PRE-PRE-PDAC

Gold's moving again, just in time for the run-up to the annual PDAC conference in Toronto, and the Metals Investment Forum that precedes it. Copper is trading very well too. While I've pointed out many times that this isn't as unusual as some think, I'm sure generalists at least will make much of the fact that bullion is moving higher in tandem with the $USD.

Gold is moving higher on straight up demand, not as the "anti-dollar". To my mind, this increases the odds of this move having some "legs". That's good, since I still think the important price level lies on the other side of the $1350 mark. Reaching the $1360's is what would really make the generalists pay attention.

Gold Chart 2/19/19

The move in metals is well timed for junior traders, as we should be getting another deluge of news leading up to the annual PDAC convention. Most of the news will be trivial. Companies desperate to get attention at the conference will pull together what they can and push out a release. Not all the news will be marginal, however.

Several HRA list companies are working to report more important items like resource estimates or additional economic studies before PDAC. I expect we'll be seeing more drill results from some of the active explorers on the list as well.

We're all hoping for a repeat of 2016 this year, and we're certainly overdue for some love as a sector.

One important thing to keep in mind about 2016 is that, unlike most years, it did not feature a "PDAC curse". As I'm sure you're all aware, that infamous curse refers to the tendency of the junior market to top out at or around the time of the annual conference in early March.

In 2016, the junior resource sector kept moving higher until mid year.

I'm not feeling that optimistic yet, but it's nice to see the possibility is still open.

I think a literal repeat of 2016 will require the gold price to move comfortably above the levels where it topped out during the last couple of years, which will take another $30-40/oz of upside.

Some sort of resolution to current trade disputes and evidence that China's growth rate has bottomed out would help a lot too as it would help base metals join the party.

Eric Coffin
February 19, 2019

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