US Recession, Can Carney Bird Change Feathers? Gold Correction
BFG, GPAC, LVX
We are certainly living in different times as the Toronto Maple Leafs won a playoff round. This fan jersey of someone I know, says it all.
US Recession Watch
I have been warning for months that the U.S. was headed into a recession and was probably already in one, well this week we got confirmation of my expectations.
The U.S. economy contracted in the first quarter of 2025 for the first time in three years, reflecting a surge in imports ahead of Trump’s tariffs and a slowdown in consumer spending. Gross domestic product, the official report card on the economy, shrank at a 0.3% annual rate from January to March, the government said Wednesday. It’s the first contraction in GDP since early 2022.
The biggest culprit behind the negative reading in the first quarter was a record surge in imports as U.S. businesses sought to bring in foreign goods before the tariffs, which typically raise the cost of imports, took effect. The record trade deficit shaved a whopping 4.8 percentage points off GDP.
We have to see two consecutive quarters of contraction for an official recession. This quarter was kind of quirky because of the trade distortion, but it also means a lot of Q2 economic activity is already accounted for in Q1. Most all economic data points continue to weaken.
Consumer spending, the main engine of the economy, deflated in the first quarter after unsustainably strong increases in last six months of 2024. Consumer spending rose at a 1.8% clip, well below the 4% and 3.7% gains in the final two quarters of 2024. Spending did perk up late in the quarter, but that was mainly because consumers bought lots of new cars and other goods to avoid tariff-related price increases. Car sales hit a four-year high in March.
Monthly data showed spending rose 0.7% last month, a few ticks above the forecast of economists polled by The Wall Street Journal. New-car sales were the biggest driver, as auto-related spending surged 57% in March, an unusually large increase. Again Q2 spending done in Q1.
The cost of U.S. goods and services was flat in March and put the Federal Reserve closer to its 2% inflation target. The PCE index, the Fed’s preferred inflation gauge, was unchanged last month, the Bureau of Economic Analysis said Wednesday. It was the lowest reading in four months. The 12-month rate of inflation, meanwhile, slowed to 2.3% from 2.7% but a stronger than expected increase Economists forecast that the index would rise 2.1%.
When volatile food and energy costs are factored out, the Federal Reserve’s preferred measure of inflation increased 2.6% from one year ago, above expectations. Economists forecast that the core PCE inflation index would rise 2.5%.
The Chicago Business Barometer slipped 3.0 points to 44.6 in April. This more than reverses March's 2.1 point rise, but still leaves the index above January 39.5 reading. The index has been in contraction for seventeen consecutive months.
The business activity in the U.S. manufacturing sector continued to contract in April, with the ISM Manufacturing Purchasing Managers Index (PMI) edging lower to 48.7 from 49 in March. This reading came in better than the market expectation of 48.
Construction spending during March 2025 was estimated at a seasonally adjusted annual rate of $2,196.1 billion, 0.5 percent (±0.8 percent) below the revised February estimate of $2,206.9 billion. The March figure is 2.8 percent (±1.2 percent) above the March 2024 estimate. This has been one of the stronger data points but it too is softening.
No surprise that Initial jobless claims jumped by 18,000 to 241,000 in the week ending April 26, the Labor Department said Thursday. That’s the highest level since early October.
U.S. companies added only 62,000 jobs in April, the ADP National Employment Report showed on Wednesday. This is the lowest amount since last July. Economists polled by the Wall Street Journal had forecast a gain of 120,000 jobs.
Today jobs report had the average estimate of economists of 130K added to U.S. payrolls, down from the 228K increase in March. The numbers came in stronger at 177,000 Investors were also watching the March figure to see if it is revised lower, given that last month's report came in much stronger than expected. It was revised down to 185,000 from 228,000.
Can Carney Bird Change His Feathers?
I don't like to be negative so will look at a positive possibility. PM Carney is an economist and a Central Banker, he knows the Canadian economy is broken and he does or should have the knowledge to fix and improve it. That said, there are 4 main points he has to do, no question.
