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

DISCLOSURE

The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO), McEwen Ming (MUX) 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.

Wednesday, June 30, 2010

Metals & Miners on Shaky Timber, Western Lithium Update


Morning Miners!

It is 9:23AM. A little late for the ole Colonel but things got busy in the shop - how about a mid-morning market report? We got a second pot going, pour yourself a hot one and let's see what's going on. The metals & miners are doing a little better today after being taken to the woodshed yesterday. It was disconcerting to see large pullbacks in our bellwether mining stock, Freeport-McMoran (FCX), and benchmark moly producer, Thompson Creek (TC). Thompson is in the green this morning but Freeport is continuing its slide just barely staying above $60 as copper continues to fall below the critical $3/lb level. As we witnessed in early April, both FCX & TC signaled trouble ahead for the sector before copper and the other miners rolled over for the May-June commodity tail spin.

Things are not looking too great for the broader markets either. The S&P 500 hit an intraday low yesterday of 1035.18 which is 15% below the 4/26 S&P 500 intraday high of 1219.8. Another 5% down and we are back in bear country (S&P 500 is down 20% at 975.8, a drop considered by many to signal a new bear market). With the current market sentiment, I think it is likely that we will see the S&P drop below 1,000 in the next several days or weeks; the DOW is already trading south of the psychologically important 10,000 mark.

Concerns about the health of the global recovery are at the source of these declines with new China growth worries and a Europe promising to enforce drastic fiscal tightening before their recovery has got any real legs. At home, the Labor Department's monthly jobs report on Friday is the most important upcoming market event. This morning's Automatic Data Processing Inc. (ADP) report indicated that private-sector jobs in the U.S. increased by only 13,000 last month; economists had expected the ADP to show a gain of 60,000 for June. The ADP survey tallies only private-sector jobs, while the Friday nonfarm payroll data released by the Bureau of Labor Statistics includes government workers.

On a more positive note, a better-than-expected report of Chicago-area business activity boosted industrial stocks and fears over the European banking system ebbed some. This has kept most stocks above water today even with the lousy ADP data. Stay tuned buckaroos.

Here is an interesting update from Western Lithium for those of you that have been following the lithium story in nearby Humboldt County:

Western Lithium Commences Continuous Pilot Test Production of Lithium Carbonate and Infill Drilling Campaign (Press release, 6/29/2010)

Western Lithium (TSX-V:WLC) plans to conduct several pilot tests in the U.S. and Europe to prove the economic feasibility of producing battery grade lithium carbonate from their large deposits in Kings Canyon. Their open pit mining of lithium carbonate should ultimately offer cost advantages over the brine-extraction-from-dry-lakes process used by most of today's lithium producers.

Western Lithium’s President, Jay Chmelauskas, sates, "We are focusing our attention on process optimization and cost reduction to include in our pre-feasibility study, planned to commence this Fall. We are going to continue to make lithium carbonate at various facilities, large and small, to further refine and define our process."

and,

"With the race to roll out electric vehicles by a multitude of manufacturers in 2010 and 2011, we believe that the market is coming close to realizing the value of a new large scale source of domestic lithium from our Nevada project..."

The Report has been covering the Nevada lithium story since last September. If you want to get caught up on what's happening with lithium, vandium and other strategic metals important to our state and county you might want to start with this article which includes links to earlier blogs:

A Third Tank on Our Hill? Lithium & Vanadium Update (The Eureka Miner's Market Report, 3/22/2010)

Enough talk, let's walk the walk:

Our newly minted Eureka Miner's Index (EMI - what's this?) is sub-par at 73.71; up slightly from yesterday's 72.87 and the 6/7/10 low of 50.7. Remember an EMI greater than 100 is good times for metals & miners.

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is above 25; metals & miners remain on shaky timber with benchmark FCX trading in the the low-$60s well below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The YELLOW light is turned back on for Commodity Reflation with copper trading below $3/lb

The YELLOW light is turned on for Stable Markets the VIX above the 30 level (what's this?)

The YELLOW light is turned back on for Investor Confidence as further market corrections are likely

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 $0.15 in early trading to $75.79 (August contract, most active); Gold is down $4.4 to $1238.0 (August contract, most active); Silver is down $0.110 to $18.525 (July contract, most active); Copper is down $0.0470 to $2.8835 (September contract, most active)

Western Molybdenum Oxide is at $16.00; European Molybdenum Oxide is at $14.50; LME moly 3-month seller's contract is $15.64, LME cash seller is $15.42

The DOW is up 25.62 points to 9,895.92; the S&P 500 is up 5.76 to 1047.00. The miners are mostly up except Freeport:

Barrick (ABX) $45.68 up 1.51%
Newmont (NEM) $61.97 up 1.34%
US Gold (UXG) $5.12 up 3.23%
General Moly (Eureka Moly, LLC) (GMO) $3.19 up 0.63%
Thompson Creek (TC) $9.01 up 1.01%
Freeport-McMoRan (FCX) $60.81 down 0.43% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $27.55 down 0.18% - global steel producer
POSCO (PKX) $96.10 up 1.33% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.95% to $1,356,393.55 (what's this?).

Cheers,

Colonel Possum

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

Headline photograph by Mariana Titus

Tuesday, June 29, 2010

10-yr T-Note Drops below 3% - Gold, Copper Stumble


Morning Miners!

It is 5:45AM. Coffee is on the Colonel this morning! I've been saving Mariana's headline photo of a foreboding sky for a morning like this. For quite some time this Report has held the premise that an environment of low interest rates and low fear in the marketplace attracts money to commodities and allows the metals & miners to prosper. Low interest rates have not been a problem with the Fed target unchanged near zero and the benchmark 10-year note dropping in yield since early April.


On the other hand there have been enough concerns about the health of the global recovery to fan the flames of fear. The 10-yr yield peaked around 4% (3.986% on 4/5) about the same time copper made its year-to-date high of $3.64/lb on 4/9 (COMEX July contract). It has been a tough slog ever since with the 10-year plunging below 3% this morning (2.987%) and COMEX copper again failing to hold the key $3/lb level ($2.998/lb). Gold has realigned with metals as investors turn to U.S. Treasuries as the preferred safe haven. The shine in our pan has fallen from an all time high last week of $1266.5/oz (COMEX August contract, 6/21) to a more sobering $1228.7/oz in early trading.

