Friday, July 16, 2010
Metals & Miners Call in Sick for Friday
It is 6:35 AM. Have a welcome cup of that delicious Raine's Red Label TGIF brew. Do I hear an echo? Maybe it is because the break room is empty, the miners called in sick today - maybe they've got plans for the weekend. One day does not a market make but it is a little disappointing to end this week with everything we cherish in the red. I delayed writing this report until the broader markets opened hoping the ole Colonel could find some sun in our canyon. Nope, not today.
I started my morning in London to watch gold and silver nose dive. Spot gold plumbed $1189.98 before recovering slightly; silver touched $17.85:
And our poor old canary in the mineshaft of global recovery wasn't faring much better. Copper, which has been bravely flying just above $3/lb all week, spiraled to lower altitudes:
The Eureka Miner's Index (EMI), which has been above-par since last Friday, reflects the morning malaise by plummeting to a sub-par 81.4 (an EMI greater than 100 is good times for the metals & miners). The Eureka Miner's Grubstake Portfolio is down 2.32%. Nuts.
What's up? That old enemy fear has crept back into the marketplace - fear that the economic growth story is on the ropes again. Here's how the Wall Street Journal reports it this morning:
NEW YORK—U.S. stocks fell broadly as investors registered their disappointment with a gloomy consumer sentiment report, and as a round of earnings reports showed revenues falling below expectations.
Data on consumer sentiment from the University of Michigan came in well below expectations with a reading of 66.5, down from a prior reading of 76.0. Economists had been expecting 75.0.
So far this week, most bellwether companies had been reporting strong earnings that indicated the U.S. corporate sector was still faring well despite an apparent slowdown in economic indicators. Friday, however, the earnings were less encouraging, which added fuel to investors' concerns over economic growth. (WSJ, 7/16/2010)
We have been reporting contrary indications all week but sometimes it's just good to take the day off. Stay on your horse, pardner. Happy trails 'til Monday.
Enough talk, let's walk the walk (to the parking lot):
Our newly minted Eureka Miner's Index (EMI - what's this?) falls to a sub-par 81.37, a big drop from yesterday's 100.46 but still an improvement 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 just below 30; metals & miners remain on shaky timber with benchmark FCX trading 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 back on for Commodity Reflation with copper trading below $3/lb
The GREEN light is turned on for Stable Markets the VIX below the 30 level (what's this?)
The YELLOW light is on for Investor Confidence as further market corrections are possible
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, U.S. House committee debates miner workplace safety bill
Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)
NYMEX/COMEX: Oil is down $0.34 in early trading to $76.28 (August contract, most active); Gold is down $16.8 to $1191.5 (August contract, most active); Silver is down $0.462 to $17.900 (July contract, most active); Copper is down $0.0255 to $2.9865 (September contract, most active)
Western Molybdenum Oxide is at $14.00; European Molybdenum Oxide is at $14.00; LME moly 3-month seller's contract is $15.20, LME cash seller is $14.97
The DOW is down 167.64 points to 10,191.67; the S&P 500 is down 18.72 to 1077.76. The miners are off for the day:
Barrick (ABX) $41.85 down 2.83%
Newmont (NEM) $59.23 down 2.42%
US Gold (UXG) $4.63 down 2.75%
General Moly (Eureka Moly, LLC) (GMO) $3.06 down 1.92%
Thompson Creek (TC) $8.83 down 2.75%
Freeport-McMoran (FCX) 61.82 down 2.14% (a bellwether mining stock spanning copper, gold & molybdenum)
The Steels are down, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $29.21 down 2.18% - global steel producer
POSCO (PKX) $101.07 down 1.29% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is down 2.23% to $1,329,797.18 (what's this?).
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Headline photograph by Mariana Titus