"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.

Friday, May 25, 2012

The Colonel's Gold, Silver & Copper Prices for Next Week

Old Glory, Eureka, Nevada


Latest Nevada Gas Prices (click this link)


NEW WEEKLY SCHEDULE - The Eureka Miner takes a brief hiatus from daily reports

Friday Commentary & Kitco Gold Survey
The Colonel's Weekly Gold, Silver & Copper Price Predictions
Weekly Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Update
- Eureka Miner's Million Dollar Grubstake Portfolio


My latest Kitco commentary: Gold Prices Falling, Gold Value Rising (5/29/2012)

This morning's...
COMEX Gold price = $1,563.1/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 94.44 (gold value gaps up, 5/4; gold value trending higher with respect to key commodities oil, copper & silver)
Value Adjusted Gold Price© (VAGP) = $1,404.1/oz
COMEX - VAGP = $180.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains above its 3-month average (bearish condition but average moving sideways, Cu overall bearish)



Morning Miners!

It is 6:00 AM. Have a welcome cup of Raine's delicious Red Label TGIF. Have a safe and happy Memorial Day weekend!



The Colonel's Gold, Silver & Copper Prices for Next Week

 I think the observation from Reuters Wednesday says a lot about commodities of late:

"Metals warehouses in China are said to be so full that workers are starting to stockpile iron ore in granaries and copper in car parks."

One has to wonder if we're headed back to the October market lows of last year?

Three tidbits from the Colonel's foxhole:
  1. Using this morning's COMEX prices, gold price adjusted for oil, copper & silver historical norms is $1,383.0 per ounce. In other words, gold trading presently at $1,563.1 per ounce is priced at a $180 per ounce premium to these three commodities.
  2. On the morning of Nov. 30, 2010 gold traded at $1,384.9/oz or a $1/oz premium to this same aggregate of oil, copper and silver prices (i.e. adjusted price then was $1,383.9/oz) - gold was "fairly valued" with respect to these key commodities
  3. At the S&P 500 low on Oct. 4, 2011 the adjusted price was a lowly $1,255.6/oz and a $397/oz premium to the same commodities (the morning gold price then was $1,652.5/oz)
Scary but still not October yet - some of this will be in my upcoming Kitco commentary on gold value.

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. Up slightly, $1,575 per ounce target.

Q. Why?

A. Gold will likely remain range bound between its mid-May low of $1,526.7 per ounce and Monday’s high of $1,599.0; $1,600 per ounce is the key level to break for higher gold prices.

Next week’s outlook is driven by the same factors that drove this week only conditions appear to have worsened – the European debt crisis may be spreading and economic data from Germany is weaker than expected; in China, brimming commodity inventories deepen demand concerns although the government may be ready to take simulative steps to boost their economy.

Presently key commodities oil, copper and silver have a high positive correlation with gold and in turn, gold has a high correlation with the euro. In marked contrast, when the S&P 500 bottomed Oct. 4, 2011, oil and copper were negatively correlated with the yellow metal and all three gold ratios were wildly divergent (gold-to-oil,-copper & -silver).

This suggests the downturn in precious and base metal prices is at least orderly and sets the stage for regaining substantial lost ground on any improving news from Europe even though significant challenges still exist for the Chinese demand story and pace of U.S. recovery.

For $1,575 per ounce gold we can expect to see silver in a range of $27.8-$29.9 per ounce; and copper, $3.37-$3.66 per pound.

Background Notes:
  1. Gold is range bound between the May 16 low of $1,526.7 per ounce and the May 21 high of $1,599.0. My $1,575 per ounce target is biased slightly above the geometric mean ($1,562.4 per ounce) of the trading range. $1,600 per ounce is the key psychological barrier to break.
  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 94.44 this morning, roughly where it was last Friday and down 14.0% from the Oct. 4 high of 109.97. Gold value is trending higher with respect to key commodities oil, copper & silver.
  4. The gold-to-copper ratio today is 454.52 pounds per ounce and above its 3-month moving average of 441.35 pounds per ounce. Remaining above this average and trending away from the 400 pounds per ounce level is bearish for copper but the average is still moving sideways for now (1-month rolling correlation is +0.90; 3-month is +0.83). 3-month relative volatility is 1.41X gold and price sensitivity (beta) is +1.17
  5. The gold-to-silver ratio is trending above its historical norm at 55.4 (bearish); 3-month rolling correlation is +0.96, relative volatility is 2.33X gold and price sensitivity (beta) is 2.24

Friday's Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $39.81 up 0.76%
Newmont (NEM) $48.88 up 0.51%
McEwen Mining (MUX) $2.44 up 1.24%  (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $2.56 down 0.39%
Thompson Creek (TC) $3.73 up 0.81%
Freeport-McMoRan (FCX) $32.57 unchanged (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.39 unchanged

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

ArcelorMittal (MT) $14.23 down 0.42% - global steel producer
POSCO (PKX) $74.90 down 0.20% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 5/24 to reflect current 200-day moving averages for benchmark miners.