What's got everybody spooked? Nearly everything would not be a bad answer, checkout this Wall Street Journal summary this morning:

"Treasurys have garnered strong demand [i.e. driving prices higher and yields lower] in recent sessions as concerns rose that an economic recovery could falter in the second half of the year as government stimulus fades away.

Recent data in the U.S. have showed a struggling housing market, and the Federal Reserve last week turned more cautious in its assessment on the economy. Investors increasingly are coming around to the view that the Fed's ultra-low interest-rate policy will remain in place for the rest of the year and even into 2011.
The anxiety was further heightened as a gauge of the economic outlook for China, one of the world's leading growth engines, was revised sharply lower than previously thought. The fear pushed down riskier assets from stocks to commodities." (WSJ, 6/29/2010)

The London Metal Exchange (LME) morning headline says it a bit more compactly, "Base metals under pressure as risk aversion resurfaces." Hey, yesterday these same guys said, "Metals maintain strength in open-outcry sessions, risk in vogue." What's going on here? Market volatility, pardner. The broader markets just opened and the volatility index or VIX (what's this?) is back above 30 as the DOW drops below the psychologically important 10,000 level. Ouch.

Bringing this a little closer to home, the Eureka Miner's Grubstake Portfolio (what's this?) is down 2.85% dropping nearly $40,000 in less than an hour. All twelve stocks are in the red with the steels and benchmark moly producer, Thompson Creek (TC), the worst hit; the gold miners, the least. Negative sentiment on global growth is a bone crusher when timbers start breaking in this mineshaft. Our new Eureka Miner's Index (EMI - what's this?) has dropped to 72.9 from yesterday's sub-par 95.9 but is still above the 6/7 low of 50.7.

Nuts. This could be a tough close going into the end of the quarter tomorrow. Stay tuned buckaroos.

Enough talk, let's walk the walk:

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is above 30; metals & miners remain on shaky timber with benchmark FCX trading in the the low-$60s well below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The YELLOW light is turned back on for Commodity Reflation with copper trading below $3/lb

The YELLOW light is turned on for Stable Markets the VIX above the 30 level (what's this?)

The YELLOW light is turned back on for Investor Confidence as the specter of further market corrections remains

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 $2.48 in early trading to $75.77 (August contract, most active); Gold is down $9.9 to $1228.7 (August contract, most active); Silver is down $0.178 to $18.540 (September contract, most active); Copper is down $0.0123 to $2.9485 (September contract, most active)

Western Molybdenum Oxide is at $16.00; European Molybdenum Oxide is at $15.00; LME moly 3-month seller's contract is $15.65, LME cash seller is $15.42

The DOW is down 233.45 points to 9,905.07; the S&P 500 is down 26.15 to 1048.42. The miners are in pain:

Barrick (ABX) $45.28 down 1.97%
Newmont (NEM) $60.75 down 1.16%
US Gold (UXG) $5.15 down 0.77%
General Moly (Eureka Moly, LLC) (GMO) $3.24 down 2.70%
Thompson Creek (TC) $9.32 down 5.48%
Freeport-McMoRan (FCX) $62.27 down 3.70% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $27.82 down 5.57% - global steel producer
POSCO (PKX) $96.05 down 5.02% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 2.78% to $1,361,911.03 (what's this?).

Cheers,

Colonel Possum

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

Headline photograph by Mariana Titus

Monday, June 28, 2010

Tight Moly Supply - G20 with the Sound Off



Morning Miners!

It is 5:44AM. Grab a cup of Monday java and let's get to work. A faithful reader contributed a terrific link to an article on the tight global moly supply in our Weekly Molybdenum Summary below. Be sure to check it out before you leave the break room today.

If you found yourself in front of the television this weekend, the World Cup was a lot more exciting than anything coming out of the G20 meetings in Canada. As cars burned in Toronto, I watched press conferences of the world leaders with the sound off. Perhaps the ole Colonel is getting too cynical about their lofty pronouncements about the future fate of the global economy. My view is that if copper can stay somewhere above $3/lb and oil doesn't get too crazy (either up or down), somebody is doing the right thing; if not, run for cover.

For the record this is how the Wall Street Journal reported the meetings in Canada:

"Leaders of the wealthiest Group of 20 nations showed common resolve to contain budgets and ballooning debt levels while ensuring that the global recovery remains intact.

The G-20 also pledged to stick to the 2012 timetable to implement tougher capital and liquidity standards for banks, with standards converging after initial variation. Attempts at reaching consensus on a bank tax to pay for bailouts failed, however, with governments essentially agreeing to disagree by choosing their own approaches." (WSJ, 06/28/2010)

Ho-hum. COMEX copper is down a thin flat washer this morning from Friday's close ($3.0970) and oil is pulled back a quart to $78.10/bbl. The London Metal Exchange (LME) reports, "Metals maintain strength in open-outcry sessions, risk in vogue." I guess global recovery is still on track by my measure. The Eureka Miner's Index (EMI - what's this?) showed some recovery too at the close of last week just making it above par (100.9):



The broader markets are open now and it appears metals & miners are pulling back some with the EMI dropping to a sub-par 95.85. The 10-year Treasury yield (an input to the EMI) is telling us something this morning at a super low 3.044% yield. Investors are still seeking safe haven in U.S. Treasurys signaling that risk is not in "vogue" for everyone. The VIX (what's this?) is creeping back to the 30 level again too (29.65) reminding us that there is still some fear in these markets. Talk about being on the cusp - go copper!

Gold (orange) and the dollar (blue) have re-established their inverse relation since early this month which I interpret as a bullish sign for commodities:



Let's checkout our resilient and unflappable Miss Moly...

Molybdenum Weekly Summary

Here is an excellent view on the moly market moving forward in a tight supply condition:

An Exceptional Metal for 2010: Molybdenum (TheStreet, 6/25/2010)

Molybdenum prices remain in a narrow range with Western moly oxide within a buck or so of European moly and LME futures seller contracts.

