"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, December 8, 2017

Gold Dips to $1,244 after Upbeat Jobs Report; Troubling Signs for Gold


@ Clouds
Eureka, Nevada

Friday, December 08, 2017 AM

Morning Miners,

Watching gold price reverse below $1,260 yesterday was not a happy.

Presently, Comex gold is trading at $1,254.0 per ounce up from a $1,244.4 low following an upbeat monthly jobs report. For an explanation of what this portends for the Lustrous One, please read my input below to the Kitco News Weekly Gold Survey (below).

Of course in economic terms, we should be glad to see encouraging news from the Labor Department. November added a robust 228,000 jobs compared to an expected 195,000. Headline unemployment remained unchanged at a low 4.1%. The response of stronger U.S. dollar and environment for rising interest rates is a major headwind for gold prices. More troubling is the rotation of money away from the yellow metal to booming global stock markets and speculative crypto-currencies like Bitcoin. Some part of this "risk-on" boiler is going to blow one of these days.

Here's a number to ponder: the average monthly job growth in 2016 was 187,000. The monthly average for 2017 is 174,000. A booming December report could help close the gap, maybe.

Here's our scorecard on where we stand for the last-half of the year:

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 $3.2595 per pound ($7,186 per tonne) October 16, 2017 

Comex copper is presently trading at a $2.9720 per pound, below October's high and 1.8% down for the week. Improving global growth had kept the red metal above the key $3 per pound level but it experienced a sharp reversal to the downside Tuesday (12/5). All eyes remain on China to see how growth prospects shape up. LME inventories have seen an uptick lately:


It is instructive to keep our eyes on the Comex inventories which now exceed the LME but are leveling off (208,699 versus 193,675 tonnes)


And, again the chorus of our very tiresome molybdenum 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." 

My Input to Kitco News 

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 $1,250 per ounce. Target Silver price $15.8 per ounce.

A horrible week for gold.

Dipping to lows not seen since mid-year, the gold retreat reflects a move to "risk-on" assets exacerbated by a better-than-expected U.S. jobs report. With global equity markets booming again, the value loss to the benchmark S&P 500 scored a new low after the Labor Department numbers for November. There will likely be some skirmishes around the key $1,250-level next week but the outlook is not encouraging; a retest of this morning's $1,244 low followed by further descent towards $1,225 territory is possible as 2017 comes to a close.

Most troubling is this week's breakdown of one of gold's most enduring uptrends for 2017. Gold in terms of Japanese yen has enjoyed a succession of higher lows since the U.S election. That has now come to an end with gold losing nearly 2% in value to the yen this week. This is important because the Japanese currency often competes with gold for safe haven status. The uptrend collapse is an ominous turn for the lustrous metal. 

An ounce of gold does buy more copper this Friday than last week - one of the few positives as the latter fails to hold the key $3 per pound-level. A retreat in commodities since early November has generally favored gold. The yellow metal gained on the broader Bloomberg commodity index (BCOM) 0.6% for the week.

Silver should follow gold lower next week to $15.8 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 generally grown stronger. The yuan is only slightly weaker than last week at 6.6179 USD/CNY and now 2.9% above its low (i.e. its strongest level) for the year of 6.4345. A 1-month yuan volatility of 0.19% is in the ballpark of major currency levels - a healthy sign for the Chinese currency (1-month volatilities of euro, yen and gold*).

Have a great weekend!

* the euro & yen 1-month volatilites are  0.73% & 0.66% respectively; Comex gold 1-month volatility is 0.99%.

Weekly Summary  for December 08, 2017 AM 


(click on table for larger size)




Gold Price Outlook for 2018 (coming soon!):

My revised gold range for 2017 was $1,250 to $1,400 and it looks like we are headed to the lower end of that range as this year comes to a close. A new outlook will be posted soon for 2018.

Two important charts to watch remain the gold-to-S&P500 or AUSP (see "Chart to Watch" below) and gold in terms of major currencies euro and Japanese yen (directly below).

