Eureka Miner's Market Report

Dollar Up; Euro & Gold Down - Miners Grumpy

2012-02-16T09:10:00.000-08:00

Mr. White

*** BREAKING NEWS **** The euro dramatically reversed its downward slide boosting broader markets and miners. A reversal in copper prices caused a 5% bounce in benchmark miner Freeport-McMoRan (FCX). Miners grumpy no more! (10:34 AM PT)

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver Move Uptown for 2012 (02/06/2011)

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

This morning's...
COMEX Gold price = $1,713.3/oz (April contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.52 (gold value sideways, trend indeterminate)
Value Adjusted Gold Price© (VAGP) = $1,547.4/oz
COMEX - VAGP = $165.9/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Þūnresdæg
Morning Miners!

It is 6:19 AM. Have a hot cup of Thor's famous Euro Thunder Blunder. Our favorite Norseman loves nothing more than to see a little chaos in the homeland, reminds him of those good ole days of yore...

Dollar Up; Euro & Gold Down - Miners Grumpy

As much as the Colonel would like to forget about the fate of Greece and the umpteenth chapter of the euro-zone debt crisis, it does drive gold price. This 3-month chart tells the story:

Gold price (orange) and the euro (gray) have been running together for the most part - euro up, gold up; euro down, gold down. The exceptions are bad headlines on Iran which put a bid under oil and gold prices or improving economic news from the U.S. which tends to lift base and precious metals. This morning we have a mixed bag with the Greek March bailout on shaky grounds (euro headed back to the $1.30 level boosting the U.S. dollar) and good news on the domestic employment front with number of U.S. workers applying for unemployment benefits falling to its lowest level in nearly four years (initial claims dropped by 13,000 to 348,000 beating an expected 365,000). The latter news is probably blunting the effect of the steep euro-decline with COMEX gold trading down only $14.8/oz at $1,713.3/oz.

This tug-of-war between gold bearish (bad Europe news) and gold bullish (tensions in the Persian Gulf, improving U.S. economy) forces explains why the Eureka Miner’s Gold Value Index© (GVI) has been moving sideways since mid-January.

Interestingly, our debt Crisis Index (DCI) moved up this morning to levels not seen since mid-January. A increasing DCI spells trouble, although at 96.4 we are still quite a ways from the dangerous 200-level (on Octber 4, 2011 the DCI peaked at an alarming 264.9).

How does this effect the mining sector? Mining stocks have been on a tear since the beginning of the year but this morning the Eureka Miner's Index© (EMI) fell below its one-month average (202 versus 204 average, see below) after peaking at 322 on Feb. 8. Taken all together the GVI, DCI and EMI are throwing up some warning flares as the broader markets shrug off all the bad news and seem determined to peg new highs for the year. The DOW almost broke 13,000 on Feb. 9 (intraday high of 12,924.71) and is back up today boosted by the employment report to 12,839.34.

I tend to believe the miners which appear headed down the correction elevator. COMEX copper prices have also been trending down for the last 5-market days sitting at $3.7495/lb on the COMEX after almost touching $4/lb earlier this month. Hang on pardner - the ole Colonel is still bullish for 2012 but we may have to go down before up again. Stay tuned.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $46.24 down 0.83%
Newmont (NEM) $59.03 down 0.96%
McEwen Mining (MUX) 4.97 down 0.80% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.44 down 0.86%
Thompson Creek (TC) $8.53 down 0.70%
Freeport-McMoRan (FCX) $42.55 up 0.35% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.95 down 0.07%
Timberline Resources (TLR) $0.52 unchanged

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $20.68 down 1.05% - global steel producer
POSCO (PKX) $90.08 down 1.43% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 202.20, down last report's 235.31 and below the 1-month moving average of 203.82. The 1-month average is safely above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $14.8/oz at $1,713.3/oz (April contract, most active)

COMEX silver is down $0.573/oz at $32.835/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 52.179 oz/oz

Silver 1-month CRS© is 1.69% (bullish level); weak convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.52, up from last report's 92.34 and above its 1-month average of 92.41. The gold value has stalled, and the trend is again indeterminate. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,574.4/oz which is $165.9/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0520/lb at $3.7495/lb (March contract, most active)

The gold-to-copper ratio is 456.94 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 1.50% (bullish level); weak convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$$14.50
As of February 14, 2012
(updated weekly)

Ryan's Notes Average:
US$14.85
As of February 10, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.95/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$15.20/lb (US$33,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $101.61
ICE North Sea Brent crude $119.58
Spread (ICE- NYMEX) = $17.97 (last report, $15.69)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $102.41
ICE North Sea Brent crude $118.65
Spread (ICE- NYMEX) = $16.24 (last report, $14.39)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 2.82% (bullish level); ratio convergence (Oil bullish)

Prices are off their crisis highs but we have $115+ Brent and $100+ NYMEX in May favoring high oil prices this spring. A front-month spread >$20/bbl is a trouble sign.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 96.4 up from last report's 93.6. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 58.39 to 12,839.34; the S&P 500 is up 2.10 points at 1,345.33

The Eureka Miner's Grubstake Portfolio is down 0.83% at $1,532,096.91 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Does Silver Still Shine?

2012-02-14T09:06:00.000-08:00

What's Next for Silver?

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver Move Uptown for 2012 (02/06/2011)

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

This morning's...
COMEX Gold price = $1,725.4/oz (April contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.00 (gold value sideways, trend indeterminate)
Value Adjusted Gold Price© (VAGP) = $1,567.1/oz
COMEX - VAGP = $158.3/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 6:17 AM. Have a cup of Cheer and a few of Ruby T's delicious Valentine Day's cookies - if you forgot your valentine; there's still time, pardner. The ole Colonel will not be signing in tomorrow but we'll be back and at'em Thursday. Let's check out what's going on with silver before I leave...

Does Silver Still Shine?

The Report put a spotlight on silver in late December - a little tarnished then trading below $30/oz; COMEX silver sat at $29.70/oz when we asked the question, Is Silver Still a Good Investment?(12/27/2011). I answered this way:

If you are willing to sit through a lot of wild price swings, my answer is simply, "Yes!" Silver, like its companion gold, has good long term precious metal fundamentals. Silver also has a bright future as new uses in hi-tech applications will only increase its industrial demand - high-density batteries come to mind in our evermore electrified world.

For the long haul silver remains a good investment if you have a strong stomach and balance your holding with gold and currencies. Presently the Colonel splits it this way: Gold (68%), silver (10%) and U.S. dollar index (22%). There are far fancier (and often better) ways to hedge precious metals with currencies but for an old timer that takes life a little slower than the young bucks, holding the U.S. dollar index covers those days when the dollar is strong and precious metals are weak. Carrying silver as a smaller percentage of the total is also a good way to keep your blood pressure down during the white metal metal's crazy spells. Here are some popular exchange traded funds to cover all three bases:

SPDR Gold Trust (GLD)
iShares Silver Trust (SLV)
Powersahres DB US Dollar Index Bullish Fund (UUP)

Silver hasn't been a bad trade for the short haul either. This morning with COMEX silver at $34.765/oz, it's 20% above the closing price for 2011. COMEX gold by comparison is up 9.9% trading at $1,725.4/oz. Is there more room to go?

The gold-to-silver ratio is a good one to watch to answer that question. At the close of 2011 it was at an elevated 57.7 which reads gold strong; silver weak. Today the ratio at 51.1 is hovering near its more historical value of 51 (at least that's the number I use for "normal"). The lowest the ratio scored recently was 50.97 on the Feb. 9. Currently, silver is showing strength relative to gold with a "very stable" ratio (i.e. the 1-month standard deviation normalized by its mean is only 2.4%, this report considers anything less than 3% to be very stable).

If ratio stability holds and COMEX gold returns to $1,775/oz territory, we can take out the 11/16 silver high of $34.68/oz. Breaking this resistance sends the white metal another leg up. My peak price target for silver this year is $40+/oz with a nominal price of $35/oz.

I believe gold is headed higher so my answer to the question begged by today's title is - Yes!

As this report always cautions: please do your own research, the Colonel may be dead wrong. Silver can take you for a wild ride down as well as up.

I threw a few shares of SLV into the buckboard this morning at $32.71. What the heck.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $47.80 down 0.48%
Newmont (NEM) $58.95 down 0.77%
McEwen Mining (MUX) 5.05 down 0.59% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.53 down 3.29%
Thompson Creek (TC) $8.81 up 0.11%
Freeport-McMoRan (FCX) $43.88 down 1.75% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.96 down 0.07%
Timberline Resources (TLR) $0.50 unchanged

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $21.96 down 2.83% - global steel producer
POSCO (PKX) $91.01 down 1.18% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 235.1, up down last report's 256.9 and above the 1-month moving average of 200.8. The 1-month average is safely above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $0.5/oz at $1,725.4/oz (April contract, most active)

COMEX silver is up $0.0.043/oz at $33.765/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.100 oz/oz

Silver 1-month CRS© is 2.40% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.00, up from last report's 91.83 and below its 1-month average of 92.40. The gold value has stalled, and the trend is again indeterminate. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,567.1/oz which is $158.3/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0280/lb at $3.8115/lb (March contract, most active)

The gold-to-copper ratio is 452.68 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 1.37% (bullish level); ratio convergence (Cu bullish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$$14.50
As of February 13, 2012
(updated weekly)

Ryan's Notes Average:
US$14.60
As of February 10, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.65/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.74/lb (US$32,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $101.56
ICE North Sea Brent crude $117.25
Spread (ICE- NYMEX) = $15.69 (last report, $17.45)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $102.39
ICE North Sea Brent crude $116.78
Spread (ICE- NYMEX) = $14.39 (last report, $16.08)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 2.82% (bullish level); ratio convergence (Oil bullish)

Prices are off their crisis highs but we have $115+ Brent and $100+ NYMEX in May favoring high oil prices this spring. A front-month spread >$20/bbl is a trouble sign.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 88.3 up from last report's 87.3. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 42.80 to 12,831.24; the S&P 500 is down 6.09 points at 1,345.68

The Eureka Miner's Grubstake Portfolio is down 0.81% at $1,557,214.47 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

The 2012 Copper-Gold Conundrum

2012-02-13T09:16:00.000-08:00

The Diamond Range was here long before the Rocky or High Sierra Mountains...350,000,000 years old
Diamond Valley, Eureka, Nevada

Therein lies the rub. For in that sleep of death we know not what dreams may come... Hamlet's Soliloquy, Shakespeare

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver Move Uptown for 2012 (02/06/2011)

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

This morning's...
COMEX Gold price = $1,723.9/oz (April contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.83 (gold value stalled, possible reversal to the downside - see below)
Value Adjusted Gold Price© (VAGP) = $1,568.6/oz
COMEX - VAGP = $155.3/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 6:55 AM. Have a cup of Monday Ether, it's good for getting more than cold diesel's running. Sunday, Greece's parliament passed sweeping austerity measures, a key condition to receive another bailout. Rioting in the streets has blunted some of the market's enthusiasm, if Greece misses default next month what about the next time debt payments come due? Nonetheless, 17 of 19 global markets are in the green on the news and our favorite metals are up to start the week in a "risk on" mood. Oh boy, the ole Colonel needs another cup of ether.

The 2012 Copper-Gold Conundrum

It's hard to say that the red metal hasn't had good year so far. COMEX copper this morning is trading up $0.0125/lb at $3.8745/lb which is a healthy 12.7% from where we left it at the end of 2011. Gold has been doing well too riding shotgun with the metals to rise 10% over the same period, presently trading at $1,723.9/oz.

When copper price rises faster than gold, the gold-to-copper (Au:Cu) price ratio compresses which is typically a bullish sign for base metals. As the stagecoach pulled into the station last year, 456 pounds of copper bought an ounce of gold.; this morning it only takes 445 pounds. But therein lies the rub - during more normal times it should only take 300 to 400 pounds to fetch an ounce of glitter, during copper's best month last year the Au:Cu dropped to a very bullish 293 pounds-per-ounce February. What's going on?

This report considers an Au:Cu ratio above 400 pounds-per-ounce to be a recession level historically; during the Great Recession it dipped to a frightening 621 pounds-per-ounce. Given this backdrop, today's copper is most likely reflecting the expected recessionary environment in Europe, slowing demand in China and improving demand in the United States - not a great situation but certainly not Armageddon either. On the supply side, tightness is expected to persist with a net deficit for 2012.

There are several good reports on this situation today. Kitco news reports Morgan Stanley regards copper as "the preferred base metal" noting the challenges facing aluminum:

Market Nuggets:Morgan Stanley: Aluminum Burdened By Supply Overhang (Allen Sykora, Kitco Market Nuggets, 02/13/2012)

The Morgan Stanley analyst explains, "Until the global inventory pipeline is replenished and a reliable supply environment ensues, copper prices should stay well above marginal cost...We do not expect sustained relief from this constrained supply before 2014.”

Reuters adds some detail on the current demand side in this piece;

METALS-Copper up on Greek progress but demand woes weigh (Maytaal Angel, Reuters, Feb 13, 2012 10:46am GMT)

Reuters quotes Citigroup analyst David Wilson, "There's still a sense that the copper rally has been overdone. China hasn't been buying, total global exchange stocks have actually risen since beginning of December and Chinese premiums have been softening over the last month and a half."

So there you have it, pardner - a mixed picture for the red metal. The ole Colonel remains overall bullish on copper and is holding on to his Freeport-McMoRan (FCX) stock with both hands. Even if there are some ups-and-downs ahead, the copper giant pays a 2.23% dividend at it present share price and that beats a bank CD any day.

Please do your own research, tomorrow's tea leaves in the copper cup may tell a different tale in this New Year of the Dragon.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $48.05 down 0.21%
Newmont (NEM) $59.32 down 0.50%
McEwen Mining (MUX) 5.11 up 0.39% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.68 up 1.10%
Thompson Creek (TC) $8.97 up 0.79%
Freeport-McMoRan (FCX) $45.03 up 0.20% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.98 down 0.53%
Timberline Resources (TLR) $0.50 unchanged

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $22.48 up 1.26% - global steel producer
POSCO (PKX) $92.30 up 1.45% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 256.93, up down last report's 242.19 and above the 1-month moving average of 194.99. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Here is the Eureka Miner's Index© (EMI) through Friday's close (a larger more readable plot is near the bottom of the blog page):

Today's EMI remains solidly above the 100-level. The 1-month moving average is above this key level also, a necessary condition for returning our miners to bull pasture. Any change in these trends will be monitored carefully, so far so good.

Gold & Silver Report

This morning's...

