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Economics

Top 5 events to follow in Canadian markets on October 4

Highlights The S P TSX composite index began the month of October on a better note on Friday October 1 The Canadian market was likely to have been…

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This article was originally published by Kalkine Media - Canada

Highlights

  • The S&P/TSX composite index began the month of October on a better note on Friday, October 1.
  • The Canadian market was likely to have been boosted by the positive gross domestic product (GDP) data projected for August.
  • On Monday, October 4, however, Canadian stock futures noted a decline.

After closing September 2.5 per cent lower on Thursday, the S&P/TSX composite index began the month of October on a better note on Friday, October 1.

The benchmark stock index was up by 80.62 points, or 0.4 per cent, to close at 20,150.87, although it was down by 1.2 per cent for the week.

The Canadian market was likely to have been boosted by the positive gross domestic product (GDP) data projected for August and the smaller-than-estimated decline for July 2021, as per Statistics Canada.

On Monday, October 4, however, Canadian stock futures noted a decline as concerns around rising global inflation and China's real estate space put pressure on equities.

Here are a few events that can influence the markets in Canada on Monday, October 4.

Also read: Fobi (TSXV:FOBI) surged 650% in a year! A Canadian AI stock to buy?

Anticipation around rising inflation

Investors’ concerns regarding rising inflation around the world could continue to impact the stock markets as surge in commodity prices and the ongoing supply crunch persist.

Amid these fears, December futures on the Canadian main stock market index shrank by about 0.2 per cent, as of 7AM EST.

On Friday, the S&P/TSX Capped Energy was up by 0.52 per cent.

Also read: 5 TSX midcap stocks to buy

Latest data on building permits, oil and gas extractions, etc

Statistics Canada reported on Monday that value of building permits in the country dipped by 2.1 per cent to total at C$ 9.7 billion in the month of August 2021.

The reported pointed that while most provinces in Canada saw a rise in building permits for the month, significant decreases in Ontario and British Columbia managed to drag the national results down on a month-over-month (MoM) basis.

© 2021 Kalkine Media

Image description: Canada’s September 2020 manufacturing sales data

Latest data on the oil and gas extraction industry

The national data agency released another study on Monday that showed that Canada's oil and gas extraction industry’s total gross revenue shrank by 28.9 per cent year-over-year (YoY) in the pandemic-ridden year of 2020 to C$ 93.7 billion.

The StatCan report also noted that the oil and gas extraction enterprises in the country saw their total assets slim down by 13.7 per cent YoY to C$ 462.7 billion in 2020.

Bombardier (TSX:BBD.B) stocks could be one to watch

Stocks of Bombardier Inc rose by more than two per cent in the premarket trading hours on Monday, after having closed 2.3 per cent higher on Friday.

Last week, on September 30, the Canadian business jet maker said that it has received an order worth US$ 534 million to deliver 20 Challenger 3500 aircraft to an unnamed client.

Sun Life Financial Inc (TSX:SLF) expands business in US

On Sunday, October 3, financial services enterprise Sun Life Financial Inc said that it is set to purchase American oral healthcare firm DentaQuest.

The Canadian life insurance giant entered the acquisition deal for a value of about C$ 3.1 billion via its US business.

Sun Life Financial said that it is looking to expand its “leadership” into the US by buying the Boston-based company, which is said to be the biggest Medicaid dental benefits provider south of the border.

Economics

We’re Living In A Chaos Economy… Here’s How To End It

We’re Living In A Chaos Economy… Here’s How To End It

Authored by Mark Thornton via The Mises Institute,

The Federal Reserve has been increasing…

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We're Living In A Chaos Economy... Here's How To End It

Authored by Mark Thornton via The Mises Institute,

The Federal Reserve has been increasing the money supply at an explosive rate. The federal budget, deficits, and the trade deficit are record levels. Governments, both foreign and domestic, have locked down people, restricting production and consumption. How should this be viewed by an economist?

There is clearly chaos in the economy, and hardly a day goes by when I don’t find unusual if not unprecedented situations in day-to-day economic life.

However, many people and economists are either oblivious to the problems or in denial. Things are normal for them. Politicians are mostly in this camp. For economists and investment promotors, inflation is “transitory.” They don’t know how the economy works and they expect near perfection from the economy and entrepreneurs. This view is wrong.

The chaos is all too real for most others.

Homemakers who spend household income are seeing their purchasing power shrink, their choices disappearing, and more of their time consumed stretching the family budgets. Christmas shopping will be worse than normal.

Chaos deniers are further entrenched in their experience by the mainstream media (MSM). The problems are either not reported by the MSM or are masked by aggregate statistics like price inflation, i.e., the Consumer Price Index, low unemployment, wage increases, and extremely high stock markets and real estate, especially housing prices. These stats make people feel good, or at least less nervous.

Below the government economists’ radar there is real economic suffering. Small businesses are hurting and going out of business. Based on Help Wanted signs I drive by every day, it is extremely difficult to hire employees or purchase inputs. One local BBQ restaurant recently had a sign that said, “Out of Chicken, Pork and Beef.”

Big business is likewise finding roadblocks throughout their supply chains, primarily because of lockdowns and covid restrictions. This government roadblock to economic life is epitomized by the five hundred thousand shipping containers stuck off the port of Long Beach, California. Meanwhile, domestic inventories are dwindling for everything from houses to mayonnaise. 

Austrian economics provides an understanding of the causes of this chaos and the way to solve it.

The Fed’s actions have been a tidal wave force against the economy. Printing money has given some signs of prosperity, but its main known effect tangible effects are higher prices, malinvestment, and more wealth redistributed from the middle class to the very wealthy.

The solution is straightforward. The central bank needs to stop its policy of propping up the markets for government bonds and home mortgages and the perverse effects it is creating on the general loan market in the form of ultralow interest rates. Promises of the Fed “tapering,” where they do fewer asset purchases, is really too little too late. Completely ending assets purchases by the Fed would stop their mischief, limit the damage, and would make stocks, bonds, and homes more affordable for Americans.

Lockdowns and restrictions are a great harm to the US and world economies. Why are so many cargo ships sitting waiting for unloading? Why are others going unfilled in the first place? Why aren’t truckers driving product to market? Why isn’t product being placed on shelves? There are millions of details here, but in many cases, workers are not available or are unwilling to comply with covid restrictions and requirements. Production is stuck in a quagmire of government intervention.

A big piece of the problem are the restrictions and subsidies in the US labor markets. Special unemployment benefits and stimulus checks from the government mean that not working pays more than working, plus more leisure time for those that accept being on the public dole. In one recent week I engaged with three small businesses. They could not have continued to operate if they had not been able to hire a few new workers who were unwilling to be on the dole or, more likely, had not realized how easy it is to collect unemployment. Locally, McDonalds is offering 50 percent higher than minimum wage for fourteen-year-old kids, and they are still having trouble attracting workers!

The bottlenecks, empty shelves, business closures, reduced hours, and “worker wanted” signs are not the direct result of price controls nor are they the fault of the market economy. Rather prices in some areas of the economy need to rise so high and so fast to harmonize supply and demand that entrepreneurs can hardly keep pace in this environment dominated by government interventions and heightened uncertainty. I truly sympathize with entrepreneurs who are trying to save jobs, keep food on our tables, plus pay a huge chunk of taxes.

Locally, an ice cream stand that has been successfully in business for almost seven decades had to shut down. It wasn’t the complexity of the business, the lack of product or even the higher prices it charged. They could not find and maintain a workforce through the maze of restrictions of unemployment subsidies.

The current owner of this beloved multigeneration family-owned business explained, “We don’t really know what’s going to happen. It just depends on COVID and when people want to start working.” It is unclear what aspect(s) of covid is their primary concern, but the main complaint is that “[n]obody wants to work anymore.” The federal government, in a variety of ways, is what killed this business.

It is evident and increasingly clear that unemployment insurance bonuses and government stimulus checks must be stopped for the economy to recover.

It’s not just retail products that are not readily available even at higher prices. People who repair and replace things that wear out or break in normal circumstances are also much scarcer. Repair-and-replace service dealers are having a hard time finding parts, replacement models, and workers to make parts and products and to service and replace them in a timely manner. I have had several such companies not answer their phone and not be able to offer appointments or show up on time because of a lack of parts and employees. All of these companies were reliable and showed up on time for repair appointments before the government-caused chaos.

Buying a new car or large flat-screen smart TV is a joyous occasion in a family’s material life. We know that we will get years of enjoyment for a good price. How does this compare to going without a refrigerator, hot-water heater, or air conditioner because the product was not available?

It should be clear that the cause of our new economic problems is massive across-the-board government intervention here and abroad. Among the negative consequences are these harms and dislocations we face. The solution is to remove those government interventions.

