Archive for Opinions

The Major Wild Card In The Silver Market

By Money Metals News Service

There’s a sleeping tiger in the silver market, and it isn’t the Chinese. While the Chinese continue to acquire a lot of gold, they aren’t that interested in silver However; it’s the Indian investor who is has been the dominant player in the silver market. Why?

According to an article published last year on LiveMint.com, “Silver is so ingrained in Indian tradition that the country’s currency, the rupee, is named after ‘Rup,’ the Sanskrit word for silver.” How interesting. I have been doing research in the silver market for over a decade, and I just found out from this article that India’s currency, the Rupee, is named after silver. It just goes to show, we learn something new every day.

Thus, it makes perfect sense that the Indians are the major player in the silver market as their silver imports have accounted for a significant portion of annual global mine supply. In a recent article by Louis at Smaulgld.com, he provided the following charts on Indians monthly and annual silver imports:

Indian Silver Imports 2017-2018

(Indian Monthly Silver Imports)

Indian Silver Imports 1999-2018

(Indian Annual Silver Imports)

As we can see, India imported a record 902 metric tons of silver in April since last year. Furthermore, as Louis states in his article quoted above:

Indian silver imports through April 2018 were 2,889 or an average of 722.5 tons. If this average holds throughout the year, India would import 8,667 tons of silver in 2018.

If India continues to import the same amount of silver as it has over the past four months for the remainder of the year, it will reach nearly 8,700 metric tons (mt) and surpass its previous record set in 2015 at 8,529 mt. Now, if India did import 8,700 mt of silver this year, it would account for 32% of total world mine supply.

In this next chart, I show annual Indian silver imports as a percentage of global silver mine supply:

Indian Silver Imports: Percentage of Total World Mine Supply

Indian silver imports increased significantly from 2013 to 2015 as investors took advantage of lower prices. However, the Indian investor wasn’t as interested in acquiring silver in 2016 as its price surged to $21 versus $14 at the beginning of the year. But, as we can see in 2017, Indian silver imports rose to 20% of global mine supply versus 13% in the prior year. And, if Indian silver demand remains strong throughout the rest of the year, it could surpass 8,700 mt and account for 32% of global silver mine supply.

While it is true that Indian investors acquire silver during falling prices, they also did so in 2011 when the silver price peaked at $49 in May of that year. We can see that as the silver price skyrocketed higher, Indian silver imports nearly doubled to 20% of global silver mine supply compared to 11% in 2010.

Which brings me to subject matter in regards to the title of this article, I believe India is a MAJOR WILD CARD that the market is vastly underestimating. Of course, many silver investors in the west have become quite frustrated with the ongoing weakness in the silver price, but the fact remains, the Global Markets and Financial System are still in serious trouble.

What happens when the global markets finally start their major overdue correction and investors begin to flee stocks and real estate to move into the precious metals to protect wealth? Some analysts suggest that the Bond market isn’t that safe this time around because a lot of individuals are invested in Bond Funds, and not the real Bonds or Treasuries. Bond funds are nothing more than BETS on BETS.

If Indian investors can import nearly a third of global silver mine supply, then what happens when the Global Markets and currencies become under severe pressure? How high could Indian silver imports go??

Thus, India may be the MAJOR WILD CARD going forward in the silver market. Actually, once panic sets into the market, we could see silver buying coming from areas and sectors that haven’t invested in silver before. For example, when the silver price starts to surge higher during the second phase of a market crash, we could see huge demand come from the following:

  1. Industrial Silver Buyers
  2. Major Financial Brokers-Institutions
  3. Pension Funds
  4. Central Banks

The four categories listed above have not big players in the silver market, but that could change at a drop of the hat as the market realizes, THIS TIME IS INDEED DIFFERENT. Moreover, Central Banks have been net sellers of silver over the past 3-4 decades. Most of the official silver sales from the 1990’s to 2013 have come from China, India, and Russia. But, what happens when Central Banks start to acquire silver??

Of course, this is mere speculation. And, I imagine the frustrated silver investor reading this would believe this is just more hype in a market that seems to be all be DEAD, but that is exactly when we experience a bottom. Furthermore, U.S. silver exports jumped to the U.K. in Apri:

U.S. Silver Exports to the U.K.

For whatever reason, U.S. silver exports to the London, U.K. jumped to nearly 20 mt in April versus very little activity from Jan-Mar. London is the major player in the silver market, and a large percentage of Indian silver imports come from the United Kingdom. It will be interesting to see how much silver India imports for the remainder of the year.

Regardless, I believe the Indian investor may be the “Major Wild Card” once the markets become chaotic. Indian silver imports could jump to more than 50% of global mine supply during the next market meltdown. However, even if Indian investors demand more silver, it might not be available (only at much higher prices) if Industrial, Institutional or Central Banks start buying as well.


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

The Swamp vs. Alternative Currencies

By Money Metals News Service

In Federal Reserve chair Jerome Powell’s testimony before Congress last week, he reiterated his intent to continue the central bank’s gradual rate-hiking campaign.

Among those who are “not thrilled” about the prospect of higher interest rates: the President of the United States.

Trump Tweeted, “Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates – Really?”

Trump seems surprised that the Fed careerist he promoted to be chairman isn’t embracing Trump’s economic priorities. But nobody drawn from the fiat money swamp should be expected to act contrary to what’s in the institutional interests of the central bank – and the banking elite more broadly.

Swamp creature Powell couldn’t even bring himself to express support for Trump’s pro-growth tax and regulatory reforms during last week’s testimony. He nervously evaded a simple question from a Republican Congressman about whether tax cuts and deregulation have boosted business confidence. Even when pressed, he wouldn’t answer it.

Powell apparently didn’t want to say something that might offend Democrats. The Fed is “independent,” after all, and non-partisan. It has to keep up appearances before Congress.

But when it came to the question of cryptocurrencies, the government’s top banker felt free to go on at length about why he doesn’t like them.

“Cryptocurrencies are great if you’re trying to launder money or hide money,” Powell snarked. “And the money laundering and terrorist financing is a big risk.”

Powell – who is a lawyer by training and not an economist – explained to Congress that “relatively unsophisticated investors” were being drawn to crypto markets in the hope of price gains. Just like they are drawn to high-flying equity or housing markets when the Fed artificially pumps them up, he might have added (but obviously didn’t).

Powell went on to attempt a philosophical take-down of Bitcoin, stating, “There is no promise behind it. It’s not really a currency. It doesn’t really have any intrinsic value…”

A central banker who presides over a $4 trillion balance sheet of unbacked IOUs and runs a digital printing press that can generate fiat dollars in unlimited quantities is probably the least credible person ever to lecture about intrinsic value!

If Powell really believes intrinsic value is an essential feature of a currency, then he should call for the dollar to once again be redeemable in gold or silver.

He won’t, of course.

The banking system and deep state don’t like hard currency any more than they like cryptocurrency as a competing alternative to the fiat regime they control. Alternative currency proliferation is making them nervous.

Many members of Congress, especially on the Democrat side of the aisle, welcomed Fed chair Powell’s cryptocurrency bashing.

