold some liquid wealth outside the financial system sufficient to get you through any potential banking breakdowns.

 


The Money Metals News Service provides market news and crisp commentary for investors following the precious metals markets.

XPTUSD Palladium Analysis: In Asian countries car sales are declining worldwide

By IFCMarkets

In Asian countries car sales are declining worldwide

According to Japanese Automobile Manufacturers Association (JAMА), the manufacture of cars in Japan in august 2019 was decreased by 2.2 % if compared to a year ago. Will the palladium quotations fall?

80 % of the world’s consummation of palladium is accounted for by the automotive industry and the production of catalysts to reduce harmful gasoline engine emissions. Another 5% is consumed by the global chemical industry. As environmental standards tightened, the demand for autocatalysts increased and the price of palladium soared 3 times in the last 3 years. Now it has reached the psychological level of $ 1600 / ounce for the 2nd time. Meanwhile, according to the estimates of the Association of European Businesses, the Association of European Automobile Manufacturers and a number of consulting agencies, sales of automobiles in the world decreased by 7.4% in 1Q2019 compared to the same period of 2018. The data for the first half of the year may turn out to be even worse, since according to official data, the decline in car sales in China in January-May 2019 was 15.2%. Note that after 3-fold growth of palladium quotations, its consumption has decreased in the jewelry and electronics industry, in dental prosthetic and in the issue of investment coins and bars. Theoretically, it is possible to increase the dependence of quotations on the state of affairs in the global automotive industry and the chemical industry.

XPDUSD

On the daily timeframe, XPDUSD: D1 breached down the support line of the uptrend. The price decrease is possible in case of a decline in global demand of gasoline cars and, thus, the demand of autocatalysts from palladium.

  • The Parabolic indicator demonstrates a signal to decrease.
  • The Bolinger bands narrowed, indicating a volatility decrease. The upper band is titled downward
  • The RSI indicato is above 50. It has formed a negative divergence.
  • The MACD indicator дgives a bearish signal.

The bearish momentum may develop in case XPDUSDfalls below the two last fractal lows: 1730. This level may serve as an entry point. The initial stop loss may be placed above the last fractal high, the historic high, the upper Bollinger band and the Parabolic signal at 1850. After opening the pending order, the stop shall be moved following the Bollinger and Parabolic signals to the next fractal maximum. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place a stop loss moving it in the direction of the trade. If the price meets the stop level (1850) without reaching the order (1730), we recommend to cancel the order: the market sustains internal changes that were not taken into account.

Technical Analysis Summary

Position Sell
Sell stop below 1730
Stop loss above 1850

Market Analysis provided by IFCMarkets

White Gold Delivers, Investors Don’t

By The Gold Report

Source: Bob Moriarty for Streetwise Reports   11/10/2019

Bob Moriarty of 321gold discusses the stock price of this explorer with a major gold resource in the Yukon.

White Gold Corp. (WGO:TSX.V; WHGOF:OTCBB) is one of those companies with great partners, Kinross Gold as well as Agnico Eagle, over 1.7 million ounces in a gold resources in one of the best gold camps in Canada but can’t seem to get any respect. At the end of December of last year the shares traded as high as $1.69 but have tumbled lately to a new yearly low of $0.73.

I’ve said this before and I’ll keep saying it until everyone gets it. The key to making a profit in investing is to buy when things are cheap and sell when they are dear. White Gold has gone from $0.54 in September of 2018 up to $2 a month later and has dribbled back down. Surely there was a lot of potential to trade those shares at a profit in there somewhere.

In spite of the bundles of crisp $100 bills being tossed on a bonfire by the Fed since a Black Swan event in mid-September that no one can seem to figure out what caused, speculators in gold got carried away. The open interest hit a new record high and lately the price dropped a lot as gold is making a perfectly normal correction. Generally we have a low in mid-summer and at the end of the year at Tax Loss Silly Season and I think this year will be no different.

White Gold had fifteen million warrants from a 2016 private placement that expired on October 27th. The warrants were at $0.27 so you may safely assume all of them were exercised. The good news is that it brought in $3.35 million in cash to the treasury. The bad news is that due to a basic lack of liquidity sellers of the shares in order to exercise their warrants have driven the price of the stock down by 25% in the last month even while the company is charging forward.

Part of the price mismatch is due to investors being overloaded with information on the various projects White Gold is advancing. White Gold controls over 40% of the land in the White Gold district including 35 different properties. White Gold is not advancing one or two flagship projects; they are advancing the entire frigging district.

The company’s 2019 exploration program called for 17,000 meters of core drilling and an additional 7,500 meters of Reverse Circulation drilling. A revised 43-101 just based on the 2018 exploration work was released in late July. It showed a 25% increase in 43-101 resources at the Golden Saddle and Arc projects to over 1.5 million ounces of gold.

I fear investors are getting bogged down in minutiae as one press release after another is posted and they are simply confused. Rather than trying to understand the numbers to compare with other companies with drill programs only 10% of the size of White Gold, investors should think about the big investors in WGO, Kinross and Agnico Eagle.

Each company owns about 18.9% of the shares. All in all, about 60% of the shares are in the hands of insiders leaving a relatively small float of 40% for everyone else.

The gold exploration space has changed over the last twenty years. The majors and mid-tier mining companies have left the exploration business. And each year they consume more and more of their young. So in the near future the big mining companies must go on a binge of buying up juniors with real resources in friendly environments.

White Gold serves as the exploration arm of both Kinross and Agnico Eagle. When the proven resource gets big enough and the price of gold high enough we know that one or both of those companies will belly up to the bar and buy WGO.

