Friday, June 18, 2010
Record Gold, $19 Silver & Falling Copper
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?).
Write Colonel Possum at email@example.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