"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, May 29, 2009

Gold Breaks $973 - Beer, Colonel!


Morning Miners!

It is 5:28 AM and the coffee is ready! We've got a happy Colonel this morning who woke to the news that gold broke $973 on the COMEX in very early morning trading (04:30 GMT, 05:30 London time). Pardners, we've got a genuine precious metals rally underway. I had predicted $973 before July Fourth and we're still in the last innings of May (see the Colonel's Beer Derby to the bottom right of this blog). It picked up steam yesterday when silver spiked above $15 on the London Spot Market and the momentum gave gold a healthy push higher.

It has been a short but wild and crazy week starting out with our brand new "Rancher's Corner" (to your right). If you have been away check it out, there are nine links that give local farmers and ranchers direct access to the markets that affect their livelihood.

The Rancher's Corner

The Eureka Miner's Million Dollar Grubstake portfolio went in the black for the first time since we put it together earlier this month. For newcomers, the Grubstake is a $1,000,000 investment in companies that directly or indirectly contribute to the future of Eureka County Mining. There are 12 stocks in the portfolio and we post the progress of our investment after the market close every Friday. It looks like we're on track to make some moolah today!

The Eureka Miner's Million Dollar Grubstake Portfolio

The biggest news this week has been the Bond Vigilantes attack on the economic policies of Congress and the Federal Reserve. They banded with the Inflationistas (which includes most precious metal investors) for a real Wild West showdown. The Vigilantes bid up the 10-year T-Bill yield to a startling 3.70% as the Inflationistas kicked off the current silver and gold rallies. Yee-ha!

The response of the Fed has been rather stoic as wounded government troops made a tactical retreat to Fort Apache:

WASHINGTON -- Federal Reserve officials believe the recent sharp rise in yields on U.S. Treasury bonds could reflect a mending economy and a receding risk of financial catastrophe, suggesting the central bank won't rush to react -- even though some investors see danger in the government's rising cost of borrowing. (WSJ, 5/28/09)

International reaction to the skirmishes is mixed but mostly positive:

Australia

"The accumulation of positive U.S. economic data certainly supports the green shoots theory. It's pointing to a "V" shaped recovery," said Macquarie Private Wealth associate director David Halliday. (WSJ, 5/29/09)

Japan

"Upside still depends on the U.S. market [and] U.S. sentiment seems to change every day," said Tachibana Securities analyst Kenichi Hirano. (WSJ, 5/29/09)

South Korea

"The market is not moving in a certain direction. There are no definite signs of the U.S. housing market bottoming yet. But foreigners continue to buy Korean stocks, preventing a sharp correction," said Kim Hak-kyoon at Korea Investment & Securities. (WSJ, 5/29/09)

What does it all mean? Stay tuned buckaroos, the ole Colonel has got you covered!

Enough talk, let's walk the walk:

Oil is up $1.27 to $66.35 (July contract); Gold is up $13.5 to $976.7 (August contract); Silver up $0.310 at $15.470 (July contract); Copper is up 0.0550 to $2.1920 (July contract); Molybdenum holds at $10.25.

The DOW is down 8.36 points to 8395.44; the S&P 500, down 2.00 points to 904.83. The miners are still on fire:

Barrick (ABX) $38.59 up 3.79%
Newmont (NEM) $48.99 down 3.46%
General Moly (Eureka Moly, LLC) (GMO) $1.99 up 4.74%
Freeport McMoran (FCX) $53.50 up 2.48% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are jolly (a "tell" for General Moly):

Nucor (NUE) $43.44 up 1.45% - domestic steel manufacturing
ArcelorMittal (MT) $33.52 up 0.65% - global steel producer
POSCO (PKX) $83.66 up 1.95%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio continues in the black, up 2.48% to $1,043,302.43 for a daily gain of $25,266.60. Isn't it fun to be a millionaire!

Cheers,

Colonel Possum

Thursday, May 28, 2009

Where's the Duke When We Need Him?


Morning Miners!

It is 5:42 AM and we have a beautiful pink sky over Diamond Valley. Across the pond, spot silver prices just broke $15.00 at 13:42 London time with an impressive spike up. Exactly eight hours ahead in a land far away, something "unexpected" has occurred. What the tarnation is going on buckaroos? In the days of the Wild West, at least in the movies, our heroes like John Wayne would come in every once in awhile to clear the prairie of evil-doers and scalawags. Today, there are no shortage of scoundrels in financial markets and far too few heroes to set things straight.

Let's start with the word "unexpected". When used in the context of markets, especially bear markets, grab your Model 94 and take cover. Unexpected occurred yesterday when the 10-year Treasury Note yield jumped above 3.70%, a level last seen in November. So what? The 10-year note is key in setting mortgage and other consumer credit interest rates which the government has been working like the dickens to keep contained. The Fed has gone beyond cutting rates to directly purchasing such financial assets such as mortgage-backed securities, as well as printing new money to buy Treasury notes for the first time in half a century. Yikes!

All of this effort is to reflate housing and get us back on track economically. So who screwed up the plan yesterday? The Bond Vigilantes! Folks, I'm not making this up, that's what the group of investors are called on Wall Street that have declared war on Congress and the Federal Reserve's policy of flooding the world with dollars to beat the recession. Yesterday, they flexed their muscles by bidding up yields on T-Notes which killed the recent rally in the stock market dropping the DOW 171 points. The ole Colonel is willing to bet this morning's pop in silver is a metallic reaction to the first shots fired in a financial range war. My problem is that I can't tell good guys from bad guys in this movie!

Let's keep track of this brouhaha and watch where interest rates (that affect you and me) go in the next month. Today's national averages (WSJ, 5/28/09):

Money Market 1.33%
5-year Bank CD 2.73%
30-yr mortgage, fixed 5.09%
15-yr mortgage, fixed 4.71%
New-car loan, 48-month 7.48%
Home-equity LOC, $30K 5.79%

The Report will compare these in June, stay tuned.

Enough talk, let's walk the walk:

Oil is up $0.40 to $63.85 (July contract); Gold is up $5.8 to $961.0 (August contract); COMEX Silver follows London Spot up $0.265 at $15.130 (July contract); Copper is up 0.0155 to $2.1365 (July contract); Molybdenum holds at $10.25.

The DOW is down 13.46 points to 8286.56; the S&P 500, down 0.49 points to 892.57. The miners are on fire:

Barrick (ABX) $36.93 up 2.44%
Newmont (NEM) $47.33 down 3.18%
General Moly (Eureka Moly, LLC) (GMO) $1.85 up 3.35%
Freeport McMoran (FCX) $51.11 up 2.37% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are screaming (a "tell" for General Moly):

Nucor (NUE) $43.06 up 3.18% - domestic steel manufacturing
ArcelorMittal (MT) $32.36 up 5.54% - global steel producer
POSCO (PKX) $80.83 up 3.80%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio has gone in the black, up 2.18% to $1,002,795.13 for a gain of $2,795.13.

Cheers,

Colonel Possum

Wednesday, May 27, 2009

Barrick, General Moly Ride the Global Tide


Photo by Reuters

Morning Miners!

It is 5:23 AM and the coffee is hot! We had the ranchers in the break room yesterday and kicked off the new "Rancher's Corner" to your right. Gary McCuing gave me a holler after the meeting and reminded me that I forgot one link and then he added another. You'll find the Fallon Livestock Exchange, Inc. and the Livestock Marketing Information Center in the new list for a total of nine links to great market information for farming and ranching in our area. Thanks Gary!