Not only have they caused a great deal of interference in economic transactions, but they have destroyed businesses and people’s lives. Many have also even died as a result, from the despair and chaos, not the disease. Meanwhile, social media and internet giants, and pharmaceutical companies, among others, have received an enormous unearned windfall.

This is an economic crisis, and it is one of the government’s making. Economic statistics and stock markets (led by a small number of superwinners from the lockdowns) have masked the calamity. The sure remedy is to end the interventions, especially the Fed’s inflationary policy and the restrictions and subsidies on production and consumption. This would help restore the market economy to a functioning state.

Tyler Durden Sat, 10/16/2021 - 13:30
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Economics

The Amount of Government Spending Is Not Independent of the Means of Financing

(Don Boudreaux) TweetHere’s a letter to my friend Richard McKenzie: Richard: In your latest, excellent post at EconLog you quote Milton Friedman’s…

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(Don Boudreaux)

Here’s a letter to my friend Richard McKenzie:

Richard:

In your latest, excellent post at EconLog you quote Milton Friedman’s insistence that “the true tax” is “how much government is spending.” You quote Friedman further: “If you’re not paying for it in the form of explicit taxes, you’re paying for it indirectly in the form of inflation or in the form of borrowing.”

Friedman’s point is both correct and important, and you’re right to remind readers of it. It’s a reality that too many people – including too many economists – ignore.

But I disagree with you on one small matter – specifically, with your claim that:

How the added government outlays are financed—through taxes, newly printed dollars and inflation, or debt—is of secondary importance, perhaps only marginally affecting people’s incentives.

If the amount that government spends were independent of the means of financing, then I’d agree with you. But the amount that government spends surely is not independent of the means of financing.

Spending financed with newly created money gives, at least for a time, citizens-taxpayers the false impression that government-supplied goods and services are less costly than they really are. Therefore, resort to spending financed with newly created money, by lowering the perceived prices of government programs, increases quantity of such programs that the public demands beyond what it would be were these prices more accurately perceived.

Resort to deficit spending works similarly. By allowing today’s government spending to be paid for by tomorrow’s citizens-taxpayers, deficit financing allows today’s citizens-taxpayers to free ride on future generations. The inevitable result is that today’s citizens-taxpayers will demand more government spending today than they would demand were deficit financing unavailable. Indeed, because, unlike money creation, deficit financing doesn’t itself fuel inflation, deficit financing plausibly fuels an even greater and longer-lasting excess of government spending than does money creation.

In short, while Friedman correctly insisted that the real cost of government is the amount that it spends, it’s a mistake to suppose that this reality implies that the means of financing government are of little importance. Because financing with money creation or debt causes government spending to be higher than it would otherwise be, the means of financing are of paramount importance.

Sincerely,
Don

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Precious Metals

Mountain Boy Minerals awaits assay results on seven holes drilled at American Creek, surface sampling returns high grades

2021.10.16
Drilling at Mountain Boy Minerals Ltd.’s (TSXV: MTB) (OTCQB: MBYMF) (Frankfurt: M9U) flagship American Creek property in British Columbia…

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2021.10.16

Drilling at Mountain Boy Minerals Ltd.’s (TSXV: MTB) (OTCQB: MBYMF) (Frankfurt: M9U) flagship American Creek property in British Columbia is progressing well so far, with a total of seven holes completed from two drill pads.

Five of the holes were completed in the High-Grade zone, with the remaining two on the High-Grade extension. Core samples have been shipped to the lab, with assays pending.

The drill has since been mobilized to the third pad at the Maybee zone, where drilling is currently underway.

Results from surface sampling of the property earlier this season have also been received, with assays of up to 3,444 ppm Ag (Maybee zone), 6.166% Cu (High-Grade zone), 15.26% Pb (Mann zone) and 17.57% Zn (High-Grade zone).

The recent work by MTB included mapping and sampling along the cliffs north of the old mine, an area that had not previously been examined due to the difficult access.

Geologists skilled in rock climbing traced the structure hosting the High-Grade mineralization approximately 400 m to the north, identifying an area now referred to as the High-Grade extension, where the initial two holes were completed.

Geological work is continuing, focusing on the area between the High-Grade zone and the Maybee zone, a 2 km long corridor within the 33 sqkm property. Multiple veins in that area remain underexplored to this day.

The intent of the current program is to improve the geological context with the intent of identifying further drill targets.

“Silver and base metal mineralization has been identified over multiple kilometers and includes some exceptional grades. We are working systematically toward an understanding of this extensive and robust mineralizing system which we firmly believe has the potential to host the kind of deposit for which the Golden Triangle is renowned,” Mountain Boy CEO Lawrence Roulston commented in a news release dated August 16.

American Creek Overview

The American Creek project is centered on the past-producing Mountain Boy silver mine, located 20 km north of Stewart in BC’s Golden Triangle.

The property has favourable host stratigraphy, including rocks from the Lower to Middle Jurassic Mount Dilworth formation and Lower Jurassic Hazelton Group. Recent geochronology also confirmed the presence of Early Jurassic intrusions on the property.

Geology of American Creek

There is abundant evidence pointing to large, continuous regional and property scale faults, folds and shear zones, which are often related to mineralization in the region. Significant alteration and mineralization have already been observed along these structures forming the American Creek corridor.

Therefore, Mountain Boy Minerals considers the area to have “real potential to host one or more deposits.” While it holds a significant land package, with a variety of targets identified, much of the project area remains underexplored.

Mapping and prospecting on the project so far have already led to multiple discoveries, including a new area of gold-silver-base metal mineralization on Bear River Ridge, a silver and base metal intermediate epithermal system along an approximate 2 km trend, and — more importantly — an Early Jurassic latite porphyry intrusion below the epithermal system.

This previously unrecognized intrusion is similar in age to the many Jurassic Intrusions that are related to several deposits in the area, including the Premier porphyry, which is directly related to what was once considered North America’s largest gold mine.

Ascot Resources is currently focused on restarting the historic Premier mine, which has produced over 2 million ounces of gold and 45 million ounces of silver.

The Stewart mining camp — where American Creek and many other MTB projects are found — is part of the larger Stikinia Golden Triangle and is known to contain well over 200 mineral occurrences.

“The presence of numerous nearby past producers, an evolving understanding of the geology and encouraging results and discoveries in the region all support the highly prospective nature of the area,” the company commented on its flagship asset.

2021 Exploration Program

For this year’s program, detailed structural mapping has concentrated around the many mineralized showings on the American Creek project, including the High-Grade zone.

Results from this mapping suggest that the High-Grade zone mineralization is related to an interpreted shallow westward dipping thrust fault and east-west steeply dipping cross-cutting structures.

It is postulated that the best mineralization occurs at the intersection of these two structures, and this year’s drilling will test this hypothesis.

Geologists have been working with a mountain guide mapping the cliffs around the historic silver mine. This has resulted in the discovery of several new mineralized showings to the north. The mineralization appears to be within the same stratigraphic horizon as the High-Grade zone and is cut by similar steeply dipping cross structures.

Drilling last year demonstrated that the shallow structures intersected in drill holes are rich in base metals and likely represent one of several mineralizing pulses in the epithermal system.

Guided by additional mapping results, the company has turned to steeper cross structures and localized ore shoots during this season’s drilling.

The 2021 drill program is specifically targeting four areas: the High-Grade zone, the newly discovered extension of the High-Grade zone, the Four Bees zone and the Maybee zone to the north.

Drilling of the High-Grade zone occurs at a different azimuth with the intent of testing the intersection of the shallow westward dipping thrust fault and the east-west cutting cross structures.

In 1999-2000, 51.6 tonnes of material were extracted from the High-Grade vein and sent to the Cominco smelter in Trail, BC. The documented grades of 13.6 tonnes of this material were 18.854 kg/t Ag, 1.1% Zn and 2.5% Pb.

These exceptional grades demonstrated why this is still such a compelling target to drill.

BA Project Update

Elsewhere in the Golden Triangle, Mountain Boy is also moving forward with a drill program on the BA silver-lead-zinc VMS project, located 18 km northeast of Stewart.

The 10,658-hectare BA property was acquired by Mountain Boy in 2006 following the discovery of the Barbara zone, where initial sampling yielded assays of 5.24% Zn, 0.66% Pb and 55.2 g/t Ag over 1.7 m, and 2.17% Zn, 0.41% Pb and 13.5 g/t Ag over 1.2 m.

Drilling continued at the Barbara zone over a three-year period, with a total of 13,570 m in 93 holes completed from 55 different drill pads. Significant silver, lead and zinc mineralization was encountered both in drilling and on surface.

