Thursday, February 4, 2010
If Wishes Were Horses - Gold, Metals & Miners Stumble
*** BREAKING NEWS *** Continuing slide in the broader markets as well as metals & miners has caused the ole Colonel to switch the "Investor Confidence" indicator from GREEN to YELLOW on the Eureka Outlook Dashboard to your right ***
It is 6:01 AM, grab a cup of Thor's java and let's checkout the Colonel's wishing well. The end of November brought a new worry to the world stage, sovereign debt. It all began with a debt crisis in Dubai (Dubai World, A World Away?) and quickly spread to doubts about the credit worthiness of several European Union countries. Greece was first euro-zone member in the hot seat and just this week it seemed a plan was coming together to shore up their national balance sheet. The fear was that if quick action failed to save the Greeks, Portugal and Spain may be the next to fall. This morning's news added substantially to those fears. As reported by the Wall Street Journal:
"The cost of insuring the debt of euro-zone members with large budget deficits against default rose Thursday, dashing hopes that the European Commission's qualified endorsement of Greece's budget plan would calm investor fears. Greece, Portugal and Spain were in focus, with their five-year sovereign credit default spreads moving sharply wider." (WSJ, 2/4/2010)
Pardner, I wish this would all go away! Every time the sovereign debt snakes resurface in my wishing well, metals and miners get big snakebites. If you think the wayward finances of far away countries aren't your concern, think again. After this morning's news, gold dropped $30 and copper is solidly below the key $3 level. The miners and steelmakers are in retreat dropping 3 to 5%. This is not encouraging for a Nevada county with a commodity-sensitive economy.
Of course as market fears go this may be all overblown. The VIX (what is this?) has bounced back up to the fear level today but it may be down again tomorrow. Who knows. These credit crises are like slow motion train wrecks (remember sub-prime mortgages), I just wish we didn't have to watch another. Oh-oh there I go again wishing, say is that a beggar riding my horse?
On the positive side, global folks are liking the U.S. dollar again and oil took a notch south on the Europe news.
Enough hand wringing, let's walk the walk:
4-WD is ON - the VIX or "fear index" is courting 25 again, rougher markets are expected (what is this?)
Green light is ON for investor confidence in the metal and mining sectors but it is starting to flicker yellow again, let's see what tomorrow brings.
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 down $1.68 in early trading to $75.30 (March contract, most active); Gold is down $30.4 to $1081.6 (April contract, most active); Silver is down $0.552 to $15.795 (March contract); Copper is down $0.0645 to $2.9090 (March contract); Molybdenum steady at $15.00
The DOW is down 176.47 points to 10094.08; the S&P 500 is down 21.68 points to 1075.60. The miners are in the down elevator:
Barrick (ABX) $34.62 down 3.59%
Newmont (NEM) $44.54 down 2.90%
US Gold UXG) $2.19 down 3.95%
General Moly (Eureka Moly, LLC) (GMO) $2.35 dowm 5.25%
Thompson Creek (TC) $11.63 down 4.66%
Freeport McMoRan (FCX) $67.87 down 3.68% (a bellwether mining stock spanning gold, copper & molybdenum)
The Steels are cold-cold, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $38.76 down 4.20% - global steel producer
POSCO (PKX) $114.96 down 3.61% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is down a jaw dropping 3.69% to $1,175,537.64 (what is this?).
Headline Photograph by Mariana Titus