Old School Mining - Euclid Haul Truck
Windfall Mine, Eureka, Nevada
[Photo by Eric Pastorino]
[Photo by Eric Pastorino]
***
"I cannot overstate the potential harm the coronavirus can do to the world economy." (Eureka Miner, January 31, 2020)
Follow the ole Colonel on twitter @Eurekaminer
Next Week Target Gold Price: $1,930 per ounce, Target Silver Price: $23.44 per ounce
Baker: Gold in the time of coronavirus (Elko Daily Free press, 6/4/2020)
My latest Kitco News commentary: Gundlach copper-gold indicator: low volatility in unexpected places (4/28/2020, Kitco News) [summary of recent commentaries given at the bottom of the blog]
An easy-to-understand overview on gold (32 slides, read explanation below each slide): History of gold and which countries have the most
WHAT IS THE RECORD GOLD PRICE?
[UPDATE: The Comex December contract closed at $1,925.2; the intraday high was $1,933.6, looks like a new record coming on board as the August contact rolls over]
There are many correct answers to this question, different answers but no less true. Some folks refer to the spot gold price on a particular day others futures prices. They may cite a closing or intraday number. For the purposes of this report, the "all-time record" refers to the highest intraday price on the Comex futures exchange as recorded in continuous monthly charts which is $1,923.7 per ounce.
That occurred on Tuesday, September 6, 2011. I reported on the record intraday price the following day in this Eureka Miner:
Gold Trips; Copper & Oil Bounce (Eureka Miner, 9/7/2020)
Morning Miners!
The Eureka Miner has forecast for several months that gold was on a path to take out the 2011 all-time high. Well pardner, we're on the doorstep. Earlier this morning, Comex August gold peaked at $1,904.6 per ounce. Comex September silver got its mojo a little sooner touching $23.67 per ounce on Wednesday. I expect gold to make a new record next week and silver to come in just below this week's high.
A cautionary note is that both metals appear to be in "overbought" territory suggesting consolidation before the next spurt higher. However, there is tremendous momentum behind these trades which encourages bidding the prices higher. With gold this close to its record, the ole Colonel bets momentum and "animal spirits" will prevail before any price retreat. Silver is a little trickier but heck we're over $20, that's something to be happy about!
Comex August gold is presently trading at $1,897.9 per ounce (8:44 am Eureka Time).
Silver rose with gold and some technical numbers for silver shine even brighter than last week [see Silver Watch below].
Comex September Silver is currently trading at $22.97 per ounce (11:18 am Eureka Time).
Comex September copper is presently $2.8925 per pound (11:18 am Eureka Time). Copper is slightly down for week [see Weekly Summaries below, recorded earlier this morning].
Old School Mining - Windfall Pit
Windfall Mine, Eureka, Nevada
[Photos by Eric Pastorino]
[Photos by Eric Pastorino]
Here's how I explained my gold and silver outlook to the Kitco News Weekly Gold Survey this morning:
As gold crests $1,900 per ounce courting the 2011 all-time high, it is hard to remember a better environment for the yellow metal.
There is plenty of domestic and geo-political uncertainty. U.S. elections, an out-of-control virus in The U.S. that dampens economic recovery, the potential for civil disorder and rapidly escalating U.S./China tensions are a few of the concerns causing investors to seek safe-havens.
As the euro breaks 1.16 USDEUR, a weak dollar boosts dollarized commodities like gold. The fortunes of the U.S. currency grow dimmer with more expected Federal Reserve and U.S. Treasury largesse. Also there is an increasing differential between countries recovering successfully from covid-19 (like China, Japan and Germany) and a still struggling U.S.
U.S. real rates are continuing to become more negative, a bullish trend for non-interest earning assets like gold. The 5-year real rate is below -1% this week with the 10-year not far behind.*
Silver continues in full gallop with a 3-month beta above 3.0 as the gold-to-silver ratio (GSR) breaks below a long-term trendline of higher-lows established in April 2011.
I believe gold is on a path to take out the 2011 high with a target of $1,930 for next week. Silver will follow at $23.44 per ounce.
These are the strange times of coronavirus.
* U.S. 5-yr real rate -1.13% ,U.S. 10-yr real rate -.93%; 10-year bonds: German Bund -0.44%, France -0.14% and Japan 0.00%
** GSR=82.34
Since it continues to dominate markets, a covid-19 summary is updated below.
Mariana and I just completed a seven-state tour of some of the worst hit areas in the United States. Day-by-day accounts of our travels can be found on my twitter feed @Eurekaminer.
The ole Colonel has also included the overview of the 1918-1919 Influenza impact on Eureka County from previous posts (bottom of blog).
