Gold Misses $1,300 Then Stumbles; General Moly (GMO) Surprise

Diamond Range

Lone Mountain, Eureka, Nevada

Friday, June 9, 2017 AM

Morning Miners,

Rough week for the yellow metal; good one for the red. After nearly breaking $1,300 Tuesday, gold is in danger of losing its latest momentum while copper gets some giddy-up go. Share price of General Moly (GMO) took an unexpected 90% leap from its May low to a high of $0.52 yesterday although it has since pulled back to $0.39 (story below). Moly Oxide remains unchanged on the LME at $7.94 per pound ($17,550 per tonne).

Comex copper is currently trading at $2.6365 per pound, up nearly 2.5% for the week. Here's how I see the gold story as provided to the Kitco News Weekly Gold Report:

My vote is down. Target gold price $1,260 per ounce. Target Silver price $17.1 per ounce.

The week ends with a much stronger U.S. dollar on a U.K. election result with no clear majority. Yesterday's ECB hold on rates and the Comey testimony had less impact on [metal] markets. Dollar strength has pulled gold from a near miss of the key $1,300-level Tuesday* to trade this morning below $1,270 per ounce.

I believe a likely bump in interest rates from the FOMC next week will bring the yellow metal to $1,260 or lower threatening an uptrend of higher-lows established since May 9th.

The red metal fared much better, gaining nearly 2.5% for the week even with a stronger greenback. This was broadly true for other key commodities with the exception of falling oil. Gold lost nearly 1% of value compared to the Bloomberg Commodity Index but gained 3% against oil.

Gold's losses also extended to the Japanese yen but held steady relative to the euro. Holder's of gold in terms of pound sterling were among the few happy campers in the gold world.

Not a great short-term outlook for the yellow metal in commodities or currencies. Ongoing political and geopolitical uncertainty should, however, maintain strong support at $1,250 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 most of 2017 and has had a surprising stretch of strengthening lately. Volatility has also picked up from recent calm.  This morning, the yuan is trading at 6.7970 USD/CNY (1-month volatility** up from last week at 0.59%).

Have a great weekend!

* Tuesday's intraday high was $1,298.8 per ounce; May 9th low is $1,217.8

** by comparison the euro & yen 1-month volatilites are  1.7% & 1.9% respectively.

Weekly Summary  for June 9, 2017 AM  (something new!)

(click on table for larger size)

My commentary in the just released Summer 2017 Mining Quarterly:

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

My latest column in Kitco News, Montreal:

Validating Gundlach's 10-yr Treasury relation to the Copper:Gold Ratio (Kitco News, April 18,2017)

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

McEwen Mining (MUX) $2.56 per share (Close)

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) $0.3000 per share (Close); Moly oxide (LME) $7.94 per pound

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

Old Tree, Old Mountain

Lone Mountain, Eureka, Nevada

General Moly Surprise

The surge in General Moly (GMO) share price yesterday remains surprising to me given that Moly oxide price hasn't moved in nearly a month from $7.94 per pound. The jump was nonetheless noteworthy with over one million shares trading at nearly six times the average 90-day volume. The high for yesterday was $0.4394 per share with a close at $0.4350. Today, prices shot up to $0.5270 but quickly collapsed to trade at $0.38 - let's see where GMO closes today, anything above $0.37 would be encouraging from my view [Update: GMO closed at $0.38, game on].

Why the jump? There was an Annual Meeting this week but I didn't see any big surprises in their press release. Perhaps more importantly, General Moly will tell why they are optimistic about the future next Thursday (June 15):

General Moly Presents at Marcum Microcap Conference in New York (Press Release, 6/5/2017)

The press release provides this teaser:

In his presentation, Mr. Hansen [General Moly CEO] will provide an overview of the Company and its major assets in Nevada, the Mt. Hope Project, one of the largest and highest grade primary molybdenum deposits in the world, and the previously mined Liberty Project. He will also discuss the unsustainability of current low molybdenum prices amidst improving long-term fundamentals in the molybdenum market, including rising steel consumption from a stabilized oil industry, growing liquid natural gas market and China's unprecedented infrastructure expansion.

Maybe a stronger Chinese yuan (see above) and GMO jump in share price are seeing something I'm not. It would be great to be surprised again by more momentum next week.

Best of luck to the General Moly team.

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 evolving U.S. trade policies, political or geo-political 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 somewhat worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen) but has since stabilized. Gold in yen has consistently trended higher.

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 were stabilizing near historically less extreme levels which proved a healthy sign. However, the gold-to-oil ratio is once again headed north above a comfortable range of variation. Gold valuations relative to copper are elevated but not alarming.

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. There is solid support at the $1,250-level.

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:

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 new chart to watch. Click on the image for a larger size:

Gold-to-S&P 500 Ratio

An important gold ratio to watch 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 March 15, 2017. We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.5200, still surprisingly resilient given that S&P 500 is again setting new all-time highs this morning.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted

Gold Just Shy $1,280 On Mixed Jobs Report - Rat Rod for 2017?

Don't Let Looks Fool You - Damn Quick at 6,000 feet!

Annual Drag Races, Eureka, Nevada

Friday, June 2, 2017 AM

*** UPDATE *** Comex gold closed Friday at $1,280.2 per ounce; intraday high scored $1,282.2

Morning Miners,

I love a sleeper. The Rat Rod featured in the headline photo took many by surprise at the Eureka Annual Drag Races over Memorial Day Weekend. The young man (left) drove this beauty from Wells, Nevada to put many fancier machines on the trailer. He clocked low 12-seconds in the quarter with top speeds of 110-plus miles per hour. All this is at 6,000 feet, pardner!

This year gold has a similar story. In a rising interest rate environment with the prospects of strong U.S. economic growth, many experts thought the yellow metal would have a dismal year. As we enter the second-half of 2017, gold nearly broke $1,280 per ounce this morning while stock markets made new highs and interest rates plummeted (10-year Treasury dipped to 2.144%). If the Lustrous One is this year's Rat Rod, there should be some more bullish surprises ahead.

Comex copper wobbles at $2.5875 per pound, down 1% from last Friday on China worries. Moody's debt downgrade of the world's second largest economy and falling iron ore prices are red flags for the recovering demand narrative. Moly oxide remains unchanged at $7.94 per pound after its big jump three weeks ago.

My input to the Kitco News Weekly Gold Report:

My vote is up. Target gold price $1,280 per ounce. Target Silver price $17.4 per ounce.

Like the U.S. labor report this morning, gold's performance is mixed. Jobs added were lower than expected but the unemployment rate fell to to a 16-year low at 4.3%*.

Although up for the week on a weakening U.S. dollar, Comex gold failed to break $1,280** by a few cents on weaker-than expected gains in U.S. jobs added with downward revisions for previous months. However, the jobs report did give the yellow metal enough boost to stay abreast with U.S. stocks which made new record highs this morning.

Gold raced ahead of key commodities copper and falling oil scoring a value peak with the latter not seen since November of last year. Its gains compared to the Broader Bloomberg Commodity Index were greater than 2.5% [see Weekly Summary below].

Gold lagged major currencies euro and yen, but not significantly. Upward trends relative to both remain intact [see currency chart below]. I believe the bullish trend established since the May 9th low** will continue next week with gold taking another shot at $1,280.

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. Continuing low volatility suggests the yuan remains a currency yawn.  This morning, the yuan is steady, trading at 6.8136 USD/CNY (1-month volatility*** slightly up from last week at 0.39%).

Have a great weekend!

