"The history of Eureka lies in its future." - Lambert Molinelli, 1878

DISCLOSURE

The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO), McEwen Ming (MUX) 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.

Friday, December 30, 2011

The Colonel's 2012 Predictions for Gold & Silver

Scott Raine of Raine's Market

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,569.1/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.16 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,422.7/oz
COMEX - VAGP = $146.2/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down



Morning Miners!

It is 6:29 AM. Have a last cup of Raine's 2011 Red Label. Scott Raine bought over a whole new batch of 2012 brew last night. We'll be up and at'em for the New Year...

The Colonel's 2012 Predictions for Gold & Silver

2012 may prove to be an "outside" year for gold prices exceeding both the highs and lows of 2011. This would see gold near or above the $2,000/oz level on the high side and at the low-$1,300/oz level on the low side. I plan to write a Kitco News commentary on why next month but here are some possible drivers:

1) A conflict in the Persian Gulf could very well cause a sharp spike in oil prices. $150/bbl oil and $2,000/oz gold are compatible if the yellow metal recovers some of its safe-haven status and applying the 13 bbl/oz gold-to-oil ratio experienced during the 2011 Arab Spring (early April).

2) Continued downward revisions of global growth due to worsening problems in Europe and China could result in a disinflationary environment (i.e. decreasing inflation rate). For this case, base and precious metal price could fall further pushing gold into $1,300/oz territory and copper below $3.00/lb.

3) Quantitative easing in Europe and possibly the U.S. (in response to item 2 if disinflation becomes deflation) could boost both gold and base metals resulting in price performance somewhere between the extremes of (1) and (2).

Debbie Carlson, Kitco Global News Editor, agrees that 2012 may be "..a very volatile market next year, especially in 1H. I think there are some good opportunities to buy gold cheaper in Q1." There is good logic to this with respect to Europe as we enter the third year of their sovereign debt crisis. Unless the details of a solid plan are worked out soon, it is doubtful that credit markets will wait for many more shoes to drop from dithering political leaders and an intransigent ECB. Uncertainty creates volatility.

The Persian Gulf has become a tinder box given recent tensions with Iran - now that our troops have departed Iraq, with their ally Syria on the brink of collapse and an atomic program inching ever closer to weapon capability. Recent Iranian naval exercises have had a lot to do with $100/bbl oil prices lately although the US Seventh Fleet remains a stabilizing factor in the region.

My 2012 prediction for silver is somewhat more muted. I don't believe we'll test the highs of 2011 and my latest calculations suggest a pretty solid price floor around $22.50/oz. On the high side, silver should be able to crest $34/oz and possibly return to $40/oz territory; $50+/oz silver seems much less likely for 2012.

The long term fundamentals for gold and silver are intact.

The Colonel's input to the Weekly Kitco Gold Survey

Below is my weekly input to the Kitco gold survey. Gold and silver appear to headed for reversals on this last market day of the year (i.e higher highs, higher lows and higher close). If this is indeed the case, a relief rally extending into next week is likely.

Q. Where do you see gold’s price headed next week, up, down or unchanged?

A. Up.

Q. Why?

A. Relief rally on the New Year.

May you and your family have a happy and safe New Year and thank you for following the Eureka Miner!

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $45.70 up 1.17%
Newmont (NEM) $60.62 up 0.43%
US Gold (UXG) $3.45 up 4.23%
General Moly (Eureka Moly, LLC) (GMO) $3.00 unchanged
Thompson Creek (TC) $6.89 up 0.44%
Freeport-McMoRan (FCX) $36.91 up 1.01% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.83 down 0.07%
Timberline Resources (TLR) $0.55 down 1.79%

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

ArcelorMittal (MT) $18.20 up 0.44% - global steel producer
POSCO (PKX) $81.80 up 0.04% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 77.61, up from last report's 68.79 and below the 1-month moving average of 80.99. The new record low for 2010-2011 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $28.2/oz at $1,569.1/oz (February contract, most active)

COMEX silver is up $0.745/oz at $28.060/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 55.919 oz/oz

Silver 1-month CRS© is 2.42%; bullish level, diminishing stability (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.16, up from last report's 91.92 and below its 1-month average of 94.92. The new record high for 2010-2011 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,422.7/oz which is $146.2/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0560/lb at $3.4260/lb (March contract, most active)
458.00 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.42%; bullish level, divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.35
As of December 26, 2011
(updated weekly)

