"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.

Tuesday, January 31, 2012

General Moly (GMO) Breakout? Yes, but....

A Point of Balance - Devil's Gate, Eureka, Nevada

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio


My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

This morning's...
COMEX Gold price = $1748.8/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.64 (possible gold value trend reversal)
Value Adjusted Gold Price© (VAGP) = $1,577.3/oz
COMEX - VAGP = $171.5/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels



Morning Miners!

It is 6:37 AM. Have a cup of Ruby T's famous Blue Skies. Our market bull is whistling Willie Nelson's hopeful tune as the morning markets react positively to progress in Europe.

A European Union pact to tighten fiscal ties and a statement by Greek Prime Minister Lucas Papademos that negotiators had made "significant progress" on debt talks with a possible agreement by the end of this week put 17 of 19 global markets in the green. Spot copper jumped more than 1% and COMEX gold hit $1,750.6/oz before falling back slightly to $1,748.8/oz. My target for this week was $1,750/oz so the Colonel's buying Ruby coffee this morning. There's another reason too...

General Moly (GMO) Breakout? Yes, but...

Last Tuesday Ruby T whispered in my ear that General Moly was long overdue for a breakout in stock price. I looked at the charts and surmised:

An optimist might say GMO is patiently building a "base" and will move aggressively higher to catch up with the benchmark [Thompson Creek] on any good news regarding the DEIS, water rights and so forth. A pessimist may characterize the flat line stock price as "dead money" and move on to greener pasture.

The ole Colonel just threw a few shares in the buckboard at $3.25 so I guess I'm just another one of those durn optimists - at least there is a CEO riding shotgun with me.
(Eureka Miner, 1/24/2012)

The CEO reference was to General Moly's boss Bruce Hansen who felt good enough about the future to have added to his position in the company January 6.

How has GMO done since last Tuesday? As of yesterday's close, the moly miner logged five consecutive market days in rally mode. This morning GMO is up another 1% trading presently at $3.77 or a full 16% up from when the Colonel put his toe in the water. That's a breakout from dead money in my book.

Whether today will be day-6 of the rally is uncertain and I won't be surprised to see a pullback with some profit taking. The ole Colonel is staying put. Here's a six-month chart of GMO (blue line) versus benchmark moly miner Thompson Creek (TC, green line) and GMO's 200-day moving average (orange line):


GMO has gone from flat line to closing fast on the benchmark. TC is down 5% from 6 months ago and GMO is still 20% off the mark. Importantly, GMO is now threatening to cross its 200-day average to the upside ($3.77 vs $3.81 average), a bullish development. This could also bring on selling pressure later today.

Western and European moly oxide spot prices and London Metal Exchange (LME) moly futures are all equal to or above $14/lb, another bullish indication (see Copper & Molybdenum Report below).

A faithful follower of this report and serious General Moly investor offered these four comments when I asked him last night what he thought about the recent move in share price (I've added some comments of my own in brackets []):

Q. Are we ready to call GMO a "gap up?"

A. Looks good.

and...

1) We only had one day of high volume [1,111,529 shares on 1/26, 90-day volume is 644,093]... all the rest was nothing [i.e. less than 90-day].

2) Short interest has gone down which is perplexing...maybe some smart ppl are accumulating? Maybe all sellers have dried up?

3) I'm watching level II closely.. and don't see large buys just slow and steady.

4) Relative against TC looking very good [as shown in the above chart].


This cowboy does his homework, please do your own research too. The report could be dead wrong about the prospects of any stock. As the Colonel said last week, all bets are off if Europe goes into a tailspin or the Persian Gulf explodes into conflict.

I'm going to buy Ruby another cup of java.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $49.69 up 1.04%
Newmont (NEM) $62.04 up 1.34%
McEwen Mining (MUX) 6.01 up 2.56% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.77 up 1.07%
Thompson Creek (TC) $8.61 up 0.94%
Freeport-McMoRan (FCX) $46.80 up 1.52% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.01 down 0.33%
Timberline Resources (TLR) $0.55 up 3.77%

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

ArcelorMittal (MT) $20.79 up 0.58% - global steel producer
POSCO (PKX) $92.64 up 0.38% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 191.49, up from last report's 172.36 and above the 1-month moving average of 131.69. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 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 up $14.4/oz at $1,748.8/oz (April contract, most active)

COMEX silver is down $0.473/oz at $34.000/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.435 oz/oz

Silver 1-month CRS© is 3.44% (bullish level); weak convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.64, down from last report's 93.74 and above its 1-month average of 92.11. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,577.3/oz which is $171.5/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 up $0.0470/lb at $3.8735/lb (March contract, most active)

The gold-to-copper ratio is 451.48 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.56% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.00
As of January 30, 2012
(updated weekly)

Ryan's Notes Average:
US$14.00
As of January 27, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.05/lb

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

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above 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 $101.18
ICE North Sea Brent crude $112.76
Spread (ICE- NYMEX) = $11.58 (last report, $12.44)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $101.89
ICE North Sea Brent crude $112.16
Spread (ICE- NYMEX) = $10.71 (last report, $11.12)

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

NYMEX WTI 1-month CRS© is 3.87% (neutral level); weak divergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in May favoring high oil prices this 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 83.1 down from last report's 87.4. A level above 200 is time for serious concern. We are now well 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 and continuing into 2012.

