"The history of Eureka lies in its future." - Lambert Molinelli, 1878


The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO) and Newmont Mining (NEM); together with benchmark miner Freeport-McMoRan (FCX). Please do your own research, markets can turn on you faster than a feral cat.

Thursday, May 3, 2012

The General Brings Eric Dodge to Eureka

Red Metal Morning Art by Mariana Titus

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 = $1,639.6/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 89.17 (gold value moving sideways)
Value Adjusted Gold Price© (VAGP) = $1,536.4/oz
COMEX - VAGP = $103.2/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 6:34 AM. Have a steaming cup of Thor's Party Hearty java. Our favorite Norseman has been polishing up his Viking boots for some fun times coming our way in Eureka and Crescent Valley...

The General Brings Eric Dodge to Eureka

General Moly (GMO) will bring the Eric Dodge Band to the Eureka Opera House for a little toe-tappin' and two-steppin'. The event will be from 5:30 p.m. to 8:30 p.m. May 17 featuring food and a great band from St. George, Utah - the ole Colonel and Mariana plan to be there!

Mining Editor Adella Harding did a nice story on this and a second event planned for the community center in Crescent Valley the day before, May 16 from 5:30 p.m. to 8:30 p.m. The Crescent Valley shindig will have a barbecue and live music. Here are the details:

General Moly plans community events (Adella Harding, Elko Daily Free Press, 5/2/2012)

As reported by Adella, "General Moly Inc. plans two events this month to show appreciation to Eureka County communities for their support of the company’s efforts to permit the Mt. Hope molybdenum project. The company also will project updates at the events, Zach Spencer, manager of external communications for General Moly, said Wednesday."

Yee-ha! See you there.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $38.50 down 2.18%
Newmont (NEM) $46.31 down 1.68%
McEwen Mining (MUX) 3.46 down 3.89% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.02 down 1.31%
Thompson Creek (TC) $5.86 down 1.68%
Freeport-McMoRan (FCX) $37.63 down 1.29% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.43 unchanged

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

ArcelorMittal (MT) $16.88 down 0.59% - global steel producer
POSCO (PKX) $83.21 down 0.17% - 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 114.67, down from last report's 116.21 and below the 1-month moving average of 126.80. The 1-month average is falling but still above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $14.4/oz at $1,639.6/oz (June contract, most active)

COMEX silver is down $0.240/oz at $30.450/oz (July contract, most active)

The gold-to-silver ratio (Au:Ag) is 53.865 oz/oz

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

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 89.17, down from last report's 89.42 and below its 1-month average of 89.75. 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 $1,536.4/oz which is $103.2/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 down $0.0200/lb at $3.7670/lb (July contract, most active)

The gold-to-copper ratio is 435.25 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 443.59 (Cu bullish trend in a bearishPrice Domain B)

Copper 1-month CRS© is 2.30% (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:
As of April 30, 2012
(updated weekly)

Ryan's Notes Average:
As of May 1, 2012
(updated twice weekly)

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

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

US$14.29/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 $104.31
ICE North Sea Brent crude $117.64
Spread (ICE- NYMEX) = $13.33 (last report, $13.36)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $104.95
ICE North Sea Brent crude $117.03
Spread (ICE- NYMEX) = $12.08 (last report, $12.10)

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

NYMEX WTI 1-month CRS© is 1.12% (bullish stability level); CRS© 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 70.9 down from last report's 71.9. 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 20.66 points to 13,247.91; the S&P 500 is down 3.21 points at 1,399.10

The Eureka Miner's Grubstake Portfolio is down 1.21% at $1,328,144.40 (what's this?).


Colonel Possum

Headline photograph by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

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