"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, July 31, 2009

The Duke Returns, Recession Heads for the Backdoor



Morning Miners!

It is 5:44 AM, the coffee is hot and I just turned off the television. Now what the heck is the ole Colonel doing watching the boob tube before the chickens are up? Washington just released their GDP number for this Spring as reported by CNBC's morning business show, "Squawk Box". I'm sure you've got better things to do, so the Colonel watches this for you. He also thinks co-host Becky Quick is kind of cute, so does Warren Buffet.

GDP or Gross Domestic Product acts as a scoreboard for the economy by measuring all goods and services produced and here is when bad news is good (or at least better). The new number showed a contraction in the economy of 1.0% giving us the fourth consecutive quarter of negative GDP, a record since the government propeller heads started tracking it after World War II. How is this good? The experts were expecting a negative 1.5% so 1.0% is better and a whole lot better than the declines of 6.4% for the first quarter and 5.4% in the fourth quarter, at the pit of the recession. Buckaroos, things are looking up; The Big R is heading for the backdoor.


And who just came through the swinging door? It's the Duke! Yes folks, the Duke returns the last day of each month to check up on all these eco-scalawags. The Report started this check in the blog, Where's The Duke When We Need Him?. We report key consumer interest rates so you can track where we're going as time marches on. Here are today's national averages compared to last month's numbers (WSJ Market Data, 7/31/09):

10-yr Treasury Note 3.56% vs 3.47%, up
Money Market 1.21% vs 1.29%, down (52-wk low, 1.20%)
5-year Bank CD 2.65% vs 2.65%, unchanged (52-wk low, 2.59%)
30-yr mortgage, fixed 5.55% vs 5.68%, down (52-wk low, 5.06%)
15-yr mortgage, fixed 4.86% vs 5.04%, down (52-wk low, 4.69%)
New-car loan, 48-month 7.28% vs 7.30%, down (52-wk low, 6.45%)
Home-equity LOC, $30K 5.78% vs 5.81%, up (52-wk low, 5.03%)

There is a some good news in these numbers too. CD rates may have bottomed and will hopefully start inching up. Mortgage rates are back down after a scare last month that they could be heading north. If you're fixing to buy that new F-250, new-car loans are ever so slightly better but the "Cash-for-Clunkers" just ran out of money (up to $4500 for Old Faithful). After blowing a billion, Congress may squirt in a few more billion in to nab the old timers. They ain't getting mine, I love my '72 F-250 and '67 half-ton Chevy. They still run and I can still fix'em! My dear dad bought me the Chevy 42 years ago.


The Duke is in the house, let's walk the walk:

Oil is down $0.02 to $66.92 in early trading (September contract); Gold is up $3.8 to $941.1 (December contract, most active); Silver is down $0.055 to $13.430(September contract); Copper is down $0.0355 to $2.5995 (September contract); Molybdenum is lazy-dazy at $15.

The DOW is up 31.06 points to 9185.52; the S&P 500, up 1.63 points to 988.83. The miners are happy today:

Barrick (ABX) $34.11 up 0.77%
Newmont (NEM) $40.47 up 1.66%
General Moly (Eureka Moly, LLC) (GMO) $2.77 up 1.47%
Freeport McMoran (FCX) $58.51 up 0.17% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are mixed today, POSCO breaks $100 (a "tell" for General Moly):

Nucor (NUE) $44.00 up 0.16% - domestic steel manufacturing
ArcelorMittal (MT) $35.81 down 0.14% - global steel producer
POSCO (PKX) $100.60 up 3.26%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.82% to $1,078,378.72

Cheers,

Colonel Possum

Thursday, July 30, 2009

Strong Barrick Report, General Moly Jumps 10%


Morning Miners!

It was 6:06 AM, I grabbed a cup of coffee and read Barrick's Second Quarter News Release. Now I'm back after the market open and what a difference a day makes! After crashing Chinese markets and plummeting oil prices yesterday, it is nice to be in a town that has good resiliency in a recession. Barrick issued a strong report and General Moly jumped 10% by 6:44 AM. The Chinese markets have recovered too, quelling fears that the global recovery had downshifted to the slow lane.

In the words of Aaron Regent, Barrick’s President and CEO:

"Our portfolio of operations performed strongly in Q2, exceeding plan, and positioning us well to meet our production and cost targets for the year. The go-ahead decision on Pascua-Lama during the quarter marks an important milestone for Barrick and our strategy of developing long life, low cost mines. Pascua-Lama is expected to be one of the industry's lowest cost gold operations and joins the
world-class Cortez Hills and Pueblo Viejo projects in construction. Execution on this new generation of projects, combined with a favorable gold price outlook and our focus on cost management provides the foundation from which Barrick willcontinue to deliver shareholder value."

Now it doesn't get much better than that buckaroos. Let's look at the numbers. Barrick reported a net income of $492 million ($0.56 per share) compared to $485 million in Q2 2008. How many companies can say they are doing better than last year? For instance Exxon Mobil Corp, who also reported this morning, watched their second-quarter profit tumble a bigger-than-expected 66% amid weak demand, falling margins and slumping prices. Aren't you glad you live in a gold town and not an oil town?

While global gold production is in decline, Barrick can brag, "Production is expected to increase to approximately 7.7-8.1 million ounces in 2010 at lower total cash costs with the start-up of Cortez Hills." Go Nevada!

And just to make a lot of faltering U.S. corporations feel really bad, "Barrick continues to maintain a strong financial position with quarter-end cash of $2.0 billion, an undrawn credit facility of $1.5 billion and robust cash flow." I bet General Motors would like to say that someday!

Enough gloating, let's walk the walk:

Oil is back up $1.71 to $65.06 in early trading (September contract); Gold is up $4.4 to $931.6 (August contract); Silver is cranking up 0.142 to $13.400(September contract); Copper is up $0..0480 to $2.5255 (September contract); Molybdenum is snoozing comfortably at $15.

The DOW is up 160.60 points to 9231.32; the S&P 500, up 20.20 points to 995.35. The miners are giddy today:

Barrick (ABX) $33.87 up 3.07%%
Newmont (NEM) $40.20 up 2.11%
General Moly (Eureka Moly, LLC) (GMO) $2.68 8.5%
Freeport McMoran (FCX) $57.60 up 3.77% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are tip-toeing through the tulips (a "tell" for General Moly):

Nucor (NUE) $44.33 up 2.59% - domestic steel manufacturing
ArcelorMittal (MT) $35.64 up 4.00% - global steel producer
POSCO (PKX) $98.00 up 5.46%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up a whopping 3.22% to $1,065,851.89

Cheers,

Colonel Possum

Wednesday, July 29, 2009

A Bad Day for China, A Rough Road for Steelmakers?



Morning Miners!

It is 5:50 AM, I'm on my second cup and there is a flood of international news pouring in the mineshaft. For starters, the Shanghai Composite Index plunged as much as 7.7% before ending down 5.0%, the biggest percentage drop at market close since the dark days of last November.

