Metals & Miners Stumble - LME Boasts Cobalt & Molybdenum

Morning Miners!

It is 5:23 AM. Ruby Tuesday rolled into town with an oversize yesterday afternoon and bailed out Old Miner Woden. Give them a holler if you see them heading east on HWY 50, they'll be pouring coal at sunrise. Grab a cup and let's see what's happening to our metallic compadres. Gold, silver and copper are all down in the spot markets on continuing pessimism about the global recovery. As the Report mentioned yesterday (Good Time to Buy Silver or Sift Sand for Bean Gold?), silver may be interesting in the $17/oz range if you share my optimism for the future; if not, keep stocking your cave in Double-Dip Canyon. This early morning Reuters article thinks copper may be headed back to sub-$3/lb pasture:

METALS-Copper at 1-wk low, economic, demand outlook gloomy (Maytaal Angel, Reuters, 8/24/2010)

In other news the London Metals Exchange (LME) is boasting about their new cobalt in molybdenum futures market as reported by Hedgeweek::

LME reports encouraging start to cobalt and molybdenum trading (Hedgeweek, 5/23/2010)

This Report has been covering the minor metals launch since February this year when Miss Moly packed her bags for her London debut (Miss Moly Flies to London). We are in the very early stages of a futures market with fairly thin trading for either metal. This should improve as more moly miners become involved and more speculative money is attracted to these futures contracts. Both 3-month and 15-month moly contracts have shown amazing resilience though the worst of the commodity downturn in May-June, trading in a range of $30,000 to $40,000/metric ton ($13.61/lb to $18.14/lb) since March of this year. Hats off to Miss Moly.

The broader markets are just opening up and you may have to pass on silver today. Looks like someone else thought it is cheap at these levels, look at this bounce on the London exchange:



Daily Market Roundup

Enough talk, let's walk the walk:

The Eureka Miner's Index(EMI) nose-dived to sub-par country at 98.64, a big drop from yesterday's 129.32 but a big improvement from the 6/7/10 low of 50.7. Today's number has broken the lower trend line (124.42), a bearish sign. Remember an EMI greater than 100 is good times (or at least better times) for metals & miners.

4-WD is ON - rough roads in the marketplace; The VIX or "fear index" is above 25; metals & miners are returning to shakier timber with bellwether Freeport-McMoRan (FCX) falling back to the high-$60s well below its 200-day average of $75.3 (our new warning level, 8/05 update); 10-year Treasurys are safely below 4% preserving a low-interest rate environment but there is some deflationary caution now that we are sub-3%.

The YELLOW light is turned back on for Commodity Reflation. Although copper is trading above $3/lb, the 10-yr T-Note is solidly below 3.00%

The GREEN light is turned on for Stable Markets the VIX below the 30 level (what's this?)

The YELLOW light is turned on for Inflation/Deflation Watch as the Federal Reserves resumes buying back Treasurys and the 10-yr T-Note remains below 3.00%

The YELLOW light is turned back on for Investor Confidence as the bond markets signal trouble ahead

The GREEN light is turned on our Fuel Gauge with oil below $80

A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions , General Moly Mt. Hope Water Rights, U.S. House committee debates miner workplace safety bill

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

NYMEX/COMEX: Oil is down $1.28 in early trading to $71.82 (October contract, most active); Gold is down $12.7 to $1215.8 (December contract, most active); Silver is down $0.169 to $17.825 (September contract, most active); Copper is down $0.0740 to $3.2175 (September contract, most active)

Western Molybdenum Oxide is $14.75; European Molybdenum Oxide is $15.75; LME moly 3-month seller's contract is $16.33, LME cash seller is $16.08

The DOW is down 120.18 points to 10,054.23; the S&P 500 is down 14.13 to 1053.23. The miners are down big time:

Barrick (ABX) $43.28 down 1.88%
Newmont (NEM) $56.79 down 1.37%
US Gold (UXG) $4.79 down 0.83%
General Moly (Eureka Moly, LLC) (GMO) $2.97 down 1.66%
Thompson Creek (TC) $8.74 down 2.56%
Freeport-McMoRan (FCX) $67.79 down 3.65% (a bellwether mining stock spanning copper, gold & molybdenum)

The Steels are down too, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $28.62 down 2.35% - global steel producer
POSCO (PKX) $102.61 down 0.44% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 1.64% to $1,326,977.19 (what's this?).

Cheers,

Colonel Possum

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

Headline photograph of Mt. Hope by Mariana Titus