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


The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO) 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.

Wednesday, April 15, 2009

A Fool's Errand

Morning Miners!

It is 6:43am and the coffee's hot. Predicting the price of gold is a fool's errand but the ole Colonel is at least a happy fool. The conventional market wisdom maintains a pretty bleak picture for near term gold prices and this morning's inflation data lends some additional support to their argument:

"The consumer price index slid 0.1% in March from February, the Labor Department said Wednesday...Year over year, consumer prices fell 0.4%, the first annual decline since August 1955."(WSJ, 4/15/09)

If gold is an inflation hedge, fear of deflation is usually a gold slayer. The naysayers predict gold will find resistance at $900 and fall back, maybe way back. A lot of this pessimism involves who is in the market. As I said in my 4/13 article, "What's up (or down) with Gold?", investors have overshadowed fundamentals of supply and demand lately.

Dennis Gartman, the "Commodity King" and my hero, said yesterday that a rise in gold today is a sell. Furthermore, Gartman may very well "short" gold for the time being. Shorting is a way to bet a price will go down, and so-called shorts can create havoc if they sense price weakness (remember what happened to bank stocks last Fall? Things got so bad that shorting was temporarily halted by the SEC for that sector).

So what does the Colonel think? Hell, like a happy fool I'm sticking with my beer bet:

Gold sees $929 before $844 on or before 5/15/09

I must admit that Gartman's statement yesterday did catch some sweat on my hat band. Not too many folks have got rich betting against this guy. Any takers out there?

Enough talk, let's walk the walk:

Oil is a bit over $50 in early trading at $50.24; the dollar ("Dixie" or .DXY) is pounding the euro and yen but weaker against the Canadian Loonie, up 0.3% to 85.06. The commodity index (.CRB) is up a scotch at 226.13.

Gold is up $3.5 to $895.5 (June contract); Silver is up 0.015 to $12.780; Copper is kicking butt again up $.0470 to $2.1620; Molybdenum remains not so fat but dumb and happy at $7.95.

The DOW is up 31 points to 7951.24; the S&P 500, up 2.36 points to 843.86. Miners are so-so, General Moly is holding steady after yesterday's monster rally:

Barrick (ABX) $29.35 up 0.22%
Newmont (NEM) $42.38 down 0.07%
General Moly (GMO) $1.67 down 0.01%
Quadra (QUA.T) C$6.09 down 0.98%
Freeport McMoran (FCX) $44.27 up 0.01% (a bellwether mining stock spanning gold, copper & molybdenum)


Colonel Possum

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