So you can safely ignore drill results such as 24.38 meters of 23.44 g/t gold at JP Ross, 3.59 g/t Au over 68.0 meters, 83.13 g/t au over 2.2 meters, 30.86 g/t gold over 7 meters and 24.86 g/t gold over 7 meters. Knowing that the company reported grab samples of 605 g/t gold, 497 g/t gold and a further 113 g/t gold doesn’t necessarily tell you what you need to know but I can guarantee Kinross and Agnico Eagle realize what those results mean.

I was buying Great Bear Resources at $0.50 a share before they started releasing extraordinary results. I knew and I told them they were on to something big. Great Bear is now $5.87 a share and they have a $248 million market cap. White Gold closed at $0.77 on Friday and shows a $95 million-market cap. In my view White Gold is the better company but it has a market cap only 40% of what GBR has.

The price is cheap today because (1) investors can’t cope with half a dozen projects being advanced at the same time and (2) a flood of shares being sold to pay for the $0.27 warrants. As to (1), ignore it; you don’t have to keep track of a bunch of projects. Let Kinross and Agnico Eagle do your due diligence for you and (2) as the overhang of shares stops since the warrants have expired, expect a pop in the share price.

I’m looking for the correction in the price of gold and silver to continue. Mid-December would be a great time for a low if the DSI goes below 10 for both of them and Tax Loss Silly Season ends. But while I see a lot of juniors declining into year-end, I suspect WGO will go higher. The reason for their decline in price has passed.

White Gold is an advertiser and I bought shares in the open market. Do your own due diligence.

White Gold Corp.
WGO-V $0.77 (Nov 11, 2019)
WHGOF-OTCBB 113.4 million shares
White Gold website.

Bob Moriarty founded 321gold.com, with his late wife, Barbara Moriarty, more than 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.

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Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: White Gold. White Gold is an advertiser on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
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Alianza Minerals Hits High-Grade Silver at Haldane During First Stepout Drilling

By The Gold Report

Source: The Critical Investor for Streetwise Reports   11/08/2019

The Critical Investor does a deep dive into this explorer’s drill program at its Yukon silver project.

All cashed up after raising C$1.1 million in an oversubscribed financing in July, Alianza Minerals Ltd. (ANZ:TSX.V) was ready for its 2019 Phase II drill program at its flagship Haldane silver project, after the Phase I drill target defining program was completed earlier this summer, and drilling began in late August. The main focus for management were the new stepout targets like the Bighorn and Ross anomalies, and the extension of Mount Haldane Veins System (MHVS) targets, to indicate size potential, and are presented in red below:

Afbeelding met tekst, kaart

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A total of 963 meters was cored in four holes. It took quite a while, according to management the assay lab was relatively slow, an issue several explorers are dealing with this year.

On October 22, 2019, the company reported drilling had confirmed the presence of new silver-bearing vein targets at the Bighorn Zone. The first two holes of the program tested the Ross and Bighorn targets. One hole was completed at each of the Ross and Bighorn anomalies, with two holes targeting the A and B veins of the Middlecoff Zone in the Mt. Haldane Vein System target area.

Highlights of the first hole HLD19-15 at the Bighorn Anomaly include 125 g/t Ag and 4.4% Pb over 2.35m from 154.15m depth.

In itself this is not an economic intercept, as it would be a gold equivalent of 2.35m @ 3.5g/t AuEq (for underground, 5-6g/t Au at 2m wide at least is considered economic), but the fact it hit this kind of mineralization that far out of known mineralization is considered promising by management.

The hole HLD19-14 at the Ross anomaly did intersect zones of anomalous veining and disseminated mineralization in rocks overlying the prospective lower Keno Hill quartzite unit, but didn’t return significant values. It is believed by management that these are the manifestation of the target structures and that they may form cohesive veins at depth in the permissive units. According to the news release:

“The first hole of the program tested the Ross Anomaly, a 300m by 100 m Pb-Zn-Ag soil anomaly, approximately 3 km along trend from the Middlecoff Zone on the Mt Haldane Vein System. The anomaly sits in schist and phyllite of the Upper Keno Hill Formation (Sourdough Member) in the immediate hanging wall to the contact with the Lower Keno Hill quartzite.”

For some more understanding of geological concepts, here is an image explaining the concept of a hanging wall, at the same time describing four different basic fault concepts:

The news release continues:

“The Lower Keno Hill consists of massive quartzite and phyllitic quartzite, which are much better hosts for the vein-fault style of mineralization present on the Haldane Property and elsewhere in the Keno Hill District.

The hole intersected quartzite below 180 m suggesting the initial target may exist deeper on the section.”

As there is quite a bit of faulting going on at Keno Hill, this might very well be the case. CEO Jason Weber had the following to say about the first results: “The first-ever drill hole at the Bighorn Zone, almost three kilometers from known mineralization, successfully intersected at least four mineralized structures confirming a new zone for systematic follow-up drilling. The Ross hole, which also tested a new area, returned only anomalous lead and silver values, but appears to have intersected weak structures that may be conducive to forming veins in the more brittle Lower Keno Hill Quartzite that lies below.”

After asking a bit further about Ross, Jason commented: “It was great to get the result at Bighorn, and a bit frustrating that we were in the wrong rocks at Ross to form veins, but it looks like potential vein structures are located deeper here so the target isn’t dead at all. These results weren’t bad for the first ever holes at these targets. Obviously we would have liked some high-grade intersections but it is a great start nonetheless.”

