"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, December 14, 2010

General Moly (GMO) Water Right Application Update

*** BREAKING NEWS *** COMEX Copper set a new record of $4.2290/lb this morning at 05:30:00 ET

Morning Miners!

It is 6:01 AM. Have a mug of Sweet Ruby T's favorite joe, "the best part of waking up is Folgers in your cup!" Last week she rolled in with a lo-boy trailer full of new records for gold, silver and copper. Today it appears Santa Claus is taking a little profit in all three. London spot and COMEX gold both brushed $1408/oz in the early hours and then fell back to earth below the $1400 level. Silver and copper have lost some shine too [note copper actually reached a new high earlier in the morning, see above]. Might be a good day to clean the shop and do a little catch-up...

General Moly Water Right Application Update

The General Moly water right application hearing wrapped up last week. As you may recall the State Engineer set December 6 as the date for protests to the Company's water right applications to be heard. General Moly spent Monday and Tuesday giving their testimony, there was a break Wednesday and the opposing parties gave theirs Thursday and Friday. Following the hearing, the State Engineer will issue a ruling with respect to these applications. Yesterday, Mt. Hope General Manager Tim Arnold gave this wrap up to the Report:

"We feel that the hearing went very well and we remain confident that we will once again receive our water right applications. From a timing standpoint, we don't anticipate hearing anything for a few months as the State Engineer's office will likely take some time to write up its decision."

A trusted non-company source provided this opinion:

"...they [General Moly] have presented a water monitoring model that the county is much happier with. The County fully expects the mine’s water rights to stay intact and at this point, are trying to gain insurance that the County will have the ability to engage GM in mitigation if impacts emerge in Diamond Valley. I know that the Commissioner’s biggest issue was the mine’s water model and it sounds like they are much more comfortable with what has been proposed."

This Report respects all parties involved and the application process. We will continue to monitor the hearing outcome as new developments occur.

Where do the Markets Go From Here?

The other day Gary Kaminsky of CNBC Business News "The Strategy Session" commented that this Friday (12/17) will wrap up the year for most of the big players in the marketplace. His point was that it is much more difficult to buy and sell large orders as the market volumes thin out near the Christmas and New Years holidays.

Last March, the ole Colonel predicted that the S&P 500 would break 1,251 before Christmas (Still Fearless in 2010? The Colonel's Market Prediction, 3/19/2010). Yesterday, the S&P 500 made it to a new high for the year of 1,246.73 and closed at 1,240.46. If Gary Kaminsky is right, we may only have this week to make my bet good. the broader markets are now open and the S&P is trading at 1,242.00...just 9 points to go. Will the Christmas rally put coal or candy in my stocking?

The S&P 500 moving above the 1,250 level has some significance. Before the so-called "Great Recession", the S&P 500 closing high was set 10/9/2007 at a lofty 1,565.15. Technically we entered a bear market when the index fell 20% from this peak or 1,252. That occurred in September 2008 as the collapse of Lehman Brothers accelerated the financial crisis. The market bottom followed on March 6, 2009 for an intraday low of 666.79. We've come a long way from the bottom of that canyon buckaroos.

The key question is whether we are now at the gate of the bull pasture or headed back to bear country as this year unwinds and 2011 begins. If we can sustain the S&P 500 above 1,252 for any decent period of time, I'd say we have a shot at all that green grass on the other side of the fence. If not? Stay tuned.

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 681.57, down from yesterday's 723.32. The 1-month moving average is 529.44. 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 remain in Christmas rally mode; 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 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 $0.51 in early trading at $88.10 (January contract, most active); Gold is down $2.2 to $1395.8 (February contract, most active); Silver is down $0.254 to $29.370 (March contract, most active); Copper is down $0.0130 to $4.1940 (March contract, most active)

Western Molybdenum Oxide is $15.75; European Molybdenum Oxide is $16.05; LME moly 3-month seller's contract is $15.88, LME cash seller is $15.74

Stock Market Morning Update

The DOW is up 22.74 points to 11451.30; the S&P 500 is up 1.54 to 1242.00. Miners are down:

Barrick (ABX) $53.58 down 0.56%
Newmont (NEM) $61.44 down 0.70%
US Gold (UXG) $7.34 down 1.08%
General Moly (Eureka Moly, LLC) (GMO) $5.43 down 0.37%
Thompson Creek (TC) $13.85 down 1.00%
Freeport-McMoRan (FCX) $115.01 down 0.45% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $36.88 down 1.18% - global steel producer
POSCO (PKX) $104.50 down 0.55% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.53% to $1,846,725.45 (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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