Happy Thanksgiving! Looking Back One Year

November, 2010

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.

Have a good read and welcome back!

This morning's...
COMEX Gold price = $1,693.3/oz (December contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 99.63
Value Adjusted Gold Price© (VAGP) = $1,402.1/oz
COMEX - VAGP = $273.2/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels


Wōdnesdæg
Morning Miners!

It is 6:22 AM. The Colonel caught Old miner Woden trying to brew up some of that horrible Cold Reality coffee this morning. It is safely down the oil sump and there is some Red Label a'brewing. The cranky codger has left for his cave in a huff. Our market bear should be happy with all the downside today if gold wasn't getting whacked too...

Looking Back One Year

It was eery to read last year's day-before-Thanksgiving blog. Here is an excerpt:

The scary bit is continued sovereign-debt contagion fears in Europe which has kept the euro on the slide against the U.S. dollar and Japanese yen. This time Ireland is in the hot seat with troubles brewing in Spain and Portugal. You may remember that the sovereign debt booger bear appeared one year ago with the Dubai crisis followed by Greece well into 2010. Both had a devastating effect on the metals & miners with the Eureka Miner's Index (EMI) hitting a low of 50.7 in early June. The index has been above the 400s this month (see below), let's hope we're not headed down the same road as last November - stay tuned. (The Eureka Miner's Market Report, 11/24/2010)

This morning the EMI is below the worst day in 2010 at 45.94 but thankfully still above the Oct. 4 low of 22.88. Nuts.

Whoever compared watching a debt crisis develop to slow train wreck knew what they were talking about -  real slow. This morning a surprisingly weak German 10-year bond auction drove the U.S. dollar to a 7-week high as it emerges as one of the safest havens for worried investors. Strong dollar; weak gold and commodities - been there done that.

The European debt crisis has now moved from the profligate peripherals to the euro zone core countries, Germany and France. This combined with dismal manufacturing data from China is sending the global markets packing into the cave with Old Miner Woden.

I thought it might be interesting to compare some of this morning's prices with the Nov. 24, 2010 data. Here is a sample:

COMEX gold $1,375.4/oz (then) $1,693.3/oz (now)
COMEX silver $27.270/oz (then) $31.695/oz (now)

COMEX copper $3.7395/lb (then) $3.2670/lb (now)

Western moly oxide $15.75/lb (then) $13.85/lb (now, Metals Weekly)

Barrick Gold (ABX) $51.06 (then) $47.89 (now)
General Moly (GMO) $5.52 (then) $2.90 (now)

And the Eureka Miner's Million Dollar Grubstake Portfolio:

(then) $1,702,262.24
(now) $1,330,312.72 down 21.9%

Ouch!

Time for some turkey tryptophan!

The report wishes you a Happy Thanksgiving and thank you again for following the crazy markets with the ole Colonel.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $47.89 down 2.38%
Newmont (NEM) $64.48 down 1.99%
US Gold (UXG) $3.87 down 5.15%
General Moly (Eureka Moly, LLC) (GMO) $2.90 down 5.54%
Thompson Creek (TC) $5.91 down 0.84%
Freeport-McMoRan (FCX) $34.92 down 2.02% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $9.19 down 3.52%
Timberline Resources (TLR) $0.63 down 3.08%

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

ArcelorMittal (MT) $15.54 down 4.70% - global steel producer
POSCO (PKX) $76.54 down 3.76% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 45.94, down from yesterday's 54.53 and below the 1-month moving average of 73.38. 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 10/4/2010 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 $9.1/oz at $1,693.3/oz (December contract most active)

COMEX silver is down $1.256/oz at $31.695/oz (December contract, most active)

The gold-to-silver ratio (Au:Ag) is 53.425 oz/oz

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 99.63, up from yesterday's 98.11 and below its 1-month average of 98.63. The new record high for 2010-2011 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,402.1/oz which is $273.2/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 down $0.0660 at $3.2670/lb (December contract, most active)

The gold-to-copper ratio (Au:Cu) is 518.30 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"

Western molybdenum oxide (price per pound):

Metals Week Average:
US$13.85
As of November 21, 2011
(updated weekly)

Ryan's Notes Average:
US$13.625
As of Nov 22, 2011
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.75/lb

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

US$13.83/lb (US$30,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices

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 $96.22
ICE North Sea Brent crude $107.56
Spread (ICE- NYMEX) = $11.34 (last report, $10.02)

Here are the March contracts* with a narrower spread:

NYMEX light sweet crude $96.57
ICE North Sea Brent crude $106.81
Spread (ICE- NYMEX) = $10.24 (last report, $9.17)

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

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 197.5 up from yesterday's 181.6. A level above 200 is time for serious concern. We are now just 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 163.40 points to 11,330.32; the S&P 500 is down 19.69 points at 1,168.35

The Eureka Miner's Grubstake Portfolio is down 3.03% at $1,330,312.72 (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