Warning from this week's gold survey (above): Most troubling is this week's breakdown of one of gold's most enduring uptrends for 2017. Gold in terms of Japanese yen has enjoyed a succession of higher lows since the U.S election. That has now come to an end with gold losing nearly 2% in value to the yen this week. This is important because the Japanese currency often competes with gold for safe haven status. The uptrend collapse is an ominous turn for the lustrous metal. 

 A fall below $1,260 is bearish (we're there!); below $1,230, very bearish.

Click on the image for a larger size:


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

Note for currency buffs: Value parity in the above chart occurs when the EUR/JPY cross rate is 139.24; something to watch for - presently 133.13 yen per euro. 

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 again July 7, 2017 (0.4989). Currently this AM the AUSP is 0.4737 - a new low and very bearish indication.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted.

Friday, December 1, 2017

Gold $1,277, Pops to $1,291 on Flynn; Tax Reform Passage Likely


Gold Country
Eureka, Nevada

Friday, December 01, 2017 AM

Morning Miners,

What a text book morning for gold!

For the most part, gold has been roughed up this week on improving expectations for passage of the U.S. Tax Reform bill in some form. As I explain in my input to the Kitco News Weekly Gold Survey (below), passage will be "net bearish for gold given the thesis that lower taxes will spur economic growth, strengthen the U.S. dollar and establish an environment for higher interest rates." When I wrote that opinion Comex gold traded at $1,277 per ounce, down 0.9% for the week. 

Then BAM! 

The newswires report that Michael Flynn pleads guilty to lying to the FBI. Comex gold pops to $1,291 as the U.S. political uncertainty pot gets a new stir:


In the early morning, gold behaved as a currency reacting to the forces of U.S dollar strength and interest rate expectations. With the Flynn headline, gold switches to safe haven mode. Currently Comex gold has retreated some from its high to trade at $1,287.2 (8:40 a.m. Eureka time). The two bookends of gold's 2017 story - the ebb and flow of currency-like behavior and "run-for-the-exits" price transients. 

I believe there will be some settling in the coming days and that Tax Reform will probably advance to reconciliation. Political and geo-political turmoil support gold; a shot-in-the arm to economic growth provides some headwinds in terms of U.S. dollar and interest rates.

So it goes for the Lustrous One.

For more about gold, please read my input below to the Kitco News Weekly Gold Survey.

Here's our scorecard on where we stand for the last-half of the year:

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 $3.2595 per pound ($7,186 per tonne) October 16, 2017 

Comex copper is presently trading at a $3.0800 per pound, below October's high and 2.9% down for the week. Improving global growth has kept the red metal above the key $3 per pound level (it bears repeating that the OECD now predicts 45 economies will grow this year and the IMF has stepped up global 2018 GDP from 3.6% to 3.8%). All eyes are on China to see how growth prospects shape up now that their upbeat 5-yearly Congress has concluded.  Today's Caxin PMI was weaker-than-expected at 50.8 but still expansionary. Copper prices are less sensitive to supply side excess as LME inventories continue to decline:


It is instructive to keep our eyes on the Comex inventories which are on the rise and now exceed the LME (209,143 versus 191,725 tonnes)


And, again the chorus of our very tiresome molybdenum 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." 

General Moly (GMO) popped to $0.35 yesterday and is currently trading at $0.31 per share. The company received their AMER Tranche #2 funding on October 16. 

My Input to Kitco News 

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 $1,270 per ounce. Target Silver price $16.2 per ounce.

Gold price is very sensitive to the fate of the U.S. Tax Reform bill as evidenced by a more than $30 per ounce swing this week that tracked up-and-down expectations for passage. Although the Senate vote has been delayed until possibly today, it will likely pass in some form; the same is true for the reconciliation phase. This will be net bearish for gold given the thesis that lower taxes will spur economic growth, strengthen the U.S. dollar and establish an environment for higher interest rates. 

