"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.

Thursday, February 25, 2010

Miss Moly Teaches the Texas Two-Step

There are in that country, small pine trees and the cones are like small eggs, but the seeds are better than those of Castille - Cabeza de Vaca; Spanish adventurer, healer, and lost wanderer commenting on the Piñon Pine of the Southwest

Morning Miners!

It is 6:04 AM and it's Thor's Day again. That old Scandinavian gray beard sent the Colonel a nice present yesterday. If you haven't heard, he has retired to a comfortable Airstream trailer in the Four Corners region of New Mexico. When he isn't thrilling the locals with lightning bolts of yore, he's sitting outside sipping some delicious New Mexico Piñon Coffee. I had a can waiting for me at the post office and it's brewing in the pot. Have a tall cup, you'll need it - there's some lightning going on in the markets. As reported in the Wall street Journal this morning:

NEW YORK—U.S. stocks dropped sharply after Thursday's opening bell as jobless claims hit their highest level in more than three months. U.S. Federal Reserve Chairman said in Congressional testimony that he was looking into U.S. banks' swaps with Greece, adding to nervousness about the debt woes of some European countries. (WSJ, 2/26/2010)

Like the front bumper of a truck in a slow speed collision, commodities and industrial stocks are getting crunched first with Caterpillar (CAT) leading the Dow Jones Industrial Average down 136 points at the open. Copper continues to fall and bellwether miner Freeport McMoRoan (FCX) has dipped to $71.36 in early trading well below the $74-and-all's-well level identified yesterday (Freeport, Faith and Ice Fishing). Nuts. Piñon nuts!

How's our dear Miss Moly doing in this fender bender of a week? From yesterday's close at the London Metal Exchange (LME), I'd say she at least has her seat belt on. Here's a roundup of molybdenum prices as of 2/24:

Western Moly Oxide (FeMo65) $17.50/lb (the price reported by Infomine and posted by Base Metals on the General Moly Website)

Moly Oxide, Europe (Mo Drummed Molydbic Oxide EU) $17.42/lb (the price reported in the Metals Bulletin)

LME Futures Contracts

3-Month (Buyer) $37,000/metric ton $16.78/lb
3-Month (Seller)$38,000/metric ton $17.24/lb

15-Month (Buyer) $36,000/metric ton $16.33/lb
15-Month (Seller)$37,000/metric ton $16.78/lb

This is not a very exciting chart but for the record here is the price action of the 3-month contract (seller) from Monday's launch:

So what's your point Colonel? With all the hubbub in the commodity space nickel and molybdenum are doing well (so far). Western Moly Oxide price actually bumped up two-bits yesterday while nickel dipped slightly:

There was some fear that the introduction of a molybdenum futures market may attract wild-eyed speculation. Three data points do not make a track record but so far so good. Neither the three or fifteen-month contracts show much spread from the physical market albeit it is early in the game to draw any real conclusions. Miss Moly has just started to teach her new London friends the Texas Two-Step at the beginning of a very long dance.

Have another cup of Thor's Piñon coffee, you can order some for your shelf with this link:

NM Piñon Coffee

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" is below 25, smoother broader markets are expected; metals & miners may have a rough road with FCX below $74 (what is this?)

The GREEN light is our fuel gauge has returned with oil falling below $80

An ORANGE light is ON for possible adverse regulation/legislation: Miner Taxation, Cortez Hills & mercury emissions

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

NYMEX/COMEX: Oil is down $1.92 in early trading to $78.08 (April contract, most active); Gold is down $3.7 to $1093.5 (April contract, most active); Silver is down $0.198 to $15.730 (May contract); Copper is up $1.25 to $3.1830 (May contract); Western Molybdenum Oxide is up $0.25 to $17.50

The DOW is down 161.28 points to 10212.88; the S&P 500 is down 15.33 points to 1089.91. The miners are mixed:

Barrick (ABX) $36.94 up 0.63%
Newmont (NEM) $48.02 up 3.31%%
US Gold UXG) $2.56 down 0.78%
General Moly (Eureka Moly, LLC) (GMO) $2.36 down 3.28%
Thompson Creek (TC) $12.82 down 3.10%
Freeport-McMoRan (FCX) $71.71 down 1.33% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are down, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $37.55 down 2.03% - global steel producer
POSCO (PKX) $114.24 down 2.63% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 1.19% to $1,219,936.24 (what is this?).


Colonel Possum

Headline photograph by Mariana Titus

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