Tuesday, March 16, 2010
Miss Moly & Gold Pass the Test
It is 5:57 AM. Grab a cup of mid-March coffee and let's check on Miss Moly and her metallic compadres. You'll remember yesterday we saw the metals get pounded starting with Friday's sharp decline in Western moly oxide price and a pullback in the base metals (Hang On, Another Pothole - Moly, Copper Dings). COMEX copper closed the session losing all its gains for March. The culprit? Good ole sovereign debt and China jitters; typical headline-driven volatility for so called "risky assets."
There were at least two new and positive things to note. For molybdenum, the 15% decline in spot price did not crater the London Metal Exchange (LME) futures on Monday. Secondly, gold and silver showed some new found resilience breaking their lock-step march with the base metals.
For moly, the 3-month and 15-month contracts both moved up to $18.14/lb and the Western moly oxide price recovered from its $15.50/lb low to close at $16.25/lb. The ole Colonel believes this is an important test of a very young financial market for molybdenum. I read this latest price action as investor confidence in future moly prices, unshaken by a scary wobble in the spot market. That gets a Colonel Yee-ha!
Yesterday, the Report stated:
"In the recent past, precious metals have jumped down the mineshaft with base metals on any murmur of bad news coming from the global front. Gold returning to 'safe haven' status is somewhat encouraging as we hit another pothole." (The Eureka Miner's Market Report, 3/15/2010)
I got some backup this morning from Jim Wyckoff of Kitco Metals who made a similar observation about Monday's gold price and the follow through today:
"Spot gold in Europe was also higher Tuesday. London traders were impressed with gold's ability to post gains Monday despite a weaker Euro currency and stronger U.S. dollar." (Kitco Metals, 3/16/2010)
By the by, Jim writes a terrific daily roundup especially on the precious metals. You can read his full piece with this link:
A.M. Kitco Metals Roundup: Gold Higher as U.S. Dollar Weakens (Kitco Metals, 3/16/2010)
Here's London spot gold today:
Not a bad bounce and the S&P 500 has just posted a new intraday high of 1153.85 (7:33 AM PDT). The Federal Reserve's statement this afternoon after their Federal Open Market Committee meeting is not expected to upset the ore cart, we'll see. Stay tuned buckaroos!
Enough talk, let's walk the walk:
4-WD is OFF - the VIX or "fear index" is below 25, improving broader markets are expected; metals & miners have a smoother road with FCX comfortably above $74 (what is this?)
The YELLOW light is switched on our fuel gauge with oil above $80
An ORANGE light is ON for possible adverse regulation/legislation: Miner's claim fee, 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 up $$0.95 in early trading to $80.75 (April contract, most active); Gold is up $17.8 to $1123.1 (April contract, most active); Silver is up $0.332 to $17.440 (May contract); Copper is up $$0.0490 to $3.3640 (May contract); Western Molybdenum Oxide sits at $16.25
The DOW is down 3.78 points to 10620.91; the S&P 500 is down 2.21 1147.78. The miners are mostly up today:
Barrick (ABX) $40.12 up 2.85%
Newmont (NEM) $51.17 up 2.90%%
US Gold UXG) $2.92 up 2.10%
General Moly (Eureka Moly, LLC) (GMO) $3.41 down 1.45%
Thompson Creek (TC) $13.77 up 1.17%
Freeport-McMoRan (FCX) $81.87 up 1.5% (a bellwether mining stock spanning gold, copper & molybdenum)
The Steels are mixed, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $42.59 up 1.19% - global steel producer
POSCO (PKX) $120.26 down 1.02% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 0.85% to $1,363,759.71 (what is this?).
Headline photograph by Mariana Titus