Social Security Ponzi-Scheme

Rep. Collin Peterson (D-MN) called Bitcoin a “Ponzi scheme.”

He should know. As a borrow-and-spend member of Congress, Peterson’s complicit in running up unfunded liabilities larger than Charles Ponzi himself could have imagined.

That’s what happens when gold is not present in the monetary system to constrain the ambitions of politicians.

If you believe Rep. Brad Sherman (D-CA), “There is nothing that can be done with cryptocurrencies that cannot be done with sovereign currency that is meritorious and helpful to society.”

Swamp creatures like Sherman have used sovereign currency to saddle taxpayers with more than $21 trillion in debt. If he really wanted to be “helpful to society,” he’d vote to strip Congress of the power to engage in deficit spending. He wants to ban the trading and mining of cryptocurrencies instead.

Cryptocurrencies lack tangible value, and that does make them speculative and potentially prone to abuse. But no currency is more prone to abuse than an unbacked fiat currency that can’t or won’t compete freely in the market.


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

Australian Regenerative Medicine Firm ‘Lands a Great Partner in China’

By The Life Science Report

Source: Streetwise Reports   07/22/2018

A Maxim Group report reviewed the deal between the two companies.

In a July 18, 2018, research note, analyst Jason McCarthy reported that Maxim Group raised its price target on Buy-rated Mesoblast Ltd. (MESO:NASDAQ; MSB:ASX) following its recent partnership with a Chinese pharmaceutical company. The new target price, $16 per share, up from $14, compares to $6.62 per share, where Mesoblast’s stock is currently trading.

The partnership between Mesoblast and Tasly Pharmaceutical Group concerns the former’s mesenchymal precursor cell (MPC) assets, MPC-150-IM, in chronic heart failure, and MPC-25-IC, in acute myocardial infarction. “The companies plan to leverage each other’s clinical data in China and the United States to support potential regulatory submissions,” McCarthy relayed. “Phase 3 data sets from ex-China trials could potentially be used to support registration in China.”

Under the agreement, McCarthy noted, Mesoblast will get $40 million in cash on closing, a 50/50 upfront and equity investment along with milestones and royalties from Tasly. For instance, Mesoblast will receive $25 million when products are approved in China along with double-digit, increasing royalties on net product sales. It will also get a milestone payment when each of six specific sales targets in China is reached.

Tasly will receive from Mesoblast the exclusive rights to its MPC candidates. The Asian firm will fund all related development, manufacturing and commercialization activities in China.

The analyst highlighted that the large size of the cardiovascular market in China represents a significant opportunity for Mesoblast and Tasly. For instance, 17% of the 1.3 billion people there have cardiovascular disease. About 500,000 individuals per year experience cardiac arrest, presumably due to various factors, including substandard air quality, great incidence of smoking, excessive salt intake and inactive lifestyles. “It’s estimated that the cardiovascular disease drug market in China will rise to $45 billion in 2018,” McCarthy added.

He concluded the report by pointing out that the Mesoblast-Tasly partnership provides the Australia-based firm with the chance to commercialize its products in the Asian country. Also, it extends Mesoblast’s cash runway beyond a year, into H2/19, and through various catalysts, including graft versus host disease, degenerative disc disease, heart failure and rheumatoid arthritis. It further validates the MPC platform, specifically ahead of data expected in H2/18 from the Phase 2b trial in late-stage heart failure. “Mesoblast lands a great partner in China with favorable terms which have multiple positive aspects for the company,” wrote McCarthy.

[NLINSERT]

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 company mentioned in this article is a billboard sponsor 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 one week after the publication of the interview or article.

Disclosures from Maxim Group, Mesoblast Ltd., July 18, 2018

I, Jason McCarthy, Ph.D., attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.

I, Caroline Palomeque, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.

The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.

Maxim Group makes a market in Mesoblast Ltd.

Maxim Group received compensation for investment banking services from Mesoblast Ltd in the past 12 months.

Maxim Group expects to receive or intends to seek compensation for investment banking services from Mesoblast Ltd. in the next 3 months.

( Companies Mentioned: MESO:NASDAQ; MSB:ASX,
)

DOC Investigation Could Prove Bullish Long Term for U.S. Uranium Firms

The Energy Report

Source: Streetwise Reports   07/22/2018

A Haywood Securities report provided an update on the uranium sector.

In a July 19, 2018, research note, Haywood Securities analyst Colin Healey reported that on July 18 the U.S. Department of Commerce launched an investigation into how uranium imports may be threatening national security. “U.S.-focused uranium equities rallied yesterday on the news, although we expect some profit taking is likely in the term,” added Healey.

The DOC’s move came in response to a joint request for such an inquiry, in accordance with Section 232 of the Trade Expansion Act of 1962, filed in mid-January by two of the U.S.’ largest uranium producers, Ur-Energy Inc. (URG:NYSE.MKT; URE:TSX) and Energy Fuels Inc. (EFR:TSX; UUUU:NYSE.American).

Healey pointed out that in that correspondence, the two companies purported that the domestic uranium mining industry is vital to U.S. national security but is suffering dramatically from having to compete with heavily subsidized ex-U.S. producers.

Ur-Energy and Energy Fuels offered two solutions, that a cap be placed on uranium imports and that utilities in the United States be required to buy uranium produced in the U.S. For example, “if the government were to mandate that 25% of its nuclear fuel be sourced domestically, this would require an incremental increase of about 10 million pounds of uranium,” Healey indicated.

Healey relayed that the most recent data shows 83% of the uranium the U.S. requires is imported. About 25% comes from Canada, about 24% from Kazakhstan, about 20% from Australia and about 14% from Russia. U.S. uranium production has plummeted by about 90% since the peak in 1980.

The DOC’s investigation and any subsequent action are expected to take about a year. By law, the commerce department has 270 days to complete and report the findings of such an investigation along with its recommendations to the U.S. president, who then has 90 days to take action.

The imposition of any tariffs, quotas and/or federal utility purchase mandates resulting from the investigation would greatly benefit U.S. uranium producers and developers because it would allow them to capture a larger share of the domestic market. “This could eventually lead to outperformance from the associated equities and turn the group into sector leaders,” suggested Healey.

The companies that could benefit, he wrote, are: Ur-Energy, Energy Fuels, Uranium Energy Corp. (UEC:NYSE.MKT), Azarga Uranium Corp. (AZZ:TSX), Laramide Resources Ltd. (LAM:TSX; LAM:ASX), Peninsula Energy Ltd. (PEN:ASX) and Cameco Corp. (CCO:TSX; CCJ:NYSE). Haywood’s favorite stocks in the sector are: NexGen Energy Ltd. (NXE:TSX; NXE:NYSE.MKT), Denison Mines Corp. (DML:TSX; DNN:NYSE.MKT) and Uranium Participation Corp. (U:TSX).

In the interim, near-term drivers of share price in the sector will be news flow, particularly related to the Section 232 investigation, and market sentiment. As such, Haywood recommends investors build positions in “quality uranium names, using news-driven price shocks such as this as an opportunity to rebalance security exposures,” Healey noted.

