Tuesday, February 9, 2010
Miss Moly Flies to London
It is 5:58 AM, grab a cup and warm up. I drove Miss Moly to the Elko airport yesterday and saw her off for her big debut in London tonight. She and her cousin Cobalt will be honored at a cocktail reception held at the London Metal Exchange's historic trading floor called "The Ring." Starting February 22, minor metals molybdenum and cobalt will be traded right along with the traditional base metals. This will expose molybdenum to a larger group of market participants (including speculators) by creating futures contracts that provide transparent and regulated pricing as well as risk management tools for producers. You can read more about this in our January report, Miss Moly and the Platinum Looking Glass.
The Report stated then, "In the current economic environment of low interest rates and continuing global recovery, the expanded [molybdenum] market will most likely be supportive of molybdenum price in the near term." That assumption has certainly been put to a test with most miners falling into bear correction territory amid growing concerns about China's monetary tightening, European sovereign debt and most recently worries about a Federal Reserve making plans to raise interest rates later this year.
We've got a nice two-day rally in copper and gold as some of the European concerns are easing for the time being. There is little doubt that metals and miners are still walking underneath some shaky timbers. Dennis Gartman, "The Commodity King", was very somber on CNBC Business News yesterday suspecting that the worse is yet to come; a greater than 10% correction in the broader markets and possibly rougher going for commodities. He is watching copper prices very carefully for further signs of deterioration in the global recovery story. On January 28th Gartman announced that Freeport McMoRan (FCX) was a technically broken stock and a harbinger of tough times for the mining sector (Freeport "Broken", Miners in Correction, 1/29/2010). The Commodity King called the collapse in commodities in 2008 so he is someone the ole Colonel listens to while standing at attention. Since I am an incurable optimist, I hope the King is wrong this time.
Did I talk to Miss Moly about any of this on our way to the airport? Hell no, I'm not going to spoil her nice party. We'll keep an eagle eye on copper and other metals while she and Cobalt dance the boogaloo in jolly ole England.
Enough partying, let's walk the walk:
4-WD is ON - the VIX or "fear index" remains above 25 again, rougher markets are expected to continue (what is this?)
Yellow light is ON for concerns about commodity reflation given a stronger dollar (U.S. Dollar Index DXY remains above 80).
Yellow light is ON for diminished investor confidence in the metal and mining sectors.
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 $0.66 in early trading to $72.55 (March contract, most active); Gold is up $7.2 to $1073.4 (April contract, most active); Silver is up $0.135 to $15.220 (March contract); Copper is up $0.0370 to $2.9500 (March contract); Molybdenum is steady at $15.00
The DOW is up 75.05 points to 9983.44; the S&P 500 is up 4.89 points to 1061.63. The miners are feeling better today:
Barrick (ABX) $35.36 up 2.29%
Newmont (NEM) $45.37 up 2.16%
US Gold UXG) $2.29 up 5.35%
General Moly (Eureka Moly, LLC) (GMO) $2.20 up 3.77%
Thompson Creek (TC) $11.99 up 5.45%
Freeport McMoRan (FCX) $71.75 up 3.68% (a bellwether mining stock spanning gold, copper & molybdenum)
The Steels are also looking good, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $39.47 up 4.97% - global steel producer
POSCO (PKX) $114.02 up 5.35% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 3.57% to $1,186,011.28 (what is this?).
Headline Photograph by Mariana Titus
The inset molybdenum symbol was designed for Metalprices.com by the artist Murray Robertson. The design is influenced by historical symbols used in the ancient science of Alchemy. This creative molybdenum symbol is adapted from lead as these elements being of similar appearance were often mistaken for each other.