Monday, April 19, 2010
Gold, Goldman, Greece & Eyjafjallajökull
It is 5:55 AM. Have a cup of coffee to start your week, pardner. Don't spill any, burn yourself or cause the the Bunn to explode off the workbench. It seems the markets are proving all of Murphy's Laws and we might be next here in the break room. When I left you last Friday, Greece had popped back in the headlines and later in the day we discovered that the America's premier investment bank, Goldman Sachs, may not have the brightest kids in the room (Equo ne credite, Teucri - Trust the Metals & Miners) . All the while Iceland's stubborn volcano caused the cancellation of 63,000 flights, created untold economic devastation and tied the tongues of reporters trying to pronounce Eyjafjallajökull.
And what happened to the markets? The DOW and S&P 500 blew off more than 1% of their rally steam, the metals & miners fell down the mineshaft and the poor Eureka Miner's Grubstake Portfolio (what's this?) dropped nearly $50,000 in a single day, a record loss of 3.22%. COMEX Gold was one of the worst hit falling from a Monday intraday high of $1170 to an early morning low of $1124 today. Mineweb carries a good article on the impact of the SEC's fraud charges on Goldman Sachs had on the price of glitter:
Gold's upward momentum thwarted by Goldman Sachs news (Mineweb, David Levenstein, 4/19/2010)
So what's a poor miner to do? Here's what the Colonel did to feel better:
1) Learned to pronounce Eyjafjallajökull - "Aye-ya fyah-dla jow-kudl"
Now I'm smarter than most talking heads on T.V.
2) Gave thanks that another volcano hasn't exploded in Indonesia. That might be enough to shut down air traffic for the entire world, fill the atmosphere with ash and precipitate a new ice age. So much for global warming, good time to buy stock in railroads and North Face arctic wear.
3) Shouted Yee-ha when oil prices dropped another 2-bucks on the COMEX.
4) Bought a little gold this morning to throw in the buckboard.
Now I'm smiling. The DOW, S&P and our two junior miners, General Moly and US Gold, are all up by a thin flat washer. Gold is climbing back too, $1134 on the COMEX. Our other favorite miners are down but not by much. The Eureka Miner's Grubstake Portfolio is still more than $400,000 north of where we started last May and I bet the metals & miners will all be seeing light before long. Let's check on Miss Moly and see how she's faring in this economic Murphy storm. I understand she's been stuck at Gatwik all weekend trying to fly back to Ely (Miss Moly Flies to London)
Here is a complete summary of last week's molybdenum price action:
Western Moly Oxide (FeMo65) $17.25/lb (the price reported by Infomine and tracked by Base Metals on the General Moly Website)
Moly Oxide, Europe (Mo Drummed Molydbic Oxide EU) $17.50/lb (the price reported in the Metals Bulletin)
LME Futures Contracts
3-Month (Buyer) $38,000/metric ton $17.24/lb
3-Month (Seller)$40,000/metric ton $18.14/lb
15-Month (Buyer) $38,000/metric ton $17.24/lb
15-Month (Seller)$40,000/metric ton $18.14/lb
Here is a chart of the LME 3-month contract (seller) from the February launch to the present:
Enough Murphy-talk, let's walk the walk:
4-WD is OFF - smoother markets return; the VIX or "fear index" has moved back into the 18-19s still below 25 but something to monitor; metals & miners are recovering some there with benchmark FCX comfortably above $74, 10-year Treasurys are safely below 4% preserving a low-interest rate environment (what's this?)
The YELLOW light is switched back on our fuel gauge with oil above $80
A YELLOW light is ON for possible adverse regulation/legislation: Mine Safety Violations, 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 down $2.21 in early trading to $82.46 (June contract, most active); Gold is down $2.5 to $1134.4 (June contract, most active); Silver is down $0.005 to $17.670 (May contract); Copper is down $0.0375 to $3.4770 (May contract); Western Molybdenum Oxide sits at $17.25, LME moly 3-month seller's contract rests at $18.14
The DOW is up 7.71 points to 11026.37; the S&P 500 is up 0.08 to 1192.21. The miners are mixed:
Barrick (ABX) $38.63 down 1.23%
Newmont (NEM) $51.93 down 0.42%
US Gold (UXG) $3.11 up 0.97%
General Moly (Eureka Moly, LLC) (GMO) $3.64 up 0.28%
Thompson Creek (TC) $12.95 down 1.82%
Freeport-McMoRan (FCX) $80.74 down 0.54% (a bellwether mining stock spanning copper, gols & molybdenum)
The Steels are down, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $43.29 down 1.43% - global steel producer
POSCO (PKX) $117.81 down 0.44% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is down 0.34% to $1,400,231.45 (what's this?).
Write Colonel Possum at firstname.lastname@example.org for answers to your questions or to request e-mail updates on the market
Headline photograph by Mariana Titus