The analyst concluded, “We continue to believe we are in the very early stages of a secular bull market in uranium and that sentiment is beginning to perk up. . .we expect a sustained increase in the long-term price to be the sector’s most salient catalyst.”

[NLINSERT]

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 billboard sponsors of Streetwise Reports: Energy Fuels and Azarga Uranium. 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 one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Azarga Uranium, a company mentioned in this article.

Disclosures from Haywood Securities, Uranium Sector Update, July 19, 2018

Haywood Securities, or certain of its affiliated companies, may from time to time receive a portion of commissions or other fees derived from the trading or financings conducted by other affiliated companies in the covered security. Haywood analysts are salaried employees who may receive a performance bonus that may be derived, in part, from corporate finance income.

Haywood Securities, Inc., and Haywood Securities (USA) Inc. do have officers in common however, none of those common officers affect or control the ratings given a specific issuer or which issuer will be the subject of Research coverage. In addition, the firm does maintain and enforce written policies and procedures reasonably designed to prevent influence on the activities of affiliated analysts.

Analyst Certification: I, Colin Healey, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.

Important Disclosures

The following Important Disclosures apply:
▪ At the end of the month immediately preceding this publication either Haywood Securities, Inc., one of its subsidiaries, its officers or directors beneficially owned 1% or more of Azarga Uranium and NexGen Energy

▪ Haywood Securities, Inc. has reviewed lead projects of Azarga Uranium, Denison Mines, Energy Fuels, NexGen Energy and Uranium Energy Corp. and a portion of the expenses for this travel may have been reimbursed by the issuer.

▪ Haywood Securities Inc. or one of its subsidiaries has managed or co-managed or participated as selling group in a public offering of securities for Uranium Participation Corp. in the past 12 months.

▪ Haywood Securities, Inc. or one of its subsidiaries has received compensation for investment banking services from this company in the past 12 months: Azarga Uranium Corp.
▪ Haywood Securities, Inc. or one of its subsidiaries has received compensation for investment banking services from this company in the past 24 months: Azarga Uranium Corp. and NexGen Energy.

Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities Inc. knows or has reason to know at the time of publication or at the time of public appearance: n/a.

( Companies Mentioned: AZZ:TSX,
EFR:TSX; UUUU:NYSE.American,
URG:NYSE.MKT; URE:TSX,
)

Short Update on Novo

By The Gold Report

Source: Bob Moriarty for Streetwise Reports   07/20/2018

Bob Moriarty of 321 Gold discusses the reasons behind the slow pace of assay results.

The chat boards on Novo Resources Corp. (NVO:TSX.V; NSRPF:OTCQX) have been a hive of activity pondering the issue of why only five assays have been released in the past year. Is Quinton Hennigh involved in some devious conspiracy to hold down the price of his own shares? Is Novo maneuvering to take over Artemis or Kirkland Lake? Or is Quinton simply incompetent?

None of the above actually comes even close to the truth.

The conglomerate gold story based around Karratha is similar to one of those good news/bad news stories. Due to the size of the gold, it is virtually impossible to measure with accuracy. I have said before and I will repeat it again. You can’t measure this gold, you can only mine it. I don’t give a damn what anyone calls it, a bulk sample is mining, albeit on a tiny scale.

Everyone keeps trying to run the exploration program just as if you are exploring a many million-ounce gold deposit. Which it most certainly is. But thinking of it as a giant hard rock property is causing all of the companies involved, not just Novo Resources, to see the trees and miss the forest.

The conglomerate gold story is a placer story. And with placer gold, you have exactly the same good news/bad news story. Depending on the size and grade of the gold it varies from measuring with a 35% plus or minus guess at the grade to simply wetting your finger and holding it in the breeze to see which way the breeze is blowing. Or better put, giving a SWAG (Stupid Wild-Assed Guess). It’s between hard to measure to impossible to measure.

However the good news is really good news. Placer gold is really easy to process. The bigger the gold, the easier and cheaper it is to process.

After figuring out that a large core drill rig could drill nice wide pretty holes, Novo also figured out that you couldn’t blow the gold, with an specific gravity of about 19, back up the hole so you could measure it scientifically.

If you can, just imagine the drill supervisor looking down a wonderful wide hole three meters deep at a pile of gold nuggets at the bottom and saying, “Yup. You got a lotta gold here.”

So Novo went the mining route bulk sample process as I suggested. I think that started back in November when they figured out the large diameter drill was a write off. And the company went to one of the best and most qualified assay labs in Australia, SGS. SGS was going to design and build a small plant just for processing the bulk samples.

Since December SGS has managed to process and release two samples. In seven months.

That’s absurd.

There are two issues that caused this utter failure. One is that unbeknownst to most people, Australia has a severe labor problem. With the iron and coal mines working 24/7 it’s damned hard to find and keep qualified labor.

The other issue is that everyone, including SGS, is making the conglomerate gold issue too complicated. It’s placer gold that just happens to be in hard rock. Crush it and run it across a sluice box. But SGS makes a lot more money if they come up with a complicated solution.

They don’t need a complicated solution, they need a simple solution. Simple solutions work. Complicated solutions fail.

I talked to Quinton a little while back and asked just what it was that held things up; after all, all they are doing is building a mini plant. He said there were issues with the hardness of the rock and they seemed to have a crusher that didn’t work.

Rocks tend to be hard. That is what makes them rock. If they were soft, they would be dirt. If you try running a certain species of rock through a crusher and the crusher has a problem with it, get a bigger hammer. No problem.

I had a placer project in Mexico and used a screen deck and a short sluice box to recover most of the gold from what was fairly fine gold. Certainly not coarse. It cost about $50,000 all in, design, fabrication, customs, transportation and set up. And it worked even though the guys working for me specialized in breaking equipment. The life span of a truck was about six months.

I had another placer gold project in Tanzania with ultra fine, fly spec gold. We used $3000 all in, hand fed sluice boxes larger but similar to this. A pan of dirt to be sampled might have 400 colors. It was really hard to pan, the gold was so small. But those tiny almost home-made recovery plants worked.

When I was in Karratha a year ago, we drove out to Comet Well and Purdy’s and passed a shallow gravel pit on the way to the projects. Someone working on a road crew a few months before saw some gold in the gravel on a job they were on and asked around about where the gravel came from. He and a mate bought a metal detector and tested the gravel pit. It wasn’t big, maybe 100 meters across and maybe 1-2 meters in depth. They took home hundreds of ounces of gold from a weekend. I’m certain they declared all the gold and paid taxes on it.

There is a boatload of gold in Karratha. It could easily be mined at great profit if people would stop making it so damned complicated. If metal detectors work, buy some and rip the ground with a D-11 dozer with a ripper. Run the crap across a sluice box and recover 98% of the gold. Easy Peasy.

SGS has stopped the conglomerate gold rush in its tracks just by keeping their head where the sun don’t shine. It would be wonderful to have a Jorc or 43-101 and know to a gnat’s ass just how much gold there is in the Pilbara.

But I could put it in production in a weekend with a blasting permit, a D-11 and a sluice box. For a couple of million dollars. If two guys can recover $400,000 of gold in a weekend with a $10,000 metal detector, it really need not be rocket science.

