General Moly (GMO) Update, Liu Han Saga Continues; The Colonel's Gold Price for Next Week

Eureka stories, old building glories, Eureka, Nevada

*** BREAKING NEWS ***

Last week a $665 million loan was suspended for the General Moly Mt. Hope molybdenum project. Below is a chronology of related articles that came to the attention of the Eureka Miner this week (newest to oldest, click here for earlier articles):

(1518 PT Mar 28, 2013)

Missing Tycoon Mars Overseas Push of China’s Private Businesses (Michael Wei in Shanghai, By Bloomberg News - Mar 28, 2013 9:00 AM PT)

This report is presently trying to contact Michael Wei

Tuesday's market mover:

Hanlong Misses Deadline for $1.19 Billion Sundance Iron Bid (Elisabeth Behrmann, Soraya Permatasari, Henry Sanderson and Helen Yuan, Bloomberg News Mar 25, 2013 9:43 pm ET)

(1041 PT Mar 24, 2013, note that Australia is one day ahead)

Murder claims hit Sundance takeover (SARAH-JANE TASKER From: The Australian March 25, 2013 12:00AM) 

(0822 PT Mar 23, 2013)

Firms Try to Get Fix On Chinese Tycoon (with Liu Han video) (By JAMES T. AREDDY in Shanghai and GILLIAN TAN in Sydney, Wall Street Journal, Updated March 20, 2013, 5:34 p.m. ET)

James Areddy is the lead WSJ correspondent in Shanghai and contacted this report in 2012 to check on how things were going with the Mt. Hope project.

Source article on Liu Han & Mt. Hope (reported by the Eureka Miner Dec 28, 2012):

In Nevada, a Chinese King of the Hill (James T. Areddy, WSJ, Dec 28, 2012)


Latest Nevada Gas Prices (click this link)

My latest Kitco commentary:  Copper & Gold Weather Report (03/25/2013)

Paintings by Mariana Titus, The Three Anas, are presently being featured at Lafitte Guest House & Gallery, New Orleans

Friday's morning prices...

Below are the closing prices for yesterday, the last market day of this shortened holiday week:

COMEX Gold price = $1,595.7/oz (April contract most active)
COMEX Silver = $28.323/oz (May)
COMEX Copper = $3.4020/lb (May)
NYMEX WTI crude = $97.23 (May)
ICE Brent crude = $110.02/bbl (May)
Eureka Miner’s Gold Value Index© (GVI) = 94.35 (gold value is elevated with respect to key commodities oil & copper given historical norms)
Value Adjusted Gold Price© (VAGP) = $1,413.2/oz
COMEX - VAGP = $182.5/oz; gold is trading at a premium to key commodities.

Happy Easter Miners!

The Mt. Hope and Liu Han saga rolled into this week with more details emerging about Mr. Liu's errant brother, an alleged triple murder and politics of doing business with China's new leaders. This would be a terrific mystery thriller if Eureka County weren't one of the set props in the unfolding drama. Links to the latest articles are given below today's headline photo including a Liu Han video.

Here is a quote from Chairman Liu Han taken from his website: www.hanlonggroup.com

Mountains stand tall and high, and our ambitions stand higher than the sky. Looking into the future, with the preeminent management and innovation capabilities, Hanlong Group shall devote its efforts to providing the society with richer and better life choices and jointly creates a better future to make contributions for the country and society in accordance with credible and sound management style.

Early in the week Mr. Liu's Sichuan Hanlong Group faced the collapse of their $1.19 billion takeover of Australia’s Sundance Resources Ltd. after missing a term-sheet deadline. This news hit our markets Tuesday morning and took General Moly (GMO) stock down another leg. Last week Hanlong had suspended a $665 million loan for General Moly's Mt. Hope molybdenum project. Here's a quick replay of closing and intraday low share prices:

Friday (3/22) close $2.43
Monday (3/25) close $2.32 ($2.23 low)
Tuesday (3/26) close $2.17 ($2.12 low)
Wednesday (3/25) close $2.25 ($2.10 low)
Thursday (3/25) close $2.21 ($2.16 low)

A rough slide considering that GMO share price touched $4.25 on January 3 and yesterday the S&P 500 set an all time new record closing at 1,569.19 - Ouch.

On the positive side, share price still remains above $2 indicating that the markets have not lost faith in General Moly's resourceful management team to turn Mt. Hope around with an alternate financing plan(s). I believe mine pre-construction activities are funded and will continue. Remember, pardner, Mt. Hope remains a world class asset of strategic and critical minerals with a lot of hard work already done.

