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A “dead cat” bounce or the beginning of a move of potential historic proportions? – a trader’s guide to the Venture in Q1…

Visit the BMR comments section throughout the day for updates and helpful information!

1. Gold has traded between $1,276 and $1,297 so far today…as of 7:00 am Pacific, bullion has backed off $16 an ounce at $1,278 in a healthy minor correction after a very strong U.S. jobs report this morning…indicating investor appetite for Gold, holdings of SPDR Gold Trust, the world’s largest Gold-backed exchange-traded fund, rose to 795.31 tonnes this week, their highest since early August…Silver has slipped 12 cents to $15.59…base metals have firmed up with Copper, Nickel and Zinc each posting modest gains at $2.65, $4.94 and $1.13, respectively…Crude Oil has surged $1.64 a barrel to $48.73…OPEC cut Crude output in December, a Reuters‘ survey showed, while the American Petroleum Institute reported a drop in U.S. Crude inventories…the U.S. Dollar Index has gained one-third of a point to 96.59 but will likely retreat from that key resistance area…Federal Reserve Chairman Jerome Powell pledged this morning that the central bank will be watching how the economy performs this year and will adjust policy should growth slow unexpectedly, words that will comfort Wall Street…Powell along with his immediate predecessors, Janet Yellen and Ben Bernanke, spoke this morning at the American Economic Association’s annual meeting in Atlanta…

2. Brazil on getting back on track, a country resource investors should start looking at again for opportunities in 2019…Jair Bolsonaro announced the country’s “liberation from socialism, inverted values, the bloated state and political correctness” after being sworn in as the country’s 42nd President this week…his words delighted a crowd of more than 100,000, many of whom had travelled to its modernist capital for the event, convinced the conservative populist can rescue their troubled country from virulent corruption, rising violent crime and economic doldrums…“We have a unique opportunity before us to reconstruct our country and rescue the hope of our compatriots,” he said…“We are going to unite the people, rescue the family, respect religions and our Judeo-Christian tradition, combat gender ideology, conserving our values”…he also added, “One of our strategies to get Brazil to climb from the lowest spots of the educational rankings is to tackle the Marxist garbage in our schools head on.  We shall succeed in forming citizens and not political militants”…

3. The Trump economy continues to create jobs at a stunning rate:  Job creation ended 2018 on a powerful note, as reported by the Labor Department this morning, with non-farm payrolls surging by 312,000 in December…the unemployment rate rose to 3.9% but for the right reason as 419,000 new workers entered the workforce and the labor force participation rate increased to 63.1%…the participation level was up 0.2 percentage points from November and 0.4 percentage points compared with a year earlier…for all of 2018, the manufacturing industry posted net job gains of 284,000, capping its best calendar year in 2 decades…in addition to the big job gains, wages jumped 3.2% from a year ago and 0.4% over the previous month…the year-over-year increase is tied with October for the best since April 2009…economists surveyed by Dow Jones had been expecting job growth of just 176,000, though they projected the unemployment rate to fall to 3.6%…the wage number also was well above expectations of 3% on the year and 0.3% from November…

4. Full-time employment in the Trudeau economy actually FELL in December…how long will Canadians keep accepting this embarrassing under-performance vs. the United States, thanks to bad policy choices???…overall, the economy eked out a small gain of 9,300 jobs for December but the increase was driven by part-time work and self-employed workers, according to Statistics Canada…for all of 2018, the economy added 163,300 full-time jobs, a pace consistent with slower growth and well below the average annualized 225,000 since 2010…another negative in the Canadian labor market data continues to be wages, with annual gains still hovering at a sluggish 2% in December…wage gains for permanent workers were just 1.5% last month…

5. China has stepped up efforts to boost lending in its economy, with the central bank freeing up new funds and the country’s premier ordering big banks to lend to cash-starved small businesses…today’s moves by the central bank and Premier Li Keqiang, though modest in scope, aim to bolster a weak link in the economy – smaller businesses that traditionally have trouble getting bank credit and whose continued troubles threaten to hamper a turnaround…in separate, well-publicized meetings, Li ordered the heads of 3 of the biggest state-owned banks to allocate 30% of new lending to small businesses and to do so at low rates…he called such support crucial to stabilizing economic growth and employment…The People’s Bank of China, whose governor sat in on the meetings, later said it would reduce the amount of reserves Chinese banks are required to hold…the 1 percentage point reduction – to be carried out in 2 equal cuts on Jan. 15 and Jan. 25 – will free up a net 800 billion yuan ($116.6 billion) for lending, according to the central bank…the adjustment is the 5th broad-based cut to required reserve holdings since the start of 2018 and came earlier than many in the financial community expected, signaling Beijing’s concerns about growth…

