"The history of Eureka lies in its future." - Lambert Molinelli, 1878

DISCLOSURE

The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO), McEwen Ming (MUX) and Newmont Mining (NEM); together with benchmark miner Freeport-McMoRan (FCX). Please do your own research, markets can turn on you faster than a feral cat.

Friday, September 22, 2017

Gold Below $1,300 - Why I'm Not Worried; Inventory Weighs on Copper


March 1, 1954 Hydrogen Bomb Test
Bikini Atoll

Friday, September 22, 2017 AM

Morning Miners,

What a week.

My thoughts yesterday: Mightier than a North Korean ICBM, mightier than a super-storm, the Fed proves once again it can stir up the markets...at least the gold market. Comex gold dips to $1,291.2 per ounce on hawkish comments from Fed Chair Yellen on interest rates and unwinding of its $4.2 trillion balance sheet.

My thoughts this morning: North Korea's threat to explode an H-bomb over the Pacific trumps Yellen. Comex gold heads back to the key $1,300-level, trading presently at $1,298.8 per ounce.

A quick look in the rear view mirror as summer turns to fall:

Intraday highs on the Comex futures exchange (all December contracts):

Gold $1,362.4 per ounce September 8, 2017
Silver $18.290 per ounce September 8, 2017
Copper $3.1785 per pound ($7,007 per tonne) September 5, 2017 

I think gold can regain its September high before fall turns to winter, perhaps higher if North Korean tensions increase. An argument for why gold's dramatic pullback this week was an overreaction to Fed is given below in my weekly input to Kitco News.

Here's an interesting fact: even with gold's drop below $1,300 this week, the yellow metal gains this year still exceed those of the record breaking S&P 500 by nearly 1%. Something to think about before you turn bearish on gold.

The new H-bomb threat was heard around the world blunting the U.S. dollar advance and tumbling base metal prices -  especially copper, nickel and lead. Taken together the retreat was 3%.

Copper continues to take a beating on its recent "avalanche" of inventory and renewed fears that China demand is slowing yet again. Comex copper this morning is trading at $2.9415 per pound. This London Metal Warehouse (LME) Chart tells the story:



Zinc and lead also suffer from recent build in inventory.

Allow me to repeat what I said last week, "Comex copper should return above $3 per pound if 'synchronous' global recovery remains intact. China's currency remains very strong, Europe and India are humming, and rebuilding Houston and Florida [and now Puerto Rico] should give an eventual lift to our own GDP. Inventories will adjust with time. We may have to wait until next year to see a second sustained rally in the red stuff." Barring a nuclear explosion in the Pacific, I still believe this to be true.

And, like the chorus of a tiresome song,  "LME Moly Oxide remains on snooze alarm at $7.26 per pound. This is disappointingly short of $8 after climbing to $7.94 for much of May. Since moly oxide is primarily a byproduct of copper mining, the copper glut is not helping this situation." 

General Moly (GMO) shares have pulled back to $0.43 per share from the $0.46-level established after an upgrade to "buy" earlier this month from Zack's Investment Research, Inc. 

Here's how I saw the weekly price action as told to the Kitco News Weekly Gold Survey:

My vote is up. Target gold price $1,310 per ounce. Target Silver price $17.2 per ounce.

Gold below $1,300.

The lustrous metal is on track to take notable weekly losses against a broad array of assets: major currencies euro & yen, domestic stocks, broader commodity index (Bloomberg BCOM) and Dr. Copper. However, I believe much of this is an overreaction to the Federal Reserve's comments this week that kicked off the great unwind of their 4.2 trillion balance sheet and considerably increased the chances for a rate hike in December.

The exchange of threats between the U.S. and North Korea peaking on a threat for the latter to explode a massive H-bomb over the Pacific have brought new shine to gold this morning. This coupled with global banking policies that remain expansionary and the uncertain economic impact that hurricane devastation will have near term on the U.S. economy, mitigate some of the reaction to Fed Chair Yellen's comments.

