Ed Moya – Senior Market Analyst at OANDA – Thu 2 Jan, 2020

Comments on China Stimulus, European Data, Oil, and Gold

Ed Moya joins me today to recap a couple key news events today out of China and European data. Both of these events are supportive of risk on assets. We also look tot he recent in moves in oil, gold and how the US dollar is contributing.

Click here to visit the OANDA website to follow along with what Ed is writing on a daily basis.

Take a 2 Week Vacation to Europe on Volvo

This post Take a 2 Week Vacation to Europe on Volvo appeared first on Daily Reckoning.

Dear Rich Lifer,

I just got back from a great trip to Italy, and in a recent article I told you how the vast majority of the flights were covered by a simple credit card trick.

Today I want to give you another way to get to Europe for free. In some instances, you’ll not only get a complimentary flight. You’ll also get a free hotel room and a fully-insured car to use for a couple of weeks.

Of course, the weirdest part is that the car will not only be brand-new … it will be yours to keep.

I’m talking about a program that several automakers call “overseas delivery.”

What is Overseas Delivery?

Essentially, you buy your new car here in the United States but go pick it up overseas. You then get to drive the car in Europe for a certain amount of time, with plates and insurance, before having it shipped back to the U.S. for your regular use.

If you’re worried about getting the car across the Atlantic, don’t be! The manufacturers take care of everything for you – from transportation to importation.

What’s more, there are often additional advantages beyond the ones I’ve already described.

That’s why my wife and I seriously considered taking European delivery on our 2010 Volvo XC70 when we bought it nine years ago.

If you’re a long-time reader, you might know that I ended up buying a 1988 Volvo to save a bunch of money on the new – but that’s a (crazy) story for another time.

For now, let’s just stick with all of the advantages of Volvo’s particular program because it’s the most generous one out there.

What Are the Benefits?

Every single car model in Volvo’s lineup is available for European delivery.

Better yet, you get an automatic discount off the sticker price – probably a better and more substantial one than you could negotiate through a dealer on your own (including removal of the destination charge).

You can also select individual options for the vehicle rather than taking pre-packaged trim levels that normally include some pricey items you don’t want. There are even colors and options not normally available on U.S.-spec vehicles.

Once you design your car and agree on the total price, your local dealer places the order and gives you a lead time (normally a few months).

As part of your package, you’ll get two round-trip flights to Sweden, a night in a hotel room, and a tour of the factory (pretty great deal already). From there, you have up to full two weeks driving your new car with full insurance before returning it to various ports where it will then be shipped back to the U.S. There are additional charges for drop off at some locations in Europe, but overall it’s an amazing deal.

Don’t Want A Volvo?

BMW offers overseas delivery on many of its models. You’ll get as much as 5% off MSRP, free airport transfers to the company’s Munich factory, a tour, and up to 14 days to test your new car on the Autobahn (or other farther-flung destinations in Europe).

Audi has a similar program that also gives you 5% off your vehicle (certain models like the R8 are excluded), free ground transfers, factory and museum tours, plus two weeks using the vehicle on European roads.

Not to be outdone by its German rivals, Mercedes offers up to a 7% discount off most of its models – U.S.-made vehicles are obviously excluded – and will also waive the hefty destination charge. Plus, it will throw in an airfare voucher, a hotel stay, and a free meal. They’ll even make sure your car has a full tank of gas before you head off for your European adventure.

You can also take European delivery of your new Porsche, but you won’t get any type of discount. However, depending on which model you buy, and which factory it was made in, you might get a chance to drive the same model of the car you purchased on the company’s test track.

Obviously, there are additional details related to each of the individual programs and all of these brands skew toward the luxury side of the market.

But if you are ever considering the purchase of a new vehicle from one of the manufacturers I just mentioned, I would definitely encourage you to investigate their overseas delivery programs a bit further.

Not only can you get a really great price without any unpleasant haggling, but you might also get the European experience of a lifetime just thrown in as part of the deal.