Stock Market Morning Update

The DOW is up 36.71 points to 12,690.43; the S&P 500 is up 3.58 points at 1316.59

The Eureka Miner's Grubstake Portfolio is up 1.16% at $1,616,258.82 (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

Monday, January 30, 2012

The Red, the Black and the Shiny Ones Give Back

Devil's Hawk - Devil's Gate, Eureka

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio


My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

This morning's...
COMEX Gold price = $1,731.2/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 93.47 (WARNING - possible gold value trend reversal, see below)
Value Adjusted Gold Price© (VAGP) = $1,547.6/oz
COMEX - VAGP = $183.6/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels


Morning Miners!

It is 6:07 AM. Have a cup of Monday morning Devil's Gate Java. There are certainly a lot of little devils at work in the markets this morning. My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour just posted this morning too.

The Red, the Black and the Shiny Ones Give Back

For starters the ole Colonel would like to thank Debbie Carlson of Kitco News and Adella Harding of the Elko Daily Free Press for carrying this report's Friday thoughts on gold's direction this week:

METALS OUTLOOK: Gold’s Rally Expected To Continue Next Week (Debbie Carlson, Kitco News, 1/27/2012)

Gold prices at seven-week high (Adella Harding, Elko Daily Free Press, 1/27/2012)

I predicted Friday that a gold price of $1,750 was in the cards, oil will be roughly $99 to $101 per barrel, silver will be $33-$34 an ounce and copper will be between $3.70 per pound and $3.90.

OK, here we are. This morning 19 of 19 global markets are in the red as a world audience frets about deteriorating conditions in the European sovereign debt drama. Restructuring talks in Greece are struggling and Portuguese bond yields are surging; the 10-year yield jumped over 16% on Monday, anything greater than 7% is time for grave concern. Nuts.

There is always a quote that stands out in the morning market summaries. Today Kitco news reported that Janet Mirasola, managing director of R.J. O’Brien & Associates, said:

"Commodity baskets are facing some risk reduction trading this morning as the Red (copper), the Black (oil) and the Shiny Ones (gold) all give back some of last week’s gains in reaction to the fall of the euro/USD…back below $1.3200 and risks a re-test of $1.3000 if nothing is resolved shortly..." (Market Nuggets: R.J. O'Brien: Copper, Gold Ease With Global Markets In 'Sea Of Red', Kitco News, 1/30/2012)

Will today's retreat just be a correction to January's run-up or are we setting the stage for a "February Flop" as coined by another news agency?

So far things are not crazy. With respect to my predictions, COMEX gold is presently trading down to $1,731.2/oz or about $19/oz below my target for the week. NYMEX WTI is at $98.59 on the low-side of the report's $99/bbl to $101/bbl range, COMEX silver is presently $33.300/oz inside the $33/oz-$34/oz along with COMEX copper at $3.8305/lb, comfortably between $3.70-$3.90/lb.

However, here are three troubling signs this morning as January winds down:

1) Both 10-year & 30-year U.S. Treasury yields are below 2% and 3% again at 1.834% and 2.974% respectively. Lower yields mean higher prices and therefore greater safe-haven demand.

2) This report's Eureka Miner’s Gold Value Index© (GVI) may be reversing its declining trend. Friday the GVI crossed above its 1-month average and today the average ticked up after declining since mid-October. Generally a declining GVI is bullish for the mining sector (see Gold & Silver Report below).

3) The S&P Volatility Index sometimes referred to as the "fear index" is courting the 20-level again after being in the low-18s just a week ago. Bigger number equals greater market apprehension. This report uses 25 as a threshold for scary; Oct. 4 hit a really scary 46+ level - at least we're quite a way below that.

Not time to run for the exits but there is a whiff of smoke in the global theater. Maybe it's only that European finance minister smoking in the balcony seats. Stay tuned.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $48.49 down 2.04%
Newmont (NEM) $60.59 down 1.50%
McEwen Mining (MUX) 5.82 down 2.51% (formerly US Gold)
General Moly (Eureka Moly, LLC) (GMO) $3.66 down 0.81%
Thompson Creek (TC) $8.59 down 1.94%
Freeport-McMoRan (FCX) $45.29 down 1.82% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.88 down 0.40%
Timberline Resources (TLR) $0.53 unchanged

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

ArcelorMittal (MT) $20.66 down 5.01% - global steel producer
POSCO (PKX) $92.06 down 1.89% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 172.36, down from last report's 202.30 and above the 1-month moving average of 126.20. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Here is the Eureka Miner's Index© (EMI) through Friday's close (a larger more readable plot is near the bottom of the blog page):


Today's EMI is still solidly above the 100-level. The 1-month moving average is fortunately above this key level also, a necessary condition for returning our miners to bull pasture. Any change in these trends will be monitored carefully.

