Thursday, June 10, 2010
One Dog's View of the Markets - LME Moly Drops
It is 5:23 AM. Have a brimming cup of Thor's java and let's checkout what my dog, Loquita, thinks of the markets. Not much - Loquita believes my time would be better spent on longer walks with her than all this worry about the global marketplace. To prove her point she suggested that I checkout this Report at the same date last year (One-Armed Bandits & $71 Oil, 6/10/2009).
At that time the buzz was that the economy was coming out of recession but speculative money was driving up the price of oil to a shocking $71/bbl. Surely inflation would soon be on the horizon with all the new government stimulus money pouring into the economy. Today the talking heads are nervous that oil is plunging to the low-$70s/bbl, that speculative money is fleeing commodities and a double-dip recession is just around the corner. Deflation worry is now the bugaboo du jour.
Hmmm...maybe Loquita has a point.
I will point out to her that oil is at least back in the mid-$70s this morning (NYMEX $75.25/bbl) and although copper is still below the key $3/lb level (COMEX Cu $2.8575/lb), it is a good dime above its lows earlier this week. Oh, she's not listening - time for her morning pee.
I plan to do something constructive today. The Colonel has a 9:00am appointment with Tim Arnold, General Manager of our Mt. Hope project, to see how things are going with General Moly (GMO). I'm sure we'll talk about water rights and kick around the price of molybdenum - look for a debrief in tomorrow's Report.
Speaking of moly prices, the London Metal Exchange (LME) futures prices took a notch down after Euro moly oxide dipped to $14/lb yesterday. The LME cash seller dropped to $13.70/lb and the 3-month seller contract is now $13.83/lb. Western moly oxide is still sitting at $16/lb but may be the next to head south. It's funny that a year ago we were cheering moly prices cresting $10/lb as a sign of good times in the mineshaft (why is Loquita looking at me with that smug Chihuahua grin?). I guess it's time for a quick walk before we see Tim - see you tomorrow!
Enough talk, let's walk the walk:
Our newly minted Eureka Miner's Index (EMI - what's this?) moved uo to 65.25 this morning, a good step from Monday's low of 50.7. Remember an EMI greater than 100 is good times for metals & miners - we're still moving in the right direction.
4-WD is ON - rough roads in the marketplace; The VIX or "fear index" moves to the low-30s, still above our 25 level threshold; metals & miners remain remain on shaky timber with benchmark FCX in 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 on for Commodity Reflation with copper trading below $3/lb
The YELLOW light remains on for Stable Markets with the VIX above the 30 level (what's this?)
The ORANGE light remains on for Investor Confidence the possibility of a 20% 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 $0.87 in early trading to $75.25 (July contract, most active); Gold is down $5.6 to $1224.3 (August contract, most active); Silver is down $0.139 to $18.050 (July contract); Copper is up $0.0075 to $2.8575 (July contract)
Western Molybdenum Oxide is at $16.00; LME moly 3-month seller's contract is at $13.83, LME cash seller moves is at $13.70, Euro moly oxide drops sits at $14.00.
The DOW is up 183.19 points to 10,082.44; the S&P 500 is up 19.61 to 1075.30. The miners are happy:
Barrick (ABX) $42.87 up 0.35%
Newmont (NEM) $56.05 up 0.63%
US Gold (UXG) $3.88 up 0.26%
General Moly (Eureka Moly, LLC) (GMO) $3.45 up 5.18%
Thompson Creek (TC) $8.80 up 2.56%
Freeport-McMoRan (FCX) $63.45 up 4.44% (a bellwether mining stock spanning copper, gols & molybdenum)
The Steels are happy too, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $28.68 up 5.25% - global steel producer
POSCO (PKX) $91.97 up 2.97% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 2.20% to $1,304,810.25 (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 other photographs by Mariana Titus