Friday, April 9, 2010
A Little Greenback with Your Greek Salad?
It is 6:01 AM and high-time for a little Raine's Red Label TGIF coffee! I think I've got it figured out. If you want the price of gold or copper to go up and the dollar to go down, just wait for a European leader to tell the world that the solvency of Greece is not a problem. It just takes words. The folks in the EU castle were a little light on words this week so markets shuddered as yields exploded on Greek bonds, the U.S. dollar enjoyed a 4-day rally and gold started to look like a good bomb shelter to escape the next financial crisis. Things got so out of hand that someone across the pond decided it might take two leaders and an EU President to generate enough words to spare us Armageddon.
Yesterday at a special bilateral summit French President Nicholas Sarkozy and Italian Prime Minister Silvio Berlusconi spoke at a joint news conference. As reported this morning in the Wall Street Journal the leaders said they, "...are ready to aid Greece...a failure to support the country would be bad for the euro and euro-zone economy." and to make us feel extra good Mr. Sarkozy added that, "[our] position on Greece has not changed", without providing details.
And to make the world feel even mo' better, EU President Herman Van Rompuy said in a French newspaper interview published this morning, "The EU is prepared to intervene to help Greece out of its financial crisis."
Boy that's tellin' em! In early trading the U.S. dollar fell against the euro like a rock in a mineshaft, gold hit a 3-month high and copper got back up in the giddy-up go saddle. Haven't we been to this rodeo before?
Let's break these rocks down to something we can haul. In early morning trading, Barrick Gold (ABX) market capitalization increased $414,000,000 on the "euro-words." By my count there were 41 reassuring words between two leaders and one president which works out to be $10 million per word for one mining company alone. Those are some pretty fancy words, pardner. Sure is easier money than busting rocks for gold.
I think it is time for the weekend. Make sure you pack some "euro-words" in case you run into trouble on the road to Ely.
Enough euro-talk, let's walk the walk:
4-WD is OFF - smoother markets return; the VIX or "fear index" is in the 16s, far below 25 which is good; metals & miners hang are happy with benchmark FCX comfortably above $74 (what's this?)
The YELLOW light is switched back 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 $0.38 in early trading to $85.77 (May contract, most active); Gold is up $3.4 to $1156.3 (June contract, most active); Silver is up $0.188 to $18.315 (May contract); Copper is up $0.0155 to $3.6020 (May contract); Western Molybdenum Oxide sits at $17.45, LME moly 3-month & 15-month seller's contracts remain at $18.14
The DOW is up 41.79 points to 10968.86; the S&P 500 is up 3.80 to 1190.24. The miners are mixed:
Barrick (ABX) $41.37 up 1.03%
Newmont (NEM) $53.98 up 0.15%
US Gold UXG) $3.15 up 0.96%
General Moly (Eureka Moly, LLC) (GMO) $3.52 down 0.28%
Thompson Creek (TC) $14.12 down 0.07%
Freeport-McMoRan (FCX) $86.04 down 0.01% (a bellwether mining stock spanning copper, gols & molybdenum)
The Steels are mixed, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $45.67 down 0.26% - global steel producer
POSCO (PKX) $121.96 down 2.28% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 0.09% to $1,434,987.02 (what's this?).
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Headline photograph by Mariana Titus