Ryan's Notes Average:
US$13.40
As of December 27, 2011
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.55/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.61/lb (US$30,000/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl with a narrowing spread with the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $99.06
ICE North Sea Brent crude $107.12
Spread (ICE- NYMEX) = $8.06 (last report, $8.04)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $99.37
ICE North Sea Brent crude $106.32
Spread (ICE- NYMEX) = $6.95 (last report, $7.05)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.56%; neutral level; stalled convergence (Oil neutral)

Prices are off their crisis highs and we have $105+ Brent and $95+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 105.1 down from last report's 107.5. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 5.91 points to 12,281.13; the S&P 500 is down 0.11 points at 1262.91

The Eureka Miner's Grubstake Portfolio is up 0.81% at $1,343,523.31 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Thursday, December 29, 2011

Gold & Silver Down Again; The Colonel Puts Up


NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,533.8/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.92 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,394.2.0/oz
COMEX - VAGP = $139.6/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down



Þūnresdæg
Morning Miners!

It is 5:54 AM. Have a cup of our favorite Norseman's Thorsday Thunder. With no storms in sight, Thor has been getting all his thrills watching the poor ole Colonel worrying about Italian debt auctions...

Gold & Silver Down Again; The Colonel Puts Up

A less than stellar Italian debt auction gave the markets another wiggle this morning. In the wee hours COMEX gold plumbed $1,523.9/oz and COMEX silver followed 5 minutes later to hit a low of $26.145/oz. Both have since recovered trading now at $1,533.8/oz and $26.560/oz respectively. The euro dropped below $1.29, touching an 11-month low against the dollar and 10-year low against the yen.

This report has been tracking silver's descent most of this short week - it was time to put up or shut up so the Colonel took a nibble at the fallen white metal as the broader markets opened. An easy way to buy silver is through the iShare Silver Trust exchange traded fund SLV. It tracks silver futures fairly accurately and was near the 52-week low of $25.65 when I pulled the trigger at $25.84. Considering the 52-week high was $48.35 (present price down more than 45%), this is probably a reasonable entry point although there could very well be additional downside. Please don't take this as investment advice - it may turn out to be a bad bet, at least in the short run. I remain long-term bullish on silver and tomorrow will reveal my 2012 predictions for Nevada's historic metal and its faithful companion gold.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $44.21 down 0.07%
Newmont (NEM) $58.94 down 0.81%
US Gold (UXG) $3.11 up 0.32%
General Moly (Eureka Moly, LLC) (GMO) $3.00 down 1.32%
Thompson Creek (TC) $6.83 up 0.15%
Freeport-McMoRan (FCX) $36.26 down 0.14% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.76 up 0.13%
Timberline Resources (TLR) $0.56 down 3.45%

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

ArcelorMittal (MT) $17.81 up 1.19% - global steel producer
POSCO (PKX) $81.61 down 0.28% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 68.79, down from last report's 70.78 and below the 1-month moving average of 80.08. The new record low for 2010-2011 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $30.3/oz at $1,533.8/oz (February contract, most active)

COMEX silver is down $0.674/oz at $26.560/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 57.748 oz/oz

Silver 1-month CRS© is 2.36%; bullish level, very stable (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.92, down from last report's 92.97 and below its 1-month average of 95.21. The new record high for 2010-2011 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,394.2/oz which is $139.6/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0055/lb at $3.3710/lb (March contract, most active)

The gold-to-copper ratio (Au:Cu) is 455.00 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.48%; bullish level, stalled convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.35
As of December 26, 2011
(updated weekly)

Ryan's Notes Average:
US$13.40
As of December 27, 2011
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.55/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.61/lb (US$30,000/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl with a narrowing spread with the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $99.49
ICE North Sea Brent crude $107.53
Spread (ICE- NYMEX) = $8.04 (last report, $7.85)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $99.81
ICE North Sea Brent crude $106.86
Spread (ICE- NYMEX) = $7.05 (last report, $6.43)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 2.97%; bullish level; divergent (Oil bearish)

Prices are off their crisis highs and we have $105+ Brent and $95+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 107.5 down from last report's 111.5. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011.

Stock Market Morning Update

The DOW is up 73.68 points to 12,225.09; the S&P 500 is up 6.93 points at 1256.57

The Eureka Miner's Grubstake Portfolio is down 0.35% at $1,310,106.81 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Wednesday, December 28, 2011

Gold Drops; More Thoughts on Silver

Eureka December 2011

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,573.3/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.97 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1414.0/oz
COMEX - VAGP = $159.3/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down



Wōdnesdæg
Morning Miners!

It is 7:51 AM. Let the Colonel pour you a cup of Hump Day on a Short Week. This week feels even shorter. Old Miner should be in fine spirits today with the markets in a slump, lots of opportunity for one of his "I told you so." But he's grumpy as heck to see gold stumble with everything else...

Gold Drops; More Thoughts on Silver

Same-o, Same-o. Investors are skittish ahead of an Italian auction of longer-term government debt tomorrow. 18 of 19 global markets are in the red this morning - the euro has dropped below 1.30; 10-year US Treasuries are again below 2% and 30-years underneath 3%. Nuts.

COMEX gold is down a full $22.2/oz at $1,573.3/oz and more alarmingly COMEX silver dropped a buck-twenty-five to $27.490/oz. The only hero of the day in my world is a US dollar bounce which is adding pressure to the metals and miners in a clearly "risk-off" day.

Yesterday we talked a little bit about silver and I said, "...silver is starting to look interesting to the ole Colonel at present or lower prices." Yesterday morning COMEX silver was $29/oz, today we're looking at $27.5/oz.

Even more surprising today is a pop in the closely watched gold-to-silver ratio. Today it is 57.2; yesterday, 55.0 - a 4% move up. The ratio has been in an upward trend (silver bearish) since early November. Anything above 59 is a little scary and we're getting close to that threshold.

I haven't pulled the trigger on a silver purchase yet but it is now even more exciting to watch. I said yesterday that $23.50/oz was a reasonable floor for prices and $26.18/oz is our next level of support (set 9/26/2011). If gold drops below $1,562.50 (set 12/15/2011) there may be a lot more downside for both precious metals.

Please do your own thinking on this one but we're falling into some tempting territory for a nibble at the white metal.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $44.51 down 2.18%
Newmont (NEM) $60.43 down 1.53%
US Gold (UXG) $3.04 down 3.80%
General Moly (Eureka Moly, LLC) (GMO) $3.08 down 3.14%
Thompson Creek (TC) $6.75 down 1.03%
Freeport-McMoRan (FCX) $37.23 down 1.64% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.78 up 0.47%
Timberline Resources (TLR) $0.59 down 3.28%

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

ArcelorMittal (MT) $17.76 down 3.58% - global steel producer
POSCO (PKX) $82.15 down 1.69% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 70.78, down from last report's 84.68 and below the 1-month moving average of 79.47. The new record low for 2010-2011 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $22.2/oz at $1,573.3/oz (February contract, most active)

COMEX silver is down $1.250/oz at $27.490/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 57.232 oz/oz

Silver 1-month CRS© is 1.93%; bullish level, very stable (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.97, up from last report's 92.53 and below its 1-month average of 95.50. The new record high for 2010-2011 is 109.97 set on Oct. 4, 2011.
The Value Adjusted Gold Price© (VAGP) is $1,443.7/oz which is $155.1/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0180/lb at $3.3910/lb (March contract, most active)

The gold-to-copper ratio (Au:Cu) is 463.96 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.46%; bullish level, converging stability (Cu bullish)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.35
As of December 26, 2011
(updated weekly)

Ryan's Notes Average:
US$13.40
As of December 23, 2011
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.55/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.61/lb (US$30,000/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the ongoing crises in the Middle East and North Africa (MENA). It remains above $100/bbl with a narrowing spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $100.17
ICE North Sea Brent crude $108.35
Spread (ICE- NYMEX) = $8.18(last report, $7.85)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $100.40
ICE North Sea Brent crude $107.26
Spread (ICE- NYMEX) = $6.86 (last report, $6.43)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 2.97%; bullish level; divergent (Oil bearish)

Prices are off their crisis highs and we have $105+ Brent and $100+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 111.5 up from last report's 109.3. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011.

Stock Market Morning Update

The DOW is down 85.56 points to 12,205.79; the S&P 500 is down 10.24 points at 1255.19

The Eureka Miner's Grubstake Portfolio is down 2.61% at $1,325,521.65 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Tuesday, December 27, 2011

Is Silver Still a Good Investment?

Christmas BBQ Eureka 2011

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,598.8/oz (December contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.53 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,443.7/oz
COMEX - VAGP = $155.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down



Morning Miners!

It is 7:24 AM. Have a cup of delicious 2011 Red Label, we're nearly at the bottom of the can. No worry, Scott Raine will surprise the break room with a fresh batch of 2012 soon. The ole Colonel trusts you had a peaceful Christmas break, it sure feels like spring in Eureka (except there would be more snow!).

