"The history of Eureka lies in its future." - Lambert Molinelli, 1878

DISCLOSURE

The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO), McEwen Ming (MUX) and Newmont Mining (NEM); together with benchmark miner Freeport-McMoRan (FCX). Please do your own research, markets can turn on you faster than a feral cat.

Friday, June 30, 2017

Strong Copper, Weak Dollar, Gold Swoons to $1,236 - What's Up?


Lone Mountain Afternoon
Eureka, Nevada

Friday, June 30, 2017 AM

Morning Miners,

A mini-flash crash in London to $1,236 per ounce and highly nuanced words from European Central Bank President Mario Draghi* were enough to batter and bruise our favorite metal this week. The latter and other comments by major central bankers also plummeted the U.S. dollar. Currently Comex gold is trading at $1,241. The red metal is our metallic hero to close June soaring toward the important $6,200 per tonne-level ($2.81 per pound). Comex copper is presently trading at a respectable $2.71 per pound. The $6,200 goal was Goldman Sachs' 3-month target - a level briefly touched in mid-February. On May 8, Comex copper dipped to $2.4850 so this is good news.

LME Moly Oxide remains at $7.26 per pound disappointingly short of $8 after climbing to $7.94 for much of May. $8 per pound is a key level for General Moly (GMO) to secure additional funding for Mt. Hope from AMER.

Here's how I saw the weekly price action as told to the Kitco News Weekly Gold Survey:

My vote is down. Target gold price $1,230 per ounce. Target Silver price $16.5 per ounce.

Gold had a horrible week.

Starting Monday with a mini-flash crash to $1,236 in London proved a bad omen for gold. It retested that level yesterday plumbing 1,239.7 on the Comex. The yellow metal fortunately moved up to $1,241 in morning trading so far containing loses to 1% for the week. Although this price recovery may seem encouraging, it is scored against a backdrop of a beaten U.S. dollar and roaring copper prices that posted more than 3% gains.

A sobering fact for the weekly score sheet: gold lost considerable value compared to key commodities, the broader Bloomberg commodity index, U.S. equities and major currencies euro and Japanese yen - reminiscent of 2013 cross-asset loses [see Weekly Summary Chart].

The primary culprit is the prospect that four of the world's five largest central banks moving to tighten monetary policy. This has set off a sell-off in global bonds and clobbered the U.S. dollar - the DXY has fallen below 96 to score a low of 95.47 today. Tighter policy, higher bond yields with only tame inflation is kryptonite for our lustrous hero. I believe the 3-week downtrend will extend to next week with prices falling below this week's lows to test the key-$1,230-level. A further fall to the May Comex low ($1,217.8) would be ominous indeed.

One encouraging sign is softer inflation in Europe printing 1.3% for June compared to 1.4% in May. If this has the effect of moderating the recent nuanced stance by ECB Mario Draghi [that was interpreted hawkish*], gold should survive the recent pullbacks and re-affirm strong support in the low-$1,200 range.

Additional Note:

The fate of the Chinese yuan remains a key tell for gold and copper - a material drop in valuation could boost gold and depress copper prices. The yuan has stabilized below 7 USD/CNY for most of 2017 and has surprisingly strengthened lately. Volatility has also picked up from recent calm.  This morning, the yuan is trading even stronger than last week at 6.7792 USD/CNY (1-month volatility*** 0.26%).

Have a great weekend!

* Draghi Tried to Be Cautious But Spooked the Market Anyway (Bloomberg News, 6/28/2017);
This month's intraday Comex gold high was $1,298.8 per ounce; the May 9th low is $1,217.8

** Goldman Commodity Analysts Ask: How Did We Get It So Wrong? (Bloomberg News, 6/29/2017)

*** by comparison the euro & yen 1-month volatilites are  0.75% & 0.89% respectively.

Weekly Summary  for June 30, 2017 AM  (something new!)


(click on table for larger size)

My latest column in Kitco News, Montreal:

My commentary in the Summer 2017 Mining Quarterly:

Bottoms Up! (6/8/2017. Elko Daily Free Press)

Online Edition (pages 77-80): Summer 2017 Mining Quarterly

McEwen Mining (MUX) $2.625 per share


General Moly (GMO) $0.35 per share; Moly oxide (LME) $7.26 per pound

Marcum Microcap Conference  (Press Release, 6/16/2017)



Summer 2017 Mining Quarterly - It Rocks!