Of course this is pure exploration, you look for all kinds of indicators of mineralization, you theorize about geological and mineralized concepts, you drill, you get new data, you fine tune or even overturn your original thesis, and you continue, until the target is killed or you hit economic mineralization. To me this is a solid start, as Alianza hit mineralization at three out of the first four holes. For comparison, the famous Hemlo and especially Eskay deposits were found only after dozens and dozens of drill holes, at the 76th and 109th attempt respectively to be precise.

At the Bighorn Zone, hole HLD19-15 was drilled from west to east near the center of the 900m by 150m, north-south trending, Pb-Ag-Sn soil anomaly.

The drill hole intersected four significant north trending, steep faults, plus several smaller faults all with associated mineralization. The most significant of these faults occurred at 150–159m depth. This fault appears to correlate with a silicified breccia/fault zone on surface. I consider this as a very interesting indication of mineralized zones extending to surface, and this zone is of course also still open at depth. Management believed that locally poor core recovery within these faults may have negatively impacted some results, but as far as I can see this doesn’t seem to occur often or at relatively long intercepts.

On November 1, 2019, the second batch of results of two holes was released. Holes HLD19-16 and HLD19-17 targeted the Middlecoff Zone along strike from a high-grade silver-bearing vein that had seen some interesting historical underground sampling at an average of 775 g/t Ag over 13.7 meters of strike in the past. Hole HLD19-16 targeted this zone along a shallow plunge and intersected significant mineralization in the Middlecoff Zone from 110.30 to 125.00 meters downhole.

Afbeelding met tekst, kaart

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The highlight here obviously was a very narrow but also very high grade 0.35m section of 996 g/t silver and 1.486 g/t gold. To put this in perspective, in order to mine underground a rule of thumb is that conventional mining equipment needs at least 2m to operate effectively, as already hinted on earlier. In this case it would mean a gold equivalent of 2m @4.3g/t AuEq, so it is still not economic, but it is a promising start for such a stepout. I liked the other intercepts a bit deeper as well, which seem to indicate fairly consistent dispersion of about 400-450g/t Ag over 1m normalized on average, which can be seen in this table of results for HLD19-16 and HLD19-17:

Hole HLD19-17 intersected a geologically similar section below the Ewing fault, but structures and veins are not as well-developed as in hole HLD19-16. The returned results were less significant as well, suggesting in my view less potential going at depth in this particular location. However, the Middlecoff vein–faults intersected in the current drilling and limited historical underground workings remain very much open to depth and in both directions along strike below the Ewing Fault.

CEO Jason Weber had this to say:

“Drilling at the Middlecoff Zone has confirmed the presence of a wide structure capable of hosting high-grade silver mineralization in a series of anastomosing faults. We are just starting to understand the orientation of the high-grade shoots that were targeted since the 1920s, and with the new information from this drilling we can adjust our interpretation and target drilling in subsequent phases.”

Afbeelding met buiten, berg, boom, gras

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After following up with him on this, he commented more in-depth on the results, the geology and the potential:

“The importance here lies in the fact that we are building continuity in the mineralization from the high-grade mineralization encountered underground in the 1960s. We have expanded the Middlecoff Zone to the south. The geometry has been tricky to figure out so far, but it looks like the host structure thickens in hole 16 and there may be a relatively flat high-grade shoot seen in hole 16, but not 17. We thought there could be a steep high-grade shoot but doesn’t mean below that it doesn’t thicken again. The vein-structure is still present but at lower grades. This is still heavily oxidized mineralization.

“In the main faults, mineralization is mostly oxidized so you don’t see much in the way of sulphide, just the weathered oxide minerals making it difficult to tell what the original mineral species were. That said, we know that there is a high-grade vein at the top of the Middlecoff that is different, carrying gold (about 1.5 g/t Au), with elevated copper and antimony. Looking at that chemistry it may be due to a sulphosalt mineral—it is great to see some of this really high-grade material. We know these structures that host mineralization are big, we know that the system produces very high grades so it is now a matter of finding where the veins could be thicker and higher grade.”

The oxidized and fractured nature made me wonder about the type of mining, and I asked Jason what is possible regarding this rock competence. According to him, this is the same scenario that exists elsewhere in the Keno District. Importantly, as you follow these vein-faults to depth (300 meters or more of vertical extent is not unheard of in the district) the oxidation decreases.

Aside from the section I received from him, I wondered if there will be more sections and maps coming soon, so it will be easier to interpret potential mineralization as an investor. I also asked him when drilling resumes, and what number of holes and meters drilled he has in mind, on what targets. He continued:

“We are working on a plan map to show the zone with respect to the three sets of underground workings and drilling to better illustrate it, although this is proving to be a challenge. The challenge is drill holes, and all three levels of underground workings catch the Middlecoff at different elevations so it doesn’t look like they join up projected to surface on a plan map. That is complicated by the Ewing fault which overlies the zone (and may cut it off in places).

“The next step is to get this and the workings into a workable format (sections and plans, 3D) so we can try to use the underground data in conjunction with the drilling to vector the next set of holes. This will be done over the winter and we will be back out there in the spring for the next drill program as soon as weather allows. I want to spend some more time with the data and incorporate what we have learned this year before outlining what the next program will be, but it is safe to say it will be heavily weighted on drilling. I would expect we would want to test Middlecoff and Bighorn again to expand on what we have identified there, and to test the idea that the target may be deeper at Ross.”