This week's better-than-expected U.S. GDP print of 3.3% reinforced the notion of a strengthening economy. A key interest rate to watch is the 10-year Treasury yield: sustained rise above 2.4% is bearish.

The yellow metal has, however, gained more than 2% on falling copper with a slight loss to the broader Bloomberg Commodity Index (BCOM). Mixed results are also true relative to major currencies; gaining value on the yen but falling to against the euro.

Silver should follow gold lower next week to $16.2 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 generally grown stronger. The yuan is weaker than last week at 6.6103 USD/CNY and now 2.7% above its low (i.e. a stronger level) for the year of 6.4345. A 1-month yuan volatility of 0.21% is in the ballpark of major currency levels - a healthy sign for the Chinese currency (1-month volatilities of euro, yen and gold*).

Have a great weekend!

* the euro & yen 1-month volatilites are  0.97% & 0.85% respectively; Comex gold 1-month volatility is 0.66%.

Weekly Summary  for December 01, 2017 AM 


(click on table for larger size)




Gold Price Outlook: Fourth Quarter 2017 (Revised)

Gold started the year nicely and should remain in my latest revised range of $1,250 to $1,400 per ounce*. Average gold price for 2017 is expected to print above $1,250 per ounce with a chance to see $1,400 given an adverse outcome for President Trump's tax reform plan or political/geopolitical shocks (e.g., North Korea, Iran, 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 a trend higher since early-July. The ECB's "lower for longer" approach to quantitative easing has returned some mojo to the gold-in-euro uptrend although that movement up has now faltered (see chart below).

Gold in yen has mostly trended higher since the U.S. election. The Bank of Japan announcement that their accommodative monetary policy is unchanged supports this uptrend.

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 at historically less extreme levels which proves a healthy sign. However, gold valuations relative to copper are again in decline posting a new low for the year of 401 pounds per ounce on October 18th and again on the 25th. Falling below 400 is bearish for gold.

Political and geopolitical 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 $1,260 is bearish; below $1,230, very bearish. A rise above $1,300 is bullish; above $1,362, very bullish.

(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

Note for currency buffs: Value parity in the above chart occurs when the EUR/JPY cross rate is 139.24; something to watch for - presently 132.69 yen per euro. 

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 again July 7, 2017 (0.4989) and yesterday (0.4822). Currently this AM the AUSP is 0.4830...a modest uptick from this week's low but at now bearish levels (AUSP < 0.5).

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted.

Friday, November 3, 2017

Gold $1,278 on Weaker-than-Expected Jobs Report; What Drives Gold price Now?


Ruby Hill (2014)
Eureka, Nevada

Friday, November 3, 2017 AM

Morning Miners,

Ah, those crazy numbers!

This morning's monthly jobs report from the Labor Department surprised to the downside. The nonfarm payrolls showed an advance of 261,000 jobs compared to expectations of 312,000. By a separate survey, headline unemployment dropped to 4.1% with a shrinking work force. How should you read this?

The first thing to remember is the impact of major hurricanes - the Bureau of Labor statisticians have never sharpened their pencils on the impact of two debilitating hurricanes (Puerto Rico is not in the survey, otherwise it would be three). Last month jobs were down 33,000 but that was revised to up 18,000 with this morning's report (still low but now positive).

Consensus called for a big positive correction of 300,000 or more, some even forecasting 400,000. That is why the reported number was deemed low with talking heads saying things like "weak number" and "lower than anyone expected."

Here's how the ole Colonel sees it. No one really knows how to figure in storm impacts of this magnitude so it is best to look at averages to see the big picture. The 3-month average is 162,000. 261,000 is a lot higher than the average so we're in pretty good shape. Another positive is a decrease in the broader U6 unemployment which includes everyone with a heartbeat that has even vaguely thought about getting off the couch to find work. The U6 number is now 7.9% - pretty darn low remembering it was running above 17% during the bad times.

