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

DISCLOSURE

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

Monday, October 12, 2009

Ghosts, Gold & Oil



Morning Miners!

It is 6:09 AM and the ole Colonel had quite a visit this morning. The ghost of George Haskell dropped in for a cup of joe, talk about an old timer! George was the first postmaster of Eureka and gave the town its first name. There were only about 100 folks in a tent camp then and George set about finding a proper name for the tiny mining community. After some thought, he settled on "Napias" which in the Shoshone tongue means "silver". Later on the name "Eureka" caught on inspired by the popular miner's exclamation upon finding a new lode. You can read more about George and other colorful character's in Lambert Molinelli's fact-filled book, Eureka And Its Resources, written in our town's heyday of prosperous mines, a stagecoach and railroad. Check out the museum, there are also copies available on Amazon.


Before we move on to markets, I have to tell you a funny thing about George. With all the modern gadgets around the shop he was most fascinated with the Bunn coffeemaker. He called it a "coffee still" and asked me if it was any good for making whiskey! Poor old guy kept looking for a fire inside. Give George a hey-howdy when you pick up your mail today, he said he was fixin' to hang around the mail room a spell until the stage arrived.

I thought we'd take sometime this week to ponder where gold is headed next. There is pretty good consensus that gold will continue a positive trend up as the dollar continues to slide down. Although the Colonel generally agrees with this thesis in the long term, it is less than clear what may happen in the next several months. I spent the weekend pouring over my models of such things and will share some of my thoughts over the next few days. My observations will be based on two records of gold and oil price data:

Record 1 - November 2007 through August 2008
Record 2 - January 2009 to the present

Both records span 10 months, the first begins just ahead of the recession and covers both peak oil and gold prices in 2008 ($147 oil, $1,033 gold); the second, the year-to-date performance for 2009. There are some eerie similarities in the data during the turmoil of the financial crisis and our present situation. Stay tuned buckaroos, George may not be the only ghost in town.

Enough talk, let's walk the walk:

CAUTION: 4-WD is OFF - the VIX or "fear index" has returned well below 25, smooth markets expected in the near term (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 up $1.70 in early trading to $73.47 (November contract); Gold is up $8.6 to $1057.2(December contract, most active); Silver is up $0.170 to $17.860(December contract); Copper is down $0.0270 to $2.8650 (December contract); Molybdenum is steady at $13.625.

The DOW is up 66.28 points to 9931.22; the S&P 500, up 7.81 points to 1079.30. The miners are mixed:

Barrick (ABX) $39.87 up 0.99%
Newmont (NEM) $47.12 up 1.33%
General Moly (Eureka Moly, LLC) (GMO) $3.17 down 0.31%
Freeport McMoran (FCX) $75.86 down 2.04% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $44.97 down 0.20% - domestic steel manufacturing
ArcelorMittal (MT) $38.22 up 2.14% - global steel producer
POSCO (PKX) $105.63 down 1.63% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.72% to $1,257,954.95 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus
















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