Besides Haldane and as a reminder, Alianza also has a JV with Hochschild in Nevada. Hochschild has optioned three Nevada sediment-hosted gold properties from Alianza. The BP and Bellview properties are located in the southern extension of the Carlin Trend, while the Horsethief property represents an off-trend gold target located 26 km east of Pioche, Nev. The Horsethief property is considered the most prospective by Alianza, and is the focus of attention.

Highlights of the latest program on Horsethief were reported on October 30, 2019, and include the discovery of new gold-bearing jasperoid, the identification of favorable carbonate host stratigraphy, and the mapping of alteration and structural features that may act as pathways for gold-bearing fluids at Horsethief.

Alianza Minerals Identifies New Targets and Expands Horsethief Gold Project , NV

CEO Jason Weber was clearly enthusiastic about the reconnaissance (early stage) program results: “The 2019 exploration program was extremely successful, identifying new mineralized occurrences of jasperoid and prospective carbonate stratigraphy, illustrating potential for Horsethief to host a large gold-bearing system. However, the most interesting outcome was the identification of these features at or near the contact between Cambrian and Ordovician-aged rocks, which, are known to host large sediment-hosted gold deposits such as the Long Canyon Gold Mine.”

As a result, an additional 26 claims were staked to cover the jasperoid occurrence as well as prospective stratigraphy identified in the southern portion of the property. Jasperoid can be an important source of gold bearing mineralization, and Nevada is known for these occurrences, sometimes resulting in significant gold deposits. Alianza believes that jasperoid found to date may represent the lateral or vertical extents of a gold-bearing system at Horsethief which is what will be targeted in the drilling program planned for 2020.

Afbeelding met grond, gras, buiten, zitten

Automatisch gegenereerde beschrijving
Jasperoid

Jasperoid breccias from Horsethief have returned gold values up to 1.221g/t (21.94g/t historically) from surface grab samples. Shallow historical drilling has tested the jasperoid exposures with one hole returning 0.79 g/t gold over 39.6m and four holes ending in mineralization.

Horsethief hosts five primary drill targets; four target areas defined by surface exposures of altered carbonate rocks and one target at depth, interpreted from induced polarization (IP) and resistivity geophysical surveys. Exploration at Horsethief is targeting sediment-hosted gold mineralization in a window of Cambrian and Ordovician carbonate rocks overlain by volcanic flows and pyroclastics. Work by prior operators included mapping and sampling hematite-rich jasperoid breccia outcrops and shallow drilling. Historical drilling, generally 100 meters or less in depth, returned multiple intervals of gold mineralization including 13.7 meters averaging 1.2 g/t gold besides the jasperoid exposure drilling mentioned above. Subsequent geophysical surveys (Induced Polarization chargeability and resistivity) indicate that stratigraphy and potentially mineralized targets dip to the east under the volcanic cover and below the extent of prior drilling.

Management is working with Hochschild’s technical team to prioritize these targets for a 2,500 meter drilling program in 2020. The original plan was to start drilling Horsethief in October/November of this year, but since Hochschild reshuffled some priorities on exploration, this has been rescheduled for early next year unfortunately, since the silver price is doing relatively well lately.

Afbeelding met rots, buiten, lucht, berg

Automatisch gegenereerde beschrijving
Jasperoid Breccia outcrops; Horsethief North area

Conclusion

The first set of stepout drilling results from Haldane looks promising, as it extended known mineralized zones by quite a bit, although not directly hitting economic mineralization. As this would be fairly rare in itself and there are many targets to test, it is still early exploration days for Alianza Minerals, and I am looking forward to follow-up stepout/infill drilling after the winter break at Haldane. Horsethief doesn’t have a winter break like Haldane as it is in Nevada, but has to wait for operator Hochschild in order to see the start of drilling. When this will start early as they can next year, I expect a steady flow of drill results, doubling the chances on hitting something of economic interest. Stay tuned.

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.

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Disclaimer:

The author is not a registered investment advisor, and currently has a long position in this stock. Alianza Minerals is a sponsoring company. All facts are to be checked by the reader. For more information go to www.alianzaminerals.com 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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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) 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.

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Lion One Hits Bigly

By The Gold Report

Source: Bob Moriarty for Streetwise Reports   11/07/2019

Bob Moriarty of 321gold discusses the implications of the drill results the company released at its gold project in Fiji.

When I found out Quinton Hennigh was going to be a geological advisor to Lion One Metals Ltd. (LIO:TSX.V; LOMLF:OTCQX) back in early 2019, I wrote about them. They just announced results that pretty much prove what I was trying to say. In technical terms, they hit Bigly.

Lion One talked about what they were aiming for in the drill program in a press release issued over a month ago as they began the drill program. They seem to have hit exactly what they were aiming for but are criminally remiss in not posting the latest press release on their GD web site. I shall chastise them severely.

2019-11-07 08:49 ET – News Release
Mr. Walter Berukoff reports

LION ONE EXPANDS NAVILAWA ALKALINE GOLD SYSTEM

Lion One Metals Ltd. has provided an update on recent exploration progress at its 100-per-cent-controlled Navilawa alkaline gold project in Fiji.

Drilling Highlights:

The first of a series of four deep diamond drill holes, TUDDH493 oriented eastward at an inclination of 55 degrees, is nearing its target depth of approximately 600 m after undercutting the entire Tuvatu lode network near the bottom of the current delineated resource. This hole targets a particular area where several high-grade structures appear to be converging.