The EMI is below-par at 71.31, up from last report's 39.72 and below the 1-month moving average of 76.79. The 1-month average is below the key 100-level (bearish condition)

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. The 2012 YTD low is 39.45 recorded 05/23/2012. 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 $5.6/oz at $1,563.1/oz (June contract, most active)

COMEX silver is up $0.028/oz at $28.185/oz (July contract, most active)

The gold-to-silver-ratio (Au:Ag) is 55.459 oz/oz

Silver 1-month CRS© is 1.88% (bullish stability level); weak stability divergence (Ag overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 94.44, down from last report's 95.11 and above its 1-month average of 91.92. Gold value gaped up Friday, 5/4/2012, and is trending higher; a bearish indication for key commodities. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,383.0/oz which is $180.1/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 & silver 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 $0.0105/lb at $3.4390/lb (July contract, most active)

The gold-to-copper ratio is 454.52lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domain; the ratio is below its 3-month moving average of 441.35 (Cu overall bearish conditions in a bearish Price Domain B)

Copper 1-month CRS© is 2.05% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (however, overall indicators bearish)

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

Metals Week Average:
US$13.775

As of May 22, 2012
(updated weekly)

Ryan's Notes Average:
US$13.85

As of May 22, 2012
(updated twice weekly)
European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.65/lb

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

US$13.77/lb (US$30,350/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 $105/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 $90.66
ICE North Sea Brent crude $106.68
Spread (ICE- NYMEX) = $16.02 (last report, $15.87)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $91.22
ICE North Sea Brent crude $105.70
Spread (ICE- NYMEX) = $14.50 (last report, $14.42 )

* NYMEX futures contracts have rolled forward, we now show July and September

NYMEX WTI 1-month CRS© is 3.28% (neutral stability level); weak stability divergence (WTI overall indicators bearish)

Prices remain high for 2012 but have pulled back dramatically, we have $105+ Brent and $90+ NYMEX in September still favoring high but moderating oil prices this summer and early fall. 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 86.9 down from last report's 101.6. 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 28.45 points to 12,501.30; the S&P 500 is up 0.16 points at 1,320.84

The Eureka Miner's Grubstake Portfolio is up 0.19% at $1,199,864,72 (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, May 18, 2012

The General Rocks Eureka; The Colonel's Latest Thoughts on Gold, Silver & Copper Prices

The Eric Dodge Band comes to the Eureka Opera House

Latest Nevada Gas Prices (click this link)

NEW WEEKLY SCHEDULE - The Eureka Miner takes a brief hiatus from daily reports

Friday Commentary & Kitco Gold Survey
The Colonel's Weekly Gold, Silver & Copper Price Predictions
Weekly Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Update
- Eureka Miner's Million Dollar Grubstake Portfolio


My latest Kitco commentary: Are Gold and Silver Parting Ways? (5/07/2012)

This morning's...
COMEX Gold price = $1,589.7/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 94.60 (gold value gaps up, 5/4; gold value trending higher with respect to key commodities oil,copper & silver)
Value Adjusted Gold Price© (VAGP) = $1,404.1/oz
COMEX - VAGP = $185.6/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains above its 3-month average (bearish condition but average moving sideways, Cu overall bearish)



Morning Miners!

It is 8:18 AM but the ole Colonel was up a lot earlier trying to make sense out of these crazy markets. Let me pour you a hot cup of Raine's Red Label and I'll first tell you about a great time last night....


The General Rocks Eureka

General Moly (GMO) treated Eurekans to a terrific night of food and entertainment at the historic Eureka Opera House in appreciation of the communities' support of the Mt. Hope molybdenum project. With all the challenges of bringing this mine to Eureka County, differences were set aside last night and I didn't see a soul that wasn't having fun. Food was catered by the Pony Express Deli and featured barbequed beef, beans, taters, salad and chocolate chip cookies the size of a small frisbee.



The Eric Dodge Band from St. George Utah played multiple sets of great music including original compositions and favorites from the likes of George Strait, John Michael Montgomery, Hank Williams and Johnny Cash.

Eric Dodge told his inspiring tale of being stranded on a cruise ship during the 9-11 crisis to his present success as a country western star - an odyssey of a lone karaoke singer trying to rally dispirited passengers and not realizing he had hidden musical talents to a performer of hit tunes on the country charts. His band featured talented musicians including his brother on guitar and a keyboard player with a voice as deep as mineshaft. If you missed them, check out the Eric Dodge band, pardner!



Last night was a scene replayed so many times since the 1880s in this small western town - political season in high gear at the Opera House packed with local politicians spreading charm among miners, ranchers and farmers with a great band on stage to keep everyone's toes a-tappin' There is quite a field running for Eureka County Commissioner seats this year and the outcome of the elections could have a significant impact on new mining projects like Mt. Hope.

