"The history of Eureka lies in its future." - Lambert Molinelli, 1878


The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO) 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.

Tuesday, September 29, 2009

Good News: Houses, Gasoline & Propane

Morning Miners!

It is 5:58 AM and we're nearly at September's backdoor. Grab a cup and let's look at a some things that may prove good for the economy and your wallet. There are few heroes left standing on the battlefield of our recent financial crisis, Professor Robert Shiller of Yale University is one. Shiller clearly saw the housing balloon rise to the heavens and accurately predicted its rapid descent to earth. His prediction was assisted by something of his own invention now called the "S&P Case-Shiller Home-Price Index". The index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the nation and has become one of the most revered indicators for economic recovery. The latest index performance was announced this morning:

Home prices climbed in July from a month earlier, according to the S&P Case-Shiller home-price indexes, with just two of 20 metropolitan areas -- Las Vegas and Seattle -- showing declines. Every region posted year-over-year declines. David M. Blitzer, chairman of S&P's index committee, said the rate of annual decline in home price values continues to decelerate, "and we now seem to be witnessing some sustained monthly increases across many of the markets." (WSJ, 9/29/09)

This is good news; as housing goes, so goes the economy buckaroos. There are some other encouraging signs, the wholesale price of gasoline is headed south reacting to a present glut in crude oil inventories. Crude oil futures are in the mid-sixties again and RBOB has come down from its August highs...what's RBOB you say? Try saying "Reformulated gasoline Blendstock for Oxygenate Blending" the next time you stop by Marge's Chevron. RBOB is the wholesale price of gasoline traded on the New York Mercantile Exchange and this is where we stand:

August RBOB contract (high) $1.9363/gal
September RBOB contract (9/29) $1.6328/gal (down 15.6%)

That's more good news. Although a lot of other factors affect the retail price, you should see a savings for the rest of this year (unless Iran does something stupid!).

To close let's look at wholesale propane prices. They've come up some from the last time we looked in July but that is typical as we approach winter. The encouraging sign is that we are a lot better off than last year:

2008 August Propane contract $1.70/gal
2009 August Propane contract $0.80/gal (down 53%)
2009 November Propane contract $0.99/gal (down 42%)

Keep in mind that our Propane suppliers hedge their wholesale contracts so you can't expect to see dramatic decreases but the home should be a bit cheaper to heat this winter. Stay warm.

Enough talk, let's walk the walk:

CAUTION: 4-WD is ON (the VIX or "fear index" has been above 25 for the last several days and took a nice dip below today. I'm going keep the warning set until we get past Friday's employment report. So for now, off-road conditions for markets possible (what's this?)

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 down $0.51 in early trading to $66.33 (November contract); Gold is down $1.0 to $993.1 (December contract, most active); Silver is down $0.015 to $16.180(December contract); Copper is down $.0105 to $2.7165 (December contract); Molybdenum is steady at $14.00.

The DOW is down 21.38 points to 9767.98; the S&P 500, down 1.34 points to 1061.64. The miners are mixed:

Barrick (ABX) $33.24 up 2.64%
Newmont (NEM) $43.94 up 2.98%
General Moly (Eureka Moly, LLC) (GMO) $3.2481 down 0.37%
Freeport McMoran (FCX) $69.79 up 1.20% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $46.95 down 0.93% - domestic steel manufacturing
ArcelorMittal (MT) $37.89 down 1.12% - global steel producer
POSCO (PKX) $102.00 down 0.58% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.14% to $1,192,550.86 (what is this?).


Colonel Possum

Headline Photograph by Mariana Titus

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