Novo Resources has about 1.2 million warrants at $1.25 expiring on August 12. Some warrant holders will probably be selling shares to exercise. Expect higher prices once the selling pressure lets up.

I’m a big fan of Novo and have been for nine years. They are still my biggest holding and naturally I am biased. Do your own due diligence.

Novo Resources
NVO-V $3.83 (Jul 20, 2018)
NSRPF $2.88 OTCQX 159 million shares
Novo Resources website

Bob and Barb Moriarty brought 321gold.com to the Internet almost 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: Novo Resources. Novo Resources 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.
2) The following companies mentioned are billboard sponsors of Streetwise Reports: None. 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: NVO:TSX.V; NSRPF:OTCQX,
)

COT Report: USD bets rise. Gold bets lowest in over 2 years. Crude, Silver, Copper bets down

By CountingPips.com

Here is a short summary and this week’s links (below) to the latest Commitment of Traders changes that was released on Friday.

 


Forex Speculators raise US Dollar bets, drop Yen & Euro positions

US Dollar net speculator positions leveled at $18.41 billion as of Tuesday

The latest data for the weekly Commitment of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC) on Friday, showed that large traders and currency speculators raised their bullish bets for the US dollar again this week while cutting their positions for the Japanese yen and the euro. See full article


WTI Crude Oil Speculators pared their bullish bets for 2nd week

The non-commercial contracts of WTI crude futures totaled a net position of 631,294 contracts, according to data from this week. This was a slide of -23,171 contracts from the previous weekly total. See full article


Gold Speculators sharply drop bullish bets to lowest in over 2 years

The large speculator contracts of gold futures totaled a net position of 57,841 contracts. This was a weekly decline of -23,593 contracts from the previous week. See full article


10-Year Note Speculators added to their bearish net positions this week

The large speculator contracts of 10-year treasury note futures totaled a net position of -469,138 contracts. This was a weekly reduction of -29,990 contracts from the previous week. See full article


Silver Speculators drop bullish bets to lowest in 9 weeks

The non-commercial contracts of silver futures totaled a net position of 8,882 contracts, according to data from this week. This was a weekly fall of -14,817 contracts from the previous totals. See full article


Copper Speculators pared their bullish net positions for 5th week

The large speculator contracts of copper futures totaled a net position of 9,113 contracts. This was a weekly shortfall of -5,070 contracts from the data of the previous week. See full article


Article by CountingPips.com

The Commitment of Traders report data is published in raw form every Friday by the Commodity Futures Trading Commission (CFTC) and shows the futures positions of market participants as of the previous Tuesday (data is reported 3 days behind).

To learn more about this data please visit the CFTC website at http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm

New Discovery Returns Gold Grades Up to 336 g/t

By The Gold Report

Source: Streetwise Reports   07/19/2018

The results highlight a mineralized trend in a new area near the existing mine site.

Cabral Gold Inc. (CBR:TSX.V; CBGZF:OTC.MKTS) announced in a July 19 press release initial sampling and exploration results from an ongoing program assessing the potential of newly discovered high-grade veins at the Machichie site, within the Cuiú Cuiú Project, Pará State, northern Brazil.

“Initial results have highlighted a newly recognized mineralized trend with no previous drilling that is located only 500 meters north of the Cabral’s MG deposit. MG is one of four deposits with defined resources at Cuiú Cuiú,” noted the company.

The newly discovered Machichie mineralized structures extend at least 300 meters and lie along an easterly trend, roughly parallel to the MG deposit, according to the company.

“The discovery is highlighted by a line of recently sunk artisanal shafts that are exploiting high-grade gold-bearing quartz veins hosted in soft, shallow weathered bedrock,” explained the company in the release. “The structure is defined as a subtle magnetic low that corresponds to a coincident gold-in-soil geochemical anomaly (100-315ppb Au).”

“A composite grab sample of mineralized rock returned 336 g/t Au from a 1-meter-wide quartz-pyrite vein in an artisanal shaft at Machichie,” note the company. “Channel sample results include 54.6 g/t Au over 0.80 meters, 13.2 g/t Au over 0.75 meters, 13.8 g/t Au over 1.5 meters and 5.8 g/t Au over 1.75 meters.”

The Cuiú Cuiú Project includes the largest of the historical placer gold camps in the Tapajós region of northern Brazil. The project has yielded an estimated 2 Moz of gold from the overall 20-30 Moz gold produced during the Tapajós gold rush from the late-1970s though the mid-1990s.

“Placer workings cover over 850 hectares on the property but are largely exhausted,” according to the news release. “The few remaining artisanal workers now process gold from palaeo-valley placer deposits and in places exploit high-grade gold mineralization from quartz veins in saprolite (shallow highly weathered bedrock).”

Exploration from 2006 through 2012 identified multiple bedrock sources for numerous placer workings, largely discovered through following up pronounced surface gold-in-soil geochemical anomalies. Many potential source areas remain untested, and recent work by artisanal workers is uncovering additional new targets, noted the company.

Earlier this year, Cabral reported an updated a Mineral Resource Estimate totaling 5.9 million tons grading 0.9 g/t Au (Indicated) and 19.5 million tons grading 1.2 g/t Au (Inferred), or 0.2 Moz and 0.8 Moz of gold, respectively. That estimate was based on four deposits drilled prior to the cessation of drilling in 2012.

“The Company’s current program is designed to improve understanding and expand existing prospects, evaluate newly identified discoveries, prioritize drill targets, and to build upon the existing resource inventory. One focus is on the definition of gold targets that are strategically close to existing resources. The Machichie area is one such target, as it lies within 500 meters of the MG deposit,” the company noted.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) John McPhaul compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Cabral Gold. 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 one week after the publication of the interview or article. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Cabral Gold, a company mentioned in this article.

( Companies Mentioned: CBR:TSX.V; CBGZF:OTC.MKTS,
)

Upside Could Lie in Explorer’s Secondary Vein Targets on Nevada Property

By The Gold Report

Source: Streetwise Reports   07/19/2018

Moving into the next exploration phase means a shift in this company’s areas of focus.

American Pacific Mining Corp. (USGD:CSE;USGDF:OTCPK) intends to expand its Tuscarora gold project in Elko, Nevada, beyond the South Navajo vein to an additional 13 or so previously mined targets identified during historical work. “These vein sets and stockworks will be a main focus in our exploration efforts moving forward,” said American Pacific Mining President Eric Saderholm. “This is the upside of the Tuscarora property,” which is located northeast of Nevada’s Carlin trend, southwest of the Jerritt Canyon deposit and east-northeast of the Midas deposit.

Listed by geographical location, from west to east, the targets to be further explored include: Battle Hill, Modoc Hill, Silica, Kings Pinto, Navajo Hill, Navajo North and South, Revenue, Schoolhouse, Independence, DuFreese, Grand Prize and East Pediment. “All of these veins, or vein clusters, project into the pediment with fewer than 10 drill holes to test them aside from the South Navajo vein,” Saderholm said.