Participation rate unfortunately ticked down 0.4% to 62.7% which is a measure of folks that are earnestly looking for work. Another disappointment is that hourly wages remained flat - we want this to go up! Again, there may be some stormy stuff in these calculations.

Bottom line? I think the U.S. Federal Reserve is more upbeat about the economy then earlier this year and is on course to bump rates in December. Janet Yellen will be replaced by Jerome Powell next year but most expect a continuity of monetary policy. The U.S. is tightening while most major central banks are still in loosey-goosey mode as I discuss in my input to Kitco News (see below). This divergence in policies supports gold price with a floor now around $1,250 per ounce. As long as someone out there continues to print money, gold is in good shape.

The high side is driven by political and geopolitical uncertainties and shocks. Although hard to predict, an upset or two could very well set gold on a course above $1,300 and perhaps touch $1,400 next year. Lacking such drama, the yellow metal will behave as a currency driven by global monetary policy. It had a good week gaining on both the euro and Japanese yen (discussion and charts below).

For more about gold, please read my input below to the Kitco News Weekly Gold Survey.

Here's our scorecard on where we stand for the last-half of the year:

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 $3.2595 per pound ($7,186 per tonne) October 16, 2017 

Comex copper is presently trading at a $3.1430 per pound, below October's high but up 1.3% for the week. Improving global growth has kept the red metal climbing but now it faces U.S. dollar strength (it bears repeating that the OECD now predicts 45 economies will grow this year and the IMF has stepped up global 2018 GDP from 3.6% to 3.8%). All eyes are on China to see how growth prospects shape up now that their upbeat 5-yearly Congress has concluded. Copper prices are less sensitive to supply side excess as LME inventories continue to decline:


It is instructive to keep our eyes on the Comex inventories which, albiet lower in total, have leveled off:


And, again the chorus of our very tiresome molybdenum 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." 

General Moly (GMO) has fallen to the $0.28-level per share. The company received their AMER Tranche #2 funding on Monday, October 16. 

My Input to Kitco News 

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 $1,285 per ounce. Target Silver price $17.2 per ounce.

A weaker-than-expected U.S. jobs report has backed the 10-year Treasury further away from 2.4% and the U.S. dollar index (.DXY) from 95. Both of these levels were identified as key to maintaining an uptrend in interest rates and stronger U.S. dollar; retreat from these levels is bullish gold, at least for the time being.

Gold price was steady around $1,278 per ounce following the labor report and its price floor supported by recent announcements from Central Banks. With the selection of Jerome Powell as the new Fed Chair, the U.S. is expected to continue tightening albeit at a gradual pace. The Bank of Japan will continue its policy of accommodation while Europe takes a "lower for longer" approach to quantitative easing. The Bank of England broke ranks by its first rate rise in 10 years but the net effect is a general divergence of U.S. monetary policy from most other major central banks. This establishes a solid floor for gold which, I believe, is $1,250 per ounce.

President Trump's travel to Asia could, at least initially, stir the geopolitical pot and provide gold another run at the $1,285-level next week - perhaps higher (e.g., provocative action by North Korea).

Although gold lost ground to key commodities and the broader Bloomberg commodity index (BCOM), it showed strength compared to the euro and Japanese yen. Gold has re-established uptrends in both currencies - another bullish indication [see Weekly Summary Table & currency chart below].

Silver should follow gold higher next week to $17.2 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 generally grown stronger. The yuan is stronger than last week at 6.6240 USD/CNY and now 2.9% above its low (i.e. a stronger level) for the year of 6.4345. A 1-month yuan volatility of 0.36% is in the ballpark of major currency levels - a healthy sign for the Chinese currency (1-month volatilities of euro, yen and gold*).

Have a great weekend!

* the euro & yen 1-month volatilites are  0.67% & 0.69% respectively; Comex gold 1-month volatility is 0.81%.

