"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, December 28, 2012

Happy New Year! General Moly Rolls on Mt. Hope

Happy New Year! Eureka, Nevada
 
Latest Nevada Gas Prices (click this link)

My latest Kitco commentary: Copper & Gold – Fast Eddie’s Lucky Run


This morning's...
COMEX Gold price = $1,660.3/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 96.82 (gold value is elevated with respect to key commodities oil, copper and silver)
Value Adjusted Gold Price© (VAGP) = $1,432.9/oz
COMEX - VAGP = $227.4/oz; gold is trading at a  premium to key commodities.


Morning Miners!

Mariana and I visited Mt. Hope General Manager Mike Iannacchione the day after Christmas at Eureka Moly LLC. He gave us a quick project update and shared a positive view on the China recovery, South Korea and the big picture for molybdenum in 2013.

The General Moly (subsidiary Eureka Moly LLC) Mt. Hope project is a molybdenum mine 23 miles north of Eureka with an expected mine life off 44 years. Mt. Hope contains approximately 1.3 billion pounds of proven and probable molybdenum reserves. Final permitting is complete, financing is coming together and mine construction will commence this spring. Together with a broad array of industrial uses, molybdenum is a key strengthening alloy in high-quality steel products.

Mike is trying to think of all manner of ways to start something in the winter time to save schedule next year. Even with poor weather, tree clearing may be possible if the snow permits. He is also actively working with Caterpillar to get the big machinery in play. Archaeologists have returned to  Mt. Hope to wrap up their evaluations but are constrained by weather too.

Even though the current stalemate on the U.S. fiscal cliff negotiation has kept domestic markets in the lurch, Asians markets are showing signs of recovery. The Japanese stock market hit 21-month highs this morning in anticipation of further monetary accommodation by the new Abe government with a focus on infrastructure projects.

The South Korean KOSPI stock index has rallied from its multi-month mid-November low and the Chinese Shanghai composite is up from February 2009 levels plumbed in early December. Improving conditions in both Japan and China will be positive in 2013 for South Korean steel producer POSCO (PKX). POSCO (subsidiary POS-Minerals) owns a 20% share of Mt. Hope and Mike reminded me that having a share of the project is as important for the steel producer as future production of Mt. Hope molybdenum.

This morning's trading has POSCO (PKX) up on a down market day and General Moly (GMO) pulling back a tad:

POSCO (PKX)  $81.22 up 0.38%
General Moly (GMO)  $3.74 down 0.53%

The S&P 500 is down 0.44% at 1,411.58
The KOSPI is up 0.49% at 1,997.50 (2,000 is a key level)
The Shanghai Composite is up 1.24% at 2,233.25

Here is an interesting article by James Areddy of the Wall Street Journal about Hanlong financing of the Mt. Hope project:

In Nevada, a Chinese King of the Hill (James T. Areddy, WSJ, 12/28/2012)

James is the lead WSJ correspondent in Shanghai and contacted me several months ago to check on how things were going with the Mt. Hope project.

Moly prices are thankfully back in mid-$11 per pound territory, another sign of improving prospects for the minor metals in 2013. However, we need to see prices continue to trend up to the $15-level before sounding the all-clear:

Metals Week Average:
US$11.525

As of December 24, 2012
(updated weekly)

Ryan's Notes Average:
US$11.55

As of December 21, 2012
(updated twice weekly)

The London Metal Exchange (LME)  3-month seller's contract is US$26,000 per metric ton (US$11.79 per pound)

The best of luck to Mike and the General Moly Team!

Where do gold, silver and copper prices go next week? Checkout my today's input to the Weekly Kitco Gold Survey below.

Enjoy another cup of Raine's delicious Red Label TGIF and have a great weekend.

The Colonel and Mariana wish you all a Happy New Year and thank you for following the Report!

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


Here is my input to the Kitco Weekly Gold Survey:

12/28/2012 (10:47 CT)

Q. Where do you see gold’s price headed next week, up, down or unchanged?

A. Up, $1,680 per ounce target.

Q. Why?

A. Thin holiday trading and the stalled U.S. fiscal cliff negotiations have put closing COMEX gold prices in “freeze frame” since last Friday varying by only several dollars per ounce. Assuming some comprise is reached next week to forestall the worst consequences of taxation and sequestration, gold should be poised to move higher. My target is therefore a neutral bias from the mean of December’s highs and lows ($1,725.0 and $1,636.0 per ounce, respectively). This will bring gold bullishly above the 200-day average which is presently $1,667.5 per ounce.

