After the Fed reinforced its dovish stance last Wednesday, and the Fed dot plot suggesting that it will keep interest rates at 0% at least through the end of 2022 while continuing to buy USTs and MBS at the current pace, we see a willingness to flatten the 2-10-year-US-yield curve once again. Because of this, Gold’s technical side has brightened once again.
But after an initial bullish stint, Gold suddenly dropped, and reaching 1,700 USD because its focus again.
This is surprising, as Equities dropped heavily too, alongside the Dow Jones Industrial Average dropping 6.9% on Thursday the day after the Fed, marking its 27th largest 1-day decline in history. The volatility index VIX spiked 48% that same day as well, making it the 7th largest 1-day percentage increase in history.
For us, it seems as if the Gold weakness may be driven by two factors:
Margin Calls kicking in after Equities saw an enormous run from its March and yearly lows, while precious metals like Gold and Silver saw heavy gains, and no funding to finance Equity positions.
The Fed’s balance sheet only increased by 4 billion USD over the last week, pointing to what is, by far, the smallest increase since February 2020.
That said, in our opinion it should be only a question of time to see the Fed increase the pace of its QE again, which should then act as a very bullish driver for Gold. As long as the precious metal trades above 1,660 USD, this could set the path up to the current all-time high of around 1,920 USD.
On the other hand: a drop below 1,660 USD could trigger a deeper correction, driving Gold below 1,600 USD, even though such a move should be considered only short-term:
Source: Admiral Markets MT5 with MT5-SE Add-on Gold Daily chart (between March 18, 2019, to June 16, 2020). Accessed: June 16, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of Gold fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, in 2019, it increased by 18.9%, meaning that after five years, it was up by 28%.
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Crude Oil is struggling to return to the $40/bbl level, as it searches for new gusts of tailwinds to build on its stunning 170 percent surge since April 21. Likewise, Brent appears adrift and Oil bulls are doing their best to hang on to that psychologically important $40/bbl handle.
Oil’s outlook has been dimmed by the number of rising coronavirus cases in major economies. With the global tally now exceeding eight million cases, the risks of second waves are keeping a lid on Oil’s upside. Another round of lockdowns across the global economy could send Oil prices spiraling once more.
Such downside risks would frame OPEC’s monthly market report, which is due to be released today, with Oil investors needing more clarity to firm up their market outlooks.
Also later today, Oil traders will be looking out for the OPEC+ Joint Technical Committee’s advice on whether or not the alliance of major Oil producing nations should keep its supply cuts at elevated levels past July. Earlier this month, OPEC+ had agreed to reduce its collective output by 9.6 million barrels a day in July, which is 1.9 million barrels more than under their previous agreement. Such market intervention has clearly helped Oil prices recover, though remain some ways off from pre-pandemic levels.
While more OPEC+ supply cuts could help provide some near-term lift to Oil prices, ultimately, markets remain focused on demand-side uncertainties, considering the trail of demand-destruction left in the wake of the global pandemic. Even as countries embark on their respective recoveries, the evidence suggests that the process will be long and laborious. In the International Energy Agency’s report, which was released Tuesday, the IEA warned that it could take until 2023 for global demand to be fully restored to pre-crisis levels. Fuel consumption next year is expected to remain 2.5 percent lower than 2019 levels of around 100 million barrels per day.
More recently, US crude stockpiles reached a new record high of 538.1 million barrels, according to the Energy Information Administration, despite production levels having dropped by at least two million barrels a day since March. It remains to be seen how much Fed chair Jerome Powell’s view that the US economy may be bottoming out correlates with Oil’s supply-demand data. Should the latest US inventories levels, set to be reported later Wednesday, reveal a new record high, that could prompt more unwinding of Oil’s recent gains.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Chile’s central bank left its monetary policy rate steady for the second month but said the current state of the economy “requires an intensification of the monetary boost” and expanded its asset purchases and other incentives to businesses to stimulate economic activity further. The Central Bank of Chile (CBC) maintained its monetary policy rate at 0.50 percent, the level if it described as a “technical minimum.” CBC has already cut its policy rate by 125 basis points this year following two rate cuts in March and by 250 points since June 2019 when it embarked on a monetary easing cycle. Chile’s central bank said it would open phase two of the Conditional Facility for Increased Lending (FCIC), which covers US$16 billion of incentives for 8 months to lend to small and medium-sized enterprises (SME) and to non-banking credit providers. Secondly, CBC said it would implement a special asset purchase program in the amount of US$16 billion over 6 months with both programs mobilizing resources of up to 10 percent of Chile’s Gross Domestic Product. The central bank added that it would continue to explore options to intensify the monetary stimulus and support financial stability via unconventional monetary instruments if needed. Data from Chile in April show a significant drop in economic activity in April, which the central bank should go to “new depths” in May and June due to the extension and duration of the measures to contain the Covid-19 pandemic.