Is Silver Still a Good Investment?

A good friend of this report asked me if I thought silver was still a good investment. If you are willing to sit through a lot of wild price swings, my answer is simply, "Yes!" Silver, like its companion gold, has good long term precious metal fundamentals. Silver also has a bright future as new uses in hi-tech applications will only increase its industrial demand - high-density batteries come to mind in our evermore electrified world.

That said, 2011 was a tumultuous year for silver as COMEX silver touched $49.880/oz on April, 25 followed by a bruising crash to the mid-$30/oz range. This morning, COMEX silver is trading at $29.060/oz. That might be enough to discourage any interest in the white metal unless you remember $9/oz prices during the 2008-2009 financial crisis - from that perspective $29/oz silver still looks good to me if you were fortunate enough to be a buyer then.

Presently, asking where silver is headed next is akin to asking where gold will go. I wrote for the International Business Times earlier this month about this precious metal reunion, Gold and Silver “Together Again” 12/5/2011. The commentary concluded borrowing a line from that old Ray Charles classic tune:

Positive correlation of gold not only with silver but other key commodities, silver’s high-beta, and a declining trend in the gold-to-silver ratio are bullish signs for a year end rally if prevailing market pessimism proves overdone. $36/oz silver could ride quite comfortably in the saddle with $1,800/oz gold for a sunset ride. Alternately, tomorrow’s dire headline might send them both packing to a cheap hotel. In either case our lustrous hero will no doubt sing to his white metal companion, “…nothing else matters baby, we’re together again.”

The Colonel is probably wrong about the year end rally since both have indeed checked into a cheap hotel. Although it didn't take a dire headline to get there, gold and silver have shared a fairly dramatic price consolidation. I'm not discouraged and will reveal my gold and silver price predictions for 2012 later this week. The present gold-to-silver ratio is 55 and demonstrates remarkable stability (less than 1.5% variation over the last month; less than 2.6% over 3-months). Even if gold heads for low-$1300/oz territory and stability persists, silver price should stay above $23.5/oz. If we reach the mercurial $2,000/oz level for gold in 2012, silver should easily return to the $35-$40/oz range. In that context, silver is starting to look interesting to the ole Colonel at present or lower prices.

Please do your own research, I could be dead wrong - but probably not dead wrong for the long run.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $45.82 down 0.43%
Newmont (NEM) $61.87 down 0.02%
US Gold (UXG) $3.24 down 0.92%
General Moly (Eureka Moly, LLC) (GMO) $3.24 down 1.82%
Thompson Creek (TC) $6.93 down 1.56%
Freeport-McMoRan (FCX) $38.02 down 0.78% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.75 down 0.53%
Timberline Resources (TLR) $0.61 up 7.02%

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

ArcelorMittal (MT) $18.50 up 0.82% - global steel producer
POSCO (PKX) $84.26 down 1.07% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 84.68, down from last report's 93.13 and above the 1-month moving average of 78.19. The new record low for 2010-2011 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $7.2/oz at $1,598.8/oz (February contract, most active)

COMEX silver is down $0.024/oz at $29.060/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 55.017 oz/oz

Silver 1-month CRS© is 1.47%; bullish level, very stable (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.53, down from last report's 92.78 and below its 1-month average of 95.77. The new record high for 2010-2011 is 109.97 set on Oct. 4, 2011.
The Value Adjusted Gold Price© (VAGP) is $1,443.7/oz which is $155.1/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0345/lb at $3.430/lb (March contract, most active)

The gold-to-copper ratio (Au:Cu) is 465.44 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.61%; bullish level, converging stability (Cu bullish)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.35
As of December 26, 2011
(updated weekly)

Ryan's Notes Average:
US$13.40
As of December 23, 2011
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.55/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.61/lb (US$30,000/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the ongoing crises in the Middle East and North Africa (MENA). It remains above $100/bbl with a narrowing spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $100.46
ICE North Sea Brent crude $108.31
Spread (ICE- NYMEX) = $7.85(last report, $8.59)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $100.85
ICE North Sea Brent crude $107.28
Spread (ICE- NYMEX) = $6.43 (last report, $7.03)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 2.60%; bullish level; stalled convergence (Oil neutral)

Prices are off their crisis highs and we have $105+ Brent and $100+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 109.3 down from last report's 104.0. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011.