Ouch. China has been doing the heavy lifting on global recovery with their timely and efficient stimulus plan, driving commodities and especially metal prices in the last several months. The decline in Wednesday's market is attributed to concerns that Chinese banks may start to tighten credit after they lent a record 7.4 trillion yuan ($1.08 trillion) in the first half of this year. Why is everything on the world stage "trillions" lately? A trillion is 12 zeroes buckaroos. This might be a China market blip or something more serious. I'll keep an eye on these fortune cookies.

Let's drill down to the next level. The global downturn has hit demand for steel, an industry seen as a broad gauge of an economy's strength. The world's top two steelmakers, global leader ArcelorMittal and second-ranked Nippon Steel Corp, just reported quarterly losses and warned the climb back to growth from the bottom of the economic slump would be gradual, with China setting the pace of recovery.

ArcelorMittal Chief Financial Officer Aditya Mittal told a conference call, "We are expecting the first half [of this year] will be the bottom of the cycle. In the second half we should be see gradual demand growth and price increases -- clearly from very low levels though."

Chief Executive Lakshmi Mittal (hey, it is a family company!) added:

"Provided there are no further unexpected economic deteriorations, we should see continued gradual improvement throughout the second half of the year, with full recovery remaining slow and progressive."

AecelorMittal is a key investor in General Moly. POSCO, the South Korean steel producer with a 20% share in our Mt. Hope, reported their quarterly results earlier this month. They raised their 2009 production target, signaling the worst of the global slump in demand may be over after second-quarter profit plunged 71 percent.

So what does all this mean? If China continues to perform, steelmakers should recover which is good for other economies and good for General Moly. This view has been supported by the recent rise in share price for the steels and GMO together with
gains in the price of molybdenum ($8 to $15 since April). If China slows there could be a considerable damper to all the recent optimism. Stay tuned, the Colonel has got you covered.

Enough hand wringing, let's walk the walk:

Oil is down $1.98 to $65.25 in early trading (September contract); Gold is down $8.9 to $930.2 (August contract); Silver is down 0.270 to $13.470 (September contract); Copper is down $0.0535 to $2.4670 (September contract); Molybdenum remains at $15.

The DOW is down 27.66 points to 9069.06; the S&P 500, down 5.34 points to 974.28. The miners are pooting the blues today:

Barrick (ABX) $33.06 down 1.31%
Newmont (NEM) $39.34 down 2.48%
General Moly (Eureka Moly, LLC) (GMO) $2.56 down 1.92%
Freeport McMoran (FCX) $55.94 down 4.49% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $43.91 down 3.07% - domestic steel manufacturing
ArcelorMittal (MT) $34.29 down 6.26% - global steel producer
POSCO (PKX) $93.25 down 3.31%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down a punishing 2.72% to $1,043.194.05

Cheers,

Colonel Possum

Tuesday, July 28, 2009

The Colonel's Gold & Silver Price Predictions for the Summer


Morning Miners!

It is 5:44 AM, the coffee is gurgling and it is time for the ole Colonel to stick his neck out with some gold and silver price predictions for the summer. Have you ever noticed that the crazy relatives that are not much fun to be around create the most memorable family stories? In the precious metal family, silver is either obediently following her lustrous cousin gold or running in the park naked with her hair on fire. We talked about this a bit July 10th (Silver Stumbles on the Precious Metal Trail) when silver did an unexpected swan dive in the London spot market. Fortunately she recovered but has been displaying that loony split personality ever since.

In our previous article we talked about "beta" or the amount (on average) the price of one thing moves relative to the price change in another. If gold moves up 1% and silver follows with an increase of 1.5%, we say silver has a beta of 1.5 with respect to gold. Lately, silver has been showing off her bipolar disorder with two betas. The Colonel plots silver and gold futures prices to find these anomalies as shown in the figure below (a more readable copy can be found in Colonel Possum's Charts at the very bottom of this blog).

The slope of the lines indicates the silver/gold beta. The magenta line represents a 3-month average with a whopping beta of 2.3. The dotted line indicates a more typical beta of 1.7. The dots and squiggly lines are silver running in the park switching back and forth from normal to nutcase. Yesterday was a good example when silver suddenly jumped from the 1.7 line to break $14.


So what does all this mean for summer precious metal prices? Gold and oil are presently tightly correlated and will probably move higher together on the wave of the latest commodity reflation. Dennis Gartman, the "Commodity King", noted several months ago that gold has been hitting a brick wall every time it nears $980. He mentioned a mystery seller that appears at this level which pushes gold prices back down the hill. It could be the International Monetary Fund (IMF) which has a lot of gold and sells periodically to raise capital for struggling economies. They have pledged to sell a little at a time to avoid market disruption and their sell point could very well be $980. This is pure speculation on my part.

I have predicted earlier this year that gold will overcome selling pressure before Christmas and break $1050. The Colonel thinks this is more likely in the fall than the summer so I'll go with $980 gold in the near term. What about silver? Here's where beta helps us out, observe where the vertical line intersects the magenta and dotted slopes on the chart. If silver continues to run naked in the park, she should break $15.80; if not, she should return to quietly tagging along at $14.20 as gold sees $980.

Wasn't that fun? Here are the Colonel's gold & silver price predictions for the summer (I'll bet silver remains loony):

Gold will see $980 before Labor Day

Silver will see $15.80 before Labor Day


Enough number crunching and soothsaying, let's walk the walk:

Oil is down $0.82 to $67.56 in early trading (September contract); Gold is down $8.7 to $944.8 (August contract); Silver is down 0.120 to $13.870(September contract); Copper is down $0.01 to $2.5440 (September contract); Molybdenum remains at $15.

The DOW is down 23.71 points to 9084.78; the S&P 500, down 4.88 points to 977.30. The miners are down today:

Barrick (ABX) $34.37 down 1.74%
Newmont (NEM) $40.78 down 1.92%
General Moly (Eureka Moly, LLC) (GMO) $2.62 down 3.11%
Freeport McMoran (FCX) $58.95 down 1.67% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $45.12 up 0.04% - domestic steel manufacturing
ArcelorMittal (MT) $36.86 down 2.02% - global steel producer
POSCO (PKX) $96.69 down 0.72%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 1.21% to $1,080,651.68

Cheers,

Colonel Possum

Monday, July 27, 2009

Moly Makes $15, Silver Breaks $14



Morning Miners!

It is 5:59 AM, the coffee pot is whistling and metals are on the march. Last week the ole Colonel drew a line in the sand of $15 for molybdenum and by golly Friday we made it! We are nearly half way to the 2008 highs and have almost doubled the March lows. Silver is another star hitting $14.10 at high noon today in London. As the Brits say, that's a proper way to start the week.

And it will be a full week as we head to the end of July with Barrick reporting their second quarter results Thursday at 6:30 AM (PDT) and a new GDP(Gross Domestic Product) estimate coming from the government Friday. The latter is important since GDP or the value of all goods and services produced by the economy, is a key measure to gauge if the end of recession is near.

Most economists expect that the second quarter has contracted at about a 1.5% annual rate, marking it the fourth consecutive decline. That's actually good news considering the economy, shrank by 6.3% in the fourth quarter and 5.5% in first. Economists instead of fretting about a depression are now seeing a little light at the top of the mineshaft.

Much of this can be explained by the stronger than expected performance of China and other BRIC countries which has caused the recent lift in commodity prices. Stimulus in our country is starting to take hold although there are renewed concerns about the banking industry given default rates on commercial properties and credit cards.

The Report will track all of this and remember buckaroos, the Colonel is watching your backside. I can't imagine a better town to wait out the recession with moly and precious metals on the rise. Bart Melek of BMO Capital Markets sums it all up with his outlook on gold,"Notwithstanding any possible short-term correction, gold's impressive seven-year run is expected to continue well into 2011." (InfoMine, 7/27/09).

Enough talk, let's walk the walk:

Oil is down $0.07 to $67.98 in early trading (September contract); Gold is up $1.7 to $954.8 (August contract); Silver is cranking up 0.160 to $14.035(September contract); Copper is up $0.0375 to $2.5595 (September contract); Molybdenum likes $15.

The DOW is down 28.41 points to 9064.83; the S&P 500, down 2.68 points to 976.58. The miners are mixed today:

Barrick (ABX) $34.04 up 0.85%
Newmont (NEM) $41.90 up 0.34%
General Moly (Eureka Moly, LLC) (GMO) $2.66 down 0.56%
Freeport McMoran (FCX) $60.30 up 0.80% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $44.94 up 0.25% - domestic steel manufacturing
ArcelorMittal (MT) $37.92 up 1.36% - global steel producer
POSCO (PKX) $96.96 down 1.41%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.38% to $1,094,668.26

Cheers,

Colonel Possum

Friday, July 24, 2009

Potash & Propane, What's Going On?


Morning Miners!

It is 6:00 AM sharp and a Friday cup of Joe is always welcome. We've had quite a rally this week but things should settle down a bit today, the ole Colonel believes the summer to be a sideways move from here on. Let's build a good foundation to these markets before we start raising the roof.


The Report has a mining focus but we shouldn't forget that there is a strong agriculture segment to our local economy and other things such as the cost of energy affect our pocketbooks. Some readers are no doubt are less concerned with the price of molybdenum than the price of fertilizer and the bill to heat their home in the winter. For a change of pace let's talk about the latter two; I'll pick potash and propane.

Potash, nitrogen and phosphate, are the three main macro nutrients used by farmers across the globe. Yesterday, Potash Corp of Saskatchewan (POT), the world's largest fertilizer maker, announced a drop of almost 80 percent in its second-quarter profit on Thursday, hurt by lower sales volumes and weaker pricing, and it also cut its full year financial forecast. Last year POT was one of the hottest stocks around with a high of $214 last June crashing to a low of $47 in the darkest days of March. Yesterday it rallied off their grim report to $95.78 which is not unusual. Investors know the world must continue to eat even in hard times and POT will certainly have a brighter future as the global recovery gets its legs. Hopefully, farmers will benefit with lower fertilizer costs in the meantime. If POT falls back to $89, the Colonel is a buyer (no, not that pot!).


Last April the Report looked at the propane futures data to try and figure out if lower propane prices were in store for Eurekans (Lower Propane Bills and More Gold in China). Natural gas has been one of the worst performers this year enjoying none of the rallies of gold or oil. Propane is a derivative product of oil and gas production and indeed follows the latter pretty closely in wholesale price. It made sense to me in April that your propane bills should be lower this year than last. Now we have some data to compare, a faithful reader has reported the recent renewal of his one-year propane contract:

Last year (July/August contract), $2.50/gal.
This year (July/August renewal), $2.35/gal. down 6%

I filled my tank from the same vendor in December and again in June without the advantage of a yearly contract (i.e. retail, single-fill price):

December/08, $3.00/gal.
June/09, $2.75/gal. down 8%

I'm sure you have your own comparison and now enjoy some decrease in price. The question I have is why these prices aren't a whole lot cheaper! Let's look at wholesale prices taken from the futures market:

2008 PROPANE peak price $1.95/gal (6/08)

2008 PROPANE May contract $1.85/gal
2009 PROPANE May contract $0.64/gal down 65%

2008 PROPANE August contract $1.70/gal
2009 PROPANE August contract $0.80/gal down 53%

I imagine propane distributors hedge their fuel contracts like airlines so it is difficult to predict actual savings for Eureka. Hedging is good since it avoids wild swings in your propane costs but things still seem out of whack given the dramatic downturn in wholesale price. I certainly don't want to make an enemy of my propane supplier but am curious about the large difference between retail and wholesale pricing over the last year. Are there readers out there that can help the ole Colonel better understand this disparity?

Enough whining, let's walk the walk:

Oil is down $0.21 to $66.95 in early trading (September contract); Gold is down $2.3 to $952.5 (August contract); Silver is unchanged at $13.770(September contract); Copper is up $0.05 to $2.5245 (September contract); Molybdenum holds at $14.50.

The DOW is down 32.65 points to 9036.64; the S&P 500, down 7.26 points to 969.03. The miners are mixed today:

Barrick (ABX) $35.32 up 0.66%
Newmont (NEM) $41.61 down 0.36%
General Moly (Eureka Moly, LLC) (GMO) $2.63 up 1.16%
Freeport McMoran (FCX) $59.46 down 0.49% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $44.77 up 0.95% - domestic steel manufacturing
ArcelorMittal (MT) $37.04 up 0.16% - global steel producer
POSCO (PKX) $97.53 down 0.36%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.11% to $1,079,498.32

Cheers,

Colonel Possum

P.S. Today's Potash report was derived from a Thomson Reuters article in today's InfoMine.

Thursday, July 23, 2009

Moly Jumps to $14.50, Newmont Reports



Morning Miners!

It is 6:08 AM, the coffee is hot and we've got a lot of work this morning. Yesterday the ole Colonel said that if molybdenum prices got to $15 the folks at Eureka Moly, LLC would be smiling. Well buckeroos we're only 50 cents away with a jump yesterday from $13.25 to $14.50! Copper has also broke the key $2.50 level in early trading. To top things off, Newmont just reported their second quarter results for the year, you can click on their link in the Miner's corner or checkout their slide presentation:

Second Quarter Earnings Release

We'll close today with Newmont, let's start with General Moly. In yesterday's Back to Basics for Eureka's Outlook, the Report reviewed five pillars that support the near term future of Eureka County's economic recovery. The fifth pillar was investor confidence in Barrick and General Moly. Investment spans those of us that own a few shares in these companies to large investors like the steel producer POSCO which has a 20% interest in the Mt. Hope Project. You know how the Colonel feels about our proud homeboys with the Molybdenum T-shirts, let's take a few core samples on the steelmakers. Molybdenum is a key material in the production of high grade steels; if investors are happy with steel, it follows that some of this goodwill should flow to General Moly.

The Report covers three on a daily basis: ArcelorMittal (MT), POSCO (PKX)and Nucor (NUE). The first two have a global footprint; Nucor has a domestic focus as a manufacturer of steel and steel products in North America. For our quick look today, let's throw U.S. Steel (X) in the mix. Here's how they are ranked by market capitalization, a direct gauge of investor participation (market cap is the product of share price and outstanding shares of a company's stock):

ArcelorMittal $48.9B
POSCO $29.2B
Nucor $14.0B
US Steel $5.45B

The big dogs in this list are both investors in General Moly (MT & POSCO). My dear departed father would never believe that US Steel is the Chihuahua in this pack. Of course, he would also not believe that General Motors has been delisted from the DOW Jones. Times, they are a changing pardner. Let's see where these folks actually make steel:

ArcelorMittal - 36% in the Americas, 49% Europe, 15% other (e.g. Kazakhstan)
POSCO - South Korea
Nucor - North America
US Steel - 77% North America, 23% Europe

We might reasonably conclude that a look at these four should give us a pretty good sense of what is happening in the world of steel. ArcelorMittal alone covers 20 countries on four continents. Yesterday we tracked the stock performance of Barrick and General Moly against the S&P 500 for the past 3-months. That's a good interval for comparison because it takes us back to some pretty dark days. Let's do the same for the steel dogs:

S&P up 12%
ArcelorMittal up 36%
POSCO up 29%
Nucor up 10%
US Steel up 36%

It is interesting that the domestic Nucor roughly tracks the S&P in 3-month performance while the other three with international exposure have done noticeably better. This pretty much tells the larger story about global recovery. China, which was not only quick but efficient in applying their stimulus dollars, has benefited steelmakers with a global footprint. The United States is back on its feet but will take a bit longer for stimulus dollars to lift domestic industries. The bottom line is that all four are doing much better with the return of investor confidence and so should General Moly. I just peeked and GMO is up again today in early trading to $2.54 - that's a Colonel Yee-ha!

Here are the Second Quarter 2009 highlights from the Newmont Report:

* Equity gold sales of 1.2 million ounces at an average realized price of $915 per ounce
* Equity copper sales of 47 million pounds at an average realized price of $2.17 per pound
* Costs applicable to sales for gold of $423 per ounce, down 4% from $439 per ounce in the year ago quarter
* Costs applicable to sales for copper of $0.58 per pound
* Net cash provided from continuing operations of $503 million
* Adjusted net income of $213 million ($0.43 per share)

Checkout slide #4 of Newmont's presentation for an interesting comparison of Nevada to their other mining operations. The new Boddington Project in Western Australia should be a big plus for their future.

Enough globe trotting, let's walk the walk:

Oil is up $0.66 to $66.06 in early trading (September contract); Gold is up $1.5 to $954.8 (August contract); Silver is up $0.060 to $13.760(September contract); Copper is up $0.0495 to $2.505 (September contract); Molybdenum is soaring at $14.50.

The DOW is up 160.67 points to 9041.93; the S&P 500, up 18.66 points to 972.73. The miners are happy today:

Barrick (ABX) $35.63 up 1.95%
Newmont (NEM) $41.99 up 0.02%
General Moly (Eureka Moly, LLC) (GMO) $2.54 up 1.60%
Freeport McMoran (FCX) $59.73 up 1.62% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $44.24 down 0.09% - domestic steel manufacturing
ArcelorMittal (MT) $37.06 up 3.69% - global steel producer
POSCO (PKX) $97.60 up 2.25%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 1.83% to $1,075,774.28

Cheers,

Colonel Possum

Wednesday, July 22, 2009

Back to Basics for Eureka's Outlook


Morning Miners!

It is 5:59 AM, the coffee is hot and the ole Colonel is actually pleased that markets are pulling back a little this morning. As I've said before, the recent rally has caught me off guard and a sense of "too good to be true" is fortunately tip toeing back into the marketplace. I believe we need to see stable markets before any sustained rally can occur and stability means some up days, some down. Don't be discouraged, let's review the basics for Eureka's near term future:

Commodity reflation intact
Stabilizing credit and equity markets
Low inflation for the next 6-12 months
Positive trend for gold and molybdenum prices
Continued investor confidence in Barrick and General Moly

Our old friend copper is probably the best metal to show commodity reflation is still alive and well. Early trading today has copper moving closer to a key $2.50 level while other metals are down. The falling dollar isn't enough to explain the recent rise in copper and it remains a good gauge of global health. Remember that China has the greatest growth demand for copper and China's economic prosperity is a key pillar of support for recovery elsewhere.

Ben Bernanke brought up an interesting point in his testimony on the Hill yesterday. There has been a lot of fear about inflation lately with the government's so-called printing of money. Inflation is commonly described as "too much money chasing too few goods". More accurately, it should be described as "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation. Uncle Ben reminded us that a lot of this "new" money is in bank reserves to prop up their balance sheets. Since it is not being spent, the near term threat of inflation is absent. The credit markets apparently agree since the interest rates on long term Treasurys are still low. Uncle Ben and Tiny Tim will get gold stars if they can pull the monopoly money back in at the proper moment as our economy rebounds. If their timing is off and hyperinflation occurs; angry crowds will roll them flatter than a freshly printed Ben Franklin.

Although gold is taking a breather today, we have noticed that molybdenum prices are moving nicely with a pop to $13.25 Monday. Although this is still far from the $30 plus highs of last year it is good progress from the $8 lows of April. The Colonel is willing to bet that if gold stays in the $900-$1000 range and molybdenum approaches $15 there won't be too many unhappy folks at Barrick or Eureka Moly. By the by, Tim Arnold left a comment on yesterday's blog on his whereabouts; welcome back, Tim:

"Just for clarity, Tim Arnold is now joined by his family and critters (3 dogs, 2 cats) and living comfortably in Diamond Valley. We sold the house, table saw, and old truck in Alaska, and we are now full time Eureka residents. The trips back to Alaska will have to be for friendship and to fill the freezer (you get used to that fresh halibut!). Tears, no. Joy, you bet!" (Cheers, Tim)

To close on our outlook discussion, the stock performance of both Barrick and General Moly is good which means a lot of investors believe in their future. Look at their gains in the last three months compared to the S&P 500:

S&P 500 up 12%
Barrick (ABX) up 18%
General Moly (GMO) up 50%

So buckaroos, don't worry be happy. The Colonel would rather see a dull stable summer followed by a year end rally than too much lemonade for the July picnic.

Let's ignore the ants on our cake and walk the walk:

Oil is down $1.58 to $64.03 in early trading (September contract); Gold is down $0.2 to $946.7 (August contract); Silver is down $0.048 to $13.430(September contract); Copper is up $0.0235 to $2.4745 (September contract); Molybdenum is hanging tough at $13.25.

The DOW is up 1.89 points to 8917.83; the S&P 500, down 0.45 points to 954.13. The miners are down today:

Barrick (ABX) $34.84 down 1.61%
Newmont (NEM) $41.69 down 1.33%
General Moly (Eureka Moly, LLC) (GMO) $2.34 down 0.85%
Freeport McMoran (FCX) $57.73 down 0.76% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $44.14 down 1.05% - domestic steel manufacturing
ArcelorMittal (MT) $35.36 down 1.28% - global steel producer
POSCO (PKX) $94.09 up 0.49%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 1.22% to $1,039.670.03

Cheers,

Colonel Possum

The inflation notes for today's blog were taken from our old buddy Wikipedia. The more complete explanation for all you eco-buffs:

Demand-pull inflation arises when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation. This would not be expected to persist over time due to increases in supply, unless the economy is already at a full employment level.

The term demand-pull inflation is mostly associated with Keynesian economics.

Tuesday, July 21, 2009

CAT Raises Forecast, Molybdenum Breaks $13



Morning Miners!

It is 6:07 AM and the ole Colonel keeps pinching himself. It seems I just keep writing good news stories lately and that's a little scary. As they say; don't trade the market you think should be, trade the one you have. The Colonel's "lackluster summer market model" just got run over by a CAT D-10 dozer! Although their profits are down 68% from last year (which is understandable), Caterpillar is bullish looking forward in their latest report:

"There is still a great deal of economic uncertainty in the world, but we are seeing signs of stabilization that we hope will set the foundation for an eventual recovery," said [Caterpillar] Chairman and Chief Executive Jim Owens, who noted improved credit markets and stimulus spending, particularly in China, as positive trends. (WSJ, 7/21/09)

Now you're probably thinking that doesn't sound all that positive but someone does; Caterpillar share price jumped over 20% in 2-days from $34 to $41 in early trading this morning. Then we got a pop yesterday in molybdenum prices from $11.50 to $13.25, a level 66% above the April lows of this year. I don't know if Tim Arnold of Eureka Moly, LLC is still in Alaska but I'll bet he's got tears of joy in his eyes wherever he is!


The other big news is Uncle Ben's visit to Capitol Hill this week which may put a slight damper on all this giddy-up go:

"In the first of two days of congressional testimony, Bernanke shed light on the toolkit the central bank can employ to unwind its crisis measures, but made clear to lawmakers that the economy remains too weak to start tightening monetary policy." (WSJ, 7/21/09)


Let's put the hat on the cat and walk the walk:

Oil is up $0.64 to $65.93 in early trading (September contract); Gold is up $2.8 to $951.6 (August contract); Silver is down $0.010 to $13.615(September contract); Copper is up $0.0185 to $2.4875 (September contract); Molybdenum is a drunken sailor at $13.25.

The DOW is up 44.52 points to 8892.67; the S&P 500, up 0.04 points to 951.17. The miners are mixed today:

Barrick (ABX) $35.55 down 0.11%
Newmont (NEM) $42.20 up 0.14%
General Moly (Eureka Moly, LLC) (GMO) $2.37 down 2.47%
Freeport McMoran (FCX) $58.63 up 2.86% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $45.54 down 0.60% - domestic steel manufacturing
ArcelorMittal (MT) $36.38 down 0.36% - global steel producer
POSCO (PKX) $93.30 up 0.50%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.84% to $1,058,563.42

Cheers,

Colonel Possum

Monday, July 20, 2009

Good News for Eureka, Will It Last?



Morning Miners!

It is 5:44 AM, the coffee is hot and gold got a nice bump to $955 this morning on the London spot exchange, silver followed to $13.75. That's a great way to start a Monday buckaroos and what a great week at our tailgate. While the ole Colonel and his sidekick Loquita were on the road Friday, The Eureka Miner's Grubstake portfolio closed in the black. The readers made a cool $101,927.64 for the week rising 11.1% while the S&P 500 gained 7.0%; the DOW Jones, 7.33%. That's not too shabby.

If this lasts, it is good news for Eureka. Our County is a commodity-sensitive economy and commodities have been leading the way in this latest rally (compare the Grubstake to the S&P). Look at these the Friday closing prices and weekly gains for some of our favorites:

Gold $937.20 up 2.7%
Crude Oil $63.56 up 6.1%
Aluminum $1707 (per ton) up 8.6%
Copper $2.4140 up 9.7%

The rally is fueled by a sense that a recovery is truly underway even though many hurdles remain (e.g., 9.5% unemployment). Last week we covered two market pessimists, Nouriel Roubini and Meredith Whitney, who are thawing slightly from their usual frosty (and accurate)outlooks on the economy and the health of the banking industry. One encouraging sign this weekend was the rescue of CIT Group, a commercial lending giant on the brink of collapse, by private not government funding. The Wall street Journal reported that Jeremy Grantham, chairman of Boston fund company GMO (no, not General Moly!), has turned from a bearish to a more bullish outlook:

"Mr. Grantham, who during the bull market earned a reputation as a permanent doomsayer, now thinks the Standard & Poor's 500-stock index -- currently around 940 -- could rise as high as 1,100 this year on a wave of renewed risk taking and government spending (although, to be fair, he thinks there may be further trouble a year or two down the road)." (WSJ, 7/20/2009)

The ole Colonel stuck his head out a few months ago with a prediction that the S&P 500 would hit 1,000 before New Years but I saw this summer as a pretty rocky road. This recent rally has quite honestly thrown me off my horse. I'll be watching this closely, stay tuned.

Let's dust off and walk the walk:

Oil is up $0.01 to $64.20 in early trading (August contract); Gold is up $16.3 to $953.8 (August contract); Silver is up $0.297 to $13.700(September contract); Copper is up $0.0335 to $2.4565 (September contract); Molybdenum is still purring at $11.50.

The DOW is up 73.61 points to 8817.55; the S&P 500, up 7.91 points to 948.29. The miners are in orbit today:

Barrick (ABX) $35.55 up 3.19%
Newmont (NEM) $42.37 up 2.99%
General Moly (Eureka Moly, LLC) (GMO) $2.40 up 3.45%
Freeport McMoran (FCX) $57.17 up 3.01% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are in launch phase(a "tell" for General Moly):

Nucor (NUE) $45.55 up 2.13% - domestic steel manufacturing
ArcelorMittal (MT) $36.09 up 2.94% - global steel producer
POSCO (PKX) $91.81 up 3.01%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 3.00% to $1,047,132.50

Cheers,

Colonel Possum

Thursday, July 16, 2009

On The Road Again!



Morning Miners!

It is 5:30 AM, grab a cup, sit a spell and then we'll start loading up my truck. The ole Colonel will be on the road again so the next Report you'll see will be bright n' early next Monday, 7/20. It has been a great week so far with extended rallies in precious metals and the broader markets. The readers of this report made $78,189.63 since Friday's close in the Eureka Miner's Grubstake portfolio. Them ain't bad wages for three-days work buckaroos! For new readers, you can check out the Grubstake by clicking on this link:

The Eureka Miner's Million Dollar Grubstake

This is a portfolio of 12 stocks that directly or indirectly benefit Eureka County's future. This is what two of our favorites have done since early July:

Barrick (ABX) up 7.7% to $33.94
General Moly (GMO) up 29.7% to $2.27

I'm glad to see GMO above $2 again but we are still off the lofty highs of this Spring:

Barrick (ABX) down 9.5% from $37.50
General Moly (GMO) down 24.3% from $3.00

The Canadian firm Genuity Capital Markets has recently set a 12-month target for ABX of C$55 so you can see there is a lot of headroom here if things continue to pick up.

Enough counting eggs before the chickens have laid, let's walk the walk:

Oil is down $0.01to $61.53 in early trading (August contract); Gold is down $4.8 to $934.6 (August contract); Silver is up $0.032 to $13.240(September contract); Copper is updown $0.0030 to $2.3890 (September contract); Molybdenum is still sitting fat, dumb and happy at $11.50.

The DOW is up 15.95 points to 8632.16; the S&P 500, down 2.33 points to 922.21. The miners are mixed today:

Barrick (ABX) $33.73 down 0.62%
Newmont (NEM) $40.11 down 0.84%
General Moly (Eureka Moly, LLC) (GMO) $33 up 4.62.64%
Freeport McMoran (FCX) $51.53 up 1.22% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $43.89 up 0.64% - domestic steel manufacturing
ArcelorMittal (MT) $34.13 up 0.80% - global steel producer
POSCO (PKX) $89.49 up 0.27%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.66% to $999,502.

Cheers,

Colonel Possum

Wednesday, July 15, 2009

KOSPI Smiles, General Moly Is Happy


Morning Miners!

It is 5:33 AM, the coffe is hot and the Diamond Valley greets us with a dusty rose smile. This might prove to be a good day for precious metals, gold and silver spot prices took off to the races early morning London time. That reminds me, my favorite Brit asked me yesterday if there was an easy way to buy silver and the ole Colonel never got around to answering his question. Ian and I are nearly the same age, the Colonel is ahead by just two weeks. We were both teenagers in the 1960s; he grew up across the pond and we both love to tell tall tales about those wild and crazy days. That was it, all those splendid lies got in the way of answering an easy question. I promise to close today with an answer.

By the by, you can check London spot prices for yourself by clicking the InfoMine link in The Miner's corner to your right.


Since I am two weeks Ian's senior, I often joke that I'll tell him what lies ahead. That's what the Report tries to do, look ahead for Eureka County to see what twists and turns may await us on the road to economic recovery. Sometimes I'm right, sometimes wrong; the trick in markets is to be more right than wrong. Quite honestly, this week has me confused.

We started out the week with two of our market's biggest pessimists, Nouriel Roubini and Meredith Whitney, saying relatively positive things about the wind down of the recession and improving conditions for our financial system. You can review their thoughts in this Monday and Tuesday's reports. For the past several years, they have both predicted our present crisis with nearly 100% accuracy so the Colonel takes notice when they speak.

Markets have also rallied this week, 35 out of the 36 international stock markets that the Report monitors were in the green yesterday (real time global index data can be found at the bottom of this blog). Italy's MIB Tel was down for reasons unknown to me, but everyone else soared with South Korea's KOSPI leading the pack jumping 2.6% skyward.

Why should we care about the KOSPI? POSCO, the South Korean integrated steel producer, has a 20% investment in our Mt. Hope Project; what is good for POSCO, is good for General Moly (GMO). POSCO helped the KOSPI with a 3.5% gain in their share price; GMO followed breaking 2-bucks with a 5.3% pop for the day. Molybdenum prices are also up 44% from their April lows. That's a Colonel Yee-ha!

What's going on here? Just recently GMO, and everyone else was sliding down hill for what the Report has predicted to be a rough and tumble summer/fall. This sudden well of global optimism is a pleasant surprise, will it last? We'll watch this one closely buckaroos, stay tuned.

Now I'd better answer Ian's question. The simplest way to buy and sell silver (or gold, stocks and bonds) for the individual investor is through an online brokerage house. There are a bunch, I use Ameritrade and Fidelity but E-Trade and others are fine. Signup takes a few minutes to start an account, send them some money and you are good to go. The type of account is important depending on your long or short term plans. You might consider an IRA rollover if you're an old timer, but they have simple nontax-deffered accounts as well. Most of these institutions have very good customer support to guide you on your choices.

The Colonel uses Exchange Traded Funds(ETF)to buy and sell precious metals. Here are two:

iShares Silver Trust (SLV)
SPDR Gold Trust (GLD)

There is a short CNBC video (4/2009) on GLD at the bottom of this blog. Interestingly, GLD now holds more gold (some 1,100 metric tons) than Switzerland to place it in number six in global gold reserves. Ian will be happy to know that all that gold in GLD is tucked safely away in a London Bank!

Enough tall tales about the Sixties, let's walk the walk:

Oil is up $1.21 to $60.73 in early trading (August contract); Gold is up $15.6 to $938.4 (August contract); Silver is up $0.370 to $13.225(September contract); Copper is up $0.0930 to $2.3920 (September contract); Molybdenum is still sitting happily at $11.50.

The DOW is up 157.06 points to 8517.06; the S&P 500, up 16.37 points to 922.21. The miners are rocking the clock today:

Barrick (ABX) $34.0 up 3.53%
Newmont (NEM) $40.28 2.99%
General Moly (Eureka Moly, LLC) (GMO) $2.14 up 4.63%
Freeport McMoran (FCX) $50.23 up 4.25% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $43,60 up 1.99% - domestic steel manufacturing
ArcelorMittal (MT) $33.24 up 6.74% - global steel producer
POSCO (PKX) $88.09 up 1.98%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up a startling 3.23% to $981,242.60.

Cheers,

Colonel Possum

Tuesday, July 14, 2009

Looking for Change in Familiar Places


Morning Miners!

It is 5:29AM, grab a cup and let's take a quick eye test. The ole Colonel will use the headline photo to illustarte a fact about perception. A good tracker will tell you that he doesn't look for something in a scene, he looks for what has changed. Animals process visual information much the same way, especially predators. The change in that case is movement. My Loquita can find her ball in the tall grass as long as it is bouncing, she has a heck of a time finding it when it comes to rest. Market watching is no different. Some mornings there is a news item you didn't expect or unusual movement in a price. Last week it was a quick drop in London's spot silver that caught my eye(Silver Stumbles on the Precious Metal Trail). Fortunately, this wiggle didn't presage a broad decline in precious metals, but it could have.


This week it is not so much much motion as unexpected events. Yesterday Nouriel Roubini saw a ray of light in the economic recovery tunnel (Dr. Doom Speaks, End of Recession in Sight). Last night the Wall Street Journal reported that Meredith Whitney, I call her Ms. Doom, is feeling a bit bullish:

"The financial sector was especially helped by a 5.2% gain in Goldman Sachs Group, which kicks off the wave of bank reports on Tuesday. The bank's shares were upgraded by Meredith Whitney Advisory Group to 'buy' from 'neutral.'

'It's a major positive event' for Ms. Whitney to put a buy rating on any bank, said Kent Engelke, managing director at Capitol Securities Management in Glen Allen, Va., noting that she has a reputation as a bear after being one of the earliest analysts to predict major pain for Wall Street from soured credit bets." (WSJ, 7/13/2009)

Now that's what a I call a change in the scenery; back-to-back positive commentary from two of our biggest gloom-and-doomers in the marketplace. Of course both have had the reputation for being right on the money for the past several years:

"Whitney's extremely bearish view on banks landed her on the cover of the August 18, 2008 issue of Fortune Magazine. Even before the problems in September that befell Merrill Lynch and Lehman Brothers, she is quoted as saying, 'It feels like I'm at the epicenter of the biggest financial crisis in history.'" (Wikipedia)


She is also married to WWE professional wrestler John "Bradshaw" Layfield. Hey, the Colonel ain't going to pick a fight with this soothsayer! That completes our eye test for the morning.

Oh, you ask, "What IS that thing in the headline photo?" I understand that is Ichthys (or "Ickie" or ἰχθύς), Eureka's HWY 50 paleozoic fish. Since much of our basin is an old Devonian seabed, I guess it is fitting for Ichthys to return to visit after a 350 million year hiatus.

Enough fish stories, let's walk the walk:

Oil is up $1.39 to $61.08 in early trading (August contract); Gold is up $2.0 to $924.50 (August contract); Silver is up $0.105 to $12.548905 (September contract); Copper is up $0.0520 to $2.2750 (September contract); Molybdenum is still sitting happily at $11.50.

The DOW is down 11.34 points to 8320.34; the S&P 500, down 0.61 points to 8320.34. The miners are rocking today:

Barrick (ABX) $32.65 up 2.06%
Newmont (NEM) $39.04 1.53%
General Moly (Eureka Moly, LLC) (GMO) $1.95 up 1.03%
Freeport McMoran (FCX) $49.51 up 3.34% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $42.93 up 0.82% - domestic steel manufacturing
ArcelorMittal (MT) $31.28 up 1.26% - global steel producer
POSCO (PKX) $82.10 up 2.51%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 1.02% to $946,249.35.

Cheers,

Colonel Possum

Monday, July 13, 2009

Dr. Doom Speaks, End of Recession in Sight



Morning Miners!

It is 5:38 AM and our Monday pot of coffee is beeping ready! The Diamond Valley has haze in her sleepy eyes but should wake soon to another beautifil day in the Great Basin. Truth is often something we don't care to hear especially when it carries painful outcomes. The ole Colonel is as guilty of this as anyone and always believes the road is a little straighter and the sun a little brighter in the next valley over. When you find yourself at the business end of a handyman changing a truck tire in the pouring rain, that belief system can be shaken. While Truth sits laughing in your warm dry cab you may wonder if things will ever get better.

Nouriel Roubini has proved to be a prophet of economic truth. A Professor of Economics at the Stern School of Business and sometimes called "Dr. Doom", Roubini has nearly a perfect batting average for the predicting our present financial mess. Check this out:

"In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he's a sage." ("Eight Who Saw it Coming" Fortune Magazine, Aug. 2008)

In September, 2006, he warned a skeptical IMF that "the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession." ("Dr. Doom"; Mihm, Stephen, August 15, 2008, New York Times)

He also saw,

"..homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt." The New York Times labeled him "Dr. Doom." In hindsight, IMF economist Prakash Loungani has called him "a prophet." (same New York Times article)

OK...OK Nouriel! So you were right now what? His RGE Global Monitor offers a peak at its new U.S. forecast.

"..The general consensus is that this recession will end sometime in the second half of 2009…. We also expect the pace of contraction of economic activity to slow significantly. We forecast negative real GDP growth in Q2 2009 and Q3 2009, and for real GDP to remain flat in Q4. After the sharp contraction in economic activity in 2009, growth will reenter positive territory only in 2010, and then at a very sluggish rate, well below potential."

And a little more hopefully:

"Improvements in real economic activity are present and visible in the reduction of the pace of job losses, in the improvement in indicators of manufacturing activity, in the stabilization of housing starts and in the improvement of financial conditions."

You can read Roubini's entire report here: RGE Monitor

If Dr. Doom is just a little happier, the Colonel is A LOT happier!

By the by, Barrick has an organizational announcement out today. Check their homepage out with the link in the Miner's Corner to your right.

Enough prognostication, let's walk the walk:

Oil is down $0.82 to $59.07 in early trading (August contract); Gold is down $1.7 to $910.8 (August contract); Silver is down $0.10 to $12.545 (September contract); Copper is up $0.0095 to $2.221 (September contract); Molybdenum is sitting happily at $11.50.

The DOW is down 3.71 points to 8142.8; the S&P 500, down 3.14 points to 875.49. The miners are mixed today:

Barrick (ABX) $31.02 down 1.96%
Newmont (NEM) $37.30 down 0.59%
General Moly (Eureka Moly, LLC) (GMO) $1.85 up 0.54%
Freeport McMoran (FCX) $45.50 down 2.44% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $41.12 down 0.19% - domestic steel manufacturing
ArcelorMittal (MT) $29.99 up 0.98% - global steel producer
POSCO (PKX) $82.46 down 1.72%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.69% to $908,469.58

Cheers,

Colonel Possum

Friday, July 10, 2009

Silver Stumbles on the Precious Metal Trail


Morning Miners!

It is 6:08 AM and I've been spending some time this morning watching silver on the London Spot Market. That's the great thing about markets, somebody is always trading something no matter the time of day. The ole Colonel looks for "funnies" and we might have one shaping up between gold and silver. In normal times, silver follows gold down the wiggly trail of precious metal prices. Silver is called a "high beta" metal with respect to its lustrous cousin gold. That means that when gold goes up the stairs, silver takes the fast elevator (beta greater than one). Of course, the opposite is true; when gold slides, silver falls down the elevator shaft. For number geeks, the silver beta has been about 1.6 this year although I haven't run the numbers since vacation.

Silver is "thinly traded" with respect to gold because there are many more folks and countries invested in the yeller stuff and for many more reasons (currency backstop etc.). Following this argument, when silver does something on its own it's a good time to take notice. The massive hedge fund liquidation of silver last November was a good example and silver courted $9...oooh weee! By contrast, the 20-day moving average of gold stayed within plus or minus 10% through the worst carnage of last year's economic crisis. The lesson? Gold is a fairly stable precious metal; its whacky cousin can somtimes behave like a screaming nut case.

There is nothing that dramatic going on in London but silver did drop 2.6% suddenly to $12.56 while gold only dropped 0.8% to $908. Using this beta stuff, one would expect silver to follow gold down 1.3% (i.e. 1.6 X 0.8), so 2.6% is something to watch. More importantly, silver the follower dropped first. To round things out, platinum spot fell 1.8% to $1091 but only after silver stumbled.

Have I given you a headache with all this blasted number crunching? Let me leave you with a bottom line; if silver falls below $12, the Colonel is buying a chunk. Today might be a big nothing but if it signals further weakness in precious metals the Colonel is buying a tad more gold below $883, yee-ha!

Let's toss out the calculator and walk the walk:

Oil is down $1.14 to $59.27 in early trading (August contract); Gold is down $6.2 to $910.0 (August contract); Silver is down $0.35 to $12.585 (September contract); Copper is down $0.0215 to $2.216 (September contract); Molybdenum is still sitting at $11.50 which ain't too bad buckaroos!

The DOW is down 28.1 points to 8155.06; the S&P 500, down 1.62 points to 881.06. The miners are mixed today:

Barrick (ABX) $31.47 down 0.82%
Newmont (NEM) $37.70 down 0.89%
General Moly (Eureka Moly, LLC) (GMO) $1.82 down 2.67%
Freeport McMoran (FCX) $46.82 up 0.28% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $40.77 down 1.62% - domestic steel manufacturing
ArcelorMittal (MT) $29.49 down 1.27% - global steel producer
POSCO (PKX) $85.25 up 2.32%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.79% to $912,230.61.

Cheers,

Colonel Possum

Thursday, July 9, 2009

The Colonel Returns



Morning Miners!

It is 5:43 AM, the coffee pot is smiling and the Diamond Valley holds a pretty rose. Loquita and I enjoyed the time off and we're are up and at'em. The headline photo is something we saw on HWY 50 that gives the ole Colonel goose bumps. Is there anything more more fun than watching Miss Pete haul a haul truck with three state troopers scattering traffic like Mormon crickets? A durn sight more fun than watching the markets lately.

When I left, Have a Happy Fourth Eureka!, we talked about a rough summer/fall but a good chance for a rally at the year's end. Whoa! The Colonel didn't think we'd get moving quite this quickly: General Moly is below 2-bucks, gold has been heading for 800 country and oil might see a 5-handle before the end of the month. There is resurgent conern about the economy and some investors are moving back to safe havens. We may very well see a repeat of 2008 but with much less severity; remember that markets had a good run and now there's some summer road repair on the recovery highway.

We are just entering "Earnings Season" when corporations report their second quarter performance and provide forecasts for things to come. This is bound to increase volatility so tighten your seatbelts a notch and enjoy the ride. The first to report was Alcoa which may be typical of others in the commodity-sensitive names; a lousy last quarter but perhaps a straighter highway ahead:

"Alcoa Inc., the first blue chip to report earnings this season, lost $454 million in its recent quarter, hammered by a sharp drop in sales in nearly all of its businesses. But Klaus Kleinfeld, the aluminum maker's chief executive, said that there are signs the market is strengthening as aluminum prices rise and some markets, including the automotive sector, are starting to show some resurgence." (WSJ, 7/9/09)

Enough talk, let's walk the walk:

Oil is up $0.51 to $60.65 in early trading (August contract); Gold is up $4.9 to $914.2 (August contract); Silver is up 0.023 to $12.875 (September contract); Copper is up $0.0610 to $2.220 (September contract); Molybdenum is sitting at $11.50 which ain't too bad buckaroos!

The DOW is down 1.06 points to 8177.35; the S&P 500, up 1.54 points to 902.87. The miners are a little happier today:

Barrick (ABX) $31.96 up 1.52%
Newmont (NEM) $38.47 up 1.37%
General Moly (Eureka Moly, LLC) (GMO) $1.84 up 5.14%
Freeport McMoran (FCX) $46.31 up 2.68% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $41.08 up 1.68% - domestic steel manufacturing
ArcelorMittal (MT) $30.64 up 4.57% - global steel producer
POSCO (PKX) $83.96 up 4.00%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 1.66% to $916,322.48.

Cheers,

Colonel Possum

Thursday, July 2, 2009

Have a Happy Fourth Eureka!


Morning Miners!

It is 6:00 AM sharp. The ole Colonel will be on the road soon as many of you. Drive safely and The Report should be on the air later next week. Let me leave you with some good thoughts for the upcoming Independence Day holiday.

Last month we looked down the recovery highway with an article, Positive Signposts for Eureka County. For a week we dug around in the sage and found the following:

Commodity reflation
Stabilizing credit and equity markets
Low inflation for the next 6-12 months
Positive trend for gold and molybdenum prices
Solid reports from Barrick and General Moly

The Colonel has said that this summer/fall could be rough. There is a lot of glum news out there, today's jobs report is a good example. Nonfarm payrolls declined 467,000 in June, a much greater decline than the 350,000 economists expected. No one said the economic recovery would be easy but we are off the peaks at start of the year where we saw losses of 700,0000. Don't tell the poor soul that just lost his job that labor reports are a rear view mirror look at the economy, but they are.

In the next several months I expect the stock market, commodities and gold to all see downward corrections. Remember a "stable" market is one that goes down as well as up. We've had one heck of a run in metal and stock prices since March and it is time to see some downward movement. Stocks might correct 10% or maybe even 15% but I doubt we're headed back to the Devil's Triple Six (S&P 500 March intraday low, 666.79). Gold may drop in the mineshaft a bit and see the 800s again but don't despair, the trend is still up and positive for the year. I've made some predictions, I'm sticking to them and they say by the end of the year we should have the flat changed and be rolling down the highway again. You can revisit my predictions for gold and the S&P 500 in the Colonel's Beer Derby on the bottom right of this blog.

So don't worry, be happy and have a great Fourth of July. We've got a lot to be thankful for, let's walk the walk:

Oil is down $2.50 to $66.81 in early trading (August contract); Gold is down $10.7 to $930.6 (August contract); Silver is down 0.38 to $13.380 (September contract); Copper is down $0.0585 to $2.2720 (September contract); Molybdenum is down a thin flat washer to $10.57 from last week's $10.58.

The DOW is down on the jobs report 177.83 points to 8326.23; the S&P 500, down 20.46 points to 902.87. The miners are sad puppies today:

Barrick (ABX) $33.74 down 3.601%
Newmont (NEM) $41.15 down 2.44%
General Moly (Eureka Moly, LLC) (GMO) $2.15 down 4.87%
Freeport McMoran (FCX) $49.14 down 2.83% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are feeling the blues too (a "tell" for General Moly):

Nucor (NUE) $42.51 down 2.19% - domestic steel manufacturing
ArcelorMittal (MT) $31.80 down 4.10% - global steel producer
POSCO (PKX) $83.50 up 2.27%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 3.04% to $965,660.79.

Cheers,

Colonel Possum