"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.

Monday, April 30, 2012

The Gold-Dollar Challenge - "Every Which Way But Loose"

Every Which Way but Loose

Latest Nevada Gas 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: 2012 Copper and Gold - Is a Red Metal Crash Next? (4/16/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,652.4/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 89.23 (gold value moving sideways)
Value Adjusted Gold Price© (VAGP) = $1,547.2/oz
COMEX - VAGP = $105.0/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains below its 3-month average (Cu bullish)


Morning Miners!

It is 5:48 AM. Have a cup of Philo Beddoe Special - it will turn you every which way but loose! The markets are uninspired today but this could become an interesting week with renewed fears about Europe and the big monthly jobs report on Friday. Let's take a moment to review what's happening with gold and the US dollar...

The Gold-Dollar Challenge - "Every Which Way But Loose"


Buried in the background notes of my Friday gold, silver and copper thoughts was the following observation:

The SPDR Gold Trust (GLD) is trending up to its 100-day average and the PowerShares DB US Dollar Index Bullish Fund (UUP) is threatening to break below its 300-day average. Gold and the dollar continue in a mirror image dance with their longer term averages but have changed places – now a bullish chart emerging for gold and bearish for the US dollar.

GLD tracks gold prices; UUP tracks the US Dollar Index.

I wrote this comment as a gold optimist, it would have a different last sentence if the ole Colonel was a gold skeptic, "Gold and the dollar continue in a mirror image dance with their longer term averages but have changed places – now twirling in circles going every which way but loose."

Yes, a borrowed title from Clint Eastwood's memorable movie may be the better interpretation until a new catalyst appears to move gold and the dollar to a different spot on the dance floor. Let's look at the charts, first here is GLD trapped below its 100-day moving average (red Line) since early-March:


And here is the U.S. dollar supported nicely by its 300-day average (red line) over roughly the same period:


Friday I thought the dollar may drop below its 300-day and GLD above its 100-day. Alas, there is enough new worry this morning about Europe to pull the dollar up on a weakening euro and push gold prices back to the middle of their April trading range - presently COMEX gold is $1,652.4 per ounce (trading range mean is $1,648.8 per ounce). UUP traded at $21.83 on the open just above its 300-day at $21.79. GLD opened at $160.5 below its 100-day at $162.50 - every which way but loose.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $40.07 down 1.45%
Newmont (NEM) $47.18 down 1.42%
McEwen Mining (MUX) 3.53 down 1.40% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.24 down 0.92%
Thompson Creek (TC) $6.04 down 0.66%
Freeport-McMoRan (FCX) $37.91 down 0.58% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.45 up 2.27%

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

ArcelorMittal (MT) $17.43 down 1.02% - global steel producer
POSCO (PKX) $83.48 down 0.88% - 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 below-par at 124.10, down from last report's 136.24 and below the 1-month moving average of 133.68. 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 $12.4/oz at $1,652.4/oz (June contract, most active)

COMEX silver is down $0.611/oz at $30.800/oz (July contract, most active)

The gold-to-silver ratio (Au:Ag) is 53.649 oz/oz

Silver 1-month CRS© is 1.47% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Ag bullish mid-term stability, overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 89.23, up from last report's 89.10 and below its 1-month average of 89.71. Gold value is oscillating about its average and moving sideways. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,547.2/oz which is $105.0/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 $0.0095/lb at $3.8155/lb (July contract, most active)

The gold-to-copper ratio is 433.08 lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domian; the ratio is below its 3-month moving average of 444.49 (Cu bullish trend in a bearishPrice Domain B)

Copper 1-month CRS© is 2.31% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (overall indicators mildly bullish)

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

Metals Week Average:
US$14.175
As of April 30, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 24, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.23/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 Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

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 $115/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 $104.06
ICE North Sea Brent crude $119.19
Spread (ICE- NYMEX) = $15.13 (last report, $15.03)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $104.77
ICE North Sea Brent crude $118.45
Spread (ICE- NYMEX) = $13.68 (last report, $13.55)

* NYMEX futures contracts have rolled forward, we now show June and August.

NYMEX WTI 1-month CRS© is 1.17% (bullish stability level); CRS© weak convergence (Oil neutral)

Prices remain high for 2012, we have $115+ Brent and $100+ NYMEX in August favoring high oil prices this summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign.

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 71.5 up from last report's 68.1. 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 37.31 points to 13,191.00; the S&P 500 is down 7.92 points at 1,395.44

The Eureka Miner's Grubstake Portfolio is down 0.93% at $1,356,754.69 (what's this?).

Cheers,

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

Friday, April 27, 2012

The Colonel's Friday Thoughts on Gold, Silver & Copper

Cloud Chorus

Latest Nevada Gas 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: 2012 Copper and Gold - Is a Red Metal Crash Next? (4/16/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,664.9/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 89.4 (gold value moving sideways)
Value Adjusted Gold Price© (VAGP) = $1,555.9/oz
COMEX - VAGP = $109.0/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains just below its 3-month average (Cu bullish)



Morning Miners!