Gold & Silver Report

This morning's...

COMEX gold is down $4.2/oz at $1,731.2/oz (April contract, most active)

COMEX silver is down $0.490/oz at $33.300/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.988 oz/oz

Silver 1-month CRS© is 3.46% (bullish level); weak divergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 93.47, up from last report's 92.52 and above its 1-month average of 92.12. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,547.6/oz which is $183.6/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.

The Eureka Miner’s Gold Value Index© (GVI) may be reversing its downward trend. Here is plot of the GVI at Friday's close (also near the bottom of the blog page):

To get the metals & miners firmly back on their feet, we need gold to give up more relative value to copper, oil and silver. Remember, the GVI and EMI typically (but not always) have an inverse relation; as the GVI falls, the EMI rises. It is bullish for miners then to see the GVI 1-month average (dark line) continue to trend down - this morning the average started to move up, a bearish signal. Presently, the GVI at 93.47 is below an average of 92.52 and down 15.0% from its 2010-2011 high of 109.97.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0585/lb at $3.8305/lb (March contract, most active)

The gold-to-copper ratio is 451.95 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.61% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.00
As of January 30, 2012
(updated weekly)

Ryan's Notes Average:
US$14.00
As of January 27, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.05/lb

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

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above 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 $98.59
ICE North Sea Brent crude $111.03
Spread (ICE- NYMEX) = $12.44 (last report, $11.70)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $99.44
ICE North Sea Brent crude $110.56
Spread (ICE- NYMEX) = $11.12 (last report, $10.47)

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

NYMEX WTI 1-month CRS© is 3.81% (neutral level); weak divergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in May favoring high oil prices this 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 83.0 up from last report's 81.7. A level above 200 is time for serious concern. We are now well 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 and continuing into 2012.

Stock Market Morning Update

The DOW is down 100.09 points to 12,560.37; the S&P 500 is down 12.60 points at 1303.74

The Eureka Miner's Grubstake Portfolio is down 1.50% at $1,587,489.92 (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

Friday, January 27, 2012

The Colonel's Friday Thoughts on Gold; US Gold Now McEwen Mining

Goodbye for now old friend

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio


My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,722.5/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.22 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,562.4/oz
COMEX - VAGP = $160.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels



Morning Miners!

It is 6:03 AM. Have a cup of Raine's Red Label TGIF - you deserve it! Not a bad week for gold and the markets even though we're down a bit today. Things are looking up, pardner.

The Colonel's Friday Thoughts on Gold

My input to the Weekly Kitco Gold Survey:

Q. Where do you see gold’s price headed next week, up, down or unchanged?

A. Up - $1,750/oz possible

Q. Why?

A. The Federal Reserve extension of very low interest rates to late 2014 and the possibility of additional quantitative easing with today’s less-than-expected Q4 GDP create a favorable environment for gold and commodities going forward. Gold value with respect to key commodities oil, copper and silver has been falling since October but its descent is showing signs of slowing. It is likely that this pause is temporary and a bullish price environment could develop for all four in the near-term (see notes).

For $1,750/oz gold we can expect to see oil (WTI) in a range of $99-$101/bbl; silver, $33-$34/oz; and copper, $3.7-$3.9/lb.

Background Notes:

1. This report's Gold Value Index© (GVI) equals 92.22 this morning, down 16.1% from the Oct. 4 high of 109.97
2. The GVI, which has been below its 1-month moving average for many weeks, has just crossed above (92.22 vs 92.06 average)
3. If this pause in value decline is temporary, a bullish environment should remain in place for copper and silver. Gold is presently gaining the most value relative to oil.
4. If the gold value trends higher from here; copper and silver could weaken similar to oil. Oil is presently negatively correlated to the yellow metal (3-month correlation = -0.18, a typically bearish condition)
5. Scenario (3) is thought to be more likely than (4). Scenario (3) does not preclude a rising dollar gold price with a resumption of declining value. If oil re-correlates positively with gold, a bullish price condition for all four could develop in the near-term.

US Gold Now McEwen Mining

As of this morning, US Gold is listed with the NYSE as McEwen Mining, Inc. The NYSE sticker symbol has changed from UXG to MUX. Among many holdings, McEwen Mining owns a portion of the old Atlas Gold Bar Mine properties.

