Cu Breaks $4.30 - Au, Ag, General Moly (GMO) Surge

Morning Miners!

It is 6:09 AM. Grab a cup of joe and let's see what Sweet Ruby T has loaded on her lo-boy trailer. On Pearl Harbor Day she hauled in new records for copper, gold and silver. Looks like today's load has a new high for the red metal and new life for our favorite precious metals...

Copper breaks $4.30 - Gold, Silver Surge

COMEX copper broke the elusive $4.30/lb level in the early morning hours. Asian supply tightness and depreciating global currencies are the reasons sited by Bloomberg's Glenys Sims in Singapore:

Copper Futures Gain to Record on Currency Alternative, Demand (Glenys Sim, Bloomberg News - Singapore, 12/28/2010)

At the time of this article COMEX copper was trading at $4.3075/lb; it went on to peg $4.3200/lb at 9:00:00 ET. COMEX gold surged to $1406.0/lb 30 minutes earlier and silver followed making its morning high of $29.880/oz at the same time as copper. The moves in the precious metals were welcome after lackluster performance since their 12/7 highs.

It is startling that copper has posted 7 new highs in the 14 market days since its Pearl Harbor Day record. Here's where we stand for the big three:

COMEX Gold $1432.5/oz 08:25:00 ET 12/7/2010, February contract most active
COMEX Silver $30.75/oz 08:25:00 ET 12/7/2010, March contract most active
COMEX Copper $4.3200/lb 09:00:00 ET 12/28/2010, March contract most active

General Moly (GMO) & Freeport-McMoRan (FCX) post new 52-week highs

The broader markets are now open and it looks like the miners are following the metal's bounce. General Moly (GMO), which popped 9.3% yesterday, has set a new 52-week high of $6.36/share on the open. Copper giant Freeport-McMoRan (FCX) posted its new 52-week mark at the same time at $119.72/share.

Do the Metals & Miners need a rest?

This Report devised the Eureka Miner's Index (EMI) to give us the market temperature for the sectors that have the greatest impact on mining in Eureka County. Although this morning's market performance is impressive, the EMI is showing some signs of cooling off. On December 7th, the EMI set it's record for the year at 739.1. On December 16th and 27th, the EMI dropped uncomfortably close to its 1-month moving average at 555.2 and 596.5 respectively. This morning's bounce gets us back to 654.8 but more than short throw from our Pearl Harbor high.

Although our benchmark miners are doing well, rising oil prices (NYMEX crude is $91.45/bbl this morning) and interest rates (10-year Treasury is 3.378%) are increasing headwinds for the index. This holiday week is thinly traded so it is also difficult to determine new trends. I'm betting that the Pearl Harbor EMI will remain the record for 2010, everyone needs a rest. Let's break 1,000 in 2010!!

POSCO raises stainless steel prices

South Korean steel producer and 20% owner of the Mt. Hope molybdenum project decided to raise the prices for its stainless steel products. Molybdenum is a key alloy in the manufacture of stainless steel. The ole Colonel remains bullish on the steelmakers for 2011 and this is a bullish another sign:

Stainless steel: 5.5% price hike by South Korea's POSCO (Hyunjoo Jin, Reuters, 28 Dec 2010)

Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Miner's Index(EMI)

This morning the Eureka Miner's Index(EMI) is above-par at 654.78, up from yesterday's 596.47. The 1-month moving average is now 602.93. If we break below this level in the coming days, the recent EMI uptrend may reverse.

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 $0.45 in early trading at $91.45 (February contract, most active); Gold is up $21.3 to $1404.2 (February contract, most active); Silver is up $0.590 to $29.845 (March contract, most active); Copper is up $0.0320 to $4.3120 (March contract, most active)

Western Molybdenum Oxide is $16.00; European Molybdenum Oxide is $16.70; LME moly 3-month seller's contract is $17.24, LME cash seller is $17.01

Stock Market Morning Update

The DOW is down 7.15 points to 11,547.88; the S&P 500 is up 0.21 to 1257.75. Miners are up:

Barrick (ABX) $52.18 up 1.13%
Newmont (NEM) $60.79 up 1.16%
US Gold (UXG) $7.40 up 1.47%
General Moly (Eureka Moly, LLC) (GMO) $6.24 up 5.76%
Thompson Creek (TC) $13.52 up 2.27%
Freeport-McMoRan (FCX) $118.68 up 0.06% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $37.24 down 0.35% - global steel producer
POSCO (PKX) $106.75 up 0.24% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 1.45% at $1,893,152.18 (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 photograph by Mariana Titus