I believe, a move up to at least the $1,310-level is in the cards for next week, maybe even higher. It is notable that even with recent pullbacks:1) gold is out pacing the record-setting S&P 500 by nearly 1% this year, 2) it's gains against the yen continue a trend higher since the U.S. election and, 3) with inventories crushing copper prices, gold value compared to the red metal is again elevated.

Silver should move above the $17 per ounce-level to $17.2.

Take heart. Gold is still in bull mode for the year! 

Additional Note:

The fate of the Chinese yuan remains a key tell for gold and copper - a material drop in valuation could boost gold and depress copper prices. The yuan has stabilized below 7 USD/CNY for 2017 and has strengthened recently. This morning, the yuan is trading weaker than last week at 6.5895 USD/CNY, 2.4%  above a low (i.e. a stronger level) for the year of 6.4345. Yuan volatility is now in the ballpark of major currency levels (1-month volatility* 0.72%).

Have a great weekend!

* by comparison the euro & yen 1-month volatilites are  0.44% & 1.15% respectively; Comex gold 1-month volatility is 1.37%.

Weekly Summary  for September 22, 2017 AM  (something new!)


(click on table for larger size)

My latest column in Kitco News, Montreal:


McEwen Mining (MUX) $2.45 per share


General Moly (GMO) $0.461 per share; Moly oxide (LME) $7.26 per pound



Marcum Microcap Conference  (Press Release, 6/16/2017)




Gold Price Outlook: Second-Half 2017 (Revised)

Gold started the year nicely and should remain in my latest revised range of $1,200 to $1,400 per ounce*. Average gold price for 2017 is now expected to print above $1,300 per ounce with a chance to see $1,400 given an adverse outcome for President Trump's agenda, the initial financial impact of super storms Harvey, Irma and Maria, or geopolitical shocks (e.g., North Korea, Syria).

Gold has gained ground on the embattled euro and yen. Post-election, gold in euro and yen terms is up and safely above 2013 lows (chart below). It was worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen), and headed lower on the prospects of the ECB taking a more hawkish stance on monetary policy. It  had a nice rally following President Trump's "fire and fury" comments with an established trend higher. It is presently testing that trend line as shown in the chart.

Gold in yen has mostly trended higher since the U.S. election.

An important gold ratio to watch is gold-to-S&P500 or AUSP (see "Chart to Watch" below).

Gold ratios relative to copper and oil are stabilizing near historically less extreme levels which proves a healthy sign. Gold valuations relative to copper are elevated and recovering from a recent descent lower.

Political and geo-political events together with concerns about the timing and efficacy of the new administration's policies have restored glitter to gold in 2017. A fall below $1,230 is very bearish; above $1,300, bullish; above $1.362, very bullish.

Gold below $1,285 per ounce-level is a tempting "buy."

(please do your own research, markets can turn on you faster than a feral cat!)

* My pre-election October range for gold price was $1,240 to $1,320 per ounce, Winter 2016 Edition of the Mining Quarterly:

 Storms Never Last: Positive News for Gold, Oil & Copper

My commentary in the Spring 2017 Mining Quarterly reaffirms an average price above $1,200 per ounce with a potential run at $1,400:


Click on the image for a larger size:


Gold in euro & yen terms with good margin above 2013 lows

Chart to Watch

Here's a chart to watch for 2017. Click on the image for a larger size:


Gold-to-S&P 500 Ratio

An important gold ratio is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of 2015 and reversed to a bullish trend, peaking February 11, 2016. It bottomed again December 20, 2016 trended higher but then bearishly bottomed yet again July 7, 2017 (0.4989). We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.5193, falling back to the center of the range after a bullish breakout from the July low. Gold gains still, however, lead the S&P 500 gains for the year by a small margin.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted.

Friday, September 15, 2017

Gold Fails to Hold $1,338; Copper Clobbered - What's Up?


Remote Command Post
North Ranch, Eureka, Nevada

Friday, September 15, 2017 AM

Morning Miners,

Nothing lasts forever - the summer gold and copper rally is over. Nuts.