Winston Churchill once said, “democracy is the worst form of government except all the others that have been tried.” I think last night was a good example of democracy at its best and the ole Colonel was proud to be in a lively crowd of diverse opinions.

The Eureka Miner respects the views of all interested parties and their valuable contribution to Eureka County. I look forward to a resolution of the ongoing Mt. Hope water rights issue that provides an equitable solution for all concerned. As General Moly's Zach Spencer reminded us, successful completion of the permitting process is expected the second half of this year and then it's mining time.



The Colonel had the pleasure of talking a spell with General Moly's Chief Operating Officer Bob Pennigton. I like Bob not only because we both have engineering backgrounds but he too is an optimist. Mining strategic minerals like molybdenum is exciting stuff and adds to the economic diversity of Northern Nevada in a manner that only grows in significance with diminishing global resources. Let's take a responsible first step with General Moly into that future.



General Moly threw a second food and music bash in Crescent Valley Wednesday that was well attended. Thanks to the General and the best to all!

The Colonel's Latest Thoughts on Gold, Silver & Copper Prices

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. Up, $1,600 per ounce target.

Q. Why?

It is likely the Thursday, May 17, gold rally will continue into next week but stall below the COMEX gold high of $1,607.0 of May 9.

Although the market downturn this week brings back memories of the October lows of last year there is a striking difference – presently key commodities oil, copper and silver have a high positive correlation with gold and in turn, gold has a high correlation with the euro. When the S&P 500 bottomed Oct. 4, 2011, oil and copper were negatively correlated with the yellow metal and all three gold ratios were wildly divergent (gold-to-oil,-copper & -silver).

This suggests the euro-headline downdraft of oil, precious and base metal prices is at least orderly and sets the stage for regaining substantial lost ground on any improving news from Europe even though significant challenges still exist for the Chinese demand story and pace of U.S. recovery.

For $1,600 per ounce gold we can expect to see silver in a range of $28.4-$31.1 per ounce; and copper, $3.40-$3.63 per pound.


Background Notes:

1. The relief rally will stall below the April 9 low of $1,607.0 per ounce. My $1,600 per ounce target is also biased below the geometric mean ($1,604.1 per ounce) of the May 16 low ($1,526.7 per ounce) and April’s high ($1,685.4 per ounce).

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 94.60 this morning down 14.0% from the Oct. 4 high of 109.97. Gold value is trending higher with respect to key commodities oil, copper & silver.

4. The gold-to-copper ratio today is 454.98 pounds per ounce and above its 3-month moving average of 441.76 pounds per ounce. Remaining above this average and trending away from the 400 pounds per ounce level is bearish for copper but the average is still moving sideways for now (1-month rolling correlation is +0.84; 3-month is +0.71). 3-month relative volatility is 1.01X gold and price sensitivity (beta) is +0.72.

5. The gold-to-silver ratio is trending above its historical norm at 55.8 (bearish); 3-month rolling correlation is +0.94, relative volatility is 2.00X gold and price sensitivity (beta) is 1.89

Daily Market Roundup




There will be no detailed market report this morning due to all the whooping and hollering last night. The usual format will resume Monday.

Cheers,

Colonel Possum

Event photographs 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, May 11, 2012

The Colonel's Friday Thoughts on Gold, Silver & Copper; "London Whale" Flops

Roofing season fast approaches...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: Are Gold and Silver Parting Ways? (5/07/2012)

This morning's...
COMEX Gold price = $1,582.1/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.35 (gold value gaps up, 5/4; gold value weakly trending higher)
Value Adjusted Gold Price© (VAGP) = $1,447.1/oz
COMEX - VAGP = $135.0/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains below its 3-month average (weakly bullish condition with average moving sideways, Cu overall neutral)



Morning Miners!

It is 6:08 AM. Have a welcome cup of Raine's Red label TGIF brewed with that delicious piñon pine flavor. The ole Colonel will be on the road next week but up and at'em for the Friday gold, silver and copper report. Have a great weekend.

The Colonel's Friday Thoughts on Gold, Silver & Copper; "London Whale" Flops

Old timers like the Colonel remember 1960s movie thrillers that featured clever bank robbers making off with ungodly sums of money, say $100,000. Whoa Nellie!

Times have changed. Today's new actor is a trader nicknamed the "London Whale" who is alleged to have made a series of bad credit derivative trades for J.P. Morgan Chase - the bank is expected to lose as much as two billion dollars. That's $2,000,000,000, a big-big Whoa Nellie!

Needless to say in our present downbeat global environment, headline shock has depressed precious and base metal prices this morning.

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. Up, $1,610 per ounce target.

Q. Why?

A. It is likely that COMEX gold will test its April intraday low ($1,613.0/oz) which has flipped from support to resistance after the recent downturn in prices. If, as Dennis Gartman has recently suggested, there is margin-related selling in gold and silver then next week could witness a modest relief rally for both.

