7 @ 7:00 « BullMarketRun.com

January 14, 2019

7 @ 7:00

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1. Gold has traded between $1,288 and $1,297 so far today…as of 7:00 am Pacific, bullion is up $5 an ounce at $1,292…Silver is 2 cents higher at $15.59…next key breakout point is $15.75…ETF and central bank buying are offsetting weakness in the Gold market in India where imports fell 23% in December…for all of 2018, India’s Gold imports totalled 762 tons vs. 951 tons the year prior…high domestic prices for Gold, due to a falling rupee, have deterred buyers in the world’s 2nd-largest consuming country…Copper, Nickel and Zinc are off slightly at $2.66, $5.18 and $1.12, respectively…Cobalt is steady at $19.05 after a significant drop during the 1st half of January…Crude Oil is 32 cents lower at $51.27…Saudi Energy Minister Khalid al-Falih said over the weekend that the Oil market is “on the right track” and there’s no need for an extraordinary OPEC meeting before its next planned gathering in April…despite growth concerns regarding China, the country’s Crude imports in December surged nearly 30% from a year earlier according to Reuters‘ calculations of customs data…the U.S. Dollar Index is off slightly at 95.64…the dollar downtrend in Q1 has legs with a now-declining 50-day moving average (SMA) which will also cap any rallies…key U.S. economic data this week includes Wednesday’s retail sales which have been in positive territory for 9 months in a row…wage growth is at 10-year highs, the Trump economy keeps producing terrific job numbers and consumers remain very confident, so we should see another strong month for retail sales…Palladium is up another $8 an ounce at $1,311 as the white metal overtakes the yellow metal for the first time since 2001 on increased demand from automobile manufacturers…more than 80% of world Palladium supply is used in the production of catalytic converters…

2. A blockbuster deal announced this morning in the Gold sector – Newmont Mining (NEM, NYSE) is acquiring Goldcorp (G, TSX; GG, NYSE) in a friendly all-stock transaction valued at $10 billion…Newmont will acquire each Goldcorp share for 0.3280 of a Newmont share, which represents a 17% premium based on the companies’ 20-day volume weighted average share prices…the deal will combine 2 Gold industry leaders into Newmont Goldcorp, creating a highly compelling portfolio of operations, projects, exploration opportunities, reserves and people in the Gold mining sector…in addition to offering investors the largest Gold reserves per share, Newmont Goldcorp will feature the highest annual dividend among senior Gold producers…“This combination will create the world’s leading Gold business with the best assets, people, prospects and value-creation opportunities,” stated Gary Goldberg, Newmont’s CEO. “We have a proven strategy and disciplined implementation plan to realize the full value of the combination, including an exceptional pool of talented mining professionals, stable and profitable Gold production of 6 to 7 million ounces over a decades-long time horizon, the sector’s largest Gold reserve and resource base, and a leading project and exploration pipeline. Our cultures are well aligned, with strong commitments to zero harm, inclusion and diversity, and industry-leading environmental, social and governance performance. We expect to generate up to $100 million in annual pre-tax synergies, with additional cost and efficiency opportunities that will be pursued through our proven Full Potential continuous improvement program. The combination is expected to be immediately accretive to Newmont’s net asset value and cash flow per share. We constantly review opportunities to raise our performance, and this combination represents the most promising path to deliver superior and sustainable value for our shareholders, employees, host countries and communities”…

3. Despite the flowery language, Newmont is taking over a company that has failed on many fronts, leading some to refer to Goldcorp as “Goldcorpse“…in late October, Goldcorp lost nearly a fifth of its market value in a single day after reporting falling production, rising costs and a decline in reserves…Gold grades at its flagship Cerro Negro mine in Argentina fell by more than 30% in the 3rd quarter compared with the previous quarter…production at its Musselwhite mine in Ontario and giant Pueblo Viejo operation in the Dominican Republic also fell more than expected…Goldcorp shares have also been in a long-term tailspin, hitting a new 17-year low in Q4…the transaction comes just 3 months after Barrick Gold’s (ABX, TSX; GOLD, NYSE) move to buy Randgold Resources in a $5.4 billion deal, which instantly spurred speculation that rivals would have to respond…just 2 weeks ago, Mark Bristow, Barrick’s new CEO, said the industry is heading for irrelevance unless there are major changes…Newmont is off $1.42 a share at $33.46 in early trading while Goldcorp has jumped $1.37 to $14.23 on the TSX…