But take heart, we've seen this movie more times than a few of us would like to remember. In the next episode yellow and red metals will hear the bugles of the global cavalry and prices shall rise again. Maybe soon. Maybe later...

Let's first review the summer scorecard. Even though Fall Equinox is still a week away, I don't think we'll beat these stalwart numbers. 

Intraday highs on the Comex futures exchange (all December contracts):

Gold $1,362.4 per ounce September 8, 2017
Silver $18.290 per ounce September 8, 2017
Copper $3.1785 per pound ($7,007 per tonne) September 5, 2017 

Copper has taken a beating with a recent "avalanche" of inventory and renewed fears that China demand is slowing yet again. Metals maven Janet Mirasola of Sucden Futures NY reports that an additional 100,000 tonnes of the red metal were added to warehouses just this week. Comex copper is once again below $3 per pound trading at $2.9505 - more than 7% below its September high.

Gold, for the reasons noted in my Kitco report below, is trading at $1,328.9 per ounce - encouragingly only several percent off its high.

Gold, although weaker this week against domestic stock markets making new all-time highs, has a foundation of global uneasiness about North Korean missiles, terror and U.S policy direction. This should keep prices elevated for the time being. Inflation may become a concern if it causes central banks to become more hawkish (gold does poorly if interest rates rise faster than inflation expectations).

Comex copper should return above $3 per pound if "synchronous" global recovery remains intact. China's currency remains very strong, Europe and India are humming, and rebuilding Houston and Florida should give an eventual lift to our own GDP. Inventories will adjust with time. We may have to wait until next year to see a second sustained rally in the red stuff.

LME Moly Oxide remains on snooze alarm at $7.26 per pound. This is disappointingly short of $8 after climbing to $7.94 for much of May. Since moly oxide is primarily a byproduct of copper mining, the copper glut is not helping this situation. However, General Moly (GMO) shares still remain around $0.46 holding on to the gains from an upgrade to "buy" earlier this month from Zack's Investment Research, Inc. 

Here's how I saw the weekly price action as told to the Kitco News Weekly Gold Survey:

My vote is down. Target gold price $1,320 per ounce. Target Silver price $17.6 per ounce.

Gold is in a slump; inflation is in the air. 

Closing the week with a North Korean missile launch over Japan, poor U.S. industrial production and retail data, and a terrorist attack in London have not restored much shine to the yellow metal. Trading at $1,328.9 per ounce this morning on all this news is a notable fall from Thursday's $1,338.2 high. 

Gold has lost buoyancy from its fellow metals with copper down more than 7% for the week on an "avalanche" of inventory and fears that China is slowing again. There is a suspicion of continued hawkishness among central bankers with the euro zone scoring a healthy 2% wage growth, the U.S. CPI ticking up in August and the Bank of England raising rates. 

This suggests gold has further to fall with a likely drop to the $1,320- level next week. Silver should find comfort at $17.6 per ounce.

Additional Note:

The fate of the Chinese yuan remains a key tell for gold and copper - a material drop in valuation could boost gold and depress copper prices. The yuan has stabilized below 7 USD/CNY for 2017 and continues to strengthen. This morning, the yuan is trading a bit weaker than last week at 6.5426 USD/CNY, 1.7%  above a low (i.e. a stronger level) for the year of 6.4345. Yuan volatility is picking up above major currency levels (1-month volatility* 0.91%).

Have a great weekend!

* by comparison the euro & yen 1-month volatilites are  0.72% & 0.70% respectively; Comex gold 1-month volatility is greater at 3.14%.

Weekly Summary  for September 15, 2017 AM  (something new!)


(click on table for larger size)

My latest column in Kitco News, Montreal:


McEwen Mining (MUX) $2.45 per share


General Moly (GMO) $0.461 per share; Moly oxide (LME) $7.26 per pound



Marcum Microcap Conference  (Press Release, 6/16/2017)




Gold Price Outlook: Second-Half 2017

Gold started the year nicely and should remain in my latest revised range of $1,200 to $1,400 per ounce*. Average gold price for 2017 is expected to print above $1,200 per ounce with a chance to see $1,400 given an adverse outcome for the President Trump's agenda, the initial financial impact of super storms Harvey and Irma or geopolitical shocks (e.g., North Korea, Syria).

