"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, March 19, 2012

Miners 2012 - "Mark time, MARCH"

Day at the Beach - 350,000,000 B.C. Devil's Gate, Eureka, Nevada

Latest Nevada Fuel Prices (click this link)

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 Bids Adieu to Gold and Silver (3/19/2011)

My Latest International Business Times commentary: Silver to Gold, “Whither Thou Goest…” (02/27/2011)

This morning's...
COMEX Gold price = $1,655.5/oz (April contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 86.10 (gold value trending down)
Value Adjusted Gold Price© (VAGP) = $1,601.3/oz
COMEX - VAGP = $54.2/oz; gold is trading at a declining premium to key commodities; the gold-to-copper ratio remains below its 3-month average and compressing (Cu bullish)

Morning Miners!

It is 6:01 AM. Have a hot cup of Monday Morning and then let's do a little close order drill to warm up - hup, hup, hup...two, three, four

Miners 2012 - "Mark time, MARCH"

If you have never enjoyed the delight of marching to drill commands, "Mark time, MARCH" is the command to march in place and go nowhere. That's what the miners have done for the last 6-market days, at least according to this report's Eureka Miner's Index© (EMI). The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. These include the share price of the three benchmark miners that we've been examining in the Miners 2012 Series, interest rates, market volatility and oil, copper, gold and silver prices. Individually each factor has moved about quite a bit in the last week but the composite index has averaged 201.61 with less than an 8 point change in either direction; today the EMI is 201.21. Truly amazing.

Typically in markets when things move sideways for an extended period the likelihood of a dramatic move up (or down) is increased. The expression is "the longer the base, the higher the space." The EMI is faithfully forming a base around 200, comfortably above our key-level of 100 which is the dividing line between cold and hot markets. As, the EMI departs from this base there will be more "space" to move higher (or lower). Why such things are so is "beyond our ken to know" as Dennis Gartman of the well respected Gartman Letter often says.

Here is the latest EMI chart from December, 2010 to last Friday's close (a larger and more readable plot can be found at the bottom of this blog page):

The EMI (magenata) is just below its 1-month moving average (blue). Breaking above the average would be bullish for the mining sector going forward; breaking it dramatically would be very bullish. On the other hand, if the EMI drops it will soon challenge the lower trend (dotted line) which would be a bearish move; breaking to the downside with drama would be very bearish. For the time being it is "Mark time, MARCH."

Stay tuned, pardner. Theory says we're approaching something a lot more exciting to watch than close order drill.

Copper Bids Adieu to Gold and Silver

Kitco news just posted my latest commentary on our favorite metals:

Copper Bids Adieu to Gold and Silver (Kitco News, 3/19/2011)

This is the sequel to Silver & Copper 2012 - A Tale of Two Metals. Our favorite metals again find themselves in 18th century France at the mercy of a vengeful Madame...

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $44.03 up 0.18%
Newmont (NEM) $53.95 up 0.37%
McEwen Mining (MUX) 4.16 up 3.23% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.35 up 2.13%
Thompson Creek (TC) $7.09 up 1.29%
Freeport-McMoRan (FCX) $39.60 up 2.70% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $n/a
Timberline Resources (TLR) $0.51 up 2.00%

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

ArcelorMittal (MT) $20.97 up 1.01% - global steel producer
POSCO (PKX) $89.57 up 0.83% - 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 201.21, up from last report's 200.54 and below the 1-month moving average of 206.80. The 1-month average is falling but still 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 $0.3/oz at $1,655.5/oz (April contract, most active)

COMEX silver is down $0.114/oz at $32.490/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 50.940 oz/oz

Silver 1-month CRS© is 1.89% (bullish level); CRS© weak divergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 86.38, down from last report's 86.70 and below its 1-month average of 89.42. Gold value is now solidly trending down. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,601.3/oz which is only $54.2/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 up $0.0165/lb at $3.8945/lb (May contract, most active)

The gold-to-copper ratio is 425.09 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"; the ratio is below its 3-month moving average of 452.05 (Cu bullish trend emerging in Price Domain B)

Copper 1-month CRS© is 3.03% (bullish level); divergent, compressing ratio(Cu bullish)

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

Metals Week Average:
As of March 19, 2012
(updated weekly)

Ryan's Notes Average:
As of March 16, 2012
(updated twice weekly)

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

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

US$14.52/lb (US$32,000/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 $107.87
ICE North Sea Brent crude $125.90
Spread (ICE- NYMEX) = $18.03 (last report, $18.10)

Here are the June contracts* with a narrower spread:

NYMEX light sweet crude $108.81
ICE North Sea Brent crude $125.38
Spread (ICE- NYMEX) = $16.57 (last report, $16.03)

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

NYMEX WTI 1-month CRS© is 2.76% (bullish level); CRS© divergent (Oil bearish)

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 between Brent and WTI >$20/bbl is a trouble sign, OK for now but getting closer.

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 is 68.13 down from last report's 68.7. A level above 200 is time for serious concern - we are now well below that level. The highest level recorded since inception was 271.0 Aug. 9, 2011; the lowest level is 65.1 on Mar. 13, 2012

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 6.66 to 13,225.96; the S&P 500 is up 1.45 points at 1,405.62

The Eureka Miner's Grubstake Portfolio is up 0.85% at $1,464,371.03 (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

No comments:

Post a Comment