"The history of Eureka lies in its future." - Lambert Molinelli, 1878


The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO) and Newmont Mining (NEM); together with benchmark miner Freeport-McMoRan (FCX). Please do your own research, markets can turn on you faster than a feral cat.

Friday, May 28, 2010

The Colonel Wishes You a Safe and Thoughtful Memorial Day

Morning Miners!

It is 6:09 AM. Scott double-stocked the break room last night, let's enjoy a hot cup of his famous Red Label TGIF coffee and toast the upcoming holiday. Memorial Day, formerly known as Decoration Day, commemorates those who died while in the military service. It was first enacted to honor Union soldiers of the American Civil War and we've had quite a few more sacrifices for our great country since.

There is a terrific old time photo on the west wall of the Clinic of a Eureka Decoration Day procession marching up from the Courthouse to our many graveyards. The photo is taken just up from Stu's house. Check it out, pardner, and have a safe and thoughtful holiday weekend. Give me a hey-howdy if you see me and Mariana at the High School Rodeo. It should be a dandy and she'll be snapping lots of photos.

It's time to leave the month of May with a positive thought after all the recent market turbulence and worry. If you read this Report regularly, you know the ole Colonel is an optimist; not the flighty head-in-the-clouds type, but one with his feet planted firmly on the footwall. The Irish poet, Oscar Wilde, penned an accurate definition of someone on the opposite side of my stope:

"Pessimist: One who, when he has the choice of two evils, chooses both."

There are enough bad thoughts floating around today about the condition of the world that today's choices about what the future may bring are a lot more than two. Here is a Mineweb article that pretty much covers the claim on what scary things may lay ahead. It is a Gold Report interview with investment adviser and mining stock analyst Roger Wiegand;

Euro collapse, debt defaults and gold and resource stocks to watch (Mineweb, 5/28/2010)

There are a lot lot of well considered positions in this article with a pretty gloomy outlook for metals & miners but I remain an optimist. I told Mariana the other day that there are more good outcomes in human history than bad. If that weren't true, we'd still be living in caves only they'd be smaller, more damp and there would be less food to eat. The pessimist in the next cave over would still be unhappy and forecasting worse things to come. Nuts to that.

Now this doesn't mean we won't see some corrections and go through some pain. Dinosaurs had a bad day when an asteroid plowed into the Gulf of Mexico many moons ago. But remember, after things got chilly and the big'uns died, little furry mammals poked their pointy noses out of their burrows and repopulated the earth. I've thought more than once that all the latest dinosaur blood coming up from the Gulf is a new asteroid challenge for us. We'll survive and be better for it buckaroos. So take heart on this Memorial Day and I'll be back at ya' bright and early Tuesday morning.

Enough talk, let's walk the walk:

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" remains in the low 30s, an improvement but still above our 25 level threshold; metals & miners remain on shaky timber with benchmark FCX trading right at $70 well below its 200-day average of $75 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The GREEN light remains on for Commodity Reflation with copper trading just above $3/lb

The YELLOW light remains on for Stable Markets with the VIX slightly above the 30 level (what's this?)

The YELLOW light remains on for Investor Confidence with the possibility of a greater than 10% correction in the broader markets

The GREEN light remains turned on our Fuel Gauge with oil below $80

A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions &
General Moly Mt. Hope Water Rights

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

NYMEX/COMEX: Oil is down $0.11 in early trading to $74.4 (July contract, most active); Gold is down $3.8 to $1210.6 (August contract, most active); Silver is down $0.118 to $18.356 (July contract); Copper is up $0.0035 to $3.1620 (July contract)

Western Molybdenum Oxide is at $17.00; LME moly 3-month seller's contract is $17.00, LME cash seller is $16.92

The DOW is down 65.91 points to 10,193.08; the S&P 500 is down 7.18 to 1095.88. The miners are mostly down:

Barrick (ABX) $42.16 down 0.66%
Newmont (NEM) $54.21 down 1.31%
US Gold (UXG) $4.02 up 1.01%
General Moly (Eureka Moly, LLC) (GMO) $3.77 down 0.79%
Thompson Creek (TC) $9.97 down 0.50%
Freeport-McMoRan (FCX) $70.56 down 0.72% (a bellwether mining stock spanning copper, gols & molybdenum)

The Steels are down, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $30.80 down 2.04% - global steel producer
POSCO (PKX) $97.59 down 1.50% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.63% to $1,356,528.64 (what's this?).


Colonel Possum

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Headline and series photographs by Mariana Titus

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