To a richer life,

Nilus Mattive

Nilus Mattive

The post Take a 2 Week Vacation to Europe on Volvo appeared first on Daily Reckoning.

Weekend Show – Sat 31 Aug, 2019

Hour 1 – A Major Focus On The PM Bull Market and A Look At Europe’s Roll In Financial Markets
  • Segment 1 – Extended Interview – Marc Chandler, Managing Partner at Bannockburn Global ForEx – It’s more about politics rather than economics right now. We get into an in depth discussion on what is happening in Europe. This all begs the question of if the US markets can stay strong for the near term.
  • Segment 2 and 3 – Jordan Roy-Byrne, Founder of The Daily Gold – We all agree that this is an early stage bull market for gold but there are some near term swings to take note of. We also discuss how the stocks
  • Segment 4 – Brien Leni, Founder of the Junior Stock Review – A look at the Abitibi District in Quebec in terms of companies with work programs and investment ideas.

Exclusive Company Interviews This Week

Marc Chandler
Jordan Roy-Byrne
Brien Leni

London Metal Exchange and Fastmarkets to set lithium price benchmark

The London Metal Exchange (LME) is partnering with Fastmarkets to develop the reference price for its planned lithium futures contract, which will help analysts and executives to get a full sense of the global market for the key ingredient in the making of the batteries that power electric vehicles (EVs).

Unlike for copper or other metals used in the making of EVs, there currently is no traded price for lithium.

“In recent years there has been unprecedented price volatility in the lithium market, driven particularly by explosive electric vehicle (EV) battery demand,” the exchange said.

Unlike for copper or other metals used in the making of electric vehicles, there is no traded price for lithium.

The move, it added, comes after industry players, including producers, end-users and several leading automotive firms, urged the LME to develop effective lithium price-risk management tools.

“This global strategic partnership will develop a definitive roadmap aimed at providing a pricing mechanism for lithium that can be utilized throughout the supply chain and will support the development of risk-management tools for the industry,” Fastmarkets said in a separate statement.

Last year, the LME asked companies that assess prices of battery-grade lithium to submit proposals to supply a reference for cash-settled contracts it planned to launch  in the fourth quarter of this year.

Today, however, the exchange only said it would continue “to gauge appropriate timing” for a launch.

Currently, producers negotiate contracts with buyers, but the terms of the deals are not made public.

The LME, the world’s oldest and largest market for industrial metals, said it selected Fastmarkets because their prices were used widely across the industry.

The agency already provides the global benchmark for the cobalt market — another key battery raw material.

The post London Metal Exchange and Fastmarkets to set lithium price benchmark appeared first on MINING.com.

DeepGreen closer to mining battery metals from the sea after $150m injection

Canada’s DeepGreen Metals, a start-up planning to extract cobalt and other battery metals from small rocks covering the seafloor, has secured the bulk of the $150 million it needs to carry out its first feasibility studies.

The financing, provided by Switzerland-based offshore pipeline company Allseas Group, is a welcome sign of progress for the deep sea mining sector, which has been stalled due regulatory uncertainty and environmental concerns.

Unlike other seafloor mining companies, including pioneer Nautilus Minerals, the Vancouver-based explorer doesn’t want to drill, blast or dig the bottom of the ocean. DeepGreen’s main goal is to scoop up small metallic rocks located thousands of metres below the surface in the North Pacific Ocean.

Unlike other seafloor mining companies, the Canadian start-up doesn’t want to drill, blast or dig the bottom of the ocean, but to scoop up small rocks containing cobalt, nickel and other battery metals.

Its exploration focus is the Clarion-Clipperton Zone (CCZ), a mineral-rich, 4,000-kilometre swath of the Pacific that stretches from Hawaii to Mexico, where billions of potato-sized metals-rich rocks lie in a shallow layer of mud on the seafloor.

The deep sea, more than half the world’s surface, contains more cobalt, nickel, copper, manganese and rare earth metals than all land reserves combined, according to the US Geological Survey.

