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Recapping the moves this week in precious metals, currencies, and central banker comments

Cory
July 19, 2019

Chris Temple was traveling all week so this is the first chance we had to discuss the moves in the markets. There is a lot to discuss when it comes to the PMs with silver finally starting to play catch up. Also some of the volatility due to comments made by NY Fed President John Williams and the retraction of those statements. We also look at the oil sector and USD swings.

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Discussion
20 Comments
    Jul 19, 2019 19:09 AM

    So I guess that makes JP Morgan the modern day Hunt bros–

    Jul 19, 2019 19:03 AM

    Gold is the better money and safe haven, hands down, but silver will still beat it by a good margin throughout this bull market. However, it is gold’s “mini-me” with A.D.D. so it will always be much more stressful to hold through thick and thin for most people.

    It is definitely mini gold not big copper. Only gold has a consistently larger and more stable (in size) above ground supply. No other metal comes remotely close. This is why silver is also money, albeit, runner-up money. The larger the above ground supply, the more difficult it is to inflate it appreciably with annual production. Even the mining budgets that come with the wildest bull markets is no threat since ore bodies continue to be depleted and average grades continue to fall.
    Gold is limited but not scarce and that’s why it remains the stablest store of value on the planet. Since silver production is primarily a byproduct of industrial metals mining, its annual production relative to its above ground supply swings wildly between as low as 20 or 30 to 1 to as high as 70 to 1 (70 to 1 is common for gold – that is, 70 years of production equals the above ground pile).
    Two things conspire to push silver’s “production to pile” ratio way down when the economy is doing well:
    1.) Unlike gold, silver sees production jump during good times since it is a byproduct of several industrial metals, and 2.) Industrial demand swells during good times due to its vast and growing list of industrial applications.
    So, during a bear market for the monetary metals you have silver production going up while industrial demand (metal disappears), not investment demand (metal is stored/above ground pile grows) is also going up. This is bad for the silver price but, luckily, we have just the opposite situation when the monetary metals are in a bull market and the economy is shrinking.

    Jul 19, 2019 19:34 AM

    Here’s another of my favorites with his comments on the PM markets. Two of his charts are well worth looking at. http://silverseek.com/article/precious-metals-big-picture-silver-gets-its-horse-17698

    Jul 19, 2019 19:35 AM

    IPT is holding up well considering the nearby resistance and very overbought daily chart in addition to this financing:
    http://www.impactsilver.com/s/NewsReleases.asp?ReportID=854342&_Type=News-Releases&_Title=IMPACT-Silver-Updates-Additional-3000000-to-Non-Brokered-Private-Placement

      Jul 19, 2019 19:44 AM

      Is the additional private placement gonna slow down IPT in the short term?

        Jul 19, 2019 19:34 PM

        Maybe, but probably not by much. Picking up the $5M at the bottom of the market is a good thing that could bring in enough buying to offset the selling caused by the small dilution.
        Plus, it’s a new and already very strong bull market so we probably won’t notice it due to all the new buyers coming into the sector. Let’s say it doubles in a month, how will we know if it would have done better without the financing?

        I sure won’t be selling based on this news.

          Jul 20, 2019 20:36 AM

          No selling!

    Jul 19, 2019 19:52 AM

    I m watching BBB Brixton metals, I remember 2016 it was just amazing, with a very tiny share structure BBB shot up to about 1 cad I think from almost nothing. I wonder if BBB has the same opportunity this time to run? And I wonder is it mainly a silver play or more of a silver/gold play this time?

      Jul 19, 2019 19:39 PM

      I think Brixton has more upside this time but it probably won’t happen as fast.

        Jul 19, 2019 19:59 PM

        While the redirected focus lately for Brixton has clearly been on Gold & Copper (Thorn & Atlin projects), there are still the 2 idle Silver assets (Langis & Hog Heaven) that they still may JV out to other partners, while they stay focused at their Gold projects.

        Over at ceo we were discussing Brixton (BBB) today, and here is a blurb from that conversation:
        _________________________

        …both of those Silver projects were prior producing mines, and Langis is right in the Cobalt camp in Ontario peppered with old mines all over their property. They started hitting bonanza grade silver/cobalt trenching and then drill intercepts in 2016, and that is why I and many other silverbugs positioned in the company in 2016 (when they had switched the focus away from Thorn & Atlin over to Langis), and that is when they went on such an epic run in the 2016 surge.

        Those 2 prior mines (Langis/Hudson Bay) would be very easy to permit since it has a historical mining presence. Hog Heaven in Montana would be much more difficult to get permitted at this point.