A faithful follower of the Eureka Miner recently took this photo of Mt. Hope as viewed from Diamond Valley near 10th Street. You can see some of the clearing and grubbing that has occurred as part of the mine pre-construction phase.

Molybdenum Prices

Spot moly oxide prices are below the key-$11 per pound level. Here are the latest numbers compliments of moly benchmark miner  Thompson Creek (TC):

Metals Week Weekly Average: US$10.75 As of March 25, 2013 (updated weekly)

Ryan's Notes Average: US$10.75 As of March 26, 2013 (updated twice weekly)

The London Metal Exchange (LME) futures contracts are above $11 per pound this week which is encouraging. Remember that this is a thinly traded futures market and contract prices reflect developments in Europe probably more than the global spot price averages above.

3-month seller's contract $24,500 per metric ton ($11.11 per pound)

15-month seller's contract $25,185 per metric ton ($11.42 per pound)

The Colonel's Gold, Silver & Copper Prices for Next Week

My weekly input to Kitco Gold Survey was a target price for gold without the usual in-depth analysis on this shortened holiday week and no targets for silver or copper price.

Here is my e-mail survey input to the Kitco News Global Editor Debbie Carlson:

Just under the wire "Up, $1,610 per ounce target" 

Technical analysis: Positive bias above March lows & highs ($1,588.9 geometric mean) + yesterday's quiz question and answers (strange correlation landscape for the yellow metal)

Headline analysis: If Cyprus crisis grows worse, gold up: if not, sideways to down.

The strange "correlation landscape" is a reference to a quiz the ole Colonel put together on gold's curious relation to other market parameters. Admittedly, this is a quiz for market nerds; if you are so inclined have fun:

Crazy Market Quiz

On a one month basis...

1) Comex gold is positively correlated with the S&P VIX     T or F

2) Comex gold is positively correlated with Nymex WTI & Brent crude  T or F

3) At least gold has a friend in silver, both are still highly correlated  T or F

For the last 3 months...

4) Oil prices have been more volatile than gold  T or F

Answers:

1) False, gold has zero correlation with the so-called "fear index" (rolling correlation -= -0.06)
2) False, gold is positively correlated with WTI and negatively correlated with Brent (+0.64 & -0.37 with WTI-Brent spread collapsing)
3) False, gold is gaining value on the white metal and the correlation is a paltry +0.25
4) False, WTI has been 0.9X less volatile than gold on a relative basis over the last three months

If you got all four answers correct, I'll buy you a beer at the Keyhole. Have a good'un.

Cheers,

Colonel Possum

Inset painting and headline photo by Mariana Titus

Please checkout bayoutales.com for books and book orders

Paintings by Mariana Titus, The Three Anas, are presently being featured at Lafitte Guest House & Gallery, New Orleans
 
Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

General Moly (GMO) Loan Suspended; Unfolding Saga of Liu Han, Hanlong & Mt. Hope

Liu Han, right, Chairman of Sichuan Hanlong Group, has been reportedly detained in China, image from news.com.au  (Australia) & Associated Press

*** BREAKING NEWS ***

$665 million Chinese sourced Hanlong loan for Mt. Hope suspended:

General Moly Announces Financing Update (Press Release, Mar 20, 2013)

Chronology of related articles that came to the attention of the Eureka Miner throughout the week (most recent to first news break):

(0833 PT Mar 22, 2013)

Sundance suitor's chairman Liu Han detained for harbouring fugitive brother (news.au.com & AP March 21, 2013 11:37 PM)

(1426 PT Mar 21, 2013)

Sundance poised to pull plug on Hanlong (Philip Wren, Business day (Australia), March 22, 2013)

(1251 PT Mar 20, 2013)

Latest update on the Liu Han Saga (note co-author and source article from last December below). The Fox News (via WSJ) article mentions Mt. Hope and General Moly directly. 

Firms Struggle to Locate Chinese Tycoon (Fox News: Gillian Tan, James T. Areddy, WSJ, Mar 20, 2013) 
 

(0827 PT Mar 20, 2013)

Sundance Seeks Information From Hanlong After Detention Report (By Soraya Permatasari & Janet Ong, Bloomberg - Mar 19, 2013 11:28 PM PT)

China detains Hanlong founder (Philip Wen, Mar 21, 2013 (Australia time), The Sidney Morning Herald) 

Source article on Liu Han & Mt. Hope (reported by the Eureka Miner Dec 28, 2012):

In Nevada, a Chinese King of the Hill (James Areddy, WSJ, Dec 28, 2012)


James Areddy is the lead WSJ correspondent in Shanghai and contacted this report in 2012 to check on how things were going with the Mt. Hope project.



