Tuesday, May 18, 2010
The Gold & Oil Gunfight at the O.K. Corral
It is 6:00 AM sharp. Let me pour you a hot one and let's see if there are any good Westerns on the tube. Oh yeah, I've seen this one before. Marshal Gold Bar and Deputy Dollar have a gunfight with Black Oil at the O.K. Corral. Of course in this movie the O.K. corral is in Cushing, Oklahoma, where Black Oil has been squirreling away record levels of his gooey stuff. Old rivals Gold and Dollar who usually travel in opposite directions have teamed up this month to track down that nasty villain Blackie. They've done a pretty decent job. On May 3rd Blackie hijacked a $90/bbl August contract on the NYMEX Futures Market (Strong Gold & Silver, Strong Dollar, $90 Oil?). Today you have to go all the way to December 2016 to find that price for this outlaw as his fortunes have dropped to a lowly $75/bbl in this morning's trading (July contract).
Actually that's up a couple of bucks from yesterday's oil shootout and Marshall Gold Bar and Deputy Dollar are taking a needed rest. Phew, this old Colonel needs a rest too. I'll leave my market metaphor alone for now but am more than happy to see some stability return to these crazy markets: Gold and the dollar down...oil and copper up (finally). It looks like Asian and European markets are a lot happier too and the U.S. just opened positive. Our embattled bellwether Freeport McMoRan (FCX) and moly benchmark Thompson Creek (TC) are up nicely. In fact all our favorite miners are in the green this morning except for Newmont (NEM) which is down just a thin flat washer.
Did everything suddenly get better in Europe? Has China recovered her voracious appetite for natural resources? Nobody knows for sure, let's just enjoy a little break in the action. The Colonel does know that to sustain a rebound in the metals & miners our poor little canary in the global mineshaft, copper, better keep flying above the $3/lb clouds. COMEX copper dipped to scary low altitude of $2.91 yesterday before climbing back to $3.03 this morning. Stay tuned buckaroos, this Western ain't over til' it's over.
Enough talk, let's walk the walk:
4-WD is ON - rough roads in the marketplace; The VIX or "fear index" returns to the high 20s but still above our 25 level threshold; metals & miners remain on shaky timber with benchmark FCX trading in the low $70s still 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 returns for Stable Markets with the VIX below the 30 level (what's this?)
The YELLOW light returns for Investor Confidence with the possibility of a 10% correction in the broader markets possible and more likely
The GREEN light remains turned on our Fuel Gauge with oil below $80 (although this may only be a brief respite)
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 up $2.17 in early trading to $75.02 (July contract, most active); Gold is down $14.5 to $1213.6 (June contract, most active); Silver is up $0.061 to $18.920 (July contract); Copper is up $0.0909 to $3.0310 (July contract)
Western Molybdenum Oxide remains at $17.25, LME moly 3-month seller's contract remains at $18.14
The DOW is up 80.86 points to 10706.69; the S&P 500 is up 7.10 to 1144.04. The miners are mostly up:
Barrick (ABX) $44.79 up 0.81%
Newmont (NEM) $56.99 down 0.09%
US Gold (UXG) $4.15 up 2.47%
General Moly (Eureka Moly, LLC) (GMO) $3.82 unchanged
Thompson Creek (TC) $10.31 up 2.28%
Freeport-McMoRan (FCX) $70.13 up 3.18% (a bellwether mining stock spanning copper, gols & molybdenum)
The Steels are up, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $32.66 up 1.49% - global steel producer
POSCO (PKX) $99.25 down 2.71% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 1.28% to $1,392,573.44 (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