Multiple mineralized intercepts are apparent in core from TUDDH493, most notably:
a 11.3 m interval of quartz veinlets in altered monzonite beginning at 318.6 m. This intercept is situated approximately 7 m from a high-grade interval in historic hole TUDDH160 that displayed assays up to 1,600 grams per tonne gold. Bright green roscoelite, a key indicator mineral at Tuvatu, is evident in some veinlets within the 11.3 m interval (Figure 1).

a 4 m interval of hydrothermal breccia beginning at 422.5 m. This breccia is unlike any mineralization previously observed at Tuvatu but closely resembles that seen in some lodes at the Vatukoula Gold Mine approximately 40 km to the northeast. The 4 m breccia zone occurs in monzonite and is cemented by vuggy quartz-adularia-pyrite veining (Figure 2). Specks of visible gold up to 2 mm across are observed in vugs at approximately 423 m (Figure 3). Lion One believes this intercept is highly significant and suggests the mineralizing system is evolving with depth at Tuvatu, a possible indication of further high-grade mineralization below.

For those who don’t understand techno babble in the resource sector, they have hit Bigly and exactly what they wanted to hit. The system does go a lot deeper than they have drilled before. I have no doubt it will be higher grade. For the skeptics in the crowd; sit on your hands and at the end of November when assays are released you can pay a lot more for the shares.

On the news, I increased my position by 50%. I love this story.

Lion One is an advertiser. I approached them, not the other way around and I never do that. I own shares and someday when they raise money, I will participate in the PP. I am biased. Do your own due diligence.

Lion One Metals
LIO-V $0.90 (Nov 07, 2019)
LOMLF OTCQX 103.1 million shares v
Lion One website.

Bob Moriarty founded 321gold.com, with his late wife, Barbara Moriarty, more than 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.

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Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Lion One. Lion One is an advertiser on 321gold. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned are billboard sponsors of Streetwise Reports: Lion One. Click here for important disclosures about sponsor fees.
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. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 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) 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 one week after the publication of the interview or article.

( Companies Mentioned: LIO:TSX.V; LOMLF:OTCQX,
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Gold Speculators raised their bullish bets for 3rd straight week

November 9th – By CountingPips.comReceive our weekly COT Reports by Email

Gold Non-Commercial Speculator Positions:

Large precious metals speculators once again lifted their bullish net positions in the Gold futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Gold futures, traded by large speculators and hedge funds, totaled a net position of 279,828 contracts in the data reported through Tuesday November 5th. This was a weekly change of 3,313 net contracts from the previous week which had a total of 276,515 net contracts.

The week’s net position was the result of the gross bullish position (longs) advancing by 9,168 contracts (to a weekly total of 344,591 contracts) while the gross bearish position (shorts) gained by a lesser amount of 5,855 contracts for the week (to a total of 64,763 contracts).

Gold speculators slightly boosted their bullish positions this week, pushing bets higher for a third straight week and for the fourth time out of the past five weeks. The gold position remains at the higher end of its bullish range as bets have continued to be higher than at least +250,000 net contracts for sixteen straight weeks.

Gold Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -317,138 contracts on the week. This was a weekly decrease of -15,922 contracts from the total net of -301,216 contracts reported the previous week.

Gold Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Gold Futures (Front Month) closed at approximately $1483.70 which was a decrease of $-7.0 from the previous close of $1490.70, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

 

Silver Speculators trim bullish bets for 1st time in 3 weeks

November 9th – By CountingPips.comReceive our weekly COT Reports by Email

Silver Non-Commercial Speculator Positions:

Large precious metals speculators lowered their bullish net positions in the Silver futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Silver futures, traded by large speculators and hedge funds, totaled a net position of 47,997 contracts in the data reported through Tuesday November 5th. This was a weekly decline of -5,681 net contracts from the previous week which had a total of 53,678 net contracts.

The week’s net position was the result of the gross bullish position (longs) advancing by 1,806 contracts (to a weekly total of 97,174 contracts) but being more than offset by the gross bearish position (shorts) that rose by a greater amount of 7,487 contracts for the week (to a total of 49,177 contracts).

Silver speculators cut back on their bullish positions following two weeks of gains that had put the bullish level back over the +50,000 contract threshold. The silver position continues to remain strongly bullish with long contracts staying above the +40,000 net level for the past twelve weeks. Overall, the silver position has been in a bullish position for twenty-two consecutive weeks since June 11th.

Silver Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -74,982 contracts on the week. This was a weekly loss of -6,937 contracts from the total net of -68,045 contracts reported the previous week.

Silver Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Silver Futures (Front Month) closed at approximately $1756.80 which was a decline of $-26.30 from the previous close of $1783.10, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

Copper Speculators continued to pare their bearish bets for 4th week

November 9th – By CountingPips.comReceive our weekly COT Reports by Email

Copper Non-Commercial Speculator Positions:

Large precious metals speculators once again cut back on their bearish net positions in the Copper futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Copper futures, traded by large speculators and hedge funds, totaled a net position of -23,311 contracts in the data reported through Tuesday November 5th. This was a weekly change of 1,914 net contracts from the previous week which had a total of -25,225 net contracts.

The week’s net position was the result of the gross bullish position (longs) gaining by 4,838 contracts (to a weekly total of 81,652 contracts) while the gross bearish position (shorts) rose by a lesser amount of 2,924 contracts for the week (to a total of 104,963 contracts).

Copper speculators continued to reduce their bearish bets for the fourth straight week and now by a total of 24,782 contracts over these past four weeks. The current bearish position (-23,311 contracts) is now less than half of the recent record high bearish position that was recorded on September 3rd at a total of -58,841 contracts.