Latest Nevada Gas Prices (click this link)

My latest Kitco commentary:  Copper & Gold Weather Report (03/25/2013)

Paintings by Mariana Titus, The Three Anas, are presently being featured at Lafitte Guest House & Gallery, New Orleans

Friday's morning prices...

Below are the prices used for this morning's analysis. Since then COMEX gold is up a tad at 1,607.1/oz (0948 PT):

COMEX Gold price = $1,606.2/oz (April contract most active)
COMEX Silver = $28.665/oz (May)
COMEX Copper = $3.4670/lb (May)
NYMEX WTI crude = $93.13 (May)
ICE Brent crude = $107.62/bbl (May)
Eureka Miner’s Gold Value Index© (GVI) = 95.39 (gold value is elevated with respect to key commodities oil & copper given historical norms)
Value Adjusted Gold Price© (VAGP) = $1,406.9/oz
COMEX - VAGP = $199.3/oz; gold is trading at a premium to key commodities.

Morning Miners!

A rough way to start the spring for the General Moly team...and Eureka County.

Just before the Equinox, news started to break that Liu Han, the Chairman and founder of  Hanlong Sichuan, together with members of his family had been mysteriously detained in China. General Moly has been waiting for a $655 million loan from Hanlong to begin Mt. Hope mine construction in earnest this spring. Pre-construction activities are presently underway to clear and grub the Mt. Hope site together with associated waterworks for the construction effort.

Below the headline AP photo is a chronology of the news as it came to the attention of this report. The ole Colonel updated last Friday's Eureka Miner with these links but waited to hear from General Moly (GMO) before publishing Thursday's Special Report. The really bad news came with a GMO press release after the market close Thursday.

General Moly Announces Financing Update (Press Release, Mar 20, 2013)

It states:

 "[General Moly] has been informed that legal counsel has suspended work on the $665 million Chinese sourced Term Loan that is currently being negotiated with China Development Bank (“CDB”) for the development of the Mt. Hope Project until further notice. This suspension of activities relates to media reports that Mr. Liu Han, Chairman of Sichuan Hanlong Group (“Hanlong”) has reportedly been detained by Chinese authorities. Hanlong or an affiliate is obligated to arrange and guarantee the Term Loan, throughout its life."

I first learned of Liu Han last year from the Wall Street Journal source report by James Areddy, their correspondent in Shanghai:

In Nevada, a Chinese King of the Hill (James Areddy, WSJ, Dec 28, 2012)

James Areddy had interviewed a number of Eureka residents including this report in the preparation of this article. Ironically, the Eureka Miner e-mailed James on an unrelated topic this Monday before the recent stories broke. In closing, I joked that construction of Eureka's Liu Han Casino hadn't started yet. He didn't reply to my humor and now I know why!

Truth is stranger than fiction (and jokes) with the Australian press citing Mr. Han's shady ties to Macau casinos, suspected money laundering and most recently, hiding his brother who is suspected of murder. Australia is keen to find out more about the Chinese tycoon because they have two mines whose future hangs in the balance of Hanlong loans. General Moly is as anxious to sort out the latest dust-up and to seek financing alternatives. A trusted source informed me several minutes ago that it is likely that Ames will be allowed to continue their present work and that General Moly should have plenty of cash on hand after the winter Mt. Hope activities are tallied.

The markets seem to agree that there is still a lot of hope for Mt. Hope. After closing at $2.77 a share Wednesday, General Moly stock plummeted to an intraday low of $2.04 Thursday (-26%) but then recovered to close at $2.31 followed by this morning's trading at $2.32. We'd be well south of $2 by now if the investment community was heading for sunlight in this moly mine.

As a point of disclosure, I lost 1/4 of my position in GMO by stop loss but have decided to tough it out with the remaining 3/4 position until dust clears on that mountain top 21 miles north of town. General Moly has a strong management team and have climbed a lot of other mountains in the past - after all, one of the world's largest molybdenum reserves hasn't left Eureka County!

The best of luck to the entire General Moly team!

Please do your own research, pardner. As I warned last week "markets can turn on you faster than a feral cat."

