Wednesday, May 26, 2010
Saving Old Glory
It is 5:48 AM. Pour yourself a hot one and let me tell you a tall tale about saving Old Glory while we wait for these goofy markets to open. After the DOW's 315 point swing from down to up yesterday, it's about time for a good story.
You can see my flagpole on the hill to your right as you come into Eureka, NV, on Highway 50 from the valley side. It is just past the Eureka welcome sign; if the flag is flying the ole Colonel is in town. I came home yesterday afternoon to find my poor flag in an upside down contorted position hanging from the eagle's wings (there is a gold eagle and ball at the top of my pole). Neither Old Glory or that proud bird were too happy about their new relation.
We've had plenty of screwy winds lately and yesterday was no exception. My theory is that a little twister corkscrewed the flag vertically and when it stopped, the flag got skewered by the eagle's sharp wingtips. On arrival there were two holes in the flag hooked on each side of the eagle's wings. As I scratched my head on what to do next, another gust freed the left wing but the flag was still hopelessly ensnared. Quick action was needed. Buster, a battle-tested tanker from the Korean War, would have my butt if he saw his fighting colors spread eagle for the world to see.
Now, I know you're already cooking up neat solutions to this problem. I am certain there were some passing tourists on Highway 50 thinking of helium balloons and fishhooks or 30' bamboo poles. Practically, the simplest and fastest approach would be a boom truck. My friend Johnny has one but I'd seen him on it in the morning cutting trees at the other end of town. Time was of the essence!
Jim the welder built my pole in 2004 and had done a nice job of design. It has a pivot so you can lower the pole for painting and repair. There is a hook at the pole base where a rope can be tied on the opposite side of the pivot from the eagle. You can control the pole descent with the rope until everything comes safely to terra firma. I got to thinking about wind loads and this approach seemed to present some problems in gusting winds. If you've never been at the business end of a torque wrench, accept that this design has challenges with a tangled flag and skip the next paragraph.
OK, for the mechanically inclined: poor Old Glory in her trapped state made one heck of a sail, something like the jib on a sailboat. The gusts were moving the top back and forth a good 12 inches in displacement. I had no worries about whether Jim's pole could take this in a vertical position but things could get tricky coming down. It is about 25' from eagle to pivot. As the lowered pole moves closer to earth this could exert a terrific torsional (twisting) load on the base. I poured the base concrete, not Jim...get the point? Conservatively, let's say the trapped flag gives 30 lbs of peak force, that approaches 750 foot-lbs of torque in a horizontal position in a gusting wind. I ain't going there, pardner.
The ole Colonel's instinct was a main battle tank approach - close with the objective without delay. I'm sure Buster would agree. The nearest thing to a tank in my neighborhood is Dave's JCB 214 Site Master backhoe. I scrambled Dave and we were off to action! The battle plan was clear: I'd stand in the elevated front bucket to brace the pole from excessive sideways movement, a chain and rope would provide some level of safety if things got squirrelly and Dave would lower me and the pole slowly to the ground. No looking down, no thoughts of hydraulic failure or human error - 10-4 good buddy!
With the exception of some confusing hand signals and a knotted rope, the plan came off perfectly. Reverse the plan and the flagpole (without flag) was up before sundown, just another great day in the Great Basin.
The Iwo Jima Moment
And Old Glory is saved
The domestic markets are open now, let's see what's cooking. Oh boy, gold is back up over $1200 and copper is in rally mode. The broader markets are happy too!
Enough tall tales, let's walk the walk:
4-WD is ON - rough roads in the marketplace; The VIX or "fear index" has dropped in a range of 24 to 32.5, an improvement but still too close to our 25 level threshold; metals & miners are happier but remain on shaky timber with benchmark FCX trading in the high 60s 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 still too close to the 30 level for comfort(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 up $1.85 in early trading to $70.60 (July contract, most active); Gold is up $15.5 to $1213.5 (June contract, most active); Silver is up $0.549 to $18.330 (July contract); Copper is up $0.0570 to $3.0990 (July contract)
Western Molybdenum Oxide is at $17.00, LME moly 3-month seller's contract is at $17.24
The DOW is up 116.01 points to 10,159,76; the S&P 500 is up 14.38 to 1088.41. The miners are all up nicely:
Barrick (ABX) $42.85 up 1.66%
Newmont (NEM) $54.11 up 1.06%
US Gold (UXG) $4.08 up 5.43%
General Moly (Eureka Moly, LLC) (GMO) $3.64 up 3.70%
Thompson Creek (TC) $9.55 up 3.92%
Freeport-McMoRan (FCX) $68.84 up 1.80% (a bellwether mining stock spanning copper, gols & molybdenum)
The Steels are up, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $30.26 up 1.44% - global steel producer
POSCO (PKX) $93.28 up 1.70% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 2.53% to $1,335.088.01 (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 and series photographs by Mariana Titus