COMEX gold is up $1.2/oz at $1,723.9/oz (April contract, most active)

COMEX silver is up $0.031/oz at $33.635/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.253 oz/oz

Silver 1-month CRS© is 2.50% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.83, down from last report's 92.64 and below its 1-month average of 92.39. The gold value has stalled, but it may return to a decling trend. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,568.6/oz which is $155.3/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

The Eureka Miner’s Gold Value Index© (GVI) stalled last week with an indeterminate trend. A strong move down this morning may indicate a reversal to declining trend going forward. Here is plot of the GVI at Friday's close (also near the bottom of the blog page):

To keep the metals & miners firmly back on their feet, we need gold to give up more relative value to copper, oil and silver. Remember, the GVI and EMI typically (but not always) have an inverse relation; as the GVI falls, the EMI rises. Today's GVI may resume its downward trend (bullish miners). Presently, the GVI at 91.83 is above an average of 92.39 and down 16.5% from its 2010-2011 high of 109.97.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0125/lb at $3.8745/lb (March contract, most active)

The gold-to-copper ratio is 444.93 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 1.38% (bullish level); weak convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$$14.50
As of February 13, 2012
(updated weekly)

Ryan's Notes Average:
US$14.60
As of February 10, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.65/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.74/lb (US$32,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

A faithful friend of this report in Mumbai sent this insightful article on China, Iran and oil:

China buys up Saudi, Russian oil to squeeze Iran (Published on Wed, Feb 08, 2012, Reuters)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $100.33
ICE North Sea Brent crude $117.78
Spread (ICE- NYMEX) = $17.45 (last report, $19.20)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $101.23
ICE North Sea Brent crude $117.31
Spread (ICE- NYMEX) = $16.08 (last report, $17.88)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.10% (bullish level); weak convergence (Oil bullish)

Prices are off their crisis highs but we have $115+ Brent and $95+ NYMEX in May favoring high oil prices this spring. A front-month spread >$20/bbl is a trouble sign.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 87.3 down from last report's 93.9. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 50.22 to 12,851.45; the S&P 500 is up 6.84 points at 1,349.48

The Eureka Miner's Grubstake Portfolio is up 0.36% at $1,570,571.82 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

The Colonel's Friday Thoughts on Gold, Copper & Silver

2012-02-10T09:25:00.000-08:00

Lone Mountain, Eureka, Nevada

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver Move Uptown for 2012 (02/06/2011)

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

This morning's...
COMEX Gold price = $1,717.1/oz (April contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.28 (gold value stalled, trend indeterminate - see below)
Value Adjusted Gold Price© (VAGP) = $1,554.8/oz
COMEX - VAGP = $162.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It's 6:12 AM. The ole Colonel is glad it is Friday, have a cup of Raine's delicious Red Label TGIF. Yesterday it was good news from Greece; today, bad. 18 out 19 global markets are in red, COMEX gold is down $24/oz with oil and base metals in retreat. There are very confusing cross-currents between gold, oil, and copper given the daily headlines from Europe and Iran. Below is may best shot at sorting out the commodity-relative technicals. Have a good weekend.

The Colonel's Friday Thoughts on Gold

My input to the Weekly Kitco Gold Survey:

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

A. Up - $1,750/oz target

Q. Why?

A. Gold value with respect to key commodities oil, copper and silver has stabilized in the last several weeks after a steady decline since last October. Gold value is presently oscillating up and down about its 1-month average driven by news from Europe or Iran. Gold value is likely to pullout of this holding pattern, perhaps dramatically, in the coming weeks. Positive outcomes from the ongoing debt negotiations in Europe will cause relative value to decline, potentially a bullish condition for all four commodities. Escalating tensions in the Persian Gulf would be bullish for gold and oil; bearish for copper and silver with an overall rise in gold value (see notes). Next week’s outlook is biased for a slight rise in gold dollar price given expectations for improving conditions in Europe; no change in Iran. (see notes).

For $1,750/oz gold we can expect to see oil (WTI) in a range of $98-$101/bbl; silver, $33-$34/oz; and copper, $3.7-$3.9/lb.

Background Notes:

1) The Eureka Miner’s Gold Value Index© (GVI) equals 92.28 this morning down 15.9% from the Oct. 4 high of 109.97 but virtually unchanged from two weeks ago (GVI =92.22, 1/17/2012).
2) The GVI, which had been below its 1-month moving average for many weeks, is oscillating up and down about its average. Today it is slightly above (92.28 vs 92.44 average); 2-weeks ago, slightly below (92.22 vs 93.31 average, 1/17/2002)
3) If this pause in value decline is temporary, a bullish environment should remain in place for copper and silver. Gold has halted gaining value relative to oil.
4) If gold value trends higher from here, copper and silver could weaken (Ag, Cu bearish). Oil has just switched from negative to slightly positive correlation with the yellow metal (3-month correlation = +0.06 trending more positive). If this correlation firms, gold and oil prices could rise together with increasing gold value (oil bullish).
5) Scenario (3) is thought to be more likely than (4). If oil continues to re-correlate positively with oil, a bullish price condition for all four could develop in the near-term (e.g., improving conditions in Europe). However, rising tensions with Iran could quickly make scenario (4) more likely – a bullish condition for gold and oil alone.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $48.18 down 1.92%
Newmont (NEM) $59.56 down 1.78%
McEwen Mining (MUX) 5.16 down 3.19% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.69 down 4.90%
Thompson Creek (TC) $8.98 down 2.50%
Freeport-McMoRan (FCX) $45.19 down 2.65% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.00 down 0.27%
Timberline Resources (TLR) $0.50 unchanged

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $22.30 down 4.29% - global steel producer
POSCO (PKX) $91.16 down 1.31% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 254.56, down down last report's 316.78 and above the 1-month moving average of 188.98. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $24.1/oz at $1,717.1/oz (April contract, most active)

COMEX silver is down $0.417/oz at $33.500/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 50.257 oz/oz

Silver 1-month CRS© is 2.65% (bullish level); weak convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.28, up from last report's 92.07 and below its 1-month average of 92.44. The gold value has stalled, trend indeterminate. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,554.8/oz which is $162.1/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down 0.0825/lb at $3.8960/lb (March contract, most active)

The gold-to-copper ratio is 440.73 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 1.77% (bullish level); weak convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$$14.50
As of February 13, 2012
(updated weekly)

Ryan's Notes Average:
US$14.25
As of February 7, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.74/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.74/lb (US$32,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

A faithful friend of this report in Mumbai sent this insightful article on China, Iran and oil:

China buys up Saudi, Russian oil to squeeze Iran (Published on Wed, Feb 08, 2012, Reuters)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $97.81
ICE North Sea Brent crude $117.01
Spread (ICE- NYMEX) = $19.20 (last report, $18.43)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $98.22
ICE North Sea Brent crude $116.10
Spread (ICE- NYMEX) = $17.88 (last report, $14.79)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.31% (bearish level); weak convergence (Oil bullish)

Prices are off their crisis highs but we have $115+ Brent and $95+ NYMEX in May favoring high oil prices this spring. A front-month spread >$20/bbl is a trouble sign.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 91.3 up from last report's 83.8. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 117.27 to 12,773.19; the S&P 500 is down 10.79 points at 1,341.16

The Eureka Miner's Grubstake Portfolio is down 1.92% at $1,571,844.83 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Greeks Lift Gold & Copper; Red Metal 2012 Revival?

2012-02-09T09:02:00.000-08:00

When I get older losing my hair,
Many years from now,
Will you still be sending me a valentine
Birthday greetings bottle of wine?

If I'd been out till quarter to three
Would you lock the door,
Will you still need me, will you still feed me,
When I'm sixty-four? Paul McCartney - 1966

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver Move Uptown for 2012 (02/06/2011)

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

This morning's...
COMEX Gold price = $1,747.6/oz (April contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.07 (gold value resumes declining trend)
Value Adjusted Gold Price© (VAGP) = $1,585.9
COMEX - VAGP = $161.7/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Þūnresdæg
Morning Miners!

It is 6:18 AM. Have a little uzo in Thor's Euro Thunder java. Things may be looking up a bit across the pond...

Greeks Lift Gold & Copper; Red Metal 2012 Revival?

News that Greek leaders agreed on an austerity package to comply with demands set by international creditors for another bailout deal hit the wires at 5:55 AM PT. COMEX gold went from $1,736.40/oz to $1,748.90/oz by 6:20 AM PT; COMEX copper from $3.920/lb to a new 2012 high of $3.9710/lb; euro is trading up at $1.328, the U.S.dollar is down.

These are not huge price moves but they illustrate two important facts about today's headline driven markets: 1) good news for Europe is positive for the euro and gold - negative for the U.S. dollar and, 2) gold continues to run with the base metals (rolling 3-month gold-copper correlation is 0.40 and rising).

Although copper has nearly returned to the psychologically important threshold of $4/lb, unexpectedly high inflation data today from China has capped its bounce. As Reuters reports this morning, year-on-year inflation for January jumped to 4.5%:

METALS-Copper gains on Greece, strong euro (Reuters, Feb 9, 2012)

Another sobering fact is that the gold-to-copper ratio, although improving, is still a lofty 441 lbs/oz. Ratios above 400 lbs/oz are considered by this report to be at recession levels based on recent history. The red metal market is telling us that although things are picking up in the U.S., Europe will probably not escape a recessionary period and China demand has softened. The pecking order for world copper demand is China (roughly 40 percent of refined copper demand last year) followed by the U.S. and then Europe (dominated by German demand).

Copper still appears a good story for 2012 with supply rebounding but still facing deficits in 2012 as reported by Allen Sykora of Kitco news:

Market Nuggets:Barclays: 2012 Copper-Mine Supply To Rebound After Decline In 2011 (Allen Sykora, Kitco News, 09 February 2012, 8:16 a.m. ET)

Improving times for the red metal are evidenced by the healthy 26.5% rise of copper giant Freeport-McMoran (FCX) share price from the end of 2011 to yesterday's close. FCX is trading up an additional 21 cents this morning at $46.74. FCX pays a 2.15% dividend, sure beats a bank CD.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $49.64 up 1.16%
Newmont (NEM) $61.16 up 0.76%
McEwen Mining (MUX) 5.58 up 1.09% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $4.00 up 0.25%
Thompson Creek (TC) $9.34 unchanged
Freeport-McMoRan (FCX) $46.74 up 0.45% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.12 up 0.07%
Timberline Resources (TLR) $0.51 unchanged

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $23.42 up 0.21% - global steel producer
POSCO (PKX) $91.90 up 0.77% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated last night to reflect current 200-day moving averages for benchmark miners. This has the effect of lifting the EMI from yesterday's mid-200 level to +300-levels.

The EMI is above-par at 316.78, up down last report's 322.31 (after re-calibration) and above the 1-month moving average of 182.75. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $16.3/oz at $1,747.6/oz (April contract, most active)

COMEX silver is up $0.586/oz at $34.290/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 50.965 oz/oz

Silver 1-month CRS© is 2.72% (bullish level); weak convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.07, down from last report's 92.26 and above its 1-month average of 92.44. The declining gold value trend is re-established. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,578.5/oz which is $164.4/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up 0.0510/lb at $3.9605/lb (March contract, most active)

The gold-to-copper ratio is 441.26 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 1.94% (bullish level); weak convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.125
As of February 6, 2012
(updated weekly)

Ryan's Notes Average:
US$14.25
As of February 7, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.40/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.79/lb (US$32,600/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

A faithful friend of this report in Mumbai sent this insightful article on China, Iran and oil:

China buys up Saudi, Russian oil to squeeze Iran (Published on Wed, Feb 08, 2012, Reuters)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $99.90
ICE North Sea Brent crude $118.33
Spread (ICE- NYMEX) = $18.43 (last report, $16.57)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $100.81
ICE North Sea Brent crude $117.46
Spread (ICE- NYMEX) = $16.65 (last report, $14.79)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.62% (bearish level); convergence (Oil bullish)

Prices are off their crisis highs but we have $115+ Brent and $100+ NYMEX in May favoring high oil prices this spring. A front-month spread >$20/bbl is a trouble sign.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 83.8 up from last report's 78.6. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 35.12 to 12,919.07; the S&P 500 is up 2.01 points at 1,351.97

The Eureka Miner's Grubstake Portfolio is up 0.56% at $1,628,307.23 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

General Moly (GMO) & Thompson Creek (TC) Rock; Moly Prices Bounce

2012-02-08T09:05:00.000-08:00

Zig-Zag

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver Move Uptown for 2012 (02/06/2011)

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

This morning's...
COMEX Gold price = $1,742.9/oz (April contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.26 (Possible second reversal in gold value trend, down)
Value Adjusted Gold Price© (VAGP) = $1,578.5
COMEX - VAGP = $164.4/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Wōdnesdæg
Morning Miners!

It is 6:18 AM. Old Miner Woden just left the break room in a huff. Our market bear can't take a hump day when 16 of 19 global markets are in the green. "I'm gettin' durn tired of waiting for the world to end!" he said as he stomped off to his cave. Have a cup of Cheer, the ole Colonel just washed Woden's Cold Reality brew down the sink...

General Moly (GMO) & Thompson Creek (TC) Rock

While the world awaits the latest Greek Salad of debt-restructuring and next round of bellicose threats from Iran, it appears we have peaceful Wednesday morning at our door. What better time to check on the moly miners - the Report has been tracking General Moly (GMO) and moly benchmark miner Thompson Creek (TC) for several weeks:

General Moly (GMO) Breakout? Yes, but.... (1/31/2012)

Is General Moly (GMO) Ready for a Breakout? (1/24/2012)

Before we look at their relative performance there are several other cool things going on:

1) General Moly has just launched a new and dandy website - check it out!

2) A faithful follower of this report sent a link to a recent upbeat Thompson Creek article:

Thompson Creek Metals In Rally Mode (Chris Damas, Seeking Alpha, 2/3/2012)

3) If you have never been there, the Yahoo GMO message board is a terrific place to find the latest buzz on General Moly. There's one for Thompson Creek also.

When we started checking, Thompson Creek was enjoying a strong recovery but GMO hadn't made a 2012 breakout to the upside. Now, both moly miners look positive with their share price surging above their respective 200-day averages (a key bullish indicator). Here is the latest 6-month chart of benchmark TC (blue line) and its average (green):

And here is the companion chart for GMO with the same color scheme:

Finally, here are the two together showing the relative performance of General Moly (blue line) and Thompson Creek (green line).

General Moly hasn't quite caught up with the benchmark but is posting a solid 11% gain from 6-months ago; Thompson creek is up an impressive 29%.

What about moly prices?

Moly Prices Bounce

Yesterday, the London Metal Exchange (LME) 3-month seller's contract bounced to $32,600/metric ton ($14.79/lb). This has been matched by recent moves in the spot markets on both sides of the pond. Western moly oxide is $14.25/lb (Ryan's notes) and $14.40/lb in Europe (Bloomberg). See the complete report below (Copper & Molybdenum Report)

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $49.39 up 0.22%
Newmont (NEM) $61.11 up 0.41%
McEwen Mining (MUX) 5.61 unchanged (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $4.03 up 2.81%
Thompson Creek (TC) $9.25 up 1.54%
Freeport-McMoRan (FCX) $46.77 up 2.23% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.10 unchanged
Timberline Resources (TLR) $0.53 up 1.92%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $23.06 up 4.01% - global steel producer
POSCO (PKX) $91.28 up 0.47% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 231.86, up from last report's 215.96 and above the 1-month moving average of 168.57. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $5.5/oz at $1,742.9/oz (April contract, most active)

COMEX silver is down $0.0190/oz at $34.175/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 50.999 oz/oz

Silver 1-month CRS© is 2.88% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.26, down from last report's 93.92 and above its 1-month average of 92.50. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,578.5/oz which is $164.4/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up 0.0490/lb at $3.9250/lb (March contract, most active)

The gold-to-copper ratio is 444.05 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.19% (bullish level); stalled divergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.125
As of February 6, 2012
(updated weekly)

Ryan's Notes Average:
US$14.25
As of February 7, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.40/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.79/lb (US$32,600/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

A faithful friend of this report in Mumbai sent this insightful article on China, Iran and oil:

China buys up Saudi, Russian oil to squeeze Iran (Published on Wed, Feb 08, 2012, Reuters)

"Things are hotting up in the Middle East!" (England)

"die Lage im Nahen Osten spitzt sich zu or verschärft sich!" (Germany)

"IDC INDB!" (U.S.)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $99.76
ICE North Sea Brent crude $116.33
Spread (ICE- NYMEX) = $16.57 (last report, $20.40)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $100.65
ICE North Sea Brent crude $115.44
Spread (ICE- NYMEX) = $14.79 (last report, $18.51)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 4.43% (bearish level); divergent (Oil bearish)

Prices are off their crisis highs but we have $115+ Brent and $100+ NYMEX in May favoring high oil prices this spring. A front-month spread >$20/bbl is a trouble sign.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 79.5 down from last report's 81.2. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 14.00 to 12,892.20; the S&P 500 is up 3.73 points at 1,350.78

The Eureka Miner's Grubstake Portfolio is up 0.82% at $1,629,133.08 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

The Colonel's 2012 Predictions for Gold, Silver, Copper & ...Iran

2012-02-07T09:30:00.000-08:00

Pickett's Charge - July 3,1863

*** BREAKING NEWS *** COMEX gold touched $1,752.60/oz at 13:50 ET, SPDR Gold trust GLD peaked at $170.09 at 13:54 ET. Gold was buoyed by a rising euro, oil prices and Bernanke comments reaffirming low interest rates until 2014.

die Lage im Nahen Osten spitzt sich zu or verschärft sich!