Copper Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of 20,249 contracts on the week. This was a weekly decline of -3,845 contracts from the total net of 24,094 contracts reported the previous week.

Copper Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Copper Futures (Front Month) closed at approximately $270.05 which was an uptick of $0.90 from the previous close of $269.15, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

Precious Metals Prices Drop, Copper Rises; David Jensen: Gold & Silver to Head Dramatically Higher

By Money Metals News Service

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up, David Jensen of Jensen Strategic joins me for a revealing conversation on why he believes we’ve passed the point of no return when it comes to monetary policy, how the recent injection of liquidity by the Fed will NOT be able to reverse the problems it’s been creating, and why the explosion in palladium prices is a foreshadowing some BIG developments in the gold and silver markets. So stick around for a must-hear interview with David Jensen, coming up after this week’s market update.

A rising U.S. dollar is putting downward pressure on precious metals prices this week.

On Thursday, gold and silver markets took a beating under a confluence of adverse forces. In addition to dollar strength versus foreign currencies, trade optimism and rising bond yields drew investors out of precious metals.

As of this Friday recording, gold is settling lower by $46 or 3.2% for the week to come in at $1,468 per ounce. Silver, meanwhile, re-tested the $17.00 level during Thursday’s selling. The white metal now at $17.02 an ounce and is registering a whopping weekly decline of $1.18 or 6.5%.

Turning to the PGMs, platinum is down similarly to silver, off $60 or 6.3% this week to trade at $894. And palladium is off 3.3% to come in at $1,756 per ounce.

Metals lost some of their safe-haven appeal after China and the United States reportedly reached an agreement to cancel some of the tariffs imposed by both sides in recent months. A ramping down of the trade war was deemed by investors to be good news for the U.S. economy, which has experienced a slowdown in the manufacturing sector.

Investors apparently perceive the risk of a recession to be waning, at least for now. That is being reflected in a steepening yield curve.

Back in August, the yield curve had inverted, meaning some longer-term Treasuries yielded less than shorter-term paper. Much talk about a looming recession followed in the media. One still may be coming. In the past, recessions have occurred several months to a year after an inversion.

Meanwhile, the Federal Reserve has cut short-term rates to try to stave off a recession. It has also committed hundreds of billions of dollars to repo and Treasury bill markets to keep overnight rates from rising above target.

This week, long-term bond yields spiked. The 30-year Treasury saw a yield above 2.4% for the first time since July. The 10-year yield jumped past 1.9% on Thursday in its biggest move since the day after Donald Trump was elected in November 2016.

Interest rate sensitive sectors of the stock market, including real estate and utilities, got clobbered as sector rotation took place. In favor were sectors included energy, technology, and cyclicals.

On the plus side for hard asset investors, industrial commodities including copper benefited from the “risk on” trade. Copper prices rose Thursday to a three and half month high.

If you’re bullish on the global economy in general – and perhaps the prospects for Trump’s trade policies boosting U.S. industries in particular – then copper may be a good play.

Rising demand for copper threatens to outweigh its supply. Miners are finding less copper on digs, and low spot prices have deterred development of new copper sources.

This year has seen copper prices make little progress. They have dipped into a trading range, but that trading range is now showing signs of resolving to the upside.

Physical copper can play a relatively small but vital role within a diversified investment portfolio. Like gold and silver, copper has been used in coinage and serves as a store of value over time.

In fact, U.S. pennies minted prior to 1982 are one of the handiest and most straightforward ways to own physical copper, including the lowest cost way to purchase the metal.

Money Metals Exchange also offers pure copper rounds, including our new copper President Trump round. They are .999 pure copper bullion and commemorate the 45th President of the United States, Donald J. Trump.

Money Metals sells these Trump Copper Rounds in full tubes of 20. They will serve as the perfect gift for anyone who loves our 45th president.

There’s no denying President Trump is one of the more controversial political figures in American history, so this type of commemorative item just may well be in high demand for a long time to come.

We also offer gold and silver Trump rounds in multiple sizes. The 2 Oz Ultra High Relief Pure Silver Round may make the biggest impression.

Of course, if you’re just looking to accumulate bullion while keeping a low profile and not drawing any unwanted negative attention to yourself, you might prefer to opt for a more politically neutral product.

Bullion bars are a plain but efficient way to accumulate any of the metals we offer – from copper to gold, silver, platinum, palladium, and even rhodium. Check out our complete product lineup and take advantage of the recent price dip by going to MoneyMetals.com.

Well now, without further delay, let’s get right to this week’s exclusive interview.

David Jensen

Mike Gleason: It is my privilege now to welcome in David Jensen of Jensen Strategic and a highly studied mining analyst and precious metals expert with close to two decades of experience in the mining industry. And it’s great to have him back on with us.

David, thanks so much for the time again today, and it’s nice to talk to you again. Welcome.

David Jensen: Thank you, Mike. It’s good to be back with you again.

Mike Gleason: Well, David, we had you back on at the beginning of the year and you shared some amazing insights on palladium, and we’ll get to that in a bit because that market is still very interesting. But first off, you’ve been watching the Fed balance sheet closely here and I wanted to get your comments about that to begin with. Now, after the extraordinary expansion, which followed the 2008 financial crisis and a few rounds of QE, the Fed began contracting the money supply in 2017. You’ve been making the case that the withdrawal of liquidity could trigger another catastrophe.

So, let’s start with the basics here. If you would, please explain the history of the Fed’s balance sheet, and why it is something investors should be carefully watching.