4. The importance of President Trump going after China on trade is supported by numbers released today that showed that China’s trade surplus with Washington last year was the largest in more than a decade…China’s surplus with the U.S. grew 17% from a year ago to hit $323.32 billion, according to Chinese government data…it was the highest on record dating back to 2006…exports to the U.S. jumped 11.3% on-year in 2018, while imports from the U.S. to China rose a merger 0.7% over the same period…China’s overall trade surplus for 2018 was $351.76 billion…China’s General Administration of Customs said today that the biggest worry in trade this year is external uncertainty and protectionism which will likely lead to slower trade growth…December’s numbers reflect that concern…China’s overall December exports unexpectedly fell 4.4% from a year earlier, the biggest monthly drop in 2 years, while imports also unexpectedly contracted in December…they fell 7.6%, marking the biggest decline since July 2016…

5. The S&P 500 is headed for its 5th straight quarter of double-digit earnings growth, according to FactSet, though the rate of growth will decelerate in the 4th quarter from the 3rd…the estimated earnings-growth rate for Q4 is 11%, down from the projected 17% in September…however, the unusually steep drop-off in earnings estimates can be attributed to Apple’s cuts…the company ranks among the 5 biggest publicly traded firms in the world, meaning changes to its earnings estimates can disproportionately affect overall estimates…excluding Apple, as well as energy firms that have trimmed estimates due to falling Oil prices, “we’re back to something that’s more or less on trend,” stated Jonathan Golub, chief U.S. equity strategist at Credit Suisse…

6. The Dow has started a new week down 130 points through the first 30 minutes of trading…in Toronto, the TSX is up 15 points…First Majestic Silver (FR, TSX; AG, NYSE ) announced this morning that total production in 2018 reached 22.2 million equivalent ounces of Silver, representing a 37% increase over 2017, and at the upper end of the company’s guidance…total production consisted of 11.7 million ounces of Silver, 111,084 ounces of Gold, 16.1 million pounds of Lead and 5.7 million pounds of Zinc…the company anticipates a 28% increase in Silver production in 2019 and an 18% increase in total production compared to 2018…Q4 and full-year financial results are scheduled to be released February 25…Aurora Cannabis (ACB, TSX) is up 23 cents at $8.70 in early trading after announcing that it has entered into an LOI to acquire all the issued and outstanding shares of privately held Whistler Medical Marijuana Corp. in an all-share transaction valued at up to approximately $175 million, including certain milestone payments…Whistler Medical Marijuana has developed one of Canada’s most iconic cannabis brands…the transaction is expected to provide Aurora with a premium and differentiated organic certified product suite, expanding both its medical and adult-use offerings, and reinforcing the company’s presence in the well-established west coast cannabis market…Chemesis International (CSI, CSE), through subsidiary Natural Ventures, has launched its beverage division in Puerto Rico…Natural Ventures, currently servicing approximately 90% of the dispensaries in Puerto Rico, is a fully integrated medical cannabis company with 100,000 sq. feet of cultivation and 35,000 sq. feet of manufacturing and extraction…the initial launch of these all-natural ingredient products will include an energy shot, a sleep shot, and a calming shot…with initial roll-out this week in select dispensaries, the company anticipates these products to be available within the next 30 days across its entire dispensary network in Puerto Rico…the Venture has gained 1 point to 603 as of 7:00 am Pacific…one of the early leaders is GGX Gold (GGX, TSX-V), up 4 pennies or 50% at 12 cents, after the company announced late Friday a near-surface intersection grading 129 g/t Au and 1,154 g/t Ag over a core length of 7.3 m (COD-18–67) at its Gold Drop Property near Greenwood in southern British Columbia…the mineralized COD vein system has been traced by drilling and/or trenching for an approximately 400-m strike length and is open to the northeast, at depth and possibly to the southwest…

7. Ontario has announced the results of its much-anticipated cannabis retail lottery, naming 25 companies that are now eligible to begin applying for a licence to operate a brick-and-mortar pot shop in the province…absent from the list of 25 were any known cannabis retail brands such as The Friendly Stranger and National Access Cannabis (META, TSX-V) – the latter already operates a number of cannabis retail shops across the country…among the companies randomly selected by the Alcohol and Gaming Commission of Ontario (AGCO) were Pure Alpha Holdings, Tripsetter Inc., CGS Foods Inc., and The Niagara Herbalist…nearly 17,000 expressions of interest were included in Friday’s draw, two-thirds of which came from sole proprietorships, stacking the odds heavily against established retailers…National Access Cannabis CEO Mark Goliger has criticized the province for allowing many of Ontario’s first cannabis retail stores to be run by first-time business owners with no background in heavily regulated industries such as cannabis…while calling it “a little bit distracting and crazy” to be chasing franchising deals with individual lottery winners, Goliger said the lack of previous cannabis or retail experience among most of Ontario’s successful applicants will make it difficult to establish a competitive alternative to the illicit market…a majority of the 25 lottery winners were individuals through sole proprietorships…