Since last week the yellow metal has also lost additional value to key commodities oil and copper but has recovered some value relative to the broader markets. Less the fiscal cliff, the underpinnings for gold and base metals remain supportive given worldwide accommodative monetary policies, indications the Chinese economy has bottomed and some signs of stabilization in Europe.

For $1,680 per ounce gold we can expect to see silver in a range of $29.4-$33.5 per ounce; and copper in a range of $3.42-$3.64 per pound. Both silver and copper are expected to have a positive bias above their respective means.

As measured by the Eureka Miner’s Gold Value Index (GVI, Ref 1), the value of gold relative to global commodities copper and oil and companion metal silver is 96.82, staying below the key-100 level at and 1-month moving average of 98.36 (bearish gold trend). The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) has recovered some after a precipitous drop to mid-August levels on Dec. 20. It is now 7.1% below its 2012 high (1.2710, Nov.15) at 1.1802 but up 3.5% from the December low. The latest price action indicates gold has lost considerable value relative to the broader markets but is now trending up from a bottom.

Background Notes:
  1. My target price of $1,680 per ounce is a neutral bias from the geometric mean of the given highs and lows for December.
  2. Given the target gold price, the silver price ranges are derived from the 1-month gold ratio mean (GSR) and its respective ratio stability (CRS©). A similar technique was used to predict the price range for copper.
  3. My Gold Value Index© (GVI) equals 96.82 or 6.7% below the 2012 high of 103.73. Today gold value is below its 1-month moving average of 98.36; a value of 100 represents a historically high-value of gold relative to key commodities oil, copper and silver.
  4. The gold-to-copper ratio today is 460.81 pounds per ounce and below its 3-month moving average of 477.46 and 6-year trend of 484.04; falling below the long-term trend line is a bullish indication for the red metal; trending above 500 pounds per ounce, bearish (Ref 3).  The 1-month gold-to-copper ratio stability is a very low 1.53%. The 1-month rolling correlation is +0.54; 3-month is +0.43. 3-month relative volatility is 1.47X gold and price sensitivity (beta) is +0.64
  5. The gold-to-silver ratio (GSR) is above its historical norm at 55.205; the 3-month rolling correlation is +0.98, relative volatility is 2.00X gold and price sensitivity (beta) is +1.77. The GSR is above its 3-month average of 52.78; the 1-month gold-to-silver ratio stability is 3.28%.
Ref 2: Copper and Gold - In the Eye of the Storm (Kitco News, 10/30/2012)
Ref 3: Copper and Gold - The Bank Shot (Kitco News, 11/19/2012)
Ref 4: Copper & Gold – Fast Eddie’s Lucky Run (Kitco News, 12/03/2012)

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, December 21, 2012

The Colonel Wishes You a Merry Christmas!

A White Christmas for 2012, Eureka, Nevada
 
Latest Nevada Gas Prices (click this link)

My latest Kitco commentary: Copper & Gold – Fast Eddie’s Lucky Run


This morning's...
COMEX Gold price = $1,651.3/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 98.18 (gold value is elevated with respect to key commodities oil, copper and silver)
Value Adjusted Gold Price© (VAGP) = $1,405.3/oz
COMEX - VAGP = $246.0/oz; gold is trading at a  premium to key commodities.


Morning Miners!

Today is the first day of the 14th b'ak'tun of the Mayan Calendar and I guess the world didn't come to an end after all. Thirty three months ago this report predicted the DOW Industrial Average would break 12,901 before the apocalypse - that did happen.

DOW 12,901 by the End of the World? (Eureka Miner's Market Report, 4/01/2010)

This February the DOW broke that level and even with all the woe surrounding the present fiscal cliff negotiations, the mighty average is presently trading at 13,140.79 down 170.93 points from yesterday's close.

In the long run markets are robust even under the harrowing circumstances of the last several years. It's easy (and understandable) to be a pessimist but the market is up over 20% from April Fool's 2010 and that sure beats the return from a bank CD, pardner. I will pass to the next reality an eternal optimist but apparently that won't occur today unless something comes from the heavens this afternoon.

Here's some other fun comparisons from that morning in April to today:

COMEX gold  $1,123.4/oz (4/1/2010) $1,651.3/oz (today) up 47.0%
COMEX silver  $17.940/oz (4/1/2010) $30.010/oz (today) up 67.2%
COMEX copper $3.5960/lb (4/1/2010) $3.5450/lb (today) down 1.4%

Precious metals have been a better bet than the broader markets; not so, copper.

Where do gold, silver and copper prices go from here? Checkout my today's input to the Weekly Kitco Gold Survey below.

Enjoy another cup of Raine's delicious Red Label TGIF and have a great weekend.

The Colonel and Mariana wish you all a very Merry Christmas and thank you for following the Report!

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


Here is my input to the Kitco Weekly Gold Survey:

12/21/2012 (10:50 CT)

Q. Where do you see gold’s price headed next week, up, down or unchanged?

A. Up, $1,675 per ounce target.

Q. Why?

A. The dimming prospects for a successful avoidance of the U.S. fiscal cliff are casting a long shadow on global markets. This has caused the rather unusual circumstance of multi-month downtrends in both the U.S. dollar and gold. The yellow metal has also lost value to key commodities oil and copper as well as the broader markets. My sense is that the yellow metal is now oversold and should benefit next week from a relief rally albeit not to the highs of mid-December. My target is therefore a negative bias below the mean of December’s highs and lows ($1,725.0 and $1,636.0 per ounce, respectively).

Less the fiscal cliff, the underpinnings for gold and base metals remain supportive given worldwide accommodative monetary policies, indications the Chinese economy has bottomed and some signs of stabilization in Europe.

For $1,675 per ounce gold we can expect to see silver in a range of $29.7-$32.8 per ounce; and copper in a range of $3.30-$3.69 per pound. Both silver and copper are expected to have a negative bias in price below their respective means.

As measured by the Eureka Miner’s Gold Value Index (GVI, Ref 1), the value of gold relative to global commodities copper and oil and companion metal silver is 98.18, staying below the key-100 level at and 1-month moving average of 99.14 (bearish gold trend). The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) has dropped precipitously to mid-August levels. It is now 8.7% below its 2012 high (1.2710, Nov.15) at 1.1604. The latest price action indicates gold has lost considerable value relative to the broader markets but may be near a bottom.

Background Notes:
  1. My target price of $1,675 per ounce is a negative bias below the geometric mean of the given highs and lows for December.
  2. Given the target gold price, the silver price ranges are derived from the 1-month gold ratio mean (GSR) and its respective ratio stability (CRS©). A similar technique was used to predict the price range for copper since its 3-month correlation with gold is still positive (although the 1-month is negative).
  3. My Gold Value Index© (GVI) equals 98.18 or 5.3% below the 2012 high of 103.73. Today gold value is below its 1-month moving average of 99.14; a value of 100 represents a historically high-value of gold relative to key commodities oil, copper and silver.
  4. The gold-to-copper ratio today is 465.81 pounds per ounce and below its 3-month moving average of 478.08 and 6-year trend of 483.58; falling below the long-term trend line is a bullish indication for the red metal; trending above 500 pounds per ounce, bearish (Ref 3).  The 1-month gold-to-copper ratio stability is 2.78%. The 1-month rolling correlation is -0.12; 3-month is +0.53. 3-month relative volatility is 1.60X gold and price sensitivity (beta) is +0.86
  5. The gold-to-silver ratio (GSR) is above its historical norm at 55.025; the 3-month rolling correlation is +0.87, relative volatility is 1.89X gold and price sensitivity (beta) is +1.65. The GSR is above its 3-month average of 52.54; the 1-month gold-to-silver ratio stability is 2.45%.
Ref 2: Copper and Gold - In the Eye of the Storm (Kitco News, 10/30/2012)
Ref 3: Copper and Gold - The Bank Shot (Kitco News, 11/19/2012)
Ref 4: Copper & Gold – Fast Eddie’s Lucky Run (Kitco News, 12/03/2012)
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, December 7, 2012

General Moly $$$; The Colonel's Gold, Silver & Copper prices for Next Week

Stars and Stripes, Eureka, Nevada
 
Latest Nevada Gas Prices (click this link)

The next Market Report will be December 21, 2012

My latest Kitco commentary: Copper & Gold – Fast Eddie’s Lucky Run


This morning's...
COMEX Gold price = $1,702.9/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 98.80 (gold value is elevated with respect to key commodities oil, copper and silver)
Value Adjusted Gold Price© (VAGP) = $1,440.2/oz
COMEX - VAGP = $262.7/oz; gold is trading at a  premium to key commodities.


Morning Miners!

This will be a short report this morning as ole Colonel prepares for a road trip next week.  The next report is bright and early Friday, Dec. 21 - winter solstice for 2012 and the last day of the Mayan long calendar. Being an optimist, I don't believe the world will end on that day.

The latest news for General Moly is receipt of $100M from POS-Minerals (subsidiary of POSCO, 10% owner of Mt. Hope). Here's yesterday's press release:

General Moly Announces Receipt of $100 Million Contribution Payment from Joint Venture Member POS-Minerals to Commence Construction at the Mt. Hope Project (Press release, 12/6/2012)

I continue to believe that copper price action will continue to shed light on gold's next move as explained in my Kitco commentary, Copper & Gold – Fast Eddie’s Lucky Run.

