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October 5, 2016

BMR Morning Market Musings…

Gold has traded between $1,263 and $1,278 so far today after yesterday’s biggest single-day tumble in almost 3 years…as of 10:00 am Pacific, bullion is down $6 an ounce at $1,263…Silver is 21 cents lower at $17.56…Copper is flat at $2.16…Crude Oil has jumped $1.10 a barrel to $49.80 while the U.S. Dollar Index is flat at 96.14…

Several key factors influenced Gold’s dramatic drop yesterday, not the least of which was the general lack of Chinese buyers due to the week-long holiday in that country…Fed Bank of Richmond President Jeffrey Lacker, a non-voting Fed member, urged a rate hike to head off what he called a looming pickup in inflation (of course that has been an oft-repeated line from Fed members for a few years), and of course the mainstream media jumped all over that…as yields on 10-year Treasuries and German bunds rose, the Gold sell-off gathered steam…

Meanwhile, Bloomberg reported that the European Central Bank is said to be building an informal consensus to gradually wind down bond purchases (everything’s just peaches and cream all of a sudden in the EU?), while technical pressure added significantly to yesterday’s selling as soon as the metal breached $1,300 for the first time since June…Gold may have to test its rising 200-day moving average (SMA) around $1,250 before traders perceive that a bottom has been put in…$1,200 is viewed as the ultimate floor, but action since yesterday hasn’t altered Gold’s primary trend one bit…

Crude prices have firmed up again today after the Energy Information Administration reported that U.S. Crude inventories decreased by 3 million barrels, marking the 5th straight week of declines…

U.S. Jobs Growth Wanes But Other Data Exceeds Expectations

Factory orders and ISM non-manufacturing both came in better than expected this morning…however, U.S. companies in September created jobs at the slowest pace in 6 months according to a report from ADP and Moody’s Analytics…private payrolls increased by 154,000 for the month, the lowest total since April and below the 2016 average of 181,000…the total also missed expectations of 166,000 from economists surveyed by Reuters, and was below the downwardly revised 175,000 in August…the manufacturing sector continued its struggles, losing 6,000 jobs for the month…the numbers come two days before the closely watched non-farm payrolls report for September when the Labor Department is expected to report 175,000 new jobs for the month…

A private Texas company reported yesterday that it has made a large-scale discovery off Alaska’s North Slope (red meat for the Oil haters)…Dallas-based Caelus Energy Alaska LLC announced a find of 6 billion barrels of light Oil on its state leases in the Arctic Ocean waters of Smith Bay about 450 miles northwest of Fairbanks…COO Jim Musselman called the discovery exciting for the state, which receives a majority of its revenue from the Oil industry.  “It has the size and scale to play a meaningful role in sustaining the Alaskan Oil business over the next three or four decades,” Musselman said of the discovery in a prepared statement…the Smith Bay development could deliver 200,000 barrels per day of light Oil to the trans-Alaska pipeline, increasing volume and reducing the average viscosity of Oil, which would help extend its viability, the company said…

In Today’s Morning Musings…

1. What’s next for Gold?…

2. The “best case” and “worst case” near-term scenarios for the Venture (depending on your point of view)…

3. The opportunity in this 6-cent stock after traders “got it wrong” on a company’s news yesterday…

4. Breakout coming in this Oil play…

5. Update on the southern Labrador Trough…

6. Daniel’s Den – why did Orca Gold (ORG, TSX-V) buck the trend yesterday?…

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…

23 Comments

  1. Sophisticated perspective on Kiska, thanks Jon! Also, Richmont, one of our leading indicators traded just 600k shares yesterday versus 1.2M avg daily volume in the states. Just 240k so far today. Hardly convincing or panicked levels of selling. Price has held above late August lows so far too.

    Comment by Daniel — October 5, 2016 @ 9:35 am

  2. Nervous nellies quake in their boots as Gold drops $40 an ounce. Ross Beaty buys 13 million shares of ORG. Hmm. Ask Beaty if he thinks the bull market in Gold is over.

    Comment by Jon - BMR — October 5, 2016 @ 10:02 am

  3. All purchases of ORG in the open market too, $4.1M at a cost of 31-cents. Explains a lot. I’m blushing. Always nice to recognize an opportunity and get endorsed by the professionals later on. Hopefully I’m not the only one here? Sources tell me guru Brent Cook (no relation) was a “water skeptic” – he’ll be writing about it later on, albeit at much higher prices.

    Comment by Daniel — October 5, 2016 @ 11:12 am

  4. Cxo nr out.

    Comment by Laddy — October 5, 2016 @ 12:24 pm

  5. CXO – that should make some people happier

    Comment by david — October 5, 2016 @ 12:55 pm

  6. WRR BREAKOUT?? 11 BID!

    Comment by STEVEN1 — October 5, 2016 @ 4:56 pm

  7. JON: nice rebound somewhat today on Venture….and Gold stabilzing….where do you see the bottom in Gold? Thanks for any comments!