Companies exploring or already developing projects to mine the seafloor argue the extraction of those deep-buried riches could help diversify the sources currently supplying metals needed for electronics and evolving green technologies, such as electric vehicles (EVs) and solar panels.

Academics and scientist, however, are concerned by the lack of research on the possible impacts of high seas mining. They fear the activity could devastate fragile ecosystems that are slow to recover in the highly pressurized darkness of the deep sea, as well as having knock-on effects on the wider ocean environment.

Not enough studies

Last year, the European Parliament called for a ban on seabed mining until the environmental impacts and risks of disturbing unique deep-sea ecosystems are understood. In the resolution, it also urged the European Commission to persuade member states to stop sponsoring and subsidizing licenses to explore and exploit the seabed in international waters as well as within their own territories.

Shortly after, an international team of researchers published a set of criteria to help the International Seabed Authority (ISA), a UN body made up of 168 countries, protect biodiversity from deep-sea mining activities.

So far, it has granted 29 licences to governments and companies, authorizing them to explore in international waters.

Nautilus, however, is the only company that has gone beyond the exploration stage and has gotten close to open the first polymetallic seabed mine off the coast of Papua New Guinea. Its Solwara 1 project, however, has been slowed by funding issues and local opposition.

Anglo American (LON:AAL) sold its 4% stake in Nautilus a year ago, as part of efforts to retain only its most profitable assets. And, in March, it had to delist from the Toronto Stock Exchange.

The post DeepGreen closer to mining battery metals from the sea after $150m injection appeared first on MINING.com.

Bonus schemes play a role in tailings dams failures – research

A paper published in the journal Resources Policy states that bonus schemes for middle management employees in mining companies play a role in tailings dams failures.

According to the research article, such compensation packages actively encourage managers to cut costs and increase production, as the material decisions that put into motion such measures lay in their hands and positive results would increase their annual bonuses.

Although most mining companies don’t make public the compensation packages they give their middle management personnel, such incentives are known to be a common practice in the industry. Thus, using the information provided by the two companies that do report them, Newmont Goldcorp (NYSE: NEM, TSX: NGT) and AngloGold Ashanti (JSE:ANG, NYSE:AU), the authors of the study found that some schemes are equivalent, in financial terms, to an equity payment plus a put option.

The number of tailings dam failures has doubled in recent years from 8 in the period 1999–2003 to 16 in 2014–2018

“So the bonus is highly leveraged. Like investment bankers, the person stands to gain a lot if his/her performance is above target, but loses little, if it falls below target,” the study reads. “Year after year, managers keep taking risks with a low probability of occurrence but with potentially catastrophic consequences. These risks are compounded by shortages of experienced staff due to the cyclic nature of the industry and the retirement of the baby-boomer generation.”

Authors Margaret Armstrong, Renato Petterd and Carlos Petterd connected their observations to those in earlier research papers that analyzed certain cases of tailings dams failures and found that either production was increased or costs were significantly reduced in the years leading to the accidents.

The academics report that, for example, prior to the collapse of the tailings facility at the gold and copper Mount Polley mine in British Columbia in August 2014, which resulted in 24 million cubic meters of contaminated sludge and mine waste going into nearby lakes and rivers, Canada’s Imperial Metals (TSX: III) had grown its production by 23% in Q2-2014 from the previous quarter.

Boliden Apirsa, on the other hand, had flat revenues from 1995 to 1997, just before the tailings dam crashed at the Los Frailes lead and zinc mine in Aznalcóllar, Spain, in April 1998. But capital expenditures doubled during this period from $55.4 million to $112.3 million and operating income increased spectacularly from $2.3 million to $84.9 million. “So production costs must have dropped significantly over the period.”

The aftermath of the disaster in Brumardinho following Vale's tailings dam collapse. Photo by Vinícius Mendonça/Ibama, Wikimedia Commons.