#1 There is no expertise in the Liberal caucus. Ten years has proven that and what expertise there was, spoke against some Trudeau policies and were vanquished from the party. Mark Carney must know outside experts in economies, trade and foreign relations etc. He must bring some of that expertise in to help lead Canada.
#2 He cannot put more carbon tax on business and industry. There is no investment in Canada because taxes are too high and industry is already concerned about his election talk of moving more of the carbon tax there.
#3 Bill C69 must be repealed. This bill makes it near impossible to develop major projects. The bill requires assessments for environmental, health, social and economic impacts and the rights of Indigenous people. Industry and critics call it 'The build nothing act'.
#4 PM Carney should not form another coalition with the NPD or Bloc. Canadians are fed up with these socialist coalitions. They have proven not to work. Carney is going to have to work with the Conservative party.
These are the must happen changes and if they don't happen, nothing else matters. However, there are other things that could help.
Carney has pledged to build small homes at a rapid pace. If this is done in Canada with factories or what have you, it is a good thing. However if Carney uses his Chinese ties and gets them there like Ontario City, Hamilton did, than it will be a bad thing. You can't build an economy by going in debt to buy and import infrastructure. We must build it here for the economic benefit.
It should be easy to get a deal with the U.S. to pause tariffs while a new trade deal is negotiated. However, this would mean Carney's Trump emergency is not much of an emergency anymore.
Rebuild the military and start building some military equipment and supplies in Canada.
There are other things, but this is enough to watch for on the near term to see where Canada is headed. The big question is whether Carney can shed his net zero emission, socialist and WEF feathers and grow new Canadian feathers. I am quite doubtful, but I am willing to give benefit of the doubt the next few months to see what he does. I long time liberal MP is warning Canadians too.
At a recent security summit in Taiwan, former longtime Liberal MP John McKay warned that Canada is entering a period of “existential” uncertainty. “This was the most consequential election of my lifetime,” said McKay, who did not seek re-election this year after serving as a Liberal MP since 1997. Predicting that Prime Minister Mark Carney “may be a very unpopular politician within six months,” McKay warned Canadians to prepare for a period of sacrifice and difficult decisions: “We’re not used to asserting our sovereignty. Taiwan lives that reality every single day.”
Another speaker, Professor Scott Simon of the University of Ottawa, took a far sharper stance on Beijing’s role in the increasingly volatile geopolitical environment, describing China as part of a “new axis of evil” engaged in cognitive warfare targeting both Taiwan and Canada. Simon argued that democracies like Canada have lulled themselves into a false sense of security by believing that trade and engagement would neutralize authoritarian threats.
Expanding on Beijing’s tactics, Simon said: “They’re active against the Philippines, South Korea, Japan—and Taiwan is only part of it. What they’re using now is a combination of military threats—what we often call gray zone operations—but also cognitive and psychological warfare, as well as lawfare. And they use these techniques not just in Taiwan, but in Canada. And so Canada has to be a part of countering that lawfare.”
Gold Correction Over
Yesterday gold corrected to the bottom of my consolidation range. Most likely the strong sell off was because China markets were closed for the May Day holiday so this enabled Comex shorts to push the price down more aggressively. It probably marks a climax sell off in this pull back and gold will start heading back up again. All in all, it is a healthy correction.
Giant Mining - - - CSE:BFG - - - - - Recent Price - $0.18
A couple days ago I warned about a lot of shares that will come free trading from a financing that closed the end of 2024. As expected some sellers materialized and drove the stock down as low as $0.15. There has been a lot more volume, so there has been buyers for these shares.
Drill results could be out soon, but in the mean time, I would consider buying with bids around $0.16
Great Pacific Gold - - TSXV: GPAC, OTC: FSXLF - - Recent Price - $0.30
Today Great Pacific announce that the Board of Directors of the Company has unanimously approved a spin out transaction whereby Great Pacific will distribute the shares of a new company named Walhalla Gold Corp. to the shareholders of Great Pacific. Walhalla will own the Company's Walhalla Gold Project in Victoria, Australia.