Stock Market Morning Update

The DOW is up 22.93 points to 12,316.93; the S&P 500 is up 3.31 points at 1268.64

The Eureka Miner's Grubstake Portfolio is down 0.41% at $1,368,324.71 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Thursday, December 22, 2011

Winter Solstice, Montagu Norman & Gold

Merry Christmas Eureka!

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,605.3/oz (December contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 93.36 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,436.7/oz
COMEX - VAGP = $168.6/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down




Þūnresdæg
Morning Miners!

It is 7:14 AM. Let the ole Colonel pour you a first cup of Winter. Winter Solstice was 5:30 AM Stone Henge time or 9:30 PM last night our time. Our favorite Norseman couldn't be happier. He stacked a pile of rocks in the parking lot that he calls Eureka Stone Henge blocking all access to the break room. Got to love that Thor...

Winter Solstice, Montagu Norman & Gold

Other than minus 1 degree (F) under the eaves, Winter Solstice hasn't brought out any market druids. Things are still pretty quiet ahead of the holidays. COMEX gold is hanging in above $1,600/oz, dropping 8 bucks to $1,605.3/oz; COMEX copper is up $0.0215 at $3.4160/lb - nothing too scary.

The ole Colonel is brushing up his 2012 gold, silver & copper predictions for next week - there will be some surprises and it has a lot to do with Europe, the Persian Gulf and of course China and India. All the same actors will be back next year for more thrills and chills.

To give the global economic outlook some perspective, I highly recommend an article in the Dec. 10-16 Economist. Their "Briefing Lessons of the 1930s - There could be trouble ahead" (printed version, pp. 76-78) is a terrific overview of what may lay ahead - a balanced analysis with plenty of hope (for optimists like me) and despair (for the less optimistic readers). Of particular interest is Montagu Norman, then governor of the Bank of England and possibly the great-grandfather of today's European Financial Stability Facility (EFSF). In the 1930s, his leveraged concept to save Europe from what would become Great Depression never got off the ground. Montagu's idea was to create an international lender with a fund capitalized with $250m to be leveraged up to $750m (3-to-1 leverage). This lender of last resort could provide money to governments and banks in need of capital. Sound familiar?

Today's EFSF starts with 440 billion euros to be leveraged up to 2 trillion euros (4.5-to-1 leverage). Montagu's scheme failed because France and America, owners of gold needed for leveraging, didn't like the concept. Gold no longer backs the US dollar or other fiat currencies like the euro so it won't get in the way this time. It is still a mystery, however, how the EFSF will create that much moola out of thin air. Let's forget historical booger bears until 2012, here's where the markets stand on this first day of winter...

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $45.81 down 1.02%
Newmont (NEM) $60.87 down 3.20%
US Gold (UXG) $3.17 down 0.31%
General Moly (Eureka Moly, LLC) (GMO) $3.32 down 0.60%
Thompson Creek (TC) $6.88 down 1.29%
Freeport-McMoRan (FCX) $37.70 down 0.13% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.83 down 0.07%
Timberline Resources (TLR) $0.63 up 3.28%

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

ArcelorMittal (MT) $18.20 up 1.11% - global steel producer
POSCO (PKX) $84.27 up 0.45% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 87.84, up from last report's 86.51 and above the 1-month moving average of 74.67. The new record low for 2010-2011 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $8.3/oz at $1,605.3/oz (February contract, most active)

COMEX silver is down $0.154/oz at $29.095/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 55.174 oz/oz

Silver 1-month CRS© is 1.36%; bullish level, very stable (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI)

The Value Adjusted Gold Price© (VAGP) is $1,436.7/oz which is $168.6/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0215/lb at $3.4160/lb (March contract, most active)

The gold-to-copper ratio (Au:Cu) is 469.94 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.68%; bullish level, converging stability (Cu bullish)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.35
As of December 19, 2011
(updated weekly)

Ryan's Notes Average:
US$13.40
As of December 20, 2011
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.45/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.61/lb (US$30,000/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the ongoing crises in the Middle East and North Africa (MENA). It remains above $100/bbl with a narroeing spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $99.60
ICE North Sea Brent crude $108.19
Spread (ICE- NYMEX) = $8.59(last report, $9.12)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $99.92
ICE North Sea Brent crude $106.95
Spread (ICE- NYMEX) = $7.03 (last report, $7.78)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 2.05%; bullish level; stalled convergence (Oil neutral)

Prices are off their crisis highs and we have $105+ Brent and $95+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 102.4 down from last report's 110.8. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011.