It is 6:02 AM. Have a well deserved cup of Raine's famous Red Label TGIF. Have a great weekend!



The Colonel's Friday Thoughts on Gold, Silver & Copper

The Commerce Department just reported that the gross domestic product (GDP) grew at an inflation-adjusted annual rate of 2.2% in the first quarter of 2012. Not great but the metals & miners are feeling pretty good today. Here is my input to the Weekly Kitco Gold Survey:

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

A. Down, $1,650 per ounce target.

Q. Why?

A. Precious and base metal prices continue to be range-bound and relatively stable as central banks attempt to manage a global slowdown and Europe shows signs of deepening financial turmoil. Accommodative monetary is generally bullish for gold but the European debt crisis dampens price increases. Given lower demand expectations, base metals like copper are supported by growing supply tightness.

Lacking any major geopolitical shocks, price crashes in either precious or base metals are unlikely. For example, 1-month copper price volatility remains less than (0.91X) gold and gold ratios are still uncommonly stable (e.g., gold-to-copper & gold-to-silver).

For $1,650 per ounce gold we can expect to see silver in a range of $30.6-$32.4 per ounce; and copper, $3.59-$3.93 per pound.


Background Notes:

1. Without a new catalyst, it is likely that COMEX gold will trade down on expectations for further bad headlines in Europe but remain between its April intraday low ($1,613.0/oz) and high at ($1,685.4/oz). My target will return to the geometric mean of the April low and high or $1,650/oz (i.e. $1,648.8/oz).
2. Given the target gold price, the copper and silver price ranges are derived from the 1-month gold ratio mean (GCR & GSR) and respective ratio stability (CRS©)
3. My Gold Value Index© (GVI) equals 89.4 this morning down 18.8% from the Oct. 4 high of 109.97, and at levels of early August, 2011. The GVI is presently moving sideways.
4. The gold-to-copper ratio today is 437.10 pounds per ounce and below its 3-month moving average of 444.82 pounds per ounce. Remaining below this average and trending away from the 400 pounds per ounce level is bullish for copper. 3-month rolling correlation is +0.51, relative volatility is 0.91X gold and price sensitivity (beta) is +0.46. Importantly, the 1-month correlation remains positive at +0.44
5. The gold-to-silver ratio is trending above its historical norm at 53.090 (bearish); 3-month rolling correlation is +0.89, relative volatility is 1.51X gold and price sensitivity (beta) is 1.35
6. The SPDR Gold Trust (GLD) is trending up to its 100-day average and the PowerShares DB US Dollar Index Bullish Fund (UUP) is threatening to break below its 300-day average. Gold and the dollar continue in a mirror image dance with their longer term averages but have changed places – now a bullish chart emerging for gold and bearish for the US dollar.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $40.45 up 1.28%
Newmont (NEM) $48.03 up 0.63%
McEwen Mining (MUX) 3.61 up 1.12% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.30 up 0.30%
Thompson Creek (TC) $6.09 down 0.16%
Freeport-McMoRan (FCX) $38.11 up 0.95% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.45 up 4.65%

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

ArcelorMittal (MT) $17.55 up 1.50% - global steel producer
POSCO (PKX) $84.30 down 0.65% - 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 below-par at 135.74, up from last report's 119.56 and below the 1-month moving average of 135.93. 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 up $4.4/oz at $1,664.9/oz (June contract, most active)

COMEX silver is up $0.084/oz at $31.360/oz (July contract, most active)

The gold-to-silver ratio (Au:Ag) is 53.090 oz/oz

Silver 1-month CRS© is 1.39% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Ag bullish mid-term stability, overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 89.4, down from last report's 90.03 and below its 1-month average of 89.71. Gold value is oscillating about its average and moving sideways. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,555.9/oz which is $109.0/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 $0.0355/lb at $3.8090/lb (July contract, most active)

The gold-to-copper ratio is 437.10 lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domian; the ratio is below its 3-month moving average of 444.82 (Cu bullish trend in a bearishPrice Domain B)

Copper 1-month CRS© is 2.25% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Cu mid-term stability bullish)

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

Metals Week Average:
US$14.225
As of April 23, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 24, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.23/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 Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

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 $115/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 $104.53
ICE North Sea Brent crude $119.56
Spread (ICE- NYMEX) = $15.03 (last report, $15.51)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $105.20
ICE North Sea Brent crude $118.75
Spread (ICE- NYMEX) = $13.55 (last report, $13.89)

* NYMEX futures contracts have rolled forward, we now show June and August.

