"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.

Thursday, September 30, 2010

Gold & Silver New Highs, Base Metals Stall, Moly Soft

Morning Miners!

It is 6:00 AM sharp. Have a cup of Thor's Thunderous September Brew. Our favorite Norseman's alarm clock didn't sound and the poor ole Colonel had to kick start Thursday by himself. Thor's up now grumbling that I didn't get the sun angle just right or some such nonsense. Anyway, happy "Thor's Day!"

Gold & Silver New Highs

You can just about bet on a new-record-per-day with the U.S. dollar falling again against major currencies and reaching a 5 1/2-month low with the euro ($1.366). Gold & silver pegged new highs in the early morning:

COMEX gold $1317.5/oz 08:55:00 ET December contract, most active - record
COMEX silver $22.125/oz 06:25:00 ET December contract, most active - 30-yr high

It is important to note that the much watched gold/silver ratio (Au:Ag ratio) is now sub-60 at 59.71. In calmer times this ratio was in a range of 50-56 prior to Lehman Brother's collapse; afterwords, it shot up north of 80. A smaller number can infer less fear in the marketplace, here is a 3-year chart:

Base Metals Stall - Moly Soft

The base metals are taking a breather letting yesterday's best number for copper (since April) stand:

COMEX copper $3.6735/lb 11:40:00 ET (9/29/10) December contract, most active - April high: $3.68/lb 4/12/2010

Our dear gals in London remain quite bullish on copper outlook given a falling dollar, contracting inventories and a copper deficit now projected for this year and next (125,000 tons 2010; 255,000 tons 2011). Copper is an important proxy for global growth:

Copper Heads for Its Largest Quarterly Climb in a Year on Weakening Dollar (By Anna Stablum, edited by Claudia Carpenter, London Bloomberg, 9/30/10)

There appears to be more downward pressure on LME moly futures with the cash seller falling below $15/lb at $14.70 and the 3-month seller at $14.97. Both are still comfortably within a trading range that has been quite stable for most of 2010. The Colonel's mid-range target is $15.71/lb. The Report will keep an eye on spot prices, there will be a European Moly update tomorrow.

Strongest September Rally Since 1939

The broader markets are now open and the Wall Street Journal reports that this will be the strongest September rally since 1939 for the Dow Jones Industrial Average. We can be proud that Caterpillar (CAT) has been the measure's strongest performer in the third quarter, climbing 33%. CAT is one of the twelve stocks in the Eureka Miner's Grubstake Portfolio. The Grubstake is hitting new highs today too at $1,535,113. If dividends are included, the Report readers have made $536,756.62 since its kickoff on 5/09/2009. That's a return of 53.7%, not too bad buckaroos.

Daily Market Roundup

Enough talk, let's walk the walk:

The Eureka Miner's Index(EMI) is above-par at 258.11, down from yesterday's 260.25 and a long way from the 6/7/10 low of 50.7. Today's number is just below the lower trend level of 258.46 and very comfortably above support at 186.51. The 1-month moving average is 206.34. The new 2010 record high for the EMI is 274.66 set Friday, 9/24/2010. Remember an EMI greater than 100 is good times (or at least better times) for the metals & miners relevant to Eureka County.

Eureka Outlook Dashboard

4-WD is OFF - improving roads in the marketplace; The VIX or "fear index" is below 25; metals & miners are on firm timber with bellwether Freeport-McMoRan (FCX) in the mid-$80s above its 200-day average of $74.48 (our new warning level, 9/03 update); 10-year Treasurys are safely below 4% preserving a low-interest rate environment but there is still 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 below 3.00%

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

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

The GREEN light is turned back on for Investor Confidence as investment returns to the equity markets but 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 up $1.34 in early trading at $79.20 (November contract, most active); Gold is up $3.7 to $1314.0 (December contract, most active); Silver is up 0.053 to $22.005 (December contract, most active); Copper is down $0.0080 to $3.6535 (December contract, most active)

Western Molybdenum Oxide is $15.00; European Molybdenum Oxide is $15.05; LME moly 3-month seller's contract is $14.97, LME cash seller is $14.70

Stock Market Morning Update

The DOW is up 60.85 points to 10896.13; the S&P 500 is up 7.24 to 1151.97. Miners are mixed:

Barrick (ABX) $46.46 down 1.06%
Newmont (NEM) $63.85 down 0.08%
US Gold (UXG) $5.13 unchanged
General Moly (Eureka Moly, LLC) (GMO) $3.68 up 1.94%
Thompson Creek (TC) $10.94 up 0.82%
Freeport-McMoRan (FCX) $86.34 up 0.16% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $33.63 up 2.06% - global steel producer
POSCO (PKX) $114.02 up 1.38% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.51% to $1,535,113.00 (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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