Western Moly Oxide (FeMo65) remains at $16.00/lb (the price reported by Infomine and tracked by Base Metals on the General Moly Website)

Moly Oxide, Europe (Mo Drummed Molydbic Oxide EU) moves down to 15.00/lb (the price reported in the Metals Bulletin)

LME Futures Contracts

LME cash seller moves down to $32,500/metric ton $14.74/lb

3-Month (Buyer) $32,000/metric ton $14.06/lb
3-Month (Seller) $33,000/metric ton $14.97/lb

15-Month (Buyer) $32,000/metric ton $14.06/lb
15-Month (Seller)$33,000/metric ton $14.97/lb

Here is a chart of the LME 3-month contract (seller) from the February launch to the present:



Enough G20 high falutin talk, let's walk the walk:

Our newly minted Eureka Miner's Index (EMI - what's this?) is sub-par at 95.85; down from Friday's 100.91 but up from the 6/7/10 low of 50.7. Remember an EMI greater than 100 is good times for metals & miners.

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is above 25; metals & miners remain on shaky timber with benchmark FCX trading in the the mid-$60s well below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The GREEN light is turned back on for Commodity Reflation with copper trading above $3/lb

The YELLOW light is turned on for Stable Markets the VIX too close to the 30 level for comfort (what's this?)

The YELLOW light is turned back on for Investor Confidence as the specter of further market corrections remains

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 $0.76 in early trading to $78.10 (August contract, most active); Gold is down $2.6 to $1253.6 (August contract, most active); Silver is down $0.010 to $19.100 (July contract, most active); Copper is down $0.0140 to $3.0970 (September contract, most active)

Western Molybdenum Oxide is at $16.00; European Molybdenum Oxide is at $15.00; LME moly 3-month seller's contract is $14.97, LME cash seller is $14.74

The DOW is down 15.23 points to 10,128.58; the S&P 500 is down 3.19 to 1073.57. The miners are down:

Barrick (ABX) $46.10 down 0.50%
Newmont (NEM) $61.40 down 0.44%
US Gold (UXG) $5.15 down 2.53%
General Moly (Eureka Moly, LLC) (GMO) $3.35 down 0.30%
Thompson Creek (TC) $10.15 down 1.93%
Freeport-McMoRan (FCX) $65.25 down 1.98% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $29.65 up 0.10% - global steel producer
POSCO (PKX) $101.54 down 1.90% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.93% to $1,410,972.58 (what's this?).

Cheers,

Colonel Possum

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

Headline photograph by Mariana Titus

Friday, June 25, 2010

US Gold & Atlas Mine Memories Revisited


Morning Miners!

It is 6:04AM. Pour yourself a cup of Raine's Red Label TGIF java and let's close this week of ups and downs with something fun. A Friday before a big G20 meeting in Canada and the the dawn of new U.S. financial regulations will probably confuse the markets enough that we can ignore pretty much anything that happens today.

Eureka old timers no doubt have mixed memories of the Atlas Mine days in the late 1980s and early 1990s. As General Moly (GMO) follows a path of "doing mining right" with community involvement and proper planning, the Atlas Gold Bar mine serves as an example for many of doing everything wrong. Inadequate infrastructure to support an influx of new miners, the absence of drug and alcohol testing and a lot of hootin' and hollerin' on the weekends darkens community recollections. As a young pup, the ole Colonel thought it was a terrific time and came as close as I'll ever come to a "Wild West" experience. Now, with a few more gray hairs under my hat, I can at least respect the opposing view. I wrote a piece about those wild and woolly days last November, Johnny Horton and Atlas Mine Memories.


Moving the clock forward, US Gold (UXG) now owns most (but not all) of the old Gold Bar mine. I believe Barrick (ABX) and others have an interest in the mill site and adjoining claims. I don't want to start a rumor that things are about to restart at Gold Bar, but US Gold has been on fire lately in an otherwise down market. They have other holdings elsewhere so there may be many factors at play to explain their meteoric rise in share price over the last year. As domestic gold reserves decline, one thing certain is that any mining property on the Battle Mountain-Eureka trend perks investor's interest. We included US Gold in the Eureka Miner's Grubstake Portfolio (what's this?) this January at $2.66 and it has nearly doubled trading at $5.26 this morning (Eureka Good News: US Gold, General Moly & POSCO, 1/11/2010)

Let's look at some price performance. Here is a 1-year chart of UXG:


By comparison Barrick (ABX), our benchmark gold miner, has done quite well too:


Our last chart is a direct comparison of UXG and ABX over that same period in terms of percent change. In one year, junior miner UXG is up 120% compared to 30% for the venerable senior ABX. Just something to think about buckaroos.



I understand Buster and Bob have headed up to Alaska recently. There sure were a lot of Alaskans during the Atlas mine days. Is that Johnny Horton I hear playing over at the Nevada Club or is it just a long lost memory...

Way up north, (North To Alaska.)
Way up north, (North To Alaska.)
North to Alaska,
They're goin' North, the rush is on.
North to Alaska,
They're goin' North, the rush is on.


Enough tall tales, let's walk the walk:

Our newly minted Eureka Miner's Index (EMI - what's this?) is sub-par at 83.42; down from yesterday's 93.03 but up from the 6/7/10 low of 50.7. Remember an EMI greater than 100 is good times for metals & miners.

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is above 25; metals & miners remain on shaky timber with benchmark FCX trading in the the mid-$60s well below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The GREEN light is turned back on for Commodity Reflation with copper trading above $3/lb

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

The YELLOW light is turned back on for Investor Confidence as the specter of further market corrections returns

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 $0.99 in early trading to $77.50 (August contract, most active); Gold is up $9.1 to $1255.0 (August contract, most active); Silver is up $0.159 to $18.915 (July contract); Copper is up $0.0050 to $3.0060 (July contract)

Western Molybdenum Oxide is at $16.00; European Molybdenum Oxide is at $15.00; LME moly 3-month seller's contract is $15.20, LME cash seller is $14.97

The DOW is down 31.97 points to 10,120.83; the S&P 500 is down 2.31 to 1071.38. The miners are up:

Barrick (ABX) $45.34 up 1.68%
Newmont (NEM) $59.71 up 1.29%
US Gold (UXG) $5.26 up 3.34%
General Moly (Eureka Moly, LLC) (GMO) $3.38 up 0.60%
Thompson Creek (TC) $9.87 up 0.92%
Freeport-McMoRan (FCX) $63.65 up 0.33% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $29.71 down 2.57% - global steel producer
POSCO (PKX) $100.74 down 1.72% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.87% to $1,398,502.18 (what's this?).

