Wednesday, December 9, 2009
Timeo Danaos et Dona Ferentes
It is 6:25 AM. Grab a cup and let's hike to the top of Whiskey Flats. No, we don't have to go outside; it's too darn cold. Let's just imagine the climb above Eureka for a broader view. With all the market calamity of the last ten days and related plunge in gold, it is easy to lose perspective. Things started to unravel with worries about Dubai's massive debt (Dubai, A World Away?) and accelerated with yesterday's panic over the solvency of Greece and other European nations with heavy debt loads (A Stronger Dollar for 2010?). This morning's Mineweb is awash with articles about gold bubbles and Nouriel Roubini's (aka Dr. Doom) latest warnings about the fragility of the "barbarous relic". Here's a sample:
"So all the gold bugs who say gold is going to go to $1,500, $2,000, they're just speaking nonsense. Without inflation, or without a depression, there's nowhere for gold to go. Yeah, it can go above $1,000, but it can't move up 20-30% unless we end up in a world of inflation or another depression. I don't see either of those being likely for the time being. Maybe three or four years from now, yes. But not anytime soon." (Nouriel Roubini quote, Mineweb 12/9/2009)
Is gold a Trojan horse filled with wicked speculators and central governments with a nasty aversion to U.S. dollar reserves? I can't help but use this metaphor given the latest state of Greek finances:
Equo ne credite, Teucri. Quidquid id est, timeo Danaos et dona ferentes.
Do not trust the horse, Trojans! Whatever it is, I fear the Greeks, even bringing gifts. (Book II of Virgil's Aeneid, the siege of Troy)
Nay. Looking out from Whiskey Flat, the ole Colonel is going to bet all this gold gloom-doom is a bit overdone. Gold north of $1225 was due for a correction and we got a nudge down. Dubai's rich neighbors will resuscitate their profligate cousin and the European Union will no doubt rescue Greece and other errant members. Sovereign debt remains a global issue but isn't going to return us to the level of financial crisis we experienced just one year ago.
I was actually pleased to see oil pop up a bit from its recent decline this morning. Gold and silver are stabilizing too as the dollar runs out of Popeye spinach. Copper wobbled this week but is still comfortably above $3. If Barrick can't make money on $1000/oz gold and Freeport McMoran suffers to make ends meet on $3 copper, we might as well gather up gifts for the Trojan horse and return to living in caves.
Things are sure nicer up here on Whiskey Flat. Glad we had a chance to share the view together.
Enough talk, let's walk the walk:
4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected (what's this?)
Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions
Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)
Oil is up $0.44 in early trading to $73.06 (January contract, most active); Gold is down $4.3 to $1139.1 (February contract, most active); Silver is down $0.032 to $17.775(March contract); Copper is down $0.0010 to $3.1640 (March contract); Molybdenum is steady at $11.15
The DOW is down 14.44 points to 10271.53; the S&P 500 is down 2.86 points to 1089.08. The miners are drinking Uzo:
Barrick (ABX) $41.19 up 1.68%
Newmont (NEM) $51.33 up 1.99%
General Moly (Eureka Moly, LLC) (GMO) $2.18 up 2.35%
Freeport McMoran (FCX) $76.86 up 0.77% (a bellwether mining stock spanning gold, copper & molybdenum)
The Steels are mixed, (a "tell" for General Moly):
Nucor (NUE) $42.75 up 1.04% - domestic steel manufacturing
ArcelorMittal (MT) $39.71 up 1.02% - global steel producer
POSCO (PKX) $118.79 down 1.44% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 0.75% to $1,242,288.85 (what is this?).
Photographs by Mariana Titus (Whiskey Flat, Eureka, 2005)