Summer 2017 Mining Quarterly

[SPECIAL NOTE: Marianne Kobak McKown will no longer be with the Elko Daily Free Press after this week. She was hired as the executive director of the Committee Against Domestic Violence and will start July 1. She will be missed by this report and the mining community, the best of luck on her new journey! Elko Daily Free Press column: Waters retires from CADV, 6/29/2017]

Marianne Kobak McKown has done an excellent job again bringing a new Mining Quaterly in time for summer. It has a new size format with glossy pages that really make images pop! There are great stories and updates on Goldstrike/Cortez, Florida Canyon, RheoMinerals, Newmont and McEwen Mining's Gold Bar Project north of Eureka.

Veteran Adella Harding has several columns on the rise in Nevada gold production and mining claims as well as new exploration. My column on commodity prices also discusses good news on mining employment nationally and updates from Barrick and Newmont locally:

Bottoms Up! (6/8/2017, Elko Daily Free Press)

Online Edition (pages 77-80): Summer 2017 Mining Quarterly

Hats off to Marianne, Adella and crew!

Gold Price Outlook: Second-Half 2017

Gold started the year nicely and should remain in my revised range of $1,180 to $1,320 per ounce*. Average gold price for 2017 is expected to print above $1,200 per ounce with an outside chance to see $1,400 given an adverse outcome for evolving U.S. trade policies, political or geo-political shocks (e.g., North Korea, Syria).

There is a sobering possibility of a serious gold correction later this year if you believe some of the observations and interest rate projections of bond guru Jeffrey Gundlach of DoubleLine Capital. Here's my analysis on why this may be the case:

The Gundlach Conundrum: $1,000 Gold by Year's End? (Kitco News, June 21,2017)

Gold has gained ground on the embattled euro and yen. Post-election, gold in euro and yen terms is up and safely above 2013 lows (chart below). It is worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen) and is now headed lower on the prospects of the ECB taking a more hawkish stance on monetary policy . Gold in yen has mostly trended higher since the U.S. election.

An important gold ratio to watch is gold-to-S&P500 or AUSP (see "Chart to Watch" below).

Gold ratios relative to copper and oil were stabilizing near historically less extreme levels which proved a healthy sign. Gold valuations relative to copper were elevated but are now falling.

Political and geo-political events together with concerns about the timing and efficacy of the new administration's policies have restored glitter to gold in 2017 although that is being tested lately. A fall below $1,230 is very bearish.

Gold below $1,200 per ounce-level is, however, a tempting "buy."

(please do your own research, markets can turn on you faster than a feral cat!)

* My pre-election October range for gold price was $1,240 to $1,320 per ounce, Winter 2016 Edition of the Mining Quarterly:

 Storms Never Last: Positive News for Gold, Oil & Copper

My commentary in the Spring 2017 Mining Quarterly reaffirms an average price above $1,200 per ounce with a potential run at $1,400:


Click on the image for a larger size:


Gold in euro & yen terms with good margin above 2013 lows

Chart to Watch

Here's a chart to watch for 2017. Click on the image for a larger size:


Gold-to-S&P 500 Ratio

An important gold ratio is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of 2015 and reversed to a bullish trend, peaking February 11, 2016. It bottomed again December 20, 2016 trended higher but then bearishly bottomed yet again March 15, 2017. We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.5112, in the lower level of a range bound meander for 2017.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted

Friday, June 23, 2017

Gold Bounce to $1,260; Red Metal Revival at $2.65; Moly Oxide Drops to $7.26 - Ouch!


Summer 2017 Mining Quarterly - It Rocks!

Friday, June 23, 2017 AM

Morning Miners,

What a dipsy-doodle this week for commodity prices. After some scary lows Wednesday, gold and copper look to finish Friday fit as a fiddle. If you want some rest form this drama check out the latest Mining Quarterly featured at the Annual Elko Mining Expo earlier this month - it rocks! (see below).

Troubling for General Moly (GMO) is the LME drop in moly oxide from $7.94 to $7.26 per pound. They need to have sustained prices above $8 per pound to be eligible for a new round of AMER funding. Ouch - going the wrong way!