Cheers,

Colonel Possum

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

Headline photograph by Mariana Titus

Thursday, June 24, 2010

General Moly on Track - Is the Global Economy?


Morning Miners!

It is 5:49AM. Have a cup of Thor's Thunderous java and let's scratch our heads on what's changed since I hit the road earlier this week. We looked like we were in pretty good shape Monday with copper over $3/lb and the Eureka Miner's Index (EMI - what's this?) comfortably over 100 at 122.5. Yesterday, copper was sub-$3/lb again and the EMI had slumped to a below-par 88.0. Maybe the ole Colonel should be happy he was shoving highway under the floorboard instead of worrying about these goofy markets.

The Wall Street Journal has a pretty good summary this morning of what has been spooking investors:

NEW YORK—Stocks fell as worries about the global economy persisted, despite better-than-expected reports on jobs and durable-goods orders in the U.S....However, investors continued to worry about the economy a day after the Federal Reserve's policy-making body kept its key interest rate near zero, as expected, but cast its policy statement with more downbeat language. "Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad," namely in Europe, the central bank said in its Wednesday statement. (WSJ, 6/24/2010)

Nuts. The same old culprits - Europe and our own sputtering recovery. Interestingly, the 10-year Treasury is plumbing new lows in yield near the border of 3% (3.081%) as more investors seek safe haven in U.S. bonds over gold (remember, lower bond yields mean higher price driven by demand). Gold has fallen from its lofty $1,260/oz altitude to a more sane flight path (COMEX gold 1,233/oz) with the U.S. dollar on the rise. The Report has been cautioning that the gold and the dollar are heading back to their more typical inverse relation signaling a sea change since early this month. This chart of gold (orange) and the dollar (blue) shows that the dollar trending higher with gold falling in recent weeks:



A mixed story, pardner. For the metals and miners to have a sustainable rally we need two things - low interest rates and less marketplace fear. The former is looking good with some folks forecasting that the Fed will maintain its low interest rate stance until the end of 2011. The recent 10-year Treasury yields support this outlook. The VIX (what's this?) is less than 30 but greater than 25; somewhere between mild panic and sort-of-scary. We need to get below 25 (like this Monday) before there can be much hope for improvement in our sector. In the meantime expect to see more warning lights coming on the the Eureka Outlook Dashboard (upper right, what's this?) and a sub-par EMI.

Let's end with some good news - General Moly (GMO) announced yesterday that things are on track with a Preliminary Draft Environmental Impact Statement (PDEIS) completion anticipated next month and an update on the water rights issue:

GENERAL MOLY ANNOUNCES SIGNIFICANT MILESTONE IN MT. HOPE PERMITTING EFFORT (6/23/2010)

Here are the portions of this press release that relate to schedule:

The Company anticipates that the PDEIS will be completed next month and provided to Cooperating Agencies (County of Eureka, Nevada Department of Wild Life, and National Park Service). Following a 25 business-day review period, the BLM will revise the document to accommodate comments from the Cooperating Agencies and develop the public DEIS, which the Company anticipates being published later this year. Following publication of the DEIS, the public will be allowed to review and comment on the DEIS and a Final EIS will be drafted prior to the issuance of the Record of Decision (ROD), which the Company anticipates by mid-2011. Initial production is anticipated to occur in the first half of 2013.

and with respect to water rights...

A necessary publication and protest period will likely push the State Engineer's water hearing to the later part of this year; however, the Company remains confident that it has every right to be granted access to water for the Mt. Hope project and that such action will be completed prior to initiation of construction activities at the project.

Enough talk, let's walk the walk:

Our newly minted Eureka Miner's Index (EMI - what's this?) is sub-par at 93.03; up from yesterday's 87.96 and the 6/7/10 low of 50.7. Remember an EMI greater than 100 is good times for metals & miners.

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is above 25; metals & miners remain on shaky timber with benchmark FCX returning to the mid-$60s well below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The YELLOW light is turned back on for Commodity Reflation with copper trading below $3/lb

The GREEN light is turned on for Stable Markets the VIX staying below the 30 level (what's this?)

The YELLOW light is turned back on for Investor Confidence as the specter of further market corrections returns

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 $2.01 in early trading to $75.84 (August contract, most active); Gold is down $7.4 to $1259.1 (August contract, most active); Silver is down $0.442 to $18.460 (July contract); Copper is up $0.0590 to $2.9330 (July contract)

Western Molybdenum Oxide is at $16.00; European Molybdenum Oxide is at $15.00; LME moly 3-month seller's contract is $15.20, LME cash seller is $14.97

The DOW is down 74.67 points to 10,223.77; the S&P 500 is down 8.76 to 1083.28. The miners are mixed:

Barrick (ABX) $45.09 up 0.78%
Newmont (NEM) $59.71 up 1.07%
US Gold (UXG) $4.93 up 1.65%
General Moly (Eureka Moly, LLC) (GMO) $3.44 down 0.55%
Thompson Creek (TC) $9.94 down 0.70%
Freeport-McMoRan (FCX) $64.37 down 1.06% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $30.51 down 1.68% - global steel producer
POSCO (PKX) $104.58 down 0.53% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.02% to $1,396,878.89 (what's this?).

Cheers,

Colonel Possum

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

Headline photograph by Mariana Titus

Monday, June 21, 2010

Happy Summer Solstice - The Colonel is on the Road Again


Morning Miners!