    Comment by STEVEN1 — October 5, 2016 @ 7:45 pm

  8. Jon, how much lower can CLE possibly go? Bought more at .06, never thought I would buy it that cheap, seems like tax loss selling is happening earlier this year.

    Comment by Danny — October 5, 2016 @ 7:56 pm

  9. Steven1, we have an interesting Gold chart in Canadian dollars which we’ll be posting in the morning that’s kind of revealing. Certain events, from the election to Fed chatter, could create further market distortions over the near-term but that’s not going to change Gold’s primary trend. First major support was the band between about $1,320 and $1,290, which temporarily has been broken (could certainly reassert itself on a month-end basis). There are various other levels of support between the high $1,260’s (where Gold is now) and $1,200 as John’s charts have shown. Where Gold ultimately bottoms within that lower range is anyone’s guess – depends on the day-to-day noise that’s impossible to predict – but the Big Picture remains very clear, technically and fundamentally, and that makes anything below $1,200 extremely remote. Physical buying should also really pick up, especially in the Asian markets, if Gold were to dip below $1,250, adding to that floor of support from $1,200 up (keep in mind it’s a week-long holiday in China, which has removed some potential buying support this week). TSX Gold Index is looking really attractive just above 200, so one can’t rule out a day to the upside in Gold like we just had to the downside.

    Comment by Jon - BMR — October 5, 2016 @ 8:25 pm

  10. Ridiculous where CLE is trading, Danny, when you consider the quality tenure they hold in the Lithium space in Canada, and of course their huge position in the Southern Labrador trough next to NRN (plus other holdings). Sequoi is about to be drilled soon (mid-November), and that could be a huge driver for CLE. Fib. support is 6 cents, which was evident again today, and John will have a fresh chart in the AM. I’d watch for a near-term move out of oversold conditions.

    Comment by Jon - BMR — October 5, 2016 @ 8:36 pm

  11. NRN – according to the NR just put out, Ian said drilling will not be till mid November.

    Comment by dave — October 6, 2016 @ 5:25 am

  12. You’re correct, Dave, thank u. The good thing is, it’s going to get some drill holes this quarter which was an issue in question previously.

    Comment by Jon - BMR — October 6, 2016 @ 5:36 am

  13. ETF trade ALERT…someone has to stand up for Gold——we’ve added the HGU at $17.50…double bull Gold Index ETF…further details in Morning Musings…low risk entry point if you look out to year-end and could deliver very quick returns on any sudden turnaround in Gold…support zone on the HGU from just above $16…100% accuracy rate on ETF trades over the past year with short-term returns of 60%, 35%, 47%, 40% and 24%…

    Comment by Jon - BMR — October 6, 2016 @ 5:38 am

  14. aside from a maybe $50k work programming in Que this summer, CLE has no work programs and must wait for others to generate news. They aren’t alone in the un-loved dept , as closeology doesn’t seem to be working for many plays this year. ugh. NRN has had a run, and results to come, but is likely eating some of the 3 cent PP and 10 cent wts that came trading end of Aug.

    Comment by david — October 6, 2016 @ 6:08 am

  15. Yea Jon I was just going to ask if you were getting in on that. I will do the same thanks. I’m predicting a miss on job numbers and a big spike in gold tomorrow that will continue next week.

    Comment by Sameer — October 6, 2016 @ 6:24 am

  16. UMB up again today on strong volume.

    Comment by DBReese — October 6, 2016 @ 6:45 am

  17. Weed stocks the flavor of the week.

    CLE- just noticed. L2 less than 100k to .105, coming out of oversold now, but just barely. Should see .10 quick

    Comment by dave — October 6, 2016 @ 6:49 am

  18. And some of those weed stocks are getting quite O/B at the moment, Dave…so we’ll see if there’s some rotation out of there shortly…

    Comment by Jon - BMR — October 6, 2016 @ 6:57 am

  19. Reiterating the HGU…really looks like a bottom this morning…if you have a stomach for a double leveraged ETF, very attractive risk-reward ratio this morning…

    Comment by Jon - BMR — October 6, 2016 @ 8:00 am

  20. Jon – do you recommend we dont buy an mmj stocks at this point?

    Comment by omega — October 6, 2016 @ 8:05 am

  21. I’d be very careful as technical conditions on most of those plays (APH, for example, which is one of our favorites) are temporarily very overbought…there is going to be a pullback, so the immediate risk-reward is not favorable…that kind of chasing doesn’t often result in trading success…that’s one reason I like the HGU this morning, and we’ve patiently waited for this one for a while…going in the opposite direction of the crowd in this case should work out well and immediate risk is limited due to oversold conditions and critical support levels…the same applies with some juniors in the Gold space…

    Comment by Jon - BMR — October 6, 2016 @ 8:09 am

  22. Jon, sorry maybe you mentioned this but I haven;t been able to follow recently. Did you call or play any mmj stocks before this recent breakout? I unfortunately missed it completely which really bothers me.

    Comment by omega — October 6, 2016 @ 8:20 am

  23. Jon, what do you think of NSP and DYA?

    George

    Comment by omega — October 6, 2016 @ 8:34 am

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