Sector expert Michael Ballanger critiques the latest news and moves in the stock and precious metals markets.
As I was watching the pompom news channel (CNBC), they went into full damage control over Thursday’s massacre, and I thought to myself, “What markets or media bullet points do ‘the boys’ need to control today in order to avoid a weekly sell signal and ensuing panic?”
In order of urgency, here is the list:
Those were the “Big Five,” and just as sure as the sun rising in the east, everything on the checklist was executed with absolute perfection, such that this Federal Open Market Committee (FOMC) week ended without the need for weekend press conferences or COVID-19 briefings. You see, if the S&P closes higher on the Friday before the weekend, the COVID death stats are deemed “unimportant,” and the Great Recovery continues.
I get into some great exchanges with people that I really enjoy, and there is no one better with whom to have a debate than David Chapman (@DaveCha12). He is a card-carrying member of the Society of Technical Analysts (or something like that), but his business card should read “Chairman Emeritus Society of Market Historians,” because while I am pretty good, “Chappie” is unbeatable.
He is such an unmovable object on the topic of market manipulation and central bank intervention that we end up flaming each other over absolute nonsense in areas of meaningless trivia. It’s like we are kids playing Monopoly in a tent in Algonquin Park on a stormy day, and he is the banker (who cheats), and I have run out of money and properties. However, he helps me whenever I reach out, and what we both agree upon is that gold and silver are in corrective phases of massive bull markets, with new all-time highs on the immediate horizonand that the current stock market advance is nothing more (or less) than a “bear market rally.”
There are two worlds out there that we are forced to deal with. The first is the world of gold and silver and their roles as custodians of wealth, proven over thousands of years by every civilization on the planet. That world takes its denizens back to a time of rational thinking and prudent wealth management, to a period long before Harvard Business School or central banking. The alternative universe is one dominated by the illusion of paper assets as the dutiful custodians of wealth, where faith in the stewardship of politicians and former stocks salesmen (like Jerome Powell) has caused massive dislocations of valuation and a massive inequality gap between societal chasms.
Social unrest in the U.S. has forced the city of Minneapolis to consider disbanding the police department over the treatment of a citizen, albeit black and albeit a felon and albeit a police hater and albeit “not a very nice man,” who has become the poster child for “all that is wrong with America.”
As you all know, I lived in the downtown core of St. Louis, Missouri, for four years, and you might also know that in 1972, the intersection of Grand Avenue and Lindell Boulevard was the “Demarcation Line” where we “honkies” were not allowed to venture. As I was a young kid from Canada with zero fear of black Americans, I used to wander up Grand Avenue well beyond Lindell to shoot pool with some really fine pool players (all black) because there was zero “action” at the university. I was trained on an old English snooker table with rounded pockets; for those of you that understand the true meaning of the word “suckered,” those that are trained on the square pockets of an American “pool” table will flounder in mediocrity on an English “snooker” table. So, I would walk into the pool room, literally the only Caucasian within seven blocks. Old Sandy was the man who confronted me the very first time I walked in the door, and he would always greet me with, “and here come Mister Canuck to take some bruthah’s money.” I would always reply, “Only if I don’t lose,” but always in a really heavy Canuck accent.
I used to play these ghetto players time after time, and win, and there was not one time that they refused to pay. They had their cousins and uncles and sisters all hovering around the table waiting for “dat white boy” to cave in out of fear. It was only until they brought in local St. Louis former heavyweight champ Michael Spinks to play me that I finally got total respect from the locals, after I beat him in a nine-ball game where he did not get a shot. We shook hands after the game, and then had a bunch of drinks, and told our athletic war stories about female conquests and athletic disappointments, but not once did the topic of race come up. People devoid of racial bias never bring up the topic of “race.”
