An environmental assessment green light. A first gold pour. Drilling results. A takeover aimed at an in-development U.S gold mine. The sale of half a massive copper mine for a billion dollars.
Things are still happening in the metals and mining sector. Sure, there are bad news announcements too – Goldcorp cutting its dividend, miners announcing quarterly losses, record short gold bets, and the like – but the situation is not dire.
There are good companies doing promising work. Yes, the news flow is slower than in better markets, but that doesn’t mean it’s crickets out there.
Pretium Resources got a green light from the Feds on the environmental assessment (EA) for its Brucejack project in west-central British Columbia. Officially, the assessment determined that Brucejack is not likely to cause significant adverse environmental effects. The actual permit for development follows this decision, but a positive EA outcome bodes very well for Brucejack’s odds of permitting success.
I certainly want to see Pretium succeed. Brucejack is a great project. Previous owners discovered the West zone, which has good gold and silver grades but wasn’t enough alone to make a mine. Then Pretium discovered Valley of the Kings,
…
I spent Monday reading and writing.
The reading was the usual – a run through of analyst reports and mining commentators and emails and articles. After last week’s metals smackdown, the tone was tense.
The writing was a pair of lists: Reasons for Optimism and Reasons for Caution. I’m a list person. Lists keep me organized and help me feel accomplished. They can also help me figure out a jumble of thoughts.
And the thinking out there certainly is jumbled. The mainstream media is certain gold is dead. That is usually a strong buy signal…but it is hard to find near-term reasons for gold to gain. Copper’s slide has many convinced that Chinese growth is all but over. That would indeed be very bad for mining…but China is not done growing. An interest rate hike might be coming, or not, and it might be bad for gold, or good. US markets are showing some topping warning signs, but such signs have come and gone over the last six months.
The whole situation – from the state of global economies and currencies to the outlooks for specific metals and mining equities – is a mess of details and predictions and
…
Gold fell below its mid-November low of US$1,142 per oz. on Friday, sinking to US$1129.80 before rebounding slightly to close at US$1,133.30. This morning a bear raid in Asia slammed the price down to $1,088 for a short time. It is currently hovering just above $1,100.
So I was wrong. Mid-November was not the bottom.
But I am not awash in tears. In fact, buying off that November bottom and then managing risk by selling parts of positions when the price performed means the Maven portfolio was still up 11% as of today’s open.
(Portfolio performance calculated as simple average of gains and losses to date of active holdings. All equities are given equal weighting except those where partial sells lowered the average cost base (ACB). For those, contribution to overall portfolio performance is reduced proportionate to the amount of holding sold; if a third was sold, the gain on the ACB is reduced by a third for portfolio performance calculations.)
Couple things I like about that.
- A gain is a gain. Sure, it’s not guaranteed. But that fact that Maven could sell everything now and walk away with 11% means there are gains available. Bottoms last an
…
Two weeks sailing in Alaska. An incredible trip: humpback whales and icebergs and grizzly bears and glaciers, almost all of it in glorious sunshine. I have sailed the waters of B.C. since childhood but Alaska is different: vast and rugged, with peaks rising straight out of the ocean and often not another boat in sight.
Cell coverage followed me for the first few days, then disappeared. I had no way of knowing what was going on in Greece or how badly Chinese markets were melting down or what it all meant for the price of gold.
Returning to civilization, somewhat panicked about what I had missed, I was reminded of the unshakeable nature of a depressed market.
The seven-year-old Greek drama had reached peak pressure. Chinese stocks went into freefall, a 30% loss in just four weeks representing more than $3 trillion in evaporated value. Real progress in negotiations with Iran, which today produced an historic deal, had the price of oil down 10%. Some significant situations had played out.
Gold barely blinked. It slid some, but stayed comfortably inside its 4-month range.
Copper did blink, but not substantially. The red metal punched down to US$2.42 per lb., a
…
It’s been a while since I wrote about the price of gold. Time to revisit the yellow metal – though to be honest, we haven’t missed much.
Gold has had a pretty boring couple of months. After running to almost $1300 per oz. in January and then falling back to $1150, the yellow metal has sauntered sideways, staying mostly between $1170 and $1215 per oz.
When it manages to attract attention, gold’s narrative remains stuck on the same points. When will the Fed raise rates? Are the US markets topping? What will happen with Greece and the EU? Is the US economy really growing? What’s the outlook for the greenback?
On a day-by-day basis, much can be said on each of these points. Stepping back, though, the drama dies away and it looks more like these macro questions simply make up our new normal.
