OPEC Decision Plunges Oil, Metals, Mining Stocks; Gold Resilient

View from McCoy Hill, Eureka, Nevada (click for panoramic view)

My latest Kitco News commentary:

Is Gold Still on a Slippery Slope? (Nov. 24, 2014)

*** Local Mining News ***

MIDWAY RECEIVES FIRST BANK FUNDS FOR PAN GOLD PROJECT (Press release, 12/1/2014)

*** UPDATE ***

The washout in commodities continued after the morning brief (below). The Goldman Sachs Commodity Index notched a new 52-week low; oil,copper, gold & silver continued their downward descent:

Closing prices (intraday low):

S&PGSCIES 274.09 (273.50)

Nymex oil (WTI) $66.15 ($65.69) per barrel
Comex copper $2.8460 ($2.8435) per pound
Comex gold $1,175.5 ($1,163.9) per ounce
Comex silver $15.556 ($15.410) per ounce

At least gas prices are expected to go lower too!

Latest Nevada gasoline prices

Morning miners!

The OPEC decision to not cut production to counter falling oil prices has sent a shock wave through commodity markets. Nymex WTI touched $67.75 per barrel; Brent crude dropped as far as $71. The gooey declines quickly spilled over to the metal complex. Comex silver tested $15.80 per ounce and Comex copper dipped briefly to $2.8515 per pound passing easily through its March low - Ouch!

Encouragingly, the fall in gold prices was not nearly as spectacular falling no further than to $1,175 per ounce (see discussion below and Kitco News Weekly Gold Survey).

Beleaguered mining stocks got a real wallop. Big gold miners Newmont (NEM) and Barrick Gold (ABX) fell to $12.02 and $18.62 (chart below) . Midway (MDW) is just below $0.74 down 6.2% in morning trade. Benchmark Moly miner Thompson Creek (TC) and General Moly (GMO) are both feeling pain falling 3.85% and 5.07% respectively.

Most ominously, benchmark miner and copper giant Freeport-McMoRan (FCX) dropped a full 8.86%. Freeport has recently taken on oil interests to diversify so is feeling double-pain following the OPEC decision.

Mining Stocks, Yahoo Finance

Is this just the result of thin trading on a shortened post-holiday market day? We won't need to wait too long to find out, Monday is the start of a new month - keep the faith, pardner.

Look for my column on gold outlook for 2015 in the upcoming Winter Edition of the Mining Quarterly.

Here is my input to the Kitco News Weekly Gold Survey :

My vote:

Up. Next week's target price $1,190 per ounce.

Discussion:

What a contrast in markets this morning.

The S&P 500 made a new intraday high against a backdrop of an OPEC-induced collapse in oil price spilling over to declining metal complex. The bond market is reacting with lower yields and an ever-flatter yield curve as the U.S. dollar surges against both euro and yen.

Although Comex gold is being pulled lower by commodity declines and a stronger dollar, it is only down 1.6% for the year in mid-morning trading. Importantly the yellow metal is positioned ever stronger relative to silver and industrial commodities copper and oil. As shown in the first chart, gold value is up 20% compared to Comex silver, 17% versus Comex copper and nearly 40% versus Nymex oil (WTI).

This resilience may bring gold closer to the upper boundary of the "value wedge" as illustrated in the second chart: my target is $1,190 per ounce for next week. If lower oil prices lead to geopolitical instability (e.g., collapsing Russian economy), gold could rally significantly. Without additional catalyst, gold could fall with commodities to a range between $950 to $1,170 per ounce in the first quarter of next year.

Have a great Thanksgiving weekend!

Cheers - Colonel

Headline photo by Mariana Titus

News from China, Europe Lifts Gold, U.S. Dollar & Mining Stocks

That time of year again, Eureka, Nevada

My latest Kitco News commentary:

Is Gold Still on a Slippery Slope? (Nov. 24, 2014)

Morning miners!

A terrific market Friday before Thanksgiving week. Central banks come to the rescue again with news of monetary stimulus coming from China and Europe (see discussion below and Kitco News Weekly Gold Survey). Asset classes that often work in opposition are all marching in step today - the DOW and S&P 500 are setting new highs, the U.S. dollar is up and gold rallied above the key $1,200 per ounce-level.

Beleaguered mining stocks are also doing well. Although there appears to be some profit taking on the big gold miners Newmont (NEM) and Barrick Gold (ABX), both have recovered considerably from their recent bottoms - up 8.6% and 16.3% respectively. Midway (MDW) is whistling $0.79 up 1.28% in morning trade. Benchmark Moly miner Thompson Creek (TC) and General Moly (GMO) are both in the green too.

Mining Stocks, Yahoo Finance

Let's enjoy this while it lasts pardner.

Look for my column on gold outlook for 2015 in the upcoming Winter Edition of the Mining Quarterly.

Here is my input to the Kitco News Weekly Gold Survey :

My vote:

Up. Next week's target price $1,220 per ounce.

Discussion:

What a remarkable morning for markets.

On the news that China will cut interest rates and inject liquidity into their banking system and ECB's Mario Draghi is ready to apply "all means necessary" to meet inflation targets, all boats rise. The S&P 500 scores yet another record intraday high, the U.S. dollar is up, Gold is up and the base metal complex is reacting constructively.

Notably, Comex gold has recovered all its losses for the year in morning trading ($1,202.4 versus 12/31/13 close at $1,202.3). Most importantly the yellow metal is positioned very strongly relative to silver and industrial commodities copper and oil. As shown below gold value is up 18% compared to Comex silver, 11% versus Comex copper and 28% versus Nymex oil (click on chart for larger image).

This new found momentum may bring gold to the upper boundary of the "value wedge" as illustrated in this second chart: $1,220 per ounce, my target for next week. Without additional catalyst, this may be to the top of the present rally. If commodities can rally higher gold may too, breaking the curse of the declining wedge. If not, gold could fall to a range between $990 to $1,170 per ounce in the first quarter of next year.

Have a great Thanksgiving!

Cheers - Colonel

Headline photo by Mariana Titus