NYMEX WTI 1-month CRS© is 1.17% (bullish stability level); CRS© weak convergence (Oil neutral)

Prices remain high for 2012, we have $115+ Brent and $100+ NYMEX in August favoring high oil prices this summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we continue to fall away from that 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 is 68.7 down from last report's 72.5. 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 up 25.13 points to 13,229.75; the S&P 500 is up 1.69 points at 1,401.67

The Eureka Miner's Grubstake Portfolio is up 0.59% at $1,372,960.49 (what's this?).

Cheers,

Colonel Possum

Note 1: The actual comment was, "a bumpy journey to a new normal."

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

Thursday, April 26, 2012

"We are in a synchronized global slowdown..."

No reception, no bad news

Latest Nevada Gas 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: 2012 Copper and Gold - Is a Red Metal Crash Next? (4/16/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,652.9/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 90.03 (gold value moving sideways)
Value Adjusted Gold Price© (VAGP) = $1,534.1/oz
COMEX - VAGP = $118.8/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains just below its 3-month average (Cu neutral)



Þūnresdæg
Morning Miners!

It is 6:04 AM. Have a cup of Thor's Flash-no-Thunder java. Our favorite Norseman has been practicing how to make dark skies lighten without the usual thunder chorus - I think he may be taking lessons from Fed Chairman Ben Bernanke. After concluding their 2-day FOMC meeting there is a hint that the Fed is ready to lighten dark economic skies if necessary but the thunder of QE3 is moving farther and farther away, perhaps to be never heard. The FOMC kept gold alive, copper up and the dollar down but no spectacular moves by any - nice trick.

"We are in a synchronized global slowdown..."

Sometimes a market observer will coin a phrase that frames the big picture so well that it becomes a mainstay in the daily news patter. Pimco's CEO Mohamed El-Erian coined "new normal" to describe the difficult transition to a world of low returns and sputtering growth (see note 1).

News commentators have overused and abused the "new normal" part of El-Erian's thoughtful post-financial crisis remark to render it cliche and useless. Every week is a "new normal" if you watch too much business news.

I found a phrase this morning that may not have the staying power of "new normal" but offers a powerful global insight nonetheless. Allen Sykora of Kitco News covered it in one of his morning Market Nuggets:

Market Nuggets: FCStone: Gold Performance After FOMC Outcome Modestly Reassuring (Allen Sykora, Kitco News, Thursday April 26, 2012 8:40 AM)

FCStone commodities consultant Edward Meir found gold price resilience after the FOMC meeting "modestly reassuring." His broader observation is what caught my attention:

We think that in the days ahead, focus will revert to the still-festering European debt crisis and the fact that we are in a synchronized global slowdown, likely keeping pressure on the central banks to remain accommodative. In addition, European elections, at least from what we have been able to judge thus far, are generating a strong backlash towards austerity measures and a clear desire to pursue more definitive growth policies. Should the latter option be ‘voted in,’ it would mean that more expansionary fiscal and monetary policy will be placed on the table, something that should be constructive for the precious metals group going forward.

"Synchronized global slowdown" may never make CNBC's Closing Bell but I think Edward Meir coined a gem.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $39.73 down 0.60%
Newmont (NEM) $47.09 down 0.80%
McEwen Mining (MUX) 3.55 up 2.31% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.23 unchanged
Thompson Creek (TC) $6.00 down 0.66%
Freeport-McMoRan (FCX) $37.17 down 0.40% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.43 unchaged

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

ArcelorMittal (MT) $17.06 down 1.78% - global steel producer
POSCO (PKX) $84.14 down 1.12% - 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 below-par at 119.56, up from last report's 119.23 and below the 1-month moving average of 138.90. 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 up $10.6/oz at $1,652.9/oz (June contract, most active)

COMEX silver is up $0.399/oz at $30.755/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 53.744 oz/oz

Silver 1-month CRS© is 1.38% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Ag bullish mid-term stability, overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 90.03, up from last report's 89.78 and above its 1-month average of 89.66. Gold value is oscillating about its average and moving sideways. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,534.1/oz which is $118.8/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 $0.0345/lb at $3.7345/lb (May contract, most active)

The gold-to-copper ratio is 442.6 lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domian; the ratio is below its 3-month moving average of 445.06 (Cu bullish trend in a bearishPrice Domain B)

Copper 1-month CRS© is 2.66% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Cu mid-term stability bullish, overall Cu neutral)

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

Metals Week Average:
US$14.225
As of April 23, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 24, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.25/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 Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

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 $115/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 $104.13
ICE North Sea Brent crude $119.64
Spread (ICE- NYMEX) = $15.51 (last report, $14.54)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $104.89
ICE North Sea Brent crude $118.78
Spread (ICE- NYMEX) = $13.89 (last report, $13.22)

* NYMEX futures contracts have rolled forward, we now show June and August.

