Eureka Miner's 2-Year Anniversary; Silver Breaks $38

Þūnresdæg
Morning Miners!

It is 5:49 AM. Have a cup of Thor's Day Thunder. I can hardly be too upset with our favorite Norseman this morning. His heart was in the right place when he tried to bake a cake for the Eureka Miner's second anniversary. Either there was too much yeast in the pan or the thunderbolt was too hot but we have more cake on the walls of the break room than on our table. We'll just have to settle for a hot cup of Thor's famous java, happy anniversary miners!

The Eureka Miner's 2-Year Anniversary

This will be the four hundred and fifty ninth morning market report since we went on the air March 24th 2009. That was 2-weeks after the worst drop in the stock markets that most living folks remember. Copper was a $1.80/lb, gold was $940/oz and T. Boone Pickens had just predicted that oil would see $60/bbl before $40/bbl. The average price for NYMEX crude at that time was $42/bbl. General Moly stock closed at $1.23 and Barrick stood at $32.06. There were grave concerns about global recovery and further crumbling of markets.

That was then, this is now. Copper is up a healthy $4.44+/lb, gold is trading above $1400+/oz and COMEX silver just set a new record at an eye-popping $38.180/oz. Of course, NYMEX oil is a chilling $105+/bbl taking some of the fun out of the party.

In May of 2009, the Report put together a portfolio of 12 stocks that directly or indirectly impact mining in Eureka County, Nevada. The ole Colonel gave the readers one million dollars of play money to invest and today the Eureka Miner's Grubstake Portfolio is worth $1,882,878.82. General Moly is trading today at $5.38 and Barrick is standing tall at $51.78. I'd say we've come a long way together, pardner.

Some fun facts about the Eureka Miner's Market Report

When I started the Report, my intent was to provide Eurekans a summary of how metal and equity markets fare every morning, especially those that influence the mining concerns in our area. Surprisingly, there has been considerable interest in what Eureka is up to beyond our county borders. Here are some fun facts:

The Report has had 4,880 domestic and international visitors.

92 countries and territories have checked out the Eureka Miner. The top five as a percent of total visits are:

United States 88.4%
Canada 2.8%
United Kingdom 2.0%
India 0.9%
Australia 0.8%

Every state and territory in the U.S.A. has dropped by for an occasional read. The top five are:

Nevada 30.4%
California 17.9%
Colorado 7.6%
New York 5.4%
Virginia 3.6%

Over two years the average reader of the report has spent 3 minutes and 35 seconds checking out the latest market news. Our biggest day was 208 readers; lately, the average traffic is about 50 readers per day.

The internet traffic breaks out like this:

Direct traffic 37.9%
Referring sites 37.3%
Search engine 24.9%

The ole Colonel also places an occasional beer bet with the readers on commodity and stock prices. Here's who owes who:

2010 Prediction Accuracy 77.8%
2010 Score: 15 Bets; Colonel 7 beers, Readers 2, Rollovers 6

2009 Prediction Accuracy 71.4%
2009 Score: 14 Bets; Colonel 10 beers, Readers 4, Rollovers 0

This year I predicted we'd see $100/bbl oil, $36/lb silver and $1,570/oz gold before the Fourth of July. We still have to get gold in the bag but there are a lot of market days left before Independence day.

Thank you all for you faithful readership, contributions and support!

I would also like to thank my sweetheart Mariana for taking all the terrific headline photographs for the Report. Mariana Titus has been photographing the folks and environs of Eureka since the mid-1980s.


Daily Oil Watch

On February 1st we identified North Sea Brent crude oil as a good barometer for the developing crisis in the Middle East and North Africa. It is still above $100/bbl with a large but narrowing spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX (see note 1). The Report normally follows the latter but will track both until things settle out in the region.

Here are the key front-month contracts as of this morning:

NYMEX light sweet crude $105.99
ICE North Sea Brent crude $114.68
Spread (ICE- NYMEX) = $8.69 (Yesterday $10.26)

Here are the July contracts* with a narrower spread:

NYMEX light sweet crude $106.61
ICE North Sea Brent crude $114.37
Spread (ICE- NYMEX) = $7.76 (Yesterday $9.10)

*(the most active front-month contracts are now May so we moved from June to July contracts for a 2-month look-ahead).

Although prices are off their crisis highs, we have $100+ Brent and NYMEX in July favoring higher oil prices through the summer. My December prediction that we would see NYMEX $100/bbl oil before the Fourth of July came true on February 23rd.


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 446.76, up from yesterday's 362.77 and above the 1-month moving average of 384.45. The EMI continues to be down from the high set on January 4th and up from the March 15th low of 262.02

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. 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 of 100 is the boundary between good lands and bad lands for the metals & miners.

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 ON - The miners are still in a real rough patch; The VIX or "fear index" is just below 25; bellwether Freeport-McMoRan (FCX) is just above its 50-day and 100-day moving average and above its 200-day average of $44.85 (our new warning level, 03/04 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 RED light is turned on our Fuel Gauge with oil above $100

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, R&R Partners parts ways with Nevada Mining Association, Obama budget includes mining royalty , Mineral commission fights consolidation

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Commodity Market Morning Update

NYMEX/COMEX: Oil is up $0.24 in early trading at $105.99 (May contract, most active); Gold is up $1.0 to $1439.0 (April contract, most active); Silver is up $0.457 to $37.665 (May contract, most active); Copper is down $0.0110 to $4.4175 (May contract, most active)

Western Molybdenum Oxide is $17.00; European Molybdenum Oxide is $16.75; LME moly 3-month seller's contract is $17.01, LME cash seller is $16.81

Stock Market Morning Update

The DOW is up 32.70 points to 12,118.72; the S&P 500 is up 2.19 at 1299.73

Miners are mixed:

Barrick (ABX) $51.78 down 0.48%
Newmont (NEM) $54.75 down 0.15%
US Gold (UXG) $8.59 down 0.23%
General Moly (Eureka Moly, LLC) (GMO) $5.38 down 1.82%
Thompson Creek (TC) $12.69 down 0.31%
Freeport-McMoRan (FCX) $54.26 down 1.13% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $35.61 up 0.37% - global steel producer
POSCO (PKX) $111.20 down 1.11% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.21% at $1,882,878.82 (what's this?).

Cheers,

Colonel Possum

Note 1 - West Texas intermediate (WTI), also known as Texas light sweet, is a type of crude oil used as a benchmark in oil pricing and is the underlying commodity of New York Mercantile Exchange's (NYMEX) oil futures contracts. The price of WTI is often referenced in North American news reports on oil prices, alongside the price of North Sea Brent crude (Wiki).

Headline photograph by Mariana Titus (Eureka December 2005)

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