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver Move Uptown for 2012 (02/06/2011)

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

This morning's...
COMEX Gold price = $1,725.8/oz (April contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 93.92 (rising gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,535.3
COMEX - VAGP = $190.5/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 7:06 AM. No, the Colonel didn't get up late - I've just been scratching my noggin on our favorite metals for 2012. Join me and Ruby for a cup of Up From Here and let's see where we stand on atomic numbers 79, 47 and 29...

The Colonel's 2012 Predictions for Gold, Silver & Copper &...Iran

In my commentaries of late, I've put together my thoughts on where three of our favorite metals are headed for 2012:

Gold and Silver Move Uptown for 2012 (02/06/2011)

Copper and Gold Plan Their 2012 World Tour (01/30/2012)

The whys and wherefores are in the articles but here's a quick summary if you're in a hurry:

Other than multi-year worry about the Greeks and European banks, the Colonel continues to believe that the Persian Gulf could be the biggest story for precious metals this year (this report's first blog on the impending Gulf crisis was in early December). As the English say, "Things are hotting up in Iran" - a misstep at the Strait of Hormuz could make Italy's debt-to-GDP ratio seem as insignificant as the proverbial flea on an Elephant's behind. With some great irony, this straight served as a land bridge for the great migrations from Africa that eventually populated Asia and the Americas; today it's the watery 30-mile gateway to a significant pool of the world's oil reserves and fragile prospects for global recovery.

The surging price spread between Western Texas Intermediate (WTI) light sweet crude and Brent North Sea crude oil is a loud warning bell this morning - the former is a domestic benchmark; the latter a global benchmark. At the close of 2011, the spread had fallen back to sub-$10/bbl registering $8.06/bbl for the front month futures contracts. This morning, the spread is back to Libyan crisis levels at $20.40/bbl (see Oil Watch below).

A crisis induced spike in oil prices could easily send gold to my $2,000+/oz peak prediction. The math is pretty simple: let's say Brent soars to $175/bbl, then a $25/bbl spread with WTI gives us $150/bbl WTI. When oil and gold spiked during the Libyan conflict the gold-to-WTI ratio was 13.7 bbl/oz for WTI north of $113/bbl. Applying that ratio to $150/bbl WTI gives you $2,055/oz gold.

Where do silver & gold go in a Persian Gulf scenario? If silver can avoid liquidations due to other adverse market reactions, I expect it to follow gold up to my $40+/oz top-end. COMEX copper would no doubt be whacked pretty hard but even using the most bearish ratio from the 2008-2009 financial crisis, the red metal should stay above my $3/lb floor.

Gold has been in the doldrums this week so I threw a little more in the buckboard this morning buying the SPDR Gold trust GLD at $167.55. COMEX gold is presently trading down $0.9 at $1,725.8/oz.

Please do your own research, the ole Colonel could dead wrong on this call.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $48.62 down 1.12%
Newmont (NEM) $60.21 down 1.12%
McEwen Mining (MUX) 5.62 down 0.18% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.92 down 2.97%
Thompson Creek (TC) $9.22 down 1.18%
Freeport-McMoRan (FCX) $45.77 down 2.05% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.02 unchanged
Timberline Resources (TLR) $0.53 down 1.85%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $21.83 up 1.82% - global steel producer
POSCO (PKX) $90.25 down 1.17% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 215.95, down from last report's 222.70 and above the 1-month moving average of 162.49. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $0.9/oz at $1,725.8/oz (April contract, most active)

COMEX silver is down $0.0370/oz at $33.505/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.509 oz/oz

Silver 1-month CRS© is 3.09% (bullish level); weak convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 93.92, up from last report's 93.22 and above its 1-month average of 92.56. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,535.3/oz which is $190.5/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down 0.0370/lb at $3.8275/lb (March contract, most active)

The gold-to-copper ratio is 450.89 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.38% (bullish level); stalled divergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.125
As of February 6, 2012
(updated weekly)

Ryan's Notes Average:
US$14.25
As of February 3, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.10/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $96.39
ICE North Sea Brent crude $116.79
Spread (ICE- NYMEX) = $20.40 (last report, $17.39)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $97.56
ICE North Sea Brent crude $116.07
Spread (ICE- NYMEX) = $18.51 (last report, $15.88)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 4.43% (bearish level); divergent (Oil bearish)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in May favoring high oil prices this spring. The front-month spread 9>$20/bbl)is worrisome.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 81.2 up from last report's 79.0. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 51.20 to 12,793.93; the S&P 500 is down 7.29 points at 1,337.04

The Eureka Miner's Grubstake Portfolio is down 0.93% at $1,602,818.39 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Miner's Unchained for 2012 or Another Brick in the Wall?

2012-02-06T08:57:00.000-08:00

The Cask of Amontillado

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver Move Uptown for 2012 (02/06/2011)

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

This morning's...
COMEX Gold price = $1,720.5/oz (April contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 93.22 (rising gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,542.2
COMEX - VAGP = $178.3/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 6:15 AM. Have a Monday cup of Edgar Allen Poe. The Colonel doesn't want to start the week in a dark mood but today's headline photo reminded me of Poe's scary tale, The Cask of Amontillado. The miners in 2011 were like Poe's unfortunate Fortunato chained in a dark chamber while his friend Montresor walled up the only exit with bricks and mortar. To complete the metaphor, the evil Montresor reminds me of the sovereign debt overhang in Western economies that has entombed commodity and broader markets for many months...

Miner's unchained for 2012?

2012 has been a welcome exception so far with miners breaking chains to rise above the 100-level as measured by this report's Eureka Miner's Index© (EMI). An EMI that sustains above the 100-level is bullish for miners; today its at a healthy 222.8 - October plumbed a multi-year low of 22.88. Local miners Barrick Gold, McEwen Mining (formerly US Gold) and General Moly have all enjoyed a substantial new year bounce:

Barrick (ABX) 45.25 (12/30) 49.07 (Friday's close, 2/03) up 8.4%
McEwen Mining (MUX) 3.36 (12/30) 5.76 (Friday's close, 2/03) up 71.4%
General Moly (GMO) 3.09 (12/30) 4.08 (Friday's close, 2/03) up 32.0%

...or another brick in the wall?

Last week it looked like a Greek debt deal to avoid a disorderly default on its debts next month was imminent. Markets rallied and were pushed even higher by an exceptionally good U.S. labor report Friday. Talks between the Greeks and their European partners, International Monetary Fund and private creditors has still resulted in no deal. This morning, 16 of 19 global markets are in the red with gold, silver and copper in retreat. Nuts, another brick in the wall.

But the mortar is still wet and a Greek deal followed by a comprehensive plan for European debt resolution would not only break the chains but blow bricks out the mineshaft. It would be terrific to return markets to good ole supply and demand fundamentals. A Europe fix, a U.S. congress that effectively addresses our own debt issues and reduced tensions with Iran could result in a very decent year for the mining sector. There is still plenty of global demand out there for raw materials we just need fewer evil Montresors.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $48.94 down 0.26%
Newmont (NEM) $60.75 down 0.72%
McEwen Mining (MUX) 5.67 down 1.56% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $4.03 down 1.23%
Thompson Creek (TC) $9.30 down 0.64%
Freeport-McMoRan (FCX) $46.25 down 0.49% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.04 down 0.40%
Timberline Resources (TLR) $0.53 unchanged

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $21.15 down 2.71% - global steel producer
POSCO (PKX) $91.78 down 2.41% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 222.76, down from last report's 238.19 and above the 1-month moving average of 156.57. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Here is the Eureka Miner's Index© (EMI) through Friday's close (a larger more readable plot is near the bottom of the blog page):

Today's EMI is remains solidly above the 100-level. The 1-month moving average is above this key level also, a necessary condition for returning our miners to bull pasture. Any change in these trends will be monitored carefully, so far so good.

Gold & Silver Report

This morning's...

COMEX gold is down $19.8/oz at $1,720.5/oz (April contract, most active)

COMEX silver is down $0.409/oz at $33.340/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.605 oz/oz

Silver 1-month CRS© is 3.17% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 93.22, down from last report's 93.31 and above its 1-month average of 92.52. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,542.2/oz which is $178.3/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

The Eureka Miner’s Gold Value Index© (GVI) reversed its downward trend last week. Here is plot of the GVI at Friday's close (also near the bottom of the blog page):

To get the metals & miners firmly back on their feet, we need gold to give up more relative value to copper, oil and silver. Remember, the GVI and EMI typically (but not always) have an inverse relation; as the GVI falls, the EMI rises. After last week's GVI reversal, both the GVI and the EMI are now trending higher which is the exception to the rule - either the miners are due for a correction or the gold value reversal to the upside is temporary. Presently, the GVI at 93.22 is above an average of 92.52 and down 15.2% from its 2010-2011 high of 109.97.

Copper & Molybdenum Report

This morning's...

COMEX copper is down 0.0520/lb at $3.8490/lb (March contract, most active)

The gold-to-copper ratio is 447.00 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.95% (bullish level); weak divergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.00
As of January 30, 2012
(updated weekly)

Ryan's Notes Average:
US$14.075
As of January 31, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.10/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $97.20
ICE North Sea Brent crude $114.59
Spread (ICE- NYMEX) = $17.39 (last report, $16.77)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $98.18
ICE North Sea Brent crude $114.06
Spread (ICE- NYMEX) = $15.88 (last report, $15.21)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 4.43% (bearish level); divergent (Oil bearish)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 79.0 up from last report's 75.6. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 43.25 to 12,818.98; the S&P 500 is down 3.76 points at 1341.14

The Eureka Miner's Grubstake Portfolio is down 0.83% at $1,614,846.28 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Blowout Jobs Report; The Colonel's Friday Thoughts on Gold

2012-02-03T08:32:00.000-08:00

350,000,000 Years Ago - Devonian seabed, Devil's Gate, Eureka, Nevada

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

This morning's...
COMEX Gold price = $1,753.1/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 94.79 (rising gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,545.7
COMEX - VAGP = $207.7/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 5:51 AM. Have a hot cup of Raine's Red Label TGIF and checkout today's job report. The ole Colonel turned on CNBC business News at 5:30 AM to catch the U.S. Labor Department's monthly employment numbers - what a surprise...

Blowout Jobs Report

The employment data for January was expected to slow to 125,000 jobs from December's 200,000 with an unemployment rate steady at 8.5%. Instead nonfarm payrolls rose by 243,000 last month and the jobless rate fell to 8.3%, the lowest it is has been since February 2009. Importantly, the private sector added 257,000 jobs, offsetting the 14,000 in job cuts by the public sector.

Not too bad, pardner. So much for the expert's predictions, I may say the same for my recent thoughts on gold...

The Colonel's Friday Thoughts on Gold

My input to the Weekly Kitco Gold Survey:

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

A. Up slightly - $1,760/oz target

Q. Why?

A. Although welcome news, the exceptionally strong U.S. jobs report this morning throws a monkey wrench into forecasting gold prices for next week. The consensus that stagnant job growth in 2012 would spur the Federal Reserve to engage a third round of quantitative easing (QE3) is now in question. QE3 is generally bullish for gold and commodities going forward; markets without monetary stimulus return to the fundamental forces of supply and demand. Gold value relative to key commodities oil, copper and (to a lesser extent) silver has been falling since October but experienced a dramatic reversal to the upside this week. This is a potentially bullish development for gold and a bearish indication for copper and oil. A favorable domestic employment report, improving conditions in Europe but slowing demand in China for raw materials gives a mixed picture that could blunt this reversal resulting in only a small positive bias for gold prices next week (see notes).

For $1,760/oz gold we can expect to see oil (WTI) in a range of $96-$100/bbl; silver, $33-$35/oz; and copper, $3.7-$3.9/lb.

Background Notes:

1) The Eureka Miner’s Gold Value Index© (GVI) equals 94.79 this morning down 13.8% from the Oct. 4 high of 109.97 but up 4.4% from the Jan. 19 low of 90.81
2) The GVI, which has been below its 1-month moving average for many weeks, crossed strongly to the upside this week (94.79 vs 92.51 average)
3) If this reversal is temporary, a bullish environment should remain in place for copper and silver. Gold is presently gaining the most value relative to oil (oil bearish).
4) If gold value trends higher from here; copper could weaken further similar to oil. Oil is still negatively correlated to the yellow metal (3-month correlation = -0.11, a typically bearish condition)

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $48.86 down 1.95%
Newmont (NEM) $61.16 down 1.81%
McEwen Mining (MUX) 5.74 down 1.03% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.99 up 2.57%
Thompson Creek (TC) $9.17 up 1.66%
Freeport-McMoRan (FCX) $45.99 up 1.05% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.11 up 0.13%
Timberline Resources (TLR) $0.53 down 3.64%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $21.54 up 1.08% - global steel producer
POSCO (PKX) $93.63 up 0.66% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 232.36, up from last report's 206.91 and above the 1-month moving average of 150.09. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $6.2/oz at $1,753.1/oz (April contract, most active)

COMEX silver is down $0.110/oz at $34.065/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.463 oz/oz

Silver 1-month CRS© is 3.16% (bullish level); weak convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 94.79, down from last report's 95.33 and above its 1-month average of 92.51. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,545.7/oz which is $207.7/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0620/lb at $3.8430/lb (March contract, most active)

The gold-to-copper ratio is 456.18 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.59% (bullish level); stalled divergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.00
As of January 30, 2012
(updated weekly)

Ryan's Notes Average:
US$14.075
As of January 31, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.10/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $96.73
ICE North Sea Brent crude $113.50
Spread (ICE- NYMEX) = $16.77 (last report, $15.39)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $97.70
ICE North Sea Brent crude $112.91
Spread (ICE- NYMEX) = $15.21 (last report, $13.82)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 4.43% (bearish level); divergent (Oil bearish)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 76.1 down from last report's 80.1. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 140.96 to 12,846.37; the S&P 500 is up 16.49 points at 1342.03

The Eureka Miner's Grubstake Portfolio is down 0.09% at $1,619,644.08 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Buy Gold Now? Mining Tax Initiative

2012-02-02T08:38:00.000-08:00

Devil's View - Devil's Gate, Eureka, Nevada

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

This morning's...
COMEX Gold price = $1,751.4/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 95.33 (rising gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,535.1
COMEX - VAGP = $216.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Þūnresdæg
Morning Miners!

It is 6:12 AM. Have a cup of Thor's All That Glitters java. Our favorite Norseman has hitched up the buckboard, he says there some glitter in the creek...

Buy Gold Now?

Yesterday the Report confirmed that gold value as measured by the Eureka Miner’s Gold Value Index© (GVI) had reversed directions from a declining value trend since mid-October to rising value. Lately, gold has been increasing in relative value with respect to key commodities copper and oil, and to a lesser extent silver. If this trend persists concurrent with a rise in U.S. dollar price, it may be time to add a little yellow metal to your stash in the cave.

The ole Colonel wrote about this in a Kitco Commentary last summer:

Buy or Sell Gold Now? Check the VAGP First (Kitco Commentary, Aug 22 2011)

Here's an excerpt on the basic idea:

Presumably, it is a good time to buy gold at the bottom of a value cycle when it appears price and value are ready to rise together. On April 21 [2011] a Kitco News Market Nugget reported that Dennis Gartman, editor/publisher of the Gartman Letter, made bullish comments about gold to his subscribers. Bill O'Neil of Logic Advisors LLC made similar remarks on CNBC Business News the day before. This is significant because he and Gartman are much respected commodity traders and are often openly skeptical of gold seeking greater rewards elsewhere in the commodity space.

In the commentary, April 21 coincided with "point A" in the chart below which marked a trend reversal from declining to rising value:

If the present reversal has legs, we are in a similar situation as shown by "point A." One key difference from last April is that gold is presently trading at a premium (i.e. positive VAGP delta) to key commodities instead of a discount (i.e. negative VAGP Delta) which limits the gold upside in U.S. dollar price. Nonetheless, this reversal is a bullish change for gold - at least for a trade.

It is reassuring that Kitco News reported on the day that this Report first warned of a possible reversal, "Investor and newsletter writer Dennis Gartman says he is buying gold in euro terms again after stepping to the sideline during the metal’s correction late last year." Here is the complete report:

Market Nuggets: Gartman Returning To Gold/Euro, Still Holds Copper Position (27 January 2012, 8:09 a.m., By Kitco News

I threw a few shares of SPDR Gold Trust in the buckboard this morning at $170.99/share. Please do your own homework, the ole Colonel could be dead wrong.

Mining Tax Inititative

Last night the Elko Daily Free Press carried a nice piece from the Associated Press on at not-so-nice mining tax initiative that has surfaced lately for Nevada miners:

Inititative would raise mining tax cap (SANDRA CHEREB Associated Press, 2/1/2012)

The initiative proposes a constitutional amendment to raise the cap on Nevada mining taxes to 9 percent of net proceeds, up from the current 5 percent - here we go again, pardner...where's that goose that lays the golden eggs?

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $49.44 up 0.37%
Newmont (NEM) $61.54 up 0.69%
McEwen Mining (MUX) 5.76 down 0.17% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.84 unchanged
Thompson Creek (TC) $8.87 up 0.11%
Freeport-McMoRan (FCX) $46.17 up 0.02% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.03 down 0.07%
Timberline Resources (TLR) $0.53 down 1.85%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $21.33 up 1.04% - global steel producer
POSCO (PKX) $93.22 up 1.06% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 206.91, up from last report's 198.26 and above the 1-month moving average of 143.54. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $1.9/oz at $1,751.4/oz (April contract, most active)

COMEX silver is down $0.057/oz at $33.750/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.893 oz/oz

Silver 1-month CRS© is 3.14% (bullish level); weak convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 95.33, up from last report's 94.07 and above its 1-month average of 92.35. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,551.8/oz which is $195.0/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0370/lb at $3.8050/lb (March contract, most active)

The gold-to-copper ratio is 460.29 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.59% (bullish level); weakly divergent (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.00
As of January 30, 2012
(updated weekly)

Ryan's Notes Average:
US$14.075
As of January 31, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.10/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $96.52
ICE North Sea Brent crude $111.91
Spread (ICE- NYMEX) = $15.39 (last report, $13.26)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $97.34
ICE North Sea Brent crude $111.16
Spread (ICE- NYMEX) = $13.82 (last report, $11.82)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 4.92% (bearish level); divergent (Oil bearish)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 80.1 unchanged last report's 80.1. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is unchanged to 12,716.46; the S&P 500 is up 1.89 points at 1325.98

The Eureka Miner's Grubstake Portfolio is up 0.06% at $1,608,206.03 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Gold Value Reversal; What's the Buying Power of the Dollar?

2012-02-01T08:49:00.000-08:00

Blinded by the Light - Devil's Gate, Eureka, Nevada

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

This morning's...
COMEX Gold price = $1,747.1/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 94.07 (gold value trend reversal to the upside)
Value Adjusted Gold Price© (VAGP) = $1,551.8/oz
COMEX - VAGP = $195.3/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Wōdnesdæg
Morning Miners!

It is 6:14 AM. Have a cup of Old Miner Woden's Hump Day Grump... or some of yesterday's Blue Skies, it's still pretty good. Our market bear has been in my ear all morning about the the up and coming "February Flop." Nuts to that, but there is something weird going on with gold...

Gold Value Reversal

Monday, the Report said a reversal in gold value to the upside may be in the works. This morning, I'm willing to say that this is true although it may be temporary. Presently, gold is gaining relative value against key commodities copper, oil and silver - typically a bearish indication for the mining sector. If you own gold, you can be happy that an ounce now buys more pounds of copper, barrels of oil and ounces of silver than it did just a week ago.

A reversal is significant because gold value as measured by the Eureka Miner’s Gold Value Index© (GVI) has been trending down since mid-October. A return to high value levels (GVI > 100) would indeed be a scary sign. October 4 was arguably the worst day for miners when the GVI peaked out at 109.97. Today at 94.07 we are safely below those levels but also 3.6% above where we were just 10-market days ago at 90.81.

It's too early to fully understand why this is happening but some safe-haven buying may be returning from euro-worriers. They have generally preferred the U.S. dollar over gold for some time but that could be changing. Here's what Kitco News reported this morning about Europe and gold:

Market Nuggets: Commerzbank: European Debt Crisis Remains Supportive Influence For Gold (Kitco news, 2/01/2012)

Stay tuned.

What's the Buying Power of the Dollar?

A good friend of this report asked the Colonel if there was an easy way to figure out inflation over different time periods. The answer is yes, very easy!

Checkout the US Inflation Calculator that measures the buying power of the dollar over time:

http://www.usinflationcalculator.com/

You just enter the years and it gives you the inflation rate. Entering 2007 to 2011 gives you 8.5% which says if you bought something for $20.00 in 2007 it would cost $21.70 today.

Perhaps more fun is to remember what you paid for something a long time ago and see what it would cost today. In 1967, I bought a new Chevrolet pickup truck for $2,200; there were cheaper models but the ole Colonel got the 4-speed with a granny low and the venerable 292 stump-puller six-cylinder. No power steering or brakes but it did have a transistor radio.

Plug that price and year into the US Inflation Calculator and it informs you the same truck should cost $14,816.34 or an annual rate of inflation change of 573.5%. Actually that price tag seemed pretty low so I checked the Kelley Blue Book for a 2012 Chevrolet Silverado 1500 priced for Central Nevada to discover a stripped down model now costs $22,185.

The devil is always in the details; here are two little devils:

1) This number is based on the consumer price index (CPI) which is "a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services." How accurately this applies to folks living in Eureka is probably a topic for endless Owl Club debate.

2) The calculator uses an average over an entire year and the January 2012 data doesn't become available until 2/17/2012.

Argue all you want but this is what the government thinks inflation is and it does tell a story about the poor ole greenback.

I did a calculation from raw CPI data that is December 2007-to-December 2011 for the first example and the number is 7.4%, slightly less than the average. I like this one because the Great Recession began December 2007 and it takes you right up to last month. If you put in 2008 to 2011 in the calculator you get only 4.5% which reflects some of the deflation caused during the recession.

Lot's of fun, pardner. By the way, I still drive that 1967 Chevy after 45 years. I think the Colonel got his money's worth inflation or not.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $49.39 up 0.26%
Newmont (NEM) $61.00 down 0.78%
McEwen Mining (MUX) 5.87 up 1.21% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.77 up 1.34%
Thompson Creek (TC) $8.66 up 2.73%
Freeport-McMoRan (FCX) $46.79 up 1.26% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.08 down 0.07%
Timberline Resources (TLR) $0.54 up 1.89%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $20.98 up 2.24% - global steel producer
POSCO (PKX) $92.16 up 0.44% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 198.26, up from last report's 191.49 and above the 1-month moving average of 137.57. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $6.7/oz at $1,747.1/oz (April contract, most active)

COMEX silver is up $0.538/oz at $33.800/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.689 oz/oz

Silver 1-month CRS© is 3.21% (bullish level); weak convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 94.07, up from last report's 92.64 and above its 1-month average of 92.21. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,551.8/oz which is $195.0/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0175/lb at $3.8075/lb (March contract, most active)

The gold-to-copper ratio is 458.86 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.57% (bullish level); weakly divergent (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.00
As of January 30, 2012
(updated weekly)

Ryan's Notes Average:
US$14.075
As of January 31, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.10/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $99.05
ICE North Sea Brent crude $112.31
Spread (ICE- NYMEX) = $13.26 (last report, $11.58)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $99.86
ICE North Sea Brent crude $111.68
Spread (ICE- NYMEX) = $11.82 (last report, $10.71)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.90% (neutral level); weak convergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 80.1 down from last report's 83.1. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 129.04 points to 12,761.95; the S&P 500 is up 13.04 points at 1325.45

The Eureka Miner's Grubstake Portfolio is up 0.88% at $1,607,836.29 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

General Moly (GMO) Breakout? Yes, but....

2012-01-31T08:54:00.000-08:00

A Point of Balance - Devil's Gate, Eureka, Nevada

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

This morning's...
COMEX Gold price = $1748.8/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.64 (possible gold value trend reversal)
Value Adjusted Gold Price© (VAGP) = $1,577.3/oz
COMEX - VAGP = $171.5/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 6:37 AM. Have a cup of Ruby T's famous Blue Skies. Our market bull is whistling Willie Nelson's hopeful tune as the morning markets react positively to progress in Europe.

A European Union pact to tighten fiscal ties and a statement by Greek Prime Minister Lucas Papademos that negotiators had made "significant progress" on debt talks with a possible agreement by the end of this week put 17 of 19 global markets in the green. Spot copper jumped more than 1% and COMEX gold hit $1,750.6/oz before falling back slightly to $1,748.8/oz. My target for this week was $1,750/oz so the Colonel's buying Ruby coffee this morning. There's another reason too...

General Moly (GMO) Breakout? Yes, but...

Last Tuesday Ruby T whispered in my ear that General Moly was long overdue for a breakout in stock price. I looked at the charts and surmised:

An optimist might say GMO is patiently building a "base" and will move aggressively higher to catch up with the benchmark [Thompson Creek] on any good news regarding the DEIS, water rights and so forth. A pessimist may characterize the flat line stock price as "dead money" and move on to greener pasture.

The ole Colonel just threw a few shares in the buckboard at $3.25 so I guess I'm just another one of those durn optimists - at least there is a CEO riding shotgun with me. (Eureka Miner, 1/24/2012)

The CEO reference was to General Moly's boss Bruce Hansen who felt good enough about the future to have added to his position in the company January 6.

How has GMO done since last Tuesday? As of yesterday's close, the moly miner logged five consecutive market days in rally mode. This morning GMO is up another 1% trading presently at $3.77 or a full 16% up from when the Colonel put his toe in the water. That's a breakout from dead money in my book.

Whether today will be day-6 of the rally is uncertain and I won't be surprised to see a pullback with some profit taking. The ole Colonel is staying put. Here's a six-month chart of GMO (blue line) versus benchmark moly miner Thompson Creek (TC, green line) and GMO's 200-day moving average (orange line):

GMO has gone from flat line to closing fast on the benchmark. TC is down 5% from 6 months ago and GMO is still 20% off the mark. Importantly, GMO is now threatening to cross its 200-day average to the upside ($3.77 vs $3.81 average), a bullish development. This could also bring on selling pressure later today.

Western and European moly oxide spot prices and London Metal Exchange (LME) moly futures are all equal to or above $14/lb, another bullish indication (see Copper & Molybdenum Report below).

A faithful follower of this report and serious General Moly investor offered these four comments when I asked him last night what he thought about the recent move in share price (I've added some comments of my own in brackets []):

Q. Are we ready to call GMO a "gap up?"

A. Looks good.

and...

1) We only had one day of high volume [1,111,529 shares on 1/26, 90-day volume is 644,093]... all the rest was nothing [i.e. less than 90-day].

2) Short interest has gone down which is perplexing...maybe some smart ppl are accumulating? Maybe all sellers have dried up?

3) I'm watching level II closely.. and don't see large buys just slow and steady.

4) Relative against TC looking very good [as shown in the above chart].

This cowboy does his homework, please do your own research too. The report could be dead wrong about the prospects of any stock. As the Colonel said last week, all bets are off if Europe goes into a tailspin or the Persian Gulf explodes into conflict.

I'm going to buy Ruby another cup of java.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $49.69 up 1.04%
Newmont (NEM) $62.04 up 1.34%
McEwen Mining (MUX) 6.01 up 2.56% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.77 up 1.07%
Thompson Creek (TC) $8.61 up 0.94%
Freeport-McMoRan (FCX) $46.80 up 1.52% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.01 down 0.33%
Timberline Resources (TLR) $0.55 up 3.77%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $20.79 up 0.58% - global steel producer
POSCO (PKX) $92.64 up 0.38% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 191.49, up from last report's 172.36 and above the 1-month moving average of 131.69. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $14.4/oz at $1,748.8/oz (April contract, most active)

COMEX silver is down $0.473/oz at $34.000/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.435 oz/oz

Silver 1-month CRS© is 3.44% (bullish level); weak convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.64, down from last report's 93.74 and above its 1-month average of 92.11. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,577.3/oz which is $171.5/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0470/lb at $3.8735/lb (March contract, most active)

The gold-to-copper ratio is 451.48 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.56% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.00
As of January 30, 2012
(updated weekly)

Ryan's Notes Average:
US$14.00
As of January 27, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.05/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $101.18
ICE North Sea Brent crude $112.76
Spread (ICE- NYMEX) = $11.58 (last report, $12.44)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $101.89
ICE North Sea Brent crude $112.16
Spread (ICE- NYMEX) = $10.71 (last report, $11.12)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.87% (neutral level); weak divergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 83.1 down from last report's 87.4. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 36.71 points to 12,690.43; the S&P 500 is up 3.58 points at 1316.59

The Eureka Miner's Grubstake Portfolio is up 1.16% at $1,616,258.82 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

The Red, the Black and the Shiny Ones Give Back

2012-01-30T09:13:00.000-08:00

Devil's Hawk - Devil's Gate, Eureka

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour (01/30/2012)

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

This morning's...
COMEX Gold price = $1,731.2/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 93.47 (WARNING - possible gold value trend reversal, see below)
Value Adjusted Gold Price© (VAGP) = $1,547.6/oz
COMEX - VAGP = $183.6/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 6:07 AM. Have a cup of Monday morning Devil's Gate Java. There are certainly a lot of little devils at work in the markets this morning. My latest Kitco commentary: Copper and Gold Plan Their 2012 World Tour just posted this morning too.

The Red, the Black and the Shiny Ones Give Back

For starters the ole Colonel would like to thank Debbie Carlson of Kitco News and Adella Harding of the Elko Daily Free Press for carrying this report's Friday thoughts on gold's direction this week:

METALS OUTLOOK: Gold’s Rally Expected To Continue Next Week (Debbie Carlson, Kitco News, 1/27/2012)

Gold prices at seven-week high (Adella Harding, Elko Daily Free Press, 1/27/2012)

I predicted Friday that a gold price of $1,750 was in the cards, oil will be roughly $99 to $101 per barrel, silver will be $33-$34 an ounce and copper will be between $3.70 per pound and $3.90.

OK, here we are. This morning 19 of 19 global markets are in the red as a world audience frets about deteriorating conditions in the European sovereign debt drama. Restructuring talks in Greece are struggling and Portuguese bond yields are surging; the 10-year yield jumped over 16% on Monday, anything greater than 7% is time for grave concern. Nuts.

There is always a quote that stands out in the morning market summaries. Today Kitco news reported that Janet Mirasola, managing director of R.J. O’Brien & Associates, said:

"Commodity baskets are facing some risk reduction trading this morning as the Red (copper), the Black (oil) and the Shiny Ones (gold) all give back some of last week’s gains in reaction to the fall of the euro/USD…back below $1.3200 and risks a re-test of $1.3000 if nothing is resolved shortly..." (Market Nuggets: R.J. O'Brien: Copper, Gold Ease With Global Markets In 'Sea Of Red', Kitco News, 1/30/2012)

Will today's retreat just be a correction to January's run-up or are we setting the stage for a "February Flop" as coined by another news agency?

So far things are not crazy. With respect to my predictions, COMEX gold is presently trading down to $1,731.2/oz or about $19/oz below my target for the week. NYMEX WTI is at $98.59 on the low-side of the report's $99/bbl to $101/bbl range, COMEX silver is presently $33.300/oz inside the $33/oz-$34/oz along with COMEX copper at $3.8305/lb, comfortably between $3.70-$3.90/lb.

