"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, McEwen Mining (MUX) and General Moly (GMO). Please do your own research, markets can turn on you faster than a feral cat.

Thursday, March 26, 2009

Fire Trucks, Mining and the Price of Oil

Morning Miners!

It is 6:48 am, the ole Colonel is on his second cup and it looks like a good day in early morning trading. General Moly continues its winning streak at $1.38 up another 5% from yesterday. Barrick and Newmont are moving sideways at $32.99 and $46.05. April contract for gold is up $7.00 at $942.8.

My good buddy Eric tells me the new Eureka firehouse has doors and will soon be ready for bricks, lay'um tall and true Stu! At least we'll all have a safe place to go if North Korea points a missile at Eureka. This brings me to my thought for the day: North Korea is fixing to launch soon and that caused a pop in the oil futures yesterday even with a lower than expected inventory report.

Last June, geopolitical concerns could move oil $10 in a day; nowadays it's hardly worth a buck. Futures opened around $54, up again from yesterday. High oil is bad for mining's bottom line resulting in higher operating costs. In this goofy environment, however, low oil prices could erode the company’s top line revenue. There is general consensus that $25 sweet crude means the world economy is in deep doo-doo with a lower demand for raw materials.

T. Boone Pickens predicted the other day that oil would see $60 before $40 and hit $75 before the end of the year. Not too many folks have gotten rich betting against this Texas octogenarian. I'd like to see things stabilize around $45; the average price for this year is inching up just north of $42. We’ll see, by the way where are all the fire trucks?

Cheers,

Colonel Possum

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