It is 5:32AM and it has been summer for 64 minutes. Don't you feel better already? Here, have some delicious Kaldi French roast to start your week. Last week, General Moly's consultant, Elaine Barkdull-Spencer, roasted up a batch for the break room and my good friend Johnny Brown ground the beans in a coffee grinder used by his grandfather. As his story goes, granddad used to grind up chicken feed in the same contraption. Johnny likes old things, so does the Colonel - checkout out one of his many old timer trucks in Mariana's headline photo. Good folks in these parts, thanks Elaine and Johnny!

The ole Colonel will be on the road again soon and the Report will be back on the air bright and early Thursday.

Where do we think the markets will go this week? If you asked me last night, I would have simply told you "up". The weekend buzz was that China would take steps to increase the flexibility of its currency starting today. This morning, People's Bank of China Monday set the dollar-yuan parity rate at 6.8275, the same level as Friday. Never bet on what you think the Chinese are going to do, pardner.

Why would a move in the yuan change things for metals and miners? The U.S.A. has been complaining about the unfairness of a Chinese currency pegged to our dollar for a long-long time. As the argument goes, an undervalued yuan gives an unfair trade advantage to the Chinese; great for exporters of Chinese goods, tougher for foreigners to sell into China's domestic markets. It does appear there will be some loosening coming soon. A stronger yuan compared to the dollar could provide a real shot in the arm for metals and other dollarized commodities. Instead of continuing to unwind last year's stockpiles, Chinese buyers may jump back into the market with a stronger yuan to buy metals like copper. Even with this morning's disappointment, spot copper managed to rise and stay above the key $3/lb level:



NYMEX oil is also taking a flyer at $80/bbl this morning at $79.74 (most active, August contract) so I'm willing to say commodity reflation is alive and well again after nearly a month and a half of running around in the European Sovereign Debt House of Horrors. There are a few signs that Europe is on the mend, checkout this headline in this morning's Steel Business Briefing (SBB):

"UBS maintains a cautious view on EU steel prices and margins, but has upgraded the European sector to neutral from underweight. 'We believe risks are now more balanced and we now recommend a Neutral stance', the bank comments in its European steel sector update obtained by Steel Business Briefing.

According to the report, the steel price should not fall much further because: the price has already fallen quite sharply; steel demand has improved significantly since its 2008-2009 lows and still appears to be rising; steel buyers’ inventories are fairly low in absolute terms; and deliberate capacity closures or plans to idle capacity for more than a month or two can be positive leading indicators to bring the steel market's supply and demand back in balance." (SBB, 6/21/2010)

As steel goes, so goes molybdenum prices which have been slowly inching up again in the spot and futures markets (see moly summary below).

OK, the broader markets are now open and it looks like we're on a tear with the exception of the large gold miners. POSCO (PKX) & Thompson Creek (TC) have popped nearly 8%, Freeport (FCX) is up 5.5% and General Moly (GMO) is up 4%. Fear is leaving the marketplace with the VIX (what's this?) falling below the key 25 level:



I think I'm leaving you in good shape buckaroos, checkout the move in the Eureka Miner's Index below! See you Thursday.

Molybdenum Weekly Summary

Molybdenum prices appear to be on the mend with Western moly oxide now lagging the European and LME futures markets. Look for a catchup move in the western price:

Western Moly Oxide (FeMo65) remains at $14.00/lb (the price reported by Infomine and tracked by Base Metals on the General Moly Website)

Moly Oxide, Europe (Mo Drummed Molydbic Oxide EU) moves up to 15.50/lb (the price reported in the Metals Bulletin)

LME Futures Contracts

LME cash seller moves up to $16.19

3-Month (Buyer) $34,000/metric ton $15.42/lb
3-Month (Seller) $36,000/metric ton $16.33/lb

15-Month (Buyer) $34,000/metric ton $15.42/lb
15-Month (Seller)$36,000/metric ton $16.33/lb

Here is a chart of the LME 3-month contract (seller) from the February launch to the present:



Enough talk, let's walk the walk:

Our newly minted Eureka Miner's Index (EMI - what's this?) jumps to 122.45 this morning, continuing its rise from the 6/7/10 low of 50.7. Remember an EMI greater than 100 is good times for metals & miners.

4-WD is ON - rough but improving roads in the marketplace; The VIX or "fear index" is below 25; metals & miners remain on shaky timber with benchmark FCX trading in the upper-$60s well still below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The GREEN light is turned on for Commodity Reflation with copper trading above $3/lb

The GREEN light is turned on for Stable Markets the VIX staying below the 30 level (what's this?)

The GREEN light is turned back on for Investor Confidence

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 $1.48 in early trading to $79.74 (August contract, most active); Gold is up $0.8 to $1259.1 (August contract, most active); Silver is up $0.096 to $19.280 (July contract); Copper is up $0.1295 to $3.0135 (July contract)

Western Molybdenum Oxide remains at $14.00; European Molybdenum Oxide moves up to $15.50; LME moly 3-month seller's contract is $16.33, LME cash seller is $16.19

The DOW is up 98.70 points to 10,549.34; the S&P 500 is up 8.98 to 1126.49. The miners are up nicely except ABX & NEM:

Barrick (ABX) $46.03 down 0.75%
Newmont (NEM) $60.81 down 0.72%
US Gold (UXG) $4.88 up 1.24%
General Moly (Eureka Moly, LLC) (GMO) $3.67 up 3.96%
Thompson Creek (TC) $10.72 up 7.58%
Freeport-McMoRan (FCX) $69.50 up 5.46% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $32.07 up 5.32% - global steel producer
POSCO (PKX) $104.93 up 7.90% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 2.73% to $1,449,868.89 (what's this?).

Cheers,

Colonel Possum

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

Headline photograph by Mariana Titus

Friday, June 18, 2010

Record Gold, $19 Silver & Falling Copper


Morning Miners!

It is 5:32AM. Have a well deserved cup of Scott Raine's Red Label TGIF coffee! We've had quite a week in the markets starting Monday with no news is good news, a hump day with poor Sisyphus failing to push the market rock over the hump and finishing the week with the impending collapse of Western economies. OK, that last one is a little harsh but every time gold hits a new record the "goldbugs" come out of their dark damp warrens with such "I told you so" predictions.