NYMEX WTI 1-month CRS© is 1.19% (bullish stability level); CRS© stalled divergence (Oil neutral)

Prices remain high for 2012, we have $115+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we continue to fall away from that 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 is 75.2 down from last report's 75.3. 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 up 38.86 points to 13,129.58; the S&P 500 is up 0.51 points at 1,391.20

The Eureka Miner's Grubstake Portfolio is down 0.01% at $1,352,504.19 (what's this?).

Cheers,

Colonel Possum

Note 1: The actual comment was, "a bumpy journey to a new normal."

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

Wednesday, April 25, 2012

Apple Lifts Metals & Miners - What???

Brick and Rock Strata, Eureka, Nevada

Latest Nevada Gas 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: 2012 Copper and Gold - Is a Red Metal Crash Next? (4/16/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,643.2/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 89.78 (gold value moving sideways)
Value Adjusted Gold Price© (VAGP) = $1,529.4/oz
COMEX - VAGP = $113.8/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains just above its 3-month average (Cu bearish trend)



Wōdnesdæg
Morning Miners!

It is 5:57 AM. Have a delicious cup of Raine's Red Label - that's right, none of Old Miner Woden's Cold Reality brew this morning! The market curmudgeon has packed it to his cave for the day. What's got his dander up this time?

Apple Lifts Metals & Miners - What???

Old Miner Woden never liked old fashioned dial phones so you can imagine what the codger thinks about Apple iPhones, "Worthless new-fangled gadgets, a box of them don't even make a good wheel chock!"

With that for background, you can further imagine his reaction when I read Woden what Janet Mirasola, managing director of R.J. O’Brien & Associates, said about markets today.

She is a well respected commodities analyst that believes Apple's blowout earnings report yesterday has a lot to do with 17 out of 19 global markets going green and an early morning shot in the arm for embattled metals & miners. You can read bout it in Allen Sykora's Kitco News Market Nugget:

Market Nuggets: R.J. O'Brien: Stronger Euro Provides Support To Base Commodities (Allen Sykora, Kitco News, Wednesday April 25, 2012 7:50 AM)

According to Janet, “The euro is trading near a three-week high above $1.3200 after bouncing from support yesterday at $1.3100, giving support to the base commodity basket that is priced in dollars as the Shiny One (gold) ticks back up towards $1,650, the Black One (oil) tests $104 and the Red One (copper) holds onto gains above $8,100.”

The London Metal Exchange headline is, "Base metals resilient on strong euro, copper tightness builds."

And why is the euro happy? Janet's theory is that global stock markets were helped by strong results from Apple (APPL) and the tech momentum quickly spread to European markets - who in the world doesn't love an iPhone? There was also help from Swedish Telecom firm Ericsson (Mrs. Olsen has an iPhone) and Spanish bank BBVA (which is good because Spain may be the next Greece and needs any shred of good news). So forget about supply and demand, pardner - what the world really needs is more iPhones to boost metal prices. Oh, I guess a little supply tightness in the red metal doesn't hurts either. COMEX copper is up $0.0360 at a welcome $3.7085 per pound.

The Colonel is going to bring Old Miner Woden some Red Label, he might need the caffeine in his old motor this morning. I think he had a crush on Mrs. Olsen back in the day.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $39.65 up 0.10%
Newmont (NEM) $46.50 up 0.28%
McEwen Mining (MUX) 3.38 up 1.20% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.21 up 1.58%
Thompson Creek (TC) $6.03 up 1.17%
Freeport-McMoRan (FCX) $37.18 up 0.51% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.44 down 2.22%

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

ArcelorMittal (MT) $17.37 up 5.15% - global steel producer
POSCO (PKX) $84.93 up 0.75% - 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 below-par at 119.23, up from last report's 106.75 and below the 1-month moving average of 142.55. 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 $0.6/oz at $1,643.2/oz (June contract, most active)

COMEX silver is up $0.084/oz at $30.830/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 53.299 oz/oz

Silver 1-month CRS© is 1.23% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Ag bullish mid-term stability, overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 89.78, down from last report's 90.21 and above its 1-month average of 89.57. Gold value is oscillating about its average. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,529.4/oz which is $113.8/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 $0.0360/lb at $3.7085/lb (May contract, most active)

The gold-to-copper ratio is 443.09 lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domian; the ratio is below its 3-month moving average of 445.11 (Cu bullish bounce in a bearishPrice Domain B)

Copper 1-month CRS© is 2.29% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Cu mid-term stability bullish, overall Cu neutral)

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

Metals Week Average:
US$14.225
As of April 23, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 24, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.25/lb

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

US$14.29/lb (US$31,550/metric ton)

Daily Oil Watch

Latest Nevada Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

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 $115/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 $103.86
ICE North Sea Brent crude $118.40
Spread (ICE- NYMEX) = $14.54 (last report, $14.71)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $104.58
ICE North Sea Brent crude $117.95
Spread (ICE- NYMEX) = $13.22 (last report, $13.91)

* NYMEX futures contracts have rolled forward, we now show June and August.

NYMEX WTI 1-month CRS© is 1.37% (bullish stability level); CRS© stalled divergence (Oil neutral)

Prices remain high for 2012, we have $115+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we continue to fall away from that 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 is 75.3 down from last report's 82.5. 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 up 98.13 points to 13,099.69; the S&P 500 is up 17.65 points at 1,389.62

The Eureka Miner's Grubstake Portfolio is up 0.18% at $1,349,543.73 (what's this?).

Cheers,

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

Tuesday, April 24, 2012

Moly Miners Stumble; Moly Prices Steady

Close the door when you leave..., Eureka, Nevada

*** BREAKING NEWS *** General Moly (GMO) got a nice mid-morning pop, presently up 4.4% to $3.09/share; moly benchmark miner Thompson Creek (TC) is down 1.3% at $5.92/share (9:31 AM PDT)

Latest Nevada Gas 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: 2012 Copper and Gold - Is a Red Metal Crash Next? (4/16/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,645.2/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 90.21 (gold value moving sideways)
Value Adjusted Gold Price© (VAGP) = $1,523.8/oz
COMEX - VAGP = $121.4/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains just above its 3-month average (Cu bearish trend)



Morning Miners!

It is 6:07 AM. Have a cup of Ruby T's famous "Blue Sky" - it's a little cold, Old Miner Woden tip-toed in this morning and pulled the plug. Our market bull will have his hide when she gets a chance. Ruby is at least a happy to see copper up a 4 cents today and Woden would be pleased that gold bounced 13 bucks in morning trading from yesterday's close. On days when the dollar is down, my break room bull and bear can at least have something to cheer but what about the poor moly miners?

Moly Miners Stumble; Moly Prices Steady

It's been a rough spring for miners and moly miners in particular. The irony is that moly prices have been pretty steady out west and across the pond. Western moly oxide is in a range of $14.20 to $14.225 per pound compared to euro-moly oxide at $14.25 per pound. The London Metal Exchange (LME) 3-month seller's contract even ticked up $250 per metric ton yesterday to $31,750 ($14.40 per pound). Not too bad given today's downbeat macroeconomic environment (see Copper & Molybdenum Report below).

A look at the fate of our benchmark miner Thompson Creek (TC) appears to tell a different story. Here is a 6-month chart of share price (candlestick plot) versus the important 200-day moving average (green line):


A nice rally from late-November pushed $9.5 prices in early-February and it's been pretty much downhill ever since. This morning TC is trading below $6 and its 200-day average of $7.50 at $5.98/share. Ouch.

Thompson Creek is a small-cap senior miner and General Moly is a junior undergoing prolonged agony starting the local molybdenum-rich Mt. Hope Project. I'm sure the folks at Eureka Moly LLC (subsidiary of General Moly in Eureka County) would rather be gripping about the cost of diesel like Thompson Creek CEO Kevin Loughrey than waiting for yet another ruling on water rights (see Mt. Hope News sidebar in the upper right column).

Here's a six-month chart of General Moly (GMO):


GMO also enjoyed a robust rally in 2012 but it too faded like benchmark Thompson Creek (TC). GMO rose above $4.0 in early-February and this morning is trading below $3 and its 200-day average of $3.50 at $2.98/share. Nuts.

One glimmer of good news is that even with all the water rights issues, General Moly still beats the benchmark moly miner on a six-month basis. Here's a percent comparison chart of GMO (blue) and TC (green):


Although TC rallied a little stronger compared to GMO early in the year (32% versus 25%), it is presently down 7.5% to Thompson Creek's 16% over the entire period.

Hang in there, pardner.

As we've said before - The Eureka Miner respects the views of all miners, farmers and ranchers and their valuable contribution to Eureka County and looks forward to a resolution of the Mt. Hope water rights issue that provides an equitable solution for all concerned.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $39.82 up 0.33%
Newmont (NEM) $46.51 up 0.45%
McEwen Mining (MUX) 3.38 up 0.30% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $2.98 up 0.68%
Thompson Creek (TC) $5.94 down 1.00%
Freeport-McMoRan (FCX) $37.08 down 0.22% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.45 down 2.17%

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

ArcelorMittal (MT) $16.46 up 1.11% - global steel producer
POSCO (PKX) $83.91 up 0.23% - 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 below-par at 106.75, up from last report's 96.89 and below the 1-month moving average of 145.71. 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 up $12.6/oz at $1,645.2/oz (June contract, most active)

COMEX silver is up $0.444/oz at $30.975/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 53.114 oz/oz

Silver 1-month CRS© is 1.12% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Ag bullish mid-term stability, overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 90.21, down from last report's 90.57 and above its 1-month average of 89.49. Gold value is oscillating about its average. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,523.8/oz which is $121.4/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 $0.0390/lb at $3.6650/lb (May contract, most active)

The gold-to-copper ratio is 448.89 lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domian; the ratio is above its 3-month moving average of 444.93 (Cu bearish trend in a bearishPrice Domain B)

Copper 1-month CRS© is 2.32% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Cu mid-term stability bullish, overall indicators bearish)

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

Metals Week Average:
US$14.225
As of April 23, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 20, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.25/lb

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

US$14.40/lb (US$31,750/metric ton)

Daily Oil Watch

Latest Nevada Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

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 $115/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 $103.86
ICE North Sea Brent crude $118.57
Spread (ICE- NYMEX) = $14.71 (last report, $15.23)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $104.58
ICE North Sea Brent crude $117.95
Spread (ICE- NYMEX) = $13.37 (last report, $13.91)

* NYMEX futures contracts have rolled forward, we now show June and August.

NYMEX WTI 1-month CRS© is 1.37% (bullish stability level); CRS© stalled divergence (Oil neutral)

Prices remain high for 2012, we have $115+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we're falling away from that now; latest spread is a mix of domestic bottlenecks and persistent but diminished Iran concerns.

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 82.5 down from last report's 87.8. 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 up 73.49 points to 13,000.66; the S&P 500 is up 4.01 points at 1,370.95

The Eureka Miner's Grubstake Portfolio is up 0.31% at $1,340,647.79 (what's this?).

Cheers,

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

Monday, April 23, 2012

Europe, China Weigh on Metals & Miners; EMI Plunges Below 100

Icicles on the Grill, Eureka, Nevada

Latest Nevada Gas 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: 2012 Copper and Gold - Is a Red Metal Crash Next? (4/16/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,627.5/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 90.57 (gold value may resume trending lower)
Value Adjusted Gold Price© (VAGP) = $1,501.4/oz
COMEX - VAGP = $126.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains just above its 3-month average (Cu bearish trend)


Morning Miners!

It is 6:00 AM. Have a cup of hot Kevlar Koffee - you may need it. It is always tough to start a market week with 19 of 19 global markets in the red; gold, silver and copper in the red and 30-year Treasury yields threatening to drop below 3%...

Europe, China Weigh on Metals & Miners; EMI Plunges Below 100

Who's the culprit behind this sea of red? Europe, of course, as French voters tilt towards socialist opposition candidate Francois Hollande and a budget crisis erupts in the Netherlands. Both events are interpreted to threaten the fragile stabilization of the European sovereign debt crisis - a potential retreat from austerity in France and collapse of austerity talks in Holland. Nuts.

If political uncertainty in France and the Netherlands weren't enough, Monday's woes deepened on news that the euro zone's private sector contracted the most in five months in April. The Europe Purchasing Manager's Index (PMI) fell to 47.4 in April from 49.1 in March - a PMI less than 50 indicates economic contraction.

Things appeared a little brighter in China with the release of the HSBC China flash April PMI which beat its March number but at 49.1 registers its sixth straight month of economic contraction. Nuts, no help from China.

COMEX gold is down $15.3 to $1,627.5 per ounce; COMEX silver lost a buck at $30.640 per ounce and our global bellwether COMEX copper is down nearly 10 cents at $3.6050 per pound. The most troubling metric for this report is the Eureka Miner's Index© (EMI) which just fell below the key-100 level sitting presently at 96.89 - a very bearish moment for the Metals & Miners in my view.

Here is a plot of the EMI through last Friday's close at a healthier 125.87 (a larger more readable chart can be found near the bottom of this blog page):


You may remember the ole Colonel sounded an alarm March 29 for worse things to come for the metals & miners:

The thing that does have the Colonel's attention is our trusty Eureka Miner's Index© (EMI). As readers of this report know the EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County and surrounding areas. It includes three benchmark miners, interest rates and market volatility together with the prices of oil, gold, copper and silver...

The first sign of trouble was when the EMI fell below its 1-month moving average and plumbed 140.0 on March 6. That wasn't good news but at least the EMI didn't drop below the dotted blue trend line from the Oct. 4 low. Since then the EMI has skirted both the average and the trend but this morning it fell below both with conviction registering a chilly 150.6.
(Eureka Miner, 3/12/2012)

Let me pour you another cup of Kevlar Koffee, pardner.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $39.12 down 2.83%
Newmont (NEM) $45.90 down 2.86%
McEwen Mining (MUX) 3.40 down 2.86% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.00 down 1.64%
Thompson Creek (TC) $5.98 down 2.92%
Freeport-McMoRan (FCX) $36.46 down 2.95% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.43 down 6.52%

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

ArcelorMittal (MT) $16.19 down 4.88% - global steel producer
POSCO (PKX) $83.05 down 0.95% - 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 below-par at 96.89, down from last report's 125.87 and below the 1-month moving average of 148.59. 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 $15.3/oz at $1,627.5/oz (June contract, most active)