* Labor report highlights as reported by Bloomberg News; 138,000 jobs added (versus 182,000 expected), unemployment rate 4.3% (versus 4.4% expected). More details (Bloomberg):

1. Participation rate, or share of working-age people in the labor force, decreased to 62.7 percent from 62.9 percent
2. The U-6 or underemployment rate fell to 8.4 percent, lowest since November 2007, from 8.6 percent; rate includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking
3. The measure known as part-time for economic reasons fell by 53,000 people to 5.22 million Private employment rose by 147,000 (forecast was 175,000) after a 173,000 increase; government payrolls fell by 9,000
4. Factory payrolls fell by 1,000, construction was up 11,000; retail payrolls declined 6,100, the fourth straight drop; and leisure and hospitality employment rose by 31,000
5. Average work week for all workers unchanged at 34.4 hours (forecast was 34.4 hours)
6. Wages declined in manufacturing, utilities and professional and business services; pay rose in retail, construction, information

** Today's high (so far) is $1,279.2 per ounce; May 9th low is $1,217.8

*** by comparison the euro & yen 1-month volatilites are  1.25% & 1.03% respectively.

Weekly Summary  for June 2, 2017 AM  (something new!)

(click on table for larger size)

My latest column in Kitco News, Montreal:

Validating Gundlach's 10-yr Treasury relation to the Copper:Gold Ratio (Kitco News, April 18,2017)

My commentary in the the Spring 2017 Mining Quarterly:

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

Online Edition (pages 44-46): Spring 2017 Mining Quarterly

McEwen Mining (MUX) $2.56 per share (Close)

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) $0.3000 per share (Close); Moly oxide (LME) $7.94 per pound

An unofficial source told me today that a much anticipated Nevada Supreme Court decision regarding water rights has been moved from April 4th to May 1st.

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

...and he drove it to the race from Wells, NV

Annual Drag Races, Eureka, Nevada

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 evolving U.S. trade policies, political or geo-political 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 somewhat worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen) but has since stabilized. Gold in yen has consistently trended higher.

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 is a healthy sign. 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.

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:

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 new chart to watch. Click on the image for a larger size:

Gold-to-S&P 500 Ratio

An important gold ratio to watch 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 March 15, 2017. We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.5258, surprisingly resilient given that S&P 500 is setting new all-time highs this morning.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted

Gold 4-Week High $1,268; Terror, China & Falling Oil Bolster the Yellow Metal

Mr. LIZZ-ard

Lone Mountain, Eureka, Nevada

Friday, May 26, 2017 AM

Morning Miners,

Comex gold heads into the Memorial Day weekend near 4-week highs* at $1,265.1 per ounce. Underpinned by some unpleasant global events, gold should move even higher next week. Comex copper is resilient at $2.5695 per pound, just slightly down from last Friday. Moly oxide remains unchanged at $7.94 per pound after its big jump two weeks ago.

My input to the Kitco News Weekly Gold Report:

My vote is up. Target gold price $1,280 per ounce. Target Silver price $17.5 per ounce.

Gold crosses the finish line for the week sprinting ahead of major currencies and key commodities with market participants in a "risk-off" mood ahead of global holidays including our own Memorial Day. There was certainly enough to bolster the yellow metal with a Moody's debt downgrade of China, the world's second largest economy; terror in the U.K. and oil prices taking a near 8% tumble yesterday.

The stuff that makes gold shine.

One miss for the Lustrous One was comparative performance relative to domestic stocks. With the VIX returned to single digits yesterday, the S&P 500 posted new all-time highs.

Gold is trading at 4-week highs for the week up 1% or more in U.S. dollars, euro and Japanese yen. It's gains compared to commodities are even more impressive: up 2% against the broader Bloomberg commodity Index and nearly 4% versus falling oil [see chart below].

I believe it likely that gold will visit $1,280 next week following the bullish trend in place this week.

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. Continuing low volatility suggests the yuan remains a currency yawn.  This morning, the yuan is steady trading at 6.8539 USD/CNY (1-month volatility** is 0.20%).

Have a great Memorial Day weekend!

* Today's high (so far) is $1,268 per ounce; May 1st Comex gold touched $1,272,4

** by comparison the euro & yen 1-month volatilites are  1.27% & 0.89% respectively.

Weekly Summary  for May 26, 2017 AM  (something new!)

(click on table for larger size)

My latest column in Kitco News, Montreal:

Validating Gundlach's 10-yr Treasury relation to the Copper:Gold Ratio (Kitco News, April 18,2017)

My commentary in the the Spring 2017 Mining Quarterly:

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

Online Edition (pages 44-46): Spring 2017 Mining Quarterly

McEwen Mining (MUX) $2.73 per share (AM)

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) $0.2801 per share (AM); Moly oxide (LME) $7.94 per pound

An unofficial source told me today that a much anticipated Nevada Supreme Court decision regarding water rights has been moved from April 4th to May 1st.

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

The Big Picture (click for panoramic view)

Lone Mountain, Eureka, Nevada

Gold Price Outlook 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 evolving U.S. trade policies, political or geo-political 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 somewhat worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen) but has since stabilized..

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 is a healthy sign. 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.

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:

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 new chart to watch. Click on the image for a larger size:

Gold-to-S&P 500 Ratio

An important gold ratio to watch 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 March 15, 2017. We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.5239, fairly resilient given that S&P 500 set new all-time highs yesterday,

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted

Gold Visits $1,265; Weak Dollar Boosts Metals

Exploring the Ordovician

View from Lone Mountain, Eureka, Nevada

Friday, May 19, 2017 AM

Morning Miners,

Gold ends the week off yesterday's high of $1,265 per ounce trading at $1,254.7. The yellow metal may see some downward pressure next week. Comex copper is getting a nice bounce from Thursday's sell-off; presently at $2.5655 per pound. Moly oxide remains at $7.94 per pound after its big jump last week.

My input to the Kitco News Weekly Gold Report:

My vote is down. Target gold price $1,240 per ounce. Target Silver price $16.6 per ounce.

One has to be impressed by the rally in commodities this morning and their relation to gold.

After a week of political turmoil in the White House that brought Comex gold to $1,265 per ounce, there is a sense that the appointment of a Special Counsel for the Russia investigation and the President's trip abroad will bring market [near-term] stability and diminish enthusiasm for the safe haven trade.

Commodities are now responding to positive economic news for the U.S. and Europe and a beaten U.S. dollar returned to pre-election levels*. 

[Metals are recovering well too. Comex copper is up 3.2% this morning from yesterday's low trading at $2.5655 per pound or $5,656 per tonne. Staying above the $5,500-level is key]

Even though broader Bloomberg Commodity Index is at late-April levels today, gold maintains gains for the week compared to rising copper, recovering U.S. stock markets and the Japanese yen. Gold has lost some ground to Nymex oil, now above $50 per barrel, and a strengthening euro [see above chart]. Given this backdrop, it is likely that the yellow metal will return to the $1,240 per ounce level next week.

* On U.S. election day, the U.S. Dollar Index (DXY) had a low of 97.55 and then it peaked above 103 in early January. This morning's DXY is a lower still 97.24.

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. Aggressive liquidity tightening by the People's Bank of China (PBOC) has eased, stabilizing the yuan below 7 USD/CNY. Recent low volatility suggests the yuan remains a currency yawn.  This morning, the yuan is steady trading at 6.8870 USD/CNY (1-month volatility** is 0.10%).

Have a great weekend!

** by comparison the euro & yen 1-month volatilites are  1.00% & 1.18% respectively.

Weekly Summary updated for May 19, 2017 AM  (something new!)

(click on table for larger size)

My latest column in Kitco News, Montreal:

Validating Gundlach's 10-yr Treasury relation to the Copper:Gold Ratio (Kitco News, April 18,2017)

My commentary in the the Spring 2017 Mining Quarterly:

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

Online Edition (pages 44-46): Spring 2017 Mining Quarterly

McEwen Mining (MUX) $2.895 per share (AM)

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) $0.2895 per share (AM); Moly oxide (LME) $7.94 per pound

An unofficial source told me today that a much anticipated Nevada Supreme Court decision regarding water rights has been moved from April 4th to May 1st.

