"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.

Wednesday, March 2, 2011

Gold & Silver New Records; General Moly (GMO) Reports



Wōdnesdæg
Morning Miners!

It is 5:59 AM. Have a brimming cup of hump day record breaker. I'll have to chain Old Miner Woden to the hoist in the hi-bay to keep him from returning to his diggings before the snow melts. With gold at $1437/oz he's got the energy of a single jack champion...

Gold & Silver New Records

The United States may have frozen $30 billion worth of assets of Libyan dictator Moammar Gadhafi but if he's buried some gold and silver in the sand dunes, he'll probably do just fine. His recent shenanigans coupled with growing inflation concerns surged the oil markets and sent gold and silver to new records yesterday and this morning. COMEX silver led the charge in the AM pegging $34.875/oz and was followed five minutes later by a new record for gold of $1437.20/oz. Both have fallen back some with gold presently at $1435.3/oz and silver at $34.820/oz. My December predictions for gold and silver are $1570/oz and $36/oz before the Fourth of July, looks like we're on track, pardner.

With all this geo-political drama, COMEX copper has bravely held its ground trading now at $4.4715/lb. NYMEX oil crested $100/bbl again at $100.43/bbl on the most active April futures contract (see below). Amazingly, a barrel of Texas light sweet crude still buys about 22 pounds of the red metal, roughly the same level as last Thanksgiving. Oil (blue) and gold (red) have moved up approximately 25% and 15% in the last three months as shown in this chart:



In dollar terms, gold is regaining its mojo. This is the 3-month chart for gold in U.S. dollars per ounce:


Remember when $1,200/oz gold was a big deal? Or $1,100/oz or breaking the BIG $1,000/oz? I remember getting pretty durn excited when gold broke $575/oz in November 2005. After that it has been up-up and away for our lustrous hero.

Although Fed Chairman Ben Bernanke tried to play down domestic inflation fears yesterday, folks that actually buy fuel and food to survive are forming a different expectation. The craziest item in the morning news was how an upbeat report from payroll giant Automatic Data Processing Inc. (ADP) apparently fanned inflation fears for some investors and was cited by the Wall Street Journal as a another reason for gold's rise. ADP said private-sector jobs in the U.S. rose by 217,000 last month. Economists were expecting the report to show a job gain of just 170,000 in February. Go figure.

Here was the action at the London gold and silver spot markets as the Libyan crisis and economic data spooled out this morning:




Let's close this discussion with an update of the record books for the big three metals together with NYMEX and Brent crude oil:

COMEX Gold $1437.2/oz 08:30:00 ET 03/02/2010, April contract most active
COMEX Silver $34.875/oz 08:25:00 ET 03/02/2010, May contract most active
COMEX Copper $4.6375/lb 06:15:00 ET 02/04/2011, March contract most active
NYMEX WTI Crude $103.41/bbl 02:45:00 ET, 02/24/2011, April contract most active
ICE Brent crude $119.79/bbl 02:45:00 ET 02/24/2011, April contract most active

Platts joins the Eureka Miner


I've added a terrific resource with the latest news and analysis on metals and oil to our morning market report. In the right column you will find the Platts logo and links to their daily articles and reports.

In their words:

"Our goal at Platts is to provide the highest quality, most timely, insightful and relevant news and price assessments possible. We work with all our customers to ensure that we provide the best product solution for their particular needs, and that we deliver it in such a way that it is easy for them to embed into their daily workflow. View Solutions for Oil, Natural Gas, Electric Power, Coal, Shipping, Petrochemicals, and Metals."

Welome aboard!

General Moly(GMO) Reports Fourth Quarter & 2010 Results

General Moly released its fourth quarter and full year report for 2010 early this morning:

GENERAL MOLY ANNOUNCES FOURTH QUARTER AND FULL YEAR 2010 RESULTS (Press release, 03/02/2011, 5:50 AM PT)

I haven't gone through every detail yet but I don't think there are too many surprises if you have been following the frustrating Mt. Hope permitting process. Here is their latest update on that topic:

"The Bureau of Land Management (BLM) and its independent EIS contractor are continuing progress toward finalizing the Mt. Hope project's Draft Environmental Impact Statement (DEIS) for publication. The Preliminary DEIS is anticipated to be released for the second round of Cooperating Agency Review shortly. The Company estimates the BLM will complete the Draft Environmental Impact Statement (DEIS) within the second quarter and that it will be published in the Federal Register in the third quarter. Following publication of the DEIS, full permits are anticipated within 6-9 months." (Press release, 03/02/2011)

The ole Colonel would be lying if he said he won't miss former General Manager Tim Arnold's engineering contributions to these reports. If you have not heard, Tim moved on to cobalt miner Geovic earlier this year. Good luck Tim!

Arnold new COO of Geovic
(Adella Harding, The Elko Daily Free Press, Tuesday, February 1, 2011 4:10 pm)

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. The most active front month contract 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 (see note 1). The Report normally follows the latter but will track both until things settle out in this volatile region.

Here are the most active front month contracts as of this morning:

NYMEX light sweet crude $100.43
ICE North Sea Brent crude $115.53
Spread (ICE- NYMEX) = $15.10 (yesterday $15.32)

Here are the June contracts with a narrower spread:

NYMEX light sweet crude $102.70
ICE North Sea Brent crude $115.21
Spread (ICE- NYMEX) = $12.51 (yesterday $12.46)

Although prices are off their crisis highs, we still have $100+ Brent and NYMEX in June favoring higher oil prices for the summer. The Colonel's Dcember prediction that we will 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 486.13 down from yesterday's 532.89 and below the 1-month moving average of 548.01. The EMI continues to be down from the high set on January 4th and a trend reversal in the short term may again be in the works.

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.

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 rough patch but conditions are improving; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) remains trapped between its 100-day and 150-day moving averages but still above its 200-day average of $43.06 (our new warning level, 02/02 update after the FCX 2:1 stock split); 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 $0.80 in early trading at $100.43 (April contract, most active); Gold is up $4.1 to $1435.3 (April contract, most active); Silver is up $0.393 to $34.820 (May contract, most active); Copper is down $0.0500 to $4.4715(March contract, most active)

Western Molybdenum Oxide is $17.00; European Molybdenum Oxide is $17.75; LME moly 3-month seller's contract is $16.32, LME cash seller is $16.10

Stock Market Morning Update

The DOW is up 47.45 points to 12,105.62; the S&P 500 is up 6.57 at 1312.90. Miners are mixed:

Barrick (ABX) $53.71 down 0.11%
Newmont (NEM) $55.24 down 1.52%
US Gold (UXG) $8.01 up 0.63%
General Moly (Eureka Moly, LLC) (GMO) $5.18 up 0.97%
Thompson Creek (TC) $13.32 up 2.30%
Freeport-McMoRan (FCX) $52.20 up 1.12% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $36.44 up 1.33% - global steel producer
POSCO (PKX) $103.50 up 1.82% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.58% at $1,815,486.50 (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

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

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