"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, February 28, 2014

Gold, Dollar, Yuan - Very Strange Day in the Marketplace

"Titan" Now that's a Pacific storm!


*** Local Mining News ***

General Moly Announces Results of an Optional Mine Planning Scenario with Improved Economics for Mt. Hope Project, Should the Molybdenum Market See Sustained Lower Prices (Press release, 2/25/2014)

Thompson Creek to suspend output at molybdenum mine as market weak (2/21/2014)

Timberline could potentially be de-listed by the NYSE but received more time to submit a plan of compliance:

Timberline Receives Extension from NYSE MKT (2/20/2014)

 "...the NYSE MKT LLC (the "Exchange") has granted Timberline's request for a two week extension to submit a plan of compliance (the "Plan") to the Exchange. Based in part on the Company's progress to date on numerous alternatives, the previous deadline of February 20, 2014 has been extended to March 6, 2014."

Form 8-K Timberline Resources For: Feb 05

Barrick Reports Fourth Quarter and Full Year 2013 Results (Press Release, 2/13/2014)

Barrick Gold's CEO Discusses Q4 2013 Results - Earnings Call Transcript (Seeking Alpha, 2/13/2014)

Latest Nevada Gas Prices (click this link)

My latest Kitco commentary:

From Gold Bear to Gold Bull (Kitco News, Feb.18,2014)

My latest column in the Mining Quarterly:

Copper & Gold - The Long Ride from Lehman Brothers (p. 90-91 online, p. 84-85 printed copy, MQ Winter Edition 2013)


Paintings by Mariana Titus, The Three Anas & The Three Moon Anas, are presently at Lafitte Guest House & Gallery, New Orleans

Monday's AM prices used for this morning's early analysis: 


COMEX Gold price = $1.329.6/oz (April contract most active)
COMEX Silver = $21.315/oz (March)
COMEX Copper = $3.2020/lb (
March)
NYMEX WTI crude = $102.15/bbl (
April)
ICE Brent crude = $108.84/bbl (April)



Eureka Miner’s Gold Value Index© (GVI) = 86.69 (gold value relative to a basket of commodities that include oil, copper and silver; 100 is a high gold value)
Value Adjusted Gold Price© (VAGP) = $1,281.5/oz
COMEX - VAGP = +48.09/oz; gold is trading at a premium to key commodities (bullish implication - "bottom is in for gold")


As of 9:51 AM:


Barrick Gold (ABX) = $20.44 down 1.23% (Last Friday AM $20.831)
Newmont Mining (NEM) = $23.18 down 1.74% ($22.90)
Midway Gold (MDW) = $1.23 up 1.65% ($1.25)
General Moly (GMO) = $1.19 down 1.65% ($1.32)
Timberline Resources (TLR) = $0.147 up 0.75% ($0.16675)
S&P 500 = 1,866.78 up 0.25% ($1,844.74)




Morning Miners!

This is a very strange day in the marketplace.

First some good stuff. A U.S. GDP report of 2.4% was inline with analysts expectations for the fourth quarter of last year - that's not too bad. The S&P 500 is rewarding the data by surging to new record intraday highs, presently trading at 1,866.78 - that's not too bad either.

Now the more bizarre. The U.S. dollar fell on its face this morning relative to a bouncing euro (>1.38) as the U.S. dollar index (.DXY or "Dixie") plumbed a 2 1/2-month low. On the other hand, the U.S. dollar is showing remarkable strength against the Chinese yuan. This makes gold more expensive for Chinese buyers because the global market is priced in dollars. The yuan is not included in the Dixie so weakness there does not reflect dollar strength against the currency of the world's top consumer of gold - China. A falling Dixie generally supports higher gold prices but not today - a headwind for physical buying in Asia trumps euro strength. Got it? Very strange stuff indeed.

[Note: the closing price for the yuan renminbi was 0.162209 Friday, 2/28 - a 2% decline from its March high last year and a 1.7% drop from Feb. 1, 2014. The accelerated pace of decline this week caught gold traders' attention. A good way to remember this rate is that a U.S. dollar buys 6+ yuan renminbi or 0.16+ dollars per yuan]


Strong euro but Europe's giant neighbor Ukraine is spiraling into financial and geo-political chaos. This supports gold from a "risk aversion" standpoint  but not enough to bounce above the key $1,350 per ounce level - nuts! On Wednesday, Comex gold kissed $1,345.6 per ounce but that was it. Comex gold is now trading down at $1,329.6. (I explain in the Kitco gold survey below why these levels are so important).

