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

DISCLOSURE

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

Tuesday, August 31, 2010

Eric Rides the Rails - Gold Scares $1250



Morning Miners!

It is 5:55 AM. Ruby Tuesday rustled up the ole Colonel in the wee hours this morning to tell me some exciting news. Grab a cup and let's see what's up. When she dropped a load off at Barrick's Ruby Hill mine yesterday she ran into Eric Pastorino. Eric had just returned from a little V-time in Colorado and showed her today's headline photo that he took of the Durango & Silverton narrow gauge locomotive crossing the Animas River.

Eric rode this beauty from Silverton to Durango on the 22nd of this month and back to Durango on the 23rd. He told Ruby, "I got to ride in the wood car, my shirt pockets filled with cinders and I have burn holes in my hat and shirt!"

This story has a real connection to Eureka on many levels. You may remember last August that the Durango & Silverton Narrow Gauge Railroad featured the Eureka & Palisades #4 locomotive at their 11th-Annual Railfest event (August 13 - 16, 2009). The E&P Railroad connected Eureka to Palisades until it was discontinued in 1938 . Several years ago, Eric Pastorino and other dedicated Eurekans laid track at the County fairgrounds for the E&P's return to Eureka.

Here is a link to the Durango & Silverton museum:

The Durango & Silverton Narrow Gauge Railroad and Museum

Last year I found a fun video of the E&P on YouTube if you want to enjoy the sights and sounds of old time rail travel:

Eureka & Palisades Runby

You can read more about the E&P in the Report: Ruby Hill Pours One Million, E&P Railroad News, 8/3/2009

I've included some information from that article below the sign-off (Note 1). A big thanks to railroad fan Eric Pastorino for a great picture, story and keeping a little Eureka history alive!

Then and Now

When I reread last year's choo-choo blog, I couldn't help but compare markets then and now. This morning COMEX gold scared $1250/oz peaking at $1249.4/oz before dropping a tad to 1247.9/oz. In the early morning trading of last August's blog, COMEX gold was a lowly $960.5/oz; silver, $14.355/oz. Except for the precious metals and copper many things are not too different, here's a sample:

S&P 500 1000.92 (morning, 8/3/09) 1053.07 (today)

NYMEX oil $71.69/bbl (morning, 8/3/09) $74.69 (today)
COMEX copper $2.7320 (morning, 8/3/09) $3.3900 (today)
Western Moly Oxide $15.00 (morning, 8/3/09) $15.50(today)

Freeport-McMoRan (FCX) $64.83 (morning, 8/3/09) $72.05 (today)
General Moly (GMO) $2.92 (morning, 8/3/09) $2.95 (today)

Just something to ponder buckaroos.

Daily Market Roundup

Enough talk, let's walk the walk:

The Eureka Miner's Index(EMI) remains above-par at 132.23 slipping a bit from yesterday's 135.92 but a long way from the 6/7/10 low of 50.7. Today's number remains promising but we now need to pass resistance levels of 139.53 and then 151.54 to break the recent trend reversal to the downside. Remember an EMI greater than 100 is good times (or at least better times) for this sector.

Eureka Outlook Dashboard

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is above 25; metals & miners are still on shaky timber, bellwether Freeport-McMoRan (FCX) has returned to the low-$70s but is still below its 200-day average of $75.3 (our new warning level, 8/05 update); 10-year Treasurys are safely below 4% preserving a low-interest rate environment but there is some deflationary caution now that we are sub-3%.

The YELLOW light is turned back on for Commodity Reflation. Although copper is trading above $3/lb, the 10-yr T-Note is solidly below 3.00%

The GREEN light is turned on for Stable Markets the VIX below the 30 level (what's this?)

The YELLOW light is turned on for Inflation/Deflation Watch as the Federal Reserves resumes buying back Treasurys and the 10-yr T-Note remains below 3.00%

The YELLOW light is turned back on for Investor Confidence as the bond markets still signal trouble ahead

The GREEN light is 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?)

Commodity Market Morning Update

NYMEX/COMEX: Oil is down $0.32 in early trading to $74.38 (October contract, most active); Gold is up $8.7 to $1247.9 (December contract, most active); Silver is up $0.191 to $19.265 (December contract, most active); Copper is down $0.0395 to $3.3900 (December contract, most active)

Western Molybdenum Oxide is $15.50; European Molybdenum Oxide is $16.00; LME moly 3-month seller's contract is $16.67, LME cash seller is $16.44

Stock Market Morning Update

The DOW is up 40.71 points to 10050.44; the S&P 500 is up 4.15 to 1053.07 Miners are mixed:

Barrick (ABX) $47.10 up 1.64%
Newmont (NEM) $61.42 up 2.50%
US Gold (UXG) $5.12 up 3.54%
General Moly (Eureka Moly, LLC) (GMO) $2.95 down 0.34%
Thompson Creek (TC) $8.55 up 0.59%
Freeport-McMoRan (FCX) $72.05 up 2.40% (a bellwether mining stock spanning copper, gold & molybdenum)

The Steels are mixed (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $29.02 up 1.22% - global steel producer
POSCO (PKX) $101.56 down 0.54% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 1.27% to $1,370,863.94 (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 photo by Eric Pastorino, 8/22/2010

Note 1: Dan & Ditty Markoff from Las Vegas lovingly restored the historic Eureka & Palisades locomotive. Here is an overview of their efforts:

Eureka & Palisades Locomotive #4

Finally, the following taken from the R. L. Polk & Co.'s Nevada State Gazetteer and Business Directory (First Edition, 1907-1908), is an interesting account of Eureka's little locomotive that could:

"The town of Eureka is situated 84 miles from Palisade in a canyon at the south end of Diamond Valley. It is connected with the Southern Pacific RR by the Eureka & Palisade Railroad, and is the trading center for the outlying districts and ranches within a radius of from 25 to 75 miles.

The Eureka & Palisade Railroad is depended upon to carry the entire product of the mines to Palisade, where the ore is transferred to the Southern Pacific and taken to Salt Lake. The equipment of the E & P Railroad is being increased rapidly, two new locomotives and several cars having been added this spring. Ore and coal bunkers and other necessary accommodations have been constructed. The Western Pacific Railroad will also cross the county from east to west. With this increase in shipping facilities, and the material decrease in freight rates due to recent legislation, transportation of ore no longer presents a serious problem." (USGenWeb Project)

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