That's right, pardner, spot gold nearly broke $1260 this morning leaving last week's record of $1251.80 in the dust. Spot silver flew through $19 and spot copper, our suffering canary in the global recovery mineshaft, is back in the infirmary falling to $2.8827/lb. Here's the lineup just a few minutes shy of 2:30PM London time:





And those dire predictions? Lawrence Williams, a goldbug who I greatly respect, gives you a sample in the closing paragraph of this morning's Mineweb article:

"But don't necessarily expect a mega gold price increase - at least not yet - it will take a major economic collapse beyond the Central Bankers' and governments' ability to mitigate it to see this happen. One can't rule this out, but if it were to happen - again as we have said before - the whole social and economic structure could break down to such an extent that even one's holdings in gold may not be enough to protect us from the potential of ensuing chaos and anarchy!" (Lawrence Williams, Mineweb, 6/18/2010)

If that's not depressing enough, here's Mr. Williams entire article:

Poor news again has gold touch $1250 - what can make it break out? (Lawrence Williams, Mineweb, 6/18/2010)

Again, Lawrence Williams is an excellent analyst but this ole Colonel just can't go into that goldbug gloomy-doomy world.

Living in a gold town, I should be clicking my miner's boots at $1260/oz and I must admit this level is pretty exciting. However, the Colonel is confident Barrick and Newmont can do just fine at a few dollars below this price and I'd rather see copper sustain above $3/lb and gold settle in at say $1225/oz with some renewed sense that the global recovery isn't on its death bed.

Hmm...the broader markets just opened and I'll be hornswoggled! Some better than expected industrial news has trumped the macro-economic gloomer-doomers. Here is the lead market story from the Wall street Journal:

NEW YORK—U.S. stocks managed a small early gain, as ebbing euro-zone concerns and a report of Asian demand for machinery bolstered materials stocks. (WSJ, 6/18/2010)

The miners look like their going to have a positive day overall and what do you know, the Eureka Miner's Index (EMI - what's this?) just broke 100 at 100.48.



This is a big improvement from the 6/7 low of 50.7. Remember an EMI greater than 100 is good times for metals & miners. Buck up, buckaroos!

Enough talk, let's walk the walk:

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is just below our 25 level threshold; metals & miners remain remain on shaky timber with benchmark FCX trading in the mid-$60s well below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The YELLOW light is turned on for Commodity Reflation with copper trading below $3/lb

The GREEN light is turned on for Stable Markets the VIX staying below the 30 level (what's this?)

The YELLOW light is turned back on for Investor Confidence with the possibility of a 20% correction in the broader markets appearing less likely

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 $0.54 in early trading to $76.25 (August contract, most active); Gold is up $9.2 to $1257.9 (August contract, most active); Silver is up $0.299 to $19.075 (July contract); Copper is down $0.0280 to $2.8775 (July contract)

Western Molybdenum Oxide remains at $14.00; European Molybdenum Oxide sits at $14.50; LME moly 3-month seller's contract is $15.20, LME cash seller is $15.06

The DOW is down 3.78 points to 10,430.39; the S&P 500 is down 1.24 to 1114.80. The miners are up except FCX & TC:

Barrick (ABX) $45.52 up 1.56%
Newmont (NEM) $60.65 up 1.63%
US Gold (UXG) $4.85 up 3.46%
General Moly (Eureka Moly, LLC) (GMO) $3.59 up 1.70%
Thompson Creek (TC) $9.79 down 0.20%
Freeport-McMoRan (FCX) $65.57 down 0.36% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $30.58 down 0.13% - global steel producer
POSCO (PKX) $97.05 up 0.39% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 1.04% to $1,407,075.21 (what's this?).

Cheers,

Colonel Possum

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

Headline photograph by Mariana Titus of Johnny Brown's terrific Eureka bottle collection

Thursday, June 17, 2010

Barkdull-Spencer Interviews the Colonel (GMO)


Morning Miners!

It is 5:45AM. We have a real treat in the break room this morning. What's that delicious aroma? No, it's not Thor's thunderous java - we're brewing Kaldi Sumatra French coffee! Among her many talents, Elaine Barkdull-Spencer is a coffee roaster par excellence and gave the ole Colonel a sample of some pretty fine beans yesterday. Pull up a chair and have a cup. Excuse me, maybe you should put on your seat belt. Look at what precious metals did in London just moments ago (1:51PM, London time): gold broke $1240/oz and silver hit $18.80/oz:




Exciting times, pardner. We'll close on what's behind this moonshot.

You may remember that we discovered Elaine the other day on our visit to Eureka Moly LLC (subsidiary to General Moly - NYSE:GMO). General Moly has commissioned the Barkdull-Spencer Agency to perform a retail and service analysis of Eureka, Nevada. This is an important step by General Moly to ensure that "mining is done right" as they move closer to the Mt.Hope molybdenum mine construction phase planned to start next summer.

Many of you are already familiar with Elaine in her former role as Executive Director of the Elko County Economic Diversification Authority (ECEDA). During her five-year tenure, she was responsible for bringing a railport and industrial park to Elko making the Elko County region the “Hard Rock Mining Hub of the West”. The Northeastern Nevada Regional Railport, operated by Savage Services Corp. of Salt Lake City, handles containers and bulk products headed for destinations throughout the region (including Eureka County) as they are moved from trains to truck. You can read more about this key regional infrastructure improvement in this 2009 article or by going directly to the ECEDA website:

Elko: More than mining
(Northern Nevada Business Outlook, John Seelmeyer)

Yesterday, I was privileged to participate in the Barkdull-Spencer survey. Some of our readers have already talked with Elaine and are busily filling out their "Eureka Retail & Service Analyis" questionnaire. After a few questions about you and your business interest in Eureka, the survey asks for your thoughts on a variety of topics. Elaine pointed out what she believes may be the most important question of all:

"What advice could you share with the General Moly team relating to the impacts of the Mt. Hope project and Eureka businesses?"