        Honestly I’m glad they finally picked a focus and decided on Gold at Atlin and Thorn, because they’ve been running from one project to the next without a clear flagship for the last few years and seemed to have an identity crisis. This is big part of why some investors, interested in the Silver abandoned ship.

        At one point Thorn was the primary, but then it was not going to be economic based on what they had found initially, so they switched to Langis and got excited about silver in the 2016 when those stocks were ripping. Then the narrative shifted over to Cobalt, but then they bought Hog Heaven out of nowhere and were excited about Silver again. They they were going to spin the Cobalt assets out into a new vehicle, but now they’ve walked that idea back. Lastly they’ve now reactivated Atlin exploration again and are excited once again about exploration at Thorn for both Copper and Gold. The thing is there is no shortage of GoldenTriangle gold plays, but there is an audience for that.

        I’m just glad they picked more focus and it makes sense for them to JV the two projects. When you made your comment, I was concerned I’d missed a major announcement and that’s why I was asking. I hope $BBB hits it big with the drill bit.

        Ever upward!

          Jul 19, 2019 19:11 PM

          another sharp mining investor had a few great comments, and here was his point continuing on Brixton $BBB:

          __________________________

          @nicholaslepan – “Just impressed with what produced those results for Brixton. It was the culmination of years of work testing out the different zones on the Thor property which is huge (10 square kilometres). There were early results that were indicating the potential for porphyry and that the three zones were connected. The recent results confirm a bit of this theory by indicating significant mineralization at depth.”

          “This project stands out because it is in the northern most part of the gold triangle, which is more of a belt than a triangle that extends into Alaska (I am sure my regional geology knowledge is wrong) but that neck of the woods seems to be pulling out some impressive results from Trilogy Metals and Bristol Bay. Majors like large copper-gold deposits and I would not surprised to see an investment into Brixton, if they pull out a couple of more results that strengthen the porphyry theory that connects the three zones.”

          ” Gary Thompson seems like a solid dude and the most recent results were the fruit of many years of work trying to understand Thor. So Kudos to the Brixton team, could be a great exploration story. ”

          https://ceo.ca/bbb?9adfb74c27a3

          Jul 20, 2019 20:18 AM

          I feel that BBB finally has found its identity, a silver/gold play. Its good they adapt to the market changes ( the cobalt hype) but they need to be related to a longterm core business.
          More and more pure silver plays are moving towards gold to offset the risk to only depend on one asset class. Silver is very volatile and in a longterm downturn these small silverminers with small margins will be hur. Like BBB, USAS, and now IPT.

            Jul 20, 2019 20:19 AM

            typo hurt

            Jul 20, 2019 20:10 AM

            Yes, Brixton has found more of an identity now, but they’ve decided to brand the company as a Gold/Copper play, with Silver projects available for JV from other operators. I wouldn’t really call them a “Silver” play anymore though.

            The investors following them now are mostly interested in the Gold exploration narrative, far more so than their idled Silver projects. They moved the Silver projects down the batting order, and Gary mentioned that the focus was on Thorn and Atlin as a company.

            In 2016, it was a different focus, because after exploring Thorn, it initially didn’t look like there was enough gold mineralization there to make it an economic deposit, so they shifted things over to Ontario. The Silver grades they were hitting at Langis/Hudson Bay that had the market so excited and that timed out with the 2016 surge in Silver stocks – when Silver shot up to $21.

            Obviously they had to make a call and with Silver prices so lackluster for years, and with their geological model at Thorn showing it could be a porphry system that ties all three of their deposits in the Golden Triangle together into one larger system, then that is the direction they went. Obviously their recent hit excited investor interest and started a firestorm of conversation.

    Jul 19, 2019 19:13 PM

    Typical profit taking from gold over the last 24 hours. The continued consolidation with a slight bias towards the upside is painting a healthy picture for the PMs in my eyes.

      Jul 19, 2019 19:24 PM

      Agreed Ozibatla. Nothing wrong with the sector having a little profit taking and a small corrective move off resistance would be the pause that refreshes for the next move higher. So far this move up in Gold breaking above all the prior peaks from 2014-2018 and holding onto the gains has been confirmed with moves higher in the miners and Silver. So far a pretty healthy impulse leg higher indeed. Cheers!

    Jul 19, 2019 19:28 PM

    https://stockcharts.com/h-sc/ui

    So Im not one to usually delve too much into chart technicals but the above link shows how gold has made higher lows in this current consolidation period. Since the breakout last month this continues to show fresh strength in gold which bodes well I believe.