Gold Drops, Silver Struggles, Copper Up

Morning Miners!

It is 5:52 AM. Grab a cup of that delicious Raine's Red Label and let's see what's happening to our favorite metals before the 3-day holiday...

Gold drops, silver struggles, copper up

COMEX silver took a leg down for a morning low of $28.36/oz at 5:00 a.m. PT. COMEX gold followed silver down the shaft and dropped to a morning low of $1360.3/oz 45 minutes later. Both have recovered some but gold is still down a healthy $22.3 at $1364.7/oz; silver has struggled back to $28.695/oz. Two things to note: gold usually leads the precious metals down the mineshaft and silver typically falls a few levels further than her lustrous companion. This hasn't been the trend lately with silver showing more resilience to declines than gold. The gold/silver ratio is still a very low 47.6 up only slightly from yesterday's 47.3, another sign of the current "weak gold/stronger silver" character of the trade.

The London spot markets show the relative performance for the pair this morning:




Ironically as gold and silver drop, COMEX copper shows the best strength of the three rising a bit from yesterday's close - up $0.0015 to $4.3920/lb. China raised its reserve requirement ratio for the first time this year to combat inflation putting pressure on the metal complex and boosting the U.S. dollar. Europe credit worries have eased noticeably this week with the successful bond auctions making the euro the clear winner over either the U.S. dollar or gold.

The broader markets are now open and it looks like another bad day for the miners. Phew, we need a Monday holiday for the metals & miners! Have a good'un, pardner.

Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Miner's Index(EMI)

This morning the Eureka Miner's Index(EMI) is above-par at 684.45, down from yesterday's 720.04. We are now below the 1-month moving average of 689.64 - a bearish sign. The average is now 689.64, giving us further evidence of a trend reversal in process. Let's see how we fare on the close.

The record high for the EMI is 816.78 set 01/04/2011; the low was set 6/7/2010 at 50.7. An EMI greater than 100 signals better times for the metals & miners relevant to Eureka County, the EMI re-established an upward trend on Friday, 12/3 which is under considerable pressure.

200-day averages are used in the EMI to normalize current mining company share price and are updated monthly. Upper and lower trend lines are updated weekly.

Eureka Outlook Dashboard

4-WD is OFF - Markets are OK but there could be rough roads ahead; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) in the high-$110s well above its 200-day average of $83.07 (our new warning level, 01/05 update); 10-year Treasurys are safely below 4% preserving a low-interest rate environment.

The GREEN light is turned back on for Commodity Reflation with copper trading comfortably above $3.50/lb

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

The YELLOW light is turned on for Inflation Watch as the Federal Reserve resumes buying Treasurys (aka QE2)

The GREEN light is turned back on for Investor Confidence as investment returns to the equity markets

The ORANGE light is turned on our Fuel Gauge with oil above $90

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?)

Commodity Market Morning Update

NYMEX/COMEX: Oil is down $0.91 in early trading at $90.49 (February contract, most active); Gold is down $22.3 to $1364.7 (February contract, most active); Silver is down $0.568 to $28.695 (March contract, most active); Copper is up $0.0015 to $4.3920 (March contract, most active)

Western Molybdenum Oxide is $16.00; European Molybdenum Oxide is $17.28; LME moly 3-month seller's contract is $17.10, LME cash seller is $16.92

Stock Market Morning Update

The DOW is down 3.59 points to 11,728.31; the S&P 500 is up 0.92 at 1284.68. Miners are still unhappy:

Barrick (ABX) $46.64 down 1.69%
Newmont (NEM) $56.24 down 1.00%
US Gold (UXG) $7.16 down 0.97%
General Moly (Eureka Moly, LLC) (GMO) $6.15 down 1.60%
Thompson Creek (TC) $15.04 down 0.66%
Freeport-McMoRan (FCX) $117.48 down 0.50% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $36.36 up 0.69% - global steel producer
POSCO (PKX) $106.80 up 0.37% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.71% at $1,865,734.80 (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 by Mariana Titus