The markets have gotten used to the endless debate over rates, to the unsustainable mess that is Greece, to a constant argument over US market valuations versus economic indicators. Even the most ardent gold bugs seem to have quieted their prophesizing that money printing is leading the world towards fiat currency collapse, despite continued
…
We are in a holding pattern. Take the uncertainty around the Federal Reserve’s pending decision, add in tax loss selling pressures, mix in a rising US dollar, and add in end-of-year fatigue and you get a market moving as much on self protection and exhaustion as on technicals or fundamentals.
One example of that: I met with a uranium junior today and, after catching up on corporate news, we talked shop for a while. Tax loss selling came up. That’s a normal seasonal occurrence but this year-end there is another kind of pressure. Portfolio managers and institutional traders with mining exposure are in such need of gains that they are selling up stocks, even if they still like the story, to have a closed-out win in their books. They might be planning to re-enter the stock in the New Year, but the reality right now is extra selling pressure not only on tax loss candidates but on stock success stories.
Consistent metal price weakness is not helping. The 30-day copper price chart is looking almost as bad as the 6-month chart.
Gold is down too (though it jumped to end today, not yet sure why). Zinc
…
Metals are getting hammered again.
The hits are coming from all sides. Expectations of a mid-December rate raise are pushing against gold, which is down almost 10% from where it was trading before the Fed opened the door to December tightening in mid-October. In response, futures traders – expecting a rate increase to lift the dollar and depress gold – have dumped the equivalent of 368 tonnes of gold in just three weeks.
Rate moves and resulting dollar strength hit hardest against gold, but these forces don’t spare other metals. Copper traded as low as US$2.05 per lb. this morning, down from US$3 per lb. a year ago.
As the PhD of metals, copper is supposed to reflect expectations for the world’s economies. Clearly expectations are low, which you would think at some point would manifest in a US market slowdown. Instead it just keeps climbing. However, many indicators suggest the ascent is limited, from falling appetites for leveraged loans (a yielding investment that usually mirrors stock market performance) to limited market breadth to a dollar so strong it will soon strangle manufacturing and exports.
As for copper itself, prices are now at a point where many mines are
…
Happy Monday. Or not so happy, for anyone focused on gold.
It’s been a tough couple weeks for the yellow metal and the pressure is not about to abate. Equities are facing double downside pressure: metal prices are sliding and tax loss selling is getting underway. The only solace there is that many portfolios are looking at bigger losses with oil and gas holdings than metals stocks, so energy equities will bear some of the tax loss selling burden.
The time to clean out some of your underperforming metals stocks was a few weeks ago, as I advised subscribers. Take the tax loss, consolidate some cash, and be ready to play the pending strong season.This week’s Maven Weekly letter to subscribers will outline how I plan to profit in the next few months, as gold and mining moves from seasonal weakness to strength. If you are interested, click HERE and sign up for a free trial.
In last week’s letter I discussed drill results from Gold Standard, Integra Gold’s resource update, and BHP and Vale’s abysmal response to the Samarco tailings dam failure, before talking through why the dollar’s rise will keep on keeping on, holding gold
…
Gold got smacked on Friday after a strong US jobs report made a December rate increase more likely. Or so we all think. Only time and Janet Yellen really know. Gold’s slide bolstered the bears who believe gold needs ‘one more bottom’ before it can really rally. Such generic arguments mean little to me. However, chartists can create some solid arguments with their lines this way and that across gold’s price plot showing support and resistance. The non-technical summary is that gold’s failure to best US$1,185 per oz. continues a pattern of lower highs and lower lows, suggesting the worst is not yet over.
Not great news, I agree. But I have stopped stressing about gold. We may yet see gold mark a new bear-market low before the end of the year, but chartists and I generally agree it would be unlikely for such a low to be dramatically below this summer’s US$1,090 per oz. Of course there are deflationists out there with far weaker predictions for the yellow metal, but my belief that the broad US market run is dying supports a brighter near-term for gold than that.
That being said, I do not think the next six
…
I spent last week at the New Orleans Investment Conference, and what a great week it was. Quality companies, interesting and informed speakers, engaged attendees, and fantastic food and drink. Many thanks to Brien Lundin for inviting me to be a part of it.
It was a good week to be slightly detached from the metals markets. The Fed promised to really, truly think about raising rates in December and that apparently was enough to justify continued strength in US markets and the US dollar, while smacking gold back down.
Honestly, it’s enough to make you crazy. Why is bad news – that the US economy is not strong enough to sustain a teensy little rate increase – considered good? I personally don’t think the Fed will raise rates any time soon because Yellen would rather be lambasted for not doing what she promised (raise rates) than be blamed for a recession should one follow a decision to tighten.
The way to avoid being driven batty by this endless rates-dollar-gold dance is to ignore the day-to-day and focus on the fundamentals. I’m preaching to the choir when I say that metals and mining are incredibly undervalued and will cycle
…