US Gold acquired Minera Andes in an all-stock deal announced in June. The enlarged company, now called McEwen Mining, is listed in Toronto and New York today with a market capitalization of some $1.3 billion. Here's the scoop:

McEwen determined to prove his mettle (Calgary Herald, 1/27/2012)

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $49.25 up 0.80%
Newmont (NEM) $60.66 up 0.35%
McEwen Mining (MUX) n/a
General Moly (Eureka Moly, LLC) (GMO) $3.58 down 2.45%
Thompson Creek (TC) $8.62 up 1.53%
Freeport-McMoRan (FCX) $47.01 up 1.10% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.90 down 0.20%
Timberline Resources (TLR) $0.53 unchanged

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

ArcelorMittal (MT) $21.44 down 1.65% - global steel producer
POSCO (PKX) $93.72 up 0.94% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 199.55, up from last report's 214.84 and above the 1-month moving average of 122.09. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 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 $4.2/oz at $1,722.5/oz (February contract, most active)

COMEX silver is down $0.363/oz at $33.380/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.603 oz/oz

Silver 1-month CRS© is 3.31% (bullish level); weak divergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.22, up from last report's 91.51 and above its 1-month average of 92.06. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,562.4/oz which is $160.1/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 $0.0280/lb at $3.8730/lb (March contract, most active)

The gold-to-copper ratio is 444.75 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.67% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.00
As of January 30, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 24, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.05/lb

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

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above 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 $99.51
ICE North Sea Brent crude $111.21
Spread (ICE- NYMEX) = $11.70 (last report, $10.54)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $100.21
ICE North Sea Brent crude $110.68
Spread (ICE- NYMEX) = $10.47 (last report, $9.58)

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

NYMEX WTI 1-month CRS© is 3.11% (bullish level); weak divergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in May favoring high oil prices this 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 82.6 up from last report's 79.4. A level above 200 is time for serious concern. We are now well 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 and continuing into 2012.

Stock Market Morning Update

The DOW is down 49.38 points to 12,685.25; the S&P 500 is down 1.79 points at 1316.64

The Eureka Miner's Grubstake Portfolio is up 0.04% at $1,482,348.75 (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

Thursday, January 26, 2012

Gold 7-Week High; Is Silver Still in the Saddle?

And one more thing about silver...

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio


My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,724.7/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.51 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,574.8/oz
COMEX - VAGP = $149.0/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels



Þūnresdæg
Morning Miners!

It is 6:46 AM. Have a Thursday cup of Uncle Ben's Morning After. Nothing like a Central Bank to boost the fortunes of gold - they either buy the stuff to hedge paper money or set monetary policy to enhance its lustrous allure. Our Federal Reserve did the latter in a big way yesterday and precious metals have been rallying ever since.

This morning at 8:55 AM EST COMEX gold touched $1,730.5/oz before falling back to $1,724.7/oz; COMEX silver reached $33.72/oz at the same time and is presently trading at $33.540/oz.

Gold 7-Week High

On Wednesday, Federal Reserve Chairman Ben Bernanke said he expects short-term interest rates to stay close to zero “at least through late 2014.” As part of their new communication strategy, Fed officials projected that rates could stay at a record low for three more years as unemployment comes down slowly and inflation moderates.

Why is this good for gold and silver? A very low interest rate environment is bullish for both since competing assets, such as bonds, will continue to have low annual returns. Precious metals are a store of value and create no income; when interest rates rise, money flows typically reverse and the price of gold and silver decline. The Fed's actions also signal that they are still very concerned about the prospects for domestic and world economies which supports the safe-haven aspect of precious metals.

Kitco News reports this morning that yesterdays' announcement may extend the secular bull market for gold by several more years:

Sharps Pixley: FOMC Statement Means Gold Bull Run Has At Least Three More Years To Go (Allen Sykora, Kitco Marget Nuggets, 1/25/2012)

Our favorite Norseman Thor hears the thunder of hoofbeats in the distance.

Is Silver Still in the Saddle?

In late December, the Eureka Miner looked at gold's trusty side-kick:

A good friend of this report asked me if I thought silver was still a good investment. If you are willing to sit through a lot of wild price swings, my answer is simply, "Yes!" Silver, like its companion gold, has good long term precious metal fundamentals. Silver also has a bright future as new uses in hi-tech applications will only increase its industrial demand - high-density batteries come to mind in our evermore electrified world. (12/27/2012)

At that time COMEX gold was trading at $1,598.8/oz and silver at $29.060/oz. Given this mornings pop, silver has gained 15.4% to gold's 7.8%. So far so good.

Silver is known as a "high-beta" metal because its price sensitivity relative to gold is usually greater than 1.0. Presently the 3-month beta is 1.64 so a 1% change in gold price is expected to bring a 1.6% change in silver price. Beta is a two-way street so declines in gold price often can be followed by much more dramatic declines for the white metal - not the problem this morning.