However, here are three troubling signs this morning as January winds down:

1) Both 10-year & 30-year U.S. Treasury yields are below 2% and 3% again at 1.834% and 2.974% respectively. Lower yields mean higher prices and therefore greater safe-haven demand.

2) This report's Eureka Miner’s Gold Value Index© (GVI) may be reversing its declining trend. Friday the GVI crossed above its 1-month average and today the average ticked up after declining since mid-October. Generally a declining GVI is bullish for the mining sector (see Gold & Silver Report below).

3) The S&P Volatility Index sometimes referred to as the "fear index" is courting the 20-level again after being in the low-18s just a week ago. Bigger number equals greater market apprehension. This report uses 25 as a threshold for scary; Oct. 4 hit a really scary 46+ level - at least we're quite a way below that.

Not time to run for the exits but there is a whiff of smoke in the global theater. Maybe it's only that European finance minister smoking in the balcony seats. Stay tuned.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $48.49 down 2.04%
Newmont (NEM) $60.59 down 1.50%
McEwen Mining (MUX) 5.82 down 2.51% (formerly US Gold)
General Moly (Eureka Moly, LLC) (GMO) $3.66 down 0.81%
Thompson Creek (TC) $8.59 down 1.94%
Freeport-McMoRan (FCX) $45.29 down 1.82% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.88 down 0.40%
Timberline Resources (TLR) $0.53 unchanged

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $20.66 down 5.01% - global steel producer
POSCO (PKX) $92.06 down 1.89% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 172.36, down from last report's 202.30 and above the 1-month moving average of 126.20. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Here is the Eureka Miner's Index© (EMI) through Friday's close (a larger more readable plot is near the bottom of the blog page):

Today's EMI is still solidly above the 100-level. The 1-month moving average is fortunately above this key level also, a necessary condition for returning our miners to bull pasture. Any change in these trends will be monitored carefully.

Gold & Silver Report

This morning's...

COMEX gold is down $4.2/oz at $1,731.2/oz (April contract, most active)

COMEX silver is down $0.490/oz at $33.300/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.988 oz/oz

Silver 1-month CRS© is 3.46% (bullish level); weak divergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 93.47, up from last report's 92.52 and above its 1-month average of 92.12. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,547.6/oz which is $183.6/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

The Eureka Miner’s Gold Value Index© (GVI) may be reversing its downward trend. Here is plot of the GVI at Friday's close (also near the bottom of the blog page):

To get the metals & miners firmly back on their feet, we need gold to give up more relative value to copper, oil and silver. Remember, the GVI and EMI typically (but not always) have an inverse relation; as the GVI falls, the EMI rises. It is bullish for miners then to see the GVI 1-month average (dark line) continue to trend down - this morning the average started to move up, a bearish signal. Presently, the GVI at 93.47 is below an average of 92.52 and down 15.0% from its 2010-2011 high of 109.97.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0585/lb at $3.8305/lb (March contract, most active)

The gold-to-copper ratio is 451.95 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.61% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.00
As of January 30, 2012
(updated weekly)

Ryan's Notes Average:
US$14.00
As of January 27, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.05/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $98.59
ICE North Sea Brent crude $111.03
Spread (ICE- NYMEX) = $12.44 (last report, $11.70)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $99.44
ICE North Sea Brent crude $110.56
Spread (ICE- NYMEX) = $11.12 (last report, $10.47)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.81% (neutral level); weak divergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 83.0 up from last report's 81.7. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 100.09 points to 12,560.37; the S&P 500 is down 12.60 points at 1303.74

The Eureka Miner's Grubstake Portfolio is down 1.50% at $1,587,489.92 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

The Colonel's Friday Thoughts on Gold; US Gold Now McEwen Mining

2012-01-27T09:16:00.000-08:00

Goodbye for now old friend

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,722.5/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.22 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,562.4/oz
COMEX - VAGP = $160.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 6:03 AM. Have a cup of Raine's Red Label TGIF - you deserve it! Not a bad week for gold and the markets even though we're down a bit today. Things are looking up, pardner.

The Colonel's Friday Thoughts on Gold

My input to the Weekly Kitco Gold Survey:

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

A. Up - $1,750/oz possible

Q. Why?

A. The Federal Reserve extension of very low interest rates to late 2014 and the possibility of additional quantitative easing with today’s less-than-expected Q4 GDP create a favorable environment for gold and commodities going forward. Gold value with respect to key commodities oil, copper and silver has been falling since October but its descent is showing signs of slowing. It is likely that this pause is temporary and a bullish price environment could develop for all four in the near-term (see notes).

For $1,750/oz gold we can expect to see oil (WTI) in a range of $99-$101/bbl; silver, $33-$34/oz; and copper, $3.7-$3.9/lb.

Background Notes:

1. This report's Gold Value Index© (GVI) equals 92.22 this morning, down 16.1% from the Oct. 4 high of 109.97
2. The GVI, which has been below its 1-month moving average for many weeks, has just crossed above (92.22 vs 92.06 average)
3. If this pause in value decline is temporary, a bullish environment should remain in place for copper and silver. Gold is presently gaining the most value relative to oil.
4. If the gold value trends higher from here; copper and silver could weaken similar to oil. Oil is presently negatively correlated to the yellow metal (3-month correlation = -0.18, a typically bearish condition)
5. Scenario (3) is thought to be more likely than (4). Scenario (3) does not preclude a rising dollar gold price with a resumption of declining value. If oil re-correlates positively with gold, a bullish price condition for all four could develop in the near-term.

US Gold Now McEwen Mining

As of this morning, US Gold is listed with the NYSE as McEwen Mining, Inc. The NYSE sticker symbol has changed from UXG to MUX. Among many holdings, McEwen Mining owns a portion of the old Atlas Gold Bar Mine properties.

US Gold acquired Minera Andes in an all-stock deal announced in June. The enlarged company, now called McEwen Mining, is listed in Toronto and New York today with a market capitalization of some $1.3 billion. Here's the scoop:

McEwen determined to prove his mettle (Calgary Herald, 1/27/2012)

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $49.25 up 0.80%
Newmont (NEM) $60.66 up 0.35%
McEwen Mining (MUX) n/a
General Moly (Eureka Moly, LLC) (GMO) $3.58 down 2.45%
Thompson Creek (TC) $8.62 up 1.53%
Freeport-McMoRan (FCX) $47.01 up 1.10% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.90 down 0.20%
Timberline Resources (TLR) $0.53 unchanged

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $21.44 down 1.65% - global steel producer
POSCO (PKX) $93.72 up 0.94% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 199.55, up from last report's 214.84 and above the 1-month moving average of 122.09. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $4.2/oz at $1,722.5/oz (February contract, most active)

COMEX silver is down $0.363/oz at $33.380/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.603 oz/oz

Silver 1-month CRS© is 3.31% (bullish level); weak divergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.22, up from last report's 91.51 and above its 1-month average of 92.06. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,562.4/oz which is $160.1/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0280/lb at $3.8730/lb (March contract, most active)

The gold-to-copper ratio is 444.75 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.67% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.00
As of January 30, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 24, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.05/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $99.51
ICE North Sea Brent crude $111.21
Spread (ICE- NYMEX) = $11.70 (last report, $10.54)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $100.21
ICE North Sea Brent crude $110.68
Spread (ICE- NYMEX) = $10.47 (last report, $9.58)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.11% (bullish level); weak divergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 82.6 up from last report's 79.4. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 49.38 points to 12,685.25; the S&P 500 is down 1.79 points at 1316.64

The Eureka Miner's Grubstake Portfolio is up 0.04% at $1,482,348.75 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Gold 7-Week High; Is Silver Still in the Saddle?

2012-01-26T08:54:00.000-08:00

And one more thing about silver...

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,724.7/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.51 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,574.8/oz
COMEX - VAGP = $149.0/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Þūnresdæg
Morning Miners!

It is 6:46 AM. Have a Thursday cup of Uncle Ben's Morning After. Nothing like a Central Bank to boost the fortunes of gold - they either buy the stuff to hedge paper money or set monetary policy to enhance its lustrous allure. Our Federal Reserve did the latter in a big way yesterday and precious metals have been rallying ever since.

This morning at 8:55 AM EST COMEX gold touched $1,730.5/oz before falling back to $1,724.7/oz; COMEX silver reached $33.72/oz at the same time and is presently trading at $33.540/oz.

Gold 7-Week High

On Wednesday, Federal Reserve Chairman Ben Bernanke said he expects short-term interest rates to stay close to zero “at least through late 2014.” As part of their new communication strategy, Fed officials projected that rates could stay at a record low for three more years as unemployment comes down slowly and inflation moderates.

Why is this good for gold and silver? A very low interest rate environment is bullish for both since competing assets, such as bonds, will continue to have low annual returns. Precious metals are a store of value and create no income; when interest rates rise, money flows typically reverse and the price of gold and silver decline. The Fed's actions also signal that they are still very concerned about the prospects for domestic and world economies which supports the safe-haven aspect of precious metals.

Kitco News reports this morning that yesterdays' announcement may extend the secular bull market for gold by several more years:

Sharps Pixley: FOMC Statement Means Gold Bull Run Has At Least Three More Years To Go (Allen Sykora, Kitco Marget Nuggets, 1/25/2012)

Our favorite Norseman Thor hears the thunder of hoofbeats in the distance.

Is Silver Still in the Saddle?

In late December, the Eureka Miner looked at gold's trusty side-kick:

A good friend of this report asked me if I thought silver was still a good investment. If you are willing to sit through a lot of wild price swings, my answer is simply, "Yes!" Silver, like its companion gold, has good long term precious metal fundamentals. Silver also has a bright future as new uses in hi-tech applications will only increase its industrial demand - high-density batteries come to mind in our evermore electrified world. (12/27/2012)

At that time COMEX gold was trading at $1,598.8/oz and silver at $29.060/oz. Given this mornings pop, silver has gained 15.4% to gold's 7.8%. So far so good.

Silver is known as a "high-beta" metal because its price sensitivity relative to gold is usually greater than 1.0. Presently the 3-month beta is 1.64 so a 1% change in gold price is expected to bring a 1.6% change in silver price. Beta is a two-way street so declines in gold price often can be followed by much more dramatic declines for the white metal - not the problem this morning.

The closely watched gold-to-silver ratio has also fallen to bullish levels for silver. Near historical norms, today's ratio of 51.4 oz/oz is still showing good stability (about 3% variation over the last 1-month of COMEX data). There is a growing consensus that gold could make new highs in 2012 challenging or surpassing the $2,000/oz-level. Given the current ratio, a silver price of $39/oz is very comfortable with $2,000/oz gold.

So is silver still in the saddle? You bet. With a 3-month gold-silver correlation of 0.96 wherever gold goes silver will surely follow; and with the present beta, at a quicker pace.

Please do your own homework on this one - the ole Colonel has fallen down a few mineshafts with these two rascals in the past. I'm betting we're in the up-elevator now, stay tuned.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $49.36 up 1.96%
Newmont (NEM) $61.13 up 1.46%
US Gold (UXG) $5.98 up 1.87%
General Moly (Eureka Moly, LLC) (GMO) $3.47 down 1.76%
Thompson Creek (TC) $8.74 up 2.22%
Freeport-McMoRan (FCX) $48.39 up 5.01% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.90 up 0.07%
Timberline Resources (TLR) $0.53 up 6.00%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $22.13 up 3.56% - global steel producer
POSCO (PKX) $93.39 down 0.20% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 214.84, up from last report's 154.57 and above the 1-month moving average of 117.25. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $24.6/oz at $1,724.7/oz (February contract, most active)

COMEX silver is up $0.419/oz at $33.540/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.422 oz/oz

Silver 1-month CRS© is 3.09% (bullish level); weak divergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.51, up from last report's 90.92 and below its 1-month average of 92.09. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,574.8/oz which is $149.0/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0610/lb at $3.8905/lb (March contract, most active)

The gold-to-copper ratio is 443.31 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.66% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.875
As of January 23, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 24, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.98/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $101.10
ICE North Sea Brent crude $111.64
Spread (ICE- NYMEX) = $10.54 (last report, $11.40)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $101.76
ICE North Sea Brent crude $111.34
Spread (ICE- NYMEX) = $9.58 (last report, $10.62)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.11% (bullish level); weak divergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 79.4 down from last report's 89.2. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 58.57 points to 12,815.53; the S&P 500 is up 4.60 points at 1330.65

The Eureka Miner's Grubstake Portfolio is up 1.89% at $1,605,493.98 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

The Steely Side of Moly Miners: POSCO (PKX) & ArcelorMittal (MT)

2012-01-25T08:49:00.000-08:00

Up on the hill
They think I'm okay
Or so they say
Chinese music always sets me free
Angular banjos
Sound good to me
Aja
When all my dime dancin' is through
I run to you - Steely Dan

NEW FORMAT for 2012

Daily Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1655.1/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 90.92 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,521.1/oz
COMEX - VAGP = $134.0/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Wōdnesdæg
Morning Miners!

It is 6:07 AM. Have a cup of Steely Dan. Old Miner Woden has been whistling Aja all morning long. Why someone his advanced age would be singing that song is a mystery to me - maybe he's thinking about the steely side of moly miners...

The Steely Side of Moly Miners: POSCO (PKX) & Arcelor-Mittal (MT)

This report has been looking at moly miners General Moly (GMO) and Thompson Creek (TC) this week. Because molybdenum is a common alloy in high-grade steels, it is only natural to wonder how steelmakers are doing that use their product. We track the stock performance of steel producers POSCO (PKX) and ArcelorMittal (MT) on a daily basis. South Korean POSCO is a 20% owner of our Mt. Hope molybdenum project with an Asian market emphasis that includes Australia. ArcelorMittal is a global steel giant with a presence in Europe, Asia, North and South America and Africa.

The latter part of last year was hard on steel makers as well as moly miners as we can see in the following 6-month chart of share price performance for PKX (blue line) and MT (green line):

Fortunately, PKX has been in rally mode for eight out of the last market days closing fast on its 200-day moving average (orange line). So far this morning is a down day in the broader markets but PKX is up a full percent at $92.55 just below its 200-day average of $94.16. We noted yesterday that Thompson Creek (TC) was enjoying a similar move upwards to its average; bullish signs for both the steelmaker and benchmark moly producer. ArcelorMittal has struggled more to recover share price due in part to its greater exposure to European markets. Over six-months MT is down a full 35%; PKX only 18%.

Here is a chart that compares the relative performance of POSCO, Thompson Creek and General Moly over that same period:

Thompson Creek is down 14% to PKX's 18% and GMO lags 32%. The Report noted yesterday that General Moly's flat line performance may be building a base for a breakout to join benchmark Thompson Creek.

So far, it looks like things are improving in the land of moly and steel - at least in the East and possibly North America. European moly oxide got a bid up to $13.98/lb yesterday so perhaps the outlook there is not as grim as expected earlier this month (see the Copper & Molybdenum Report below).

Please do your own research, this report could be dead wrong about the future of moly miners and steelmakers. As the Colonel said yesterday, all bets are off if Europe goes into a tailspin or the Persian Gulf explodes into conflict. Stay tuned.