I only bring this up because the current “social unrest” meter has now been configured to create a race war that should not be even contemplated. They are tearing down statues of the Founders in the U.S. (my heroes) and threatening to destroy the statue of the greatest statesmen/politician/soldier of the past 500 yearsSir Winston Churchillwhile totally ignoring the ignominious gaggle that are stealing inventory from shopkeepers in neighborhood locales.
What does this have to do with the current market? The answer is “plenty.”
In a perfect world, the massively reflationary actions by J. Powell and his global central bank thieves would levitate stocks and consumer spirits to the point where the average citizen who had any savings left might want to buy some stocks and or “goods and services.” However, the problem that remains is this: There is no gas left in the reflationary tank. The tricks of the past are now the treats of the future; the can that used to be kicked down the road has been now rendered immobile and lifeless, with nothing but air and vacuous matter remaining.
And here is the saddest of all lamentable facts: The only harbingers upon which they have left to assuage are the precious metals markets. As tiny as they are, they are the last lighthouses on the shoreline of economic freedom that can be pummeled with unfettered virulence as a method of influencing investor and consumer sentiment. The precious metals assaults have been as ruthless and concentrated since the COVID Crash as I have ever witnessed in my 43-year career. “Brutal” is understatement and “vicious” is appropriate.
I would ask you to consider the policy actions of the year 2020. If I were to tell you back in 2009 that the actions of the global central banks would double their phony, counterfeit balance sheets within ten years, you would put gold at least at US$2,000 per ounce. If I then were to tell you that the central banks would move from $14 trillion to $26 trillion in total debt due to a virus that has yet to be accurately diagnosed, you would put gold prices at around $4,000 per ounce.
However, gold is now $1,738 per ounce only because it is quoted in U.S. dollars as such by U.S. exchanges and U.S. administrators, and is considered “strategic” to the national security interests of the USA.
Every other nation on the planet has seen their currency fall to all-time lows versus gold except the U.S., and the reason is that the American banking sector recognizes the importance of the “strong dollar policy” as it would pertain to gold. The Americans want the concept of “stock ownership” to represent “the joys of free market capitalism” so as long as the sons and daughters of corporate America continue to invest their inheritances in companies with zero cash flow and rotting balance sheets that continue to be supported and bailed out by the Fed. The mantra of the past remains well supported and sacrosanct within the status quo.
It is rot; nothing more and nothing less, and society will pay a pitiable price for the inactions of the “emperor class.”
My cautiousness on the precious metals markets is founded in my undying faith in the criminality of the U.S. banking establishment. With nary a margin call ever to be met, they can sell fifteen times global gold production through the Crimex with the simple and unfettered goal of capping the U.S. dollar price of gold. Because it is an even smaller market, the banks can cap silver prices even more easily, and far more so than if they were to step into the bid-offer market of Tesla or Apple or Amazon. Should the manipulators ever try to cap stock pricesas in any non-gold stock pricethere would be hell to pay, jobs lost and indictments issued.
This week, I offered subscribers the third “watershed call” of 2020. The first two are now well documented in the March 16 “Generational Buying Opportunity” in the gold miners, the April 22 “Generational Buying Opportunity” in oil. Last Wednesday’s outright “Sell the S&P!” call was within literally minutes of the top of the March 12June 8 bear market rally.
The first two calls made us a ton of money, as the world was “black bearish” on gold and oil. But the one that is shaping up as potentially a “kingmaker” is last Wednesday’s call at the intraday top of the three-month rally. I further shorted more of the S&P into Friday’s feeble attempt to levitate stocks after a totally contrived 65-point S&P opening disappeared, and wound up at 36 points after going negative in the mid-session session.
Getting back to the metals, what former stock salesman Jerome Powell told the world on Wednesday was not what the bulls nor the White House wanted to hear: Things are going to be rough for at least the next eighteen months and rates are going to stay zero-bound for a great many more weeks. As friendly as that was to negative real interest rates and the breeding ground for gold price advances, gold ended the week flat and silver was weaker.
There is an old axiom that old floor traders would echo constantly, and it goes like this: “Stocks that go down against good news are stocks that should be sold.” The news purveyed by Powell & Company was outrageously bullish for gold and silver, and yet gold closed out the week at US$1,737.30 and silver at US$17.58, which is anything but celebratory news for gold bulls like us.