A joint venture was later formed with Great Bear Resources to conduct an aggressive exploration program of the Barbara zone and its surroundings, which brought the total drill count to 178 holes (28,484 m).

A preliminary resource (2016) of the Barbara zone on all the drilling (excluding surface trenching was) showed 8.93 million tonnes of ore at 0.96% Zn, 0.017% Cu, 0.30% Pb and 36.77 g/t Ag, for a total of 188.6 million pounds of zinc equivalent (1.96% zinc equivalent).

The current drill program is designed to target the northern extension of the mineralized horizon at the Barbara discovery that was drilled between 2007 and 2010.

The historic drilling delineated substantial near-surface silver-lead-zinc mineralization extending over 610 m, striking north-northeast. Since then, receding glaciers at the northern end of the zone have exposed further mineralization at surface.

This mineralization has subsequently been sampled in three channel sampling campaigns extending the zone of mineralization to at least 700 m. Assays of up to 601 g/t Ag, 1.98 g/t Au, 3.31% Pb and 9.96% Zn have been returned from these programs.

Silver Rebound

Mountain Boy’s drilling of two highly prospective silver properties comes just as the precious market is experiencing a rebound due to re-emerging inflation concerns around the global economy.

For the month of September, the US consumer price index rose by more than forecast, which underscored the mounting inflation pressures in the world’s #1 economy. This in turn has driven up investor demand for assets that serve as inflation hedges such as gold and silver.

Source: Kitco

Coming off a record year, silver prices have somewhat pulled back in recent months, but the latest economic indicators are suggesting another rally is in the works, especially with the US Federal Reserve looking to tighten its stimulus measures very soon.

Daniel Briesemann, an analyst at Commerzbank AG, wrote in a Bloomberg note that he expects the tapering to be announced at the next meeting early in November, he said.

“The market is now seeing a major pivot here as far as how inflation is showing more signs of being persistent than transitory, and that’s likely to force the Fed’s hand to deliver a rate hike well in advance of what people were anticipating,” Oanda’s senior market analyst Edward Moya told Reuters this week.

The anticipated Fed tapering has so far led to a retreat in 10-year Treasuries and the greenback, both of which are traditionally investment alternatives to safe-haven metals.

In silver’s case, the outlook is particularly bright given its strong industrial demand on top of the monetary driver. In fact, much of silver’s value is derived from industrial demand and supply fundamentals. It’s estimated around 60% of the metal is utilized in industrial applications such as solar panels and electronics, leaving only 40% for investing.

A report by BMO Capital Markets shows that silver consumption by the solar industry alone could grow by 85% to about 185 million ounces within a decade.

In addition, silver demand for “printed and flexible electronics” is forecast to increase 54% over the next nine years, rising from 48Moz in 2021 to 74Moz in 2030.

Then there are the automotive and 5G sectors, which are likely to become even bigger demand drivers in the future. A comprehensive report by Sprott titled ‘Silver’s Clean Energy Future’ found that three areas of growing demand for silver — solar, automotive and 5G — potentially account for more than 125 million ounces in 10 years.

The question is whether the world will have enough supply of the metal by then.

According to the 2021 World Silver Survey, global demand for silver in 2021 is expected to outpace supply by 7% (+8% supply vs +15% demand), at which rate a significant market deficit will begin to surface.

Conclusion

In an article earlier this year, we showed the world has already reached peak mined silver. At the moment, there are simply not enough projects in development to generate the kind of production to match an accelerating demand.

When it comes to mining precious metals, the prolific Golden Triangle of British Columbia has never disappointed. Having consolidated a large property position within the region and integrated a wealth of exploration results, Mountain Boy Minerals could be well on its way to making an important silver discovery.

At American Creek, which is centered on a past-producing high-grade silver mine, work to date has supported the hypothesis of a large mineralized system capable of hosting deposits of the same scale as many others in the Triangle.

This year’s drilling at American Creek will test the true extent of this geological system, which, by the end of the program, could be demonstrated to extend over a 2 km length, containing several areas of silver-rich mineralization.

The fact that MTB compares this geological setting to the Premier camp, an important historic gold-silver producer, is also encouraging.

Mountain Boy Minerals Ltd. (TSXV: MTB) (OTCQB: MBYMF) (FSE: M9UA)
Cdn$0.16, 2021.10.14
Shares Outstanding 54m
Market cap Cdn$8.64m
MTB website

Richard (Rick) Mills
aheadoftheherd.com
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