It is a 1 for 1 share spin out so shareholders of Great Pacific will get one share in Walhalla for every Great Pacific share owned. Great Pacific, the company will also get $1.5 million cash from Walhalla.
Walhalla plans to do a $4.5 million financing and management of Walhalla will be announced at a future date.
The Walhalla Gold Project, located in Victoria, Australia, has a prolific history of gold production, with total historic production reported of 1,510,309 ounces at a grade of 33.59 g/t gold. It is adistrict-scale 1,400 sq km land package with both advanced stage and greenfield targets.
The high-priority greenfield target called Pinnacles, where soil geochemistry has highlighted a 400m x 1,100m gold mineralized aplitic dyke which contains disseminated sulphides and outcrops at surface. Pinnacles target is fully permitted, accessible, and ready for immediate drilling.
Great Pacific CEO, Greg McCunn states, "Victoria, well known in recent times for the success of the Fosterville Mine owned by Agnico Eagle, is experiencing a resurgence of exploration activity and interest due to successes such as the Southern Cross Sunday Creek discovery. With the Walhalla Belt now consolidated by the Company following the acquisition of Woods Point and initial field work complete in preparation for drilling, this is an excellent time to spin out the project for the direct benefit of Great Pacific Gold shareholders. The Company will also receive a direct benefit from a $1.5 million non-contingent cash payment and will retain exposure to the future success of the project via the retention of a 2% NSR."
Leviathan Gold - - - - TSXV:LVX - - - - - Recent Price - $0.27
The stock jumped this year on news they acquired Foca Metals Corp. (previously named LS Lithium Corp.) pursuant to a share exchange agreement dated Nov. 22, 2024. This brought a new group of shareholders in. As a result of the acquisition Leviathon got a 100-per-cent indirect interest in the Foca project, a highly prospective land package in Republika Srpska, Bosnia and Herzegovina.
Foca project
The project covers 100.7 square kilometres across three active exploration licences, includes a series of silver and base metal targets tentatively considered to be of sedimentary exhalative or related origin, and lies approximately 100 kilometres south of the Vares project of Adriatic Metals PLC. Vares hosts indicated mineral resources of 18.3 million tonnes at 168 grams per tonne silver, 1.3 g/t gold, 4.6 per cent zinc, 2.9 per cent lead, 0.4 per cent copper and 30 per cent BaSO4 and in rocks of closely comparable age and host lithology with those at Foca -- within the so-called Central Dinaride metallogenic zone of the Western Tethyan belt.
Leviathan has commenced a first phase of shallow mechanical trenching with the objective of defining near-term drill targets at the Foca project. This program directly follows the successful completion of the first phase of an induced polarization and electrical resistivity survey at the company's Vrela prospect, and will take place upslope from an area of very high-grade silver, lead and zinc in float samples collected by the company in 2024.
The induced polarization and electrical resistivity survey, consisting of 1,900 metres of line data, has revealed a clear, chargeable feature approximately 75 to 100 metres in width across two survey lines coincident with a prominent east-northeast-west-southwest-trending system of faults, itself coincident with zinc and lead anomalism in soil samples observable along a two-kilometre trend.
On April 11, Leviathan Gold closed a non-brokered private placement, pursuant to which the company sold 32.5 million units in the capital of the company at a price of 10 cents per unit for aggregate gross proceeds of $3.25-million.
My plan here is to sell the stock or at least take profits before this 10 cent financing becomes free trading. As the gold price goes back up and perhaps some good exploration results on the trenching, we could see a higher share price. The chart shows a nice up trend with resistance at $0.28. A clear break above that could give us another leg up.
Selection List – Advanced Juniors (20% weighting)
The List is paid subscribers only, but the 8 stocks on the list have an average gain since Jan 1, 2025 of 54% with four up and four down.
These advanced juniors have started to firm up this year and I plan on adding some more to the list .
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