"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, December 23, 2010

The Colonel Wishes You a Merry Christmas!

Morning Miners!

It is 5:59 AM. Have a cup from our last pot of Scott Raine's delicious Jingle Bell Java. Here's a toast from the break room - Sweet Ruby T, Old Miner Woden, our favorite Norseman Thor and the ole Colonel wish you and your family a very Merry Christmas. Let's rattle a few gifts for the metals & miners...

LME Molybdenum Futures Pop

It looks like Santa arrived early for our Miss Moly in London. The London Metal Exchange (LME) 3-month and 15-month seller contracts broke $17/lb yesterday re-establishing a nice contango with Western and European Moly Oxide spot prices (see note 1). This has reversed a "flattening trend" between spot and futures pricing suggesting a shift from stability to optimism for moly prices going forward into the new year:

Western Moly Oxide $16.00/lb ($35,274/metric ton)
European Moly Oxide $16.45/lb ($36,266/metric ton)
LME 3-month futures contract $17.01/lb ($38,000/metric ton)
LME 15-month futures contract $17.77/lb ($39,175/metric ton)

These 3-month charts show the shift in trend for futures pricing, first the 3-month contract:

And the 15-month contract:

The latest spot and futures price action suggests healthy near term demand coupled with optimistic expectations for 2011 and beyond - a little holiday cheer amidst volatile days for the other industrial metals.

Gold, Silver & Copper Wobbly

It looks like our other favorite metals may have got into the eggnog a little early. London spot gold & silver took a noticeable drop from recent trading ranges:

London gold bug Lawrence Williams comments on large flows in and out of the world's largest gold Exchange Traded Fund (SPDR Gold Trust GLD, held by the Eureka Miner's Grubstake Portfolio) :

SPDR Gold yoyo - big ups and downs in a week (Lawrence Williams, Mineweb, 12/23/2010)

After setting new highs, copper is getting roughed up today by persistent concerns about diminishing Chinese demand for the red metal. Moscow metals watcher, Maria Kolesnikova, reports this for Bloomberg:

Copper Falls in London Trading on Speculation That China's Demand May Slow (Maria Kolesnikova, Bloomberg News, 12/23/2010, 1:59 AM PT)

We will have to wait and see if all this is just volatility in a thinly traded holiday market or warning signs of things to come. Stay tuned.

Christmas Then & Now

I thought it would be fun to close today with a look at where we were one year ago. We've come a long way pardner. In the early morning trading for both years:

Western Moly $11.62/lb (12/23/2009) $16.00/lb (today) up 37.7%
General Moly (GMO) $1.97 (12/23/2009) $5.54 (today) up 181%

COMEX gold $1,093.0/oz (12/23/2009) $1,376.1/oz (today) up 25.9%
Barrick Gold (ABX) $40.26 (12/23/2009) $51.02 (today) up 26.7%

And the Eureka Miner's Grubstake Portfolio (EMGP) which has twelve stocks that relate directly or indirectly to mining in Eureka County (original investment was $1,000,000 in May 2009):

EMGP $1,269,004 (12/23/2009) $1,848,344 (today) up 45.6%

Looks like more candy than coal in our stockings buckaroos!

Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Miner's Index(EMI)

The Eureka Miner's Index(EMI) is above-par at 705.89, up slightly from yesterday's 704.16. The 1-month moving average is 589.83. The 2010 record high for the EMI is 739.13 set 12/7/2010; the low was set 6/7/2010 at 50.7. An EMI greater than 100 signals better times for the metals & miners relevant to Eureka County, the EMI re-established an upward trend on Friday, 12/3.

200-day averages are used in the EMI to normalize current mining company share price and are updated monthly. Upper and lower trend lines are updated weekly.

Eureka Outlook Dashboard

4-WD is OFF - Markets are stable; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) in the low-$100s above its 200-day average of $79.39 (our new warning level, 12/06 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 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 Watch as the Federal Reserve resumes buying Treasurys (aka QE2)

The GREEN light is turned back on for Investor Confidence as investment returns to the equity markets

The ORANGE light is turned on our Fuel Gauge with oil above $90

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 $0.03 in early trading at $90.53 (February contract, most active); Gold is down $11.3 to $1376.1 (February contract, most active); Silver is down $0.290 to $29.095 (March contract, most active); Copper is down $0.0410 to $4.2340 (March contract, most active)

Western Molybdenum Oxide is $16.00; European Molybdenum Oxide is $16.45; LME moly 3-month seller's contract is $17.23, LME cash seller is $17.01

Stock Market Morning Update

The DOW is up 10.26 points to 11,569.75; the S&P 500 is down 0.60 to 1258.24. Miners are mixed:

Barrick (ABX) $51.02 down 0.38%
Newmont (NEM) $59.42 up 0.19%
US Gold (UXG) $7.38 up 0.54%
General Moly (Eureka Moly, LLC) (GMO) $5.54 unchanged
Thompson Creek (TC) $13.49 up 0.67%
Freeport-McMoRan (FCX) $116.13 down 0.22% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $37.07 down 2.16% - global steel producer
POSCO (PKX) $106.95 up 0.04% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.20% at $1,848,343.65 (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

Note 1 - Contango occurs when the price of a commodity for future delivery is higher than the spot price, or a far future delivery price is higher than a nearer future delivery; backwardation is the opposite of contango.

Headline photograph by Mariana Titus

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