Brien Lundin Commentary – Wed 15 Jan, 2020

Trading strategies for metals stocks – Following Eric Sprott and following drill results

Brien Lundin joins me for a discussion on how to trade metals stocks that seem stuck in terms of share prices. Drill results continue to be a major driver for share prices however what do you do when good drill results hit the market and the share price does not move? We also touch on the strategy of following where Eric Sprott has been putting his money.

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Comments:
  1. On January 15, 2020 at 1:46 pm,
    markedtofuture says:

    Breaking: FED to announce Digital Dollar (like the China effort) tomorrow . ‘To serve the globe as a means of exchange’. -ex CFTC chairman #cfcstmoritz

    https://twitter.com/DocFleury/status/1217440235296043008

  2. On January 15, 2020 at 2:50 pm,
    cfs says:

    Since Cory did not seem to post the interview, here it is:
    http://www.kereport.com/wp-content/uploads/2020-01-15-Brien-Lundin.mp3

    • On January 15, 2020 at 4:48 pm,
      Norman Heubeck says:

      Thanks cfs

  3. On January 15, 2020 at 3:06 pm,
    cfs says:

    China Trade Deal text not yet available, but according to Larry Kudlow, Director of the National Economic Council, China has agreed to purchase up to $50 billion in Agricultural products; $40 billion in services; $50 billion in energy; and up to $80 billion in manufacturing. He also mentioned that since China’s economy was “very soft” right now, they needed this trade deal to help the Chinese economy but also their consumers. What makes this deal different is the amount of protections that now safeguard American intellectual property and prevent currency manipulation.

  4. On January 15, 2020 at 8:52 pm,
    markedtofuture says:

    AWK News 1.15.20: Targeted and Silenced for a Reason. Pain Coming.

    https://www.youtube.com/watch?v=vTD9UBXYGFo

  5. On January 15, 2020 at 10:08 pm,
    Matthew says:

    More strength tomorrow looks probable and would be a good thing. The following chart shows a great cup-and-handle continuation pattern. Price has broken out of the falling wedge “handle” but the pattern really activates with a move above the “rim” of the cup at the recent high (Jan. 3)…
    https://stockcharts.com/h-sc/ui?s=GDXJ&p=D&yr=0&mn=9&dy=0&id=p81954252536&a=713770028

  6. On January 15, 2020 at 10:45 pm,
    Matthew says:

    The 600 week EMA is now support for the Gold Miners Index (GDM) followed by the 377 week EMA and a pitchfork…
    https://stockcharts.com/h-sc/ui?s=%24GDM&p=W&yr=5&mn=0&dy=0&id=p23500239733&a=693558588

  7. On January 15, 2020 at 10:50 pm,
    Excelsior says:

    Get Ready for Round 2 of Gold’s Cash-Spinning Rally

    By Aoyon Ashraf – January 15, 2020

    “Gold’s blistering rally isn’t over, according to fund managers who see another leg up for the precious metal.”

    “Lower-for-longer interest rates, a weaker dollar and the U.S. presidential election will provide multiple catalysts for gains, even as tentative trade peace breaks out between China and the U.S. Gold has surged by about a third since August 2018 and is up more than 2% this year, hovering near the highest in almost seven years.”

    “The price increase, combined with capital discipline among the larger miners, is generating a bonanza of free cash flow while mergers could spark share gains among smaller players, according to five precious metals fund managers interviewed by Bloomberg.”

    “I have covered the sector for more than 20 years and I have never seen this kind of cash flow generation,” RBC Global Asset Management’s Chris Beer said.

    Robert Cohen, 1832 Asset Management:

    In a volatile gold market, “my job as a good stock picker is to own the stocks that I like to own with or without political events going on in the world.”

    “In North America, one of his favorite exploration plays is Great Bear Resources Ltd. K92 Mining Inc., SilverCrest Metals Inc., Mag Silver Corp. and Wesdome Gold Mines Ltd. are among other stocks that he likes.”

    https://www-bloomberg-com.cdn.ampproject.org/c/s/www.bloomberg.com/amp/news/articles/2020-01-15/gold-s-rally-seen-plowing-on-lifting-already-monster-cash-flow

  8. On January 15, 2020 at 10:52 pm,
    Excelsior says:

    Federal Reserve Admits It Pumped More than $6 Trillion to Wall Street in Recent Six Week Period

    By Pam Martens and Russ Martens: January 6, 2020

    “The Fed’s minutes also acknowledge that its most recent actions have tallied up to “roughly $215 billion per day” flowing to trading houses on Wall Street. There were 29 business days between the last Federal Open Market Committee (FOMC) meeting and the latest Fed minutes, meaning that approximately $6.23 trillion in cumulative loans to Wall Street’s trading houses had been made in that short span of time.”

