"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.

Saturday, January 19, 2013

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

Warming up in the Diamond Valley, Eureka, Nevada
Latest Nevada Gas Prices (click this link)

My latest Kitco commentary: Oil, Copper & Gold – All in the Family (01/22/2013)

Friday's closing prices...

COMEX Gold price = $1,687.0/oz (February contract most active)

COMEX Silver = $31.932/oz (March)
COMEX Copper = $3.6790/lb (March)
NYMEX WTI crude = $95.94/bbl (March)
ICE Brent crude = $111.89/bbl (March)
Eureka Miner’s Gold Value Index© (GVI) = 94.39 (gold value is elevated but falling with respect to key commodities oil, copper and silver)
Value Adjusted Gold Price© (VAGP) = $1,493.4/oz
COMEX - VAGP = $193.6/oz; gold is trading at a decreasing premium to key commodities.

Morning Miners!

Gold prices gained some momentum this week and should head higher next week as I explain in my weekly Kitco Gold Survey input (see below) and latest commentary, Oil, Copper & Gold – All in the Family.

It's a short report this morning as the ole Colonel is still trying to thaw out from our subzero cold snap. I keep an ice cooler in an enclosed breezeway between the house and workshop to keep my beer from freezing. That works but the other night I opened the cooler and the hinges shattered like glass - that's cold, pardner.

Molybdenum spot prices are a thin flat washer below the $12 per pound level which is encouraging but not much changed from last week. Here are the latest numbers compliments of Thompson Creek Metals (TC):

Metals Week Daily Average:

As of January 11, 2013
(updated weekly)

Ryan's Notes Average:

As of January 18, 2013
(updated twice weekly)

The London Metal Exchange (LME) futures contracts have crested $12 per pound but have also seen little change this week:

3-month seller's contract $26,500 per metric ton ($12.02 per pound)

15-month seller's contract $27,220 per metric ton ($12.35 per pound) 

General Moly (GMO) stock closed the week at $4.05 per share.

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 holiday weekend.

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

Here is my input to the weekly Kitco Gold Survey:

01/18/2012 (10:56AM CT)

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

A. Up, $1,705 per ounce target.

Q. Why?

A. Although range bound between January highs and lows ($1,695.0 and $1,626.0 per ounce), gold has found momentum to the upside this week. In the short-term, gold is expected to break the range reaching new highs for the month. My target is $1,705 per ounce.

This morning is a study in market contrasts. Better-than-expected China GDP and industrial output data together with an upbeat General Electric report bode well for global outlook. The S&P 500 volatility index, sometime referred to as the “fear index”, is at levels not seen since June, 2007. As a consequence, risk-on plays like copper are in rally mode today. However, as another U.S. debt ceiling fast approaches, the Treasury market and the U.S. dollar are in the green signaling safe-haven plays. This presents a mixed picture for gold but I believe the yellow metal should participate to the upside with the risk assets for the time being.

Technically, negative 3-month rolling correlations between gold and global commodities oil and copper are troubling but may be soon relieved by shorter term positive relations (Ref 4).

For $1,705 per ounce gold we can expect to see silver in a range of $31.2-$33.3 per ounce; and copper in a range of $3.61-$3.83 per pound. Silver and copper should have a positive bias above their expected range means ($32.260 & $3.7187 respectively).

The yellow metal has bearishly lost value relative to oil and copper as well as the broader markets but has recovered some this week for the latter.

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 94.55, staying below the key-100 level and 1-month moving average of 96.07(bearish gold trend). The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) is now 10.3% below its 2012 high (1.2710, Nov.15) at 1.1403. The latest price action indicates that although gold has lost considerable value relative to the broader market it may have bottomed Jan. 4 and is now trending up (bullish gold trend).

Background Notes:
  1. My gold target price of $1,705 per ounce follows a recent upward trend which should break the psychologically important $1,700 per ounce level.
  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 94.55 or 8.8% below the 2012 high of 103.73. Today gold value is below its 1-month moving average of 96.07; 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 457.98 pounds per ounce and below its 3-month moving average of 473.63 and 6+year trend of 485.93. 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 1.43%. The 1-month rolling correlation is +0.43; 3-month is -0.41. 3-month relative volatility is 1.54X gold and price sensitivity (beta) is -0.63
  5. The gold-to-silver ratio (GSR) is above its historical norm at 52.803; the 3-month rolling correlation is +0.88, relative volatility is 2.39X gold and price sensitivity (beta) is +2.11. The GSR is below its 3-month average of 53.2; the 1-month gold-to-silver ratio stability is a very low 1.61%.
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)
Ref 5: The 2013 Copper & Gold Conundrum (Kitco News, 01/07/2012)


Colonel Possum

Headline photograph by Mariana Titus

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