*** Local Mining News ***
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 = $1,339.3/oz (April contract most active)
COMEX Silver = $20.440/oz (May)
COMEX Copper = $2.9555/lb (May)
NYMEX WTI crude = $99.27/bbl (May)
ICE Brent crude = $107.18/bbl (May)
Eureka Miner’s Gold Value Index© (GVI) = 92.13 (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) = $1,214.7/oz
COMEX - VAGP = +124.64/oz; gold is trading at a premium to key commodities (bullish implication - "bottom is in for gold")
As of 9:26 AM (percentages are from yesterday's closing prices; parentheses are a comparison to last Friday's morning price):
Barrick Gold (ABX) = $19.325 down 0.49% (Last Friday AM $20.855)
Newmont Mining (NEM) = $24.58 (unch) % ($25.97)
Midway Gold (MDW) = $1.10 down 3.51% (unchanged) ($1.28)
General Moly (GMO) = $1.045 up 3.47% ($1.11)
Timberline Resources (TLR) = $0.1598 down 3.09%% ($0.19)
If gold's fortune has an evil twin, she was busy this week. Posting a respectable intraday high of $1392.6 per ounce was a good way to start the week but then there was triple-trouble as explained in my input to this week's Kitco Gold Survey (see below):
Last week gold enjoyed a notable bounce in U.S. dollar price and significant value gains relative to equities and key commodities. This week, the yellow metal experienced a broad reversal in fortunes after the boil came off the Ukraine crisis and Federal Reserve Chairman Yellen hinted at higher interest rate hikes sooner than later. A rapidly weakening yuan versus the U.S. dollar has also created headwinds for physical buying in China. The dollar regained some ground on the euro and yen too putting further pressure on dollarized commodities.
Recent gold price fluctuations are reminiscent of trench warfare; incremental ground lost, then recaptured only to be lost again. For example, this morning’s gold price is only a few dollars from the 50% retracement of last June’s low to last May’s high ($1,338 per ounce for the current April contract) – an area of pricing revisited many times over the last nine months. On the positive side, the trend has been mostly up for 2014 and revisiting last year’s lows is unlikely. Attempting to break the psychologically important $1,400-level remains elusive as the rally stalled this week at a Comex intraday high of $1,392.6.
As the impact of the Yellen comment fades, a few more turns in the Ukraine crisis will no doubt return some safe-haven luster. My gold target for next week is therefore $1,370 per ounce.
Chinese Yuan Devaluation
We started following the dramatic weakening of the Chinese yuan in late-February and the pace has accelerated. I asked Kitco Global Editor Debbie Carlson to explain some of the dynamics behind this change:
Eureka Miner: The Chinese yuan [USD/CNY] is up another 0.5% today; 3.0% higher than its January low. The pace of yuan devaluation is striking. Is the story that China is allowing the fall to advantage exports or is this an insight into economic weakness or both?
Carlson: That's been the debate, why they're doing it. If they're doing it to increase exports, economists are worried about that. But if they're doing it because they're wanting to do this structural shift in their economy, then it may not have greater ramifications. No one is quite sure yet.
Eureka Miner: This can't be good for gold physical demand, eh?
Carlson: Yes, a weaker yuan is bad for Chinese gold demand. I think we're seeing this pay out in the somewhat reduced volume at the SGE [Shanghai Gold Exchange] and especially the modest premium/sometimes discount SGE trades to spot. I don't necessarily buy the idea that Chinese people are flocking to gold to preserve their value. Maybe people with money are doing that, but the average Chinese person is still poor.
Eureka Miner: And that explains why their GDP can grow so high?
Carlson: Correct, and if it's a decision between buying a month's worth of dinners for the family or a 1/2 ounce of gold, what would be your choice?
Eureka Miner: Got it. Thanks, I'll share this with my readers!
Debbie Carlson did a terrific column on metals last week that looks at the yuan and other factors currently challenging prices:
Silver, Copper Could Weaken Further If Chinese Economic Data Disappoints; Copper Breaks $3/Lb (Kitco News March 11, 2014)
I included her thoughts and some further analysis in my latest Kitco commentary:
Oil, Copper & Gold Transmit a Distress Signal (Kitco News, Mar. 18, 2014)
Copper Bounce and Freeport McMoRan (FCX)
Today's bounce in copper price and the resilience of copper giant Freeport-McMoran (FCX) throughout the pullback is encouraging. Comex copper is currently trading at $2.9555 per pound up 3% from Wednesday's $2.8770 intraday low.
[PM update: FCX closed up 4.56% at $32.31 breaking out of a $30.4 to $31.8 trading range where it has been trapped since March 10. This is potentially a bullish development for the mining sector. Often considered a bellwether stock, Freeport has also diversified into oil and natural gas. The annualized dividend is a healthy 3.87% at the closing price today. Please do your own research, markets can turn on you faster than a feral cat.]
Keep the faith, pardner!
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 input today for the Weekly 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
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