Stock Market Morning Update

The DOW is up 42.88 points to 12,150.62; the S&P 500 is up 6.74 points at 1250.46

The Eureka Miner's Grubstake Portfolio is down 0.64% at $1,366,470.60 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Wednesday, December 21, 2011

Quiet Markets; Gold & Copper Resilient, Silver Weak

Opera House Reflection

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,610.5/oz (December contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 94.57 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,423.0/oz
COMEX - VAGP = $187.5/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down



Wōdnesdæg
Morning Miners!

It is 7:29 AM. Have a cheerful cup of Rudolf Red. Even Old Miner Woden is in a good mood this morning. He's putting some miner's lamps on the break room Christmas tree and whistling Frosty the Snowman. Doesn't look like much to make a snowman this season but remember to put on your long johns tonight -  It's heading back down to 6 degrees...Brrrrrr.

Quiet Markets; Gold & Copper Resilient, Silver Weak

The markets are thinning out for the holidays and there's nothing too exciting going on. The U.S.dollar, gold and the euro did a little dance in the early hours on the announcement of the long term refinancing operation (LTRO) by the European Central Bank. Whether the LTRO can be viewed as the ECB's equivalent of QE (quantitative easing) is a subject of debate and probably caused the price wiggles in the big three this morning. True euro-QE would be euro bearish and presumably U.S. dollar & gold bullish. Currently COMEX gold has lost 7 bucks but is still hanging in above $1,600/oz trading at $1,610.5. Don't expect to see European pressure on our markets to go away anytime too soon. The red metal is at least showing some resilience up $0.0025/lb at $3.3720/lb on the COMEX.

Silver on the other hand has been weakening with respect to gold lately. There was a time that the ole Colonel said he would buy silver below $30/lb but now I'm not so sure. COMEX silver is down $0.176 at $29.360/oz.

A good gauge of weakness and strength is the gold-to-silver ratio (Au:Ag) that is included everyday in the Gold and Silver Report below. Kitco's Debbie Carlson reports Commerzbank on the subject this morning:

Market Nuggets: Gold-Silver Ratio Rises Back Over 55:1 – Commerzbank(Kitco Market Nugget, 21 December 2011, 8:34 a.m.)

This morning Au:Ag is just under 55 at 54.76. This report gets nervous about silver when the ratio exceeds 59 so we're not scary yet the ratio is trending up (silver bearish). Something to watch.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $46.65 up 1.22%
Newmont (NEM) $62.96 up 0.56%
US Gold (UXG) $3.23 down 0.31%
General Moly (Eureka Moly, LLC) (GMO) $3.30 up 1.23%
Thompson Creek (TC) $6.98 up 1.01%
Freeport-McMoRan (FCX) $37.65 up 0.19% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.66 up 0.07%
Timberline Resources (TLR) $0.63 up 1.61%

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

ArcelorMittal (MT) $18.05 down 0.28% - global steel producer
POSCO (PKX) $83.77 down 0.25% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 86.51, up from last report's 80.09 and above the 1-month moving average of 72.76. The new record low for 2010-2011 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $7.1/oz at $1,610.5/oz (February contract, most active)

COMEX silver is down $0.176/oz at $29.360/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.760 oz/oz

Silver 1-month CRS© is 1.30%; bullish level, very stable (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 94.57, down from last report's 95.18 and below its 1-month average of 96.64. The new record high for 2010-2011 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,423.0/oz which is $187.5/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0025/lb at $3.3720/lb (March contract, most active)

The gold-to-copper ratio (Au:Cu) is 477.61 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-monthCRS© is 2.72%; bullish level, converging stability (Cu bullish)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.35
As of December 19, 2011
(updated weekly)

Ryan's Notes Average:
US$13.40
As of December 20, 2011
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.40/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.61/lb (US$30,000/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the ongoing crises in the Middle East and North Africa (MENA). It remains above $100/bbl with a narroeing spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $97.60
ICE North Sea Brent crude $106.72
Spread (ICE- NYMEX) = $9.12(last report, $9.94)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $97.14
ICE North Sea Brent crude $105.5
Spread (ICE- NYMEX) = $7.78 (last report, $8.91)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 1.78%; bullish level; stalled convergence (Oil neutral)

Prices are off their crisis highs and we have $100+ Brent and $95+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 110.8 down from last report's 114.8. A level above 200 is time for serious concern. We are now below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011.