[Sunday night update: escalating tensions in the Ukraine pushed Comex gold (April contract) to $1,345.0 per ounce in electronic trading; presently $1,344.3 at 10:16 PM PT]

Oh...and it's the end-of-the-month so there is profit taking going on for those that bought gold earlier and are pretty satisfied with the 7-week uptrend in price.

Let's see how all this confusion pans out next week. I'm still bullish on gold price but we may be in for a pause. Stay dry and warm - the radar image in the headline photo looks more like a Gulf hurricane than a strong Pacific storm!




Kitco Gold Survey 

Here is my input for the weekly Kitco Gold Survey:

02/28/2014 (10:27 AM CT)

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

A. Down. My target price is $1,320 per ounce.

Q. Why?

On Jan. 14, I changed sides from bear to bull on gold price going forward as explained in my Kitco commentaries, From Gold Bear to Gold Bull (Kitco News, 2/18/2014),  Gold’s Wild Ride Down May Soon Be Up (Kitco News, 1/21/2014).

This morning the April Comex contract is trading at $1,329.6 per ounce. Technically, the discounting process relative to the S&P 500, oil and copper appears to have bottomed in 2013 and the store-of-wealth is recovering some safe haven status from the unrest in Ukraine which poses both financial and geo-political risks.

However, there are several signals this week that gold price may pause its 7-week ascendancy. Gold has received little benefit on a day when the U.S. dollar is very weak relative to the euro (>1.38, .DXY is at a 2.5-month low) and its strength versus the falling Chinese Yuan may hurt physical demand. A weakened Yuan makes dollarized gold more expensive in China, the top consumer of the yellow metal. Finally, as the S&P 500 posts a new intraday high, gold is losing its upward momentum relative to equities.

The coming months may be more about stabilizing gold prices about long-term means than bouncing to new highs. Gold remains above its 200-day moving average but failed this week to close above the average gold price since the Lehman Brothers’ bankruptcy filing of $1,345 per ounce (Comex intraday Wednesday $1,345.6). Until gold closes above the Lehman mean, the 7-week uptrend is in jeopardy. Breaking above the $1,350-level would be a bullish development; retreat from the Lehman mean, bearish.

My gold target for next week is therefore $1,320 per ounce:

For $1,320 per ounce gold we can expect to see silver in a statistically bounded range* of $20.0-$22.1 per ounce; and copper in a range of $3.15-$3.45 per pound. Silver is expected to have a positive bias with respect to a range mean of $21.025 per ounce; copper, a negative bias with respect to a range mean of $3.3010 per pound.

(* +/- 2-standard deviations, 1-month basis: prices that fall outside this range likely signal a market-changing event. Bias from mean infers expected market direction from a 1-month gold ratio average)

This morning, the S&P 500 set a new intraday record of 1,866.16 and is up a 1.5% for the week; gold is up 0.5% losing ground to the S&P. The relation between the two is illustrated by a plot of the gold-to-S&P 500 ratio, or AUSP:



The ratio slid into a descending channel mid-November 2012 as money rotated away from gold assets into the U.S. stock market. This trend transitioned to a sideways channel July 5, 2013 (dashed blue lines, AUSP=0.7431). The AUSP then broke decisively below the lower boundary for a second leg of descent (dashed red lines). This channel was bullishly broken to the upside in late-January. This morning’s gold trading represents a loss of 43.9% of value relative to the November peak (AUSP=1.2710). Today’s ratio remains below the lower boundary of the sideways channel and appears to have lost upward momentum. A break above this boundary would be a bullish indication for the yellow metal; a retreat, bearish.

This morning, Comex gold is 7.3% below August’s high ($1,434.0). The yellow metal gained ground relative to copper and oil for the week; oil gained value relative to the red metal. The chart below is a week-over-week valuation matrix. The first row is the current commodity price in the given currency. For all other rows, read “1 unit of row A buys X units of column B”; for example, “1 ounce of gold buys 415.2 pounds of copper.” Percentages are deltas over one week.



Since November 2012, gold has experienced bearish value destruction not only in U.S. dollar terms but value relative to oil and copper.




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 86.69, below the key-100 level but above the 1-month moving average of 85.55. The 2012 high was 103.73 on Nov. 13. The value adjusted price of gold is $1,281.5 per ounce or $48.09 discount to actual gold price (i.e. gold is trading again at a premium to a basket of key commodities).

Cheers,

Colonel Possum

Photos by Mariana Titus

Please checkout bayoutales.com for books and book orders


Paintings by Mariana Titus, The Three Anas, are presently at Lafitte Guest House & Gallery, New Orleans
 

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


Friday, February 21, 2014

Gold $1,350? Miners Mixed; Timberline Breather

Raines Market, Eureka, Nevada


*** Local Mining News ***

Thompson Creek to suspend output at molybdenum mine as market weak (2/21/2014)

Timberline could potentially be de-listed by the NYSE but received more time to submit a plan of compliance:

Timberline Receives Extension from NYSE MKT (2/20/2014)

 "...the NYSE MKT LLC (the "Exchange") has granted Timberline's request for a two week extension to submit a plan of compliance (the "Plan") to the Exchange. Based in part on the Company's progress to date on numerous alternatives, the previous deadline of February 20, 2014 has been extended to March 6, 2014."

Form 8-K Timberline Resources For: Feb 05

Barrick Reports Fourth Quarter and Full Year 2013 Results (Press Release, 2/13/2014)

Barrick Gold's CEO Discusses Q4 2013 Results - Earnings Call Transcript (Seeking Alpha, 2/13/2014)

Latest Nevada Gas Prices (click this link)

My latest Kitco commentary:

From Gold Bear to Gold Bull (Kitco News, Feb.18,2014)

My latest column in the Mining Quarterly:

Copper & Gold - The Long Ride from Lehman Brothers (p. 90-91 online, p. 84-85 printed copy, MQ Winter Edition 2013)


Paintings by Mariana Titus, The Three Anas & The Three Moon Anas, are presently at Lafitte Guest House & Gallery, New Orleans

Monday's AM prices used for this morning's early analysis: 


COMEX Gold price = $1,323.0/oz (April contract most active)
COMEX Silver = $21.755/oz (March)
COMEX Copper = $3.2865/lb (
March)
NYMEX WTI crude = $102.52/bbl (
April)
ICE Brent crude = $110.22/bbl (April)



Eureka Miner’s Gold Value Index© (GVI) = 84.70 (gold value relative to a basket of commodities that include oil, copper and silver; 100 is a high gold value)
Value Adjusted Gold Price© (VAGP) = $1,305.2/oz
COMEX - VAGP = +17.85/oz; gold is trading at a premium to key commodities (bullish implication - "bottom is in for gold")


As of 9:25 AM:


Barrick Gold (ABX) = $20.831 down 0.71% (Last Friday AM $20.20)
Newmont Mining (NEM) = $22.90 down 6.38% ($23.43)
Midway Gold (MDW) = $1.25 down 2.34% ($1.38)
General Moly (GMO) = $1.32 up 0.76% ($1.27)
Timberline Resources (TLR) = $0.1667 up 0.48% ($0.145)
S&P 500 = 1,844.74 up 0.25% ($1,834.21)




Morning Miners!

This has been a week of small but encouraging steps for miners. This morning, the S&P 500 was up about 0.3% for the week and so was Comex gold trading at $1,323.0 per ounce. Gold held its head above the $1,321.5 high of last week and is now moving in concert with U.S stocks - that's progress. The yellow metal moved in opposition to rising stocks most of 2013 so a change in direction is noteworthy (for the propeller-heads, the correlation of the gold and the S&P 500 is a surprising +0.7 on a 1-month basis).

I said is in this week's Kitco gold survey (below), "Technically, the discounting process relative to the S&P 500, oil and copper appears to have bottomed and gold is now slowly regaining value on all three fronts. The store-of-wealth has recovered some safe haven status from emerging unrest in Ukraine and Venezuela together with mixed economic reports and monetary policies in the U.S., Japan and China."

Nothing like riot police, burning buildings and confusing signals from central bankers to move gold prices on firmer timber.

Local mining stocks have been mixed this week:  Barrick (ABX) continues to trend higher north of $20, Newmont (NEM) hit a 5% pothole this morning, Midway (MDW) is off its peak but hanging tough above $1.25, General Moly (GMO) thankfully whistles a happy $1.30 tune and Timberline (TLR) received a stay of execution from the New York Stock Exchange (see press releases below today's headline photo).

Underlining the weakness in the molybdenum market, moly benchmark miner Thompson creek (TC) plans to suspend operations at its once flagship mine:

Thompson Creek to suspend output at molybdenum mine as market weak (Reuters, 2/21/2014)

Not great but overall the mining sector is steadily climbing out of the deepest shafts of last year. Here's my closing thought on the shinny metal from today's Kitco survey input:

The coming months may be more about stabilizing gold prices about long-term means than bouncing to new highs. Gold remains above its 200-day moving average but is still trading below the average gold price since the Lehman Brothers’ bankruptcy filing of $1,345 per ounce. Until gold challenges the Lehman mean, the 7-week uptrend should remain intact. Breaking above the $1,350-level would be a bullish development; retreat from the Lehman mean, bearish.

You can read more about the ole Colonel's thoughts on gold prices in my latest Kitco commentary, From Gold Bear to Gold Bull.

Hang in there, the worst is over!




Kitco Gold Survey 

Here is my input for the weekly Kitco Gold Survey:

02/21/2014 (10:27 AM CT)

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

A. Up. My target price is $1,330 per ounce.

Q. Why?

On Jan. 14, I changed sides from bear to bull on gold price going forward as explained in my Kitco commentaries, From Gold Bear to Gold Bull (Kitco News, 2/18/2014),  Gold’s Wild Ride Down May Soon Be Up (Kitco News, 1/21/2014).

This morning the April Comex contract is trading at $1,323.0 per ounce. Technically, the discounting process relative to the S&P 500, oil and copper appears to have bottomed and gold is now slowly regaining value on all three fronts. The store-of-wealth has recovered some safe haven status from emerging unrest in Ukraine and Venezuela together with mixed economic reports and monetary policies in the U.S., Japan and China.

The coming months may be more about stabilizing gold prices about long-term means than bouncing to new highs. Gold remains above its 200-day moving average but is still trading below the average gold price since the Lehman Brothers’ bankruptcy filing of $1,345 per ounce. Until gold challenges the Lehman mean, the 7-week uptrend should remain intact. Breaking above the $1,350-level would be a bullish development; retreat from the Lehman mean, bearish.

My gold target for next week is therefore $1,330 per ounce:

For $1,330 per ounce gold we can expect to see silver in a statistically bounded range* of $20.1-$22.1 per ounce; and copper in a range of $3.24-$3.53 per pound. Silver is expected to have a positive bias with respect to a range mean of $21.062 per ounce; copper, a negative bias with respect to a range mean of $3.3843 per pound.

(* +/- 2-standard deviations, 1-month basis: prices that fall outside this range likely signal a market-changing event. Bias from mean infers expected market direction from a 1-month gold ratio average average)

This morning, the S&P 500 is up a 0.3% for the week about the same as gold. The relation between the two is illustrated by a plot of the gold-to-S&P 500 ratio, or AUSP:



The ratio slid into a descending channel mid-November 2012 as money rotated away from gold assets into the U.S. stock market. This trend transitioned to a sideways channel July 5, 2013 (dashed blue lines, AUSP=0.7431). The AUSP then broke decisively below the lower boundary for a second leg of descent (dashed red lines). This channel was bullishly broken to the upside in late-January. This morning’s gold trading represents a loss of 43.5% of value relative to the November peak (AUSP=1.2710). Today’s ratio remains below the lower boundary of the sideways channel. A break above this boundary would be a bullish indication for the yellow metal.

This week, Comex gold is up for the week 0.3% in U.S. dollar terms and 7.7% below August’s high ($1,434.0). The yellow metal loss ground relative to copper and oil for the week; oil gained value relative to the red metal. The chart below is a week-over-week valuation matrix. The first row is the current commodity price in the given currency. For all other rows, read “1 unit of row A buys X units of column B”; for example, “1 ounce of gold buys 402.6 pounds of copper.” Percentages are deltas over one week.



Since November 2012, gold has experienced bearish value destruction not only in U.S. dollar terms but value relative to oil and copper.




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 84.70, below the key-100 level but above the 1-month moving average of 85.17. The 2012 high was 103.73 on Nov. 13. The value adjusted price of gold is $1,305.2 per ounce or $17.85 discount to actual gold price (i.e. gold is trading again at a premium to a basket of key commodities).
Cheers,

Colonel Possum

Photos by Mariana Titus

Please checkout bayoutales.com for books and book orders


Paintings by Mariana Titus, The Three Anas, are presently at Lafitte Guest House & Gallery, New Orleans
 

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


Friday, February 14, 2014

Gold Breaks $1,320; Gold Miners Rock; Timberline Blues


Big Sky, Big Clouds


*** Local Mining News ***

Barrick Reports Fourth Quarter and Full Year 2013 Results (Press Release, 2/13/2014)

Barrick Gold's CEO Discusses Q4 2013 Results - Earnings Call Transcript (Seeking Alpha, 2/13/2014)

Timberline could potentially be de-listed by the NYSE and has cut the cord with RockStar Resources:

COEUR D'ALENE, IDAHO--(Marketwired - Feb. 8, 2014) - Timberline Resources Corporation(TLR) (TSX VENTURE:TBR) ("Timberline" or the "Company") announced today that it has received notice from the NYSE MKT LLC (the "Exchange") that the Company is not in compliance with one of the Exchange's continued listing standards as set forth in Part 10 of the NYSE MKT Company Guide (the "Company Guide"). Specifically, the Company is not in compliance with Section 1003(a)(iv) of that Company Guide in that it has sustained losses which are substantial in relation to its overall operations or its existing financial resources, or its financial condition has become impaired such that it appears questionable, in the opinion of the Exchange, as to whether the Company will be able to continue operations and/or meet its obligations as they mature.

Form 8-K Timberline Resources For: Feb 05

Latest Nevada Gas Prices (click this link)

My latest Kitco commentary:

From Gold Bear to Gold Bull (Kitco News, Feb.18,2014)

My latest column in the Mining Quarterly:

Copper & Gold - The Long Ride from Lehman Brothers (p. 90-91 online, p. 84-85 printed copy, MQ Winter Edition 2013)


Paintings by Mariana Titus, The Three Anas & The Three Moon Anas, are presently at Lafitte Guest House & Gallery, New Orleans

Monday's AM prices used for this morning's analysis: 


COMEX Gold price = $1,318.9/oz (April contract most active)
COMEX Silver = $21.225/oz (March)
COMEX Copper = $3.2640/lb (
March)
NYMEX WTI crude = $99.52/bbl (
March)
ICE Brent crude = $107.91/bbl (April)



Eureka Miner’s Gold Value Index© (GVI) = 86.05 (gold value relative to a basket of commodities that include oil, copper and silver; 100 is a high value)
Value Adjusted Gold Price© (VAGP) = $1,280.7/oz
COMEX - VAGP = +38.15/oz; gold is trading at an increasing premium to key commodities (bullish implication - bottom is in for gold)


As of 9:12 AM:


Barrick Gold (ABX) = $20.20 up 0.50%
Newmont Mining (NEM) = $23.43 down 0.42%

Midway Gold (MDW) = 1.38 up 3.67%
General Moly (GMO) = $1.27 up 3.25%
Timberline Resources (TLR) = $0.145 up 11.45%
S&P 500 = 1,834.21 down 0.24%




Morning Miners!

The ole Colonel has been AWOL for several weeks with travel and preparing an article on Eureka's Major W.W. McCoy for the upcoming Spring 2014 Edition of the Mining Quarterly. It includes recent field work that sheds new light on this most remarkable mining entrepreneur from Eureka's booming lead-silver days. Don't miss it!

Major W.W. McCoy

On January 14, I predicted the lows were in for gold and the yellow metal was heading for higher ground (Gold’s Wild Ride Down May Soon Be Up). Comex gold was around $1,240 per ounce then and this morning it briefly topped $1,320. Although the Lustrous One settled back to trade at $1,318.9 when I did my morning analysis, there is enough shine left for Valentine's! Read my full gold report below for reasons to be bullish.