Here's how I saw the weekly price action as told to the Kitco News Weekly Gold Survey:

My vote is down. Target gold price $1,250 per ounce. Target Silver price $16.6 per ounce.

After an early morning dash to the $1,260-level, gold is now trading at $1,258.4 per ounce to eek out a small weekly gain. This is welcome relief following the dramatic pullback Wednesday when many commodities followed oil lower to make multi-week or multi-month lows. Although Nymex crude is trying to stabilize around the $43-level it plumbed a 10-month low Wednesday losing 4.5% of its value for the week. In stark contrast, copper bounced to $2.6515 per pound in trade earlier today, now up over 2% for the week*.

This commodity roller coaster is symptomatic of global oversupply of key commodities and uncertainty about real demand going forward. The good new is that the yellow metal has mostly gained value against commodities (up more than 2% against the broader Bloomberg Commodity Index) except for the red metal revival to early-June prices. Gold also rose in terms of major currencies euro and Japanese yen.

Although dramatic, this week's price action reveals no major fundamental changes to the global picture and I would expect gold to return to $1,250 next week. It is critically important to stay above $1,230 per ounce. The yellow metal needs to make $1,265-$1,270 next week to break the bearish decline that started earlier this month. However, ongoing political and geopolitical uncertainty should reinstate strong support at the $1,250-level.

Additional Note:

The fate of the Chinese yuan remains a key tell for gold and copper - a material drop in valuation could boost gold and depress copper prices. The yuan has stabilized below 7 USD/CNY for most of 2017 and had a surprising stretch of strengthening earlier this month. Volatility has also picked up from recent calm.  This morning, the yuan is trading slightly weaker than last week at 6.8343 USD/CNY (1-month volatility** 0.33%).

Have a great weekend!

* Wednesday lows were: Nymex crude $42.05; Comex gold $1,241.7; Comex silver $16.315; Comex copper $$2.539

This month's intraday Comex gold high was $1,298.8 per ounce; the May 9th low is $1,217.8

** by comparison the euro & yen 1-month volatilites are  0.42% & 0.68% respectively.

Weekly Summary  for June 23, 2017 AM  (something new!)


(click on table for larger size)

My commentary in the just released Summer 2017 Mining Quarterly:

Bottoms Up! (6/8/2017. Elko Daily Free Press)

Online Edition (pages 77-80): Summer 2017 Mining Quarterly

My latest column in Kitco News, Montreal:


McEwen Mining (MUX) $2.70 per share


General Moly (GMO) $0.34 per share; Moly oxide (LME) $7.94 per pound

Marcum Microcap Conference  (Press Release, 6/16/2017)



Mining Employment Steady to Up from Here!

Summer 2017 Edition Mining Quarterly

Marianne Kobak McKown has done an excellent job again bringing a new Mining Quaterly in time for summer. It has a new size format with glossy pages that really make images pop! There are great stories and updates on Goldstrike/Cortez, Florida Canyon, RheoMinerals, Newmont and McEwen Mining's Gold Bar Project north of Eureka. 


Veteran Adella Harding has several columns on the rise in Nevada gold production and mining claims as well as new exploration. My column on commodity prices also discusses good news on mining employment nationally and updates from Barrick and Newmont locally:


Bottoms Up! (6/8/2017, Elko Daily Free Press)


Online Edition (pages 77-80): Summer 2017 Mining Quarterly

Hats off to Marianne, Adella and crew!

Gold Price Outlook: Second-Half 2017

Gold started the year nicely and should remain in my revised range of $1,180 to $1,320 per ounce*. Average gold price for 2017 is expected to print above $1,200 per ounce with an outside chance to see $1,400 given an adverse outcome for evolving U.S. trade policies, political or geo-political shocks (e.g., North Korea, Syria).

There is a sobering possibility of a serious gold correction later this year if you believe some of the observations and interest rate projections of bond guru Jeffrey Gundlach of DoubleLine Capital. Here's my analysis on why this may be the case:

The Gundlach Conundrum: $1,000 Gold by Year's End? (Kitco News, June 21,2017)

Gold has gained ground on the embattled euro and yen. Post-election, gold in euro and yen terms is up and safely above 2013 lows (chart below). It was somewhat worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen) but has since stabilized. Gold in yen has mostly trended higher since the U.S. election.