In late June, American Pacific released the initial assays from the first drilling phase at Tuscarora. It should announce results for the remaining 11, Phase 1 holes soon.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

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 billboard sponsors of Streetwise Reports: American Pacific Mining. 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 one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of American Pacific Mining, a company mentioned in this article.

( Companies Mentioned: USGD:CSE;USGDF:OTCPK,
)

Gold Mining Industry’s Costs Are Higher Than Market Realizes

By Money Metals News Service

New information suggests that the cost to produce gold is much higher than what the market realizes. As the cost to produce gold has skyrocketed over the past two decades, the mining industry has hidden certain costs by placing them in their capital expenditures. This has lowered their “Cost of Sales” figures but has significantly increased their capital expenditures.

Furthermore, this massive cost shift has forced the gold mining industry to tackle these big problems, with big solutions. However, these big solutions come at a big cost. For example, as the average gold ore grade has fallen substantially over the past 20 years, the gold mining industry now has to move a great deal more ore to produce the same or even less gold.

In order to move a great deal more ore, the mining industry has to spend a lot more on trucks, tires, materials, energy, and labor. In my newest video below, I show in detail the BIG CHANGES taking place in the top four gold miners in the world:

I believe several of the charts in this video has never been seen before by precious metals investors and alternative media community. To understand why the cost to produce gold is higher than what the industry has led us to believe, we have to focus on the massive amount of capital invested by the gold mining industry.

Unfortunately, the investment of billions of additional dollars in capital expenditures by the top gold miners has not kept production from falling. Actually, the top four gold mining companies’ production peaked more than ten years ago and continued to trend lower.

One of the charts in the video shows the enormous increase in the amount of ore processed at Barrick’s Nevada Gold Mining Operations. In just 20 years, Barrick’s Goldstrike and Cortez Mines now how to process four times, 24 million tons of ore, to produce the same amount of gold then they did in 1998:

Barrick Nevada Goldstrike & Cortez Mines Production & Average Gold Yield

To understand the tremendous increase in capital expenditures and costs to process four times more ore to produce the same amount of gold at Barrick’s top mines, I highly recommend watching the video above. Moreover, I provide additional cost analysis on the top four gold miners as a group.

The gold mining industry is plagued by rising costs in all areas. While some of these costs have decreased over the past several years due to a falling oil price, these costs will likely increase going forward as ore grades continue to decline. Furthermore, as global oil production begins to experience “Seneca Cliff” like declines in the future, gold production will be negatively impacted, even with much higher gold prices.

Precious metals investors need to understand the changing “Energy Dynamic” and its impact on the entire economy and financial system. While the gold and silver prices continue to trend lower, this should not be seen as a WEAKNESS, but rather as a STRENGTH.

Soon, the days of buying gold and silver at bargain basement prices will be gone forever.


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

Gold & Silver Need THIS to Unfold; Greg Weldon: Destructive Trade War

By Money Metals News Service

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

Coming up we’ll hear a tremendous interview with Greg Weldon of Weldon Financial. Greg shares his insights about the U.S. dollar, the major correction in commodities, and what this all means for the global economy and ultimately for gold. Don’t miss a must-hear interview with one of our favorite guests, Greg Weldon, coming up after this week’s market update.

Precious metals markets took another beating this week as the Federal Reserve vowed additional interest rate increases. In testimony on Capitol Hill, Fed chairman Jerome Powell touted low unemployment numbers and relatively strong economic growth as justifications for further monetary tightening.

Odds now favor two more rate hikes before the end of the year. But the Fed is now running into political resistance. In a CNBC interview, President Donald Trump vented his displeasure with Powell’s rate hiking campaign.

President Trump: I put a very good man in the Fed. I don’t necessarily agree with it because he’s raising interest rates. I’m not saying that I agree with it and I don’t necessarily agree with it. I must tell you, I don’t. I’m not thrilled and our currency is going up. I have to tell you, it puts us at a disadvantage. Now, I’m just saying the same thing that I would have said as a private citizen. Somebody would say, “Oh, maybe you shouldn’t say that as a president.” I couldn’t care less what they say because my views haven’t changed. I don’t like all of this work that we’re putting into the economy, and then I see rates going up. I see China where they’re … I mean, look at what’s happening with their currency. It’s dropping like a rock.

President Trump is essentially calling for a weak dollar policy to undercut China and Europe in international trade. Trump’s trade wars now threaten to bring about currency wars. Competitive currency devaluations won’t make us or the world more prosperous long-term. But they can create some near-term benefits for politically favored sectors of the economy.

The Treasury Department, and not the Federal Reserve, is officially charged with managing the dollar’s exchange rate. However, more rate hikes by the Fed will tend to put upward pressure on the buck.

That’s a big reason for the slump in precious metals markets. Gold prices hit one-year lows this week and are down 1.0% since last Friday’s close to trade at $1,229 an ounce. Silver comes in at $15.51 per ounce after suffering a 2.1% weekly decline. Platinum is down a slight 0.4% now for the week, while palladium is getting smacked, down by 5.3% to $894 as of this Friday morning recording, and that’s despite a nice rebound here today.

Metals markets are now deeply oversold and appear due for at least some kind of bounce. It could turn into a more sustained rally if rate hike expectations start to diminish. Gold and silver did come off their lows mid-day Thursday after President Trump sounded off on the Fed.

The bond market has been gradually sounding off in its own way over the past few weeks. Yields on the 30-year Treasury have fallen from three and a quarter percent in May to below 3% today. This has resulted in a flattening yield curve. The Fed jacks up short-term rates a couple more times, the yield curve could invert – meaning yields on short-term maturities exceed those of longer-term maturities.

You’ve heard Michael Pento warn previously on this podcast that an inverted yield curve could happen this fall. If the yield curve does invert, that would likely stop the Fed dead in its tracks. An inverted yield curve has historically been a warning sign of an impending recession.

We’re not there yet, but other leading indicators are suggesting the economy isn’t as hot as Fed Chair Powell seems to believe. Copper prices fell to a 1-year low this week. “Dr. Copper” is noted for being a more reliable forecaster than most Ph. D. economists. Right now the copper market seems to be anticipating a drop off in industrial demand.

That’s in contrast to most of the backward looking data the Fed sees still coming in strong. Second quarter GDP and the latest reports for industrial production and retail sales for June are all indicating strength in the economy. Yet metals traders and bond traders are pricing in a slowdown in the near future.

Perhaps President Trump sees the writing on the wall. He surely doesn’t want the Trump tariffs to get blamed for instigating the next downturn. He is already setting up the Federal Reserve as the foil if it goes one hike too far.

Rarely does a rate hiking campaign end with a soft landing. Before it’s over the Fed usually triggers some sort of adverse event in the economy or financial markets. Investors would be wise to position their portfolios defensively in case high-flying growth stories such as FANG stocks suffer a hard landing.

Well now, for more on the unfolding trade war, the selloff in commodities and gold, and much more, let’s get right to this week’s exclusive interview.

