More Silver but Diamonds Aren't Forever

Morning Miners!

It is 5:57 AM, grab a cup and let's look at what's shinning and what's lost some glitter. Yesterday we watched a much awaited jump in silver prices as gold set another record breaking day. The precious metals are consolidating a bit today but gold is still north of $1130 and silver above $18. Reuters reported an investor surge into the silver Exchange Traded Fund(SLV:NYSE) for a new record holding of over 8,950 metric tons. The Colonel will keeps his eyes on gold's wacky cousin.

Things are not faring as well for diamonds. I get worried when I see two articles in different publications sending up warning flares on the same day. MineWeb carries a Reuters article this morning warning of a speculative bubble in rough diamond prices that is likely to pop by mid-2010 and may threaten a rerun of last year's industry crisis:

Diamond industry wary of rough stone price bubble (Reuters via MineWeb, 11/17/2009)

The Wall Street Journal carried a similar story observing that major diamond miners are circling the wagons to avoid a bubble by slowly increasing output to tamp down prices of rough gemstones. Prices for uncut rocks have risen more than 40% since February in a backdrop of declining retail sales. The Report has followed diamonds and things were looking up as diamonds displaced gold as the jewelry du jour in India. Unfortunately, this has not been able to compensate for a dramatic drop in demand in western countries.

From Kenworth's to Diamonds to Kartika Trehan (10/20/2009, The Eureka Miner's Market Report)

Diamonds are a (Canadian) Miner's Best Friend (9/14/2009, The Eureka Miner's Market Report)

The Colonel bailed out on poor ole Harry Winston Diamond Corp (HWD) this morning. It was a nice ride but I don't like the "bubble" word pardners.

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" is below 25, smoother road market conditions expected (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 0.02 in early trading to $78.92 (December contract); Gold is down $3.4 to $1135.8 (December contract, most active); Silver is down $0.100 to $18.300 (December contract); Copper is up $.0085 to $3.1120 (December contract); Molybdenum is steady at $12.00

The DOW is down 27.51 points to 10379.45; the S&P 500 is down 4.26 points to 1105.04. The miners are mixed:

Barrick (ABX) $44.25 up 0.59%
Newmont (NEM) $52.13 down 0.50%
General Moly (Eureka Moly, LLC) (GMO) $2.38 up 0.42%
Freeport McMoran (FCX) $83.86 DOWN 0.73% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $41.67 DOWN 0.81% - domestic steel manufacturing
ArcelorMittal (MT) $38.42 down 0.60% - global steel producer
POSCO (PKX) $122.20 down 0.11% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.34% to $1,290,382.99(what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus, Ackerman Ranch