Aja
When all my dime dancin' is through
I run to you

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $45.44 down 0.09%
Newmont (NEM) $57.31 down 0.30%
US Gold (UXG) $5.10 down 2.30%
General Moly (Eureka Moly, LLC) (GMO) $3.25 down 1.52%
Thompson Creek (TC) $8.28 down 0.48%
Freeport-McMoRan (FCX) $43.40 down 1.27% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.55 up 0.89%
Timberline Resources (TLR) $0.48 unchanged

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $20.73 down 3.13% - global steel producer
POSCO (PKX) $92.55 up 0.99% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 154.75, up from last report's 150.75 and above the 1-month moving average of 111.48. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $9.4/oz at $1,655.1/oz (February contract, most active)

COMEX silver is down $0.230/oz at $31.745/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 52.137 oz/oz

Silver 1-month CRS© is 2.80% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 90.92, down from last report's 91.30 and below its 1-month average of 92.18. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,521.1/oz which is $134.0/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0215/lb at $3.7860/lb (March contract, most active)

The gold-to-copper ratio is 437.16 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.68% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.875
As of January 23, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 24, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.98/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $98.11
ICE North Sea Brent crude $109.51
Spread (ICE- NYMEX) = $11.40 (last report, $11.28)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $98.86
ICE North Sea Brent crude $109.48
Spread (ICE- NYMEX) = $10.62 (last report, $10.48)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 2.77% (bullish level); weak convergence (Oil neutral)

Prices are off their crisis highs and we have $105+ Brent and $95+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 89.2 down from last report's 92.4. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 68.95 points to 12,606.80; the S&P 500 is down 3.24 points at 1311.41

The Eureka Miner's Grubstake Portfolio is down 0.73% at $1,495,882.52 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Is General Moly (GMO) Ready for a Breakout?

2012-01-24T09:19:00.000-08:00

What's in the windshield for moly miners?

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,664.4/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.30 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,523.3/oz
COMEX - VAGP = $141.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 6:08 AM. Have a cup of Ruby T's Lucky-24. Our market bull couldn't be happier this morning, Ruby loves it when her day of the week falls on the 24th - that's her lucky number! She's even ignoring a pullback in the metals with morning grumblings about Greek debt negotiations turning sour.

No, this ole gal sees better days ahead for moly miners and that's worth another cup of Lucky. On the local scene, General Moly just released their impressions of the recent public hearings in Eureka and Crescent Valley:

General Moly Announces Strong Support at Public Hearings (Press release, 1/24/2012)

As we discussed yesterday, there is still a range of legitimate concerns but Chief Executive Officer Bruce D. Hansen is interpreting the two well-attended meetings in a positive light:

I was very proud to hear community leaders from Eureka stand up in support of the Mt. Hope project. Their support is a testament to the hard work of our team in Nevada and our commitment to mining done right within the Eureka community. Importantly, no new issues were raised during the public hearings and we continue to believe that the BLM has a very robust and defensible DEIS. We look forward to the conclusion of the public comment period on March 1, the completion of the Final EIS in the third quarter, and hopefully initiating construction activities before the end of the year.

Mr. Hansen bought 173,141 additional shares of his company's stock Jan. 6 (Form 4 SEC filing) so he is is backing his upbeat outlook with his own money; never a bad sign from the head honcho of a mining company.

Let's kick the tires a little bit on his haul truck of optimism...

Is General Moly (GMO) Ready for a Breakout?

For starters, 2011 was a horrible year for mining stocks in general. This report's Eureka Miner's Index© (EMI) started last year in the 800s, fell down the mineshaft to the low 20s in October and has since rebounded above the key 100-level in this first month of 2012. An EMI that sustains above 100 is necessary to even start talking about a recovery in the mining sector. Today the EMI is 150.8 and more importantly, the 1-month moving average has been above the 100-level for three consecutive market days - currently at 108.4.

In terms of product, moly oxide has been feeling pretty chipper too. Presently Western and European spot prices are both around $13.90/lb (see Copper & Molybdenum Report below). The London Metal Exchange (LME) sees $31,500/metric ton ($14.29/lb) ahead for their 3-month seller's contract and $32,675/metric ton ($14.82/lb) for the 15-month. This is a considerable improvement from the October lows of last year as seen in this 6-month chart of the LME 3-month seller:

In October the futures dropped to $29,000/metric ton ($13.15/lb) from July's high of $34,000/metric ton ($15.42/lb) - a period when moly futures are seasonally on the rise in more normal times. Being above $31,000/metric ton is a relief especially in light of almost certain recessionary times ahead for Europe.

Moly benchmark miner Thompson Creek (TC) has been on a tear too with share price up over 27% since mid-December. Although this morning is a down day for mining stocks, TC is still very close to breaking its 200-day moving average to the upside, presently trading at $8.33 vs $8.53 for the average. Although GMO and TC roughly tracked each other for much of last year, General Moly has been less fortunate trading flat since the same mid-December to present period. The following 6-month chart is a comparison of share performance between TC (blue line) and GMO (green line) including the TC 200-day average (orange line).

Over six months TC is down 14% to General Moly's 32%. An optimist might say GMO is patiently building a "base" and will move aggressively higher to catch up with the benchmark on any good news regarding the DEIS, water rights and so forth. A pessimist may characterize the flat line stock price as "dead money" and move on to greener pasture.

The ole Colonel just threw a few shares in the buckboard at $3.25 so I guess I'm just another one of those durn optimists - at least there is a CEO riding shotgun with me.

Please do your own research, this report could be dead wrong. Also remember all bets are off if Europe goes into a tailspin or the Persian Gulf explodes into conflict. That's what makes markets exciting, pardner.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $45.78 down 2.49%
Newmont (NEM) $57.92 down 2.26%
US Gold (UXG) $4.97 down 3.12%
General Moly (Eureka Moly, LLC) (GMO) $3.22 down 2.13%
Thompson Creek (TC) $8.33 down 2.00%
Freeport-McMoRan (FCX) $43.18 down 1.60% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.91 down 0.07%
Timberline Resources (TLR) $0.48 down 4.00%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $20.86 down 2.48% - global steel producer
POSCO (PKX) $91.02 down 0.85% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 150.75, down from last report's 166.15 and above the 1-month moving average of 108.39. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $13.9/oz at $1,664.4/oz (February contract, most active)

COMEX silver is down $0.170/oz at $32.100/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.850 oz/oz

Silver 1-month CRS© is 2.58% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.30, up from last report's 91.15 and below its 1-month average of 92.35. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,523.3/oz which is $141.1/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0430/lb at $3.7555/lb (March contract, most active)

The gold-to-copper ratio is 443.19 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.69% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.875
As of January 23, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 20, 2012

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.90/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $98.63
ICE North Sea Brent crude $109.91
Spread (ICE- NYMEX) = $11.28 (last report, $11.39)

Here are the May contracts* with a narrower spread:

NYMEX light sweet crude $99.29
ICE North Sea Brent crude $109.77
Spread (ICE- NYMEX) = $10.48 (last report, $10.33)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 2.77% (bullish level); weak convergence (Oil neutral)

Prices are off their crisis highs and we have $105+ Brent and $95+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 92.4 up from last report's 87.8. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 65.92 points to 12,642.90; the S&P 500 is down 6.34 points at 1309.66

The Eureka Miner's Grubstake Portfolio is down 1.52% at $1,496,456.20 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Gold 6-Week High; General Moly Update

2012-01-23T08:45:00.000-08:00

The Eureka Canyon Subdivision goes up

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,667.6/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.15 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,528.7/oz
COMEX - VAGP = $138.9/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 6:04 AM. Have a hot Monday cup of Here's Hoping. Looks like we've got a good'un on a new moon...

Gold 6-Week High

COMEX gold pushed to prices not seen since mid-December to make a 6-week high at $1,677.9/oz; now trading down a bit at $1,667.6/oz. Today we enter the never-never land in metal futures trading as the Chinese break for their Lunar New Year holiday. Europe has taken a pause too in their ongoing crises as Germany's latest offer of short-term debt drew strong demand.

On a more sober note, International Monetary Fund chief Christine Lagarde warned the German Council on Foreign Relations in Berlin that the global economy faces a depression-era collapse in demand if Europe doesn't act more aggressively in addressing their debt problems. She said, "It is about avoiding a 1930s moment, in which inaction, insularity, and rigid ideology combine to cause a collapse in global demand. A moment, ultimately, leading to a downward spiral that could engulf the entire world."

Nothing like a party-pooper at a New Years party.

COMEX copper didn't listen to Lagarde's warning and bumped up $0.435/lb to trade presently at $3.7885/lb. COMEX silver is feeling frisky too, up another $0.245/oz at $31.920/oz. The closely watched gold-to-silver ratio has compressed to levels not seen since early November (i.e. silver strengthening with respect to gold) checking in at 52.24.

All our favorite miners are whistling to work this morning except Quadra and Timberline Resource which are down a tad. Barrick (ABX) is up 1.53% at $46.53; General Moly (GMO) is up 0.30% at $3.31 (see Mining Report).

Importantly, this report's Eureka Miner's Index© (EMI) has a 1-month average cresting 100 - a sign that miners are returning to better times.

General Moly Update

The Colonel was on the road when the U.S. Bureau of Land Management conducted an open house and hearing on the draft study of General Moly's proposed Mt. Hope molybdenum project last week. Mining Editor Adella Harding did a nice piece on the event which packed the Eureka Opera House:

BLM hearing on Mt. Hope draws full house (Adella Harding, Elko Daily Free Press, 1/19/2012)

To borrow a line from Winston Churchill, the long and arduous process to bring Mt. Hope online has seemed at times like "a riddle wrapped in a mystery inside an enigma." At other times, there appears to be great hope for Mt. Hope with its job-creating molybdenum mine and 44-year life expectancy.

After witnessing one of the driest December-January periods in Eureka County since the late-1880s, I can certainly empathize with ranchers and farmers concerned about the mine's expected water usage. I hope the present resource monitoring and mitigation plans will bring a beneficial and satisfactory solution for all parties concerned.

General Moly is expecting the BLM to approve the project by September. When mine construction begins, there will be plenty of housing available in the new Eureka Canyon Subdivision (headline photos).

Thanks Adella for a good report!

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $46.53 up 1.53%
Newmont (NEM) $59.37 up 0.17%
US Gold (UXG) $5.18 up 4.02%
General Moly (Eureka Moly, LLC) (GMO) $3.31 up 0.30%
Thompson Creek (TC) $8.46 up 1.56%
Freeport-McMoRan (FCX) $43.63 up 1.25% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.05 down 0.39%
Timberline Resources (TLR) $0.49 down 2.00%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $21.43 up 1.66% - global steel producer
POSCO (PKX) $92.31 up 0.87% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 166.15, up from last report's 161.00 and above the 1-month moving average of 105.17. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently above the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Here is the Eureka Miner's Index© (EMI) through Friday's close (a larger more readable plot is near the bottom of the blog page):

Today's EMI is above the 100-level. The 1-month moving average has fortunately crested this key level also, a necessary condition for returning our miners to bull pasture.

Gold & Silver Report

This morning's...

COMEX gold is up $3.6/oz at $1,667.6/oz (February contract, most active)

COMEX silver is up $0.245/oz at $31.920/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 52.243 oz/oz

Silver 1-month CRS© is 2.26% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.15, up from last report's 91.76 and below its 1-month average of 92.52. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,528.7/oz which is $138.9/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

The Eureka Miner’s Gold Value Index© (GVI) is presently declining on average. Here is plot of the GVI at Friday's close (also near the bottom of the blog page):

To get the metals & miners back on their feet, we need gold to give up more relative value to copper, oil and silver. Remember, the GVI and EMI typically (but not always) have an inverse relation; as the GVI falls, the EMI rises. It is bullish for miners then to see the GVI 1-month average (dark line) trending down. Presently, the GVI at 91.15 is below an average of 92.52 and down 17.1% from its 2010-2011 high of 109.97.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0435/lb at $3.7885/lb (March contract, most active)

The gold-to-copper ratio is 440.17 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.76% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.875
As of January 23, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 20, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.90/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $99.00
ICE North Sea Brent crude $110.39
Spread (ICE- NYMEX) = $11.39 (last report, $11.68)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $99.70
ICE North Sea Brent crude $110.03
Spread (ICE- NYMEX) = $10.33 (last report, $10.63)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 2.65% (bullish level); weak convergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 87.8 up from last report's 84.4. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 37.61 points to 12,758.09; the S&P 500 is up 6.22 points at 1321.60

The Eureka Miner's Grubstake Portfolio is up 1.00% at $1,521,356.39 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

The Colonel's Friday Thoughts on Gold & Copper

2012-01-20T09:46:00.000-08:00

Eureka Panel Truck Memories

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,651.5/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.29 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,511.6/oz
COMEX - VAGP = $139.9/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels

Morning Miners!

It is 8:41 AM. Have a hot cup of Raine's road weary White Line Fever. The ole Colonel has finished traveling and is back for today's wrap-up and gold survey. After a nice run for commodities, there are some bearish indicators for gold, oil and copper setting up before next week's Chinese Lunar New Year holiday...

The Colonel's Friday Thoughts on Gold & Copper

There was a good CNBC video with Freeport-McMoRan's CEO Richard Adkerson yesterday:

Power Lunch Interview with Richard Adkerson (CNBC video, 1/19/2012)

Although Adkerson would make a pretty large bird, he remains my favorite canary in the global mineshaft. Copper giant Freeport's profits are down because of recent strikes in Indonesian but beat expectations. Adkerson remains bullish for the outlook of copper and his company in 2012. From my view this is good news for not only the red metal but for gold which has been riding shotgun with key commodities for some time. Although we may see some pullbacks in the near term, I remain bullish on these two metals for 2012.

The Colonel's input to the Weekly Kitco Gold Survey

Q. Where do you see gold’s price headed next week, up, down or unchanged?
A. Down slightly - $1,649/oz mean, trading in range
Q. Why?
A. After 4-month highs for copper and a good start for gold, I believe we will see a price consolidation as we move into the Chinese Lunar New Year holidays next week. There are some bearish patterns setting up for gold with respect to key global benchmarks oil and copper. Presently both are less volatile in price with respect to the yellow metal, a fairly unusual condition that continues to warrant monitoring. Although gold made new highs last year under similar circumstances, volatility is a 2-way street and may signal a downward move in the present environment. Two related metrics are signaling distress: 1) the gold-to-oil ratio has bottomed and is trending up (oil bearish) and 2) the gold-to-copper ratio remains high and the recent compression trend is now showing signs of weakening (copper bearish - ratio level & trend). As long as gold behaves as a commodity these indicators could be bearish for all three in the next several weeks.

For a nominal COMEX gold price of $1,649/oz next week, one can expect NYMEX oil to trade below just below $100/bbl and COMEX copper to stay in a $3.6/lb to $3.8/lb range.

Background Notes:

1) The 3-month volatility of oil price relative to gold is 0.928 (VOL<1.00 implies gold more volatile than oil)2) The 3-month volatility of copper price relative to gold is 0.934 (VOL<1.00 implies gold more volatile than copper)3) The gold-to-NYMEX WTI ratio bottomed 12/29/2011 at 15.4 bbl/oz and is presently 16.6 bbl/oz on an up-trend4) The 3-month rolling correlation of gold and NYMEX WTI reversed signs 1/11/12. It is presently -0.1275) The gold-to-copper ratio is currently 437 lb/oz. Ratios greater than 400 lb/oz are considered recession levels. Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $46.38 down 0.17%
Newmont (NEM) $59.40 down 0.34%
US Gold (UXG) $4.69 up 1.30%
General Moly (Eureka Moly, LLC) (GMO) $3.28 down 0.30%
Thompson Creek (TC) $8.24 down 0.48%
Freeport-McMoRan (FCX) $43.86 down 1.15% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.87 down 0.20%
Timberline Resources (TLR) $0.48 down 2.04%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $21.02 down 0.80% - global steel producer
POSCO (PKX) $91.01 up 0.65% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 147.85, up from last report's 147.72 and above the 1-month moving average of 100.18. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $3.0/oz at $1,651.5/oz (February contract, most active)

COMEX silver is up $0.016/oz at $30.525/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.103 oz/oz

Silver 1-month CRS© is 1.69% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.29, up from last report's 90.81 and below its 1-month average of 92.72. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,511.6/oz which is $139.9/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0245/lb at $3.7760/lb (March contract, most active)

The gold-to-copper ratio is 437.4 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish)

Copper 1-month CRS© is 2.89% (bullish level); divergent (Cu bearish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.875
As of January 23, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 17, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.90/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.83/lb (US$30,500/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $99.24
ICE North Sea Brent crude $110.92
Spread (ICE- NYMEX) = $11.68 (last report, $12.07)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $99.99
ICE North Sea Brent crude $110.62
Spread (ICE- NYMEX) = $10.63 (last report, $11.11)

* NYMEX futures contracts have rolled forward, we now show March and May for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 2.65% (bullish level); weak convergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in May favoring high oil prices this spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 89.3 up from last report's 87.5. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 30.65 points to 12,654.63; the S&P 500 is down 4.21 points at 1310.29

The Eureka Miner's Grubstake Portfolio is down 0.14% at $1,482,840.35 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

The Colonel's Friday Thoughts on Gold, Oil & Copper

2012-01-13T09:37:00.000-08:00

The Ghosts of Whistler Mountain

*** BREAKING NEWS *** As reported by the Wall Street Journal, "Standard & Poor’s Ratings Services has notified the French government of its decision to downgrade the country’s credit rating, a senior French government official said Friday, a move that marks the long-awaited blow to France’s international standing and knocks the country out of the top financial league of the euro zone." (9:17 AM PT)

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,638.1/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.98 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,472.0/oz
COMEX - VAGP = $166.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down

Morning Miners!

