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


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


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

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