Weekly Summary  for November 3, 2017 AM 


(click on table for larger size)

My latest column in Mining Quarterly (as reprinted in the Elko Daily Free Press):

A Tectonic Shift in Markets (Elko Daily Free Press, September 12,2017)

My latest column in Kitco News, Montreal:


McEwen Mining (MUX) $1.93 per share


General Moly (GMO) $0.28 per share; Moly oxide (LME) $7.26 per pound



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




Gold Price Outlook: Fourth Quarter 2017 (Revised)

Gold started the year nicely and should remain in my latest revised range of $1,250 to $1,400 per ounce*. Average gold price for 2017 is expected to print above $1,250 per ounce with a chance to see $1,400 given an adverse outcome for President Trump's tax reform plan or geopolitical shocks (e.g., North Korea, Iran, 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 a trend higher since early-July. The ECB's "lower for longer" approach to quantitative easing has returned some mojo to the gold-in-euro uptrend.

Gold in yen has mostly trended higher since the U.S. election. The Bank of Japan announcement that their accommodative monetary policy is unchanged supports this uptrend.

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 at historically less extreme levels which proves a healthy sign. However, gold valuations relative to copper are again in decline posting a new low for the year of 401 pounds per ounce on October 18th and again on the 25th. Falling below 400 is bearish for gold.

Political and geopolitical 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 $1,260 is bearish; below $1,230, very bearish. A rise above $1,300 is bullish; above $1,362, very bullish.

(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

Note for currency buffs: Value parity in the above chart occurs when the EUR/JPY cross rate is 139.24; something to watch for - presently 132.69 yen per euro. 

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 again July 7, 2017 (0.4989) and October 20, 2017 (0.4972). Currently this AM the AUSP is 0.4957...a modestly positive move from last week's low.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted.

Friday, October 27, 2017

Gold Resilient at $1,263; Copper Retreats, U.S. Dollar Soars


Eureka Rodeo 2012
Eureka, Nevada


Checkout Mining Quarterly by new editor Suzanne Featherston - it's a dandy!

Friday, October 27, 2017 AM

Morning Miners,

The European Central Bank (ECB) threw a lifeline to gold this week.

ECB President Mario Draghi announced that their quantitative easing program, the printing of euros to buy bonds, would be pared back but last longer. Interest rates would remain unchanged. In the U.S. better-than-expected GDP and other positive economic data increased expectations for more aggressive tightening of our monetary policy while Europe continues on the path of expansion. The divergence of policies is gold's friend creating a floor for prices which I believe is somewhere above $1,250 per ounce. 

Comex gold price dropped 1% this week dipping briefly to $1,263.8 per ounce but rose 0.8% against the embattled euro. As long as someone continues to print money, gold has a life jacket. The next test will be on Halloween when the Bank of Japan is expected to announce their monetary policy. The consensus is continued accommodation similar to Europe and opposite from the United States - more support for our favorite metal.

Now that spells support not necessarily rally, pardner. Gold in this environment behaves as another currency unless something scary happens in the geopolitical arena. Divergence in central bank thinking kicked the U.S. Dollar Index (.DXY) to 3-month highs as the euro slumped to 3-month lows. Strong dollar is a headwind for gold and the metal complex. For more about gold, please read my input below to the Kitco News Weekly Gold Survey.

Here's our scorecard on where we stand for the last-half of the year:

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 $3.2595 per pound ($7,186 per tonne) October 16, 2017 

Comex copper is presently trading at a $3.0820 per pound, now sharply below this month's high. Improving global growth has kept the red metal climbing but now it faces a stiff U.S. dollar headwind (it bears repeating that the OECD now predicts 45 economies will grow this year and the IMF has stepped up global 2018 GDP from 3.6% to 3.8%). All eyes are on China to see how growth prospects shape up now that their upbeat 5-yearly Congress has concluded. Copper prices are less sensitive to supply side excess as LME inventories continue to decline:


It is instructive to keep our eyes on the Comex inventories which, albiet lower in total, appear to be leveling off:


And, again the chorus of our very tiresome molybdenum 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." 