It is 8:39 AM. Have a well deserved cup of Scott Raine's delicious Red Label TGIF. The ole Colonel will be on the road again next week but should be back for Friday's wrap-up and gold survey. This week's survey has some unusual twists and turns for gold in the world of oil and copper...

The Colonel's Friday Thoughts on Gold, Oil & Copper

Leave it to Standard & Poor's ratings agency to wait until Friday the 13th to shake the markets with a pending downgrade rumor. I'd love to be a fly on the wall at their annual analyst awards dinner, I've heard the Global Pariah Trophy is highly prized by their credit whiz kids. As the rumor goes, S&P could announce the downgrades in the credit ratings of a number of European governments as early as today.

Several interesting technical changes are occurring to gold prices relative to oil and copper as I discussed with Kitco News for their weekly gold survey...

The Colonel's input to the Weekly Kitco Gold Survey

Q. Where do you see gold’s price headed next week, up, down or unchanged?
A. Sideways - $1,638/oz mean, trading in range
Q. Why?
A. Although I rarely take a sideways bet, the reasons for gold to go higher seem to be at equilibrium with those that drive lower prices. Conflict escalation in the Persian Gulf (gold bullish) appears to be delayed with reports of a postponement of sanctions; worsening of the European sovereign debt crises (gold bearish) is likely next week with rumors of pending credit downgrades and a lackluster Italian debt auction; physical buying in China ahead of Lunar New Year (gold bullish) provides price support. Technically, there are several gold metrics that are sending warning signals with respect to key global benchmarks oil and copper. The unrelenting compression of the gold-to-oil ratio since early August has ceased and the 3-month rolling correlation of gold and oil turned negative earlier this week. As long as gold behaves as a commodity this could be a bearish development for both. The gold-to-copper ratio remains stubbornly high (copper bearish) but continues to slowly trend down (copper bullish). However, copper price remains less volatile relative to gold - a fairly unusual condition that warrants monitoring (gold made new highs last year under similar circumstances).

For a nominal COMEX gold price of $1,638/oz next week, one can expect NYMEX oil to trade below $100/bbl and COMEX copper to stay in a $3.5/lb to $3.6/lb range.

Background Notes:

1) The gold-to-NYMEX WTI ratio bottomed 12/29/2011 at 15.4 bbl/oz and is presently 16.7 bbl/oz on an up-trend.
2)The 3-month rolling correlation of gold and NYMEX WTI reversed signs Wednesday, 1/11. It is presently -0.025
3) The gold-to-copper ratio is currently 453 lb/oz trending slowly down. Ratios greater than 400 lb/oz are considered recession levels.
4) The volatility of copper price relative to gold is 0.84 (VOL<1.00 implies gold more volatile than copper).Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $48.15 down 1.35%
Newmont (NEM) $63.55 down 0.77%
US Gold (UXG) $4.13 unchanged
General Moly (Eureka Moly, LLC) (GMO) $3.26 up 1.51%
Thompson Creek (TC) $7.78 up 0.52%
Freeport-McMoRan (FCX) $42.09 down 0.85% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.90 down 0.59%
Timberline Resources (TLR) $0.56 down 1.75%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $19.34 down 2.47% - global steel producer
POSCO (PKX) $84.92 down 0.21% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 121.41, up from last report's 118.86 and above the 1-month moving average of 88.27. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $9.6/oz at $1,638.1/oz (February contract, most active)

COMEX silver is down $0.289/oz at $29.835/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.905 oz/oz

Silver 1-month CRS© is 1.89% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.98, up from last report's 91.68 and below its 1-month average of 93.47. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,472.0/oz which is $166.1/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0365/lb at $3.6125/lb (March contract, most active)

The gold-to-copper ratio is 453.45 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio continues to trend down (Cu bullish).

Copper 1-month CRS© is 2.23% (bullish level); stalled convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.775
As of January 16, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 10, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.90/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.95/lb (US$30,750/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl now having up-trending spread with the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $98.23
ICE North Sea Brent crude $110.30
Spread (ICE- NYMEX) = $12.07 (last report, $11.96)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $98.90
ICE North Sea Brent crude $110.1
Spread (ICE- NYMEX) = $11.11 (last report, $10.82)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.11% (neutral level); weak convergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $95+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 93.7 down from last report's 98.0. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 112.08 points to 12,358.94; the S&P 500 is down 11.57 points at 1283.93

The Eureka Miner's Grubstake Portfolio is down 0.77% at $1,449,535.05 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Dragon & Spain Lift Gold & Copper

2012-01-12T09:12:00.000-08:00

The Devil's Cigar - Devil's Gate, Eureka

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,660.6/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.68 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,513.4/oz
COMEX - VAGP = $147.2/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down

Þūnresdæg
Morning Miners!

It is 6:47 AM. Have a cup of Thor's Thunder Java. Apparently, a little thunder got into the ole Colonel's computer yesterday and the Eureka Miner skipped a beat. By God and Gates, I hope this report won't suffer another disruption. Thank you for your patience...

Dragon & Spain Lift Gold & Copper

Few can say this isn't an exciting time of the year for metal markets. A combination of new year optimism and the approaching Chinese Lunar New Year typically cast a magic spell on price speculation - it seems 2012 will be no exception.

Strong physical buying in China ahead of the Year of the Dragon has put a nice bid under COMEX gold futures bouncing another $21/oz on the February contract to presently trade at $1,660.6/oz. Gold, which has been running with the commodity pack lately, was also lifted by a weakening U.S. dollar and rising oil price. This morning NYMEX WTI crude jumped nearly 2-bucks to $102.70/bbl; global benchmark Brent crude moved even higher adding $2.42 to trade at $114.66/bbl.

The ever present European debt crisis has put a damper on base metal prices for months but a better-than-expected Spanish debt auction eased some immediate concerns about the profligate peripherals. Copper rose to its highest level in more than a month - this morning COMEX copper is up $0.1210/lb at $3.6670/lb. Market participants are also trying to figure out what Chinese metal traders will do when they return from the lunar holiday break; Chinese celebrations commence January 23 and the party lasts 15 days.

China's annual inflation fell to its lowest level in 15 months in December and traders hope an easing in inflation may stimulate domestic buying after the Lunar New Year celebrations. More importantly. The Chinese government is expected to focus less on putting a brake on prices and more on stimulus measures which should be bullish for base metals prices.

What fun! Even euro-moly oxide is up to $13.90/lb just behind the LME 3-month seller's contract at $13.95/lb.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $49.30 up 1.09%
Newmont (NEM) $64.42 up 1.71%
US Gold (UXG) $3.95 up 0.77%
General Moly (Eureka Moly, LLC) (GMO) $3.35 up 1.21%
Thompson Creek (TC) $7.70 up 0.52%
Freeport-McMoRan (FCX) $41.93 up 0.67% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.95 up 0.20%
Timberline Resources (TLR) $0.61 unchanged

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $19.63 up 1.55% - global steel producer
POSCO (PKX) $84.59 up 1.15% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 118.86, up from last report's 112.54 and above the 1-month moving average of 86.18. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $21.0/oz at $1,660.6/oz (February contract, most active)

COMEX silver is up $0.685/oz at $30.575/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.312 oz/oz

Silver 1-month CRS© is 1.99% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.68, down from last report's 93.43 and below its 1-month average of 93.58. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,513.4/oz which is $147.2/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.1210/lb at $3.6670/lb (March contract, most active)

The gold-to-copper ratio is 452.85 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio continues to trend down (Cu bullish).

Copper 1-month CRS© is 2.17% (bullish level); stalled convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.625
As of January 9, 2012
(updated weekly)

Ryan's Notes Average:
US$13.80
As of January 10, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.90/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.95/lb (US$30,750/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl now having tending up spread with the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $102.70
ICE North Sea Brent crude $114.66
Spread (ICE- NYMEX) = $11.96 (last report, $10.85)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $103.15
ICE North Sea Brent crude $113.97
Spread (ICE- NYMEX) = $10.82 (last report, $9.79)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.25% (neutral level); converging stability (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 98.0 down from last report's 98.8. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 48.70 points to 12,400.75; the S&P 500 is down 5.16 points at 1287.32

The Eureka Miner's Grubstake Portfolio is up 0.96% at $1,456,869.46 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Metals & Miners Rock; Silver Breaks $30; Copper, $3.50

2012-01-10T09:10:00.000-08:00

Lichen Rock atop Devil's Gate

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,636.8/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.32 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,481.4/oz
COMEX - VAGP = $155.4/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down

Morning Miners!

It is 7:52 AM. Have a hot cup of Hoorah. Sweet Ruby T started this new year with a rumbling rally and today she's back to kick the markets higher again...

Metals & Miners Rock; Silver Breaks $30; Copper, $3.50

Earnings season has begun with a strong report from aluminum giant Alcoa. The company's fourth-quarter revenue and current-year projection late yesterday raised hopes for a stronger global economy and gave raw commodity prices a kick in the pants. The DOW has broken a 5 1/2-month high to trade at 12,483.53 and the S&P 500 is up 12.65 points at 1,293.35.

COMEX gold is following commodities, presently trading up a respectable $28.7/oz to $1,636.8/oz. COMEX silver pushed through the important psychological $30/oz-level adding a buck-and-two-bits to trade at $30.035/oz.

The red metal also broke an important level with COMEX copper now above $3.50/lb at $3.5125/lb. The gold-to-copper ratio notched down to 466 lb/oz, we need to get below 400 lb/oz to say we're out of the mineshaft but I'll take steady progress any day.

Bellwether miner Freeport-McMoRan (FCX) is up more than 4% at $41.09; General Moly (GMO) has bounced 2.3% to $3.40 and Barrick Gold (ABX) is up 1.4% at $48.51.

Thanks Ruby, let's hope the merriment lasts!

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $48.51 up 1.43%
Newmont (NEM) $62.85 up 2.00%
US Gold (UXG) $3.91 up 4.83%
General Moly (Eureka Moly, LLC) (GMO) $3.40 up 2.26%
Thompson Creek (TC) $7.65 up 2.82%
Freeport-McMoRan (FCX) $41.09 up 4.38% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $15.16 down 0.07%
Timberline Resources (TLR) $0.6080 up 3.05%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $19.19 down 2.51% - global steel producer
POSCO (PKX) $83.99 up 4.62% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is above-par at 117.46, up from last report's 95.33 and above the 1-month moving average of 83.23. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $28.7/oz at $1,636.8/oz (February contract, most active)

COMEX silver is up $1.253/oz at $30.35/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.496 oz/oz

Silver 1-month CRS© is 2.17% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.32, down from last report's 93.39 and below its 1-month average of 93.89. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,481.4/oz which is $155.4/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0965/lb at $3.4340/lb (March contract, most active)

The gold-to-copper ratio is 465.99 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.14% (bullish level); stalled convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.625
As of January 9, 2012
(updated weekly)

Ryan's Notes Average:
US$13.70
As of January 6, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.75/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.95/lb (US$30,750/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl with a narrowing spread with the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $102.96
ICE North Sea Brent crude $113.53
Spread (ICE- NYMEX) = $10.57 (last report, $10.85)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $103.33
ICE North Sea Brent crude $112.95
Spread (ICE- NYMEX) = $9.62 (last report, $9.79)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.68% (neutral level); stalled convergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 95.4 down from last report's 104.2. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 89.84 points to 12,483.53; the S&P 500 is up 12.65 points at 1293.35

The Eureka Miner's Grubstake Portfolio is up 2.64% at $1,442,226.36 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Base Metal Revival for 2012?

2012-01-09T09:09:00.000-08:00

Only 100 Million Years to Diamond Peak from Devil's Gate

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,620.9/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 93.39 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,450.3/oz
COMEX - VAGP = $170.6/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down

Morning Miners!

It is 7:29 AM. Have a hot cup of Monday Ether. Maybe the markets need a little ether to get their diesel running for 2012, it seems like everything is moving sideways. There are, however, a few positive signs emerging for the metals & miners:the Eureka Miner's Index© (EMI) is courting the 100-level again, our Debt Crisis Index (DCI) dropped below 100 at the Friday close for the first time since July 22 and moly oxide spot and futures prices have been creeping cautiously upward. Unless Europe implodes or the Persian Gulf explodes, the Colonel suspects we may have a better year than last. Let's see what the analysts think...

Base Metal Revival for 2012?

This morning's Kitco News Market Nuggets have several good reports on the prospects for base metals this year. Here are two examples:

Market Nuggets: Harbor: Copper Could Reach $4 Per Pound In Jan.-April Period (Allen Sykora, Kitco news, 09 January 2012, 7:49 a.m.)

Market Nuggets: Goldman Sachs: Current Base-Metals Prices 'Present Value To Consumers' (Allen Sykora, Kitco news, 09 January 2012, 9:02 a.m.)

The first and most optimistic piece sees copper prices moving back to $4/lb at some point during the January-April period. Harbor Intelligence analysts say that global end-user demand growth resumed in December, with an improving picture in both the U.S. and China.

From this report's perspective, if gold remained at $1,600/oz and copper was slightly above $4/lb we'd be back below recession pricing for copper relative to gold (the Eureka Miner considers a gold-to-copper ratio in the range of 300 to 400 lb/oz to be normal; and above 400, recession level). The present gold-to-copper ratio is still an elevated 472 lb/oz.

The second nugget quotes Goldman Sachs as saying, "Concerns about European sovereign-debt problems and slowing economic growth have kept base-metal prices under pressure. We caution that these concerns are likely to continue to overhang the market in the near term. However, we continue to emphasize that the main-line expectation of lackluster but positive global economic growth led by EM (emerging markets), disappointing supply growth in key metals, and the likelihood of tightening balances suggest higher metal prices in 2012."

Goldman sees 3-month and 12-month forecasts for copper, $8,000 and $9,500/metric ton; aluminum, $2,300 and $2,400; zinc, $2,050 and $2,400; and nickel, $18,500 and $21,000. $9,500/ a metric ton for copper is $4.31/lb or a gold-to-copper ratio of 371 lb/oz for $1,600/oz gold.

This morning COMEX copper is a slightly less than a buck-away from the one-year number at $3.4340/lb but not very far away from $8,000/metric ton ($3.6288/lb). The latter number gets us to a gold-to-copper ratio of 440 lb/oz for $1,600/oz gold, still a little scary especially if you think gold prices are on the rise again.