Greg Weldon

Mike Gleason: It is my privilege now to welcome in Greg Weldon, CEO and president of Weldon Financial. Greg has over three decades of market research and trading experience, specializing in the metals and commodity markets, and his close connection with the metals led him to author a book back in 2006, titled Gold Trading Boot Camp, where he accurately predicted the implosion of the U.S. credit market and urged people to buy gold when it was only $550 an ounce.

He’s a regular presenter at financial conferences throughout the country, and is a highly sought-after guest on many financial shows. And it’s always great to have him on the Money Metals Podcast. Greg, good to talk to you again. Welcome back.

Greg Weldon: Thanks, Mike. My pleasure.

Mike Gleason: Well, Greg, we’ve been keeping a close eye on the dollar, as I know you have been as well. For metals investors, the rally in the dollar is providing some serious headwinds. When we last spoke in early May, the rally had begun. You weren’t surprised, and thought it might run up to the vicinity of 96 on the DXY Index, and that’s looking like a very good call. We’re just a bit over 95 currently. But you thought the rally could fizzle out, and the dollar could be back on the slide somewhere in the second half of the year. So, what are your thoughts currently? Has anything changed your outlook for the greenback, Greg?

Greg Weldon: Yeah. I think the odds of the dollar continuing higher have expanded here, and I think it’s a function of the Fed. I think we got information in the last week or so that is, frankly, pertinent, because if you kind of trace back to what we were talking about in May, we started to see signs of stagflation. We started to see signs of stress in the second derivatives of where the growth had been. A place like Germany, an export juggernaut. When you start to see some issues in places like the Czech Republic, Hungary, Poland, they provide semi-finished goods to Germany that finishes them and exports them. So, we had already kind of seen some cracks in the global macro dynamic globally.

And the question then was, “well, if inflation’s going higher, will the Fed follow inflation even at the risk of potentially bringing the hammer down on the backend on the consumer who is extremely leveraged here, unprecedented borrowing.” Same thing as 2006 and 2007. You’re borrowing against unrealized paper profits. In that case it was mortgages, in your home, the value, all right?

In this cases it’s the stock market. Like the case in 2006 and ’07, home prices will never go down, right? Well, we learned that’s not true. And then the case here it seems like stock prices will never go down, right? Passive investment, just pile in, and you’ll be rich, and here’s the American dream in a nutshell, no problem. Well, we can call into question that, of course, and if the stock market declines and consumers are on the hook, you’re going to be facing a very similar situation where the consumer’s kind of upside down.

Having said all of that, the question really puts the focus on the Fed, and what the Fed just told us in their monetary report, which is the basis for which Chairman Powell is using as his testimony here on Capitol Hill, The Humphrey-Hawkins semiannual report to Congress. The Fed was very specific. I was really surprised at the language in this report. It’s 71 pages. I went to every single page. It took me six hours yesterday doing this, but it was really worth it because the Fed say in this report, not only do we want to get to a level where we’re at the neutral rate, the kind of natural rate, the neutral rate of Fed policy which we’ve been saying all along. They want to get to neutral, which is somewhere between two and two and a half based on where inflation is.

Well, the Fed just told us, “We don’t want to just get to neutral, we want to get a slight bit above neutral, i.e. we actually want to get tight here.” All right? And if inflation’s moving higher and the Fed wants to get tight, meaning above the rate of inflation, they’re behind the curve and they’re going to have to move more quickly and this was kind of the tone of this monetary report.

And the sense was, they’re admitting, “Hey! Inflation is now above our target for the first time, that doesn’t mean we’re slowing down.” So this is bothering commodity markets because it’s lifting the dollar. The Fed is presumably going to be tighter, it’s going to chase inflation, doesn’t care about what the back end economic dynamic might be and that you throw in the trade dynamic, which is having a huge impact, i.e. look at the declining commodities. Look at the decline in China. Look at the decline in Canada in terms of some of the economic numbers, let alone the markets. Look at the pressure on emerging market currencies.

The other thing the Fed said in this report was the external risk is primarily seen in Argentina, Turkey, China, and emerging Asia. We run spreadsheets here where I have my own proprietary algorithms that I wrote back in the 1980’s. I’m a math geek by heart, by history and we have algorithms that we use to track the ETF’s out there, all of them. Well, I ran a full scan yesterday and the top 25 trends right now in the ETF world, including international ETFs, commodity ETFs, fixed income ETFs, all the sector ETFs in the U.S., 25 top trends, 24 were bearish and it was spread out among metals, commodities, China, and emerging Asia. All the things the Fed just cited as their risk factors.

So, my question then becomes, again, does the Fed pay attention? Is the Fed doing their normal puppeteering here where they’re trying to be vocally tighter so they can use words to kind of ease some without actually having to totally shift policy and start cutting rates? I don’t know, but I think right now, whereas maybe we might think that the dollar would soften when the Fed rhetoric softened, that’s not happening because the Fed rhetoric is not softening. In fact, it’s getting harder and this is becoming a problem. You see it in emerging markets, you see it in commodities, and you certainly see it in gold and silver.

Mike Gleason: Yeah, gasp at the thought that the Fed would say one thing and do another. Where have we heard that before? One of the things you mentioned in that last conversation we had is that you felt the dollar was breaking out more than gold was breaking down. But here we are now and we’ve seen the yellow metal take it on the chin these last few weeks. It’s down to about $1,225 as we’re talking here on Wednesday afternoon. So, part of the decline has to do with the dollar, we’ve hit on that. But part of it is just the lack of demand for safe-haven assets. The speculators and the futures markets need a reason to own precious metals and right now they don’t seem to be finding many. Those who do have generally been punished for going long, so there isn’t much encouragement to be found on the charts and it has been quite a while since the fundamental reasons to own gold and silver were reflected in the price. Nobody seems too worried about debt and deficits, for example.

That said, we know change is coming, even if we don’t know when. So what are you saying to your clients, Greg, who are frustrated by the performance of the precious metals?

Greg Weldon: Well, we’ve found places to take advantage of it, frankly, so we don’t trade just gold and silver and frankly if we did, we’d have to be short here. I mean, it’s almost a technical mandate to be short. I don’t want to be short on metals because I still think, you have issues here that are going to cause the Fed to shift gears and when that happens you don’t want to be caught short. This is a situation where you’re talking about there doesn’t seem to be a lot of fear around the macro things that we’re talking about. You know, the budget in the U.S. which we’re not even talking about. The debt. Italy and Spain as socialist countries. We’re not talking about that. Merkel is probably going to lose the elections in September and could be out on her fanny, very quickly. Immigration could rip apart Europe. We’re not even talking about that.

There’s a lot of risk factors out there and to me, at some point, the biggest risk is the consumer. The biggest risk is the final demand situation in the U.S. And the biggest risk, Mike, that people talk about the growth. Gosh, the Fed is looking for nominal GDP growth this year and next of 4.5%! Where the heck is that going to come from, particularly in light of what’s going on in trade, which is massive. Look at the shipping stocks. SEA is a shipping ETF. It’s almost at a new low below the 2016 low. You look at Turkey… this is not a market that is collapsing and crumbling in everything, it’s a very tight orderly decline in a bear market that is back to the 2008, 2009 lows. You saw what happened to Argentina peso… 40% interest rates. The Brazilian real has gotten loose, and all the sudden Latin America is under performing. You have those markets breaking down. You have those currencies breaking down which also adds to the dollar’s strength.

