"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, January 11, 2011

Horse Apples! UXG, GMO, TC & PKX Giddy-Up

Morning Miners!

It is 5:50 AM. Grab a cup and let's check out what Ruby T's sister in Texas just sent her...horse apples! Ruby is so happy that she is headed for the Commercial Casino to try her luck - it's not everyday you get three horse apples on one-eleven-eleven! Looks like the metals & miners may have a turn of luck today too...

Gold rallies, fades but copper & silver trend up

COMEX gold got a nice $10 bounce in the early hours to $1386.8/oz followed by copper touching $4.3460/lb and then silver finding a peak at $29.71/oz. All three have fallen back since but there seems to be strength in the copper and silver move up. The gold/silver ratio is still a very low 46.8 down slightly from yesterday's 47.3.

The London spot markets for gold & silver show the fade in gold but positive trend up for silver price:

Moscow metals correspondent Maria Kolesnikova reports new players coming to Europe's aid in her morning Bloomberg article:

Copper Gains for First Day in Four as Japan Plans to Buy Euro-Region Bonds (Maria Kolesnikova, Bloomberg News, 01/11/2011, 5:02 AM PT)

The re-emerging European sovereign debt crisis has been a real head wind for the metals & miners so news that Japan is joining China in buying bonds issued by Europe’s financial-aid funds is very welcome. The broader markets are now open and it looks like some of our favorite stocks in the Eureka Miner's Grubstake Portfolio are more than happy to hear this news...

UXG, GMO, TC & PKX Giddy-Up

Our junior miners, General Moly (GMO) and US Gold (UXG), stepped to the front of the class this morning with early morning advances of nearly 5%. Both stocks have been in the doldrums this month following an impressive run up late last year. Benchmark moly producer Thompson Creek (TC) and South Korean steel producer POSCO (PKX) were not far behind with a pop of 3.6% and 2.5% respectively. POSCO is an investor in General Moly and 20% owner of the Mt. Hope molybdenum project.

It remains to be seen if today's rally will be enough to return the metals & miners to busting high-grade - the Eureka Miner's Index(EMI) is up this morning but still below its 1-month moving average. Stay tuned buckaroos.

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 668.30, down from yesterday's 586.12. We are now 5-days below the 1-month moving average of 683.98, a potentially bearish sign. Metals & miners may be in a corrective phase.

The record high for the EMI is 816.78 set 01/04/2011; 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 which is now under pressure.

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 but there could be rough roads ahead; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) in the low-$100s above its 200-day average of $83.07 (our new warning level, 01/05 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 $0.80 in early trading at $90.05 (February contract, most active); Gold is up $8.1 to $1382.2 (February contract, most active); Silver is up $0.694 to $29.555 (March contract, most active); Copper is up $0.0700 to $4.3345 (March contract, most active)

Western Molybdenum Oxide is $16.00; European Molybdenum Oxide is $16.70; LME moly 3-month seller's contract is $17.10, LME cash seller is $16.92

Stock Market Morning Update

The DOW is up 45.29 points to 11,682.74; the S&P 500 is up 4.16 at 1273.91. Miners are looking proud:

Barrick (ABX) $49.60 up 1.21%
Newmont (NEM) $58.07 up 0.55%
US Gold (UXG) $7.59 up 4.83%
General Moly (Eureka Moly, LLC) (GMO) $6.23 up 4.71%
Thompson Creek (TC) $15.03 up 3.58%
Freeport-McMoRan (FCX) $120.20 up 1.04% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $34.87 up 0.98% - global steel producer
POSCO (PKX) $110.41 up 2.51% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 2.28% at $1,904,410.47 (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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