The Eureka Miner

Friday, December 22, 2017

Bitcoin Collapses, Gold Bounces $1,278; Merry Christmas!

The Terror is Over (Noozhawk photo)

Santa Barbara, California

Friday, December 22, 2017 AM

Morning Miners,

The Eureka Miner has been offline for several week's as the ole Colonel's attention has been on California's second largest fire threatening both Santa Barbara and Ventura counties (272,000 acres to date). Mariana and I are now safe in our second home in Santa Barbara's foothills. Saturday was very scary as the fire came very close to our house.

That Sunday we cautiously ventured out to Joe's Cafe on State Street. Two firefighters came in and sat down at the table next to our booth - both were from Carson City! Later I told our waiter that we would like to pick up their tab. She said that they were already covered by an older gentleman at the bar. The night before he had treated 35 firefighters. The community support for the firefighter's brave efforts has been tremendous.

One patron asked the Carson City boys whether they were exhausted after days of 24 hour shifts. In typical Nevada style the lead replied, "Naw. It's hard on the new guys, we're used to this stuff."

Simply, the best.

There were many other Nevada firefighters deployed to fight California wild land fires:

RENO FIRE DEPARTMENT HELP BATTLE FIRES IN SOUTHERN CALIFORNIA (The Nevada Sagebrush, 12/12/2017)

Bitcoin Collapses, Gold Bounces $1,278

This morning's trading may be a harbinger of things to come in 2018 with the dramatic drop in Bitcoin and bounce in gold. The wildly popular and speculative Bitcoin has recently seen volatile declines starting today with a 20% drop. It has lost roughly one third of its value in 24 hours.

Presently, Comex gold is trading at $1,278.0 per ounce just shy of its $1278.8 high for the day. By the time you read this there may be a new high in place. Please read my input below to the Kitco News Weekly Gold Survey (below) for further analysis.

Digital currencies are no doubt here to stay and eventually will compete with the yellow metal as an alternative store-of-wealth. Although their recent parabolic rise in value is collapsing to gold's advantage, it is likely only the first chapter is a very long story. The venerable NYSE Art Cashin quipped yesterday that there will be a day when we stop carrying paper around with pictures of dead presidents. My theory is that so-called cryptocurrencies will follow the same path as tech stocks: wildly popular until a big crash then slowly popular again as technology eventually catches up with early expectations (internet-of-everything, online shopping, social media etc.). Currently it looks like we are headed for the "bull trap" side of a Bitcoin crash following this classic chart of bubbles:

(click on graph for larger size)

The big question is whether gold investment may indeed be headed for secular decline. We will explore this more fully in 2018. For the holidays, here is some interesting reading by renowned commodity journalist Debbie Carlson:

Will Bitcoin Futures Legitimize Cryptocurrencies? (Debbie Carlson, U.S. News, 12/14/2017)

Scorecard for the last-half of 2017

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 $3.2395 per pound, just below October's high. Improving global growth has kept the red metal above the key $3 per pound level with an added boost from passage of Tax Reform and expectations for U.S. infrastructure spending. 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 with a healthy bounce (210,486 versus 201,150 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 $1,260 per ounce. Target Silver price $16.1 per ounce.

Gold bounced nicely from the dramatic decline in Bitcoin this morning. The release U.S. economic data which included inflation and durable goods had little impact on price. We can expect more volatility from holiday trading as the end-of-the-year approaches.

I believe it likely some of this bounce will wear off next week as gold settles above the key-$1,250 level for the year - my target price is $1,260 per ounce. Silver should prove resilient around $16.1 per ounce.

This morning's trading may be a harbinger of things to come in 2018. Digital currencies are here to stay competing with the yellow metal as an alternative store-of-wealth. Although their recent parabolic rise in their value is collapsing to gold's advantage, it is likely only the first chapter is a very long story. Another important thing to watch is the interplay of rising interest rates and inflation rate expectations given a pickup in U.S. GDP. If the former gains on the latter; gold could face serious headwinds in the year to come.

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 6.5756 USD/CNY and now 2.2% above its low (i.e. its strongest level) for the year of 6.4345. A 1-month yuan volatility of 0.20% is in the ballpark of major currency levels - a healthy sign for the Chinese currency (1-month volatilities of euro, yen and gold*).

Merry Christmas & Happy Holidays!

* the euro & yen 1-month volatilites are 0.45% & 0.59% respectively; Comex gold 1-month volatility is 1.26%.

Weekly Summary for December 22, 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).

A fall below $1,260 is bearish; 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 0.4748 - still bearishly below the key 0.5-level.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted.

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

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:

Michael Flynn pleads guilty to lying to FBI in Mueller probe (NBC News, 12/01/2017)

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:

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

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:

The Gundlach Indicator R.I.P. - Gold, Copper & Interest Rates (Kitco News, August 23, 2017)

McEwen Mining (MUX) $1.93 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) $0.28 per share; Moly oxide (LME) $7.26 per pound

General Moly and its Largest Shareholder, AMER, Strengthen Strategic Partnership (Press Release, August 8, 2017)

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)

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.

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

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.