Friday, May 29, 2009
Gold Breaks $973 - Beer, Colonel!
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:
"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)
"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)
"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!