Molybdenum Prices

Spot moly oxide prices are now below the key-$11 per pound level. Here are the latest numbers compliments of moly benchmark miner  Thompson Creek (TC):

Metals Week Weekly Average: US$10.98 As of March 18, 2013 (updated weekly)

Ryan's Notes Average: US$10.90 As of March 19, 2013 (updated twice weekly)

The London Metal Exchange (LME) futures contracts are below $12, and the 3-month contact has dipped below $11. Remember that this is a thinly traded futures market and contract prices reflect developments in Europe probably more than the global spot price averages above.

3-month seller's contract $24,200 per metric ton ($10.98 per pound)

15-month seller's contract $25,210 per metric ton ($11.44 per pound)

The Colonel's Gold, Silver & Copper Prices for Next Week

Here is my weekly input to Kitco Gold Survey:

03/22/2013 (10:25 AM CT)

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

A. Up, $1,620 per ounce target.

Q. Why?

A. Gold is quickly moving away from the commodity camp as safe-haven status reemerges in response to the Cyprus debacle. Only last week, the yellow metal was strongly correlated with global commodities copper and oil on a 1-month basis (+0.89 & +0.81, respectively); today, the correlation is negative for copper and falling for oil (-0.49 & +0.55). This is a bearish sign for metals but bullish for gold.

However, opposing forces may cap gold’s advance below solid resistance at the $1,630 per ounce level. Assuming the Cyprus situation continues into next week without satisfactory resolution, gold should get another boost higher but may be limited by liquidations to raise capital for damage control in the euro-zone. My target of $1,620 is a positive bias above March’s highs, challenges the February high ($1,619.7) but is below $1,630 resistance.

For $1,620 per ounce gold we can expect to see silver in a range of $28.8-$29.6 per ounce; and copper in a range of $3.39-$3.58 per pound. Silver is expected to have a neutral bias with respect a range mean of $29.200 per ounce; copper, a neutral bias with respect to a mean of $3.4807 per pound between the intraday high and low for March.

Although the yellow metal has lost considerable value relative to global commodities oil and copper since mid-November, this trend has now reversed to the upside for gold.

If the long-term gold value uptrend relative to oil and copper remains intact, the longer term prospects for gold priced in dollars are good. The data suggest that this is still the case (Note 6, Ref 5)

As measured by the Eureka Miner’s Gold Value Index (GVI, Ref 1), the value of gold relative to global commodities copper and oil and companion metal silver is 95.39, below the key-100 level but above the 1-month moving average of 94.07. The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) is off its low for the year, but still 18.8% below its 2012 high (1.2710, Nov.15) at 1.0362 (2013 low = 1.0166). The latest price action indicates gold has lost significant value relative to the broader market but has bottomed and is now regaining ground.

Background Notes:

1. My gold target price of $1,620 per ounce challenges the February intraday high of $1,619.7 (2/26/2013).
2. Given the target gold price, the silver price ranges are derived from the 1-month gold ratio mean (GSR) and its respective ratio stability (CRS©). A different technique was used to predict the price range for copper given its present negative correlation with gold.
3. My Gold Value Index© (GVI) equals 95.39 or 8.0% below the 2012 high of 103.73. Today gold value is above its 1-month moving average of 94.07; a value of 100 represents a historically high-value of gold relative to key commodities oil, copper and silver.
4. The gold-to-copper ratio today is 463.28 pounds per ounce and now above its 3-month moving average of 452.05 but below its 6-1/2 year trend of 488.88. The 1-month gold-to-copper ratio stability is a low 1.82%. The 1-month rolling correlation is -0.48; 3-month is +0.71. 3-month relative volatility is 0.1.12X gold and price sensitivity (beta) is +0.80.
5. The gold-to-silver ratio (GSR) is above its historical norm at 56.033; the 3-month rolling correlation is +0.92, relative volatility is 1.62X gold and price sensitivity (beta) is +1.49. The GSR is above its 3-month average of 54.22; the 1-month gold-to-silver ratio stability is a very low 0.77%.
6. Although gold has lost considerable value relative to oil and copper since early November, the uptrend in gold value relative to these global commodities remains on solid footing (mid-2006 to the present). If this relation gives way, gold is probably in a world of hurt. Also, 1-month gold ratios relative to WTI & Cu remain quite stable* unlike the early-October 2011 commodity debacle following the U.S. debt downgrade (Ref 4):
1. Au:WTI -0.65 sigma below 6-1/2 year trend line; Au:Cu -0.41 sigma below trend - I consider > a negative 2-sigma indicative of a potential breakdown
2. Au:WTI 1-month stability* 1.0% (3.2% 10/6/11); Au:Cu 1.8% (5.7% 10/3/11) - I consider ratio stability > 3% to be divergent & worrisome