Yesterday’s J.P. Morgan headline shock aside, precious and base metal prices continue to be under pressure but relatively stable as central banks attempt to manage a global slowdown and Europe shows signs of deepening financial crisis. Accommodative monetary is generally bullish for gold but the European debt crisis exerts a bearish influence (e.g., weak euro, strong U.S. dollar). Given lower demand expectations (e.g., recent disappointing China industrial production data), base metals like copper are range-bound supported by growing supply tightness.

Lacking any major geopolitical shocks, price crashes in either precious or base metals are unlikely. For example, 3-month copper price volatility remains less than (0.88X) gold and gold ratios are still very stable (e.g., gold-to-copper & gold-to-silver). However, there has been bearish expansion of the gold-to-silver ratio since April 23.

For $1,610 per ounce gold we can expect to see silver in a range of $28.8-$31.0 per ounce; and copper, $3.50-$3.77 per pound.


Background Notes:

1. The relief rally will stall below the April low. My target is also biased below the geometric mean ($1,627.7 per ounce) of today’s morning low ($1,572.0 per ounce) and April’s high ($1,685.4 per ounce).

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 91.35 this morning down 16.9% from the Oct. 4 high of 109.97. The GVI is weakly trending higher.

4. The gold-to-copper ratio today is 435.96 pounds per ounce and below its 3-month moving average of 442.75 pounds per ounce. Remaining below this average and trending towards the 400 pounds per ounce level is weakly bullish for copper as the average moves sideways for now (1-month rolling correlation is +0.41; 3-month is +0.53). 3-month relative volatility is 0.88X gold and price sensitivity (beta) is +0.47.

5. The gold-to-silver ratio is trending above its historical norm at 55.3 (bearish); 3-month rolling correlation is +0.91, relative volatility is 1.88X gold and price sensitivity (beta) is 1.70

6. The SPDR Gold Trust (GLD) is bouncing off its 400-day average and the PowerShares DB US Dollar Index Bullish Fund (UUP) has broken above its 100-day average. Technically, bearish gold; bullish U.S. dollar

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $37.42 down 0.93%
Newmont (NEM) $45.73 down 1.02%
McEwen Mining (MUX) $2.97 down 2.30% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $2.99 down 0.99%
Thompson Creek (TC) $4.34 down 0.46%
Freeport-McMoRan (FCX) $34.97 down 0.96% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.38 down 2.56%

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

ArcelorMittal (MT) $16.06 down 1.89% - global steel producer
POSCO (PKX) $83.96 up 0.31% - 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 69.76, down from last report's 74.05 and below the 1-month moving average of 108.5. 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. The 2012 YTD low is 59.74 recorded 05/09/2012. 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 $13.4/oz at $1,582.1/oz (June contract, most active)

COMEX silver is down $0.568/oz at $28.610/oz (July contract, most active)

The gold-to-silver ratio (Au:Ag) is 55.299 oz/oz

Silver 1-month CRS© is 1.91% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Ag overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.35, up from last report's 90.50 and above its 1-month average of 90.37. Gold value gaped up Friday, 5/4/2012, and is weakly trending higher; a bearish indication for key commodities. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,447.1/oz which is $135.0/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 $0.0615/lb at $3.6290/lb (July contract, most active)

The gold-to-copper ratio is 435.96 lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domain; the ratio is below its 3-month moving average of 442.75 (Cu weakly bullish condition in a bearishPrice Domain B)

Copper 1-month CRS© is 1.91% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (overall indicators neutral)

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

Metals Week Average:
US$13.95
As of May 14, 2012
(updated weekly)

Ryan's Notes Average:
US$14.05
As of May 8, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.98/lb

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

US$14.06/lb (US$31,000/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 $110/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 $96.03
ICE North Sea Brent crude $111.90
Spread (ICE- NYMEX) = $15.87 (last report, $15.84)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $96.70
ICE North Sea Brent crude $111.12
Spread (ICE- NYMEX) = $14.42 (last report, $14.42)

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

NYMEX WTI 1-month CRS© is 2.14% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (overall indicators bearish)

Prices remain high for 2012 but have pulled back dramatically, we have $110+ Brent and $95+ NYMEX in August still 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 77.4 down from last report's 78.5. 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 28.38 points to 12,826.66; the S&P 500 is down 2.66 points at 1,355.33

The Eureka Miner's Grubstake Portfolio is down 0.80% at $1,259,888.7 (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

Thursday, May 10, 2012

Markets Take a Breather; GMO & TC vs FCX

Bottle Tree, 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: Are Gold and Silver Parting Ways? (5/07/2012)

This morning's...
COMEX Gold price = $1,598.1/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 90.50 (gold value gaps up, 5/4)
Value Adjusted Gold Price© (VAGP) = $1,475.5/oz
COMEX - VAGP = $122.6/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains below its 3-month average (weakly bullish condition, Cu overall neutral)



Þūnresdæg
Morning Miners!

It is 5:48 AM. Have a hot cup of Thor's Day Snoozer. Our favorite Norseman is taking a nap, not much caffeine in his brew this morning. Looks like the markets are taking a breather too...

Markets Take a Breather; GMO & TC vs FCX

After several terrifying days for the metals & miners, Thursday appears to offer a sigh of relief. Gold, silver and copper are off their lows, Europe hasn't imploded and China is still consuming natural resources. As reported by the Wall Street Journal the U.S. continues to be a mixed bag of economic news, "...initial jobless claims fell slightly more than expected, while a reading on the previous week was revised slightly higher. Separately, the U.S. trade deficit widened in March, as a wave of oil imports and Chinese goods overwhelmed record exports. The cost of goods imported into the U.S. fell for the first time since last fall." (WSJ, 05/10/2012)

Ho-hum.

Let's take this moment of rest to reflect on just how devastating the last 6-months have been for three of our favorite miners. Here is a chart of General Moly (GMO, orange line), moly benchmark miner Thompson Creek (TC, green line) and bellwether miner Freeport-McMoRan (FCX, blue line) over that period:

Thompson Creek is the fallen hero of the three rising nearly 45% or roughly twice as much as either GMO or FCX in the exuberance of the new year. After Chinese New Year, fortunes reversed for all three and poor TC is now down 32% over 6-months compared to FCX, down 9%, and GMO, down 10%.

The Eureka Miner's Index© (EMI) posted its low for 2012 yesterday at 59.74; today it is thankfully up to 74.05 but an EMI less than 100 is definitely bear country for miners (see Miner's Report below).

One sign of encouragement is that General Moly has kept pace with Freeport share price on a percentage basis. Moly prices are stable, copper is looking better in the second half of this year and hopefully investors will think more highly of Thompson Creek so it can close the gap with its other two buddies.

All-in-all a tough spring for miners, pardner.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $37.78 up 0.43%
Newmont (NEM) $46.85 up 0.67%
McEwen Mining (MUX) 3.15 up 3.28% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $2.97 down 1.33%
Thompson Creek (TC) $4.38 up 0.23%
Freeport-McMoRan (FCX) $35.82 up 0.82% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.39 unchanged

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

ArcelorMittal (MT) $16.71 up 3.72% - global steel producer
POSCO (PKX) $83.69 down 0.41% - 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 74.05, up from last report's 59.74 and below the 1-month moving average of 111.01. 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. The 2012 YTD low is 59.74 recorded 05/09/2012. 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 $3.9/oz at $1,598.1/oz (June contract, most active)

COMEX silver is up $0.069/oz at $29.310/oz (July contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.524 oz/oz

Silver 1-month CRS© is 1.77% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Ag overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 90.50, down from last report's 91.40 and above its 1-month average of 90.38. Gold value gaped up Friday, 5/4/2012, which could be a bearish indication for key commodities. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,475.5/oz which is $122.6/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 $0.0510/lb at $3.7105/lb (July contract, most active)

The gold-to-copper ratio is 430.70 lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domain; the ratio is below its 3-month moving average of 442.89 (Cu weakly bullish condition in a bearishPrice Domain B)

Copper 1-month CRS© is 1.95% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (overall indicators neutral)

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

Metals Week Average:
US$14.15
As of May 7, 2012
(updated weekly)

Ryan's Notes Average:
US$14.05
As of May 8, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.07/lb

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

US$14.06/lb (US$31,000/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 $110/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 $97.30
ICE North Sea Brent crude $113.14
Spread (ICE- NYMEX) = $15.84 (last report, $15.77)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $97.87
ICE North Sea Brent crude $112.29
Spread (ICE- NYMEX) = $14.42 (last report, $14.43)

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

NYMEX WTI 1-month CRS© is 2.05% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (overall indicators bearish)

Prices remain high for 2012 but have pulled back dramatically, we have $110+ Brent and $95+ NYMEX in August still 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 78.5 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 81.66 points to 12,916.72; the S&P 500 is up 9.08 points at 1,363.66

The Eureka Miner's Grubstake Portfolio is up 0.59% at $1,279,178.79 (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

Wednesday, May 9, 2012

"Risky assets dropped as eurozone jitters build"; Moly Edges Lower

Clouds Pass, Blue Skies Remain, 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: Are Gold and Silver Parting Ways? (5/07/2012)

This morning's...
COMEX Gold price = $1,588.0/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.40 (gold value gaps up, 5/4)
Value Adjusted Gold Price© (VAGP) = $1,451.7.0/oz
COMEX - VAGP = $136.3/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains below its 3-month average (weakly bullish condition, Cu overall bearish)



Wōdnesdæg
Morning Miners!

It is 6:40 AM. Have a hearty cup of Raine's famous Red Label. No Cold Reality coffee today, Old Miner Woden refuses to leave his cave as his precious gold plunges ever lower on euro-worries. He did throw a rock my way with a note attached, "$2,000 gold, world ends soon."

Phooey on that market curmudgeon.

"Risky assets dropped as eurozone jitters build"

COMEX silver touched $28.615 per ounce at 5:30 AM PDT before coming back to trade currently at $28.965. COMEX gold followed silver down hitting its early morning low 15 minutes later at $1,578.50 per ounce; now trading at $1,588.0. Copper dropped below the important $8,000 per metric ton ($3.6288 per pound) level on the London Metal Exchange (LME) but is resilient at $3.6310 per pound on the COMEX.


If the world is coming to an end on concerns about the political uncertainty in Greece and the health of Spanish banks, I can't think of a more pleasant voice to listen to than FastMarkets correspondent Kathleen Retourne. Here is her webcast from the floor of the LME this morning:

Risky assets dropped as eurozone jitters build (By Kathleen Retourne, Correspondent for FastMarkets Ltd, 5/9/2012)

There, now don't you feel better.

Moly Edges Lower

Molybdenum oxide spot and futures prices have been steadfast through most of the hand wringing over an unstable eurozone and China growth disappointments. There may be some small cracks now appearing in this wall of fortitude as the LME 3-month seller's contract notched down $500 to $31,000 per metric ton ($14.06 per pound) yesterday.

That's certainly not earth shaking but euro-spot fell too at $14.07 per pound and Ryans's Notes reported Tuesday a dip to $14.05 per pound for western moly.

Holding the $14 per pound level would be encouraging in the weeks ahead; falling below, worrisome. On a bright note POSCO (PKX), South Korean steelmaker and 20% owner of our Mt. Hope, continues to rally through the latest market downturns - up today 0.42% at $83.83/share. General Moly (GMO) is trading down 3.36% at $2.88.

Mining Report

This morning's mining stocks...

Barrick (ABX) $36.12 down 1.63%
Newmont (NEM) $44.13 down 1.39%
McEwen Mining (MUX) 3.01 down 4.44% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $2.88 down 3.36%
Thompson Creek (TC) $4.15 down 1.43%
Freeport-McMoRan (FCX) $34.81 down 2.27% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.37 unchanged

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

ArcelorMittal (MT) $15.66 down 4.16% - global steel producer
POSCO (PKX) $83.83 up 0.42% - 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 59.74, down from last report's 63.47 and below the 1-month moving average of 113.32. 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 $16.5/oz at $1,588.0/oz (June contract, most active)

COMEX silver is down $0.494/oz at $28.965/oz (July contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.825 oz/oz

Silver 1-month CRS© is 1.75% (bullish stability level); very stable ratio; 1-month & 3-month < 3% but divergent trend is in place (Ag overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.40, down from last report's 91.46 and above its 1-month average of 90.35. Gold value gaped up Friday, 5/4/2012, which could be a bearish indication for key commodities. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,451.7.0/oz which is $136.3/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 $0.0465/lb at $3.6310/lb (July contract, most active)

The gold-to-copper ratio is 437.35 lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domain; the ratio is below its 3-month moving average of 443.15 (Cu weekly bullish condition in a bearishPrice Domain B)

Copper 1-month CRS© is 1.82% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (overall indicators bearish)

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

Metals Week Average:
US$14.15
As of May 7, 2012
(updated weekly)

Ryan's Notes Average:
US$14.05
As of May 8, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.07/lb

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

US$14.06/lb (US$31,000/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 $110/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 $95.98
ICE North Sea Brent crude $111.75
Spread (ICE- NYMEX) = $15.77 (last report, $14.63)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $96.64
ICE North Sea Brent crude $111.07
Spread (ICE- NYMEX) = $14.43 (last report, $13.77)

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

NYMEX WTI 1-month CRS© is 2.05% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (overall indicators bearish)

Prices remain high for 2012 but have pulled back dramatically, we have $110+ Brent and $95+ NYMEX in August still 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 82.5 down from last report's 83.0. 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 101.04 points to 12,831.05; the S&P 500 is down 11.97 points at 1,351.75

The Eureka Miner's Grubstake Portfolio is down 1.97% at $1,245,236.36 (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, May 8, 2012

Gold Drops below $1,600; Thompson Creek (TC) Falling Knife

Window Sheet, 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: Are Gold and Silver Parting Ways? (5/07/2012)

This morning's...
COMEX Gold price = $1,602.6/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.46 (gold value gaps up, 5/4)
Value Adjusted Gold Price© (VAGP) = $1,464.0/oz
COMEX - VAGP = $138.6/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains below its 3-month average (weakly bullish condition, Cu overall bearish)



Morning Miners!

It is 5:55 AM. Have a lonesome cup of Ruby T's Blue Sky java - looks the Greeks put clouds in her brew this morning. Ruby called in sick and the ole Colonel just can't percolate much market optimism from her famous brew...

Gold Drops below $1,600; Thompson Creek (TC) Falling Knife

Some mornings you just can't write fast enough to follow market drops. When I started, COMEX gold had just plumbed a low of $1,608.8 per ounce at 5:00 AM PDT; an hour later gold dropped below $1,600 per ounce to $1,599.30 per ounce. Then I ran my morning calculations at 6:21 AM EDT and COMEX gold had rallied up a bit at $1,613.4 per ounce.

Things were changing to the downside so rapidly, the ole Colonel re-ran everything at 7:40 AM as COMEX gold traded at 1,602.6 per ounce - that's it for now. COMEX silver touched $29.25 per ounce before coming back up a bit to $29.325; COMEX copper is down more than a dime at $3.6650 per pound. Ouch!

Talk about catching falling knifes - our benchmark moly miner Thompson Creek (TC) is down nearly 9% at a scary $4.23 per share; General moly (GMO) is faring a little better down 2.8% at $2.77. To give that a sobering perspective TC closed at $9.03 on Feb. 8 and GMO closed at $4.08 on Feb. 3; now, down 53% and 32% respectively. Ouch-ouch!

Barrick gold is doing a little better trading down 3.2% today at $35.15 and our bellwether miner Freeport-McMoRan (FCX) is off 3.4% at $35.15. ABX is down 26% from its Feruary high and FCX is down 24% from its January peak - sometimes it's nice to be a big dog, at least relatively speaking.

Who's the culprit? The Greeks of course! U.S. markets followed Europe lower as worries increased about political turmoil in Greece even though we had a rise in U.S. small-business confidence this morning. The post-election fallout in Greece has many worrying that it will lead to expulsion from the countries that share the euro currency. Needless to say, euro down, U.S. dollar up and dollar-denominated metals in a tailspin of woe.

Oh, here's a ray of light - POSCO(PKX), South Korean steelmaker and 20% owner of the Mt. Hope molybdenum project, is one of the few stocks in the green today - up 0.62% at $82.78. Here's an upbeat assessment of the steel industry from steel giant ArcelorMittal ADS (MT):

ArcelorMittal sees 2012 steel use up 4 to 4.5 pct (LUXEMBOURG, Reuters, May 8,2012)

Nuts. The Colonel thinks this whole Greek thing is overdone (again) - I'm going to give Ruby a get well call.

Mining Report

This morning's mining stocks...

Barrick (ABX) $36.73 down 3.19%
Newmont (NEM) $44.78 down 2.95%
McEwen Mining (MUX) 3.02 down 5.63% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $2.77 down 2.81%
Thompson Creek (TC) $4.23 down 8.84%
Freeport-McMoRan (FCX) $35.15 down 3.43% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.39 unchanged

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

ArcelorMittal (MT) $15.99 down 4.19% - global steel producer
POSCO (PKX) $82.78 up 0.62% - 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 63.47, down from last report's 85.82 and below the 1-month moving average of 116.22. 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 $36.5/oz at $1,602.6/oz (June contract, most active)

COMEX silver is down $0.797/oz at $29.430/oz (July contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.822 oz/oz

Silver 1-month CRS© is 1.66% (bullish stability level); very stable ratio; 1-month & 3-month < 3% but divergent trend is in place (Ag overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.46, down from last report's 91.77 and above its 1-month average of 90.28. Gold value gaped up Friday, 5/4/2012, which could be a bearish indication for key commodities. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,464.0/oz which is $138.6/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 $0.1085/lb at $3.6650/lb (July contract, most active)

The gold-to-copper ratio is 437.27 lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domain; the ratio is below its 3-month moving average of 443.22 (Cu weekly bullish condition in a bearishPrice Domain B)

Copper 1-month CRS© is 1.69% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (overall indicators bearish)

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

Metals Week Average:
US$14.15
As of May 7, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of May 4, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.15/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 $110/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 $96.83
ICE North Sea Brent crude $111.46
Spread (ICE- NYMEX) = $14.63 (last report, $15.08)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $97.09
ICE North Sea Brent crude $110.86
Spread (ICE- NYMEX) = $13.77 (last report, $13.68)

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

NYMEX WTI 1-month CRS© is 1.82% (bullish stability level); CRS© divergence (Oil bearish overall)

Prices remain high for 2012 but have pulled back dramatically, we have $110+ Brent and $95+ NYMEX in August still 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 79.7 up from last report's 79.1. 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 161.36 points to 12,847.17; the S&P 500 is down 17.52 points at 1,352.06

The Eureka Miner's Grubstake Portfolio is down 2.60% at $1,251,145.31 (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, May 7, 2012

Miners Tumble; Are Gold and Silver Parting Ways?

Mining Memories, 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: Are Gold and Silver Parting Ways? (5/07/2012)

This morning's...
COMEX Gold price = $1,638.3/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.77 (gold value gaps up, 5/4)
Value Adjusted Gold Price© (VAGP) = $1,491.6/oz
COMEX - VAGP = $146.7/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains below its 3-month average (Cu weakly bullish)


Morning Miners!

It is 6:00 AM. Have a strong cup of Monday Ether - you may need it to start your internal diesel this morning!

