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