"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.

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%


Colonel Possum

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