Apple Lifts Metals & Miners - What???

Brick and Rock Strata, Eureka, Nevada

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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