Visit the BMR comments section throughout the day for updates and helpful information, and check back later for the next Daniel’s Den.
1. Gold has traded between $1,242 and $1,247 so far today…as of 7:00 am Pacific, bullion is up $3 an ounce at $1,246…Silver has added 17 cents to $14.71…Copper is off a penny at $2.79…Nickel is up 2 cents at $4.86 while Zinc is flat at $1.20…Cobalt remains steady at $25.06…Crude Oil has gained another 70 cents a barrel to $52.35 while the U.S. Dollar Index has firmed up to 97.47…in an interview with Reuters, President Trump said he would intervene in the Justice Department’s case against the CFO of Chinese telecom giant Huawei (released from jail in Vancouver on strict bail conditions yesterday pending possible extradition to the U.S.) if it would help serve national security interests or help U.S.-Sino trade talks…Huawei is the one of the largest tech companies in China and is also seen as a symbol of pride by the Chinese government…U.S. inflation remains in check as the Consumer Price Index was unchanged in November, in line with expectations…BlackRock, the world’s largest money management firm, has released its annual Global Investment Outlook, putting the risk of the world slipping into a recession in 2019 at 19%…by 2020, the company predicts a 38% chance of a major downturn, rising to 54% in 2021…
2. U.S. commercial Crude inventories fell by a less than expected 1.2 million barrels in the week through December 7, in data just released by the Energy Administration Administration…late yesterday, however, industry group American Petroleum Institute reported that U.S. Crude stockpiles had declined by 10.2 million barrels…a Crude supply outage in Libya is helping the market…the country’s national Oil company has declared force majeure on exports from the El Sharara Oil field following an attack by a militia group over the weekend…roughly 400,000 barrels a day of Oil have come offline, according to analysts…meanwhile, traders are continuing to assess whether the planned 1.2-million bpd production cut announced last week by OPEC and its partners, led by Russia, will be enough to rebalance the market and mop up a burgeoning supply glut…
3. First Nations take aim at Trudeau’s climate change extremism: First Nations chiefs and leaders who say they represent over 200 Indigenous communities in B.C. and Alberta are fighting back against the federal government’s plan to ban all Oil tanker traffic off the coast of northern B.C., calling it an “attack” on the energy industry that will impoverish remote First Nations…Chief Roy Jones Jr. of the National Coalition of Chiefs, a group that supports energy projects as a solution to rampant poverty on First Nations reserves, said the federal Liberal government is “arbitrarily denying Indigenous communities…investments” by curtailing development through the northern reaches of the province…“We’re trying to lessen our dependency on federal [welfare] dollars. Bill C-48 will just set us back,” Jones said…Calvin Helin, a member of the Lax Kw’alaams First Nation near Prince Rupert, B.C. and an executive with the Eagle Spirit Pipeline Project, said “elites” from Central Canada are ignoring the pleas of pro-pipeline Indigenous communities who see this sort of development as a solution to unemployment rates as high as 80%, and living standards standards on par with sub-Saharan Africa…
4. Kirkland Lake Gold (KL, TSX), our favourite producer which is aiming for its 11th straight winning session, announced after the close yesterday that it’s increasing its quarterly dividend by 33% from 3 cents to 4 cents payable in mid-January to shareholders of record as of December 31…yesterday’s updated 2019 full-year guidance was highlighted by strong production growth and improved unit costs, while the company also gave a robust 3-year production outlook…3-year guidance includes the Fosterville mine achieving over 500,000 ounces of production by 2020 and demonstrates the potential for consolidated production to reach 1 million ounces by 2021…for 2019, KL production is estimated at between 740,000 and 800,000 ounces, driven largely by higher numbers at Fosterville…all-in-sustaining costs per ounce sold are expected to improve to between $630 and $680 (U.S.)…Kirkland Lake is targeting consolidated production growth of 10 to 15% per year over the next 3 years, with production of 740,000 to 800,000 ounces in 2019 to be followed by 850,000 to 910,000 ounces in 2020, and 945,000 to 1,005,000 ounces in 2021…technically, KL is breaking out above an area of stiff resistance in 2018 and is now on a path to challenge measured Fib. resistance in the mid-$40’s in 2019…KL is up 70 cents at $33.27 through the first 30 minutes of trading, a 30% gain since November 27…
5. The Dow is up 262 points as of 7:00 am Pacific…some optimism regarding U.S.-China trade talks has boosted sentiment…yesterday the Dow swung more than 500 points before closing slightly lower while the S&P 500 and NASDAQ also alternated between gains and losses throughout the session…news headlines and computer trading are the main contributors to recent volatile intra-day trading…the TSX has climbed 139 points while the Venture has added 3 points to 567…increasingly, it appears the Venture may have found its bottom at 558, just 2 points below a key Fib. level, but there are still 9 trading sessions left after today before Christmas…iMetal Resources (IMR, TSX-V) hit extreme oversold RSI(2) conditions in early trading at 9.5 cents on a technical pullback to its rising 50-day moving average (SMA)…the company is proceeding toward first-ever drilling at its Gowganda West Property where high-grade Gold has been found in newly-exposed outcrops over a broad area…the mineralized jasper pebble conglomerate (Temiskaming sediments) in Zone 1 South is identical to that seen at Kirkland Lake…