I encourage anyone that hasn't already been contacted by Elaine to track her down if you have concerns about how the Mt. Hope mining cycle may influence our community. Drop by the Eureka Moly office today and make an appointment!

OK, what's pushing gold and silver? The euro is on a tear after Spain eased euro-worries with a successful bond auction. However, things are not faring that well today in the good ole U.S.A. as reported in the lead market headline of the Wall Street Journal:

NEW YORK—U.S. stocks turned negative after a private index of leading indicators and a manufacturing report from the Philadelphia Federal Reserve disappointed investors…Dampening the jobs market outlook, the Labor Department said Thursday that the number of U.S. workers filing new claims for unemployment benefits increased last week as states reported more claims in the construction, manufacturing and educational-service sectors. (WSJ, 6/17/2010)

Nuts. It is important to watch whether a weakening U.S. dollar will re-establish it's typical inverse relation with gold in the next several weeks. The miners seem to be one of the few sectors that are getting some bounce from a lower dollar although copper has yet to regain its $3/lb mojo. Stay tuned, buckaroos.

Enough talk, let's walk the walk:

Our newly minted Eureka Miner's Index (EMI - what's this?) moves up to 93.28 this morning, continuing its rise from last week's low of 50.7. Remember an EMI greater than 100 is good times for metals & miners.

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is below 30 but still above our 25 level threshold; metals & miners remain remain on shaky timber with benchmark FCX trading in the mid-$60s well below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The YELLOW light is turned on for Commodity Reflation with copper trading below $3/lb

The GREEN light is turned on for Stable Markets the VIX staying below the 30 level (what's this?)

The YELLOW light is turned back on for Investor Confidence with the possibility of a 20% correction in the broader markets appearing less likely

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 $0.68 in early trading to $76.99 (July contract, most active); Gold is up $17.72 to $1247.7 (August contract, most active); Silver is up $0.344 to $18.785 (July contract); Copper is down $0.0845 to $2.9110 (July contract)

Western Molybdenum Oxide remains at $14.00; European Molybdenum Oxide moves up to $14.50; LME moly 3-month seller's contract is $15.42, LME cash seller is $15.29

The DOW is down 58.80 points to 10,350.58; the S&P 500 is down 5.82 to 1108.79. The miners are up except FCX & TC:

Barrick (ABX) $44.35 up 2.69%
Newmont (NEM) $59.75 up 2.43%
US Gold (UXG) $4.57 up 3.63%
General Moly (Eureka Moly, LLC) (GMO) $3.69 up 1.10%
Thompson Creek (TC) $9.90 down 1.10%
Freeport-McMoRan (FCX) $65.88 down 1.72% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $30.74 up 0.20% - global steel producer
POSCO (PKX) $97.95 down 0.63% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.94% to $1,396,145.17 (what's this?).

Cheers,

Colonel Possum

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

Headline photograph by Mariana Titus

Wednesday, June 16, 2010

Sisyphean Markets but Life is Still Good



Morning Miners!

It is 6:14 AM. Have a hot cup of mid-week joe and let's toast one of my favorite kings of yore, Sisyphus. It is fitting to honor this poor feller on hump day because he could never quite get over the hump, at least not in his later days in the Greek Underworld. Sisyphus was made to roll a huge rock up a steep hill, but before he could reach the top of the hill, the rock would always roll back down, forcing him to begin again. Remind you of the markets lately?

Yesterday was a good day for the ole Colonel - Mariana and I stacked two cords of cedar wood for the winter, my plumbing fix is holding and the expected freeze last night didn't happen. Our spring flowers survived and life is good.

Tuesday was a good day for the markets too. U.S. stocks surged more than 2% as nervousness about Europe's economy diminished and a report of strong computer sales lifted sentiment. COMEX copper finally closed above $3/lb ($3.0045/lb) and the S&P 500 moved into the black for the year closing up 2.35%,. The Dow Jones Industrial Average climbed 213.88 points to 10404.77. Sisyphus got that rock pretty close to the top.

So where do we go today? The broader markets just opened, let's check the Wall Street Journal lead market story:

NEW YORK—U.S. stocks fell as bleak U.S. housing data and fresh worries over Spain's ability to manage its debt woes cast a shadow on hopes for a global economic recovery. (WSJ, 6/16/2010)

Ah, nuts! Down the hill we go. But maybe not - the metals & miners are down this morning but our new Eureka Miner's Index (EMI - what's this?) is currently at 91.5 which is an improvement over yesterday morning's 84.5. Remember an EMI greater than 100 signals improving times for the rock busters and metal merchants. You might reasonably ask, "If the market is down how can the EMI be up?". Even with a flip-flop in headline news, fear continues to abate overall as measured by the VIX (26.1 versus 27.4 yesterday AM, our comfort level is a VIX less than 25- what's this?). COMEX copper is down but still hanging in there at $2.98, keep pushing that rock Sisyphus!

On the other side of the moon, let's also recall how our poor Greek friend earned his maddening eternal punishment. Hubris, pardner, that timeless old bugaboo for us mere mortals. Sisyphus ended up pushing rocks due to a hubristic belief that his cleverness surpassed that of Zeus. Let's never forget that no matter how cleverly we try to predict market direction there can always be a surprise in tomorrow's headline. However, let's also be proud that miners prefer to bust rocks, not push'em. Someone give poor Sisyphus a stick of dynamite. Hang in there buckaroos, life is still good.

Since everything's about gold and currencies these days, here are the latest charts:

U.S. Dollar Index (DXY - blue) versus euro (orange)


U.S. Dollar Index (DXY - blue) versus COMEX gold (orange)


Enough talk, let's walk the walk:

Our newly minted Eureka Miner's Index (EMI - what's this?) steps up to 91.48 this morning, rebounding from last week's low of 50.7. Remember an EMI greater than 100 is good times for metals & miners.

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is below 30 but still above our 25 level threshold; metals & miners remain remain on shaky timber with benchmark FCX in the mid-$60s well below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The YELLOW light is turned on for Commodity Reflation with copper trading below $3/lb

The GREEN light is turned on for Stable Markets the VIX staying below the 30 level (what's this?)