David Jensen: Yeah, I think that the root of it all, the reason we’re watching so closely is the tremendous imbalance between the amount of cash, liquid cash that’s in the system versus the amount of debt. And the Fed has run interest rates from around 20% in 1980 down to 0% or 0.25% here a couple of years ago. And what they’ve done is expanded the greatest debt bubble in history. The total debt in the U.S., now on all levels according to the Fed’s flow of funds report is about $72 trillion. And to serve as that $72 trillion of debt that’s in extent, there’s only $14 trillion of liquid currency in deposits and in physical cash. So, what we’re seeing now is that the Fed needs to continually to expand the money stock with the money supply. The money supply is the annual change or the addition to the outstanding money stocked addition to the $14 trillion that’s out every year. And they need to add a substantial amount so that the debt can be serviced and so that the economy can continue to move forward.

And what they’ve done in the last three years, since Q1 2017, they’ve contracted the money supply, which is, again, the year over year change, they’ve decreased that increase down to about 3% from roughly about 11% in Q4 2016. So really a precipitous drop.

And so what we’re seeing now is that the rise of the interest rates and the, and the cutoff of the money supply, they’ve basically withdrawn about a one and a half trillion dollars of additional liquidity, which would be here if it continued to run it at the same run rate as in Q4 2016. So, they’ve withdrawn or tightened a substantial amount. And as interest rates go up, it also, over time, generates a need for about another $2 trillion per annum in interest payments. So what they’ve done is they’ve really created a liquidity crisis here in the market. There’s not enough money to pay the debt that’s outstanding. And, of course, the most levered or the most unstable borrowers show the distress first when these things happen. And that’s what we saw in the repo market here in September, was that that market started to seize up because the capital wasn’t there to meet the needs.

Mike Gleason: Kind of leads me right into my next question. The Fed has really been pumping lots and lots of money into that repo market and they’ve extended it multiple times. You see this intervention in the repo markets as the “first domino to fall,” and what might be the next financial crisis. The Fed, is as usual, not bothering to explain itself, but we know that, we’re pretty sure, that it isn’t good. Give us some more of your insights on that repo market intervention and why it could be the signal of larger troubles ahead.

David Jensen: Yeah, it’s a signal of illiquidity in the financial market. So any borrower of size, a hedge fund or a money manager, a bank can step into that market and borrow in that market in return for providing collateral, whether it’s a treasury or some other type of security. And that market basically dried up because the liquidity was not there, it wasn’t available. But the issue that I really see is at the core of this, is that leverage loan market, which is the most highly indebted borrowers. And that market collapsed in Q1 2008 and kicked off the great financial crisis. And that market, now, there’s a tremendous decay in the credit worthiness of the borrowers in that market. So we’re seeing the signs here that there’s a collapse in the credit worthiness of the most highly leveraged in society.

And just to give you a sense of the repo market, Mike, it’s about a $5 trillion market and about three and a half to $4 trillion of that rolls on a nightly basis. So they’re just 24 hour loans. So any kind of a seizure in that market can cause great problems in the financial markets as a whole. But the greater question is, is why is this market seizing up to begin with? What is the problem here? And the problem that I maintain is this continual drying out of the economy and taking away liquidity from the economy that’s gone on ever since the beginning of 2017.

Mike Gleason: So, the Fed’s created a problem by contracting the money supply. Is there any chance that this sudden about-face, the repo market interventions and the new bond purchase program, that we’re not supposed to call Kiwi four, by the way, will that be enough to prevent disaster, David?

David Jensen: Well, you’re talking about a net shortfall that’s occurred now in the order of trillions of dollars. And it takes years for monetary policy changes to impact the economy as a whole. So, you’ve got many trillions and it has to basically infiltrate the economy, the money expansion as it occurs has to disperse throughout the economy and be utilized. And we’re at the point now where so many of the unstable bubble activities have been tripped out. I believe that they’re not going to be able to address this with monetary policy, it just takes too long and the drying out of the economy of monetary liquidity has gone on for too long to date. The damage is already done.

Mike Gleason: Yeah, we would agree. It’s going to be interesting to watch things continue to unfold there, but we know that we don’t know the full story, I think, when it comes to all this repo market stuff.

Well, turning to palladium now, we had you on back in January of this year. And we spoke quite a bit about the palladium situation. At the time, there was a major supply shortage in that market and since then, things haven’t changed too much and we’ve seen the price of palladium go from a little over $1,300 back in January to nearly $1,800 here today. So what’s the latest on palladium and why have we seen this amazing resilience? Because not many in the metals community would have expected the meteoric rise to continue and then see it remain so firm and never really show signs of cracking or experiencing any real pullback, to speak of. So what’s going on with palladium now, David?

David Jensen: Well, it’s a good old fashioned shortage. The conundrum or the question is, why is there a metal shortage when the auto industry is in free fall? About 80% of palladium is used in catalytic converters in automobiles. And you would think that the demand would decline along with the production of autos. But I think there’s another dynamic at play here, is that the Eurozone have been practicing very loose monetary policies, as many of the banks around the world. And I think that at the margins, these are very small markets compared to the amount of capital out there. All the gold in the world is worth just one or 2% of the total capital markets out there. So, what we’re seeing now with palladium, which is a fraction of the size of the gold market, I mean, the above ground stocks are nothing and annual production is in the order of about a 10th of the amount of gold.

But I think what’s happening here that’s driving the shortage, and since we talked in January, the lease rates have started to spike up again. We’re now seeing the lease rates, on average, in and around the 8% level. So in London where this metal is traded and where there’s actual delivery of metal, is insufficient metal there to meet the market demand. But I think that there’s demand, it’s not just auto demand that’s out there. I think that if you look back in 2016, the German government went negative with the bunds there for the first time, the market did. And I think what you have is just that at the margins, enough investors start to buy real assets, including these intrinsically valuable assets like palladium and platinum, gold and silver.

But that the palladium market was already tight to begin with. We’d run over two years there where there was visible shortage and lease rate spikes in the market. The gold, silver, platinum, palladium market, they all trade promissory notes, not the metal. So, the pricing can be anywhere. But when you have metal shortages, with palladium, you can’t manipulate the market with paper anymore. You try to sell a load of paper, a promissory note as these spot contracts are these unallocated spot contracts. When you have physical metal shortage, those that you’ve sold the contracts to say, “Okay, we’d like to take delivery of the bars now.” And you have a default situation arising.

So the games can’t be played in the market when you have shortage as you do with rhodium, which is a sister metal. It’s not traded on exchanges, same applications as a palladium. It’s gone up nine times now in the last three years and palladium has roughly tripled in price. So, there’s been really tremendous price moves here, driven by good old-fashioned supply and demand dynamics. Pushing aside paper pricing, using these unallocated promissory notes in the COMEX and especially in London, which is the primary physical exchange.

Mike Gleason: So, how might all this affect gold and silver, which are obviously the much bigger markets and the precious metals that most of us pay more attention to. What kind of spillover effect might the situation in palladium have on the money metals? And what can we portend, potentially, as this relates to gold and silver?

David Jensen: Well, the, the spillover effect, I think, really comes from the central banks. They’ve run monetary policy now that has been, I think, wild is the kindest way to describe it, over the last 50 years especially. But they’ve run the debt market up so high and the bond market up so high. And this monetary inflation has been parked in these financial markets, especially in the bond markets. Now, what the Fed has done by choking off the money supply, they’ve, in essence, lit a fire in the bond market. Because when you trip the economy into a gross contraction, what happens is that you run enormous deficits. And in the end, you will not be able to have the demand in the market for the treasuries or whatever government security that you’re selling, and it leads to financing just by monetizing the debt.

So in essence, Mike, the demand comes from the central bank money supply or looseness of their monetary policy. It’s hidden for a very long time because the financial markets climb. They get their rulers out and they project for decades how high they’ll go. But eventually, you get to the point where you can’t stimulate the markets higher anymore because of the tremendous distortion built into the economy.

And as I maintain, really the crisis that we’re going to have now from the credit limitation that’s gone on for the last three years here. So, those holding the paper assets like bonds and other securities see that we’re in for a growth slowdown with even more gross money printing by the central banks. And that’s when you start seeing the movement from the paper holders into real assets of intrinsic value. And I think, then, what you have is just a tremendous vault in the price of these metals. But I think it will probably lead to some sort of a of a dislocation at these exchanges, which are so heavily papered and have only a tiny fraction of the amount of metal there for the number of contracts which are held in the spot markets there.

Mike Gleason: Yeah. Obviously the palladium market seems to be a market right now where supply and demand fundamentals do exist and it’s driving the price. And wouldn’t it be something if maybe that finally happened with silver, which unfortunately can be pushed around with all the paper that they seem to create there.

David Jensen: It will come. It will come to the silver market. It’ll come to the platinum and gold market. It just takes a little bit longer because they’re not quite as tight as the palladium market.

Mike Gleason: Well finally, David, as we begin to wrap up, give us an early 2020 outlook, if you would, what kind of a year do you expect it to be in the markets and the metals, specifically? And then also comment on anything else that you’re going to be watching most closely as you continue to analyze the state of the financial world.

David Jensen: Yeah. Well, I mean anything can happen in the metals market in terms of price wise. But at some point, the basic papering of the market is going to fail. Now people have been calling for that for decades. But I do think, Mike, what’s very different here is the fact that the Fed has acted as radically as it has over the last three years in contracting the money supply to the level that is well known to have caused the prior three crises. And if your listeners go to @RealDavidJensen on Twitter, the first thing that’s posted in there as a chart of the money supply, how that’s contracted and how that led to crises the last three times. So my sense is that we’re going to have a breakage at some point in these markets and the printing is going to be enormous. But also that there’ll be a sizeable amount of chaos and carnage.

So not good news. The last thing you want is metals to go up because you have a tremendous crisis on your hands. But I think that’s what the Fed really has created here. The narrative that we’re getting from the financial media is that it’s about Trump and trade. And so many of the comments are about Trump this and Trump that. And really, the core of it all, the essence of it all is the central bank, the failure of money, money printing, and the failure of using dilution of currency as a way to “stimulate” your economy. It’s never worked. It’s a complete fraud the way these systems are run and it’s time for a new monetary system.

Mike Gleason: Yeah, I couldn’t agree more and very well put. The next several years, figure to be very, very interesting, indeed. And we’ll see how will that all transpires and unfolds and look forward to having you back on to dissect it more. We’ll leave it there for today.

I thank you very much for your time and for coming back on and for sharing your insights. And I look forward to talking to you again down the road. Have a great weekend and take care, David.

David Jensen: Thanks Mike. It was my pleasure.

Mike Gleason: Well that will do it for this week. Thanks again to David Jensen of Jensen Strategic. You can follow David on Twitter @RealDavidJensen, be sure to check that out.

And check back here next Friday for our next Weekly Market Wrap Podcast. Until then, this has been Mike Gleason with Money Metals Exchange. Thanks for listening and have a great weekend, everybody.

 


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