Miners Tumble

Leftist party victories in France and Greece have pummeled the euro and strengthened the U.S. dollar - the future of austerity policies in either country is weighing heavily on the markets as dollar-denominated commodities and commodity-sensitive stocks are being roughed up. Gold and copper are showing brave resilience; most miners are not.

Dennis Gartman of the well respected Gartman Letter tells his readers this morning, "Political chaos now prevails and the dollar is very strong as investors are fleeing Europe and are seeking any safer ports that might be available to them in this strong and strengthening political storm..."

COMEX gold shaved 7 dollars to trade at $1,638.3 per ounce this morning; COMEX silver dropped $0.237 to $30.195 per ounce. Surprisingly, COMEX copper is showing price strength compared to either staying in the green 0.6 cents to trade at $3.7270 per ounce. Even though the red metal is up, copper giant and bellwether miner Freeport-McMoRan (FCX)is headed to lows not seen since late-2011 down 1.4% at $35.91 per share. Benchmark moly miner Thompson creek (TC) is faring even worse falling nearly 9% at $5.06. Barrick Gold (ABX), following gold's resilience, is down only 0.2% at $37.82.

Not surprisingly, this report's Eureka Miner's Index© (EMI) is spending its second consecutive day below the key 100-level presently registering a very bearish 85.82 compared to Friday's disappointing 95.41. Ouch.

Are Gold and Silver Parting Ways?

Kitco News just posted my latest commentary, Are Gold and Silver Parting Ways?. If your Monday is too hectic to read the entire article, here are my concluding remarks:

As reported by Kitco News on April 27, TD Securities made a prescient warning that its outlook for the silver market was negative near-term and suggested that the headwinds of a recessionary Europe, softening Chinese demand, fading investor interest and high inventories could return the white metal to $29 per ounce. Last Friday, silver prices did indeed dip briefly below $30 per ounce.

The above analysis demonstrates that silver and gold have moved rather abruptly from a point of relative price equilibrium to an elevated ratio presently above 54 - silver price strength relative to gold is in decline. If the ratio were to rise to the 57 levels of late-2011 and gold tests its April low, silver could easily return to $28 per ounce territory (i.e. $1,613 per ounce/57 = $28.3 per pounce). However, GSR stabilities remain “very stable” so it is unlikely that silver prices are on the verge of crashing as in 2011.

My view is that precious and base metals should enjoy a better second than first-half for 2012 and TD Securities turns bullish on silver in the next three quarters. For the time being it appears gold and silver have parted ways. In any case, Commodity Ratio Stability© analysis offers a powerful technique to track the next wiggle in their relative performance.


The referenced analysis explains the chart below and others addressing the gold-to-silver ratio level and stability (a larger and more readable chart can be found near the bottom of this blog page):


If you have a chance, give it a read on your break - tough times lately for the white metal but there may be better times ahead.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $37.82 down 0.18%
Newmont (NEM) $45.85 down 0.67%
McEwen Mining (MUX) 3.27 down 1.80% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $2.88 down 0.69%
Thompson Creek (TC) $5.06 down 8.50%
Freeport-McMoRan (FCX) $35.91 down 1.35% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.44 unchanged

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

ArcelorMittal (MT) $16.22 up 0.75% - global steel producer
POSCO (PKX) $81.55 up 0.62% - 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 85.82, down from last report's 95.41 and below the 1-month moving average of 119.82. 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 $6.9/oz at $1,638.3/oz (June contract, most active)

COMEX silver is down $0.237/oz at $30.195/oz (July contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.257 oz/oz

Silver 1-month CRS© is 1.64% (bullish stability level); very stable ratio; 1-month & 3-month < 3% but divergent trend is in place (Ag overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.77, down from last report's 91.78 and below its 1-month average of 90.12. Gold value gaped up Friday, 5/4/2012, which could be a bearish indication for key commodities. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,491.6/oz which is $146.7/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 $0.0060/lb at $3.7270/lb (July contract, most active)

The gold-to-copper ratio is 439.58 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 443.33 (Cu bullish trend in a bearishPrice Domain B)

Copper 1-month CRS© is 1.91% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (overall indicators weakly bullish)

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

Metals Week Average:
US$14.15
As of May 7, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of May 4, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.15/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 $110/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 $97.74
ICE North Sea Brent crude $112.82
Spread (ICE- NYMEX) = $15.08 (last report, $14.16)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $98.43
ICE North Sea Brent crude $112.11
Spread (ICE- NYMEX) = $13.68 (last report, $12.41)

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

NYMEX WTI 1-month CRS© is 1.82% (bullish stability level); CRS© divergence (Oil bearish overall)

Prices remain high for 2012 but have pulled back dramatically, we have $110+ Brent and $95+ NYMEX in August still 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 79.1 up from last report's 77.9. 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 31.22 points to 13,007.05; the S&P 500 is down 0.61 points at 1,368.49

The Eureka Miner's Grubstake Portfolio is down 0.86% at $1,290,165.86 (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