Stock Market Morning Update

The DOW is down 37.31 points to 12,066.27; the S&P 500 is down 4.86 points at 1236.44

The Eureka Miner's Grubstake Portfolio is up 0.21% at $1,375,289.00 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Tuesday, December 20, 2011

Ruby T Brings the Miners Christmas Presents


NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,615.4/oz (December contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 95.18 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,418.2/oz
COMEX - VAGP = $197.2/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down



Morning Miners!

It is 7:23 AM. Have a hot cup of Merry. Bless her soul, Ruby T rolled in early with a lo-boy trailer filled with Christmas presents for the miners. Even Old Miner Woden is happy with a bounce in his favorite metal...

Ruby T Brings the Miners Christmas Presents

It seems the markets just wanted to have one good day before the holidays. Today Europe is not imploding, dictators aren't dying, Iran hasn't tested an atomic bomb and China is still in the market for raw commodities. Yee-ha!

Have a good'un. Looks like a Christmas rally, at least for awhile.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $46.32 up 3.86%
Newmont (NEM) $62.76 up 2.82%
US Gold (UXG) $3.23 up 8.03%
General Moly (Eureka Moly, LLC) (GMO) $3.28 up 7.19%
Thompson Creek (TC) $6.81 up 1.95%
Freeport-McMoRan (FCX) $37.41 up 4.67% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.65 down 0.99%
Timberline Resources (TLR) $0.63 unchanged
The Steels  (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $17.97 up 6.65% - global steel producer
POSCO (PKX) $84.43 up 5.66% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 80.09, up from last report's 69.31 and above the 1-month moving average of 71.39. The new record low for 2010-2011 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $18.7/oz at $1,615.4/oz (February contract, most active)

COMEX silver is up $536/oz at $29.410/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.927 oz/oz

Silver 1-month CRS© is 1.25%; bullish level, very stable (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 95.18, down from last report's 96.02 and below its 1-month average of 96.83. The new record high for 2010-2011 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,418.2/oz which is $197.2/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0600/lb at $3.3685/lb (March contract, most active)

The gold-to-copper ratio (Au:Cu) is 479.56 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-monthCRS© is 2.71%; bullish level, converging stability (Cu bullish)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.35
As of December 19, 2011
(updated weekly)

Ryan's Notes Average:
US$13.40
As of December 16, 2011
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.45/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.61/lb (US$30,000/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the ongoing crises in the Middle East and North Africa (MENA). It remains above $100/bbl with a large spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $96.75
ICE North Sea Brent crude $106.62
Spread (ICE- NYMEX) = $9.87 (last report, $9.94)

Here are the March contracts* with a narrower spread:

NYMEX light sweet crude $97.14
ICE North Sea Brent crude $105.5
Spread (ICE- NYMEX) = $8.36 (last report, $8.91)

* NYMEX futures contracts have rolled forward, we now show January and March for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 1.68%; bullish level, converging stability (Oil bullish)

Prices are off their crisis highs and we have $100+ Brent and $95+ NYMEX in March favoring high oil prices throughout the winter and into spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 114.8 down from last report's 121.3. A level above 200 is time for serious concern. We are now below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011.

Stock Market Morning Update

The DOW is up 277.19 points to 12,043.45; the S&P 500 is up 31.66 points at 1237.01

The Eureka Miner's Grubstake Portfolio is up 3.61% at $1,370,526.13 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Monday, December 19, 2011

Kim Jong Il Dies: Au Up, POSCO & Ag Down; General Moly Updates

Eureka Bound

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,600.9/oz (December contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 96.02 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,393.1/oz
COMEX - VAGP = $207.8/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down


Morning Miners!

It is 6:34 AM. Have a Monday cup of Happy to be back. The Colonel is off the road and enjoying a beautiful Diamond Valley vista in the early hours. Let's checkout what's moving the markets...

Kim Jong Il Dies; Gold Steady, POSCO Down

Just to add one more worry to the markets, North Korean Kim Jong Il died over the weekend. The demise of Dear Leader caused a drop in Asian markets led by falls in South Korean equities and the won. POSCO, South Korean steelmaker and 20% owner of the Mt. Hope molybdenum project, lost over 3% share price in early morning trading and gold prices pushed above the $1,600/oz level. Neither move was dramatic as many anticipate that China will provide a firm and stabilizing influence if things get out of hand with the planned succession of Kim's son Kim Jong-un.