All in all, things may very well be looking up for the metals in 2012; LME moly futures inched up another 3-cents Friday to $13.97/lb ($30,800/metric ton). Stay tuned.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $47.66 up 0.25%
Newmont (NEM) $61.64 down 0.53%
US Gold (UXG) $3.65 up 0.83%
General Moly (Eureka Moly, LLC) (GMO) $3.26 up 0.31%
Thompson Creek (TC) $7.43 up 0.54%
Freeport-McMoRan (FCX) $39.09 up 0.57% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.76 down 0.13%
Timberline Resources (TLR) $0.60 up 1.69%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $18.60 down 0.37% - global steel producer
POSCO (PKX) $81.14 down 0.87% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 95.33, down from last report's 97.99 and above the 1-month moving average of 81.71. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Here is the Eureka Miner's Index© (EMI) through Friday's close (a larger more readable plot is near the bottom of the blog page):

Today's EMI is moving ever closer to the 100-level. The 1-month moving average is also headed north but needs to get above 100 to return our miners to bull pasture.

Gold & Silver Report

This morning's...

COMEX gold is up $4.1/oz at $1,620.9/oz (February contract, most active)

COMEX silver is up $0.442/oz at $29.125/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 55.653 oz/oz

Silver 1-month CRS© is 2.29% (bullish level); stalled convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 93.39, down from last report's 93.55 and below its 1-month average of 94.06. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,450.3/oz which is $170.6/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

The Eureka Miner’s Gold Value Index© (GVI) is presently declining on average. Here is plot of the GVI at Friday's close (also near the bottom of the blog page):

To get the metals & miners back on their feet, we need gold to give up more relative value to copper, oil and silver. Remember, the GVI and EMI typically (but not always) have an inverse relation; as the GVI falls, the EMI rises. It is bullish for miners then to see the GVI 1-month average (dark line) trending down. Presently, the GVI at 93.39 is below an average of 94.06 and down 15.1% from its 2010-2011 high of 109.97.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0010/lb at $3.4340/lb (March contract, most active)

The gold-to-copper ratio is 472.02 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.23% (bullish level); stalled convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$13.625
As of January 9, 2012
(updated weekly)

Ryan's Notes Average:
US$13.70
As of January 6, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.75/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.97/lb (US$30,800/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl with a narrowing spread with the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $101.72
ICE North Sea Brent crude $113.54
Spread (ICE- NYMEX) = $11.82 (last report, $10.85)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $102.22
ICE North Sea Brent crude $113.10
Spread (ICE- NYMEX) = $10.88 (last report, $9.79)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.80% (neutral level); slightly convergent (Oil bullish)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 104.2 up from last report's 98.8. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 4.73 points to 12,355.19; the S&P 500 is down 0.43 points at 1277.38

The Eureka Miner's Grubstake Portfolio is up 0.34% at $1,400,063.50 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

The Colonel's Friday Thoughts on Gold; Moly Feeling Good

2012-01-06T09:21:00.000-08:00

Not Forgotten

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,622.9/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 93.96 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,443.2/oz
COMEX - VAGP = $179.7/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down

Morning Miners!

It is 6:45 AM. Have the first cup of Raine's TGIF brew for 2012 A better-than-expected monthly jobs report started the day on a positive but the markets are still pretty glum about Europe.

Europe's woes don't seem to be hurting moly prices lately as LME moly futures popped to nearly $14/lb after being flat for many weeks. Western and European moly oxide are now trading in a range of $13.60/lb to $13.65/lb and that ain't all bad, pardner (see Copper & Molybdenum Report below)

The Colonel's input to the Weekly Kitco Gold Survey

Below is my weekly input to the Kitco gold survey:

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

A. Up. $1,644+/oz

Q. Why?

A. Sentiment appears to be returning to favorable for gold. Price has reacted positively to Persian Gulf concerns, mixed with respect to European sovereign debt issues and fairly neutral to improving domestic economic indicators (e.g., better-than-expected December jobs report). The price bias is nonetheless positive. With respect to key commodities, COMEX gold is now more volatile than COMEX copper on a 3-month basis (note 1). This may be reflecting the confused role of the yellow metal to recent global developments - something to monitor in the weeks to come (note 2).

Background notes:

Note 1. 3-month relative volatility of copper with respect to gold: VOL(Cu,Au) = 0.8728 (<1 implies gold is more volatile than copper)Note 2. Less than unity VOL (Cu,Au) is fairly rare occurring twice in 2011 during periods of market stress when gold made new highs: (4/8/2011 to 5/10/2011) & (8/10/2011 to 9/26/2011)Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $47.75 down 0.56%
Newmont (NEM) $61.92 down 0.29%
US Gold (UXG) $3.50 down 2.23%
General Moly (Eureka Moly, LLC) (GMO) $3.15 down 1.25%
Thompson Creek (TC) $7.17 down 1.10%
Freeport-McMoRan (FCX) $38.92 down 0.97% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.75 down 0.07%
Timberline Resources (TLR) $0.58 down 1.69%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $18.66 down 3.42% - global steel producer
POSCO (PKX) $82.53 down 2.37% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 91.25, up from last report's 85.63 and below the 1-month moving average of 80.95. The new record low for 2010-2012 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $2.8/oz at $1,622.9/oz (February contract, most active)

COMEX silver is down $0.241/oz at $29.055/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 55.856 oz/oz

Silver 1-month CRS© is 2.28% (bullish level); slightly divergent (Ag bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 93.96, up from last report's 92.52 and below its 1-month average of 94.18. The new record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,441.6/oz which is $162.2/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0255/lb at $3.4010/lb (March contract, most active)

The gold-to-copper ratio is 475.92 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.28% (bullish level); stalled convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.625
As of January 9, 2012
(updated weekly)

Ryan's Notes Average:
US$13.65
As of January 3, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.65/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.95/lb (US$30,750/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl with a narrowing spread with the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $101.31
ICE North Sea Brent crude $112.53
Spread (ICE- NYMEX) = $11.22 (last report, $10.85)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $101.74
ICE North Sea Brent crude $111.85
Spread (ICE- NYMEX) = $10.11 (last report, $9.79)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.80% (neutral level); slightly divergent (Oil bearish)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 105.0 down from last report's 110.9. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 66.648 points to 12,349.06; the S&P 500 is down 6.42 points at 1274.64

The Eureka Miner's Grubstake Portfolio is down 0.98% at $1,386,546.52 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

Euro Below $1.28; Gartman Gold Bullish Again; Copper Thoughts

2012-01-05T09:20:00.000-08:00

Curly-Q

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,603.8/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 92.95 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,441.6/oz
COMEX - VAGP = $162.2/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down

Þūnresdæg
Morning Miners!

It is 7:14 AM. Have a hot cup of Thor's Village Raid. European banks must feel like the Vikings are back in town plundering their treasure. It didn't take long to remember that not much has changed across the pond since last year. It's not supply and demand that is moving gold and base metal prices...

Euro Below $1.28; Gartman Gold Bullish Again; Copper Thoughts

I truly respect lunar cycles and found it somewhat ominous that the moon was half-and-half at the beginning of 2012 with the bight side low. At least it is a waxing and not waning phase with a full moon on January 9. Chinese lunar New Year is early this year beginning with the new moon on January 23. The Report will soon be talking about how this annual event affects copper prices but presently Europe remains the big gorilla in the commodity living room.

This morning the euro dropped below $1.28 for a low of $1.2796, territory not seen September 2010. Even more shocking, the euro pegged an eleven-year low with the yen at ¥98.31. Of the three major reserve currencies, the euro is calling in sick for 2012. The culprits are the same; concern about the liquidity and solvency of European banks and the ever expanding sovereign debt crisis with Hungary now added to the shaky list.

A strong dollar is putting pressure on gold and base metals although the tension between the United states and Iran is giving the former some support. Importantly, Commodity King Dennis Gartman has turned bullish on gold again as reported by Debbie Carlson in a Kitco Market Nugget this morning:

Market Nuggets: Gold Priced In Euros Makes New High – Gartman (Kitco market Nugget, 1/5/2012)

Gartman says, “The bear run that began in August has now officially ended, for the string of lower lows and lower highs is over. This does not help us in hoping for/expecting/indeed demanding some weakness into which to buy, but it does give us ‘permission’ to become officially bullish once again.”

Gartman on a bright side of the moon in January.

Closing with the red metal, two things are curious to me technically: 1) its COMEX price has been less volatile relative to COMEX gold over the last three months and 2) the gold-to-copper ratio, although declining, remains stubbornly high historically.

Nonetheless I remain cautiously bullish on our red metal friend. Let's see what the Chinese lunar New Year brings, it is the year of the dragon...

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $47.55 down 1.39%
Newmont (NEM) $61.32 down 0.92%
US Gold (UXG) $3.46 down 3.89%
General Moly (Eureka Moly, LLC) (GMO) $3.11 down 2.20%
Thompson Creek (TC) $7.21 down 2.70%
Freeport-McMoRan (FCX) $39.04 down 1.98% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.81 unchanged
Timberline Resources (TLR) $0.58 up 1.75%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $18.98 down 2.37% - global steel producer
POSCO (PKX) $84.44 down 0.55% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 85.63, down from last report's 86.01 and below the 1-month moving average of 81.04. The new record low for 2010-2011 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $8.9/oz at $1,603.8/oz (February contract, most active)

COMEX silver is down $0.257/oz at $28.840/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 55.610 oz/oz

Silver 1-month CRS© is 2.34% (bullish level); slightly divergent (Ag bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 92.95, up from last report's 91.52 and below its 1-month average of 94.23. The new record high for 2010-2011 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,441.6/oz which is $162.2/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0.0440/lb at $3.3905/lb (March contract, most active)

The gold-to-copper ratio is 473.03 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.28% (bullish level); stalled convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.45
As of January 2, 2012
(updated weekly)

Ryan's Notes Average:
US$13.65
As of January 3, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.65/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.61/lb (US$30,000/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl with a narrowing spread with the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $102.35
ICE North Sea Brent crude $102.76
Spread (ICE- NYMEX) = $10.85 (last report, $9.94)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $113.20
ICE North Sea Brent crude $112.55
Spread (ICE- NYMEX) = $9.79 (last report, $8.72)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.82% (neutral level); stalled convergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 110.9 down from last report's 113.4. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 86.58 points to 12,331.84; the S&P 500 is down 7.49 points at 1269.81

The Eureka Miner's Grubstake Portfolio is down 1.41% at $1,380,233.61 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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

General Moly Appointment & Mt. Hope Hires; Bob Pennington COO

2012-01-04T09:16:00.000-08:00

Bob Pennington, Eureka Opera House, Spring 2011

NEW FORMAT for 2012

The Eureka Miner's Market Report has a new format. Three daily reports, "Mining", "Gold & Silver" and "Copper & Molybdenum" consolidate key morning market information for metals and mining relevant to Eureka County and surrounding areas with new expanded detail on moly prices.

The "Daily Market Roundup" also includes an "Oil Watch" and "Debt Crisis Watch" to monitor the impacts of global events on oil and fuel prices and the unfolding debt crises here and in Europe. Finally, "Stock Market Morning Update" provides the latest on the broader markets as well as the Eureka Miner's Million Dollar Grubstake Portfolio.

My Latest International Business Times commentary: Gold and Silver “Together Again” (12/05/2011)

My latest Kitco commentary:
What does CRS© tell us about Gold, Copper & Oil? (11/28/2011)

This morning's...
COMEX Gold price = $1,612.0/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.52 (declining gold value trend)
Value Adjusted Gold Price© (VAGP) = $1,471.7/oz
COMEX - VAGP = $140.3/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio continues to exceed recession levels but is trending down

Wōdnesdæg
Morning Miners!

It is 8:02 AM. Have a cup of Busy Hump Day. Why is the in-basket so full in January? This morning it has some great news on the top and a little less good news underneath. Starting with the latter, Old Miner Woden is filling the Colonel's ears with "I told you so" as Europe takes some of the steam out of yesterday's market optimism.

Concerns over liquidity among euro-zone banks re-emerged overnight as deposits at the European Central Bank reached a fresh all-time high yesterday. This means that European banks are more willing to park money at the ECB than lend to other banks - not a happy. In addition, Spanish bond yields are on the rise again. Woden is tickled because at least gold got a bid suggesting that some of its safe-haven allure is returning to the lustrous metal. COMEX gold is up $11.5/oz at $1,612.0/oz.

OK, now the great news (not that a bounce in gold is all bad)...

General Moly Appointment & Mt. Hope Hires; Pennington COO

At 5:33 AM this morning, I got a press release announcing that General Moly (GMO)has appointed Robert I. Pennington as Chief Operating Officer. The ole Colonel is partial to engineers and I can't think of a better man than Bob for the job.

GMO also announced the hiring of Bernard (Bernie) Pacheco as Mt. Hope project Controller and Fred Zumwalt as Mt. Hope Mill Manager, effective January 1, 2012. Shortly after the press release a faithful follower of this report e-mailed me, "...very good promotion and the two guys coming in seem like seasoned vets." I couldn't agree more. Here's the whole scoop:

General Moly Appoints Robert I. Pennington as Chief Operating Officer, Hires Mt. Hope Project Controller and Mill Manager (Press Release, 1/4/2012)

Bruce D. Hansen, Chief Executive Officer, said:

I would like to congratulate Bob on his promotion to Chief Operating Officer. Bob works extremely hard for this Company and will be key to the successful construction and development of Mt. Hope. Additionally, I would like to welcome Bernie and Fred to General Moly. I am excited that the quality of the Mt. Hope project continues to attract some of the most experienced mining professionals from around the globe to join our small, but growing team. Both Bernie's and Fred's substantial industry experience will be invaluable in the construction and ramp-up of the Mt. Hope project.

10-4!

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $47.84 up 0.69%
Newmont (NEM) $61.42 down 1.06%
US Gold (UXG) $3.63 down 2.42%
General Moly (Eureka Moly, LLC) (GMO) $3.12 down 2.50%
Thompson Creek (TC) $7.16 down 0.83%
Freeport-McMoRan (FCX) $39.06 down 1.11% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $14.92 down 0.72%
Timberline Resources (TLR) $0.58 up 1.75%

The Steels (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $19.23 down 2.73% - global steel producer
POSCO (PKX) $84.53 down 0.27% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) is below-par at 86.01, down from last report's 88.29 and below the 1-month moving average of 81.00. The new record low for 2010-2011 was set Oct. 4, 2011 at 22.88. The 1-month average is currently below the 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2011 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $11.5/oz at $1,612.0/oz (February contract, most active)

COMEX silver is down $0.167/oz at $29.405/oz (March contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.821 oz/oz

Silver 1-month CRS© is 2.36% (bullish level); improving stability (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.52, up from last report's 91.40 and below its 1-month average of 94.40. The new record high for 2010-2011 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,471.7/oz which is $140.3/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0360/lb at $3.4925/lb (March contract, most active)

The gold-to-copper ratio is 458.00 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels" (Cu bearish) but the ratio is trending down (Cu bullish).

Copper 1-month CRS© is 2.36% (bullish level); weak convergence (Cu neutral)

The latest molybdenum oxide spot and futures prices:

Metals Week Average:
US$13.45
As of January 2, 2012
(updated weekly)

Ryan's Notes Average:
US$13.40
As of December 30, 2011
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$13.71/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$13.61/lb (US$30,000/metric ton)

Daily Oil Watch

Latest Nevada Fuel Prices (click this link)

On February 1st we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $100/bbl with a narrowing spread with the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $103.34
ICE North Sea Brent crude $113.28
Spread (ICE- NYMEX) = $9.94 (last report, $8.83)

Here are the April contracts* with a narrower spread:

NYMEX light sweet crude $103.64
ICE North Sea Brent crude $112.36
Spread (ICE- NYMEX) = $8.72 (last report, $7.37)

* NYMEX futures contracts have rolled forward, we now show February and April for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 3.56%; neutral level; stalled convergence (Oil neutral)

Prices are off their crisis highs and we have $110+ Brent and $100+ NYMEX in April favoring high oil prices throughout the winter and spring.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI has a value of 113.4 down from last report's 106.2. A level above 200 is time for serious concern. We are now well below that level.

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 42.00 points to 12,355.38; the S&P 500 is down 6.39 points at 1270.67

The Eureka Miner's Grubstake Portfolio is down 0.94% at $1,391,573.07 (what's this?).

Cheers,

Colonel Possum

Headline photo by Mariana Titus

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