A Positive Surprise for Jobs, Gold Stumbles

***BREAKING NEWS***
Appeals Court Remands Decision to District Court on Cortez Hills Project (link) - Possibly adverse consequences for Barrick's Cortez Hills Project, ".... It is premature to predict the extent of any potential injunction impact on the timing and completion of construction of Cortez Hills, which is now largely complete. The District Court will have to determine the extent to which any action, including any suspension of operations, may be required to respond to the decision of the Court of Appeals."

Barrick (ABX) share price is down nearly 10% in mid-morning trading - CP


Morning Miners!

It is 5:21 AM, I made that famous Raine's TGIF coffee extra strong this morning for the monthly jobs report. I'm going to checkout Becky Quick on CNBC Business News, the government numbers will be up in a moment...

Hey, that's not bad at all, pardner. The nonfarm payrolls fell by just 11,000 last month, the expected job loss was 125,000 (note 1). Did someone slip a decimal? In October we went down 111,000. This new 5-digit number is the best showing since December 2007 when the "Great Recession" began.

Further good news from the report are positive revisions to previous months showing that fewer than 159,000 jobs were actually lost. This gives us a new unemployment figure of 10%; an improvement from last month's 10.2%, the highest level since April 1983.

Let's give all this some perspective. The loss of any job in America is bad news especially if you are the one walking out of the door. We need positive job growth to truly recover the economy not just smaller negative numbers. In fact, the U.S. needs to add no less than 120,000 new jobs each month to stabilize employment. The reason to feel positive about today's significant drop is an encouraging change in the so-called "trajectory" to happier times. If there is follow through next month, the economic recovery in the U.S. may very well be moving faster than most economists predicted. Stay tuned.

Do you think the world cares about our jobs report? You bet. Spot gold traded at $1206 on the London exchange moments prior to the announcement and dropped like the heavy metal it is to $1188 after the news. The 10-year Treasury note, a favorite of foreign investors, jumped more than 10 basis points to a yield of 3.467% and the U.S. dollar rallied. The DOW and S&P just opened higher and European stock markets got a nice bump up.


Yesterday the Report noted that lately gold, the U.S. dollar and stock markets have moved with the predictability of a synchronized swimming team: gold up, dollar down, markets up (Gold's on Hold...?). Today's jobs numbers may very well blow everyone out of the pool. Ultimately we would like the dollar and stock markets to move upwards together for a strong American recovery. Let's wait and see. For the time being it will be a little rocky for precious metals and gold miners like Barrick given the intensity of their autumn rally. There is a good article about this by Lawrence Williams in Mineweb this morning:

Gold price stumbles after China and Barrick doubts, but longer term the only way is up (Mineweb, 12/04/09)

Hold on to your gold and silver buckaroos in case today's news is just a one-day wonder!

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 $0.64 $0.53 in early trading to $79.96 (January contract, most active); Gold is down $24.3 to $1194.0 (February contract, most active); Silver is down $0.343 to $18.785(March contract); Copper is up $0.0160 to $3.2610 (March contract); Molybdenum is steady at $12.00

The DOW is up 133.84 points to 10499.99; the S&P 500 is up 39.12 points to 1117.02. The gold miners are getting clobbered but GMO heads up:

Barrick (ABX) $44.30 down 5.42%
Newmont (NEM) $53.12 down 2.50%
General Moly (Eureka Moly, LLC) (GMO) $2.30 up 1.73%
Freeport McMoran (FCX) $83.60 down 0.24% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are up, (a "tell" for General Moly):

Nucor (NUE) $43.88 up 1.98% - domestic steel manufacturing
ArcelorMittal (MT) $41.18 up 2.64% - global steel producer
POSCO (PKX) $127.01 up 2.78% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.35% to $1,308,500.37 (what is this?).

Cheers,

Colonel Possum

Headline photograph by Mariana Titus

Note 1 - Economists surveyed by Dow Jones Newswires had expected a payroll decrease of 125,000.