COVID-19 Update
The website created for Eureka County to track and report on the covid-19 pandemic:
Here are the grim covid-19 statistics reported this morning (last Friday AM in parentheses):
U.S.A. 4,070,480 (3,592,316 ) covid-19 cases; 144,734 (138,543) deaths
Nevada 40,885 (31,915) covid-19 cases; 722 (626) deaths
If you want to track the charts and projections that Dr. Anthony Fauci and Dr. Deborah Birx reference, check out this site (included in the Eureka website also):
This is only a model prediction - it can change and adapt as we learn more each day.
Remember each region has its own curve and numbers can vary widely state-to-state, county-to-county. Face masks and social distancing are currently our only weapon to change the curve's shape.
Stay safe and distant my friends, wear a mask in public.
Copper, Oil & China Updates
Comex copper is slightly down for the week, presently trading at $2.8925 per pound. Here's a recent column from The Economist on a subject recently discussed @Eurekaminer.
Unusually, copper and gold prices are rising in tandem (The Economist, 7/23/2020)
The Saudi-Russia oil price war in combination with covid-19 has had a devastating impact on the oil markets. This morning Nymex WTI is trading up at $41.22 per barrel. The front month NYMEX futures contract plumbed a historic low of negative $37.63 per barrel on Monday, 4/20/2020.
China, which still represents copper's highest demand, is on the mend. Here is my China Indicator updated through this morning (see above 2/18/2020 Kitco column). A low number is good. A bottom of 0.3012 occurred after the signing of the Phase I deal seemed certain (Friday, 1/10/2020). This AM the indicator sits at 0.1974 below the coronavirus peak of 1.8399 set February 11th and below the 6-year average (0.79). The covid-19 pandemic is stabilizing in China and their economy recently reported a positive 3.2% annualized GDP. Let's keep an eye for any moves higher given any renewed U.S./China tensions or virus outbreaks (click on chart for larger size). The dramatic fall in one month from the 6/15/20 peak (1.3875) is a bullish indication for copper. However, re-emerging U.S./China tensions could cause a bearish move higher (red arrow).
China 2-rho Divergence Indicator
I've been actively tweeting market news/events during the week so please follow me at @Eurekaminer. I usually tweet Sunday night on the Monday Shanghai Futures Exchange (SHFE) for a heads up on copper & gold prices in the Year of the Rat.
Weekly Summary
Here is a weekly summary chart of gold and my 16 favorite market variables. They are grouped in categories "Commodities", "Interest Rates", "Indexes" and "Currencies" of 4 variables each. Over time, each variable has played some part in the gold story. It is prudent to monitor all 16 to understand the key price drivers that are currently active for the yellow metal. Importantly, this is not a unique collection of variables but one that works well for the ole Colonel
Because The Eureka Miner is a morning report, Friday AM prices are compared with the closing prices of the previous week (click on charts for larger size):
This weekly chart of comparative value tracks the value of gold relative to key currencies, commodities and indexes :
Silver Watch
Comex silver is above $20 per ounce. Please check this out if you get the silver bug:
How to Invest in Silver (Debbie Carlson, U.S. News & World Report, August 1, 2019)
How to smartly buy gold and silver:
How to Mine Physical Precious Metals for an IRA (Debbie Carlson, Barrons, Sept. 8, 2019)
The gold-to-silver ratio (GSR) set a new high Wednesday, 3/18, of 123.9 ounce per ounce solidly above July 11 high of 91.3 - a trend down from this top is bullish for silver if the Lustrous One continues its rally.
At 82.34 silver is still historically cheap relative to gold!
Importantly, the GSR has broken a long-term trend of higher-lows established April 2011 - a very bullish indication for silver.
The 10-year average GSR is much lower at 69.4 ounce per ounce.
The 3-month beta with gold is bullishly above unity at 3.31. You prefer a high beta (i.e. greater than 1.00) when gold rallies higher (click on image for larger size).
Gold-to-Silver Ratio
Historical note:
In the past, when gold and silver were legal tender (see gold overview link below headline photo), it was important to set a value relationship between them. In 1792, the U.S. fixed its price at 15:1. This means that 1 troy ounce of gold was worth 15 troy ounces of silver. Over the years, as this ratio has changed, precious metal investors have used it as a signal of when to buy.
Stay tuned.
Inflation Watch
Inflation expectations made a high of 2.18% April 23, 2018. They have tracked steadily down from there with a dive to the 0.5%-level before reversing higher - yesterday's number is 1.49%. Expectations have been rising at a faster pace than 10-year U.S. Treasury yields resulting in negative real rates again (see Weekly Summary Charts) - a bullish signal for a non-interest earning asset like gold.