Nonetheless, gold needed a little boost from safe haven traders after a miserable last week (COMEX gold plumbed a $1,562.5/oz low on Thursday, 12/15). Predictably, silver futures weakened this morning relative to gold as the closely watched gold-to-silver ratio rose above 55 oz/oz (an increase in ratio indicates gold strengthening with respect to silver). COMEX gold is presently $1,600.9/oz; COMEX silver is 29.085/oz.

The gold move up may prove to fleeting given the latest bearish trend to the downside. If anything, $1,600/oz is an important psychological level. Stay tuned.

General Moly Updates

The latest on General Moly and Mt. Hope...

General Moly Announces Receipt of Water Permits for Mt. Hope
(Press Release, 12/19/2011)

General Moly just announced that "...as of December 14, 2011, the Nevada State Engineer issued the Company, through a subsidiary, all of its water permits - allowing the Mt. Hope project to utilize approximately 7,000 gallons per minute (gpm) of groundwater for mining purposes. The permits follow the Nevada State Engineer's July 2011 ruling granting the Company's water right applications for the use of 11,300 acre-feet annually (afa) of water for mining purposes."

Aditionally, Mining Editor Adella Harding of the Elko Daily Free Press posted an update on the General Moly EIS schedule Friday:

New comment date on Mt. Hope EIS
(Adella Harding, Elko Daily Free Press, 12/16/2011)

The U.S. Bureau of Land Management's deadline for public comments on General Moly's proposed Mt. Hope Project is March 1, originally reported to be March 7.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $44.58 down 0.78%
Newmont (NEM) $61.73 down 0.72%
US Gold (UXG) $3.00 down 4.15%
General Moly (Eureka Moly, LLC) (GMO) $3.28 up 2.18%
Thompson Creek (TC) $6.71 down 0.30%
Freeport-McMoRan (FCX) $36.46 down 1.43% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.78 up 0.13%
Timberline Resources (TLR) $0.61 down 4.69

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

ArcelorMittal (MT) $17.24 up 0.47% - global steel producer
POSCO (PKX) $81.07 down 3.42% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 69.31, down from last report's 75.13 and above the 1-month moving average of 70.33. The new record low for 2010-2011 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Here is the Eureka Miner's Index© (EMI) through Friday's close (a larger more readable plot is near the bottom of the blog page):


Today's EMI has fallen to just below its 1-month average. Presently the average is moving sideways in a 69-70 range; it need to go back above the 100-level before we can say the miner's have left bear country for safer pasture.

Gold & Silver Report

This morning's...

COMEX gold is up $3.0/oz at $1,600.9/oz (February contract, most active)

COMEX silver is down $0.586/oz at $29.085/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 55.042 oz/oz

Silver 1-month CRS© is 1.20%; bullish level, very stable (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 96.02, down from last report's 95.52 and below its 1-month average of 96.95. The new record high for 2010-2011 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,393.1/oz which is $207.8/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

The Eureka Miner’s Gold Value Index© (GVI) is presently declining. Here is plot of the GVI at Friday's close (also near the bottom of the blog page):


To get the metals & miners back on their feet, we need gold to give up some relative value to copper, oil and silver. Remember, the GVI and EMI typically (but not always) have an inverse relation; as the GVI falls, the EMI rises.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0135/lb at $3.3175/lb (March contract, most active)

The gold-to-copper ratio (Au:Cu) is 482.56 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-monthCRS© is 2.73%; bullish level, converging stability (Cu bullish)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.35
As of December 19, 2011
(updated weekly)

Ryan's Notes Average:
US$13.40
As of December 16, 2011
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.45/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.61/lb (US$30,000/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the ongoing crises in the Middle East and North Africa (MENA). It remains above $100/bbl with a large spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $94.31
ICE North Sea Brent crude $104.25
Spread (ICE- NYMEX) = $9.94 (last report, $9.82)

Here are the March contracts* with a narrower spread:

NYMEX light sweet crude $94.66
ICE North Sea Brent crude $103.57
Spread (ICE- NYMEX) = $8.91 (last report, $8.87)

* NYMEX futures contracts have rolled forward, we now show January and March for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 1.55%; bullish level, converging stability (Oil bullish)

Prices are off their crisis highs and we have $100+ Brent and $90+ NYMEX in March favoring high oil prices throughout the winter and into spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 121.3 up from last report's 118.7. A level above 200 is time for serious concern. We are now below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011.

Stock Market Morning Update

The DOW is up 28.76 points to 12,046.11,895.15; the S&P 500 is up 1.03 points at 1220.69

The Eureka Miner's Grubstake Portfolio is down 0.61% at $1,342,202.79 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market