6. This morning’s strong economic news has pushed the Dow up 480 points after 30 minutes of trading after yesterday’s 660-point loss, driven by weakness in the tech sector…the TSX is has added 152 points…Gold stocks have cooled off today but that should be viewed as another accumulation opportunity…the Venture is set to record its 7th straight winning session with the Index up 4 more points at 582…Venture short-term technical indicators have turned unabashedly bullish as this market continues its recovery out of a dismal Q4…Canada Cobalt (CCW, TSX-V) is on the move again…the world’s top-performing Cobalt stock in 2018, with a gain of 46%, is up 4 pennies at 54 cents in early trading…multiple potential catalysts are in play for January including more high-grade results from underground, Re-2OX developments and an update on the discovery of a new deposit type (Archean Gold system) in exploratory drilling east of the mine…

7. The Financial Post reports that less than a week before Pan American Silver (PAAS, TSX) shareholders vote on a $1.1-billion (U.S.) acquisition of Tahoe Resources (THO, TSX), 3 non-profit companies – far left groups who consistently bash the mining industry – have filed complaints with the B.C. Securities Commission accusing the companies of hiding key risks…the Post’s Gabriel Friedman writes that the complaints say the companies are overly optimistic in their timeline for the reopening of Tahoe’s flagship Escobal mine in Guatemala and failed to disclose all conflicts with the local community around that mine…Shin Imai, a director of the Justice and Corporate Accountability Project at Osgoode Hall Law School, who drafted the complaints, said that the case ties into a broader effort to improve mining companies’ disclosures about their community relations…“This Tahoe case is just a classic example that shows that if you don’t have a social licence and you don’t disclose that, then investors get screwed,” said Imai…he said that his clients in the case – Breaking the Silence Network, Earthworks and MiningWatch Canada – sent employees to visit the Escobal site, or live in Guatemala and thus “understand the state of affairs locally” at the mine…

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Visit the BMR comments section throughout the day for updates and helpful information.

1. Gold has traded between $1,284 and $1,293 so far today, touching a new multi-month high…as of 7:00 am Pacific, bullion is up $7 an ounce at $1,291…Silver has added 15 cents to $15.65…base metals remain under mild pressure due to China growth concerns with Copper, Nickel and Zinc at $2.62, $4.78 and $1.11, respectively…Cobalt is unchanged at $25.17…Crude Oil has pushed 34 cents higher to $46.88 while the U.S. Dollar Index has slipped one-tenth of a point to 96.54…the U.S. remains in a partial government shutdown…hopes of bipartisanship anytime soon appear dim…the growing socialist wing of the Democratic Party will start to flex its muscles today with the seating of the new U.S. Congress as more self-described Democratic Socialists join the ranks…Democrats, not unlike their liberal cousins in Canada, are embracing a massive government expansion that would make FDR look like a penny pincher…the party agenda is increasingly focused on big-government policies as well as an aggressive “Green New Deal” intended to fundamentally overhaul America’s economy and specifically its energy sector (eerily similar to the Trudeau National Energy Program)…serving as a check on the Democratic controlled House is the Republican majority in the Senate, and of course a Republican President…

2. After battling some severe headwinds, including a strong U.S. dollar for most of 2018, Gold is looking “to take the bull baton from the U.S. dollar and stock market” in 2019 according to Bloomberg Intelligence (BI) in its January Commodity Outlook…Mike McGlone, BI’s senior commodity strategist, says supporting factors for Gold and commodities in general this year include a weaker greenback, continued volatility in the equity markets, and a less aggressive Federal Reserve…“It should play out positively for commodities, with elevated mean-reversion risks in the trade-weighted broad dollar at the highest end-of-year level ever, an extended stock-market bull showing exhaustion and subsiding Federal Reserve tightening.  Metals, notably Gold and Copper, should be primary beneficiaries of a peak greenback,” McGlone said…“On an end-of-year basis, the trade-weighted broad dollar has never been higher.  Sustaining that strength should require continued U.S. stock-market outperformance vs. global equities, and more rate hikes.  These dollar-bullish drivers are near exhaustion vs. commodities.  Technicals are explosive for Gold, which trades in its narrowest 36-month range in almost 2 decades.  The 3-year market picture for Gold indicates prices migrating higher within an increasingly compressed range, which typically portends a breakout”…

3. Mixed U.S. economic data this morning…activity in the manufacturing sector expanded at a much slower pace than expected last month…the Institute for Supply Management’s manufacturing index fell to 54.1 in December, its lowest level since November 2016…economists were expecting the index at 57.9 in December, down from 59.3 in November…“Comments from the panel reflect continued expanding business strength, but at much lower levels,” said Timothy Fiore, ISM chair…“Demand softened, with the New Orders Index retreating to recent low levels, the Customers’ Inventories Index remaining too low – a positive heading into the first quarter of 2019 – and the Backlog of Orders declining to a zero-expansion level”…meanwhile, contrary to growing concerns about a potentially slowing U.S. economy, job creation surged in December as measured by the latest ADP/Moody’s Analytics survey released this morning…companies added 271,000 new positions as 2018 came to a close, smashing estimates of 178,000 from economists surveyed by Reuters...it was the survey’s best month since February 2017, which saw a gain of 280,000, and brought the average monthly gain for last year to 206,000…the Labor Department’s jobs report will be released tomorrow…

4. U.S. equity markets took a dive at the open this morning after Apple (AAPL, NASDAQ) warned investors to expect lower sales from the holiday quarter due primarily to “lower than anticipated” iPhone sales in China…the company says it was hurt by slower growth in that country and ongoing trade tensions with the United States…other factors were also at play, according to CEO Tim Cook, including the company offering cheaper iPhone battery replacements…after decades of expansion, the Chinese economy is slowing down with growth in 2018 expected to be the weakest since 1990…China is a huge market for Apple, making up about 15% of its global revenues…“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook stated in a letter to shareholders…Apple now expects revenue for the 3 months ending in December to be about $84 billion, down from an earlier estimated range of between $89 billion and $93 billion…it’s the 1st time since June 2002 that Apple issued a reduction in its quarterly revenue forecast…the iPhone has been Apple’s chief moneymaker for years, accounting for nearly 60% of the company’s total sales in the 3 months ending in September…while Cook focused on the impact of China, he did note in the letter that the number of people upgrading to new iPhones was “not as strong” as the company had hoped in other more developed markets…investors in the 4th quarter were anticipating a slowdown for Apple when the stock dropped 30% in the final 3 months of 2018…Apple’s warning has also dragged down other companies that do big business in the world’s 2nd-biggest economy…

5. The facts on China: Retail sales in China marched downward most of last year with growth decelerating to 8.1% in November, the lowest level in more than 15 years…consumption accounted for more than three-quarters of economic growth in 2018 and is expected to fall to just under two-thirds this year…in recent months, investment into factories, buildings and the like slowed to a rate unseen in at least a quarter century before stabilizing…manufacturers have reported a drop in new orders, and profits from big, mostly state-owned industrial firms declined in November, the first drop in 3 years…Beijing, which has scurried to respond, has tools at hand to shore up the economy…in recent months it has given the green light to railway and other infrastructure projects shelved as unsuitable 2 years ago when the economy was stronger…many economists expect expanded deficit spending from Beijing this year, and Chinese leaders last month endorsed more tax cuts for businesses and households…growth overall is likely to hit Beijing’s annual target of about 6.5% for the past year, at least by official statistics, and many analysts expect the government to set a slightly lower goal for growth in 2019…a slowing Chinese economy should give President Trump leverage in negotiating a trade deal…

6. The Dow has fallen 399 points after 30 minutes of trading, but investors have been buying into any dips in recent sessions…the TSX is down 126 points…Wesdome Gold Mines (WDO, TSX) is threatening to hit a new high, up 8 cents at $4.51 in early trading…Kirkland Lake Gold (KL, TSX) has gained 33 cents to $35.74 while New Gold (NGD, TSX) has hit its best level since early December at $1.16…the Venture is gunning for its 6th straight winning session…it’s up another point at 572, shrugging off the drop in the broader markets which is a positive sign…with a loss of nearly 36% in 2018 the Index is coming off its worst annual performance since 2008…that was also one of the greatest buying opportunities in Venture history, but few people knew it at the time…

7. Blommberg’s Thomas Biesheuvel wrote this morning that Barrick Gold’s (ABX, TSX, NYSE) new CEO has a message for the Gold industry: This is just the start of a big shake-up…Barrick agreed to buy smaller rival Randgold Resources in a $5.4 billion deal (U.S.) deal announced in September…as part of the agreement, Randgold’s CEO, Mark Bristow, has become the CEO of Barrick, the world’s biggest Gold miner…“Without a doubt, this industry needs transformation,” Bristow stated…“We believe we have started that…this industry, if it had carried on the way it was, was going to become irrelevant…it has too few assets with too many management teams and it needs reorganization”…by combining the 2 companies, Barrick says it will run 5 of the 10 best Gold mines in the world, with operations from Nevada to South America and Mali and the Democratic Republic of Congo…the new company, which started trading yesterday, is still known as Barrick but its trading symbol on the NYSE has changed to GOLD, the ticker formerly held by Randgold on the NASDAQ…Barrick’s TSX ticker symbol has remained the same…

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