Where do gold, silver and copper prices go from here? Checkout my today's input to the Weekly Kitco Gold Survey below.

Enjoy another cup of Raine's delicious Red Label TGIF and have a great weekend!

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


Here is my input to the Kitco Weekly Gold Survey:

12/07/2012 (10:38AM CT)

1.      Where do you see gold’s price headed next week, up, down or unchanged?

Up, $1,730 per ounce target.

2.      Why?

The better-than-expected U.S. jobs report boosted both the dollar and gold this morning. Next week’s FOMC meeting is expected to give gold additional lift with an announcement of further monetary accommodation as Operation Twist draws to conclusion. Without additional catalyst, the yellow metal should bias positively above $1,715 per ounce; the range mean between the November highs and lows (Feb. contracts: $1,757.1 high, Nov. 23; $1,674.4 low, Nov. 5).

The price of gold remains range bound against a backdrop of compound uncertainties: the impending U.S. fiscal cliff, Europe’s sovereign debt crisis, China’s change in leadership and conflicts in the Middle East. However, there are further signs that the Chinese economy and has bottomed which should be supportive of gold and base metals– this week both the Shanghai composite and neighboring South Korean KOSPI have rallied off their lows.

For $1,730 per ounce gold we can expect to see silver in a range of $31.4-$34.1 per ounce; and copper in a range of $3.39-$3.82 per pound. Both silver and copper are expected to have a positive bias in price above their respective range means.

As measured by the Eureka Miner’s Gold Value Index (GVI, Ref 1), the value of gold relative to global commodities copper and oil and companion metal silver is 98.80, staying below the key-100 level at and 1-month moving average of 101.03 (bullish commodities). The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) has dropped another 0.5% this week and is 5% below its 2012 high (1.2710, Nov.15) at 1.2024. The latest price action indicates gold continues to lose value relative to the broader markets.

My Oct. 30 Kitco commentary (Ref 2) posits that copper would be the next harbinger for metal prices and the broader markets. At that time the ratio of gold-to-copper had undergone a dramatic mean reversion - expansion of the daily ratio from that state would be bearish copper; compression would be a bullish. In early November an ounce of gold bought more than 500 pounds of copper, a decidedly bearish level; the trend higher reversed which was a short-term bullish sign for the red metal (my latest commentary, Ref 3 & Ref 4). Significantly, the gold-to-copper ratio is now below its 3-month average and 6-year trend at 464.1 pounds per ounce.

Any positive movement in the current headline issues (e.g., progress on resolving the U.S. fiscal cliff) would be constructive for the red metal. However, the 1-month correlation of gold and copper is now negative which may cap the current the rally in copper and suggest that gold remains range bound for the short term.


Background Notes:
  1. My target price of $1,730 per ounce is a positive bias above the geometric mean of the given trading range.
  2. Given the target gold price, the silver price ranges are derived from the 1-month gold ratio mean (GSR) and its respective ratio stability (CRS©). A similar technique was used to predict the price range for copper since its 3-month correlation with gold is still positive (although the 1-month is negative).
  3. My Gold Value Index© (GVI) equals 98.80 or 4.8% below the 2012 high of 103.73. Today gold value is below its 1-month moving average of 101.03; a value of 100 represents a historically high-value of gold relative to key commodities oil, copper and silver.
  4. The gold-to-copper ratio today is 464.07 pounds per ounce and below its 3-month moving average of 478.87 and 6-year trend of 482.31; trending below this trend line is a bullish indication for the red metal; trending above 500 pounds per ounce, bearish (Ref 3).  The 1-month gold-to-copper ratio stability is a borderline divergent at 2.99%. The 1-month rolling correlation is -0.46; 3-month is +0.75. 3-month relative volatility is 1.99X gold and price sensitivity (beta) is +1.48
  5. The gold-to-silver ratio (GSR) is slightly above its historical norm at 51.346; the 3-month rolling correlation is +0.87, relative volatility is 1.94X gold and price sensitivity (beta) is +1.70. The GSR is below its 3-month average of 52.312; The 1-month gold-to-silver ratio stability is a low 2.01%.
Ref 2: Copper and Gold - In the Eye of the Storm (Kitco News, 10/30/2012)
Ref 3: Copper and Gold - The Bank Shot (Kitco News, 11/19/2012)
      Ref 4: Copper & Gold – Fast Eddie’s Lucky Run (Kitco News, 12/03/2012)


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