Thursday, February 11, 2010
Slower Than an Earthquake, Copper Breaks $3
***BREAKING NEWS*** Western Lithium Receives Plan of Operation Permit for Nevada Lithium Project; Work Program Underway
It is 6:11 AM. Did you see the moon this morning? A yellow sliver, a fading wink from the Old Man before a new moon child is born and Lunar New Year begins. I say we restart 2010 and get the metals and miners back to shining and singing. There is some hope today that may occur. The pause in Asian demand to celebrate their New Year will end after next week and traders there should return with renewed vigor. Copper finally returned to $3 territory this morning with a bit of positive news coming from Europe.
In terms of disasters earthquakes are the fastest; credit crises, the slowest. Why should we care in Eureka about the sovereign debt woes of a few countries in Europe? The Wall Street Journal puts it in a small ore bucket this morning:
"In recent months, gold has been trading as a risk play, so the debt concerns of the 16-nation euro bloc have emerged as a driver for gold prices as developments cause appetite for perceived riskier assets like commodities, equities and high-yielding currencies to alternately wane or increase." (WSJ, 2/11/2010)
If your community doesn't have a gold mine or two and isn't sensitive to the whims of commodity markets, maybe you can change the channel when the talking heads worry about a Greek belly flop in the global finance pool. A chart of the GFMS 30-Day Base Metal Index illustrates why we need to keep our hands off the remote:
The Index has lost some 12% of value from the highs in January as the European debt problems unfolded before the world. Gold has had a similar decline over the same period:
So how about some good news, Colonel? The Financial Times reports this morning that the European Union is finally on the move:
"Leaders of countries in the eurozone on Thursday promised to help Greece if it slashed its budget deficit, saying they would provide 'determined and co-ordinated action if needed to safeguard stability' in the bloc."
"Under an agreement hammered out in last minute negotiations in Brussels, the 16-country eurozone stopped short of providing immediate financial support for Greece, but gave an implicit assurance to help Athens if it encountered problems in refinancing its sovereign debt later this year." (Financial Times, 2/11/2010)
There are concerns about the effectiveness of their plan and the fate of other troubled countries (Portugal, Spain an Italy) but this news has lifted our miners in early trading and pulled copper across the $3 line. If we can maintain a little momentum into the Lunar New Year a healthy commodity reflation may return and some of our yellow lights on the Eureka Outlook Dashboard will be switched to "green" status. Time will tell, hang in there buckaroos.
Enough Euro-talk, let's walk the walk:
4-WD is ON - the VIX or "fear index" remains above 25, rougher markets are expected to continue (what is this?)
Yellow light is ON with concerns about commodity reflation given a stronger dollar and falling prices (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 $0.05 in early trading to $74.57 (March contract, most active); Gold is up $2.0 to $1078.3 (April contract, most active); Silver is down $0.010 to $15.290 (March contract); Copper is up $0.0390 to $3.0280 (March contract); Molybdenum is steady at $15.00
The DOW is down 21.54 points to 10016.84; the S&P 500 is down 3.79 points to 1064.34. The miners are singing today:
Barrick (ABX) $36.11 up 1.21%
Newmont (NEM) $45.93 up 1.32%
US Gold UXG) $2.31 up 3.49%
General Moly (Eureka Moly, LLC) (GMO) $2.31 up 3.59%
Thompson Creek (TC) $12.46 up 1.22%
Freeport-McMoRan (FCX) $71.90 up 1.22% (a bellwether mining stock spanning gold, copper & molybdenum)
The Steels are mixed, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $36.30 down 0.97% - global steel producer
POSCO (PKX) $115.42 up 1.30% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 1.26% to $1,189,888.09 (what is this?).