    “During the 2007 to 2010 financial collapse on Wall Street – the worst financial crisis since the Great Depression, the Fed funneled a total of $29 trillion in cumulative loans to Wall Street banks, their trading houses and their foreign derivative counterparties between December 2007 and July 21, 2010. At the pace it is currently going, it would eclipse that $29 trillion before the middle of this year.”

    https://wallstreetonparade.com/2020/01/federal-reserve-admits-it-pumped-more-than-6-trillion-to-wall-street-in-recent-six-week-period/

    • On January 16, 2020 at 1:15 am,
      JMiller says:

      No, the Fed did not say that they pumped in more than $6 Trillion over a 6 week period as that article from Wall Street On Parade is trying to make it sound. That roughly $215 billion per day was not new money being added each day. That $215 billion was just the average daily balance of repos that were outstanding over that time. Both overnight and term repos.

      It is like saying that the amount outstanding on my charge card over the last 30 days was about $2000 per day. It is not that I charged about $2000 per day but that the average daily balance that I owed was about $2000.

      Or like saying that I loaned my brother $10 for 7 days. Now did he have $70 that belonged to me or just $10? It was only $10. I loaned him $10 which he had for 7 days. Not that I loaned him $10 each day for the next 7 days.

      The current Fed repo outstanding balance is about $210 billion. That is what they current have in repos.

      https://wolfstreet.com/wp-content/uploads/2020/01/US-Fed-Balance-sheet-2020-01-09-repos.png

      Also from Wolf Richter:

      https://wolfstreet.com/2020/01/09/fed-drains-45-billion-from-repo-market-back-to-oct-level-t-bill-purchases-continue-balance-sheet-shrinks-by-most-since-qt/

      https://wolfstreet.com/2020/01/10/the-wall-street-journal-and-other-media-should-stop-lying-about-repos/

    • On January 16, 2020 at 6:39 am,
      OOTB Jerry says:

      Day late and a dollar short………. 🙂
      Reply to this comment
      On January 13, 2020 at 4:17 pm,
      OOTB Jerry says:
      Gregg M………says the Fed has bought $6 TRILLION in 6 months….of stocks…..
      the Market is RIGGED…..and going higher….Bubble TIme….
      Support….lol

      • On January 16, 2020 at 6:42 am,
        OOTB Jerry says:

        Six Weeks……..wow……(rather than 6 months)…….. 🙂

        • On January 16, 2020 at 6:46 am,
          OOTB Jerry says:

          Wonder if, the amount that has been funneled to the market this $29 TRILLION .., was stolen from , and not accounted for by the treasury……..THE $21 TRILLION, that the pentagon misplaced….with the help of the treasury…..
          WAR ON THE PEOPLE, of the USA.

          • On January 16, 2020 at 6:47 am,
            OOTB Jerry says:

            FREAKING WAR OF INFLATION…………..

          • On January 16, 2020 at 6:52 am,
            OOTB Jerry says:

            MELT UP……………Gregg
            https://traderschoice.net/

        • On January 16, 2020 at 7:33 am,
          OOTB Jerry says:

          Check out the Debt Clock Info below………………..
          In 2016…………$19 TRILLION
          today……………$23 TRILLION

          • On January 16, 2020 at 7:34 am,
            OOTB Jerry says:

            In 2008………….$9 TRILLION

  9. On January 15, 2020 at 11:01 pm,
    Thomas says:

    Resolute Mining selling their Australian mine
    https://clients3.weblink.com.au/pdf/RSG/02192951.pdf

    Resolute is now a pure West African play

    • On January 15, 2020 at 11:11 pm,
      Excelsior says:

      Yes, it seems like a wise decision for Resolute Mining, as it gets rid of their capex requirement at Ravenswood, Australia, but still gives them a little exposure to it with the new operator. That was one of their more marginal mines, and the cash can pay down debt (foregoing the need to do a capital raise), and the excess can possibly be used to do an acquisition in West Africa for one of the companies they have a strategic stake in already.

      Over time their upfront investment in Syama will start bringing in more revenues as the costs come down and efficiencies increase.

      Resolute is really hitting it’s stride now, right in time for an improving gold price the next 2 years.

      • On January 16, 2020 at 12:53 am,
        Thomas says:

        Ex, I compared Resolute Mining with Leagold, similar market cap (1B AUD vs 1B CAD), similar growth profile (400.000 oz => 700.000 oz) and similar resource base (close to 20mio oz). Even AISC is currently around $1000 for both.

        I think Leagold is the better play (better jurisdictions, better management, better insider buying). Resolutes growths profile probably changed to 500.000 oz without Ravenswood now. That would also make Leagold a much better play.

        Any thought about this comparison?

        • On January 16, 2020 at 10:32 am,
          Excelsior says:

          I believe that is a fair comparison, and they are similar, but keep in mind that Leagold is being swallowed up by Equinox, so it’s about to be a much larger company, and EQX is much more fairly valued.

          Both are solid mid-tier producers though.

          Yes, now Resolute is giving up the Ravenswood production, but it wasn’t as economic as their other mines, and they’ll still have some exposure to its upside through the new operator.

          I believe this was the better path forward for resolute, so they can pay off the debt, avoid the caped needed at Ravenswood, and can focus on acquiring a Jr developer with better economics on a project they can move into a mine.

      • On January 16, 2020 at 1:08 am,
        Thomas says:

        Ravenswood was a third of their resources. Nearly 70% of their resources and production will come from Mali now.

        • On January 16, 2020 at 10:46 am,
          Excelsior says:

          That actually will help their economics though, because bigger isn’t always better. They’ve been in Mali since 2013, and while they invested heavy on the transformation of Syama, the market isn’t fully grasping that at present. Most comments I read on the transaction are only focusing on what they spent through the lens of recent operations and margins, and not how their costs will come down, and how efficiencies in throughput will go up.

          Their risk profile has gone up bit, divesting Australia, but they’ve been clear about staying focused on Africa. They’ll likely trade at a discount to peers in North America or Aussie producers, but they are players in Africa like Endeavour, B2Gold, Semafo, Centamin, and Teranga, and may become the new Randgold in the area.

          • On January 16, 2020 at 11:52 am,
            Thomas says:

            Lawrence Lepard (EMA GARP Fund) has a nice list of African plays
            https://m.youtube.com/watch?v=LbrsIwHwtpk

            Asanko, Endeavour, Humingbird, Perseus. Orezone?, Teranga

          • On January 16, 2020 at 1:46 pm,
            Excelsior says:

            Thanks Thomas. Yes, I have positions in Orezone (solid developer) and Hummingbird (new producer), used have a position in Perseus years ago, and have owned Teranga off and on for years, but right now am hoping they takeover the explorer Sarama Resources (with land around their Golden Hill property).

            I’ve considered Asanko, but didn’t like that for a few years they were high-grading their resource, and they had some issues with their pit wall partially collapsing if memory serves, but I should take a look at where there are now.

            I opted for a position in (ROXG) Roxgold instead as they are a solid producer with a very low AISC doing 120,000-130,000 gold ounces per year, and have a 2nd development project that they are fast-tracking through the economic studies in 2020, and should be producing from it as well in 2021.

  10. On January 15, 2020 at 11:29 pm,
    Matthew says:
  11. On January 15, 2020 at 11:33 pm,
    Matthew says:
  12. On January 16, 2020 at 12:47 am,
    Matthew says:

    My minimum target for gold this year is just above 1750 but it has a good shot at 1800+ and even a brief new all-time high is very possible.
    https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=8&mn=8&dy=0&id=p46307317443&a=640032776

  13. On January 16, 2020 at 7:20 am,
    OOTB Jerry says:

    US DEBT CLOCK>>>>>>>>
    In…….1980………$857 BILLION
    Today……………..$23 TRILLION, and counting…..and put another $6 Trillion on from the balance sheet

    • On January 17, 2020 at 8:18 pm,
      Excelsior says:

      Throw another shrimp on the barbie….