An important gold ratio to watch is gold-to-S&P500 or AUSP (see "Chart to Watch" below).

Gold ratios relative to copper and oil were stabilizing near historically less extreme levels which proved a healthy sign. Gold valuations relative to copper are elevated but not alarming.

Political and geo-political events together with concerns about the timing and efficacy of the new administration's policies have restored glitter to gold in 2017 although that is being tested lately. There is solid support at the $1,250-level; a fall below $1,230 is very bearish.

Gold below $1,200 per ounce-level is a tempting "buy."

(please do your own research, markets can turn on you faster than a feral cat!)

* My pre-election October range for gold price was $1,240 to $1,320 per ounce, Winter 2016 Edition of the Mining Quarterly:

 Storms Never Last: Positive News for Gold, Oil & Copper

My commentary in the Spring 2017 Mining Quarterly reaffirms an average price above $1,200 per ounce with a potential run at $1,400:


Click on the image for a larger size:


Gold in euro & yen terms with good margin above 2013 lows

Chart to Watch

Here's a chart to watch for 2017. Click on the image for a larger size:


Gold-to-S&P 500 Ratio

An important gold ratio is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of 2015 and reversed to a bullish trend, peaking February 11, 2016. It bottomed again December 20, 2016 trended higher but then bearishly bottomed yet again March 15, 2017. We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.5174, remaining in the middle of a range bound meander for 2017.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted

Friday, June 16, 2017

Gold Loses Glitter, Heads for $1,250; General Moly (GMO) Plan


Looking for fossil traces
Lone Mountain, Eureka, Nevada

Friday, June 16, 2017 AM

Morning Miners,

Another rough week for gold and its metallic cousins . After nearly breaking $1,300 last week, gold is trading just barely above the key $1,250 support level at $1,256.8.  Comex copper fell more than 3% on the week to presently $2.5640 per pound. Comex silver has fallen about as much saying good-bye to $17, currently pricing $16.67 per ounce. Moly Oxide remains unchanged on the LME at $7.94 per pound ($17,550 per tonne).

General Moly (GMO) presented a plan for Mt. Hope at the Marcum Microcap Conference (see below).

Here's how I see the damage this week as provided to the Kitco News Weekly Gold Report:

My vote is down. Target gold price $1,250 per ounce. Target Silver price $16.6 per ounce.

A more hawkish sounding Fed and falling inflation expectations proved a tough combination for gold that came dangerously close to key support of $1,250 per ounce after nearly touching $1,300 last week*. A President under FBI scrutiny and domestic terror on a baseball field failed to provide enough safe haven lift to spare the yellow metal a 1% loss for the week as it trades near $1,256 this morning. 

Ominously, the 1-month uptrend of higher lows was broken into the close last Friday setting the stage for more bearish sentiment going forward. It is likely gold will retest $1,250 next week; a fall below $1,230 would be very bearish. Ongoing political and geopolitical uncertainty should, however, maintain strong support at the $1,250-level.

Gold fared much better compared to falling commodities copper, oil and the broader Bloomberg Commodity Index but lost ground to both euro and Japanese yen. One bright spot was a surprise PBOC [People's bank of China] injection of liquidity into China's financial system - China loosening monetary policy establishes a potentially positive dynamic for the yellow metal.

Additional Note:

The fate of the Chinese yuan remains a key tell for gold and copper - a material drop in valuation could boost gold and depress copper prices. The yuan has stabilized below 7 USD/CNY for most of 2017 and has had a surprising stretch of strengthening lately. Volatility has also picked up from recent calm.  This morning, the yuan is trading slightly weaker than last week at 6.8104 USD/CNY (1-month volatility** 0.56%).

Have a great weekend!

* The Federal Reserve boosted short-term rates by 0.25% and laid out a plan for reducing its $4.2T balance sheet; Consumer Price Index for May, a key measure of inflation, rose 0.1% versus 0.2% expected; Last week's intraday Comex gold high was $1,298.8 per ounce; May 9th low is $1,217.8

** by comparison the euro & yen 1-month volatilites are  0.39% & 0.66% respectively.

Weekly Summary  for June 16, 2017 AM  (something new!)