Gold has gained ground on the embattled euro and yen. Post-election, gold in euro and yen terms is up and safely above 2013 lows (chart below). It was worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen), and headed lower on the prospects of the ECB taking a more hawkish stance on monetary policy. It  had a nice rally following President Trump's "fire and fury" comments with an established trend higher. Gold in yen has mostly trended higher since the U.S. election. Gold in euro, however, has retreated from its recent peaks.

An important gold ratio to watch is gold-to-S&P500 or AUSP (see "Chart to Watch" below).

Gold ratios relative to copper and oil are stabilizing near historically less extreme levels which proves a healthy sign. Gold valuations relative to copper are elevated and recovering from a recent descent lower.

Political and geo-political events together with concerns about the timing and efficacy of the new administration's policies have restored glitter to gold in 2017. A fall below $1,230 is very bearish; prices above $1,260, bullish; above $1,300, very bullish.

Gold below $1,200 per ounce-level is a tempting "buy."

(please do your own research, markets can turn on you faster than a feral cat!)

* My pre-election October range for gold price was $1,240 to $1,320 per ounce, Winter 2016 Edition of the Mining Quarterly:

 Storms Never Last: Positive News for Gold, Oil & Copper

My commentary in the Spring 2017 Mining Quarterly reaffirms an average price above $1,200 per ounce with a potential run at $1,400:


Click on the image for a larger size:


Gold in euro & yen terms with good margin above 2013 lows

Chart to Watch

Here's a chart to watch for 2017. Click on the image for a larger size:


Gold-to-S&P 500 Ratio

An important gold ratio is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of 2015 and reversed to a bullish trend, peaking February 11, 2016. It bottomed again December 20, 2016 trended higher but then bearishly bottomed yet again July 7, 2017 (0.4989). We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.5329, maintaining a bullish breakout from the July low but now stalling just below the top of its range bound meander for 2017.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted.

Friday, September 8, 2017

Gold $1,362 on Irma, North Korea & Plunging U.S. Dollar; Copper Stalls


Hurricane Irma
International Space Station, NASA photo

Friday, September 08, 2017 AM

Morning Miners,

Gold and silver continue on a roll this week posting new multi-month highs this morning. Copper retreats from its Tuesday peak as the red metal rally stalls. 

Here's the intraday high scorecard on the Comex futures exchange (all December contracts):

Gold $1,362.4 per ounce this AM - since August 2016
Silver $18.29 per ounce this AM - since April 2017
Copper $3.1785 per pound Tuesday Sept. 5 - since the fall of 2014

With Hurricane Irma poised to strike Florida this weekend, fears grow that Irma and Harvey will cause headwinds for the economy. This makes a Federal reserve rate hike in December unlikely, a boost for gold. Although the "synchronous global recovery" is still intact, investor enthusiasm for copper stalled after Tuesday's high.

LME Moly Oxide remains on snooze alarm at $7.26 per pound. This is disappointingly short of $8 after climbing to $7.94 for much of May. However, General Moly (GMO) shares remain at $0.46 this morning holding on to the gains from an upgrade two weeks ago to "buy" from Zack's Investment Reasearch, Inc. 

Here's how I saw the weekly price action as told to the Kitco News Weekly Gold Survey:

My vote is up. Target gold price $1,360 per ounce. Target Silver price $18.2 per ounce.

The drivers for gold this week are dramatic U.S. dollar weakness, uncertainty surrounding the impact of multiple super storms on the U.S economy and residual global uneasiness about the North Korean missile threat. Other factors favorable to the yellow metal are seasonality and strength relative to falling U.S. equities.

With all this momentum there is some deceleration as gold retreats from highs set earlier this week in terms of euro and Japanese yen. The reversal in rising copper prices also removes some buoyancy from the metals market. 

