"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.

Monday, February 27, 2012

Silver to Gold, “Whither Thou Goest…”; Your Mt. Hope Input for the BLM

Would Someone Check the Fuse Box?

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: Silver to Gold, “Whither Thou Goest…” (02/27/2011)

My latest Kitco commentary: A Foreboding Alignment in the Copper-Gold Firmament (02/21/2012)

Latest Nevada Fuel Prices (click this link)

This morning's...
COMEX Gold price = $1.773.8/oz (April contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.05 (gold value weakly trending up)
Value Adjusted Gold Price© (VAGP) = $1,627.8/oz
COMEX - VAGP = $146.0/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio is moving about its 3-month average with upward momentum (Cu bearish)

Morning Miners!

It is 6:06 AM. Have a Monday Morning cup of Dragon Breath, you may need it - 17 of 19 global markets are in the red this morning. You guessed it, Europe is back in the mix. Finance ministers and central bankers from the Group of 20 advanced and developing economies kicked the decision-on-international-aid-for-Europe can a little further down the road.

Actually, I don't blame them. The G20 participants are reluctant to pony up until the euro-zone rescue fund is large enough to assure financial markets. In the frank words of U.K.'s Chancellor of the Exchequer, Geoorge Osborne, "We have to see the colour of the Euro-zone's money first..."

Go it goes. Say, there may be something to be happy about silver going forward...

Silver to Gold, “Whither Thou Goest…”

The International Business Times just posted the ole Colonel's latest thoughts on the white metal:

Silver to Gold, “Whither Thou Goest…” (IBT, 02/27/2012)

Silver has had quite a run this year after closing in the doldrums for 2011. Last Friday COMEX silver closed up 26.6% year-to-date at $35.338 per ounce. It added another 1.2 cents this morning trading presently at $35.350 per ounce on a morning when a lot of things including gold and copper are in the red. Check it out, I think there is more room to run for Nevada's namesake metal.

I must thank my good friend John for reminding me to think about silver at the Colonel's Christmas barbeque.

Please do your own homework, this report could be dead wrong - silver prices can be very volatile.

Your Mt. Hope Input for the BLM

A faithful follower of this report made the Colonel aware of an easy way to input your support for General Moly's Mt. Hope molybdenum project. It is carried on the Northwest Mining Association's website as an "Action Alert". Here's the link:

Support The U.S. Economy -- Support the Mt. Hope Mine (Northwest Mining Association)

In their words:

Now is the time to put people back to work! Please take a moment to send a message to the Nevada BLM letting them know you support General Moly's Mount Hope Mine.

Below is a pre-drafted letter [editor's note: form on the Action Alert] you can email to the BLM. It's even more effective if you change the letter and add your own, personalized comments. Thank you for taking the time to support American mining.
(Northwest Mining Association Action Alert)

This report respects the right of Eureka County's miners, ranchers and farmers to have differing views on the future of the Mt. Hope project. The ole Colonel plans to write a letter of support for the moly mine via this convenient format.

Check it out, deadline is this Thursday, March 1st.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $48.64 down 0.14%
Newmont (NEM) $62.29 down 0.35%
McEwen Mining (MUX) 5.55 down 1.77% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.62 down 3.98%
Thompson Creek (TC) $8.56 down 2.95%
Freeport-McMoRan (FCX) $43.20 down 1.62% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.92 down 0.07%
Timberline Resources (TLR) $0.61 up 1.67%

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

ArcelorMittal (MT) $20.81 down 2.80% - global steel producer
POSCO (PKX) $91.42 down 1.44% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 230.09, down from last report's 262.47 and below the 1-month moving average of 231.53. The 1-month average is safely 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 $2.6/oz at $1,773.8/oz (April contract, most active)

COMEX silver is up $0.012/oz at $35.350/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 50.178 oz/oz

Silver 1-month CRS© is 0.96% (bullish level); CRS© divergent (Ag bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.05, up from last report's 90.63 and below its 1-month average of 92.60. Gold value is weakly trending up after moving sideways for much of this month. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,627.8/oz which is $146.0/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 $0.0295/lb at $3.8335/lb (March contract, most active)

The gold-to-copper ratio is 462.47 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"; the ratio is near its 3-month moving average of 464.07 (Cu bearish, Price Domain B)

Copper 1-month CRS© is 1.72% (bullish level); CRS© convergence (Cu bullish)

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

Metals Week Average:
As of February 27, 2012
(updated weekly)

Ryan's Notes Average:
As of February 21, 2012
(updated twice weekly)

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

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

US$14.74/lb (US$32,500/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 $120/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 $108.83
ICE North Sea Brent crude $124.39
Spread (ICE- NYMEX) = $15.56 (last report, $15.21)

Here are the June contracts* with a narrower spread:

NYMEX light sweet crude $109.78
ICE North Sea Brent crude $122.93
Spread (ICE- NYMEX) = $13.15 (last report, $12.72)

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

NYMEX WTI 1-month CRS© is 3.06% (bullish level); CRS© weak divergence (Oil neutral)

Prices are near highs for 2012, we have $120+ Brent and $105+ NYMEX in June favoring high oil prices this spring into summer. A front-month spread >$20/bbl is a trouble sign, OK for now.

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 84.9 up from last report's 79.7. 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 62.2 to 12,920.73; the S&P 500 is down 7.37 points at 1,358.37

The Eureka Miner's Grubstake Portfolio is down 1.18% at $1,603,036.13 (what's this?).


Colonel Possum

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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