"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.

Wednesday, May 25, 2011

CNBC Anchor Mark Haines Dies


Morning Miners...

It is 6:06 AM. Have a cup with Old Miner Woden and me. It is a sad day for market watchers, Mark Haines of CNBC Business News has died unexpectedly at age 65...

CNBC Anchor Mark Haines Dies

It was promising to be a great market morning. The sun was shining over Diamond Valley after days of rain, hail and snow. All the base metal spot prices were up 1 to 2% as Goldman Sachs Group Inc. and JPMorgan Chase & Co. backed metal’s prospects amid signs of improving demand. COMEX gold was up and trading at $1,524.5/oz; COMEX silver recovered some of her shine bouncing a buck to $37.190/oz. COMEX silver was flexing at $4.0945 and NYMEX oil dropped a dollar to $98.66/bbl, not cheap but better than the $100 stuff.

Then I heard CNBC Business News reporter had died unexpectedly Tuesday evening. He was 65 years old. The ole Colonel feels like he just lost an old friend.

Veteran journalist Mark Haines was an icon of the early morning market hours; the founding anchor of CNBC's "Squawk Box" and more recently co-anchor of the network's "Squawk on the Street" program. I imagine his face and good humor are familiar to many of you. He used to joke that Mickey Mantle was his last hero - terrific wit, that Haines. Traders at the New York Stock Exchange paused for a moment of silence.

This will be a short report this morning.

CNBC Anchor Mark Haines Dies Unexpectedly at Age 65 (CNBC Business News, 5/25/2011)

Daily Market Roundup

Enough talk, let's walk the walk in memory of Mark Haines:

Eureka Miner's Index(EMI)

This morning the Eureka Miner's Index(EMI) is above-par at 272.89, up from yesterday's 253.16 and below the 1-month moving average of 340.81. The EMI continues to be down from the high set on January 4th and set a new 2011 low of 225.03 on May 23rd. The 1-month average continues a troubling negative trend.

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.

Gold Value Index (GVI)

Our newly minted Gold Value Index (GVI) is below-par at 78.40, down from yesterday's 78.96 and above its 1-month average of 75.98. The gold-gaining-value trend is intact. Today's Value Adjusted Gold Price (VAGP) is $1,624.7/oz.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. Although gold prices have been on the rise, the GVI has been trending down since 6/7/2010 when it had a value of 100. These three commodities were chosen for relative value comparison because 1) oil is a common cost element for all miners, 2) copper has been a reliable proxy for global growth and 3) silver is a precious 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 gold price is below the VAGP, then gold is undervalued; if above, overvalued.

Daily Oil Watch

Latest Nevada Fuel Prices

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 (MENA). It is now above $110/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 the region.

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

NYMEX light sweet crude $98.66
ICE North Sea Brent crude $112.21
Spread (ICE- NYMEX) = $13.55 (Yesterday, $12.85)

Here are the September contracts* with a narrower spread:

NYMEX light sweet crude $99.63
ICE North Sea Brent crude $111.40
Spread (ICE- NYMEX) = $11.77 (Yesterday, $12.08)

* NYMEX futures contracts have rolled forward, we now show July & September for a 2-month look-ahead

Prices are off their crisis highs but we still have $110+ Brent and $90+ NYMEX in September favoring high oil prices throughout the summer. My December prediction that we would see NYMEX $100/bbl oil before the Fourth of July came true on February 23rd.

Eureka Outlook Dashboard

4-WD is ON - The miners are on very rough roads; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) is still below its 200-day moving average of $50.14 (our new warning level, 05/23 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 The Federal Reserve will phase out buying Treasurys (aka QE2) but maintain low interest rates for now

The YELLOW light is turned back on for Investor Confidence as some investors avoid commodity-sensitive equities

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, R&R Partners parts ways with Nevada Mining Association, Obama budget includes mining royalty , Mineral commission fights consolidation, Democrats seek to repeal mining tax from the constitution, Rhoads, Ellison oppose repeal of net proceeds tax, Proposal could change net proceeds tax, 'You get to deduct WHAT???' Nevada lawmakers ask gold miners

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

Commodity Market Morning Update

NYMEX/COMEX: Oil is down $0.93 in early trading at $98.66 (July contract, most active); Gold is up $1.2 to $1524.5 (June contract, most active); Silver is up $1.062 to $37.190 (July contract, most active); Copper is up $0.0815 at $4.0945 (July contract, most active)

Western Molybdenum Oxide is $17.00; European Molybdenum Oxide is $16.65; LME cash seller is $17.10, LME moly 3-month seller's contract is $17.24

Stock Market Morning Update

The DOW is down 10.10 points to 12,345.96; the S&P 500 is down 0.97 at 1,315.31

Miners are up:

Barrick (ABX) $46.87 up 0.13%
Newmont (NEM) $55.65 up 0.80%
US Gold (UXG) $6.89 up 1.32%
General Moly (Eureka Moly, LLC) (GMO) $4.18 up 2.20%
Thompson Creek (TC) $10.47 up 1.16%
Freeport-McMoRan (FCX) $49.46 up 1.31% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $32.32 down 0.06% - global steel producer
POSCO (PKX) $100.16 down 1.78% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.81% at $1,699,002.11 (what's this?).


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 (source: Wikipedia)

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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