Nevada Leads U.S. - USGS 2010 Minerals Survey

Morning Miners!

It is 6:05 AM, let's start this week out with some good news. Copper and gold are both up this morning after a horrendous sell-off last week. There is a belief that the retreat in metals was overdone and that bargain hunting among traders and industry consumers will help push prices higher:

METALS-Copper rebounds on industry buying, dollar (Reuters, 2/8/2010)

The Wall Street Journal reports on gold this morning:

"The selloff in gold in recent days has brought the price of the metal closer to what some investors consider to be a more rational level. Though prices could fall more, there appears to be plenty of support for gold around $1,000 an ounce. The recent decline has cleared some of the short-term speculators out of the market, and could spur demand from buyers in India and China." (WSJ, 2/8/2010)


I remember even economist Nouriel Roubini (aka Dr. Doom) saying last month that $1000/oz was a reasonable floor. There is an expected pickup in consumer gold buying from India, the world's largest gold jewelry market and gold sales will no doubt increase in China with the coming Lunar New Year. Gold miners won't starve at $1000+ prices.

The latest USGS Minerals Survey is out and reports that Nevada led the U.S. in the value of nonfuel mineral commodities production in 2009. The USGS, however, estimated that domestic gold mine production in 2009 was 10% less than in 2008:

"Reduced production from several mines in Nevada, and the closure of one mine in Montana and one in Nevada, accounted for most of the decrease. These decreases were partially offset by an increase in production from one new mine in Washington and increases from several mines in Nevada. Because of the decrease in production, the United States fell to the fourth leading gold-producing nation; however, the United States was still a net exporter of gold." (USGS)

Let's take a look at the top big dogs in gold production last year (in metric tons) and their change from 2008:

China 300 tons up 5.3%
Australia 220 tons up 2.3%
South Africa 210 tons down 1.4%
United States 210 tons down 10%
Russia 185 tons up 5.1%

I'd say it is high time to get Cortez Hills rolling full tilt, pardner! There are also some great one-page summaries provided by the report with a handy mineral index:

USGS Mineral Commodity Summaries

Now go study up a bit, but first 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 $0.06 in early trading to $71.25 (March contract, most active); Gold is up $12.7 to $1065.5 (April contract, most active); Silver is up $0.215 to $15.045 (March contract); Copper is up $0.0250 to $2.8825 (March contract); Molybdenum is steady at $15.00

The DOW is down 21.54 points to 9990.69; the S&P 500 is up 0.62 points to 1066.81. The miners are mixed:

Barrick (ABX) $35.25 down 1.62%
Newmont (NEM) $45.13 down 2.38%
US Gold UXG) $2.17 down 1.81%
General Moly (Eureka Moly, LLC) (GMO) $2.20 up 0.46%
Thompson Creek (TC) $11.76 up 0.09%
Freeport McMoRan (FCX) $70.50 up 0.38% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $37.95 down 0.29% - global steel producer
POSCO (PKX) $109.72 down 1.95% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.65% to $1,162,957.01 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus