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