6. Seabridge Gold (SEA, TSX) reported this morning that the remaining drill holes completed this year on the Iron Cap deposit at its 100%-owned KSM Project in the Eskay Camp have confirmed a northern down-plunge extension of the high-grade core zone originally discovered by the company in 2016…results include some exceptional widths of Gold and Copper mineralization with grades exceeding the KSM resource average…assays included 1,018 m @ 0.44 g/t Au, 0.37% Cu and 1.6 g/t Ag in IC-18–82A, and 548 m @ 0.63 g/t Au, 0.44% Cu and 2.4 g/t Ag in IC-18–33…work is now in progress on an updated resource estimate for Iron Cap…this year’s principal exploration objectives were to test the down plunge projection of the high-grade core zone of the Iron Cap deposit to the west of the current resource and evaluate the relative positioning between Iron Cap and the currently planned alignment of the Mitchell-Treaty Tunnel (MTT)…due to its proximity to the MTT and its higher grade, Iron Cap could potentially improve KSM’s economics by mining it before the Kerr deposit…
7. Great Bear Resources (GBR, TSX-V) has slipped in early trading after releasing drill results from 19 holes totalling 4,290 m from the Hinge Zone (HZ) and South Limb Zone (SLZ) at its 100%-owned Dixie Project in the Red Lake district…drilling below Great Bear’s recent HZ discovery extended continuous Gold mineralization from surface to 190 m depth and the zone is open to extension…the deepest hole is located 114 m down-plunge of the HZ discovery and returned 3.65 m (estimated true width) of 27.4 g/ including 0.5 m @ 153.73 g/t…18 of the 19 drill holes at HZ and SLZ intersected quartz veins with visible Gold at the predicted plunge and dip…the HZ shows strong grade continuity and varies from 1.5 to 14.1 m in estimated true width where drilled to-date…a 2nd drill rig will be mobilized early in 2019 as GBR accelerates its fully-funded, ongoing 30,000 m drill program…
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This question could be for all at BMR. How are you able to keep cash in your trading accounts? For instance, Jon, have been mentioning adding to CCW for some time now. If it had been me, I would have put all my cash in, especially after a drop. Can you give tips or rules that you live by to keep disciplined on this?
Thanks,
DJD1
Comment by DJD1 — December 12, 2018 @ 8:26 pm
Great question DJD1. I don’t think there’s any one great answer, but i’ll chime in with a few things to consider…
a) “feather in, feather out” — too many make the mistake of buying (and selling) in large chunks, or worse, all at once. Becoming disciplined about buying into weakness and selling into strength will keep cash coming in and going out.
b) weekly or monthly, take account of all your positions. Ask yourself… would i buy more of stock XYZ at this price? If the answer is no, selling some is often the right decision (which brings in some cash). Only deploy cash into new opportunities if they are deemed to be superior to your existing holdings. Ideally the entire portfolio (more than 15 stocks but less than 35 is a nice range, allowing for diversification but not being overly-diversified) is in a perpetual state of being upgraded.
c) think of “cash” as one of your stock holdings and never let it drop below “x” percent of the total account. Let’s say the number is 5%. Any buying that would result in cash dropping below 5% would force you to evaluate your other 15 to 35 holdings and sell something.
Comment by Daniel — December 13, 2018 @ 7:51 am
An even better answer! Daniel.
In part b) you have an ideal portfolio as 15 to maybe 35 stocks. I use to have this amount and with work etc. am down to maybe 5 stocks. I find it easier to watch over just a few ,or is this a big red flag?
When you started investing have you always had a certain % in cash? Was this learn’t in your finance classes or self taught? It is very hard for me to leave that cash alone.
Thanks again,
David
Comment by DJD1 — December 13, 2018 @ 11:46 am
Hi David,
Questions relating to asset allocation are all very unique and personal. Of particular importance, is figuring out a strategy that matches with your personality. Not knowing your specific financial situation, i can’t comment with too much detail. 5 stocks could be appropriate, but just 5 stocks could also be a red flag, as you say, and too concentrated (not enough diversification).
When resource stocks are as cheap, undervalued, and depressed as they are now it is difficult to hold a lot of cash. Depending on market conditions cash as a percentage of total assets will fluctuate. And there’s no hard and fast rule to go by. In a perfect world we’d all be 100% invested at the exact bottom and 100% cashed out at the top, but unfortunately it doesn’t work that way.
Comment by Daniel — December 13, 2018 @ 4:14 pm
Hi Daniel,
Thanks so much for your responses. Much to learn, will try to work on keeping a portion in cash for times like this.
David
Comment by DJD1 — December 13, 2018 @ 8:48 pm