COMEX silver is down $1.011/oz at $30.640/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 53.117 oz/oz

Silver 1-month CRS© is 1.01% (bullish level); very stable ratio; 1-month & 3-month < 3% (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 90.57, up from last report's 89.27 and below its 1-month average of 89.38. Gold value is oscillating about its average. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,501.4/oz which is $126.1/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 0.0930/lb at $3.6050/lb (May contract, most active)

The gold-to-copper ratio is 451.33 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"; the ratio is above its 3-month moving average of 444.93 (Cu bearish trend in a bearishPrice Domain B)

Copper 1-month CRS© is 2.34% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Cu bullish)

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

Metals Week Average:
US$14.225
As of April 23, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 20, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.25/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 Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

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 $115/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 $102.22
ICE North Sea Brent crude $117.45
Spread (ICE- NYMEX) = $15.23 (last report, $14.58)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $102.99
ICE North Sea Brent crude $116.90
Spread (ICE- NYMEX) = $13.91 (last report, $13.23)

* NYMEX futures contracts have rolled forward, we now show June and August.

NYMEX WTI 1-month CRS© is 1.62% (bullish level); CRS© stalled divergence (Oil neutral)

Prices remain high for 2012, we have $115+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we're falling away from that now; latest spread is a mix of domestic pipeline bottlenecks and persistent but diminished Iran concerns.

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 87.8 up from last report's 76.1. 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 159.12 points to 12,870.14; the S&P 500 is down 17.22 points at 1,361.31

The Eureka Miner's Grubstake Portfolio is down 2.11% at $1,330,457.30 (what's this?).

Cheers,

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

Friday, April 20, 2012

The Colonel's Friday Thoughts on Gold, Silver & Copper; Thompson Creek (TC) Reports

European American Resources, Eureka, Nevada

Latest Nevada Gas 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: 2012 Copper and Gold - Is a Red Metal Crash Next? (4/16/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,640.0/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 89.11 (gold value may resume trending lower)
Value Adjusted Gold Price© (VAGP) = $1,537.8/oz
COMEX - VAGP = $102.2/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains just above its 3-month average (Cu bearish trend weakening)



Morning Miners!

It is 5:46 AM. Have a welcome cup of Raine's delicious Red Label TGIF. Let's look forward to better markets next week...


The Colonel's Friday Thoughts on Gold, Silver & Copper

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, $1,660 per ounce target.

Q. Why?

Precious and base metal prices continue to be range-bound and but relatively stable given the emerging global outlook: a better but frustratingly bumpy U.S. recovery, lower-than-expected Chinese demand for raw materials and a Europe that has stabilized but shows new signs of deterioration.

Pricing volatility is exacerbated by on-again/off-again anticipation of further quantitative easing in the U.S. and China. There is growing evidence that China’s central bank may indeed increase liquidity which should support gold price.

Gold value relative to key commodities may resume its trend lower from its mid-March move up – typically bullish for copper and silver. If the US dollar index falls below its 200-day average and gold stays above its 300-day, gold prices could move higher even if relative value declines.

Lacking any major geopolitical shocks, price crashes in either precious or base metals are unlikely. For example, 1-month copper price volatility is actually less than (0.87X) gold and gold ratios are uncommonly stable (e.g., gold-to-copper & gold-to-silver).

For $1,660 per ounce gold we can expect to see silver in a range of $31.6-$32.7 per ounce; and copper, $3.61-$3.98 per pound.


Background Notes:

1. Next week, it is likely for COMEX gold to trade between its April intraday low ($1,613.0/oz) and high at ($1,685.4/oz) with a positive bias from the mean. Therefore, my target will be $1,660/oz: slightly above this week’s high ($1,659.60/oz) and up from last week’s target which was the geometric mean of the April low and high or $1,650/oz (i.e. $1,648.8/oz)

2. Given the target gold price, the copper and silver price ranges are derived from the 1-month gold ratio mean (GCR & GSR) and the respective ratio stability (CRS©)

3. My Gold Value Index© (GVI) equals 89.11 this morning down 19.0% from the Oct. 4 high of 109.97, and at levels of early August, 2011.

4. The GVI may resume its trend lower from its mid-March move up – typically bullish for key commodities.

5. The gold-to-copper ratio today is 445.53 pounds per ounce and slightly above its 3-month moving average of 444.82 pounds per ounce. Remaining above this average and trending away from the 400 pounds per ounce level is bearish for copper but this condition may be weakening. 3-month rolling correlation is +0.47, relative volatility is 0.87X gold and price sensitivity (beta) is +0.41. Importantly, the 1-month correlation remains positive at +0.45

6. The gold-to-silver ratio is slightly above its historical norms at 51.825; 3-month rolling correlation is +0.89, relative volatility is 1.39X gold and price sensitivity (beta) is 1.24

7.The SPDR Gold Trust (GLD) is above its 300-day moving average and the PowerShares DB US Dollar Index Bullish Fund (UUP) is below its 100-day average. Gold and the dollar continue in a mirror image dance with their longer term averages – bearish for gold and bullish for the US dollar. If the dollar index falls below its 200-day average this symmetry is challenged – potentially bullish for gold.

Thompson Creek (TC) Reports

Moly benchmark miner Thompson Creek (TC) reported after the bell yesterday. The ole Colonel hasn't had the time to go through this in detail but investors are punishing TC a bit this morning: $6.25/share down 2.2%

Here's the link:

Thompson Creek Announces Completion of the Endako Mill Expansion Project and Preliminary First Quarter 2012 Production and Cash Cost Results (Press Release, 4:37 PM EDT, 4/19/2012)

Kevin Loughrey, Chairman and Chief Executive Officer of Thompson Creek, had this to say:

"We are extremely pleased to have completed the construction of the new mill at the Endako mine and to have achieved design capacity throughput so quickly in the start-up process," said Kevin Loughrey, Chairman and Chief Executive Officer of Thompson Creek. "Our dedicated employees, contractors, and suppliers performed a remarkable job commissioning the new mill and achieving design capacity throughput in approximately 20 days under extreme and difficult winter conditions, with temperatures at times reaching -40°C," added Mr. Loughrey.

"The higher costs and lower production that we experienced during the commissioning and start-up phase are typical with projects like this, and although production was lower and costs were higher from the Endako mine in the first quarter of 2012, through continued optimization we expect to make up for the lower production throughout the remainder of 2012 and to meet our previously announced 2012 production guidance from the Endako mine of approximately 14 to 15 million pounds of molybdenum on a 100% basis, or 10 to 11 million pounds for the Company's 75% share," said Mr. Loughrey. "We anticipate meeting our total 2012 production guidance of approximately 26 to 28 million pounds of molybdenum; however, due to inflationary pressures on diesel fuel, consumables, and energy, we are currently tracking to the higher range of the Company's current 2012 average cash cost guidance of approximately $7.75 to $9.00 per pound produced. If the current inflationary pressures continue, our costs will continue to increase and potentially rise above the current guidance," added Mr. Loughrey.


You may remember that fuel prices have hit moly miners especially hard compared to copper or gold miners on a year-over-year basis. Moly and copper miners are both paying a healthy premium for oil in terms of their primary product; and gold miners, a discount.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $40.52 down 1.05%
Newmont (NEM) $47.87 up 0.13%
McEwen Mining (MUX) 3.55 up 2.90% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.12 up 1.63%
Thompson Creek (TC) $6.25 down 2.19%
Freeport-McMoRan (FCX) $37.94 down 0.24% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.47 unchanged

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

ArcelorMittal (MT) $17.22 up 1.59% - global steel producer
POSCO (PKX) $83.66 up 0.84% - 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 129.40, down from last report's 131.37 and below the 1-month moving average of 153.41. 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 $1.4/oz at $1,640.0/oz (June contract, most active)

COMEX silver is down $0.134/oz at $31.645/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.825 oz/oz

Silver 1-month CRS© is 0.87% (bullish level); very stable ratio; 1-month & 3-month < 3% (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 89.11, down from last report's 90.66 and below its 1-month average of 89.22. Gold value may resume trending lower. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,537.8/oz which is $102.2/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 $0.0535/lb at $3.6810/lb (May contract, most active)

The gold-to-copper ratio is 445.53 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"; the ratio is above its 3-month moving average of 444.82 (a weakening Cu bearish trend in a bearishPrice Domain B)

Copper 1-month CRS© is 2.38% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Cu bullish)

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

Metals Week Average:
US$14.225
As of April 16, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 17, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.25/lb

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

US$14.52/lb (US$32,000/metric ton)

Daily Oil Watch

Latest Nevada Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

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 $115/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 $104.06
ICE North Sea Brent crude $119.07
Spread (ICE- NYMEX) = $14.58 (last report, $16.19)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $105.17
ICE North Sea Brent crude $118.40
Spread (ICE- NYMEX) = $13.23 (last report, $15.14)

* NYMEX futures contracts have rolled forward, we now show June and August.

NYMEX WTI 1-month CRS© is 1.62% (bullish level); CRS© stalled divergence (Oil neutral)

Prices remain high for 2012, we have $115+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we're falling away from that now; latest spread is a mix of domestic pipeline bottlenecks and persistent but diminished Iran concerns.

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 76.2 down from last report's 81.5. 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 up 98.73 points to 13,062.83; the S&P 500 is up 7.93 points at 1,384.85

The Eureka Miner's Grubstake Portfolio is up 0.44% at $1,368,460.53 (what's this?).

Cheers,

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