Wednesday, September 2, 2009
Off-Road Conditions Ahead, a Golden Opportunity?
It is 5:38 AM and the ole Colonel has made the coffee extra strong this morning. We may need it. The Dow Jones Industrial Average dropped 185 points after financial stocks cratered yesterday setting off an across-the-board selloff. There are two key employment reports coming up which should add to a bumpy ride this week. I've added a 4-WD switch to the Eureka Outlook Dashboard (to your right). I've turned it "ON" for off-road conditions ahead after reading the first employment report this morning. Private-sector jobs in the U.S. fell 298,000 in August, according to payroll giant Automatic Data Processing Inc. (ADP). The projected number was 213,000. Nuts.
The ADP numbers are of course the warm up band for the big government report on Friday rolling out at 5:30 AM, the Colonel will be up and at'em. The Eureka Miner's Market Report has been throwing out some warning flares for the last few weeks as we've watched Chinese markets fizzle and our favorite metals (except gold) top out. What about gold? Look what happened in London this morning as the spot price broke $970:
The return to safe havens has come and none too early. I made a beer bet with you that gold would hit $980 before Labor day and we only have three market days left (what is this?). Silver is back over $15 and I need to get it to $15.80 for the second Labor Day bet. Phew, things are getting exciting.
Here are two bullish reports on gold that you may find interesting reading on your break:
Gold price could still hit $1,200 this year (The Gold Report, 9/02/09)
Turning point for gold as Central Banks become buyers (Lawrence Williams, Mineweb, 9/01/09)
The first is a Gold Report interview with Blue Phoenix Chief Investment Strategist John Licata. He is convinced that gold remains one of the best asset plays in the world and is also quite high on silver. There is a good discussion of the global recovery to support his strategies.
The second article is a pleasant surprise. There are some indications that Central Banks and sovereign wealth funds are rethinking future sales of gold. A switch to purchasing may occur as attitudes towards gold as a reserve asset become much more positive. In particular, Russia and Asian countries might be in a catch up mode holding only about 1.5 to 2% of their reserve assets in gold compared to European banks which hold an average of 55%. All these players can move enough gold to make a market impact. Let's hope it's price positive.
How's John Wayne doing? One of the crew dropped by this morning to say they had taken the day off to do a little gold panning out by the Eldorado. It can't remember any water out there, must be a mirage.
Enough talk, let's walk the walk:
CAUTION: 4-WD ON, Off-Road Market Conditions Ahead
Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what is this?)
Oil is down $0.37 in early trading to $67.68 (October contract); Gold is up $16.8 to $973.3 (8:26 AM update, December contract, most active); Silver is up $0.045 to $15.105 (December contract); Copper is down $0.0405 to $2.7780 (December contract); Molybdenum holds at $17.00.
The DOW is down 21.62 points to 9288.98; the S&P 500, down 3.23 points to 994.81. The miners are mixed:
Barrick (ABX) $36.12 up 3.05%
Newmont (NEM) $41.41 up 3.06%
General Moly (Eureka Moly, LLC) (GMO) $2.58 down 2.62%
Freeport McMoran (FCX) $60.43 down 0.30% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel stocks are mixed, (a "tell" for General Moly):
Nucor (NUE) $43.30 down 0.84% - domestic steel manufacturing
ArcelorMittal (MT) $34.09 down 0.79% - global steel producer
POSCO (PKX) $90.15 up 0.16% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is up 0.02% to $1,074,820.67 (what is this?).