In Brazil, production at Vale’s (NYSE:VALE) Samarco iron ore mine had increased by almost 40% in the five quarters just before the accident there in 2015, which killed 19 people and became the country’s worst-ever environmental disaster. Similarly, at the Paraopeba subsection of the Southern System where the Corrego do Feijão dam was located, production was risen by 12% in the five quarters before the Brumardinho catastrophe where almost 300 people died.

“The next question we asked ourselves was: Had an extra tailings dam been constructed to handle this additional quantity of rejects, or was it being pumped into existing tailings facilities? Alternatively, had filter presses or high capacity thickening been introduced to reduce the quantity of water?”, the authors of the paper ask.

After reviewing Vale’s quarterly reports for investors, which list all the major projects in progress, they found that there is no mention of building a new tailings dam or of filter presses. “This means that the existing ones had to cope with the waste from the extra production.”

Off the hook

Except for $42.5 million for the initial clean-up, the paper in Resources Policy highlights the fact that Boliden Apirsa succeeded in avoiding paying for the pollution caused by the tailings dam breach.

“Boliden's legal team and expert witnesses convinced a Spanish court of law that the tailings dam failure was due to geotechnical problems, thereby transferring the responsibility to the companies that had designed and built the dam. An epic legal battle ensued in which the Spanish Ministry of the Environment and the local government of Andalusia attempted to get Boliden to pay for the damage, but failed due to loopholes in the Spanish legal system,” the document reads.

In the case of the Mount Polley mine, Armstrong and her colleagues bring to the forefront the fact that the Independent Expert Engineering Investigation and Review Panel established after the accident found that the failure was caused by the design, which did not take into account the complexity of the sub-glacial and pre-glacial geological environment associated with the Perimeter Embankment foundation.

This has meant that no one has been held responsible for the disaster and, on top of this, the 3-year deadline to lay charges under British Columbia laws passed in 2017, while there is only one year left to lay charges under federal environmental and fisheries law.

The authors of the study refrained from commenting on the legal proceedings involving Vale’s tailings dam failures as they are still in progress.

In their recommendations of what would be needed to stop tailings dam failures, the researchers suggest, besides changes in the processing technology and wider adoption of the Mining Association of Canada’s guidelines issued in 2017, heavier fines and penalties.

The post Bonus schemes play a role in tailings dams failures – research appeared first on MINING.com.

Sweden eyes Peruvian lithium

Sweden’s Deputy Minister of Foreign Trade and Promotion Niklas Johansson said this week that his country is interested in helping Peru develop its lithium mining industry.

According to Johansson, Sweden has become lithium-thirsty due to an increase in demand for electric cars, bolstered by government efforts to reduce carbon emissions and promote clean energy solutions.

EVs’ batteries have an intercalated lithium compound as one electrode material.

Experts predict that the mining industry will need to invest $12 billion within five years to meet the global demand for lithium

Even though Peru is not part of the so-called ‘Lithium Triangle’ formed by Bolivia, Chile and Argentina, just a year ago Macusani Yellowcake, the Peruvian subsidiary of Canada’s Plateau Energy Metals (TSX-V: PLU), found 2.5 million tonnes of high-grade lithium resources at its Falchani hard rock deposit in the southern Puno region.

According to Reuters, companies such as US-based Albemarle, the world’s No. 1 producer of the metal, and China’s Tianqi Lithium, the No. 3, may be waiting for Plateau to confirm the size of its reserves before showing their interest in Peru.

Sweden doesn’t seem to be waiting, though. Speaking in Lima at a conference called “Mining for the future: The Swedish experience,” which was organized by the embassy of the European country and the mining division of the Engineers College of Peru, Johansson said that the lithium demand from companies such as Volvo and Scania is in an upward trend and that Swedish miners are eager to develop responsible and sustainable lithium projects.

The post Sweden eyes Peruvian lithium appeared first on MINING.com.

Britain went coal-free for 18 days

Great Britain went 432 hours in May without using coal for electricity generation, a tweet by the National Grid ESO or NGESO revealed.

The streak ended after 18 days and 60 hours due to plant availability and system requirements, the country's electricity system operator said.