10-year Inflation Expectations
Many believe, including the ole Colonel, that gold price is more sensitive to inflation expectations than other measure of inflation. My January Kitco News commentary explains the importance of tracking "real rates" which are a function of inflation expectations:
Gold Versus Real Rates: $1,380+ by May Day 2019 (Kitco News, 1/2/2019)
Old Glory
Eureka, Nevada
Chart to Monitor
Here's a chart to monitor for 2020 (Click on the image for a larger size):
An important gold ratio is gold-to-S&P500 or AUSP. The ratio bottomed in early-December of 2015 and reversed to a bullish trend, peaking February 11, 2016 (0.6849). It bottomed December 20, 2016 (0.4973) trended higher but then bearishly reversed into a downward channel bottoming again October 1, 2018 (0.4063). Currently this AM the AUSP is at 0.5929 below the high of 0.7029 set March 23, 2020. Importantly, the ratio has aggressively left the downward trending channel with an uptrend trend of higher-lows starting with the October 2018 low. This week the ratio is moving higher above that trend (red dotted line) - bullish gold!
The Colonel's Latest Kitco News Commentaries
Please checkout my latest Kitco News columns on the stunning relationship of copper and gold prices with interest rates:
Gundlach copper-gold indicator: low volatility in unexpected places (4/28/2020, Kitco News)
Copper, gold & the coronavirus (2/18/2020, Kitco News)
Leading indicator for U.S./China trade - copper, gold & yuan (1/13/2020, Kitco News)
Is Jeffrey Gundlach right about copper, gold & interest rates? (12/23/2020, Kitco News)
Gundlach indicator: stable copper-gold means low yield volatility (11/11/2019, Kitco News)
Gundlach Indicator: treasury yield and copper-gold ratio plummet (9/03/2019, Kitco News)
Robust Revival of Gundlach's 10-yr Treasury Relation with the Copper-Gold Ratio (6/17/2019, Kitco News)
1918 Influenza in Eureka County (Update)
Earlier this year I researched old newspapers (newspapers.com) to see how Eureka County was affected by the 1918-1919 Spanish Influenza Pandemic. With 500 million cases worldwide and an estimated death toll exceeding the military fatalities of WWI and WWII, Eureka County also suffered fatalities from this deadly virus. Influenza was first detected in the U.S.A. in January 1918 but didn't make it to Northern Nevada until October of that year.
Typical newspaper column of the day reporting
1918 Influenza in Northern Nevada
There were cases reported in surrounding counties of Lander, White Pine and Elko. Some nearby cities/towns cited with influenza were Reno, Carson City, Winnemucca, Silver City, Elko, Pioche and Tonopah. I didn't find any newspaper columns specifically citing Eureka County but with a little digging (using findagrave.com) discovered two confirmed deaths, one in Palisade and another in the ghost town of Mineral (Mineral Hills Cemetery, headline photo). I found four possible influenza deaths in Eureka cemeteries and one in Beowawe. That was seven total for the County. Since then excellent research by Rhonda Shangle Gardener shows a much higher confirmed death count of 38 which includes 1919 and a re-occurrence in 1922.
Charles Safford Walker
(photo: findagrave.com)
Mining and Army training camps were often where trouble began. The main line east-west railroad was suspected to be a path of transmission. I was informed by Roger Colton that his great uncle,Charles Safford Walker (1882-1918, 36 years old), died of complications after the flu. Mr. Walker was then the owner of the Palisade Ranch. The death certificate listed the cause of death as “bronchial pneumonia following influenza,” October 31, 1918. The town of Palisade is located on the mainline in the north County suggesting that trains may have indeed been an enabler for virus spread in rural communities.
Roy Plummer Gravesite
(photo: Robert Frenchu)
A second confirmed death is Roy Plummer (Nov. 21,1896 to Dec. 23, 1918, 22 years old) buried in the Mineral Hills Cemetery. Here is his death certificate:
Death Certificate for Roy Plummer
Here is a recent news column from the Carson City Nevada News:
Echoes of the past: Exploring the 1918 influenza epidemic in Nevada (Carson City Nevada News - Carson Now, April 19, 2020)
Rhonda Shangle Gardner reached out to me and provided some excellent research she compiled. Rhonda worked from recorded death certificates to identify 19 influenza deaths in Eureka County in 1918, 10 in 1919 and 9 in 1922. This is a total of 38 confirmed and there are other "possibles" declared simply as pneumonia on the death certificate. The 1922 record indicates the re-occurrence of Spanish Influenza in Eureka County. The 1918 deaths include four I found (above) and eliminated some others.
Here is a link to her detailed and informative research:
WW1 AND THE INFLUENZA EPIDEMIC 1918-1919 (Rhonda Shangle Gardner)
Interestingly, a lot of these cases occurred in sheep camps and ranches in Antelope Valley and Bean Flat. Here is a death certificate for Alfred Pedlar of Bean Flat from Rhonda's research (35 years old, died November 23, 1918):
Death Certificate for Alfred Pedlar
Cheers,
Colonel Possum & Mariana
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