(click on table for larger size)

My commentary in the just released Summer 2017 Mining Quarterly:

Bottoms Up! (6/8/2017. Elko Daily Free Press)

My latest column in Kitco News, Montreal:


Online Edition (pages 77-80): Summer 2017 Mining Quarterly

McEwen Mining (MUX) $2.59 per share (Close)


General Moly (GMO) $0.3276 per share (Close); Moly oxide (LME) $7.94 per pound

Marcum Microcap Conference  (Press Release, 6/16/2017)



Fossils from the Ordovician
Lone Mountain, Eureka, Nevada

General Moly Plan

The surge in General Moly (GMO) share price last week, briefly scoring $0.53 per share, quickly faded the following day and this morning trades at $0.3476, a 34% drop. Ouch, nice while it lasted. GMO needs to stay above the $0.30-level from my view.

General Moly CEO Bruce Hansen presented their future plans at the Marcum Microcap Conference yesterday which included a very detailed power point presentation:

Marcum Microcap Conference  (Press Release, 6/16/2017)

These are their priorities for next year:

  1. Leverage internal skills working with AMER to identify value-accretive opportunities with a focus on base metal prospects in North America
  2. Effect reinstatement of the ROD, and re-issuance of permits for water rights at the Mt. Hope Project which would lead to the Tranche 2 investment of $6.0 million by AMER, contingent on a molybdenum price trading at or above $8 per pound for 30 consecutive calendar days, and the restoration of our water permits by the State Engineer 
  3. Maintain existing state permits for the Mt. Hope Project 
  4. Prudently manage financial liquidity and flexibility to sustain the Company over the medium term and to fund current business activities into 2Q 2018, excluding potential additional AMER investments
There are also good projections for the molybdenum market predicting moly oxide prices in the $9.40 to $10.40 range for 2018-2019. Although LME moly (which this report tracks) is slightly below the key $8-level (item 2), spot prices have been a tad above.

A good read and best of luck to the General Moly team!


Gold Price Outlook: Second-Half 2017

Gold started the year nicely and should remain in my revised range of $1,180 to $1,320 per ounce*. Average gold price for 2017 is expected to print above $1,200 per ounce with an outside chance to see $1,400 given an adverse outcome for evolving U.S. trade policies, political or geo-political shocks (e.g., North Korea, Syria).

Gold has gained ground on the embattled euro and yen. Post-election, gold in euro and yen terms is up and safely above 2013 lows (chart below). It was somewhat worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen) but has since stabilized. Gold in yen has consistently trended higher.

An important gold ratio to watch is gold-to-S&P500 or AUSP (see "Chart to Watch" below).

Gold ratios relative to copper and oil were stabilizing near historically less extreme levels which proved a healthy sign. However, the gold-to-oil ratio is once again headed north above a comfortable range of variation. Gold valuations relative to copper are elevated but not alarming.

Political and geo-political events together with concerns about the timing and efficacy of the new administration's policies have restored glitter to gold in 2017 although that is being tested lately. There is solid support at the $1,250-level; a fall below $1,230 is very bearish.

Gold below $1,200 per ounce-level is a tempting "buy."

(please do your own research, markets can turn on you faster than a feral cat!)

* My pre-election October range for gold price was $1,240 to $1,320 per ounce, Winter 2016 Edition of the Mining Quarterly:

 Storms Never Last: Positive News for Gold, Oil & Copper

My commentary in the Spring 2017 Mining Quarterly reaffirms an average price above $1,200 per ounce with a potential run at $1,400:


Click on the image for a larger size:


Gold in euro & yen terms with good margin above 2013 lows

Chart to Watch

Here's a new chart to watch. Click on the image for a larger size:


Gold-to-S&P 500 Ratio

An important gold ratio to watch is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of 2015 and reversed to a bullish trend, peaking February 11, 2016. It bottomed again December 20, 2016 trended higher but then bearishly bottomed yet again March 15, 2017. We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.177, roughly in the middle of a range bound meander for 2017.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted

Friday, June 9, 2017

Gold Misses $1,300 Then Stumbles; General Moly (GMO) Surprise


Diamond Range
Lone Mountain, Eureka, Nevada

Friday, June 9, 2017 AM

Morning Miners,

Rough week for the yellow metal; good one for the red. After nearly breaking $1,300 Tuesday, gold is in danger of losing its latest momentum while copper gets some giddy-up go. Share price of General Moly (GMO) took an unexpected 90% leap from its May low to a high of $0.52 yesterday although it has since pulled back to $0.39 (story below). Moly Oxide remains unchanged on the LME at $7.94 per pound ($17,550 per tonne).