By the by, one of the ranchers brought us over a new can of Folgers from Raine's. While you're enjoying that cup of joe, just remember that Eureka pulls out of this downturn when miners, farmers and ranchers pull together.

Enough preaching, how is that recovery coming along? I thought we'd look at Barrick and General Moly together this morning since both are riding the global tide. There is a lot of ebb and flow and each is pulled by different currents. In this context; gold price pulls Barrick, the health of international and domestic steel producers (and therefore, the price of molybdenum) pull General Moly.

Both have had impressive runs in stock price from their March lows:

Barrick (ABX) up 34.5%
General Moly (GMO) up 217%

That beats the return on a bank CD buckaroos, but can it last? Here are the price movements of the underlying metals compared to their 2009 lows:

Gold up 15.1%
Molybdenum up 28.1%

Yesterday, two key ratings agencies gave their 12-month price predictions for both miners:

Barrick (ABX) raised to $47.50 from $40 by BMO Capital markets; yesterday's close $36.80

General Moly (GMO) cut to $2.00 from $2.50 by the Bank of Nova Scotia; yesterday's close $1.90

The gold price argument has broken into two basic camps: inflationistas versus the deflationistas:

...'there are still plenty of problems out there, and I think you are going to continue to see flight to safety be an important factor,' said Bill O'Neill, one of the principals with Logic Advisors. He suggested that by year-end, gold will again test $1,000, which it topped for the first time in 2008...'Inflation seems to be an inevitable development,' he said. 'I think demand for hard assets will continue to be strong, and gold will slowly but surely benefit from that.' (WSJ, 5/25/09)

and,

Among the skeptics is Leonard Kaplan, president of Prospector Asset Management. He said he expects gold to decline in the months ahead as the global economy remains soft, dismissing ideas that signs of growth may be emerging in the economy. "In a deflationary recession," he said, "everything goes down. (WSJ, 5/25/09)

Then there is a middle-of-the-road view:

But before gold hits $1,000, it could dip below $900, some analysts say. Prices could head toward $800 as seasonal weakness sets in from mid-June to the end of the summer, said CPM Group analyst Carlos Sanchez. (WSJ, 5/25/09)

The Colonel sticks with his prediction: $973 by the Fourth of July, $1050 by Christmas!

Now for General Moly, there is a lot of activity in the world of steel:

The China Iron and Steel Association has said Chinese mills want a price cut of between 40% and 45% to reflect weaker market conditions, and that if the benchmark was set offshore, China wouldn't accept a cut of less than 40%. When contacted, a POSCO [20% stakeholder in Mt. Hope] official in Seoul said the Korean steel maker is yet to agree on prices with any of the miners. "Iron ore talks for this year are not over yet," company spokesman Kim Dong-ho said, without elaborating. (WSJ, 5/26/09)

Don't you wish you could demand a 40% discount from WalMart the next time you went shopping for Chinese goods? Some miners have already caved to price pressure:

MELBOURNE -- Rio Tinto Ltd. said it has struck a deal with Japan's Nippon Steel Corp. for a 33% to 44% drop in iron ore term prices for the 2009-10 contract year that started April 1. (WSJ, 5/26/09)

Lots to think about folks. The ole Colonel will try to sort it all out for you in the coming months. I'm still bullish on gold, Barrick and General Moly. Go with the flow, ride the tide!

Enough talk, let's walk the walk:

Oil is up $0.49 in early trading at $62.94 (July contract). Gold is down $0.4 to $952.9 (June contract); Silver is up $0.030 at $14.630; Copper is up 0.0615145 to $2.1265 (July contract); Molybdenum holds at $10.25.

The DOW is down 2.39 points to 8471.10; the S&P 500, up 0,31 points to 910.64. The miners are so-so:

Barrick (ABX) $36.63 down 0.46%
Newmont (NEM) $46.88 down 0.66%
General Moly (Eureka Moly, LLC) (GMO) $1.88 down 1.05%
Freeport McMoran (FCX) $50.67 up 1.36% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are up (a "tell" for General Moly):

Nucor (NUE) $41.89 up 1.80% - domestic steel manufacturing
ArcelorMittal (MT) $31.04 up 2.07% - global steel producer
POSCO (PKX) $79.13 down 0.09%- South Korean integrated steel producer

The venerable Eureka Miner's Grubstake Portfolio is up 0.32%

Cheers,

Colonel Possum

Tuesday, May 26, 2009

Checkout Our New Feature: "Rancher's Corner"


Morning Miners! Morning Ranchers!

It is 6:04 AM and life is good in the Great Basin! I hope you had a good Memorial Day weekend and it looks like we have some sunny weather ahead. I've invited a few ranchers to the coffee room this morning. Now don't y'all start fighting over water, there is plenty in the cooler by the coffee maker. In fact, mining, farming and ranching have existed in some form together since the Territorial days. F.D. Coburn, author of The Book of Alfalfa (1907), said in 1908:

"Gold could not always be found with pick and shovel, it could without fail be found by alfalfa roots."

Well pardners, since we've got plenty of gold, high-grade alfalfa and cattle in Eureka County, the ole Colonel thought it high time to include a "Rancher's Corner" in this market report. You'll find it to the right directly below the "Miner's Corner." Now, don't start fighting again, I couldn't figure out how to put them side-by-side!

Gary McCuing helped me put this together and I got a lot of support from Jake Tibbitts and Kathy Porter. It is a work in progress so let me know how it can be improved to get you the best market news on a daily basis.

The first three links take you to the Agricultural Marketing Service of the USDA. You'll find the latest news and Livestock & Grain Hay Reports for Northern Nevada there. The next are the Western Livestock Journal, Burely Livestock Report and Producers Livestock Marketing Association that provide livestock auction information from Shasta, California, to Jerome, Idaho. The Western Video Market gives you access to live video feeds.

Below the "Rancher's Corner" is a link to the local weather with National Weather Service maps and satellite imagery. The Report also has a "Discover Eureka" section and "Readers Tips - Hot Links." Let me know if you have some favorite links or upcoming news and the Colonel will post them.

Thank you ranchers for coming this morning and joining the Report!

OK folks, this is where we stop the talk and walk the walk:

Oil is down $1.65 in early trading at $60.02 (July contract). Gold takes a tumble, down $11.4 to $947.5 (June contract); Silver stays above $14 at $14.495; Copper is down 0.0275 to $2.0700 (July contract); Molybdenum holds at $10.25.

The DOW is up 144.48 points to 8421.80; the S&P 500, up 14.55 points to 901.55. The miners are mixed on an up day:

Barrick (ABX) $36.46 down 4.05%
Newmont (NEM) $45.62 down 3.02%
General Moly (Eureka Moly, LLC) (GMO) $1.75 up 1.16%
Freeport McMoran (FCX) $48.86 up 1.08% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are so-so (a "tell" for General Moly):

Nucor (NUE) $40.79 up 1.75% - domestic steel manufacturing
ArcelorMittal (MT) $29.17 up 0.62% - global steel producer
POSCO (PKX) $77.61 down 2.99%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.73%

Cheers,

Colonel Possum

Sunday, May 24, 2009

The Colonel Wishes You a Happy Memorial Day!


