Monday, July 20, 2009
Good News for Eureka, Will It Last?
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