Comex copper is currently trading at $2.6365 per pound, up nearly 2.5% for the week. Here's how I see the gold story as provided to the Kitco News Weekly Gold Report:

My vote is down. Target gold price $1,260 per ounce. Target Silver price $17.1 per ounce.

The week ends with a much stronger U.S. dollar on a U.K. election result with no clear majority. Yesterday's ECB hold on rates and the Comey testimony had less impact on [metal] markets. Dollar strength has pulled gold from a near miss of the key $1,300-level Tuesday* to trade this morning below $1,270 per ounce.

I believe a likely bump in interest rates from the FOMC next week will bring the yellow metal to $1,260 or lower threatening an uptrend of higher-lows established since May 9th.

The red metal fared much better, gaining nearly 2.5% for the week even with a stronger greenback. This was broadly true for other key commodities with the exception of falling oil. Gold lost nearly 1% of value compared to the Bloomberg Commodity Index but gained 3% against oil.

Gold's losses also extended to the Japanese yen but held steady relative to the euro. Holder's of gold in terms of pound sterling were among the few happy campers in the gold world.

Not a great short-term outlook for the yellow metal in commodities or currencies. Ongoing political and geopolitical uncertainty should, however, maintain strong support at $1,250 per ounce.

Additional Note:

The fate of the Chinese yuan remains a key tell for gold and copper - a material drop in valuation could boost gold and depress copper prices. The yuan has stabilized below 7 USD/CNY for most of 2017 and has had a surprising stretch of strengthening lately. Volatility has also picked up from recent calm.  This morning, the yuan is trading at 6.7970 USD/CNY (1-month volatility** up from last week at 0.59%).

Have a great weekend!

* Tuesday's intraday high was $1,298.8 per ounce; May 9th low is $1,217.8

** by comparison the euro & yen 1-month volatilites are  1.7% & 1.9% respectively.

Weekly Summary  for June 9, 2017 AM  (something new!)


(click on table for larger size)

My commentary in the just released Summer 2017 Mining Quarterly:

Bottoms Up! (6/8/2017. Elko Daily Free Press)

My latest column in Kitco News, Montreal:


Online Edition (pages 77-80): Summer 2017 Mining Quarterly

McEwen Mining (MUX) $2.56 per share (Close)


General Moly (GMO) $0.3000 per share (Close); Moly oxide (LME) $7.94 per pound



Old Tree, Old Mountain
Lone Mountain, Eureka, Nevada

General Moly Surprise

The surge in General Moly (GMO) share price yesterday remains surprising to me given that Moly oxide price hasn't moved in nearly a month from $7.94 per pound. The jump was nonetheless noteworthy with over one million shares trading at nearly six times the average 90-day volume. The high for yesterday was $0.4394 per share with a close at $0.4350. Today, prices shot up to $0.5270 but quickly collapsed to trade at $0.38 - let's see where GMO closes today, anything above $0.37 would be encouraging from my view [Update: GMO closed at $0.38, game on].

Why the jump? There was an Annual Meeting this week but I didn't see any big surprises in their press release. Perhaps more importantly, General Moly will tell why they are optimistic about the future next Thursday (June 15):

General Moly Presents at Marcum Microcap Conference in New York (Press Release, 6/5/2017)

The press release provides this teaser:

In his presentation, Mr. Hansen [General Moly CEO] will provide an overview of the Company and its major assets in Nevada, the Mt. Hope Project, one of the largest and highest grade primary molybdenum deposits in the world, and the previously mined Liberty Project. He will also discuss the unsustainability of current low molybdenum prices amidst improving long-term fundamentals in the molybdenum market, including rising steel consumption from a stabilized oil industry, growing liquid natural gas market and China's unprecedented infrastructure expansion.

Maybe a stronger Chinese yuan (see above) and GMO jump in share price are seeing something I'm not. It would be great to be surprised again by more momentum next week.

Best of luck to the General Moly team.

Gold Price Outlook: Second-Half 2017

Gold started the year nicely and should remain in my revised range of $1,180 to $1,320 per ounce*. Average gold price for 2017 is expected to print above $1,200 per ounce with an outside chance to see $1,400 given an adverse outcome for evolving U.S. trade policies, political or geo-political shocks (e.g., North Korea, Syria).

