Friday, May 18, 2012
The General Rocks Eureka; The Colonel's Latest Thoughts on Gold, Silver & Copper Prices
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)
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)
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.
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.
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.
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.
Write Colonel Possum at email@example.com for answers to your questions or to request e-mail updates on the market