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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 = $1,669.2/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 89.48 (gold value moving sideways)
Value Adjusted Gold Price© (VAGP) = $1,558.6/oz
COMEX - VAGP = $110.6/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 5:58 AM. Have a cup of Ruby T's ever optimistic Blue Skies java. Our market bull is in a fine mood even though the red metal is only up a tenth of a penny - at least it's up, COMEX copper trades at $3.8305 per pound this morning. Old Miner Woden would be happy too. Our market curmudgeon at least treasures gold and its up $5.0 at $1,669.2 per pound. With everyone happy let's hop in Ruby's F-250 on May Day and take a little break from the markets. Where are we going? Why that's a secret!
One Less Secret in Secret Canyon - "Patience is a Virtue?"
In the 1980s my neighbor Eric Pastorino took Mariana and the Colonel on a tour of Eureka's back country. We weren't neighbors then, just friends - Mariana and I wouldn't buy the old Kitchen house up from his place until 2002. With some irony there is a photo of us after this outing with the Kitchen house in the background. Isabel Kitchen was still alive then; her husband Joe and his brother Hiram ran the Kitchen Market downtown before it became Raine's Market.
Eric took us south of town and we turned onto Windfall Canyon Road to visit the old Windfall Mine and then on to Ratto Canyon and Secret Canyon. There is a lot of mining history in this area which will be the subject of future stories of this report: south and a bit east of Eureka there was the town of Vanderbilt, a settlement called Prospect and a milling camp named Pinto. All three served the mining interests in the Secret Canyon District and the nearby Silverado (Pinto) District in White Pine County. All three are ghost ruins these days - great exploring, pardner.
The subject of this tale is a large abandoned building in Secret Canyon. It is not a ghost of the late-1800s mining boom but supported renewed 1970s mining interests in the same area that drew miners to the canyons during the Vanderbilt days. Some enterprising Eureka locals used this structure as a test plant for a heap leach pilot operation. They leached the old timer tunnel dumps in Secret Canyon and also processed some preliminary exploration drill samples as well as dump samples. What they found was apparently more lead and silver than gold (a more detailed history of this operation is in the works).
Eric has had his eye on this building for a long time, "It has been there almost 40 years...hard to believe no one shot holes in it!" In 2005 he had a preliminary agreement with the BLM to take possession of the building but "the deal went south." More recently, new management in the BLM office and the state office in Reno found Superfund money to cleanup low levels of lead inside the Secret Canyon building and around the test plant site.
The BLM hired Cross Environmental, an environmental contractor from Florida, to handle the cleanup. They were supported by Eric Pastorino and his crew whose job was to dismantle the building and haul refuse to the the landfill in Beatty. Jim Brietrick and Steve Jackson were on Eric's crew and Tom Damele assisted him "by providing me with a truck tire when I blew one near his ranch on the way to Beatty." A real team effort out here in the back country!
Eric says he "obtained the building as a reward for my services" and hopes "to put it up at Phil Wilson's location out by Third St in Diamond Valley...I waited 7 years for this deal with the BLM - patience is a virtue?"
Here is the impressive timeline of the 5-day tear-down and cleanup:
Tuesday - Crew of five from Florida arrived at the site, along with Eric's crew, a BLM representative and an inspector/consultant for the Cross Environmental
Wednesday - The samples inside of the building were cleaned out
Thursday - The sheet metal came down, low level lead samples from the building were hauled to the Beatty non-hazardous section landfill
Friday - The iron structure came down
Saturday - The concrete came out, job completed
Eric thanks his crew, the BLM and Cross Environmental for a job well done.
Daily Market Roundup
Mining Report
This morning's mining stocks...
Barrick (ABX) $40.33 down 0.25%
Newmont (NEM) $47.94 up 0.61%
McEwen Mining (MUX) 3.91 up 3.17% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.27 up 0.93%
Thompson Creek (TC) $5.99 up 1.01%
Freeport-McMoRan (FCX) $38.46 up 0.42% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.44 up 2.33%
The Steels (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $17.33 unchanged - global steel producer
POSCO (PKX) $83.28 up 0.04% - 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 130.53, up from last report's 124.10 and below the 1-month moving average of 132.77. 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 $5.0/oz at $1,669.2/oz (June contract, most active)
COMEX silver is up $0.224/oz at $31.240/oz (July contract, most active)
The gold-to-silver ratio (Au:Ag) is 53.431 oz/oz
Silver 1-month CRS© is 1.53% (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 89.48, up from last report's 89.23 and below its 1-month average of 89.74. 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 $1,558.6/oz which is $110.6/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
COMEX copper is up $0.0010/lb at $3.8350/lb (July contract, most active)
The gold-to-copper ratio is 435.77 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 2.32% (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)
Here are the key front-month contracts this morning:
NYMEX light sweet crude $104.67
ICE North Sea Brent crude $118.91
Spread (ICE- NYMEX) = $14.24 (last report, $15.13)
Here are the August contracts* with a narrower spread:
NYMEX light sweet crude $105.34
ICE North Sea Brent crude $118.19
Spread (ICE- NYMEX) = $12.85 (last report, $13.68)
* NYMEX futures contracts have rolled forward, we now show June and August.
NYMEX WTI 1-month CRS© is 1.15% (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 68.3 down from last report's 71.5. 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 38.18 points to 13,251.81; the S&P 500 is up 6.21 points at 1,404.12
The Eureka Miner's Grubstake Portfolio is up 0.51% at $1,374,328.59 (what's this?).
Cheers,
Colonel Possum
Photographs by Eric Pastorino
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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