All in all, gold should have another run at the $1,360-level next week; silver should find comfort at $18.2 per ounce.

Although much is being made of the euro bounce this week from Draghi comments about possible QE tapering this fall, dollar weakness has been with us for sometime. The constancy and low volatility of the EURJPY cross rate is a clue that there is a common force moving major currencies for the last several months. Gold has thus far been the benefactor.

Additional Note:

The fate of the Chinese yuan remains a key tell for gold and copper - a material drop in valuation could boost gold and depress copper prices. The yuan has stabilized below 7 USD/CNY for 2017 and continues to strengthen. This morning, the yuan is trading much stronger than even last week at 6.4774 USD/CNY  scoring an earlier new low (i.e. a stronger level) for the year at 6.4345. This is a sea change for the yuan with volatility picking up above major currency levels (1-month volatility* 1.04%).

Have a great weekend!

* by comparison the euro & yen 1-month volatilites are  0.86% & 0.63% respectively; Comex gold 1-month volatility is greater at 1.81%.

Weekly Summary  for September 08, 2017 AM  (something new!)


(click on table for larger size)

My latest column in Kitco News, Montreal:


My commentary in the Summer 2017 Mining Quarterly:

Bottoms Up! (6/8/2017. Elko Daily Free Press)

Online Edition (pages 77-80): Summer 2017 Mining Quarterly

McEwen Mining (MUX) $2.79 per share


General Moly (GMO) $0.4599 per share; Moly oxide (LME) $7.26 per pound



Marcum Microcap Conference  (Press Release, 6/16/2017)


Gold Price Outlook: Second-Half 2017

Gold started the year nicely and should remain in my latest revised range of $1,200 to $1,400 per ounce*. Average gold price for 2017 is expected to print above $1,200 per ounce with a chance to see $1,400 given an adverse outcome for the President Trump's agenda, the financial impact of super storms Harvey and Irma or geopolitical shocks (e.g., North Korea, Syria).

Gold has gained ground on the embattled euro and yen. Post-election, gold in euro and yen terms is up and safely above 2013 lows (chart below). It was worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen), and headed lower on the prospects of the ECB taking a more hawkish stance on monetary policy. It  had a nice rally following President Trump's "fire and fury" comments with an established trend higher. Gold in yen has mostly trended higher since the U.S. election. Gold in euro and yen are below their peaks set earlier in the week.

An important gold ratio to watch is gold-to-S&P500 or AUSP (see "Chart to Watch" below).

Gold ratios relative to copper and oil are stabilizing near historically less extreme levels which proves a healthy sign. Gold valuations relative to copper are elevated and recovering from a recent descent lower.

Political and geo-political events together with concerns about the timing and efficacy of the new administration's policies have restored glitter to gold in 2017. A fall below $1,230 is very bearish; prices above $1,260, bullish; above $1,300, very bullish.

Gold below $1,200 per ounce-level is a tempting "buy."

(please do your own research, markets can turn on you faster than a feral cat!)

* My pre-election October range for gold price was $1,240 to $1,320 per ounce, Winter 2016 Edition of the Mining Quarterly:

 Storms Never Last: Positive News for Gold, Oil & Copper

My commentary in the Spring 2017 Mining Quarterly reaffirms an average price above $1,200 per ounce with a potential run at $1,400:


Click on the image for a larger size:


Gold in euro & yen terms with good margin above 2013 lows

Chart to Watch

Here's a chart to watch for 2017. Click on the image for a larger size:


Gold-to-S&P 500 Ratio

An important gold ratio is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of 2015 and reversed to a bullish trend, peaking February 11, 2016. It bottomed again December 20, 2016 trended higher but then bearishly bottomed yet again July 7, 2017 (0.4989). We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.54817, maintaining a bullish breakout from the July low and near the top of its range bound meander for 2017.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted.