So, I feel there’s an inflection point here for the Fed and I wouldn’t want to get caught short these metals, because there’s going to be a great buying opportunity and the difference here than what we saw in 2007, 2008, gold got whacked when the stock market got whacked. Why? Because there were a lot of people long. You don’t have that situation here, Mike. So this could be a situation where you don’t have that deflationary down draft in gold when you get it in equities. So, this is why I don’t want to be short.

So, we’re looking at other places. We have completely caught this move in copper. We were just waiting to pounce on copper, because here’s a market where the swaps have been at record lows this entire rally. It’s an amply supplied market. There’s no shortage of copper. It’s been a speculative frenzy driven by thought that you’re going to have future demand that’s going to be stronger. That’s demand’s not materializing. It’s not going to materialize. I’ve been saying that all along. So, we caught the move down in copper.

The next one is crude oil. We’ve caught this movement moving crude oil. You know, you can talk all you want about crude being tight, and guess what, if you look at the swaps in the U.S., it looks very tight. But that’s because the Cushing, Oklahoma supplies are 56% below two year ago levels, 53% below a year ago. I mean, you don’t have supply for delivery at the delivery point for the WTI contract. So that skews the swaps to make this market look tighter and more bullish than maybe it is, when you consider you had a huge decline in inventories. I get that. You’re still have 417 million barrels. That’s not a tiny amount of crude! There’s plenty of crude around and you look at OPEC increasing. You look at the U.S. numbers, I mean, my gosh, 11 million barrels a day almost.

So, this is a market that was maybe already overcooked a little bit. You throw the dollar into the mix and the thought process that trade’s going to draw from GDP growth and you’re going to have lower demand globally, because demand’s been a big part of the rally in crude. Everyone’s under estimated demand growth. If now they’re over estimating demand growth, it’s a flip side. So, we’ve caught this move in crude and we think it has lower to go. We think you’re going to see 60 bucks, maybe even dip to 58 in crude.

Our newest one is palladium. Look at the one metal that hasn’t cracked yet. It’s palladium and it’s right there on the verge. And I’ll tell you what, when you want to talk about these kinds of things, look at another one. Look at lumber prices. They had a limit down day today. They’re on the verge of a major breakdown after a massive bull move. You are seeing all kinds of signs of concern around global GDP growth, and I think a lot that relates back to trade which is the big elephant in the room where you haven’t talked about is the big wild card. How do you handicap that. It’s not easy, so man, there’s a lot to talk about. In terms of gold and silver, I think it’s still longer term bullish. It’s more patience, it’s waiting, it’s keeping your gunpowder dry for right now. So, there’s a lot going on. There’s always a lot of opportunities and we’re obviously in constant touch with that as it relates to our clients.

Mike Gleason: Looking at trade and trade policy, it’s getting a lot attention these days. As you mentioned, the markets seem to be signaling that a trade war is good for the dollar or maybe the markets aren’t taking the possibility of a prolonged and serious confrontation with our trading partners too seriously. Our take is that a trade war is almost certainly very bad news for the dollar long term. The U.S. may not export nearly as much as it imports in goods, but we do export boat loads of dollars. If demand for dollars falls overseas because we have fewer imports to pay for, the dollar should weaken in our estimation. On top of that, we’re likely to see price inflation as cheaper imported goods disappear from the marketplace. But, what are your thoughts? Is a serious trade war coming, and what do you think it will mean for the dollar?

Greg Weldon: Well, I think you’re there. I mean, to some degree. We have tariffs, we have retaliation, we’re involving everyone. I go back to the interviews I did in 2016. One in particular in January, 10 months before the election, when it seemed an oddity that Donald Trump was even running, let alone that he might have a chance to win. Well, we gave him a chance to win, but we said, “The thing you got to be careful with Donald Trump is, he’s not the most diplomatic guy.” And you need some level of diplomacy to deal on an international relations basis. So, our fear was always that he might overstep his bounds and really protectionism. Always the fear! Do we have to look at history to understand that protectionism could be the worst possible thing to have happen right now, and it’s happening.

So, I say we’re in a trade war. People talk about skirmishes and tariffs and are we going to have a trade war? We’re in a trade war! This is a trade war! Now, we’ve also discussed that, on many levels, the U.S. is totally justified in the way they feel and in their point of this is not fair trade. It isn’t. It’s not with Canada. It’s not with Germany. But then you have a political divide in the U.S. where you actually have people in the U.S. and you see this on the social media, on Facebook, on Twitter, they’re rooting for Angela Merkel, like “kick Donald’s ass on trade.” But they don’t understand the situation. They’re not free traders. They are socialist countries and the fact that people are now backing socialist leaders without knowing the facts and wanting them to “kick our asses” at the expense of the U.S. business man, is mind boggling.

But having said all that, we’ve talked about this before, Mike. I mean, this is a situation where the strategy is simple. We can take the pain for longer than you can take the pain. Everyone is going to feel the pain. The risk is that this is akin to being doused in gasoline and sitting there holding a lit match, and hoping you don’t basically immerse yourself in flames. That could happen. And the longer this goes on, the more likely that is to happen, because what it’s doing is, and you’re already starting to see, even today, comments around the world where the rest of the world is now becoming more cohesive in an anti-U.S. stance. China’s making waves now with threats… I haven’t heard the kind of threats that I heard today that don’t specifically speak to any type of action, but this is the first veiled threat of, “You continue to take this to the next level, understand. Watch what you ask for. You just might get it.” And, of course, the nuclear bomb, the mutually assured destruction dynamic in all of this is China selling U.S. assets and bombing the bond market.

So, you’ve got to play it careful here and I fear that the longer this goes on and the longer it’s an ego type of thing and the longer it’s, no one wants to be seen as losing or backing down, that this could become even way worse, and how that affects the dollar, I think initially it’s the same thing. It’s like, okay, the U.S. stance is, and mathematically they’re correct. If you don’t include the bond market, the U.S. is absolutely correct to say, “We can withstand the pain longer than you can.” The math is on our side in terms of imports and exports, what’s being imported and exported, what’s the price dynamics and specifically and what’s the impact on domestic GDP for a place like Canada versus the U.S. For a place like Germany versus the U.S. Even China. We are in the stronger position mathematically, economically speaking. But that’s not to say we don’t get hurt. Consumer prices go up, like you say. It’s inflation. The consumer cocoons! I mean, is that good for anybody? No! Of course not! But that’s also not good for the other countries.

So, in the first phase of this, this is why you’re seeing the pressure coming to bear on these emerging market currencies in particular, because that is the first wave of pain. Will that mutate back into a U.S. dynamic? I think it will, and that’s part of why we think the dollar will eventually turn. But we’re thinking now that our timeline might be a little too early, and that the upside for the dollar might be a little greater than we had originally thought. And it’s not like we’re revising our goals upward because the dollar’s already higher, it’s not. It’s not even surpassed our original estimate of 9,600. It’s right there. We’re actually revising these things up here. We’re actually taking. You can be short to the British pound. You can be short to Japanese yen. So, that’s a different tack. And I think the next phase is that this is going to put more pressure on other currencies than the dollar, first.