(* stability defined as the standard deviation of the gold ratio normalized by its mean over 1-month)

Ref 1: Gold Versus Copper, Oil and Silver: The Value Trend Is Your Friend (Kitco News, 7/23/2012)

Ref 2: Oil, Copper & Gold – All in the Family (Kitco News, 01/22/2013)

Ref 3: Oil, Copper & Gold – Beware the Snake? (Kitco News, 02/11/2013)

Ref 4: Oil, Copper & Gold – Don’t Worry (Kitco News, 02/25/2013)

Ref 5: The Emperor of Metals Heeds a Warning from Copper (Kitco News, 03/11/2013)

Cheers,

Colonel Possum

Inset painting by Mariana Titus

Please checkout bayoutales.com for books and book orders

Paintings by Mariana Titus, The Three Anas, are presently being featured at Lafitte Guest House & Gallery, New Orleans
 
Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

SPECIAL REPORT: Chinese Loan for General Moly (GMO) Mt. Hope Suspended

*** BREAKING NEWS ***

The $665 million Chinese sourced term loan for Mt. Hope has been suspended:

General Moly Announces Financing Update (Press Release, Mar 20, 2013)

Related news received throughout the day - Wednesday Mar 20, 2013: 

Latest update on the Liu Han Saga (note co-author and source article from last December below). The Fox News (via WSJ) article mentions Mt. Hope and General Moly directly. 

(1251 PT Mar 20, 2013)  

Firms Struggle to Locate Chinese Tycoon (Fox News: Gillian Tan, James T. Areddy, WSJ, Mar 20, 2013) 
 
I just received these two links early Wednesday:

(0827 PT Mar 20, 2013)

Sundance Seeks Information From Hanlong After Detention Report (By Soraya Permatasari & Janet Ong, Bloomberg - Mar 19, 2013 11:28 PM PT)

China detains Hanlong founder (Philip Wen, Mar 21, 2013 (Australia time), The Sidney Morning Herald) 

Source article on Liu Han & Mt. Hope (reported by the Eureka Miner Dec 28, 2012):

In Nevada, a Chinese King of the Hill (James Areddy, WSJ, Dec 28, 2012)


James Areddy is the lead WSJ correspondent in Shanghai and contacted this report in 2012 to check on how things were going with the Mt. Hope project.

These events will have a material impact on Eureka County, at least in the near-term.

Take heart,

Colonel Possum

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

Completion of Permitting Process for the Mt. Hope Project

*** SPECIAL REPORT ***

Morning Miners!

At 5:34AM General Moly announced completion of their Mt. Hope molybdenum project permitting. Here's the press release:

General Moly Announces Completion of Permitting Process for the Mt. Hope Project with Receipt of Water Pollution Control Permit (Press Release, 11/26/2012)

I believe this will put in motion funding from South Korean steel giant POSCO (PKX) of $100M within 15 days.


Bruce D. Hansen, Chief Executive Officer of General Moly, said:

We are pleased to receive the Water Pollution Control Permit from the Nevada Division of Environmental Protection and conclude the permitting process required for the construction of the Mt. Hope Project. I want to thank our team as well as our regulatory agency partners for their long hours, hard work and commitment to getting the job done right.

and,

We will now pivot aggressively to finalizing our project financing and initiating the construction and development of the world-class Mt. Hope Project. We are moving forward toward our goal of becoming the largest pure play primary molybdenum producer in the world.

General Moly is up 2.2% at $3.71 per share in early trading; POSCO (PKX) is up 0.6% at $72.97.

Western molybdenum is hovering just below $11 per pound:

Metals Week Average:
US$10.925
As of November 19, 2012
(updated weekly)

Ryan's Notes Average:
US$10.925
As of November 20, 2012
(updated twice weekly) 

The London Metal Exchange molybdenum 3-month seller's contract is $11.33 per pound ($25,000 per metric ton)

Cheers,

Colonel Possum

SPECIAL REPORT: General Moly (GMO) Hearing - "Packed house..."

The Colonel's notes

Adella Harding's Elko Daily Free Press Article:
Judge hears arguments over Mt. Hope (April 5, 2012)

Morning Miners!

It is 6:04 AM. We will interrupt our usual daily market report to bring you the latest on the Nevada District Court hearing held yesterday at the Eureka County Courthouse on the ongoing General Moly (Eureka Moly LLC) water rights issue. Let Old Miner Woden pour you a hot cup of Raine's Red Label and let's get started...