My cautious stance for gold is well noted, and now a few of my newsletter brethren have joined the “cautious” camp. Brien Lundin, who was kind enough to give me (and us) Great Bear Resources Ltd. (GBR:TSX.V; GTBDF:OTCQX) last year after the Dixie discovery at Red Lake (bought at CA$2.33/share in January 2019) has recently told the world that he too is in the near-term cautious camp, which not only looks good on Brien but actually gives me a little comfort in knowing that I am not the only near-term bear in our camp. I spoke with Brien earlier in the week, and not only is he extremely competent in his field, he is a gentleman and a genuinely nice man.
I am on the record here in saying that there has never been a period in my 43-year career as fundamentally positive for gold and silver prices, but I further advance the notion that there has also never been a period so diametrically crucial to U.S. dollar hegemony than where we are right now. If the dollar tanks and import prices start to escalate, it will matter not what stocks are doing, because social unrest will go vertical. For the short term, I maintain that we are in the crosshairs of a deflationary tempest that will force producer prices downward and consumer prices soon to follow. In the absence of pricing power, manufacturers and retailers (and their bondholders) are going to strive for cost recovery over margins, and that is neither a stagflation nor inflation scenario; it is a deflationary scenario. To the bankers loaded to the gunnels with deflating collateral, it is the nightmare from hell.
The irony of the current condition is that if the banco-politico cartel could ever allow gold and silver to assume their generational roles as barometric harbingers of economic trends, free markets could return and the natural ebb and flow of human greed and fear could be deciphered and gauged appropriately. As it stands today, I am caught in a miasma of central bank deception and deceit, and for all of the reasons mentioned above, I remain a jaundiced non-believer in the sanctity and trustworthiness of marketsand I mean all markets. The pit boss that runs the U.S. dollar gold/silver casino has your credit card info, your bank account info, your latest credit score, and your latest medical tests. He knowseverything about you and me, and that is why we keep waking up with a declining balance.
If the term “forewarned is forearmed” is a legitimate precursor to protective action, then please understand that as gold and silver investors, you are eventually going to be lifted into a position of sanguine stability (our collective goal), but if you are in the Get-Rich-Quick trader’s camp, you are deemed subordinate to the agenda of the politically driven price managers and are, by default, at risk.
Speaking of risk, the only game of “straight pool” I ever played where I thought I was “at risk” was in the winter of 1975 at Sandy’s on Grand Avenue, when I was on the verge of a three-rack run when, with over $300 on the table, my opponent decided that he had better grab my winnings and run. Sandy (an older black gentleman) leveled a sawed-off shotgun at the cash on the table and urged my opponent to “go for it.”
Imagine that: One man ensuring that another man got his money. The only color that mattered was “green.”
Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.
Disclosure: 1) Michael J. Ballanger: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Great Bear Resources. My company has a financial relationship with the following companies referred to in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector. Additional disclosures are below. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. 3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Michael Ballanger Disclaimer: This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.
June 15, 2020 – Limassol, Cyprus – RoboMarkets, the company that provides financial services to European clients, has become a winner in the nomination “Best Global Stocks Broker 2020”. This award is presented within the frameworks of “Global Forex Awards 2020 – B2B” to the most advanced and promising companies in the industry, which offer their client access to multi-purpose investment products and services on the stock market.
“Global Forex Awards 2020 – B2B” unites the world’s leading companies that made the greatest contribution to the development of trading solutions and innovations for the Forex market. Awards are given to the best representatives of the industry in providing liquidity, client services, order execution, affiliate conditions, and other important aspects of the Forex B2B market. The winners are decided by open voting among clients of the forex companies from all over the world.
Open voting to decide the winners was taking place throughout April 2020. More than 3,200 traders participated and voted more than 6,000 times for nominees in all categories. The winners were announced on June 5th, 2020.
Konstantin Rashap, RoboMarkets development manager in Europe: “We take this award as another confirmation that our efforts focused on complex development of services offered on the stock market proved to be very efficient. Our conditions for investments in stocks have become even more competitive recently, while the range of available assets has significantly expanded. The award we’ve received not only demonstrates our achievements but is also perceived as a motivation to keep development pace in order to provide our clients with the most cutting-edge professional services of the highest possible quality”.
About RoboMarkets
RoboMarkets is a European broker with the CySEC license No. 191/13. The Company offers brokerage services in many European countries by providing traders, who work on financial markets, with access to its proprietary trading platforms. More detailed information can be found on the official website at robomarkets.com.
