"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.

Tuesday, November 23, 2010

Rockets Away - General Moly (GMO) & U.S. Gold (UXG)

Morning Miners!

It is 6:11 AM. Let the ole Colonel pour you another cup and help yourself to a glazed doughnut. Sweet Ruby Tuesday dropped them by this morning on her haul-back to Elko. Enjoy the sugar rush, we could have a rough-toughie in the markets today...

Rockets Away

Nothing like a little more madness from North Korea to shake up the metals and miners (and steelmakers). Yesterday it was the enriched uranium story and this morning North Korea fired artillery rockets at a South Korean island killing two South Korean marines. Escalating tensions on the peninsula brought the the U.S. dollar to a seven-week high versus the yen early this morning given Japan's proximity to the Koreas. Dollar up, commodities down and our miners fall down the mineshaft. Fortunately, gold rose too providing some relief for the gold diggers but POSCO, South Korean steelmaker and 20% owner of Mt. Hope, dropped 6% at the open of the NYSE. Let's hope this is just a one-day whoopsy-doopsy.

General Moly and U.S. Gold

I'd planned to take a look today at Eureka's two aspiring junior miners today and Kim Jong-il is not going to stop me. Both General Moly (GMO) and U.S. Gold (UXG) have had amazing moves in their share price over the past year. General Moly moves closer to mine construction next year at our Mt.Hope and U.S. Gold has two significant land holdings, one in Nevada next to Barrick’s multi-million ounce Cortez project, and the other in Mexico with a promising silver discovery.

If you need to catch up a bit on General Moly news here is a link to the latest press release and an Elko Daily Free Press article flagged by one of the Report's faithful readers:

General Moly Announces Hanlong's Signing of Memo of Cooperation with EXIM Bank of China (Press Release, 11/18/2010)

General Moly provides update
(Elko Daily Free Press, November 19, 2010)

Below are charts of both miners and their meteoric rise in price over 1-year. The blue line is share price; the green line shows their 200-day moving average:

Here is a comparison of their relative performance over the same time period:

In one year, GMO is up 130% and UXG has moved 100% - sure beats bank CD rates. As the ole Colonel has said in the past, I wouldn't be surprised if U.S. Gold is in the cross hairs of one of our larger miners. The best of luck to both.

Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Miner's Index (EMI)

Rockets flying in Korea has sent the Eureka Miner's Index(EMI) down to it's 1-month moving average. This morning the EMI is above-par at 449.30, down from yesterday's 526.33. The 1-month moving average is 443.25. The 2010 record high for the EMI is 661.28 set 11/9/2010; the low was set 6/7/2010 at 50.7. Remember an EMI greater than 100 signals improving 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 high $90s above its 200-day average of $75.91 (our new warning level, 11/01 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 GREEN light is turned back on for Commodity Reflation with copper trading comfortably above $3.50/lb

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 Treasurys (QE2)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 may flag trouble ahead

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?)

Commodity Market Morning Update

NYMEX/COMEX: Oil is down $0.71 in early trading at $81.03 (January contract, most active); Gold is up $9.1 to $1366.9 (December contract, most active); Silver is up $0.054 to $27.515 (December contract, most active); Copper is down $0.0455 to $3.7060 (December contract, most active)

Western Molybdenum Oxide is $15.75; European Molybdenum Oxide is $16.20; LME moly 3-month seller's contract is $15.88, LME cash seller is $15.71

Stock Market Morning Update

The DOW is down 145.99 points to 11032.59; the S&P 500 is down 16.93 to 1180.91. Miners are in their foxholes:

Barrick (ABX) $50.12 down 0.26%
Newmont (NEM) $60.65 down 0.48%
US Gold (UXG) $5.62 down 1.23%
General Moly (Eureka Moly, LLC) (GMO) $5.60 down 1.75%
Thompson Creek (TC) $12.24 down 2.24%
Freeport-McMoRan (FCX) $99.88 down 2.09% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $32.13 down 3.57% - global steel producer
POSCO (PKX) $95.96 down 5.03% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 1.57% to $1,693,435.12 (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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