Thursday, August 5, 2010
General Moly (GMO) versus The Benchmark Miners
It is 6:19 AM. Have a thunderous cup of Thor's special blend. The ole Norsemen just warmed the pot with one of his pocket-size lightening strikes. Markets may be a little wobbly today, not from electrical storms but nervousness about the Labor Department's monthly jobs report tomorrow. Today an unexpected rise in weekly jobless claims together with a weak retailers' July sales report set the stage for a little hand wringing. The latter is being blamed on hot weather and a cooler economy which has kept buying relatively sluggish for July. So it goes, no one said this would be short elevator ride out of the Great Recession mineshaft.
The Colonel remains a little skeptical of the recent metals rally (China to the Rescue?). Without gold's robust participation, this is beginning to feel like a currency shuffle and not a reflection of any major shift up in global demand. Today's London Metal Exchange (LME) headline says it all: "LME LATEST - Base metals shrug off poor US jobs data, kept afloat by strong euro." We'll see how much shrugging goes on tomorrow when the BIG labor report comes out. COMEX copper shaved off a few cents this morning to trade at $3.3690/lb and COMEX gold is struggling to climb above the $1200/oz mark again resting at $1199.4.
I hope tomorrow proves me wrong - the ole Colonel is an optimist but the latest numbers are not helping me ride too high in the saddle. Let's see how our benchmark miner's are digesting all this news and close with a comparison to General Moly (GMO) stock performance.
Bellwether miner Freeport-McMoRan (FCX) made a brilliant recovery from the high-$50 badlands of July 1st to nearly breaking its 200-day average (green line) which is presently $75.3. The broader markets are now open and FCX is trading down at $73.97, here is a one-year chart:
Gold miner benchmark Barrick (ABX) has fared better than Freeport dipping below its 200-day average briefly in late July but making a solid recovery since. The latest 200-day price is $40.76; ABX is trading at $42.48:
Moly producer benchmark Thompson Creek has had the worst go of it trading this morning at $9.71, far below its 200-day average of $11.63. TC fell below this key level May 3rd and has been spinning bald tires in the sand ever since:
The Eureka Miner's Index(EMI) uses these three miners every day to compute a new index value. Today I've included a monthly update on the 200-day averages given above and it looks like the EMI got a bump up to a solid 147.3. Last Friday's closing EMI was 127.1...Hey, maybe things aren't so bad after all!
Let's close with a look at General Moly (GMO). It's chart is a lot better than Thompson Creek having stayed well above its 200-day average except for a little dip in late June and again mid-July. One of the advantages of not yet being a moly producer like TC is that you have a lot of investor hope on your side (and in this case, Mt. Hope). Today the 200-day GMO average price sits at $2.99 and GMO is trading comfortably at $3.20:
Let's see what tomorrow brings...
Enough talk and hope, let's walk the walk:
The Eureka Miner's Index(EMI) remains above par at 147.35, a nice move up from yesterday's 139.86 and a big 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 but improving roads in the marketplace; The VIX or "fear index" is below 25; metals & miners remain on shaky but much firmer timber with benchmark FCX trading close to 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
The GREEN light is turned back on for Commodity Reflation with copper trading above $3/lb
The GREEN light is turned on for Stable Markets the VIX below the 30 level (what's this?)
The GREEN light is turned back on for Investor Confidence as investors return to equities.
The YELLOW light is turned on our Fuel Gauge with oil above $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 $0.62 in early trading to $81.85 (September contract, most active); Gold is up $3.5 to $1199.4 (December contract, most active); Silver is up $0.112 to $18.390 (September contract, most active); Copper is down $0.0355 to $3.3690(September contract, most active)
Western Molybdenum Oxide is $14.25; European Molybdenum Oxide is $15.05; LME moly 3-month seller's contract is $15.31, LME cash seller is $15.10
The DOW is down 31.63 points to 10,648.80; the S&P 500 is down 4.21 to 1123.03. The miners are grumpy:
Barrick (ABX) $42.48 down 0.31%
Newmont (NEM) $56.00 down 0.44%
US Gold (UXG) $5.o6 down 0.59%
General Moly (Eureka Moly, LLC) (GMO) $3.20 down 1.23%
Thompson Creek (TC) $9.71 down 0.51%
Freeport-McMoRan (FCX) $73.97 down 1.37% (a bellwether mining stock spanning copper, gold & molybdenum)
The Steels are up, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $33.51 up 1.03% - global steel producer
POSCO (PKX) $108.48 up 0.61% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is down 0.29% to $1,408,961.22 (what's this?).
Write Colonel Possum at firstname.lastname@example.org for answers to your questions or to request e-mail updates on the market
Headline photograph by Mariana Titus