The closely watched gold-to-silver ratio has also fallen to bullish levels for silver. Near historical norms, today's ratio of 51.4 oz/oz is still showing good stability (about 3% variation over the last 1-month of COMEX data). There is a growing consensus that gold could make new highs in 2012 challenging or surpassing the $2,000/oz-level. Given the current ratio, a silver price of $39/oz is very comfortable with $2,000/oz gold.

So is silver still in the saddle? You bet. With a 3-month gold-silver correlation of 0.96 wherever gold goes silver will surely follow; and with the present beta, at a quicker pace.

Please do your own homework on this one - the ole Colonel has fallen down a few mineshafts with these two rascals in the past. I'm betting we're in the up-elevator now, stay tuned.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $49.36 up 1.96%
Newmont (NEM) $61.13 up 1.46%
US Gold (UXG) $5.98 up 1.87%
General Moly (Eureka Moly, LLC) (GMO) $3.47 down 1.76%
Thompson Creek (TC) $8.74 up 2.22%
Freeport-McMoRan (FCX) $48.39 up 5.01% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.90 up 0.07%
Timberline Resources (TLR) $0.53 up 6.00%

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

ArcelorMittal (MT) $22.13 up 3.56% - global steel producer
POSCO (PKX) $93.39 down 0.20% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 214.84, up from last report's 154.57 and above the 1-month moving average of 117.25. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 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 up $24.6/oz at $1,724.7/oz (February contract, most active)

COMEX silver is up $0.419/oz at $33.540/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.422 oz/oz

Silver 1-month CRS© is 3.09% (bullish level); weak divergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.51, up from last report's 90.92 and below its 1-month average of 92.09. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,574.8/oz which is $149.0/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 up $0.0610/lb at $3.8905/lb (March contract, most active)

The gold-to-copper ratio is 443.31 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.66% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.875
As of January 23, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 24, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.98/lb

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

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above 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 $101.10
ICE North Sea Brent crude $111.64
Spread (ICE- NYMEX) = $10.54 (last report, $11.40)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $101.76
ICE North Sea Brent crude $111.34
Spread (ICE- NYMEX) = $9.58 (last report, $10.62)

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

NYMEX WTI 1-month CRS© is 3.11% (bullish level); weak divergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in May favoring high oil prices this 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 79.4 down from last report's 89.2. A level above 200 is time for serious concern. We are now well 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 and continuing into 2012.

Stock Market Morning Update

The DOW is up 58.57 points to 12,815.53; the S&P 500 is up 4.60 points at 1330.65

The Eureka Miner's Grubstake Portfolio is up 1.89% at $1,605,493.98 (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

Wednesday, January 25, 2012

The Steely Side of Moly Miners: POSCO (PKX) & ArcelorMittal (MT)


Up on the hill
They think I'm okay
Or so they say
Chinese music always sets me free
Angular banjos
Sound good to me
Aja
When all my dime dancin' is through
I run to you
- Steely Dan

NEW FORMAT for 2012

Daily Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio


My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1655.1/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 90.92 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,521.1/oz
COMEX - VAGP = $134.0/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 6:07 AM. Have a cup of Steely Dan. Old Miner Woden has been whistling Aja all morning long. Why someone his advanced age would be singing that song is a mystery to me - maybe he's thinking about the steely side of moly miners...

The Steely Side of Moly Miners: POSCO (PKX) & Arcelor-Mittal (MT)

This report has been looking at moly miners General Moly (GMO) and Thompson Creek (TC) this week. Because molybdenum is a common alloy in high-grade steels, it is only natural to wonder how steelmakers are doing that use their product. We track the stock performance of steel producers POSCO (PKX) and ArcelorMittal (MT) on a daily basis. South Korean POSCO is a 20% owner of our Mt. Hope molybdenum project with an Asian market emphasis that includes Australia. ArcelorMittal is a global steel giant with a presence in Europe, Asia, North and South America and Africa.

The latter part of last year was hard on steel makers as well as moly miners as we can see in the following 6-month chart of share price performance for PKX (blue line) and MT (green line):


Fortunately, PKX has been in rally mode for eight out of the last market days closing fast on its 200-day moving average (orange line). So far this morning is a down day in the broader markets but PKX is up a full percent at $92.55 just below its 200-day average of $94.16. We noted yesterday that Thompson Creek (TC) was enjoying a similar move upwards to its average; bullish signs for both the steelmaker and benchmark moly producer. ArcelorMittal has struggled more to recover share price due in part to its greater exposure to European markets. Over six-months MT is down a full 35%; PKX only 18%.

Here is a chart that compares the relative performance of POSCO, Thompson Creek and General Moly over that same period:


Thompson Creek is down 14% to PKX's 18% and GMO lags 32%. The Report noted yesterday that General Moly's flat line performance may be building a base for a breakout to join benchmark Thompson Creek.

So far, it looks like things are improving in the land of moly and steel - at least in the East and possibly North America. European moly oxide got a bid up to $13.98/lb yesterday so perhaps the outlook there is not as grim as expected earlier this month (see the Copper & Molybdenum Report below).

Please do your own research, this report could be dead wrong about the future of moly miners and steelmakers. As the Colonel said yesterday, all bets are off if Europe goes into a tailspin or the Persian Gulf explodes into conflict. Stay tuned.

Aja
When all my dime dancin' is through
I run to you


Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $45.44 down 0.09%
Newmont (NEM) $57.31 down 0.30%
US Gold (UXG) $5.10 down 2.30%
General Moly (Eureka Moly, LLC) (GMO) $3.25 down 1.52%
Thompson Creek (TC) $8.28 down 0.48%
Freeport-McMoRan (FCX) $43.40 down 1.27% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.55 up 0.89%
Timberline Resources (TLR) $0.48 unchanged

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

ArcelorMittal (MT) $20.73 down 3.13% - global steel producer
POSCO (PKX) $92.55 up 0.99% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 154.75, up from last report's 150.75 and above the 1-month moving average of 111.48. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 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 $9.4/oz at $1,655.1/oz (February contract, most active)

COMEX silver is down $0.230/oz at $31.745/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 52.137 oz/oz

Silver 1-month CRS© is 2.80% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 90.92, down from last report's 91.30 and below its 1-month average of 92.18. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,521.1/oz which is $134.0/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 $0.0215/lb at $3.7860/lb (March contract, most active)

The gold-to-copper ratio is 437.16 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.68% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.875
As of January 23, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 24, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.98/lb

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

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above 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 $98.11
ICE North Sea Brent crude $109.51
Spread (ICE- NYMEX) = $11.40 (last report, $11.28)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $98.86
ICE North Sea Brent crude $109.48
Spread (ICE- NYMEX) = $10.62 (last report, $10.48)

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

NYMEX WTI 1-month CRS© is 2.77% (bullish level); weak convergence (Oil neutral)

Prices are off their crisis highs and we have $105+ Brent and $95+ NYMEX in May favoring high oil prices this 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 89.2 down from last report's 92.4. A level above 200 is time for serious concern. We are now well 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 and continuing into 2012.

Stock Market Morning Update

The DOW is down 68.95 points to 12,606.80; the S&P 500 is down 3.24 points at 1311.41

The Eureka Miner's Grubstake Portfolio is down 0.73% at $1,495,882.52 (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

Tuesday, January 24, 2012

Is General Moly (GMO) Ready for a Breakout?

What's in the windshield for moly miners?

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.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,664.4/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.30 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,523.3/oz
COMEX - VAGP = $141.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels



Morning Miners!

It is 6:08 AM. Have a cup of Ruby T's Lucky-24. Our market bull couldn't be happier this morning, Ruby loves it when her day of the week falls on the 24th - that's her lucky number! She's even ignoring a pullback in the metals with morning grumblings about Greek debt negotiations turning sour.

No, this ole gal sees better days ahead for moly miners and that's worth another cup of Lucky. On the local scene, General Moly just released their impressions of the recent public hearings in Eureka and Crescent Valley:

General Moly Announces Strong Support at Public Hearings (Press release, 1/24/2012)

As we discussed yesterday, there is still a range of legitimate concerns but Chief Executive Officer Bruce D. Hansen is interpreting the two well-attended meetings in a positive light:

I was very proud to hear community leaders from Eureka stand up in support of the Mt. Hope project. Their support is a testament to the hard work of our team in Nevada and our commitment to mining done right within the Eureka community. Importantly, no new issues were raised during the public hearings and we continue to believe that the BLM has a very robust and defensible DEIS. We look forward to the conclusion of the public comment period on March 1, the completion of the Final EIS in the third quarter, and hopefully initiating construction activities before the end of the year.

Mr. Hansen bought 173,141 additional shares of his company's stock Jan. 6 (Form 4 SEC filing) so he is is backing his upbeat outlook with his own money; never a bad sign from the head honcho of a mining company.

Let's kick the tires a little bit on his haul truck of optimism...

Is General Moly (GMO) Ready for a Breakout?

For starters, 2011 was a horrible year for mining stocks in general. This report's Eureka Miner's Index© (EMI) started last year in the 800s, fell down the mineshaft to the low 20s in October and has since rebounded above the key 100-level in this first month of 2012. An EMI that sustains above 100 is necessary to even start talking about a recovery in the mining sector. Today the EMI is 150.8 and more importantly, the 1-month moving average has been above the 100-level for three consecutive market days - currently at 108.4.

In terms of product, moly oxide has been feeling pretty chipper too. Presently Western and European spot prices are both around $13.90/lb (see Copper & Molybdenum Report below). The London Metal Exchange (LME) sees $31,500/metric ton ($14.29/lb) ahead for their 3-month seller's contract and $32,675/metric ton ($14.82/lb) for the 15-month. This is a considerable improvement from the October lows of last year as seen in this 6-month chart of the LME 3-month seller:


In October the futures dropped to $29,000/metric ton ($13.15/lb) from July's high of $34,000/metric ton ($15.42/lb) - a period when moly futures are seasonally on the rise in more normal times. Being above $31,000/metric ton is a relief especially in light of almost certain recessionary times ahead for Europe.

Moly benchmark miner Thompson Creek (TC) has been on a tear too with share price up over 27% since mid-December. Although this morning is a down day for mining stocks, TC is still very close to breaking its 200-day moving average to the upside, presently trading at $8.33 vs $8.53 for the average. Although GMO and TC roughly tracked each other for much of last year, General Moly has been less fortunate trading flat since the same mid-December to present period. The following 6-month chart is a comparison of share performance between TC (blue line) and GMO (green line) including the TC 200-day average (orange line).


Over six months TC is down 14% to General Moly's 32%. An optimist might say GMO is patiently building a "base" and will move aggressively higher to catch up with the benchmark on any good news regarding the DEIS, water rights and so forth. A pessimist may characterize the flat line stock price as "dead money" and move on to greener pasture.

The ole Colonel just threw a few shares in the buckboard at $3.25 so I guess I'm just another one of those durn optimists - at least there is a CEO riding shotgun with me.

Please do your own research, this report could be dead wrong. Also remember all bets are off if Europe goes into a tailspin or the Persian Gulf explodes into conflict. That's what makes markets exciting, pardner.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $45.78 down 2.49%
Newmont (NEM) $57.92 down 2.26%
US Gold (UXG) $4.97 down 3.12%
General Moly (Eureka Moly, LLC) (GMO) $3.22 down 2.13%
Thompson Creek (TC) $8.33 down 2.00%
Freeport-McMoRan (FCX) $43.18 down 1.60% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.91 down 0.07%
Timberline Resources (TLR) $0.48 down 4.00%

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

ArcelorMittal (MT) $20.86 down 2.48% - global steel producer
POSCO (PKX) $91.02 down 0.85% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 150.75, down from last report's 166.15 and above the 1-month moving average of 108.39. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above 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 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 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 $13.9/oz at $1,664.4/oz (February contract, most active)

COMEX silver is down $0.170/oz at $32.100/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.850 oz/oz

Silver 1-month CRS© is 2.58% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.30, up from last report's 91.15 and below its 1-month average of 92.35. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,523.3/oz which is $141.1/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 $0.0430/lb at $3.7555/lb (March contract, most active)

The gold-to-copper ratio is 443.19 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.69% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.875
As of January 23, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 20, 2012


European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.90/lb

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

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above 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 $98.63
ICE North Sea Brent crude $109.91
Spread (ICE- NYMEX) = $11.28 (last report, $11.39)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $99.29
ICE North Sea Brent crude $109.77
Spread (ICE- NYMEX) = $10.48 (last report, $10.33)

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

NYMEX WTI 1-month CRS© is 2.77% (bullish level); weak convergence (Oil neutral)

Prices are off their crisis highs and we have $105+ Brent and $95+ NYMEX in May favoring high oil prices this 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 92.4 up from last report's 87.8. A level above 200 is time for serious concern. We are now well 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 and continuing into 2012.

Stock Market Morning Update

The DOW is down 65.92 points to 12,642.90; the S&P 500 is down 6.34 points at 1309.66

The Eureka Miner's Grubstake Portfolio is down 1.52% at $1,496,456.20 (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

Monday, January 23, 2012

Gold 6-Week High; General Moly Update

The Eureka Canyon Subdivision goes up

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.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,667.6/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.15 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,528.7/oz
COMEX - VAGP = $138.9/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels



Morning Miners!

It is 6:04 AM. Have a hot Monday cup of Here's Hoping. Looks like we've got a good'un on a new moon...

Gold 6-Week High

COMEX gold pushed to prices not seen since mid-December to make a 6-week high at $1,677.9/oz; now trading down a bit at $1,667.6/oz. Today we enter the never-never land in metal futures trading as the Chinese break for their Lunar New Year holiday. Europe has taken a pause too in their ongoing crises as Germany's latest offer of short-term debt drew strong demand.

On a more sober note, International Monetary Fund chief Christine Lagarde warned the German Council on Foreign Relations in Berlin that the global economy faces a depression-era collapse in demand if Europe doesn't act more aggressively in addressing their debt problems. She said, "It is about avoiding a 1930s moment, in which inaction, insularity, and rigid ideology combine to cause a collapse in global demand. A moment, ultimately, leading to a downward spiral that could engulf the entire world."

Nothing like a party-pooper at a New Years party.

COMEX copper didn't listen to Lagarde's warning and bumped up $0.435/lb to trade presently at $3.7885/lb. COMEX silver is feeling frisky too, up another $0.245/oz at $31.920/oz. The closely watched gold-to-silver ratio has compressed to levels not seen since early November (i.e. silver strengthening with respect to gold) checking in at 52.24.

All our favorite miners are whistling to work this morning except Quadra and Timberline Resource which are down a tad. Barrick (ABX) is up 1.53% at $46.53; General Moly (GMO) is up 0.30% at $3.31 (see Mining Report).

Importantly, this report's Eureka Miner's Index© (EMI) has a 1-month average cresting 100 - a sign that miners are returning to better times.

General Moly Update

The Colonel was on the road when the U.S. Bureau of Land Management conducted an open house and hearing on the draft study of General Moly's proposed Mt. Hope molybdenum project last week. Mining Editor Adella Harding did a nice piece on the event which packed the Eureka Opera House:

BLM hearing on Mt. Hope draws full house (Adella Harding, Elko Daily Free Press, 1/19/2012)

To borrow a line from Winston Churchill, the long and arduous process to bring Mt. Hope online has seemed at times like "a riddle wrapped in a mystery inside an enigma." At other times, there appears to be great hope for Mt. Hope with its job-creating molybdenum mine and 44-year life expectancy.

After witnessing one of the driest December-January periods in Eureka County since the late-1880s, I can certainly empathize with ranchers and farmers concerned about the mine's expected water usage. I hope the present resource monitoring and mitigation plans will bring a beneficial and satisfactory solution for all parties concerned.

General Moly is expecting the BLM to approve the project by September. When mine construction begins, there will be plenty of housing available in the new Eureka Canyon Subdivision (headline photos).

Thanks Adella for a good report!

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $46.53 up 1.53%
Newmont (NEM) $59.37 up 0.17%
US Gold (UXG) $5.18 up 4.02%
General Moly (Eureka Moly, LLC) (GMO) $3.31 up 0.30%
Thompson Creek (TC) $8.46 up 1.56%
Freeport-McMoRan (FCX) $43.63 up 1.25% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.05 down 0.39%
Timberline Resources (TLR) $0.49 down 2.00%

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

ArcelorMittal (MT) $21.43 up 1.66% - global steel producer
POSCO (PKX) $92.31 up 0.87% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 166.15, up from last report's 161.00 and above the 1-month moving average of 105.17. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above 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 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Here is the Eureka Miner's Index© (EMI) through Friday's close (a larger more readable plot is near the bottom of the blog page):


Today's EMI is above the 100-level. The 1-month moving average has fortunately crested this key level also, a necessary condition for returning our miners to bull pasture.

Gold & Silver Report

This morning's...

COMEX gold is up $3.6/oz at $1,667.6/oz (February contract, most active)

COMEX silver is up $0.245/oz at $31.920/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 52.243 oz/oz

Silver 1-month CRS© is 2.26% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.15, up from last report's 91.76 and below its 1-month average of 92.52. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,528.7/oz which is $138.9/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.

The Eureka Miner’s Gold Value Index© (GVI) is presently declining on average. Here is plot of the GVI at Friday's close (also near the bottom of the blog page):


To get the metals & miners back on their feet, we need gold to give up more relative value to copper, oil and silver. Remember, the GVI and EMI typically (but not always) have an inverse relation; as the GVI falls, the EMI rises. It is bullish for miners then to see the GVI 1-month average (dark line) trending down. Presently, the GVI at 91.15 is below an average of 92.52 and down 17.1% from its 2010-2011 high of 109.97.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0435/lb at $3.7885/lb (March contract, most active)

The gold-to-copper ratio is 440.17 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.76% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.875
As of January 23, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 20, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.90/lb

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

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above 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 $99.00
ICE North Sea Brent crude $110.39
Spread (ICE- NYMEX) = $11.39 (last report, $11.68)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $99.70
ICE North Sea Brent crude $110.03
Spread (ICE- NYMEX) = $10.33 (last report, $10.63)

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

NYMEX WTI 1-month CRS© is 2.65% (bullish level); weak convergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in May favoring high oil prices this 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 87.8 up from last report's 84.4. A level above 200 is time for serious concern. We are now well 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 and continuing into 2012.

Stock Market Morning Update

The DOW is up 37.61 points to 12,758.09; the S&P 500 is up 6.22 points at 1321.60

The Eureka Miner's Grubstake Portfolio is up 1.00% at $1,521,356.39 (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