SPECIAL REPORT: General Moly Hearing

The next leg of the ongoing water rights conflict between General Moly and Eureka County unfolded yesterday in our 1879 courthouse on Main St. Unfortunately, I was out of town but received an e-mail from a faithful follower of this report at 9:56 AM, "Packed house...Indications are potential for 2-3 months on a decision, but you never know." Big news in these parts.

If you are just coming up to speed, there has been multi-year debate between General Moly and the Eureka County Commissioners together with a dedicated group of ranchers and farmers over water usage in the nearby Diamond and Kobeh valleys. General Moly plans to mine molybdenum at Mt. Hope which lies 22 miles north of the Eureka townsite and sits astride both valleys and their respective water basins. Moly mining is a water intensive process and the local ranchers and farmers are concerned that an additional water burden will adversely affect their livelihoods in an area that is already feeling the effects of water depletion.

The Elko Daily Free Press carried the Commissioner's viewpoint after their recent rejection of a "Good neighbor" offer by General Moly to resolve the conflict and avoid yesterday's hearing:

Eureka County Commissioners affirm support for individual rights (Elko Daily Free Press, submitted by EUREKA COUNTY COMMISSIONERS, Wednesday, March 28, 2012 11:22 am)

The specifics of the offer are given in a General Moly press release posted earlier this month:

General Moly Presents Good Neighbor Offer to Eureka Stakeholders (Press Release)

Zach Spencer, General Moly's media point man, called me around 4:00 PM yesterday to summarize the highlights of the hearing. Zach informed the Eureka Miner that there were about 40 folks in attendance with Judge Papez presiding over the small courtroom not unaccustomed to resolving mining disputes for the last 133 years.

The proceeding began at 9:00 AM. The lawyers representing General Moly and the appellants were "cordial" with the latter presenting points of their case first. According to Zach, "brevity was the key" as briefs had already been exchanged and both the Judge and those in attendance are very familiar with the case. After a short noon recess, The General Moly lawyer presented their side and Deputy Attorney General Bryan Stockton represented the State Water Engineer.

There were at least two local journalists in attendance: Mining Editor Adella Harding of the Elko Daily Free Press and Mining Quarterly and reporter Rudy Herndon of Winnemucca Publishing who submits stories to the Humboldt Sun, the Battle Mountain Bugle and the Lovelock Review-Miner. The Eureka Miner will update this special report as their articles become available.

Judge Papez will take the matter under advisement with both parties having the opportunity to produce further findings of fact and conclusions of law 20 days after the hearing transcript becomes available. The consensus estimate of 2 to 3 months appears to be the best guess for a final ruling. My comment to Zach was, "I hope this is over and done before Eureka's Fourth of July Parade."

With respect to the latest General Moly schedule, Zach expects the Record-of-Decision (ROD) for the Mt. Hope Molybdenum Mine to be this August with mine construction commencing in the fall. Although an unfavorable ruling may produce adverse consequences for General Moly, it is not presently standing in the way of other permitting processes. Also the recently ordered 18 CAT 793s are not needed for the initial work, first delivery is anticipated for late 2013 - early 2014 (Zach will check the actual delivery dates with General Manager Mike Iannacchione).

The Eureka County Commissioners meeting Friday, April 6, in the Commissioners’ meeting room at the County Courthouse will discuss mining housing. Per their agenda:

10:50 – EUREKA CANYON SUBDIVISION – Ron Damele, Public Works Director, and Mike Iannachionne, General Moly
1. Report on the intentions of General Moly (EMLLC) for use of a portion of the Eureka Canyon Subdivision commercial property to be used for EMLLC’s temporary construction worker housing. Discussion and possible action will include timeframes, types of temporary housing, fees and costs, infrastructure requirements, and possible conflicts with existing or proposed development of the overall site, and all matters properly relating thereto. (Action)

11:00 - NEVADA RURAL HOUSING AUTHORITY – Gary Longaker, Executive Director, and Tom Stone, Real Estate Mgr.
1. Review and discuss proposed Eureka Canyon Agreement between NRHA and Eureka County for multifamily modifications and single family settlement. (Discussion)
2. Discuss, approve, deny, or modify the Eureka Canyon Agreement between NRHA and Eureka County. (Action)

The Eureka Miner respects the views of all miners, farmers and ranchers and their valuable contribution to Eureka County and looks forward to a resolution of the Mt. Hope water rights issue that provides an equitable solution for all concerned.

Please watch for further updates throughout the day.

Cheers,

Colonel Possum

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

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

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

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