Friday, September 1, 2017

Gold Spikes $1,334 on Jobs Report; Silver Outshines Gold; Red Metal Rocks $3.14


The Serenity of a Lone Mountain View
Eureka, Nevada

Friday, September 01, 2017 AM

Morning Miners,

There are few weeks that have been this brilliant for the metals we hold dear in Northern Nevada - gold and silver posted multi-month highs; copper reached multi-year highs. Even though this morning's monthly jobs report disappointed, it showed strong gains in mining support activities. Let's call it a summer and enjoy a well-deserved holiday weekend!

Here's the intraday high scorecard on the Comex futures exchange:

Gold $1,334.5 per ounce this AM - since September 2016
Silver $17.800 per ounce this AM - since June 2017
Copper $3.1355 per pound yesterday - since the fall of 2014

The Labor Department's nonfarm payroll report shows 156,000 additional jobs for August versus 180,00 expected. Unemployment rate bumped up slightly to 4.4% from 4.3% in July. Average hourly wages, an inflation indicator, moved up 0.1%. There were downward revisions for the June and July numbers; 21,000 and 20,000 respectively. The 3-month average remains a fairly robust 185,000 jobs.

Metal ore mining employment is holding fairly steady at 39,300 compared to 39,400 last month. Mining support activities, however, moved up 6,800 jobs. Some of this gain includes oil & gas extraction support.

LME Moly Oxide is still on snooze alarm at $7.26 per pound. This is disappointingly short of $8 after climbing to $7.94 for much of May. More encouragingly, General Moly (GMO) shares remain at $0.46 this morning holding on to the gains from last week's upgrade to "buy" from Zack's Investment Reasearch, Inc. 

Here's how I saw the weekly price action as told to the Kitco News Weekly Gold Survey:

My vote is up. Target gold price $1,340 per ounce. Target Silver price $17.9 per ounce.

After a disappointing jobs report for August, Comex gold surged to $1,334.5 per ounce, presently trading only a few dollars lower at $1,331.2. With the chance of a U.S. Federal Reserve rate hike in December further diminished on the morning numbers, there are few obstacles in gold's journey to higher prices. The trend of higher-lows since early-July is firmly in place. 

Gold's momentum is bolstered by strong weekly gains in value compared to equities, commodities and major currencies. Only silver has more shine than gold touching $17.8 per ounce as gold spiked on the labor report. It is likely that gold will move up to the $1,340 level next week; silver should nudge higher to $17.9.

Gold has a lot of moving parts: 
  1. On the high-side, the sky may be the limit given the severity of a geopolitical shock. It would take only a few North Korean missile parts falling on Japanese soil to reach the $1,400-level.
  2. Globally, there is enough background uncertainty and fear to keep gold above $1,200 for a long time coming. 
  3. Important is the trend of higher-lows for gold priced in yen post-U.S. election - moving inexorably higher. When yen is in safe haven mode, gold wins the race. Gold in euro has been more erratic but has its mojo back scoring the 1,120 €/oz-level this morning. As gold peaks in dollars, it continues to move significantly higher in both currencies [see chart below]
  4. Gold has again outpaced the broader Bloomberg commodity index (BCOM) this week by good margin and has caught up to ascendant copper. The gold-to-copper ratio is now below the "fire and fury" dip to 430 pounds per ounce. It is not likely that this can continue much longer (>400 is my threshold) - a bullish outcome for gold.
  5. Gold is cheap versus over-valued equities. The yellow metal has continued to rise in value compared to the S&P 500 since early July [see "Chart to Watch" below]
  6. Finally the chimera of rising rates and inflation expectations remains just that even though wage growth bumped 0.1% in August. 
Additional Note:

The fate of the Chinese yuan remains a key tell for gold and copper - a material drop in valuation could boost gold and depress copper prices. The yuan has stabilized below 7 USD/CNY for most of 2017 and continues to strengthen. This morning, the yuan is trading much stronger than last week at 6.5549 USD/CNY  scoring an earlier new low (i.e. a stronger level) for the year at 6.5490. This may be a sea change for the yuan with volatility picking up to major currency levels (1-month volatility* 0.66%).

