"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.

Thursday, October 22, 2009

Happy Thor's Day, Don't Worry be Happy!

Morning Miners!

It is 5:48 AM, grab a cup and let's give a salute to Thor's day. A recent History Channel reminded me that Thursday is named after the big feller with the hammer that used to run things up North. Maybe we should invite Thor back to hammer out a few remaining dents in our economy. I think we call his approach "tough love" nowadays.

You don't need to ask an old timer about tougher times, just think back to this May. The Colonel wrote a piece, The Deer Don't Care if Oil is $59, inspired by one of the critters walking past my office window in the very early hours. Yesterday, oil crossed into $80 territory and I bet the deer still don't give a hoot. In May we were in recession's storm but rumblings in the clouds overhead were joined by a few rays of sunshine. Copper was at $2.14 and heading higher, molybdenum had come off its bottom and was proud to be $9.70. Yesterday copper soared through $3 which this Report has identified as a key level to show improving global recovery. Moly has come off its highs but has been holding steady at $13.6 for several weeks.

Gold has been a big story soaring to $1060 from $920 levels in May. We started the Eureka Miner's One Million Dollar Grubstake portfolio in that same month to track the health of investor confidence in areas that directly and indirectly affect Eureka County. We've accumulated over a quarter of a million dollars in profit since, and that's not too bad. The Dow Jones in May was in the mid 8,000 and this month rattles around 10,000 and that's good too.

So what's your point Colonel? I want to remind readers that perspective is as good as your favorite reading glasses. We can get all depressed about $80 oil and forget that commodity reflation is one of the key drivers to our local economy. Things have improved considerably since Spring and it appears we may be at an inflection point. Higher oil could dampen recovery but the jury is still out on whether $80 today means $100 in 2010. Supply is still at record levels and much of the run up can be attributed to a falling dollar.

There may be some improving news for the old greenback too. There is a good article on the dance of the dollar, gold and oil in today's MineWeb:

Gold could be in for shaky time in runup to G20

This is not about the imminent collapse of gold price but more about some long needed re-balancing between the greenback and the yeller stuff. It is good to remember that a $1.50 euro and near parity for the Canadian dollar just kills major exporters like Germany and Canada. With all the trash talk about the U.S. dollar, China and the Middle East countries are not anxious to see their vast dollar reserves vanish in the mineshaft. The Colonel believes a strengthening dollar and moderating gold and oil prices would be good for everyone.

So don't worry, be happy. If things go bad, I'll call in Thor for a little hammer time!

By the by, I've added a fuel gauge to the Eureka Outlook Dashboard. Unfortunately, I'm setting the yellow light on as long as oil trades above $80.

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" is 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 $0.66 in early trading to $80.71 (December contract); Gold is down $7.8 to $1056.7 (December contract, most active); Silver is up $0.340 to $17.485 (December contract); Copper is down $.0300 to $3.0165 (December contract); Molybdenum remains steady at $13.625.

The DOW is down 31.06 points to 10061.13; the S&P 500, down 3.66 points to 1094.25. The miners are happy:

Barrick (ABX) $38.64 up 2.09%
Newmont (NEM) $46.65 up 1.44%
General Moly (Eureka Moly, LLC) (GMO) $2.86 up 1.42%
Freeport McMoran (FCX) $80.72 up 2.65% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are happy-pappy, (a "tell" for General Moly):

Nucor (NUE) $46.48 up 1.80% - domestic steel manufacturing
ArcelorMittal (MT) $39.42 up 0.84% - global steel producer
POSCO (PKX) $117.01 up 1.54% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 1.24% to $1,284,260.49 (what is this?).


Colonel Possum

Headline Photograph by Mariana Titus; "Blue Space Two"

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