Howdy Miners!

The Colonel wishes you a happy and safe Memorial Day. The domestic markets will be closed Monday so I'll see you all bright and early Tuesday morning. We've got a short but full week ahead kicked off with a brand new "Rancher's Corner" feature to the Report. This has been in the works for a bit with a lot of help and encouragement from Gary McCuing, Jake Tibbitts and Kathy Porter.

Look for my nine foot Old Glory on the west side of the canyon as you drive into Eureka from the north on HWY 50.

Cheers,

Colonel Possum

Friday, May 22, 2009

The Colonel's New Gold Price Predictions




Morning Miners!

It is 5:31 AM and my Chihuahua, Loquita, just chased a deer out of the yard. I guess that proves attitude trumps size, pardner! The ole Colonel has just added a new feature to the Report. If you look below the "Miner's Corner" to your right you will find "Reader's Tips - Hot Links." Eric sent in the coolest link to the construction progress on the I-580 connecting Reno and Carson City. There are four live Web cams and I just finished watching the sun rise on the I-580 bridge over Galena (south cam). Talk about government accountability; if you see someone dogging the job, give a holler!

OK, I promised some predictions on the future price of gold today. Such things are folly but there's no fool like an old fool. This prediction business is tricky at best and I must admit that I owe the reader a beer on oil prices. If you checkout the Colonel's Beer Derby to the right (below the copper price chart), you'll see my bet that oil would see $52 before $62 on or before 5/30/09. Wednesday, the intraday trading on the July contract hit $62.26 before falling back. It happened so fast, the Colonel didn't catch it until last night. Twenty six cents blew my winning streak (4 for 5, 1 open) and I still believe we're headed south from here.

Enough whining, here are my new gold predictions:

Gold breaks $973 before the Fourth of July, 2009

Gold breaks $1050 before Christmas, 2009

Now did I just pull these numbers from where the sun don't shine? Heck no buckaroos, we've been chewing on this topic since April:


Where Does Gold Go Next? (5/18/2009)


Lower Propane Bills and More Gold in China (4/27/2009)


Who’s Got the Gold? (4/17/2009)


A Fool’s Errand (4/15/2009)


What’s up (or down) with Gold? (4/13/2009)


Gold Takes another Leg down (4/6/2009)


Of course, my bet might be worth just so much Fool's Gold!

Enough talk, let's walk the walk:

Oil is up $0.71 at $61.76 (July contract). Gold is up $5.0 to $956.2 (June contract); Silver closes on $15 at $14.710; Copper is up 0.0615 to $2.1125 (July contract); Molybdenum holds at $10.25.

The DOW is down 25 points to 8266.57; the S&P 500, down 3.44 points to 884.89. The miners are happy on a down day:

Barrick (ABX) $37.46 up 1.55%
Newmont (NEM) $46.87 up 0.54%
General Moly (Eureka Moly, LLC) (GMO) $1.73 up 2.36%
Freeport McMoran (FCX) $49.62 up 1.99% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are recovering (a "tell" for General Moly):

Nucor (NUE) $39.75 up 1.30% - domestic steel manufacturing
ArcelorMittal (MT) $29.38 up 1.70% - global steel producer
POSCO (PKX) $80.92 up 0.30%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 1.03%

Cheers,

Colonel Possum

Thursday, May 21, 2009

I Ran into the Governor Yesterday...


Morning Miners!

It is 5:53 AM and the sun is shining in Eureka! I ran into the Governor yesterday while I was walking my dog, Loquita. He had just arrived at the Opera House for a town hall meeting. The ole Colonel sensed the Governor might be asking me for more money so Loquita and I walked down to Raine's to buy some salted peanuts.


I did look forward to the Natural Resources Advisory Commission monthly meeting last night. Jake Tibbitts and the boys had a lively discussion and Kathy kept everyone in the corral. The topics included a passel of new legislation; the Wild Free-Roaming Horses and Burros Act, Clean Water Restoration Act, Hard Rock Mining and Reclamation Act of 2009 and the Blair Holt's Firearm Licensing and Record of Sale Act. Pardner, if you think the government is in your back forty just wait, they'll be sitting at your table for dinner before you can spell R-E-G-U-L-A-T-I-O-N!

By the by, Jake is looking for someone to fill a vacancy to represent mining in Eureka County. Member Carl Wagner has apparently left to work at Kennecott in Arizona. If you're interested, give Jake a holler (natresmgr@eurekanv.org).

During the Public Comment & Discussion, I introduced myself to the members I didn't know already know and asked for their input on this report. The Colonel has been kicking around the idea of adding a "Rancher's Corner" together with some related daily market data and links. I look forward to their input and yours.

International news is really a bruiser this morning and markets are going in the tank around the world. For starters:

"Steep declines in the economies of three of the U.S.'s biggest trading partners -- Mexico, Japan and Germany -- underscored the severity of the global recession and put pressure on major industrialized nations to revive moribund global trade talks" (WSJ, 5/21/09)

Recent data shows that Mexico's GDP sank 21.5% for the first quarter of this year and Japan dropped 15.2%, the worst since 1955. If that isn't bad enough it looks as though the U.K. might be ready to sell the Queen's crown jewels:

"Ratings agency Standard & Poor's shocked investors Thursday with a formal warning that the U.K. must get its finances in order or lose its coveted triple-A credit rating, underscoring the monumental challenges the country faces as it seeks to dig its economy out from under the wreckage of the financial crisis." (WSJ, 5/21/09)

Tomorrow, the ole Colonel will reveal his gold price predictions given all the global events coming at us. To that end checkout this last bit of news from India:

"MUMBAI -- India, the world's largest importer of gold, turned net exporter for the first time, exporting 20 metric tons during the quarter ended Mar. 31, the World Gold Council said Wednesday...India usually imports 700 to 800 tons of gold annually." (WSJ, 5/21/09)

What's it all mean? Stay tuned buckaroos!

Enough talk, let's walk the walk:

Oil is down $1.68 at $60.36 (July contract). Gold is up $3.0 to $940.4 (June contract); Silver keeps above $14 at $14.210; Copper is down 0.0735 to $2.033 (July contract); Molybdenum holds at $10.25.

The DOW is down 122 points to 8300.26; the S&P 500, down 12.23 points to 891.24. The miners wish they stayed in the bunk today:

Barrick (ABX) $35.51 down 1.96%
Newmont (NEM) $44.52 down 2.26%
General Moly (Eureka Moly, LLC) (GMO) $1.69 down 5.59%
Freeport McMoran (FCX) $48.38 down 3.24% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are in the scrap heap (a "tell" for General Moly):

Nucor (NUE) $39.38 down 3.03% - domestic steel manufacturing
ArcelorMittal (MT) $28.92 down 3.98% - global steel producer
POSCO (PKX) $81.05 down 4.16%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 2.78%

Cheers,

Colonel Possum

Wednesday, May 20, 2009

Wind Powered Bulldozers?



Morning Miners!

It is 5:52 AM and the ole Colonel is writing about something potentially troubling for rural communities in the future. Eric linked me to an article in the online Construction Equipment magazine last night. I've added this link to Miner's Corner to your right; here's the article:


Now Is Not Too Soon to Retire Tier 0 Diesels



Apparently, older diesel-powered equipment (tier 0 and tier 1) is in the sights of the government to ensure compliance with newly evolving emission standards. This includes off-road machines and that covers a lot of territory in our community. The standards are toughest in California but the old saying, "As California goes, so goes the nation", is never truer when it comes to emissions regulation:

"The writing on the wall says your Tier 0 diesels have to go. Same thing goes for most Tier 1 machines. Owners have some control over when, but by 2013 or 2014 in California, few firms will be able to afford to keep pre-1998 off-road diesel engines. You won’t want them and, here’s the kicker, neither will anybody else.
Regardless of whether or not your state adopts California’s In-Use Off-Road Diesel Vehicle rule, in the next five years most major metro areas in the United States are going to force by regulation or lure by incentive heavy equipment owners to retire or replace Tier 0 and Tier 1 diesel engines and upgrade Tier 2 and Tier 3 engines to the cleanest possible exhaust emissions standard." (Construction Equipment, 5/1/09)

Don't let the term "metro areas" fool you buckaroos, there might be a G-Man looking at your old D-8 dozer before you know it!

On a brighter note, commodities and miners are happy campers today as silver returns to $14 pasture.

Enough clean air, let's walk the walk:

Oil is up $0.74 at $60.84 (July contract). Gold is up $1.7 to $928.4 (June contract); Silver is nicely breaks $14 at $14.230; Copper is up 0.0275 to $2.0970 (July contract); Molybdenum holds at $10.25.

The DOW is up 98 points to 8573.69; the S&P 500, up 14.3 points to 922.44. The Miners are hot today:

Barrick (ABX) $35.49 up 4.41%
Newmont (NEM) $44.91 down 3.08%
General Moly (Eureka Moly, LLC) (GMO) $1.77 up 4.73%
Freeport McMoran (FCX) $51.90 up 4.81% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are mostly ripping (a "tell" for General Moly):

Nucor (NUE) $43.06 up 2.90% - domestic steel manufacturing
ArcelorMittal (MT) $30.77 up 5.92% - global steel producer
POSCO (PKX) $86.10 down 0.09%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 2.95%

Cheers,

Colonel Possum

Tuesday, May 19, 2009

Eureka Looney Tunes


Morning Miners!

It is 6:52 AM and we have another beautiful day in the Great Basin! I can remember putting a roof on our breezeway last year at this time amid high winds, rain, sleet and snow. What a difference a year makes. The same can be said of markets and it looks like we are having some improving weather there too. The broader markets have pulled back some in early trading today but both the DOW and S&P 500 had monster rallies yesterday (up 2.85% and 3.04%).

The Colonel's mission this week is to figure out how all this might affect gold in the near term. Although predicting gold prices is a fool's errand, I'll give it my best shot this Friday. Today we'll take a peak at commodity-sensitive currencies; the Australian dollar (Aussie) and the Canadian dollar (Loonie). Both have had significant rallies from their March lows as our dollar has retreated from its highs during the same time period. Here is the comparison including gold movement from its March low:

U.S. Dollar down 8.4%
Aussie up 24.2%
Loonie up 11.8%
Gold up 4.1%

Although I hate to see our greenback take a whooping, these currency trends potentially bode well for Eureka's commodity-sensitive economy. Typically a falling dollar supports rising gold prices. Economic conditions in resource rich Australia and Canada are helped by rising commodity prices, the same is true for Eureka. The Wall street Journal takes note of this movement in the Aussie:

"Most Asian currencies rose against the U.S. dollar as investors proved willing to take on perceived risk. The Australian dollar, for example, hit a seven-month high against the U.S. currency, and dealers said some central banks were buying dollars to curb their local currencies' advances." (WSJ, 5/19/2009)

Another piece to our puzzle.

That's all folks! Let's walk the walk:

Oil is up $0.15 at $59.74 (July contract). Gold is up $0.8 to $922.5 (June contract); Silver is stays barely below $14 at $13.980; Copper is up 0.0202 to $2.0940 (July contract); Molybdenum holds at $10.25.

The DOW is down 13 points to 8491.02; the S&P 500, down 0.79 points to 909.57. The miners are mixed today:

Barrick (ABX) $33.08 down 1.17%
Newmont (NEM) $42.27 down 0.28%
General Moly (Eureka Moly, LLC) (GMO) $1,61 unchanged
Freeport McMoran (FCX) $49.42 up 1.54% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks follow Asian rallies (a "tell" for General Moly):

Nucor (NUE) $41.26 up 0.84% - domestic steel manufacturing
ArcelorMittal (MT) $28.69 up 0.81% - global steel producer
POSCO (PKX) $85.05 up 1.25%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 1.19%

Cheers,

Colonel Possum

Monday, May 18, 2009

Where Does Gold Go Next?


Morning Miners!

It is 6:34 AM and boy, did we have a fun weekend in Eureka! The annual Show What Ya Brung car show had about twice the number of entrants as last year and there were some mean machines lined up on HWY 50. The ole Colonel saw the new GM Camaro for the first time and it is a beauty! Hopefully, the two-year waiting list will help that ailing automotive icon get on her feet. My favorites are still the old muscle cars of the 1960s and early 1970s and there were aplenty; 409s, 442s, 454s, 427s...Yee-ha! The Beach Boys singing "409" on a sunny day across a shutdown Federal Highway full of heavy metal is something to tell the grand kids.

OK, time to get back to work. Grab a cup and let's talk gold.

This report has covered a lot of aspects of gold price in the last several months (see archives in the right column). I thought it timely to carry this conversation forward because so much is happening on the international stage that could give that yeller metal a pop or drop in the coming months. The recent election results in India are a good example:

NEW DELHI -- A surprisingly strong showing by India's ruling Congress party gives a decisive mandate to Prime Minister Manmohan Singh and raises hopes that an important engine of the developing world will continue on a path of economic reforms. (WSJ, 5/18/09)



Photo: Reuters

The Indian stock market jumped 17% this morning on that news until the deluge of buy orders triggered market circuit-breakers. How might that influence gold? On the demand side, India is the world's biggest consumer of gold, primarily for gold jewelry. In the last several months the Indian demand has dropped off sharply. Watch for irrational exuberance to reverse this trend.

So did gold go up this morning? Nope, it's down $10 last time I checked and that brings us to another factor in gold prices: safe haven for investors. The rise in the Indian markets has lifted everyone else including our own DOW and S&P. There is a nice relief rally going on this morning and money is flowing away from safe havens like gold to equity markets. Remember that investors are now the sixth largest holders of gold with over 1,100 metric tons socked away in such things as the exchange traded fund, GLD. OK, who wins this race? More to come buckaroos and you can bet the ole Colonel will be tracking this one on a daily basis. I'd like to close this week with a gold price prediction; stay tuned.

Enough talk, let's walk the walk:

Oil is up $1.42 at $57.76 (July contract). Gold is down $10.1 to $921.2 (June contract); Silver is stays below $14 at $13.710; Copper is up 0.0095 to $2.0270 (July contract); Molybdenum holds at $10.25.

The DOW is up 130 points to 8398.94; the S&P 500, up 12.22 points to 895.10. The miners are mixed today:

Barrick (ABX) $32.65 down 2.51%
Newmont (NEM) $43.78 down 1.41%
General Moly (Eureka Moly, LLC) (GMO) $1.57 up 3.29%
Freeport McMoran (FCX) $46.99 up 4.03% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are up and away on the Indian news (a "tell" for General Moly):

Nucor (NUE) $39.85 up 2.44% - domestic steel manufacturing
ArcelorMittal (MT) $26.86 up 4.39% - global steel producer
POSCO (PKX) $82.24 up 1.91%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 1.56%

Cheers,

Colonel Possum

Friday, May 15, 2009

Markets and Mormon Crickets


Morning Miners!

It is 6:23 am and we've got a terrific weekend looking at us! There will be a super-duper car show and sale in Eureka on Main Street (HWY 50) and tonight Patrick Ball is coming to the Opera House. This is a great show; I've seen it before and plan to be at the door with my sweetheart at 6:30 pm sharp to buy tickets. If you see me there, give the ole Colonel a hey-howdy! Checkout the "Eureka Opera House" link on the right of this page for more details.

In the meantime grab a cup and let's talk markets and Mormon crickets.

The oddity of rising oil prices in a declining global economy has dominated the market news this week. The latest theory is a whooper-dooper so put on your seat belt. First let's cover some basics. There are only two forces that move markets; the law of supply and demand and the law of fear and greed. The first is pretty simple. If you want a widget and they are in short supply, the price goes up. If folks are sick and tired of seeing all the widgets at WalMart, the price goes down to clear the shelves.

The market influence of fear and greed is a little harder to understand and has all the logic and predictability of one million Mormon crickets crossing Highway 50. Greed creates price bubbles, fear blows them out quicker than a Tonopah low. The good thing is that the net effects of fear and greed are zero in the long run as markets return to the fundamentals of supply and demand eventually (i.e. cricket infestations don't last forever).

OK, is that it? Not quite, markets behave as described in the absence of government meddling. Throw those jokers in and a third force pops up: the law of unintended consequences. Now we're ready for our whooper-dooper ride to the nuthouse.

U.S. Treasury Bills are a typical a safe haven for investors and countries. In good times, China bought T-Bills to finance all the widgets we wanted but couldn't afford. They had a bunch of our dollars and socked it away in our Treasury notes to get a reasonable interest rate.

When times got tough the Fed dropped their interest rate target to stimulate a sick economy, when they got to zero they stopped. Their next hat trick was to buy our own T-Bills with freshly printed money. That's called quantitative easing in economic parlance; counterfeiting, if you and I do it. The idea was to keep interest rates so low that folks would move their money away from safe havens and put it back into the sick economy. How cool!

Unfortunately, one of the destinations for all this newly emboldened money was crude oil futures and up went the price of oil. That doesn't help anyone except the bad guys! Here's how the Wall Street Journal tells the story this morning:

"Oil is really floating on cheap money. Quantitative easing is, as intended, pushing investors toward riskier asset classes such as equities, high-yield debt -- and crude. Investors in oil funds push up futures prices, making it profitable for others to store crude and sell it forward; another reason inventories are high. When these are liquidated, crude prices will likely fall fast, absent a "V"-shaped economic recovery, which looks unlikely. Indeed, in supporting commodities prices at the expense of consumers, central-bank policy risks unleashing stagflation, not reflation." WSJ (5/15/09)

Time to leave the nuthouse, let's walk the walk:

Oil is down $0.46 at $58.16 (June contract). Gold is up $1.8 to $930.2 (June contract); Silver is stays below $14 at $13.960; Copper is down 0.010 to $2.0160 (July contract); Molybdenum is up again to $10.25.

The DOW is up 55 points to 8387.00; the S&P 500, up 2.83 points to 895.90. The miners are down today:

Barrick (ABX) $33.76 down 0.35%
Newmont (NEM) $43.06 down 0.61%
General Moly (Eureka Moly, LLC) (GMO) $1.60 down 0.03%
Freeport McMoran (FCX) $45.86 down 0.25% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are mixed (a "tell" for General Moly):

Nucor (NUE) $39.60 up 0.20% - domestic steel manufacturing
ArcelorMittal (MT) $25.94 up 0.39% - global steel producer
POSCO (PKX) $80.71 down 0.56%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.61%

See you at the Opera House!

Cheers,

Colonel Possum

Thursday, May 14, 2009

Copper Drops Below $2


Morning Miners!

It is 6:25 am and I wish the ole Colonel had better news on copper, our old standard bearer for global recovery. It has reversed lately and dropped below 2-bucks this morning in early trading. Let's check the Eureka Miner's Million Dollar Grubstake to see what it tells us. For new readers, the Grubstake is a portfolio of twelve stocks that directly or indirectly influence the future of mining in Eureka County. You can see the makeup of the Grubstake by checking the blog archive in the right column of this report. It should be a pretty good barometer of fair weather or storms ahead in the economic recovery.

Gadzooks! We've lost $67,440.27 in the past three days, that's down 6.7% from Friday's close. Thank heavens this is only monopoly money buckaroos! What in tarnation is going on? Here's what the pointy-shoed Wall Street boys are saying this morning:

"Oil prices fell to below $57 a barrel after a new [International Energy Agency or IEA] study predicted demand would fall by 3% this year and as weak U.S. retail sales and housing figures dampened optimism about an economic turnaround." (WSJ, 5/14/09)

Does the Colonel believe they are right? Heck, I'm an optimist. The water is always a little cold when you jump in for a swim. This recovery will recover, it just might take a little longer than we'd like. I will put my money where my mouth is on oil prices and put down my first bearish beer bet on that overvalued commodity:

Oil sees $52 before $62 on or before 5/29/09

For the new folks, The Colonel's Beer Derby is a series of beer bets on commodity prices (also in the right column of the blog).

Enough of all this gloom and dooming, let's walk the walk:

Oil is down $1.00 at $57.00 (June contract). Gold is down $0.7 to $925.2 (June contract); Silver is slipped below $14 at $13.905; Copper is retreating 0.0430 to $1.98.75 (July contract); Molybdenum has a nice pop to $10.10.

The DOW is up 10 points to 8294.92; the S&P 500, up 4.95 points to 888.87. The
miners are down today:

Barrick (ABX) $34.22 down 0.38%
Newmont (NEM) $42.75 down 0.49%
General Moly (Eureka Moly, LLC) (GMO) $1.46 down 7.01%
Freeport McMoran (FCX) $45.02 down 2.15% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are mixed (a "tell" for General Moly):

Nucor (NUE) $39.28 down 0.76% - domestic steel manufacturing
ArcelorMittal (MT) $25.00 up 2.42% - global steel producer
POSCO (PKX) $79.49 down 1.94%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.90%

Looks like another sunny day outside, let's enjoy the weather and forget the markets!

Cheers,

Colonel Possum

Wednesday, May 13, 2009

Gold Breaks $929 - Beer, Colonel!

Howdy Miners!

Gold broke $929 (June contract) in intraday trading, closing out another bet in the Colonel's Beer Derby (see right column):

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

The highest price today was $931.4 pulling back to $925.9 at the close.

This was a squeaker with only three days left. Hey, the ole Colonel is 4-for-4 with only one open bet, don't you think I'm ready for a stumble? Only Bernie Madoff was right all the time and he wasn't even in the game.

Send the ole Colonel your beer bet on the future!

Cheers,

Colonel Possum

More Words than Wealth?


Morning Miners!

It is 6:18 am and the sun is shining. Let's start with some good news: gold came out punching in early trading at $928. It fell back some but has kept the gold miners up in an otherwise down day.

The ole Colonel is starting to believe we'll end this recession with more words than wealth! Let's chew on a few to understand what's driving the markets this morning. By now, we're all familiar with deflation because the talking heads refer to it when they try to tie today's economy to the Great Depression. Deflation is a decline in general price levels often caused by a reduction in the supply of money or credit. Fear of deflation is a gold price slayer so we don't want nuthin' to do with that economic bugaboo. Our next word is disinflation , a little nicer since it is just a reduction in the inflation rate or rate at which prices rise. Deflation is a popped balloon; disinflation is one that's just a little soggy after the party.

OK enough school, here's what's going on:

"Excluding petroleum, import prices were down 0.4% from March, and were 5.6% lower on the year, the largest decline on record. That suggests steep drops in oil and commodity prices at the end of last year are no longer driving U.S. disinflation, but rather the global economic downturn. The World Bank and International Monetary Fund expect global gross domestic product to contract this year for the first time since World War II." (WSJ, 5/13/2009)

Yikes! Economists are party poopers, keep'em off your property! Oil broke $60 in early trading, fell back and the broader markets are taking a stumble.

Chuck the fancy words, let's walk the walk:

Oil is down $0.16 at $58.88 (June contract). Gold is up $1.6 to $925.5 (June contract); Silver is struggling to stay above $14 at $14.020; Copper is retreating 0.0570 to $2.0290 (July contract); Molybdenum is hanging steady at $9.70.

The DOW is down 142 points to 8327.50; the S&P 500, down 15.32 points to 893.03. The gold miners are happy in a sorry crowd today:

Barrick (ABX) $35.66 up 1.60%
Newmont (NEM) $44.60 up 0.63%
General Moly (Eureka Moly, LLC) (GMO) $1.72 down 7.03%
Freeport McMoran (FCX) $46.91 down 4.48% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are lousy (a "tell" for General Moly):

Nucor (NUE) $41.07 down 3.88% - domestic steel manufacturing
ArcelorMittal (MT) $25.20 down 3.93% - global steel producer
POSCO (PKX) $82.83 down 3.65%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 2.17%

Nuts, let's go outside and enjoy the sunshine!

Cheers,

Colonel Possum

Tuesday, May 12, 2009

The Deer Don't Care If Oil is $59


Morning Miners!

It is 5:49 am and a doe just walked past my office window. The deer don't care if oil is $59 but some of us humans do. It is a crazy upside down world when you find yourself cheering for higher oil prices. The ole Colonel has been guilty of this lately because rising oil prices are another sign that the global recovery is picking up steam. Buckaroos, I'm leaving the bleachers at these prices! Supply/demand fundamentals are getting stomped again by speculation:

"Oil prices rose despite a continued lack of demand, evidenced by U.S. crude stocks that are near 19-year highs and expected to climb further. Prices have jumped from below $35 a barrel in February amid signs indicating that the pace of economic deterioration has slowed, setting the scene for an eventual recovery." (WSJ, 5/12/09)

Sound familiar? The good news is that this crowd of speculators don't have the cajones of last year's wild-eyed commodity gamblers. Watch for oil to head south in the next several weeks.

For miners, I think the sweet spot for oil is a price high enough to ensure we're on the mend but low enough to keep production costs from blowing out the mineshaft. Let's say $45-50 is a safe and sane range in our upsy-daisy world.

Copper is a bit more interesting in the month of May. Traditionally, the Chinese buy most of their raw materials during the first few months of the calendar year. If the copper rally continues through this month, higher prices may be a very positive indication of improving demand. I don't think deer give a damn about copper either unless it's coming at'em in the Fall.

Oh, who's the feller standing on his head? Why that's the Colonel turning the Utah salt flats upside down when he was a young pup!

Enough memory lane, let's walk the walk:

Oil is up $1.38 in early morning trading trading at $59.88 (June contract). Gold is up $8.3 to $921.8 (June contract); Silver breaks $14 at $14.210; Copper rallies 0.0555 to $2.1440 (July contract); Molybdenum gets a nice pop to $9.70.

The DOW is up 17 points to 8436.22; the S&P 500, down 0.47 points to 908.77. Miners are mostly happy today:

Barrick (ABX) $34.35 up 2.11%
Newmont (NEM) $43.19 up 1.12%
General Moly (Eureka Moly, LLC) (GMO) $1.85 up 2.21%
Freeport McMoran (FCX) $50.95 down 0.06% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are flat (a "tell" for General Moly):

Nucor (NUE) $42.83 up 0.08% - domestic steel manufacturing
ArcelorMittal (MT) $26.98 down 0.13% - global steel producer
POSCO (PKX) $85.64 down 0.04%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.42%

Cheers,

Colonel Possum

Sunday, May 10, 2009

The Eureka Miner's Million Dollar Grubstake


2010 UPDATE: Changes to the Eureka Miner Grubstake for 2010
Thompson Creek Metals (TC) replaces Nucor (NUE) 01-05-2010
US Gold (UXG) replaces ConocoPhilips (COP) 01-12-2010
2011 UPDATE: Changes to the Eureka Miner Grubstake for 2011
Quadra FNX Mining Ltd. (TSX:QUX) replaces EOG Resources Inc. (EOG) 05-29-2011
Sell 384 shares of Caterpillar (CAT) + cash to purchase 50,000 shares of Timberline Resources Corp. (TLR) 07-13-2011

Morning Miners!

What if the ole Colonel gave you a million dollar grubstake to invest in the future of mining in Eureka County? Pardner, wait no longer your greenbacks are in the buckboard!

Eureka's commodity sensitive economy finds itself at the crossroads of global recovery, somewhere near the intersection of gold and molybdenum. Since late March this report has tried to measure the progress of this recovery by looking at stock and commodity markets, commodity sensitive currencies and most recently, the quarterly reports (1Q09) of our major mining interests. Things are not great but we may very well be coming off a bottom and headed for happier days.

I got to thinking this weekend that it would be fun to put twelve stocks in a Eureka Miner's Million Dollar Grubstake portfolio. Five are directly related to the future of Eureka County mining; the remainder are related to domestic and global recovery. We'll start out with $1,000,000 and see how our fortunes grow (or shrink) in the coming months. The Report will periodically update the portfolio which should be a pretty good leading indicator for local recovery. If we get rich, Yee-ha! If we go broke, head for shelter in the new Firehouse!

Here's how we're spending all those greenbacks in the buckboard:

Stocks Related Directly to the Future of Eureka County Mining:

Barrick (ABX) - Gold mining
Newmont (NEM) - Gold Mining
General Moly (Eureka Moly, LLC) (GMO) - Molybdenum mining
ArcelorMittal (MT) - International steel producer, investor in General Moly
POSCO (PKX) - South Korean integrated steel producer, investor in Mt. Hope Project (Eureka Moly, LLC)

Stocks Related to Domestic & Global Recovery:

Gold exchange traded fund (ETF) (GLD) - Gold investment fund
Silver ETF (SLV) - Silver investment fund
Caterpillar (CAT) - Global supplier of mining equipment
Freeport McMoran (FCX) - A bellwether mining stock spanning gold, copper & molybdenum
Nucor (NUE) - Domestic steel manufacturing
EOG Resources (EOG) - Domestic oil & gas producer
Conoco Phillips (COP) - International integrated energy company

Closing prices for Friday, 5/8/2009:

ABX - $34.04 2,448 shares
NEM - $43.78 1.903 shares
GMO - $1.84 45,290 shares
MT - $28.70 2,904 shares
PKX - $89.00 936 shares
GLD - $89.98 1,084 shares
SLV - $13.79 6,043 shares
CAT - $39.64 2,102 shares
FCX - $51.80 1,609 shares
NUE - $43.59 1,902 shares
EOG - $76.87 1,084 shares
COP - $46.91 1,776 shares

Eureka Miner Grubstake value as of Friday, 5/8/2009: $1,000,000, Look for updates in the right column of this blog.

Enough rolling in the dough, let's walk the walk:

Oil is down $1.06 in early morning trading trading at $57.57(June contract). Gold is down $1.9 to $913.0 (June contract); Silver is down $0.100 to $13.855; Copper is down 0.0715 at $2.0745 (July contract); Molybdenum sits at $9.25.

The DOW is down 137 points to 8437.25; the S&P 500, down 19.69 points to 909.54. Miners are lousy today:

Barrick (ABX) $33.49 down 1.62%
Newmont (NEM) $43.05 down 1.67%
General Moly (Eureka Moly, LLC) (GMO) $1.75 down 4.89%
Freeport McMoran (FCX) $49.91 down 3.65% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are not so hot(a "tell" for General Moly):

Nucor (NUE) $42.50 down 2.50% - domestic steel manufacturing
ArcelorMittal (MT) $27.93 down 2.68% - global steel producer
POSCO (PKX) $89.19 down 3.16%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 2.42%

Cheers,

Colonel Possum

Image of old gold miner from http://culturemaking.typepad.com

Friday, May 8, 2009

Springtime for General Moly


Morning Miners!

The ole Colonel is off the road and ready for some "V" time. Don't worry; the daily reports will still be coming at you, I'm just not waking up before the markets open! With a little extra time on my hands, I sorted through my "good pile" for something to read last night and came across the Spring 2008 edition of Mining Quarterly.

The cover story read, "General Moly ready to roll with its Mount Hope project near Eureka." There's a cool picture a chunk of rock containing significant amounts of molybdenum on the cover, remember? I imagine the article was written sometime after gold prices broke $1000 and before oil courted $150. What a difference a year makes.

Through no fault of their own, General Moly (GMO) got hit with the same financial tsunami that everyone on the planet has endured since last Fall. The Colonel is not one to groan and moan so here are some positive thoughts. We know from their recent quarterly report that GMO is in pause mode and good to go once the global recovery gets some legs. Rereading the Quarterly article, reminded me that POSCO, No. 3 steel producer, has a 20% interest in the Mt. Hope project. South Korean POSCO is investing in the joint venture through its Canadian subsidiary, POSCO-Canada.

"Eureka!" the ole Colonel cried out as his eyeglasses hit the floor, "POSCO should be directly benefiting from China's recent stimulus plan!" I checked the numbers and lo and behold PKX (ticker symbol for POSCO) is up 70% from this March's low. We've been tracking the rally of Arcelor Mittal (MT), No. 1 steel producer and another investor in GMO, for sometime in the Report. I'm adding POSCO to our list today, I can't think of a better way to assess the future of Mt. Hope than by watching the fortunes of their benefactors. Think POSitive, think POSCO!!

Enough talk, let's walk the walk:

Oil is up in midday trading at $57.58(June contract). Gold is down $6.7 to $908.8 (June contract); Silver is down $.175 to $13.855; Copper is steady at $2.1690 (July contract); Molybdenum sits at $9.25.

The DOW is up 66 points to 8,475.80; the S&P 500, up 6,51 points to 913.90. Miners are good today:

Barrick (ABX) $32.81 up 0.37%
Newmont (NEM) $42.76 up 0.02%
General Moly (GMO) $1.73 up 0.58%
Freeport McMoran (FCX) $50.64 up 3.25% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are rockin'(a good "tell" for General Moly):

Nucor (NUE) $43.49 up 1.66% - domestic steel manufacturing
ArcelorMittal (MT) $28.54 up 5.47% - global steel producer
POSCO (PKX) $86.41 up 3.20%- South Korean integrated steel producer

Cheers,

Colonel Possum

Tuesday, May 5, 2009

On the Road Again!


Morning Miners!

It is 6:23 am and life is good. The ole Colonel will be packing up his truck in a bit for a road trip. The report will be off the air for a short while but I think I'm leaving you with fairly good news for local mining and the overall economy. Let's look in the rear view mirror at our recent events:

Quarterly Reports - Barrick (ABX), Newmont (NEM) and General Moly (GMO) all reported their performance for the first quarter of 2009 last week. The big boys are on solid ground with good balance sheets and new projects (e.g. Cortez Hills) in the works. I sold all my Barrick stock last Spring but came back for a nibble Friday - giddy-up go! Although General Moly is in pause mode, there are encouraging signs that the steel industry is coming off the bottom. Moly price and GMO stock performance are showing signs of life.

Broader Markets - As reported in the Wall Street Journal yesterday:

"The Dow Jones Industrial Average jumped 214 points and the S&P 500 surged 3.4% to retake the 900 level and turn positive for the year to date as data on construction spending and home sales bolstered the case that the economy bottomed out in the first quarter and may be beginning to stabilize." (WSJ, 5/4/2009)

Commodities - After a pause, Copper is on a tear again and Molybdenum has got another pop to $9.25. Gold prices are again above $900/oz but may sag some as more safe haven money rushes to the equity markets. I'll still keep my bet that we see $929 before the middle of this month - Yee-ha!

Currencies - Commodity sensitive currencies (e.g. our friends the "Aussie" and "Loonie") are taking the dollar to task lately:

"Economic data and continued gains for stock and commodity prices kept global risk appetites elevated, resulting in more losses for the dollar against a broad range of currencies.

Signs that Chinese industry is ramping up and may soon stoke global demand for commodities and other raw materials are 'an ongoing positive for commodity currencies and commodity prices,' currency strategists at Barclays Capital in New York said, and contributed to the outperformance Monday of currencies like the Australian [Aussie] and Canadian [Loonie] dollars." (WSJ, 5/5/09)


Enough talk, let's walk the walk:

Oil is steady in early trading at $54.45(June contract). The dollar ("Dixie" or .DXY) is up 0.16% at 83.80. The commodity index (.CRB) is down 0.02% to 232.34.

Gold is up $11.3 to $913.5 (June contract); Silver is up $.392 to $13.505; Copper is is down slightly $.0270 to $2.1170 (July contract); Molybdenum pops up to $9.25!

The DOW is up 22 points to 8,449.20; the S&P 500, down 1.11 points to 906.13. Miners are mostly good today:

Barrick (ABX) $31.59 up 2.27%
Newmont (NEM) $41.30 up 0.85%
General Moly (GMO) $1.70 up 1.80%
Freeport McMoran (FCX) $48.58 down 0.49% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are mixed(a "tell" for General Moly):

Nucor (NUE) $44.65 down 0.51% - domestic steel manufacturing
ArcelorMittal (MT) $28.329 up 1.43% - global steel producer

Cheers,

Colonel Possum

Monday, May 4, 2009

Oil Breaks $54 - Beer, Colonel!

Howdy Miners!

Oil broke $54 (June contract) at 1:55 pm (ET), closing out another bet in the Colonel's Beer Derby (see right column):

Oil sees $54 before $47 on or before 5/8/09

We all hate for oil prices to rise but this may be another sign that global recovery is on the horizon (at least for the time being).

Send the ole Colonel your bet on the future!

Cheers,

Colonel Possum

General Moly Conserves Cash, Adjusts Time Line


Morning Miners!

It is 6:18 am, the coffee is hot and warmer days are on the horizon! Perhaps no mining interest in our area is more influenced by global recovery than General Moly and their Mt. Hope Project. The Report has covered aspects of steel demand and production (a major use of Molybdenum) for the past several weeks. The jury is still out but there do seem to be encouraging signs coming from China's stimulus package. Rising demand in China helps all steelmakers, whether or not they have plants in China, because it keeps excess Chinese steel from flooding the market and depressing prices. Last week the price of Molybdenum jumped from slightly below $8 to a thin flat washer above $9, another encouraging sign.

General Moly announced their first quarter 2009 results Friday. You can access their entire report by clicking on the link in the "Miner's Corner" to your right. The two important elements are their cash conservation plan and adjustments to the time line for initial production. Here are the relevant extracts from their report:

CASH CONSERVATION PLAN

Given the continued uncertainty in the project finance market, current low molybdenum prices, and a longer than expected timeframe to receive the federal permits to begin construction at the Mt. Hope project, on March 26, 2009 the Company implemented a cash conservation plan to reduce expenditures and conserve cash for 2009 and 2010 in order to maximize financial flexibility. With a March 31, 2009 consolidated cash balance of $80.4 million, the Company has the capacity to continue its current level of permitting efforts, maintain efforts to secure project financing, and secure the most critical long lead equipment for the ultimate construction of the Mt. Hope project.

The cash conservation plan will also reduce total cash utilization to approximately $1 million per month by the fourth quarter of this year for all expenditures other than the key equipment purchases. Based on current cash on hand and the cash conservation plan, the Company expects it will have adequate liquidity for operations, as modified, through the end of 2010. Engineering efforts, currently approximately 60% complete, have been suspended pending the completion of financing.

PERMIT AND DEVELOPMENT UPDATE

Following recent discussions with the BLM related to the Company's hydrologic studies of both pit lake geochemistry and regional hydrology, the Company determined that additional analysis and data acquisition will be conducted to improve the technical adequacy of the studies. The Company believes this further work does not indicate a concern related to ultimate permit receipt; however, this work is the primary reason for the delay in the expected receipt of the Record of Decision (ROD) from the fourth quarter of 2009 to mid-year 2010. State-issued permits related to Air Quality, Tailings Dam Safety, and Water Pollution Control are anticipated to be received well before the federal permit (ROD) is received. Once financing is obtained and we have received the major operating permits and the ROD from the BLM, it is expected that Mt. Hope can be constructed and in production within 20 months.

The ole Colonel wishes General Moly the best of luck and will continue providing updates on the pace of global recovery affecting their future.

By the by, here's a new beer bet with a 12-month stretch (the Colonel bought Barrick at $29.09, Friday):

Barrick (ABX) sees $39 before $26 on or before 5/31/2010

Enough talk, let's walk the walk:

Oil is up $0.19 in early trading to $53.39(June contract). The dollar ("Dixie" or .DXY) is down 0.18% at 84.392. The commodity index (.CRB) is up 0.31% to 229.33.

Gold is up $3.1 to $891.3 (June contract); Silver is up $.045 to $12.545; Copper is continuing its rally, up $.0525 to $2.1535 (July contract); Molybdenum holds slightly above $9.

The DOW is down slightly to 8,318.34; the S&P 500, up 11.39 points to 888.91 continuing its strong rally. Miners are ripping today:

Barrick (ABX) $29.98 up 3.38%
Newmont (NEM) $39.82 up 2.81%
General Moly (GMO) $1.62 up 3.85%
Freeport McMoran (FCX) $47.57 up 6.95% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are rocking (a "tell" for General Moly):

Nucor (NUE) $44.17 up 6.61% - domestic steel manufacturing
ArcelorMittal (MT) $26.47 up 3.44% - global steel producer

Cheers,

Colonel Possum

Friday, May 1, 2009

Two Parts Pig, One Part Bird, One Part Human


Morning Miners!

It is 6:53 am and TGIF! The ole Colonel is getting a little goofy listening to every talking head on television with an opinion on the swine flu outbreak. When I heard a microbiologist describe the H1N1 virus as two parts pig, one part bird and one part human I turned my set off. Isn't this coming from the same corner of the world that brought us Chupacabra? OK, how can we turn this into a miner's market discussion?

The Wall Street Journal reports this morning:

"Stock markets around the world shrugged off some of the worst economic data in decades and the bankruptcy filing of a top U.S. auto maker to post their biggest monthly jump in nearly two decades, capping a dramatic seven-week rebound. The Standard & Poor's 500-stock index, up 9.4% for the month, had its best April since 1938." (WSJ 5/1/09)

Hmm, a lot of irrational exuberance out there and here comes Chupacabra's cousin. I think this whole flu thing is a fizzle but if it isn't a pandemic there will no doubt be something to drive these markets down. Gold is presently getting hammered because money is flowing from safe havens to the stock markets. If there is a reversal in fortunes, there will be a rush back to gold and giddy-up go!

I think the so called "Flu Play" is right in our backyard. Buy gold now? Nah, I think I'll buy Barrick (ABX) instead. Yesterday's closing price was $29.10 and Credit Suisse set a 12-month target price at $40 with a sector outperform rating. That's a 37.5% return on your money buckaroos, sure beats a CD rate nowadays. The other cool thing is that Barrick pays a 1.37% dividend (given yesterday's price), compare that with money market rates that are presently sitting at 1.30%. The downside risk is a 10.5% loss if ABX returns to its March low; 38% upside/10% downside, that's pretty good odds my friend.

The ole Colonel doesn't give investment advice and equities can always go to zero (unlike gold). I just thought you might be interested in what I plan to do if a little furry critter crawls my way.



Enough fear mongering, let's walk the walk:

Oil jumped $1.03 in early trading to $52.15 (June contract). The dollar ("Dixie" or .DXY) is down 0.20% at 84.655. The commodity index (.CRB) is up 1.19% to 225.03.

Gold is in retreat $6.7 to $884.5 (June contract); Silver is down $..035 to $12.290; Copper is back in rally mode, up $.325 to $208.00 (July contract); Molybdenum jumped to $9...yee-ha General Moly!

The DOW is down 42 points to 8126.23; the S&P 500, down 3.69 points to 869.12 falling slightly below the critical level of 870. Miners are mixed today:

Barrick (ABX) $29.98 down 0.41%
Newmont (NEM) $39.15 down 2.71%
General Moly (GMO) $1.5199 down 0.01%
Freeport McMoran (FCX) $43.74 up 2.56% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are still zooming (a "tell" for General Moly):

Nucor (NUE) $41.17 up 1.18% - domestic steel manufacturing
ArcelorMittal (MT) $23.86 up 1.19% - global steel producer

Cheers,

Colonel Possum