Have a great weekend!

* by comparison the euro & yen 1-month volatilites are  0.70% & 0.62% respectively; Comex gold 1-month volatility is greater at 1.42%.

Weekly Summary  for September 01, 2017 AM  (something new!)


(click on table for larger size)

My latest column in Kitco News, Montreal:


My commentary in the Summer 2017 Mining Quarterly:

Bottoms Up! (6/8/2017. Elko Daily Free Press)

Online Edition (pages 77-80): Summer 2017 Mining Quarterly

McEwen Mining (MUX) $2.61 per share


General Moly (GMO) $0.46 per share; Moly oxide (LME) $7.26 per pound



Marcum Microcap Conference  (Press Release, 6/16/2017)




Summer 2017 Mining Quarterly - It Rocks!

Summer 2017 Mining Quarterly

[SPECIAL NOTE: Marianne Kobak McKown will no longer be with the Elko Daily Free Press. She was hired as the executive director of the Committee Against Domestic Violence starting July 1. She will be missed by this report and the mining community, the best of luck on her new journey!

Suzanne Featherston is the new editor of the Mining Quarterly - the best to Suzanne!]

Marianne Kobak McKown has done an excellent job again bringing a new Mining Quaterly in time for summer. It has a new size format with glossy pages that really make images pop! There are great stories and updates on Goldstrike/Cortez, Florida Canyon, RheoMinerals, Newmont and McEwen Mining's Gold Bar Project north of Eureka.

Veteran Adella Harding has several columns on the rise in Nevada gold production and mining claims as well as new exploration. My column on commodity prices also discusses good news on mining employment nationally and updates from Barrick and Newmont locally:

Bottoms Up! (6/8/2017, Elko Daily Free Press)

Online Edition (pages 77-80): Summer 2017 Mining Quarterly

Hats off to Marianne, Adella and crew!

Gold Price Outlook: Second-Half 2017

Gold started the year nicely and should remain in my latest revised range of $1,200 to $1,400 per ounce*. Average gold price for 2017 is expected to print above $1,200 per ounce with an outside chance to see $1,400 given an adverse outcome for the upcoming debt limit debate, President Trump's agenda or geopolitical shocks (e.g., North Korea, Syria).

Gold has gained ground on the embattled euro and yen. Post-election, gold in euro and yen terms is up and safely above 2013 lows (chart below). It was worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen), and headed lower on the prospects of the ECB taking a more hawkish stance on monetary policy. It  had a nice rally following President Trump's "fire and fury" comments with an established trend higher. Gold in yen has mostly trended higher since the U.S. election.

An important gold ratio to watch is gold-to-S&P500 or AUSP (see "Chart to Watch" below).

Gold ratios relative to copper and oil are stabilizing near historically less extreme levels which proves a healthy sign. Gold valuations relative to copper are elevated but falling.

Political and geo-political events together with concerns about the timing and efficacy of the new administration's policies have restored glitter to gold in 2017. A fall below $1,230 is very bearish; prices above $1,260, bullish; above $1,300, very bullish.

Gold below $1,200 per ounce-level is a tempting "buy."

(please do your own research, markets can turn on you faster than a feral cat!)

* My pre-election October range for gold price was $1,240 to $1,320 per ounce, Winter 2016 Edition of the Mining Quarterly:

 Storms Never Last: Positive News for Gold, Oil & Copper

My commentary in the Spring 2017 Mining Quarterly reaffirms an average price above $1,200 per ounce with a potential run at $1,400:


Click on the image for a larger size:


Gold in euro & yen terms with good margin above 2013 lows

Chart to Watch

Here's a chart to watch for 2017. Click on the image for a larger size:


Gold-to-S&P 500 Ratio

An important gold ratio is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of 2015 and reversed to a bullish trend, peaking February 11, 2016. It bottomed again December 20, 2016 trended higher but then bearishly bottomed yet again July 7, 2017 (0.4989). We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.53734, maintaining a bullish breakout from the July low and also above the middle of its range bound meander for 2017.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted.