*** Local Mining News ***
Timberline’s Plan of Compliance Accepted by NYSE MKT (Press release, 3/25/2014)
African Barrick seeks new name after partially splitting from Canadian parent (Mining News, March 19,2014)
Timberline and Wolfpack Gold to Merge (Press Release, March 13, 2014)
Latest Nevada Gas Prices (click this link)
My latest Kitco commentary:
Oil, Copper & Gold Transmit a Distress Signal (Kitco News, Mar. 18, 2014)
My latest column in the Mining Quarterly:
Major McCoy and the Rebellious Ores of Eureka (p. 83-87 online, MQ Spring Edition 2014)
Paintings by Mariana Titus, The Three Anas & The Three Moon Anas, are presently at Lafitte Guest House & Gallery, New Orleans
Friday's AM prices used for this morning's early analysis:
COMEX Gold price = $1,288.5/oz (June contract most active)
COMEX Silver = $19.760/oz (May)
COMEX Copper = $3.0405/lb (May)
NYMEX WTI crude = $102.07/bbl (May)
ICE Brent crude = $108.26/bbl (May)
Eureka Miner’s Gold Value Index© (GVI) = 88.20 (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) = $1,220.6/oz
COMEX - VAGP = +67.91/oz; gold is trading at a premium to key commodities (bullish implication - "bottom is in for gold"; bearish caution: premium is diminishing)
As of 10:20AM (percentages are from yesterday's closing prices; parentheses are a comparison to last Friday's morning price):
Barrick Gold (ABX) = $18.26 up 1.00% (Last Friday AM $19.325)
Newmont Mining (NEM) = $23.77 up 3.62% ($24.58)
Midway Gold (MDW) = $1.05 up 3.96% (unchanged) ($1.10)
General Moly (GMO) = $1.05 down 0.94% ($1.045 )
Timberline Resources (TLR) = $0.155 up 6.09% ($0.1598)
Here is the most bullish comment the ole Colonel can make on recent gold price declines - sometimes it's smart to throw a rock in the mineshaft to test its depth.
As the issues with Russia and the Ukraine fade and market participants mull thoughts of Federal Reserve tapering and rising interest rates, gold prices will fall until physical buyers return in earnest - that marks the bottom of the current shaft. This morning Comex gold dipped to $1,286.1 per ounce before trading up to $1,288.5 (as I write this column, June contract most active).
Is this the bottom or just a false echo? I threw a rock down the shaft with Kitco News Global Editor Debbie Carlson in a second Q&A yesterday (see below). Not much has changed.
My most recent thoughts on price direction next week are given in the input to this week's Kitco Gold Survey (following the Q&A):
This week, the yellow metal continued its broad decline, losing not only U.S. dollar price but significant value relative to equities and global commodities oil and copper. With the Ukraine crisis in idle for the time being, gold is lacking a catalyst to reverse its recent decent below $1,300 per ounce. A test for a physical buying floor may be in the offing although most of the selloff has been technical in nature. Continued weakening of the yuan versus the U.S. dollar also creates headwinds for buying in China. Although volatile, the U.S. dollar index is ending flat for the week and thereby less of a factor on the price movements of dollarized commodities. My gold target for next week is $1,300 per ounce assuming there may be one more charge to go in the land of the Light Brigade.
On a positive note, Comex copper is back above the key $3-level at $3.0405 per pound and the gold miners are mostly up on a down day for the yellow metal (above).
Keep the faith, pardner.
Carlson on Gold Price & Chinese Yuan Devaluation (Part II)
We have been following the dramatic weakening of the Chinese yuan since late-February. Last week, I asked Kitco Global Editor Debbie Carlson to explain some of the dynamics behind this change. This is a follow-up Q&A with Carlson conducted yesterday before today's dip to $1,286.1 per ounce.
Thursday, March 27 Q&A
Eureka Miner: On a morning with gold below $1,300 and the Ukraine Crisis in pause mode, a good test of physical support may be in the offing - no?
Carlson: Definitely of technical chart support, not sure yet about physical demand. Asian analysts said the slip under $1,300 didn't inspire any buying. It's only at a month low so perhaps shoppers are keeping their purses shut.
Eureka Miner: I noticed TD securities thinks it may be at the $1,295-level.
Carlson: Yes, that area as of Wednesday was the 200-day moving average for spot prices. That caused some excitement in the markets when we moved above it on the way up. This story by Kitco's Allen Sykora talks about what might happen if gold futures close under $1,300:
Technical Activity In Focus As Gold Futures Fall Back To 50, 200-Day Averages (Allen Sykora, Kitco news, March 26, 2014)
Eureka Miner: Continuing our conversation from last week, Chinese demand has been lackluster for a variety of reasons with SGE still trading at a discount to spot gold.
Carlson:Indeed, it has. Several traders who watch physical demand have said as much.
Eureka Miner: One factor we discussed was the recent devaluation of the yuan relative to the U.S dollar. Last Friday the yuan hit a high for the year at 6.2127 (USD/CNY), up 3.1% from its January low. This week the yuan retreated from this peak but appears to be on the march higher again. My understanding is that the new 2% trading band, moved from 1% March 15, gives a sense for how much higher the PBOC is willing to go in the near term. Thursday's reference rate is 6.1465 up from Wednesday's 6.1440. Using their latest target, a 2% rise would give 6.2694 - nearly 4% above January's number. How do these moves compare to seasonal softness?
Carlson: I'm no expert on currency fluctuations, but when the band expansion was announced, at least one currency analyst said in the past the yuan never really tested its full 1% band, so maybe this will give the currency more room to move. As far as Chinese currency weakening, gold analysts have said that's likely a factor.
Eureka Miner: Thank you!
Timberline (TLR) Gets Another Breather
Good news - the New York stock exchange (NYSE) has accepted a Plan of Compliance from Timberline Resources (TLR):
Timberline’s Plan of Compliance Accepted by NYSE MKT (Press release, 3/25/2014)
The NYSE was threatening to de-list TLR from the exchange but the new plan puts that decision off to this summer as the submitted plan is reviewed. Timberline has a diverse footprint in Eureka County of claims and recent explorations:
Timberline's exploration is primarily focused on the major gold districts of Nevada, where it is advancing its flagship Lookout Mountain Project toward a production decision while exploring a pipeline of quality earlier-stage projects at its South Eureka Property and elsewhere. Timberline's leadership has a proven track record of discovering economic mineral deposits that are developed into profitable mines.
The Report wishes them the best of luck on their new direction forward.
Spring 2014 Mining Quarterly
As mentioned for the last several reports, the Spring 2014 Mining Quarterly is out and can be accessed online.
MQ editor Marianne Kobak McKown has done another terrific job putting together the latest mining news and events in Northern Nevada. The ole Colonel submitted a column on Eureka's Major William Wirt McCoy - someone we can be very proud as we celebrate Nevada's Sesquicentennial:
Major McCoy and the Rebellious Ores of Eureka (p. 83-87 online)
In his 70 years, Major McCoy was a physician, cattleman, statesman and mining entrepreneur. He served with distinction in the Mexican-American War and the legislatures of three states. Most importantly for Nevada, he found an economic way to reduce the stubborn argentiferous lead ores of the Eureka mining district. His solution brought Eureka from a struggling mining camp in 1869 to become Nevada’s second largest city with a population of 10,000 and a world class lead-silver producer by 1878. Before his death in 1881, this remarkable man had contributed to the creation of Nevada through his brave actions in the Mexican-American War, served as a Senator of the “Battle Born State” and helped form Eureka town site and County.
My most sincere thanks to the many folks in Eureka that contributed to the historical and field research for this article. This included locating the sites of the McCoy waterworks, Eureka Smelting Company, brickyard south of town and quarry for the sandstone that revolutionized smelting in the Eureka mining district.
Happy reading, pardner!
Kitco Gold Survey
My weekly inpt to the Kitco Gold Survey:
Photos by Mariana Titus
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Paintings by Mariana Titus, The Three Anas, are presently at Lafitte Guest House & Gallery, New Orleans
Write Colonel Possum at firstname.lastname@example.org for answers to your questions or to request e-mail updates on the market