Mike Gleason: Certainly a very fluid situation and you always have to be adapting and moving, and you do that very well and that’s one reason why we like having you on and getting your insights. I wanted to get back to the PGM’s. You spoke about palladium there briefly, but I wanted to ask you about platinum here, because it just keeps getting cheaper and cheaper. Are we in a deeply over sold situation now, or will we continue to see a fall here? And then what’s behind this platinum correction that’s getting pretty long in the tooth now? What has been the key driver in all of this, Greg?

Greg Weldon: Yeah. I’ll tell you what, it’s a slight bit mystifying even to me on this end. Not so much in terms of platinum itself, but really platinum-gold. I mean, holy mackerel. How much of a discount are you going to take platinum relative to gold before you have value there? So, I think you’re kind of there. We thought that once before and we were wrong. So, frankly, I don’t have a really good answer for you as to where is the selling coming from. Frankly, I would suggest that this is a market where it doesn’t take a lot volume to move it right now, because you don’t have a speculative interest behind it.

It’s not like precious metals are doing well and people are buying platinum because they think it’s an alternative to gold. I also, on the flip side think, you have been down here in the 750 area a number of times and you’ve held. So, yeah, there probably is some level of value here. But I think when you get this situation you have now, zinc is down, aluminum is down, nickel’s down, platinum’s down. Silver’s down, it’s an industrial metal. It’s getting whacked under that label. But I tell you what, at some point I think I’m going to be salivating to what to buy platinum against gold.

Mike Gleason: Yeah. It does look like a very good value proposition. Over a $400 discount right now as we’re speaking, which is just unfathomable. Well, Greg, as we begin to close, any final comments on what you’re watching most closely here as we progress through the summer months? Maybe a potential black swan that people may not be accounting for perhaps, or anything else that you want to hit on before we wrap up?

Greg Weldon: Yeah, I think the consumer is the black swan. I think it’s the most important thing and I think making the correlations, understanding things are much different, but the similarities with 2006 and ’07 to me are just striking! It’s deja vu all over again. Let’s pull out some Yogi Berra quotes. I mean, the consumer is as leveraged as they’ve ever been. And I think had it not been for the tax cuts, you would have already seen the impact, because tax cuts have provided a cushion that have allowed consumers to pay more for gasoline without having to cut spending in other areas. You know that we watched these dollars, dollar for dollar, and you can make a direct correlation between spending at gas stations and spending at eating and drinking establishments.

So, I think there is a veiled weakness in the consumer that we just don’t see yet, that will show up soon. It’s not a coincidence, all right, that May retail sales were as strong as they were, when you had the ninth largest single month growth in consumer credit in history. It’s not a coincidence when in November, when you had the huge black Friday, huge cyber Monday sales. November retail sales were enormous, to the point where December was nothing because everyone bought everything in November because the word was out. You’re going to get a tax cut. It was also the second largest single month increase in consumer credit ever, including the largest single week of credit card borrowing ever. When you overlay consumer credit with retail sales on a 12-month growth basis in dollar terms, consumer credit grew over $70 billion in May. U.S retail sales were $30 billion. This is just not sustainable.

And it is again, doing the same thing. Borrowing against the unrealized paper profits on a paper asset. I’d say the mortgages and housing market in 2006 and ’07 is a paper asset. You borrowed on the appreciation in your home. It was mortgage equity withdrawal. The second home prices went down. You’re upside down. Stock prices go down, the consumer’s going to be upside down again, and you’re going to see a viscous contraction in the consumer that people are not prepared for. There may be a time out here in the not too distant future, where the bond market is going to offer a tremendous amount of value, and I don’t think you’re that far away from it, frankly. So, that’s kind of one of my outliers to kind of keep an eye on because I think that that’s a situation that people are not looking for. When you listen to the pop media, the consumer’s in great shape, income is up, and so on and so forth. Spending is still greater than income.

And I love in the Fed’s report from yesterday where they did no mention of consumer credit. Nothing. They talked about everything in this report. There wasn’t a single sentence about the unprecedented increase in consumer credit, and I’m talking about $200 billion a month on a 12-month rolling basis for 39 consecutive months. We’ve never seen that. It’s unbelievable. Not word one about any of that. What they did say was that the consumer’s healthy because income is higher than spending, and then mentioned that the savings rate had bounced. It bounced from an historic low. It bounced from levels that in the past have been major warning signs. The consumer has no savings. The consumer is borrowing like crazy. The consumer is going to be strapped, here at some point, and that’s going to be a real problem.

Mike Gleason: And we know what a rising interest rate environment might mean for all those borrowers.

Greg Weldon: Can I make one quick point about that.

Mike Gleason: Yes, go ahead.

Greg Weldon: What’s interesting there is that the interest rate on credit cards, the actual balances that get charged just went to new highs. 15.54 is the average interest rate on credit cards. So, you can say interest rates are near record lows and this is helping consumers, that’s not actually true, and in fact, the amount of money the consumer pays to service their credit, their debt, household debt, is at a new record high as of the most recent month, which I believe is May, at just shy of 325 billion dollars a month. That is not a heck of a lot less than total retail sales, including food and gasoline. So, you’re right on to talk about that. The debt burden, and this is why the delinquency rate is rising, this is why the set aside at banks are rising. This is happening all over again, you just got to look for it if you want to see it.

Mike Gleason: Yeah. So many things going on around there. It’s going to be a very interesting end of the year, I think, and look forward to catching up with you later as we see it unfold. Well, Greg, great stuff once again. We really value your insights and appreciate your time today. Before we let you go, as we always do, please tell people about Weldon Financial, how they can find you, and other information that should know about you and your firm.

Greg Weldon: Great. Thanks Mike, sure. It’s at WeldonOnline.com. If you have never had a free trial with us, you can come sign up for one. We’re actually kind of running a summer special before we kick off the new pricing dynamic for next year as well. And we’re working on building a new website, but it’s a daily service and we provide daily briefings. We provide full blown macro coverage and we provide specific trading recommendations that we follow every single day. You get alerts. You get stops. Everything. We really help you navigate these markets with a specific strategy, because this is all about helping our customers make money and helping them insulate themselves from being passive investors in the S&P ETF index that is at risk of getting sliced and diced in the next downturn. You’re welcome to email me directly to [email protected].

Mike Gleason: About the most thorough and detailed analysis you can find anywhere, as you just heard in our conversation with Greg here today. Well, excellent stuff. Thanks again. Hope you enjoy the rest of your summer and we’ll catch up with you before long. Take care Greg.

Greg Weldon: Sure. Thanks Mike.

Mike Gleason: Well, that will do it for this week. Thanks again to Greg Weldon of Weldon Financial and WeldonLive. For more information, simply go to WeldonOnline.com where you can sign up for a free trial. Again, you can find all of that information at WeldonOnline.com. Be sure to check that out.

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


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