Tuesday, September 15, 2009
Gold and Pizza in Philadelphia
It is 5:52 AM, the coffee is hot and life is good. Recent events in the markets having been confusing to say the least. The Colonel's mission is to bring some sense to all this and wrap it up in a few words for your morning break so you can go on to do better things than worry about price dips in molybdenum. Sometimes the mission is easy, sometimes hard and this morning, a delight. In today's news search I found a wonderful article by Felicity Duncan explaining the present rise in gold prices. It was posted by Mineweb and sourced from Philadelphia. It is short, concise and gives the reader a nice overview of the lustrous metal that drives our local economy. It is all told in a very straightforward manner including an explanation of inflation using a pizza purchase for an example.
This is, however, where things started to fall apart for me. In the pizza example Duncan gives the price in "rands" and the ole Colonel sensed something funny in Philadelphia. Checking Google, I discovered this Philadelphia was not in Pennsylvania but a charming little town in South Africa. It may very well be the size of our Eureka; it sits inland from the coast in the southwest tip of Africa north of Cape Town. Here's a picture of a road near Duncan's town, isn't this the road to Carlin?
Philadelphia even has a Main St. and a Meul St. I thought "Meul" St. was close enough to our "Buel" St. assuming the first letter difference and vowel transposition have something to do with being in the Southern Hemisphere (coriolis forces?). I plan to e-mail the author today and explore what other similarities our two communities may have. Stay tuned.
Back to the business of gold here is a link to the Duncan article. It's a quick read on your break.
The story the gold price is telling (Felicity Duncan, Mineweb 9/15/2009)
On the metals front the Colonel continues to be befuddled by the drop in moly and nickel prices while the stocks of General Moly and steelmakers rise and the U.S. dollar falls to new 52-week lows. In normal times (which we left many moons ago), one might argue that big consumers like China have reached their raw material restocking for the year and steel stocks are rising because their input costs (e.g. nickel, moly) are declining and demand is up. We are now in the "new normal" where raw materials are still recovering from a severe deflationary period and real global demand for steel remains questionable. Dollar drops generally cause commodities to rise but lately moly and nickel continue to fall. Hmmm...I just saw a news flash on Nucor (one of the steelmakers we track) announcing "new demand", I'll check this out and report more on our metals puzzle tomorrow. Here is the latest one-month chart of our two little canaries in the global recovery mineshaft:
Looks like we've got a new highs for General Moly today - Yee-ha!
Enough talk, let's walk the walk:
4-WD is OFF (the VIX or "fear index" is low)
Yellow light is ON for declining molybdenum price (less than magic number: $16.50)
Yellow light is ON for possible adverse regulation/legislation (mercury emissions)
Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)
Oil is up $0.79 in early trading to $69.65 (October contract); Gold is down $3.5 to $997.6 (December contract, most active); Silver is down $0.013 to $16.610 (December contract); Copper is up $0.0250 to $282.95 (December contract); Molybdenum holds at $14.75.
The DOW is down 0.30 points to 9626.50; the S&P 500, down 1.60 points to 1047.74. The miners are mixed:
Barrick (ABX) $37.20 down 0.51%
Newmont (NEM) $45.99 up 0.50%
General Moly (Eureka Moly, LLC) (GMO) $3.41 up 3.97%
Freeport McMoran (FCX) $70.53 down 0.13% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel stocks are mixed, (a "tell" for General Moly):
Nucor (NUE) $46.74 down 0.15% - domestic steel manufacturing
ArcelorMittal (MT) $40.90 up 1.56% - global steel producer
POSCO (PKX) $102.10 up 2.67% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is up 0.73% to $1,210,759.68(what is this?).
Headline Photograph by Mariana Titus
Photo of Philadelphia, South Africa,courtesy of www.traveljournals.net