Gold $1,250 on Weak Dollar; General Moly (GMO) EIS/ROD Update

Mona's Soul Food Cafe, Franklin, Louisiana

(Hey, I'm still on vacation, pardner!)

Friday, July 21, 2017 AM

Morning Miners,

OK - smothered pork chops, white beans, rice and mustard greens don't have much to do with the price of gold. Even though I'm still on vacation in Louisiana, the yellow metal had such a great week it's hard not to write about a bounce back to $1,250 territory. Comex copper is also looking very strong presently trading at $2.7380 per pound.

LME Moly Oxide still remains at $7.26 per pound disappointingly short of $8 after climbing to $7.94 for much of May. $8 per pound is a key level for General Moly (GMO) to secure additional funding for Mt. Hope from AMER. However, there is some good news on The GMO front as reported below.

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 $1,260 per ounce. Target Silver price $16.6 per ounce.

Metals strong, dollar weak. Gold gains nearly 1.9% in value from last Friday to reach that welcome but well-trodden $1,250-level. The U.S. Dollar Index (DXY) plumbs a 13-month low as the Lustrous One scores a 3-week high [UPDATE: the DXY loss continued through the day falling to a 15-month low*] . Copper was just behind gold with a 1.8% weekly bounce and oil (WTI) lagged the metals with a 0.4% gain. For the broader Bloomberg Commodity Index (BCOM), the yellow metal bullishly advanced 0.9%.

Most importantly, gold in terms of major currencies euro and yen is showing renewed strength. Gold in euros plunged as ECB's Mario Draghi created a mini-taper tantrum in June - that decline has halted with this week's dovish pause in Europe's monetary policy. Gold in yen has resumed an upward trend of higher lows since the U.S. Presidential election on lowered BoJ [Bank of Japan] inflation expectations.

The dovish slowing by central bankers including Federal Reserve's Janet Yellen combined with new controversies surrounding the White House should maintain a rise in gold prices to at least the $1,260-level.

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 lately. Volatility has also picked up from recent calm.  This morning, the yuan is trading stronger than last week at 6.7665 USD/CNY (1-month volatility** 0.356%).

Have a great weekend!

*   DXY close 93.85, low 93.85; April, 24, 2016 DXY 93.08

** by comparison the euro & yen 1-month volatilites are  1.06% & 0.79% respectively.

Weekly Summary  for July 21, 2017 AM  (something new!)

(click on table for larger size)

My latest column in Kitco News, Montreal:

The Gundlach Conundrum: $1,000 Gold by Year's End? (Kitco News, June 21,2017)

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) $2.57 per share

Gold Bar Project on Track, McEwen Rocks; Gold Bounce Next Week? (Eureka Miner, 03/03/2017)

McEwen Mining & Gold Bar Thumbs Up for 2017! (Eureka Miner, 12/30/16) 

General Moly (GMO) $0.45 per share; Moly oxide (LME) $7.26 per pound

Mt. Hope Project's Supplemental EIS Published in Federal Register, Moving Project Towards ROD (Press Release, July 20, 2017)

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

What's Up with General Moly (GMO)? EM Talks to CEO Bruce Hansen (Eureka Miner, 1/27/17)

General Moly (GMO) EIS/ROD Update

Generl Moly (GMO) has made good progress on their Supplemental EIS:

Mt. Hope Project's Supplemental EIS Published in Federal Register, Moving Project Towards ROD (Press Release, July 20, 2017). 

Bruce D. Hansen, Chief Executive Officer,estimated a new date range for the Mt. Hope ROD, 

We are pleased that the Supplemental EIS process is underway as evidenced by the publication of the NOI. We look forward to receiving the Record of Decision, and anticipate this approval in late 2017, or early 2018. This time frame could align with the continuing gradual recovery of the molybdenum market. Our internal go-ahead decision for construction will require a sustained period of higher molybdenum prices and re-instatement of water permits from the state of Nevada, followed by approval from the Board of Directors.

Best of luck to the General Moly team!

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 revised range of $1,180 to $1,320 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  upcoming debt limit debate, White House controversies, political or geo-political shocks (e.g., North Korea, Syria).

There is a sobering possibility of a serious gold correction later this year if you believe some of the observations and interest rate projections of bond guru Jeffrey Gundlach of DoubleLine Capital. Here's my analysis on why this may be the case:

The Gundlach Conundrum: $1,000 Gold by Year's End? (Kitco News, June 21,2017)

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 is 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 has since stabilized with more dovish comments by Mario Draghi this week . 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 stable..

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 although that is being tested lately. A fall below $1,230 is very bearish; a return to $1,260, bullish.

Gold below $1,200 per ounce-level is, however, 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:

Commentary: Gold ain't just whistling Dixie; The U.S. dollar has peaked and commodities have bottomed – a bullish case for gold in 2017

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 0.5070, in the lower level of a range bound meander for 2017.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted