"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.

Tuesday, January 10, 2012

Metals & Miners Rock; Silver Breaks $30; Copper, $3.50

Lichen Rock atop Devil's Gate

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 = $1,636.8/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.32 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,481.4/oz
COMEX - VAGP = $155.4/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down

Morning Miners!

It is 7:52 AM. Have a hot cup of Hoorah. Sweet Ruby T started this new year with a rumbling rally and today she's back to kick the markets higher again...

Metals & Miners Rock; Silver Breaks $30; Copper, $3.50

Earnings season has begun with a strong report from aluminum giant Alcoa. The company's fourth-quarter revenue and current-year projection late yesterday raised hopes for a stronger global economy and gave raw commodity prices a kick in the pants. The DOW has broken a 5 1/2-month high to trade at 12,483.53 and the S&P 500 is up 12.65 points at 1,293.35.

COMEX gold is following commodities, presently trading up a respectable $28.7/oz to $1,636.8/oz. COMEX silver pushed through the important psychological $30/oz-level adding a buck-and-two-bits to trade at $30.035/oz.

The red metal also broke an important level with COMEX copper now above $3.50/lb at $3.5125/lb. The gold-to-copper ratio notched down to 466 lb/oz, we need to get below 400 lb/oz to say we're out of the mineshaft but I'll take steady progress any day.

Bellwether miner Freeport-McMoRan (FCX) is up more than 4% at $41.09; General Moly (GMO) has bounced 2.3% to $3.40 and Barrick Gold (ABX) is up 1.4% at $48.51.

Thanks Ruby, let's hope the merriment lasts!

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $48.51 up 1.43%
Newmont (NEM) $62.85 up 2.00%
US Gold (UXG) $3.91 up 4.83%
General Moly (Eureka Moly, LLC) (GMO) $3.40 up 2.26%
Thompson Creek (TC) $7.65 up 2.82%
Freeport-McMoRan (FCX) $41.09 up 4.38% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.16 down 0.07%
Timberline Resources (TLR) $0.6080 up 3.05%

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

ArcelorMittal (MT) $19.19 down 2.51% - global steel producer
POSCO (PKX) $83.99 up 4.62% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 117.46, up from last report's 95.33 and above the 1-month moving average of 83.23. The new record low for 2010-2012 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 2010-2012 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 $28.7/oz at $1,636.8/oz (February contract, most active)

COMEX silver is up $1.253/oz at $30.35/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.496 oz/oz

Silver 1-month CRS© is 2.17% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.32, down from last report's 93.39 and below its 1-month average of 93.89. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,481.4/oz which is $155.4/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 $0.0965/lb at $3.4340/lb (March contract, most active)

The gold-to-copper ratio is 465.99 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.14% (bullish level); stalled convergence (Cu neutral)

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

Metals Week Average:
As of January 9, 2012
(updated weekly)

Ryan's Notes Average:
As of January 6, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):

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

US$13.95/lb (US$30,750/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 with a narrowing spread with 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 $102.96
ICE North Sea Brent crude $113.53
Spread (ICE- NYMEX) = $10.57 (last report, $10.85)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $103.33
ICE North Sea Brent crude $112.95
Spread (ICE- NYMEX) = $9.62 (last report, $9.79)

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

NYMEX WTI 1-month CRS© is 3.68% (neutral level); stalled convergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in April favoring high oil prices throughout the winter and 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 95.4 down from last report's 104.2. 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 89.84 points to 12,483.53; the S&P 500 is up 12.65 points at 1293.35

The Eureka Miner's Grubstake Portfolio is up 2.64% at $1,442,226.36 (what's this?).


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

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