Thursday, December 3, 2009
Gold's on Hold...?
It is 5:29 AM, the coffee is on and it is all hands on deck in the shop this morning. The ole Colonel will be back a bit after the markets open.
OK folks, back in the saddle. It is really nuts to watch the daily fluctuation of any one thing in the marketplace and draw all kinds of conclusions. Lately we have been paying a lot of attention to gold (and its poor cousin silver) because the action has been extraordinary. Interestingly, the focus on precious metals pretty much does tell you everything else. When the gold goes up, the U.S dollar goes down and the stock market rallies. On the rare days the dollar is strong; the process reverses. Recently the correlation between the three is so strong, the Report could just as easily focus on the dollar or the flips and dips of the DOW Jones to read the global tea leaves.
The last 24 hours is a good example. We have been hitting new gold highs almost daily and gold pegged $1,226.30 overnight on fresh Japanese buying. Japan joins the growing list of countries that are buying gold to diversify away from the U.S. dollar. Later in the day the dollar recovered from its 16-month low against the euro after the European Central Bank President Jean-Claude Trichet expressed support for a strong dollar and announced small steps toward the withdrawal of liquidity measures in Europe. Spot gold obediently dropped on the London spot exchange, the markets followed and now are trading flat. This is like watching an Esther Williams synchronized swimming movie. If your're a young'un and miss the metaphor don't worry, I doubt that movie genre is ever coming back!
Where do we go next? I think for the moment gold is on hold and catching its breath in the pool. The next big gold/dollar/stock market swimming exercise will be kicked off tomorrow with the monthly jobs report. The Colonel will be up and at'um at 5:30 AM to watch the new government numbers on unemployment cross the wire. I suggest you hit the snooze button and catch a few extra winks, this movie will go on for a long long time.
Enough talk, let's walk the walk:
4-WD is OFF - the VIX or "fear index" remains below 25; smooth 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 0.36 $0.53 in early trading to $79.96 (January contract, most active); Gold is up $2.4 to $1215.4 (February contract, most active); Silver is down $0.260 to $19.065(March contract); Copper is down $0.0060 to $3.2525 (March contract); Molybdenum is steady at $12.00
The DOW is down 6.50 points to 10446.18; the S&P 500 is up 0.87 points to 1110.11. The miners are mixed:
Barrick (ABX) $47.74 down 0.40%
Newmont (NEM) $55.38 down 0.81%
General Moly (Eureka Moly, LLC) (GMO) $2.34 up 1.30%
Freeport McMoran (FCX) $85.09 down 0.11% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel are up, (a "tell" for General Moly):
Nucor (NUE) $44.00 down 0.81% - domestic steel manufacturing
ArcelorMittal (MT) $41.06 up 1.11% - global steel producer
POSCO (PKX) $126.40 up 0.03% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 0.11% to $1,336,230.23 (what is this?).
Headline photograph by Mariana Titus