Gold has gained ground on the embattled euro and yen. Post-election, gold in euro and yen terms is up and safely above 2013 lows (chart below). It was somewhat worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen) but has since stabilized. Gold in yen has consistently trended higher.

An important gold ratio to watch is gold-to-S&P500 or AUSP (see "Chart to Watch" below).

Gold ratios relative to copper and oil were stabilizing near historically less extreme levels which proved a healthy sign. However, the gold-to-oil ratio is once again headed north above a comfortable range of variation. Gold valuations relative to copper are elevated but not alarming.

Political and geo-political events together with concerns about the timing and efficacy of the new administration's policies have restored glitter to gold in 2017. There is solid support at the $1,250-level.

Gold below $1,200 per ounce-level is a tempting "buy."

(please do your own research, markets can turn on you faster than a feral cat!)

* My pre-election October range for gold price was $1,240 to $1,320 per ounce, Winter 2016 Edition of the Mining Quarterly:

 Storms Never Last: Positive News for Gold, Oil & Copper

My commentary in the Spring 2017 Mining Quarterly reaffirms an average price above $1,200 per ounce with a potential run at $1,400:


Click on the image for a larger size:


Gold in euro & yen terms with good margin above 2013 lows

Chart to Watch

Here's a new chart to watch. Click on the image for a larger size:


Gold-to-S&P 500 Ratio

An important gold ratio to watch is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of 2015 and reversed to a bullish trend, peaking February 11, 2016. It bottomed again December 20, 2016 trended higher but then bearishly bottomed yet again March 15, 2017. We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.5200, still surprisingly resilient given that S&P 500 is again setting new all-time highs this morning.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted

Friday, June 2, 2017

Gold Just Shy $1,280 On Mixed Jobs Report - Rat Rod for 2017?


Don't Let Looks Fool You - Damn Quick at 6,000 feet!
Annual Drag Races, Eureka, Nevada

Friday, June 2, 2017 AM

*** UPDATE *** Comex gold closed Friday at $1,280.2 per ounce; intraday high scored $1,282.2

Morning Miners,

I love a sleeper. The Rat Rod featured in the headline photo took many by surprise at the Eureka Annual Drag Races over Memorial Day Weekend. The young man (left) drove this beauty from Wells, Nevada to put many fancier machines on the trailer. He clocked low 12-seconds in the quarter with top speeds of 110-plus miles per hour. All this is at 6,000 feet, pardner!

This year gold has a similar story. In a rising interest rate environment with the prospects of strong U.S. economic growth, many experts thought the yellow metal would have a dismal year. As we enter the second-half of 2017, gold nearly broke $1,280 per ounce this morning while stock markets made new highs and interest rates plummeted (10-year Treasury dipped to 2.144%). If the Lustrous One is this year's Rat Rod, there should be some more bullish surprises ahead.

Comex copper wobbles at $2.5875 per pound, down 1% from last Friday on China worries. Moody's debt downgrade of the world's second largest economy and falling iron ore prices are red flags for the recovering demand narrative. Moly oxide remains unchanged at $7.94 per pound after its big jump three weeks ago.

My input to the Kitco News Weekly Gold Report:

My vote is up. Target gold price $1,280 per ounce. Target Silver price $17.4 per ounce.

Like the U.S. labor report this morning, gold's performance is mixed. Jobs added were lower than expected but the unemployment rate fell to to a 16-year low at 4.3%*.

Although up for the week on a weakening U.S. dollar, Comex gold failed to break $1,280** by a few cents on weaker-than expected gains in U.S. jobs added with downward revisions for previous months. However, the jobs report did give the yellow metal enough boost to stay abreast with U.S. stocks which made new record highs this morning.

Gold raced ahead of key commodities copper and falling oil scoring a value peak with the latter not seen since November of last year. Its gains compared to the Broader Bloomberg Commodity Index were greater than 2.5% [see Weekly Summary below].

Gold lagged major currencies euro and yen, but not significantly. Upward trends relative to both remain intact [see currency chart below]. I believe the bullish trend established since the May 9th low** will continue next week with gold taking another shot at $1,280.

Additional Note:

The fate of the Chinese yuan remains a key tell for gold and copper - a material drop in valuation could boost gold and depress copper prices. The yuan has stabilized below 7 USD/CNY for most of 2017. Continuing low volatility suggests the yuan remains a currency yawn.  This morning, the yuan is steady, trading at 6.8136 USD/CNY (1-month volatility*** slightly up from last week at 0.39%).

Have a great weekend!

* Labor report highlights as reported by Bloomberg News; 138,000 jobs added (versus 182,000 expected), unemployment rate 4.3% (versus 4.4% expected). More details (Bloomberg):


  1. Participation rate, or share of working-age people in the labor force, decreased to 62.7 percent from 62.9 percent
  2. The U-6 or underemployment rate fell to 8.4 percent, lowest since November 2007, from 8.6 percent; rate includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking
  3. The measure known as part-time for economic reasons fell by 53,000 people to 5.22 million Private employment rose by 147,000 (forecast was 175,000) after a 173,000 increase; government payrolls fell by 9,000
  4. Factory payrolls fell by 1,000, construction was up 11,000; retail payrolls declined 6,100, the fourth straight drop; and leisure and hospitality employment rose by 31,000
  5. Average work week for all workers unchanged at 34.4 hours (forecast was 34.4 hours)
  6. Wages declined in manufacturing, utilities and professional and business services; pay rose in retail, construction, information


** Today's high (so far) is $1,279.2 per ounce; May 9th low is $1,217.8

*** by comparison the euro & yen 1-month volatilites are  1.25% & 1.03% respectively.

Weekly Summary  for June 2, 2017 AM  (something new!)


(click on table for larger size)

My latest column in Kitco News, Montreal:


My commentary in the the Spring 2017 Mining Quarterly:


Online Edition (pages 44-46): Spring 2017 Mining Quarterly

McEwen Mining (MUX) $2.56 per share (Close)


General Moly (GMO) $0.3000 per share (Close); Moly oxide (LME) $7.94 per pound

An unofficial source told me today that a much anticipated Nevada Supreme Court decision regarding water rights has been moved from April 4th to May 1st.



...and he drove it to the race from Wells, NV
Annual Drag Races, Eureka, Nevada

Gold Price Outlook: Second-Half 2017

Gold started the year nicely and should remain in my revised range of $1,180 to $1,320 per ounce*. Average gold price for 2017 is expected to print above $1,200 per ounce with an outside chance to see $1,400 given an adverse outcome for evolving U.S. trade policies, political or geo-political shocks (e.g., North Korea, Syria).

Gold has gained ground on the embattled euro and yen. Post-election, gold in euro and yen terms is up and safely above 2013 lows (chart below). It was somewhat worrisome that gold in euro terms broke below uptrend support March 9 and then again after French elections (i.e. defeat of Le Pen) but has since stabilized. Gold in yen has consistently trended higher.

An important gold ratio to watch is gold-to-S&P500 or AUSP (see "Chart to Watch" below).

Gold ratios relative to copper and oil are stabilizing near historically less extreme levels which is a healthy sign. Political and geo-political events together with concerns about the timing and efficacy of the new administration's policies have restored glitter to gold in 2017.

Gold below $1,200 per ounce-level is a tempting "buy."

(please do your own research, markets can turn on you faster than a feral cat!)

* My pre-election October range for gold price was $1,240 to $1,320 per ounce, Winter 2016 Edition of the Mining Quarterly:

 Storms Never Last: Positive News for Gold, Oil & Copper

My commentary in the Spring 2017 Mining Quarterly reaffirms an average price above $1,200 per ounce with a potential run at $1,400:


Click on the image for a larger size:


Gold in euro & yen terms with good margin above 2013 lows

Chart to Watch

Here's a new chart to watch. Click on the image for a larger size:


Gold-to-S&P 500 Ratio

An important gold ratio to watch is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of 2015 and reversed to a bullish trend, peaking February 11, 2016. It bottomed again December 20, 2016 trended higher but then bearishly bottomed yet again March 15, 2017. We must stay above the December low (0.4973)! Currently this AM the AUSP is 0.5258, surprisingly resilient given that S&P 500 is setting new all-time highs this morning.

Cheers,

Colonel Possum & Mariana

Photos by Mariana Titus if not otherwise noted