Technical analyst Clive Maund charts the explorer and discusses recent trading in the stock.
Although our buying towards the end of May didn’t succeed in triggering a breakout by Black Tusk Resources Inc. (TUSK:CSE; BTKRF:OTCMKTS; 0NB:FSE), it rose a bit and its technical condition has continued to improve, as we can see on its 8-month chart below. There is no point in writing much here because the arguments in favor of buying the stock were set out in the May 29th article on it. Given the ongoing strong upside volume and continuing strong volume indicators, I am frankly surprised that it hasn’t broken out already. Maybe it’s waiting for the moving averages to kiss, which as we can see they are about to.
There is an important point that I want to mention that was not covered in the original article, which is that when we look at the base pattern from the early October low on a 1-year chart, we can see that it has taken the form of a Cup & Handle, with the Handle of the pattern now looking complete as the moving averages come together. Again on this chart we can observe the super bullish volume pattern and volume indicators. One explanation for the lack of progress so far may be that there is a big seller in this area, but if that is the case the volume pattern and volume indicators suggest that he is on the wrong side of the equation, and that once this selling is absorbed, the price will take off higher.
Finally, on the 3-year chart we can see that with the sideways to up movement of the past couple of weeks the price is pushing a breakout from the long-term downtrend shown in force from late 2018.
The one “fly in the ointment” that could delay the breakout or cause a minor short-term retreat is that a potential Head-and-Shoulders top is forming in the sector indices and GDX that could become operative if the stock market continues to drop hard, as we can see on the latest 6-month GDX chart shown below. Any retreat caused by this should only be minor because the Black Tusk chart is so technically strong.
Trading volume on the US OTC market used to be very light, but has built up nicely in recent weeks. There are a reasonable 68 million shares in issue.
Black Tusk Resources, TUSK.CSE, BTKRF on OTC, closed at C$0.06, $0.044 on 11th June 20.
Originally posted at 7.35 am EDT on CliveMaund.com on 12th June 2020.
Postscript added 13th June: Puzzled by the refusal of Black Tusk stock to advance, I have done a little digging around to see if I could unearth a fundamental reason for itand I have. The company is waiting on soil sampling results from the McKenzie East Gold Project that are due within a week or so and possibly within days. Our charts provide compelling evidence that these results are going to be positive and lead to a breakout and sharp advance. The strong upside volume for weeks means one of two thingseither insiders know the results are going to be good and they and their associates are piling in, or those who realize the potential of the district are making an educated gamble on them being good. Could the results disappoint? Anything is possible, but our charts strongly suggest that they will be very positive. In view of all of this it considered worth going overweight on this stock, and it might also make sense to regroup any losing positions into it.
Finally, in the event that this stock duly breaks out and goes screeching higher I would like to emphasize that I have no “inside information” on this company and have not been in touch with them. The deductions made are based solely on its stock charts and on information made public by the company.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
Disclosure: 1) Clive Maund: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. CliveMaund.com disclosures below. I determined which companies would be included in this article based on my research and understanding of the sector. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. 3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Black Tusk, a company mentioned in this article.
Charts provided by the author.
CliveMaund.com Disclosure: The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
Morocco’s central bank cut its key interest rate for the second time this year as inflation is expected to remain moderate this year and in 2021 while the economy is expected to contract at the fastest pace since 1996. The Bank of Morocco, or Bank Al-Maghrib (BAM), cut its main rate by 50 basis points to 1.50 percent and has now cut it by 75 basis points this year following a first cut in March. The central bank said it was also fully releasing commercial banks’ reserve accounts. Given the strong uncertainties surrounding the evolution of the domestic and international economy, BAM said it was closely monitoring the situation and would hold an extraordinary board meeting before the next scheduled meeting on Sept. 22 if circumstances change. Internationally the pace of recovery remains subject to strong uncertainties and it’s clear the global economy will experience a severe recession this year, BAM said, forecasting Morocco’s economy will contract by 5.2 percent this year, it strongest decline since 1996, due to the combination of drought and restrictions to limit the spread of Covid-19. A survey of the labor market from April 1 to April 3 showed that almost 726,000 jobs, or 20 percent of the workforce in organized companies, had been destroyed by the pandemic, BAM said. Inflation, which averaged 1.4 percent in the first quarter of this year, eased to 0.9 percent in April and is expected to average around 1.0 percent this year and 2021 due to low inflationary pressures from demand and commodity prices. Provisional data for Morocco’s external accounts in April are also showing the first signs of the impact of the healthy crises, with exports down 19.7 percent and imports down 12.6 percent, with BAM forecasting a 15.8 percent decline in exports for the full year, with the automotive sector, textiles and leather affected by the disruption to supply chains and weaker foreign demand. Imports are seen dropping 10.7 percent due to a lower energy bill and lower imports of capital goods so official reserves are forecast of 218.6 billion dirham in 2020 and 221.7 billion in 2021, enough to cover 5 months of imports. The country’s budget deficit, excluding the impact of privatizations, is expected to deteriorate to 7.6 percent of gross domestic product this year from 4.1 percent in 2019 but then improve to 5.0 percent in 2021. The Treasury’s debt is expected to rise to 75.3 percent of GDP this year from 65.0 percent last year and then rise slightly to 75.4 percent in 2021.