According to NGESO, the British record for solar power use was also broken last month, as on May 14 a quarter of the energy was generated from the sun in a country where solar installed capacity is over 13GW. The BBC reports that the utility company expects these occurrences to become the new normal.

The 72-MW Shotwick solar farm in Flintshire, northeastern Wales, is the largest in the UK. Photo by Foresight Solar Fund.

When coal is off, gas, nuclear, wind and other sources take over the power generation job.

The UK's push to move away from coal-fired power stations and bring more renewables online has been taking place since the country announced, in the context of the 2015 United Nations Climate Change Conference in Paris, its plans to phase out the last operative plants in the span on 10 years.

The strategy, whose application is set to start on October 1, 2025, contemplates an emission limit of up to 450 grams of CO2 for each kilowatt-hour of electricity produced, which would force many plants to close unless they are fitted with carbon capture technology.

The share of coal in the United Kingdom’s electricity mix, according to the Beyond Coal movement, sits currently at about 9% down from 40% in 2015. The downward trend started in 2013 when Britain introduced a tax on CO2 emissions from power plants.

The post Britain went coal-free for 18 days appeared first on MINING.com.

Global economic growth downgraded to 2.6% in 2019 — World Bank

Global economic growth is forecast to ease to a weaker-than-expected 2.6% in 2019 before inching up to 2.7% in 2020, the World Bank says in its June 2019 Global Economic Prospects: Heightened Tensions, Subdued Investment.  

Global growth in 2019 has been downgraded 0.3 percentage point below previous forecasts, reflecting weaker-than-expected international trade and investment at the start of the year, the World Bank says.  

Growth in emerging markets and developing economies is expected to stabilize next year as some countries move past periods of financial strain, but economic momentum remains weak, the report maintains.  It’s urgent that countries make significant structural reforms that improve the business climate and attract investment —  World Bank Group President

Emerging and developing economy growth is constrained by sluggish investment, and risks are tilted to the downside. These risks include rising trade barriers, renewed financial stress, and sharper-than-expected slowdowns in several major economies, the World Bank reports. Structural problems that misallocate or discourage investment also weigh on the outlook. 

In particular, global trade growth in 2019 has been revised down a full percentage point, to 2.6 percent—slightly below the pace observed during the 2015-16 trade slowdown and the weakest since the global financial crisis.   

“Stronger economic growth is essential to reducing poverty and improving living standards,” World Bank Group President David Malpass said in a media statement.

“Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential.It’s urgent that countries make significant structural reforms that improve the business climate and attract investment. They also need to make debt management and transparency a high priority so that new debt adds to growth and investment,” Malpass added.

Read the full report here.


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Pure Gold kicks off exploration campaign at Madsen Red Lake project

Canada’s Pure Gold Mining (TSX-V: PGM), which recently listed in London, has started its 2019 exploration program at its 100%-owned Madsen Red Lake gold mine in Ontario.

The Vancouver-based miner said it would focus on the Wedge, Fork, and Russet South satellite deposits with the purpose of converting and growing mineral resources used in the recently released preliminary economic assessment (PEA).

At peak production, the mine is expected to yield about 125,000 ounces of gold with average annual production in years three through seven of approximately 102,000 ounces

The plan represents the first conceptual expansion scenario for the future phased growth of the Madsen underground mine, expected to run for 12 years and which has an initial capital cost of C$95 million.

The mine plan envisions a combination of methods from conventional cut and fill (59%), mechanized cut and fill (16%) and longhole mining (25%).

Chief executive Darin Labrenz said previous drilling had resulted in the discovery of the Wedge deposit and helped the company's understanding of the scale and tenor of gold mineralization, resulting in maiden mineral resources and a PEA.

"With this new program, our exploration team is focused on growth of the current resource and providing the framework for a second phase of development with the goal of not only extending, but potentially expanding the base case production scenario at Madsen," he said.

At peak production, the Madsen mine is expected to yield about 125,000 ounces of gold with average annual production in years three through seven of approximately 102,000 ounces.

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