"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.

Wednesday, November 25, 2009

The Report Wishes You a Happy Thanksgiving!

Morning Miners!

It is 5:56 AM, have a cup with the ole Colonel before Turkey Day. Remind me to unplug the pot, the Report will be back bright and early Monday morning, 11/30. There is a lot to be thankful for in the marketplace and I thought we'd close the week with some good news in addition to gold setting a new record this morning breaking $1180 on the London spot exchange. Here are six things to be happy about:

1. The liquidity-driven momentum of gold price (i.e. weak U.S. dollar and low interest rates) shows no sign of slowing soon. It appears a $1200 level is nearly sure thing before year's end. Down swings are moderated by central banks stepping in to buy the dips along with big players like Barrick Gold.

2. Copper, our canary in the global recovery mineshaft, is soaring like an eagle again. It is near levels not seen since September of last year hitting an intraday high of $3.179 on 11/23 (December contract). This morning's price of $3.138 is 139% above a record low set the day after last Christmas of $1.315.

3. Molybdenum price has pulled back from its summer highs but appears to have stable support as the steel industry recovers. Kevin Louhrey, President and CEO of Thompson Creek Metals, expects that 2010 will be a better year than 2009 and 2011 "even better than 2010" (Molybdenum on CNBC Business News, 11/24/09)

4. The Eureka Miner's Million Dollar Grubstake Portfolio has courted new highs lately earning the readers north of $300,000 since its inception in May (30% return). The Grubstake has twelve stocks that directly or indirectly affect the future of Eureka County so its value is a good barometer for how well we're doing as the nation recovers from the "Great Recession". The broader DOW and S&P 500 markets continue to enjoy a terrific rally from the lows this spring (e.g., S&P at 1100 is up 64.5% from a March intraday low of 666).

5. Although some years away, strategic metals such as lithium and vandium together with silver promise to play an important role in the emerging alternative energy sector. Humboldt County has massive lithium carbonate deposits, Eureka County has a promising vanadium play and silver is a natural by-product of present day gold mining (note 1). This is potentially great news for the kids and grand kids of resource-rich Northern Nevada even though us old timers may witness only the beginning of this industry (What's in a Battery for Eureka County?).

6. On the broader economic front, good news is on the wires this morning. As reported by the Wall Street Journal:

"Consumer spending increased in October by 0.7% as incomes rose and inflation remained low, boding well for economic growth. Personal income rose by 0.2% for the second straight month. In a separate report, initial claims for jobless benefits declined by 35,000 to 466,000 in the most recent week...Wednesday's report was an encouraging sign for growth in the fourth quarter, since both consumer spending and incomes rose by more than expected in October." (WSJ, 11/25/2009)

There, that's all good stuff buckaroos. The Report wishes you and your family a happy Thanksgiving!

Before the checking the turkey, let's walk the walk:

4-WD is OFF - the VIX or "fear index" is below 25, smoother road market conditions are expected to continue (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 $0.03 in early trading to $75.99 (January contract, most active); Gold is up $14.4 to $1180.2 (December contract, most active); Silver is up $0.165 to $18.620(December contract); Copper is up $0.0240 to $3.1375(December contract); Molybdenum is steady at $12.00

The DOW is up 6.28 points to 10439.99; the S&P 500 is up 0.71 points to 1106.36. The miners are happy:

Barrick (ABX) $43.49 up 1.09%
Newmont (NEM) $54.10 up 1.41%
General Moly (Eureka Moly, LLC) (GMO) $2.37 up 1.72%
Freeport McMoran (FCX) $86.53 up 1.10% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $42.46 up 1.17% - domestic steel manufacturing
ArcelorMittal (MT) $39.65 up 0.92% - global steel producer
POSCO (PKX) $124.28 up 2.99% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.93% to $1,301,523.75 (what is this?).


Colonel Possum

Note 1 - For example, much of Nevada's silver production in 2007, which totaled 262 metric tons, was a co-product or by-product of gold mining. The Robinsin mine near Ely is a good example of silver by-product in a primarily cooper mine. Nevada silver production peaked in 2007 at 770 metric tons tons (source: Nevada Bureau of Mines)

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