Armenia’s central bank cut its rate for the third time this year and said it will be necessary to maintain stimulus in the medium term as inflation is expected to remain low due to a deflationary drag on the country’s economy from abroad and inflation is only expected to approach its target at the end of the forecast horizon. The Central Bank of Armenia (CBA) cut its rate by 50 basis points to 4.50 percent and has now cut it 100 points this year following cuts in March and April. CBA has been gradually lowering its key rate since August 2015 when the rate was 10.50 percent. The rate was initially lowered by 450 basis points in 12 steps until February 2017 when it was kept steady at 6.0 percent for almost two years. But in January 2019 CBA returned to the easing path and since then the rate has been cut five times by 150 basis points. CBA said the decline in economic activity in the second quarter will deepen due to both supply and demand factors and despite the impact of fiscal policy, the impact of declining private demand will prevail, largely due to the uncertainty surrounding the Covid-19 pandemic. Given the slow recovery in both external and domestic demand, the current low inflationary environment and the negative impact of high uncertainty, CBA’s board said it considered it appropriate to further reduce its refinancing rate today. “The board also considers that in the current situation, along with the promotion of monetary policy, the implementation of more fiscal stimulus is key to restoring aggregate demand,” CBA said, adding the recovery of the world economy is estimated to be slower than expected as uncertainty over the future course of the contagion continues. At the same time, CBA said prices of raw materials are showing some signs of stabilization and recovery due to the cautiously optimistic expectations of a recovery of China’s economy. Inflation in Armenia rose to 1.2 percent in May from 0.9 percent in April, well below CBA’s target of 4.0 percent, plus/minus 1.5 percentage point. Today’s rate cut was the first under its new president, Martin Galstyan, who this week took over from Artur Javadyan.
The hotly anticipated US retail sales figures were released earlier this afternoon and they didn’t disappoint with more records broken. The headline number topped the previous high from October 2001 and came in more than double the estimate at 17.7%, while the prior month’s figure was also revised upwards.
The numbers have added to an upbeat mood on Wall Street with the Dow Jones up over 750 points. The wider S&P500 has now bounced strongly from the psychological 3,000 level and the widely watched 200-day Moving Average.
Data in the eurozone’s biggest economy also showed some positive news with the ZEW index, a prominent German business survey, increasing for the fourth consecutive month. It seems the worst may be over for the bloc’s economic powerhouse and together with the huge fiscal support from the German government, the rebound of the economy should continue, especially if fears from a second wave prove short-lived.
Brexit positivity helping GBP
Sterling is the strongest major on the day as the pound gets a boost from PM Johnson’s call yesterday with EC President von der Leyen where the leaders agreed to intensify trade talks.
After the bullish run seen since the end of May, the retrace and subsequent bounce from below 1.25 looks constructive. However, the 200d MA at 1.2692 looms above as well as a significant Fib level (61.8%).
EUR/USD pauses for breath
EUR looks to be building a broad consolidation pattern between 1.12 and 1.14 after the scaling the heights last week. Losing Friday’s low at 1.1212 would look ominous but holding sideways just below the recent highs would normally see a breakout in the direction of the recent trend. Resistance comes in the upper 1.13s and 1.1422.
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Better than forecast UK labor report bullish for GBPUSD
UK unemployment remained unchanged when an increase was forecast: the unemployment rate remained at 3.9% for April when an increase to 4.7% was expected. This is bullish for GBPUSD.