Local gold miners have a lot to be happy about too. There is buzz that Barrick's Ruby Hill may re-open as soon as May. The giant gold miner is putting emphasis on North America and especially Nevada targeting a low-ball gold price of $1,100 for planning. As reported yesterday:

Barrick calculated its reserves for 2013 using a conservative gold price assumption of $1,100 per ounce, compared to $1,500 per ounce in 2012. While this is well below the company's outlook for the gold price and below current spot prices, it reflects Barrick's focus on producing profitable ounces with a solid rate of return and the ability to generate free cash flow. Gold reserves declined to 104.1 million ounces(4) at the end of 2013 from 140.2 million ounces at the end of 2012. Excluding ounces mined and processed in 2013 and divestitures, all of these ounces have transferred to resources, preserving the option to access them in the future at higher gold prices (Barrick Reports Fourth Quarter and Full Year 2013 Results, 2/13/214)


After a dismal 2013, Barrick's share price is up 31% from its December low presently trading at $20.20. Midway (MDW) is faring well too up 89% from its low, now a respectable $1.38 per share.

Unfortunately, Timberline Resources (TLR) hasn't joined the bullion party and is on shaky timbers with the NYSE (see Local Mining News above).

Don't forget to treat your sweetheart on Valentine's Day - an ounce of Nevada gold will do nicely!




Kitco Gold Survey 

Here is my input for the weekly Kitco Gold Survey:

02/14/2014 (10:27 AM CT)

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

A. Down. My target price is $1,310 per ounce.

Q. Why?

On Jan. 14, I changed sides from bear to bull on gold price going forward as explained in my last Kitco commentary, Gold’s Wild Ride Down May Soon Be Up (Kitco News, 1/21/2014).

Technically, the discounting process relative to oil and copper appears to have bottomed in December and gold is now regaining value on both. At the time of the commentary, the key trend remaining was the yellow metal's descending relation with equities. There was a decisive breakout to the upside in late-January which has continued into February (see chart below).

The GLD ETF has recorded inflows for 2014 and broke its 200-day average to the upside this morning – the GLD has not been above this longer term average since Feb. 8, 2013.

Presently the April Comex contract is trading at $1,318.9 just below the intraday high of $1,321.5 per ounce. Given the sharpness of the rise and a shortened week for U.S. markets, some consolidation below these levels is likely.

My gold target for next week is therefore $1,310 per ounce:

For $1,310 per ounce gold we can expect to see silver in a statistically bounded range* of $20.0-$21.4 per ounce; and copper in a range of $3.20-$3.57 per pound. Silver is expected to have a positive bias with respect to a range mean of $20.664 per ounce; copper, a negative bias with respect to a range mean of $3.3822 per pound.

(* +/- 2-standard deviations, 1-month basis: prices that fall outside this range likely signal a market-changing event. Bias from mean infers expected market direction from a 1-month gold ratio average)

This morning, the S&P 500 is up a respectable 2.0% for the week and gold has gained 2.4% on the S&P. The relation between the two is illustrated by a plot of the gold-to-S&P 500 ratio, or AUSP:



The ratio slid into a descending channel mid-November 2012 as money rotated away from gold assets into the U.S. stock market. This trend transitioned to a sideways channel July 5, 2013 (dashed blue lines, AUSP=0.7431). The AUSP then broke decisively below the lower boundary for a second leg of descent (dashed red lines). This channel was bullishly broken to the upside in late-January. This morning’s gold trading represents a loss of 43.2% of value relative to the November peak (AUSP=1.2710). However, today’s ratio is approaching the lower boundary of the sideways channel - a very bullish indication for the yellow metal.

This week, Comex gold is up for the week 4.4% in U.S. dollar terms and 8.0% below August’s high ($1,434.0). The yellow metal gained relative to copper and oil for the week; oil lost value relative to the red metal. The chart below is a week-over-week valuation matrix. The first row is the current commodity price in the given currency. For all other rows, read “1 unit of row A buys X units of column B”; for example, “1 ounce of gold buys 404.1 pounds of copper.” Percentages are deltas over one week.



Since November 2012, gold has experienced bearish value destruction not only in U.S. dollar terms but value relative to oil and copper.




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 86.05, below the key-100 level but above the 1-month moving average of 84.96. The 2012 high was 103.73 on Nov. 13. The value adjusted price of gold is $1,280.7 per ounce or $38.15 discount to actual gold price (i.e. gold is trading again at a premium to a basket of key commodities).

Cheers,

Colonel Possum

Photos by Mariana Titus

Please checkout bayoutales.com for books and book orders


Paintings by Mariana Titus, The Three Anas, are presently at Lafitte Guest House & Gallery, New Orleans
 

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