The YELLOW light is turned back on for Investor Confidence with the possibility of a 20% correction in the broader markets appearing less likely

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 $0.59 in early trading to $76.35 (July contract, most active); Gold is up $0.3 to $1234.7 (August contract, most active); Silver is down $0.093 to $18.485 (July contract); Copper is down $0.0245 to $2.9800 (July contract)

Western Molybdenum Oxide remains at $14.00; LME moly 3-month seller's contract moves up slightly to $15.54, LME cash seller moves to $15.42

The DOW is down 42.40 points to 10,362.37; the S&P 500 is up 4.43 to 1110.80. The miners are mostly down:

Barrick (ABX) $42.93 down 0.02%
Newmont (NEM) $56.66 up 0.59%
US Gold (UXG) $4.45 down 0.45%
General Moly (Eureka Moly, LLC) (GMO) $3.65 down 2.14%
Thompson Creek (TC) $9.83 down 1.21%
Freeport-McMoRan (FCX) $66.37 down 1.01% (a bellwether mining stock spanning copper, gols & molybdenum)

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

ArcelorMittal (MT) $30.62 down 1.73% - global steel producer
POSCO (PKX) $97.41 down 0.45% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.66% to $1,374,903.00 (what's this?).

Cheers,

Colonel Possum

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


Headline photograph by Mariana Titus

Tuesday, June 15, 2010

Fear Recedes - LME Moly Gets a Bounce


Morning Miners!

It is 5:34 AM. Mother Nature brings us a new day in Diamond Valley wrapped in pink and gray silk scarves. I think we're going to have a good'un, pardner. There seems like there is a change of sentiment in the markets too. Copper, our battered canary in the global mineshaft, took a few passes above the $3/lb clouds this morning but couldn't quite keep her altitude. She's getting stronger every day and should be in the blue sky soon - that's a good sign for metals & miners. Here's copper spot prices this morning:


Oil is showing some resilience in the mid-$70/bbl range too. No one likes high priced oil (except oil traders) but, like copper, it is another good measure of global growth. Rising oil prices in this environment of concern about global recovery is a good sign.

In the May market doldrums, this Report suggested that 2010 may become a year of gold and currencies:

"In late November [2009], the storm center moved to the Sovereign Debt Sea with the emerging Dubai crisis. It rolled over Greece and entered the Gold & Currency Ocean as worries turned from the fiscal health of individual countries to the wisdom of central bank solutions and the potential adverse impact on their currencies; stronger gold, weaker currencies. Metals & miners pitched and rolled, volatility returned." (The Eureka Miner's Market Report, 5/27/2010)

There hasn't been much to challenge this assertion in recent news; almost every market headline lately has some mention of the euro, gold or the U.S. dollar. I thought it might be fun to test the relative value of copper with respect to the dollar, gold and a barrel of oil from its high of $3.5840/lb (COMEX intraday high) on 4/12 to this mornings price. Here are the results:

lbs of copper/ barrel of oil 24.00 (4/21) 25.38 (6/15 AM) up 5.7%
lbs of copper/ ounce of gold 326.3 (4/21) 413.3 (6/15 AM) up 26.6%
lbs of copper/ U.S. dollar 0.279 (4/21) 0.334 (6/15 AM) up 19.9%

What's all this blamed number crunching prove Colonel? OK, if you buy copper with greenbacks you can buy about 20% more these days than in April. If you happen to pack gold, there's a better deal - your buckboard will weigh in with more copper than that feller with all the dollars. You can both feel sorry for the guy toting all those barrels of oil. He can trade for just a little more copper than he did several months ago.

If you're buying commodities the dollar is strong, gold is stronger and oil has been beaten down in value with its global growth companion, copper. The tide may be turning now as fear is starting to leave the marketplace. Here's a chart of the VIX or "fear index" (what's this?) for this morning as we inch further below 30 at 27.4; still above a comfort level of 25 but much better than the harrowing days of the last several weeks. The broader markets are now open and it looks like the metals & miners are fixing to have a good'un too.


Miss Moly is showing some giddy-up-go at the London Metal Exchange (LME) with a reversal in her downward trend yesterday. The cash seller has moved up to $15.76 from $14,60; the 3-month seller, $15.88 from $14.74.

Enough talk, let's walk the walk:

Our newly minted Eureka Miner's Index (EMI - what's this?) steps up to 84.48 this morning, rebounding from last Monday's low of 50.7. Remember an EMI greater than 100 is good times for metals & miners - we're getting even closer!

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is below 30, still above our 25 level threshold; metals & miners remain remain on shaky timber with benchmark FCX in the mid-$60s well below its 200-day average of $76 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment

The YELLOW light is turned on for Commodity Reflation with copper trading below $3/lb

The GREEN light is turned on for Stable Markets the VIX staying below the 30 level (what's this?)

The YELLOW light is turned back on for Investor Confidence with the possibility of a 20% correction in the broader markets appearing less likely

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 $0.77 in early trading to $75.89 (July contract, most active); Gold is up $2.5 to $1227.0 (August contract, most active); Silver is up $0.029 to $18.47040 (July contract); Copper is down $0.0130 to $2.9905 (July contract)

Western Molybdenum Oxide remains at $14.00; LME moly 3-month seller's contract is at $15.88, LME cash seller moves to $15.76, Euro moly oxide sits at $14.00.

The DOW is up 93.41 points to 10,284.30; the S&P 500 is up 10.94 to 1100.57. The miners are mostly happy:

Barrick (ABX) $41.98 down 0.05%
Newmont (NEM) $55.31 up 0.61%
US Gold (UXG) $4.30 up 1.18%
General Moly (Eureka Moly, LLC) (GMO) $3.69 up 2.78%
Thompson Creek (TC) $9.68 up 1.68%
Freeport-McMoRan (FCX) $65.75 up 0.75% (a bellwether mining stock spanning copper, gols & molybdenum)

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

ArcelorMittal (MT) $30.39 up 2.15% - global steel producer
POSCO (PKX) $95.25 down 0.03% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 1.05% to $1,356,419,91 (what's this?).

Cheers,

Colonel Possum

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


Headline photograph by Mariana Titus