Gold has traded between $1,127 and $1,142 so far today, getting a lift over the past couple of hours from a report that a Chinese Navy ship has stolen an American underwater research drone in a South China Sea area contested by the Chinese and the Philippines (no Trump tweet yet, but we look forward to seeing one)…as of 10:30 am Pacific, bullion is up $7 an ounce at $1,135…Silver has recovered 20 cents to $16.15…Copper is off 4 cents to $2.56…Nickel has retreated 6 cents to $5.05…Crude Oil is 87 cents higher at $51.77 while the U.S. Dollar Index is off one-third of a point at 102.80…
Technically, Gold needs to hold $1,130 – $1,150 support and begin to show some strength rather quickly, as it is late today, or risk another breakdown that would take it to at least the $1,090’s…some positive action to end the week is encouraging, especially after the comments of respected HSBC analyst James Steel:
“The nature of recent Gold selling implies fresh shorting as well as liquidation,” said Steel. “The selling may not yet be exhausted. The bearish factors for Gold, namely a high U.S. dollar, rising yields and equities and risk-on investor demand appetite leave bullion clearly on the defensive.”
The heightened interest in stocks has been one of several reasons for Gold’s weakness…global equity funds received $21 billion (U.S.) in the past week – their 9th-biggest inflow ever – as investors embraced the “Trump trade”, while money flowed out of bonds for the 7th week in a row, Bank of America Merrill Lynch said today…the BAML figures, which track flows through Wednesday, showed overall equity inflows of $63 billion (U.S.) since Trump’s November 8 election victory, partially reversing the $151 billion outflows seen from January to October…the bulk of the latest gains came from an $18.5 billion rush into U.S. stocks, but European and emerging equity funds also saw inflows of $700 million and $1 billion, respectively, the data showed…
BAML added there are still “winter risk” worries about a potential sharp fall in China’s currency and another spell of outflows from the world’s second-largest economy…the yuan hit 8-and-a-half year lows to the dollar this week while local bond yields spiked, causing China’s central bank to aggressively intervene…
Quebec Premier’s Central Canada Focus
Western Canadians in particular should take note of the comments made by Quebec Premier Philippe Couillard yesterday at the official signing ceremony for a $1 billion hydroelectricity deal between that province and Ontario (of course how the climate change fanatics in those respective governments have handled energy issues is a horror story in itself)…
Anyway, Couillard, who has been a fierce opponent of the proposed Energy East pipeline designed to carry Crude from Western Canada, stated the following about yesterday’s deal with his Ontario counterpart: “This is a historic deal, the first of its kind and the continuation of the resurgence of the influence of Central Canada” (our emphasis)…
Couillard, who endorsed Justin Trudeau’s recent high praise for Castro, is an entrenched member of the eastern/central Canadian establishment who also has interesting ties to Saudi Arabia (he once lived and worked there)…he resented the rise in power of Western Canada, fueled in part by the Oil boom, during the Harper era…it’ll be interesting to see how he handles Donald Trump, Western Canada’s “check” on eastern Canada’s politicians, who is going to put Oil at the centerpiece of his economic strategy…
Canadians should ask, why would Couillard prefer to see this country import Oil from hideous regimes in the Middle East rather than consume all the ethical Oil it can from Alberta and Saskatchewan?…he loves getting “equalization” payments, though…in fiscal 2016-17, Couillard’s Quebec will once again be – by far – the biggest recipient of welfare payments from the rest of Canada – the province will get about $10 billion from the nearly $18 billion program…Quebec gets rewarded for corruptness and bad policies with taxpayers’ money from successful provinces, especially out west…makes sense, eh?…
A Disgrace: Stalled & Cancelled Resource Projects In Canada
On Tuesday we noted that a 4-month investigation by the Financial Post revealed that no less than 35 Canadian resource projects worth $129 billion in direct investment – mostly private money – are struggling to move forward or have been sidelined altogether because of opposition from environmental, aboriginal and/or community groups (and, we would add, because of a lack of political leadership)…we’re letting “activists” destroy jobs and wealth right across the country…the downside is adding up: slower growth, lower Canadian Oil prices, investment chill, less control over domestic resources, over-reliance on the U.S. market, regulatory gridlock…
Click here for a searchable database of stalled and cancelled resource projects in Canada…
Oil Update
Goldman Sachs has revised its Crude Oil price forecast for the 2nd quarter of 2017 on the back of a decision by OPEC members and other countries to cut production amid growing demand from consumers…analysts from the investment bank upped their Oil price outlook for Q2 to an average of $57.50 a barrel from $55 a barrel for WTI….
“Ultimately, our work on Saudi Arabia’s fiscal balance suggests that the kingdom has a strong incentive to cut production to achieve a normalization of inventories, even if it requires a larger unilateral cut, consistent with comments last weekend by the energy minister. Given this incentive to cut and in light of the OPEC and non-OPEC cuts announced over the past 2 weeks, we are slightly raising the 1H17 production declines that we project from the participating producers,” the analysts wrote…
WTIC 15-Month Weekly Chart
The positive fundamental backdrop reinforces the strong technical set-up as Crude has finally overcome a breakout above the “neckline” in an inverted head-and-shoulders pattern with new support now at $50 a barrel…prices should move as high as the mid-$70’s during 2017 which is very favorable for the HOU (double long Crude ETF) on the TSX (it’s up 24 cents at $8.62 as of 10:30 am Pacific)…
In Today’s Morning Musings…
1. Evaluating the next move in Gold after a Fedslide…
2. A Venture “head fake” Wednesday and Thursday?…
3. Time to revisit this high-grade Gold play after an earlier and correct sell recommendation…
4. Daniel’s Den…a beaten-down Oil stock on the rebound…
Plus more…click here to read the rest of today’s Morning Musings and all BMR exclusive content, through a risk-free Pro, Gold or Basic package, or login with your username and password…
Agree Jon, go get em mad dog.
Comment by dave — December 16, 2016 @ 12:57 pm
GGI – Painted in the last minute, up not down. love it, closed above the bigger resistance of .13
Comment by dave — December 16, 2016 @ 1:02 pm
One more week of tax loss selling, the middle of December until the end of February is without question the best time to play the juniors. It can test your resolve as some stocks have been hit with relentless selling for tax loss purposes but the light at the end of the tunnel is coming soon. I think an added bonus this year is that the major markets have done well which will have investors feeling more confident.
Comment by Danny — December 16, 2016 @ 5:50 pm
FF.V … up 25% and most of it in the last 5 minutes… a 40 million buy by Merril Lynch or so it seems..
just sayin:)
Comment by Jeremy — December 17, 2016 @ 12:53 pm