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

Fossils from 470 million years ago...or so

Lone Mountain, Eureka, Nevada

Gold Price Outlook 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 evolving U.S. trade policies, political or geo-political 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 somewhat worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen) but has since stabilized..

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 is a healthy sign. 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.

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:

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 new chart to watch. Click on the image for a larger size:

Gold-to-S&P 500 Ratio

An important gold ratio to watch 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 March 15, 2017. We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.5283, a welcome uptick on recent stock market weakness.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted

Gold Bump on U.S. Retail Sales; Moly Oxide Surges Higher 15%

Headframe, Lone Mountain

Eureka, Nevada

Friday, May 12, 2017 AM

Morning Miners,

Gold ends the week higher but may see some downward pressure next week. This morning's Comex price is $1,230.9 per ounce; copper $2.5135 per pound. Hey, check out the moly oxide jump to $7.94 per pound (see below).

My input to the Kitco News Weekly Gold Report:

My vote is down. Target gold price $1,220 per ounce. Target Silver price $16.3 per ounce.

Although gold got a bump this morning on weaker-than-expected retail sales* in the U.S., next week is likely to bring downward pressure on gold returning it to the $1,220 per ounce level.

Some of the drivers that have brought the yellow metal higher are moderating: political uncertainty in Europe has eased with the defeat of Le Pen in France, commodity markets have stabilized after last week's selloff and the S&P 500 Volatility Index (VIX) has recently dipped to single-digit lows.

Although Chinese equity markets have retreated on leverage tightening, the yuan has become the yawn with exceptionally low volatility. The latter suggests stability coupled with a better-than expected GDP for Q1 (6.9% vs. 6.5% target) - an environment not supportive of the safe haven trade there.**

For the week, gold outpaced the euro, yen and copper but lost ground to dramatically rebounding oil prices [see Weekly Summary Chart].

* Retail sales 0.4% reported versus 0.6% expected; core sales 0.3%,expected 0.5%

**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. Aggressive liquidity tightening by the People's Bank of China (PBOC) has eased, stabilizing the yuan below 7 USD/CNY. Recent low volatility suggests the yuan remains a currency yawn.  This morning, the yuan has strengthened slightly trading at 6.8775 USD/CNY (1-month volatility* is 0.11%).

Have a great weekend!

* by comparison the euro & yen 1-month volatilites are  0,99% & 1.67% respectively.

Weekly Summary updated for May 12, 2017 AM  (something new!)

(click on table for larger size)

My latest column in Kitco News, Montreal:

Validating Gundlach's 10-yr Treasury relation to the Copper:Gold Ratio (Kitco News, April 18,2017)

My commentary in the the Spring 2017 Mining Quarterly:

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

Online Edition (pages 44-46): Spring 2017 Mining Quarterly

McEwen Mining (MUX) $2.70 per share (AM)

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) $0.32 per share (AM); Moly oxide (LME) $7.94 per pound

An unofficial source told me today that a much anticipated Nevada Supreme Court decision regarding water rights has been moved from April 4th to May 1st.

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

Down Below, Lone Mountain

Eureka, Nevada

Moly Oxide Surges Higher 15%

Moly Oxide prices finally got some giddy-up go after being at $6.92 per pound since last fall. For the week, molybdenum is up 15% at $7.94 per pound - need to get above $10 per pound but this move is encouraging.

General Moly (GMO) $0.32 per share (AM)

Gold Price Outlook 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 evolving U.S. trade policies or geo-political 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 somewhat worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen).

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 is a healthy sign. Geo-political events and concerns about the timing and efficacy of the new administration's policies have restored glitter to gold in 2017.

Gold near my low-range of $1,180 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 just released 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 new chart to watch. Click on the image for a larger size:

Gold-to-S&P 500 Ratio

An important gold ratio to watch 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 March 15, 2017. We must stay above the December bottom (0.4973)! Currently this AM the AUSP is 0.5150 a very mild uptick of higher lows for 2017.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted