Monday, August 24, 2009
Klondike Miners Opened Window of Time
It is 6:01 AM and Summer is heading for the backdoor, let's catch her before she's gone! OK, that's better. You sit right here with the miners hon' and the ole Colonel will pour you cup. No use running off, you've been good to us and there is plenty of time left before Fall takes your place.
We'll get to the markets in a minute. No need to rush there either. Summer has brought us some nice rallies in metals and miners and we know Fall often brings a bag of surprises. Let's start the week with a story instead. Canwest News Service out of Toronto has a great piece on old timer miners in Alaska and the fossils they discovered along with their gold. Here's the link:
Klondike rush produced two treasures — gold, fossils
The story is sourced from this month's GSA Today, one of the world's top geological journals. A seven-member team of Canadian and British researchers detail the priceless scientific treasure that has emerged from the Klondike goldfields:
"The Klondike mines are like 'windows of time' for scientists, says Yukon government paleontologist and study co-author Grant Zazula, describing the 'amazing relationship' between gold-diggers and researchers." (Canwest, 8/24/09)
The part I found intriguing was the fossil evidence discovered by miners that date back to when there was a land bridge between Siberia and Alaska. That is the bridge that brought the first buckaroos to our neck of the woods, pardner! Have a good read on your break.
It looks like we're starting the week on a good foot with the markets. Everything is still up, up and away which gives the Colonel cause to start looking for some early signs of Fall. Now, I'm not trying to be a party-pooper but an ounce of caution is worth a pound of moly. Speaking of which, molybdenum dropped 25 cents Friday to $18.00. That in itself is not much but moly has been on a steady uphill climb since the sub-$8 lows of April. We'll keep an eye on this one since the price of moly is a good gauge of how well the global steel industry is really doing. I'm not too worried unless moly falls below $16.50.
Besides moly, the Report looks at gold, oil and copper to monitor global well being. The ole Colonel likes the 20-day moving averages (MVA) of these three since it takes out a lot of the day-to-day pops and drops. Since mid-June the averages have kept in a tight range except for copper which seems to float ever closer to $3. Here are the 20-day MVAs compared to this morning's price:
Gold $931 to $952 (2.2% range); today $955 (+0.3% outside range)
Oil $65 to $70 (7.7% range); today $74.6 (+6.6% outside range)
Copper $2.21 to $2.72 (23.1% range); today $2.88 (+5.9% outside range)
What does all this blasted number crunching signal? Let's take them one at a time. As investors have grown in confidence they have been cashing in gold to put money back in the stock market. This and a lower consumer demand from India (blamed partly on a poor monsoon season) has caused gold price to wallow in its range. Since June the SPDR gold holding ETF (GLD) had seen a fall of 6%. This is significant because the GLD holds more than a thousand tons of old yeller in London. That is a larger holding than most central banks. The turning leaf of Autumn for gold is a recent reversal of this trend. The GLD reported its first rise in its gold holdings in five weeks on August 21st, up by nearly a ton to 1,066.41 tons. Could this signal a change in investor sentiment?
Oil has just gone nuts lately rising in price far beyond the fundamentals of present supply and demand. Investors are betting that a crisp rise in global demand will justify prices rapidly approaching $80. This could be detrimental to domestic and global recovery. Increasing beyond the present price level is the autumn leaf of worry for oil.
Finally, copper our little canary in the global mineshaft since March, continues to soar like an eagle. If it breaks $3 this Fall that is a positive sign; if our bird dives below $2.50, duck for cover buckaroos! Stay tuned, the Colonel is eagle-eyeing all three.
Enough talk, let's walk the walk:
All lights are green on the Eureka Outlook Dashboard (upper right, what is this?)
Oil is up $0.74 in early trading to $74.63 (October contract); Gold is up $0.60 to $955.3 (December contract, most active); Silver is up $0.256 to $14.420; Copper is up $0.1500 to $2.8820 (September contract); Molybdenum dropped $0.25 to $18.00
The DOW is up 78.14 points to 9584.10; the S&P 500, up 9.17 points to 1035.30. The miners are happy-pappy:
Barrick (ABX) $35.03 up 1.04%
Newmont (NEM) $41.23 up 0.95%
General Moly (Eureka Moly, LLC) (GMO) $2.60 up 1.17%
Freeport McMoran (FCX) $67.08 up 3.10% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel stocks are cruising, (a "tell" for General Moly):
Nucor (NUE) $47.59 up 0.93% - domestic steel manufacturing
ArcelorMittal (MT) $37.57 up 2.82% - global steel producer
POSCO (PKX) $96.08 up 0.47%- South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is up a healthy 1.50% to $1,120,952.12 (what is this?).
Photograph by: Handout, GSA Today
Klondike-era miners pose beside the remains of an extinct mastadon dug up in the hunt for gold a century ago. The picture appears on the cover of the latest edition of the geological journal GSA Today.