General Moly (GMO) has fallen to the $0.31-level per share. The company received their AMER Tranche #2 funding on Monday, October 16. 

Here is an interesting interview with CEO Bruce Hansen which appeared in Metals News:


And General Moly's latest MolyBits on the many uses of molybdenum:

MOLYBITS (10/19/2017)

My Input to Kitco News 

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 $1,260 per ounce. Target Silver price $16.5 per ounce.

Gold's price resilience is noteworthy in the face of a daunting U.S. dollar rally, better-than expected U.S. GDP and other economic data that almost ensures that the U.S. Federal Reserve will continue a trajectory of higher rates.

Although gold in U.S dollar terms is down 1% for the week around the $1,268-level, it is up 0.8% in euro terms after ECB's Mario Drahgi announced a lower-for-longer QE policy with no raise in interest rates. Gold is also outpacing copper for the week by nearly 2% weathering the dollar storm much better than its metallic companions.

Gold relative to the record-setting S&P 500 is at a new low this morning as market participants abandon safe havens for equities against a backdrop of global optimism and strong U.S. earnings reports. However, expansionary monetary policy in Europe and Japan as the U.S tightens should set a floor for gold in U.S. dollars, especially with stubborn geopolitical concerns still hiding in the shadows synchronous global recovery.

I believe it likely that the yellow metal will test $1,260 per ounce next week but remain above $1,250 for 2017. Silver should find some relief at $16.5 per ounce.

A key test is watch how much higher the 10-yr Treasury yield goes now that it is above 2.4%, a tipping point identified by bond traders for higher yields to come. If yields stall, gold remains on solid ground. If geopolitics flare up, gold could easily head north to $1,300 territory again.

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 generally grown stronger. The yuan is notably weaker than last week at 6.6534 USD/CNY and now 3.4% above its low (i.e. a stronger level) for the year of 6.4345. A 1-month yuan volatility of 0.42% is in the ballpark of major currency levels - a healthy sign for the Chinese currency (1-month volatilities of euro, yen and gold*).

Have a great weekend!

* the euro & yen 1-month volatilites are  0.50% & 0.63% respectively; Comex gold 1-month volatility is 0.79% [Note: gold volatility was reported earlier to be elevated which it is not]

Weekly Summary  for October 27, 2017 AM 


(click on table for larger size)

My latest column in Mining Quarterly (as reprinted in the Elko Daily Free Press):

A Tectonic Shift in Markets (Elko Daily Free Press, September 12,2017)

My latest column in Kitco News, Montreal:


McEwen Mining (MUX) $1.9299 per share


General Moly (GMO) $0.3123 per share; Moly oxide (LME) $7.26 per pound



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




Gold Price Outlook: Fourth Quarter 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 $1,250 per ounce with a chance to see $1,400 given an adverse outcome for President Trump's tax reform plan or geopolitical shocks (e.g., Iran, 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 since early-July. The ECB's more dovish tone this week has returned some mojo to the gold-in-euro uptrend

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 at historically less extreme levels which proves a healthy sign. However, gold valuations relative to copper are again in decline posting a new low for the year of 401 pounds per ounce on October 18th and again on the 25th. Falling below 400 is bearish for gold.

Political and geopolitical 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 $1,260 is bearish; below $1,230, very bearish. A rise above $1,300 is bullish; above $1,362, very bullish.

My target price for next week is at the border of scary at $1,260 per ounce.

(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

Note for currency buffs: Value parity in the above chart occurs when the EUR/JPY cross rate is 139.24; something to watch for - presently 133.76 yen per euro and above where it was last week.

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 again July 7, 2017 (0.4989) and October 20, 2017 (0.4972). Currently this AM the AUSP is 0.4935...very scary. 

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted.