CPI Report, Barrick raised to $46

Morning Miners!

It is 5:50 AM and the coffee is hot! The big news today is the Consumer Price Index or CPI:

WASHINGTON -- U.S. annual inflation slid deeper into negative territory in May as consumer prices posted their largest annual decline in almost 60 years. Still, a slight rise from the prior month and an increase in core prices that exclude food and energy support the growing sentiment at the Federal Reserve that deflation risks have waned. However, there's little evidence that inflation is taking hold, either, a concern that has crept into bond markets in recent weeks. (WSJ, 6/17/09).

We visited the Producer Price Index or PPI yesterday and the conclusion was similar, no inflation fear for the near term. There's an important lesson here, just because the government is printing Monopoly money today doesn't mean you'll be hauling your dollars in a wheelbarrow to shop at Raine's tomorrow. Next year? Maybe.


Mark Spitznagel who made a fortune predicting the "black swan" that hit markets last year says yes to out-of-control inflation down the road. "Black swan" alludes to the once-widespread belief that all swans are white -- proved false when European explorers found black swans in Australia. A black-swan event is something extreme and highly unexpected. He is creating a fund that places bets on options tied to assets expected to benefit from a big leap in prices, including commodities such as corn and crude oil, and options on shares of oil drillers and gold miners. It also will short (i.e. bet against) Treasury bonds, likely to weaken in an inflationary economy.*

Is this feller right? Who knows, but the ole Colonel is going to sock away a little more gold just in case. The London gold spot market dipped to $928.50 presumably on the CPI news. If we get to $920 in the next week or so, I'm backing up the truck for a little chunk of glitter.

There is a second bit of good news today. The Barrick (ABX) price target was raised by Toronto Dominion from $41 to $46 this morning. If ABX gets to $32, I'm picking up some of that Canadian glitter getter too.

Enough talk, let's walk the walk:

Oil is down $0.80 to $69.67 in early trading (July contract); Gold is down $0.3 to $931.9 (August contract); Silver is down $0.035 at $14.095 (July contract); Copper is down 0.0200 to $2.2355(July contract); Molybdenum hold steady at $10.58.

The DOW is down 20.71 points to 8483.96; the S&P 500, down 4.90 points to 907.07. The miners are down:

Barrick (ABX) $32.83 down 1.74%
Newmont (NEM) $41.49 down 0.93%
General Moly (Eureka Moly, LLC) (GMO) $2.13 down 7.79%
Freeport McMoran (FCX) $50.61 down 3.40% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $46.16 down 1.49% - domestic steel manufacturing
ArcelorMittal (MT) $30.92 down 3.97% - global steel producer
POSCO (PKX) $82.57 down 1.41%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is in the red falling 2.43% to $990,509.82.

Cheers,

Colonel Possum

* WSJ Article, "Black Swan Trader Bets on Inflation", 6/16/2009