China Loves Buicks...Good News for Mining?

Morning Miners!

It is 6:44 am, the coffee is hot and life is good in the Great Basin! Before I do a market roundup, the ole Colonel wants to remind you that Patrick Ball is coming to the Opera House May 15th. This is a great show, I've seen it before and plan to be at the door with my sweetheart at 6:30 pm sharp to buy tickets. Checkout the "Eureka Opera House" link on the right of this page for more details.

I try to find nuggets in world news that help us understand the big picture for mining in the months ahead. There are two good ones this morning. Surprisingly, General Motors reported record sales in China for March, up 24.6%. Too bad they can't do that in the good ole U.S.A.! This is interpreted as a resurgence of confidence in China's economic outlook by the Chinese.

Item two is the long awaited Alcoa earnings report for the first quarter of this year. As expected, everything is lousy with low aluminum prices and collapsing global demand hitting their bottom line. On a positive note:

"Alcoa's president and chief executive officer, Klaus Kleinfeld, said his industry could be on the verge of improving, noting that there are "both near-term and long-term catalysts" that should help improve the aluminum business. For one thing, "current stimulus programs that target infrastructure and energy efficiency will create a demand" for aluminum, he said." (WSJ, 4/8/09)

Kleinfeld went on to say that improvements in China were key to this outlook. The markets liked that, Alcoa (AA) is up more than a percent to $7.869 (Hey, they could have easily been down 10% in this environment!).

These news items and the recent price action in copper say something positive for improving global demand and that's good for mining. I rest my case.

Enough talk, let's walk the walk:

Oil is still below $50 and headed lower at $48.37; the dollar ("Dixie" or .DXY) is flat at 85.347 and the commodity index (.CRB) is down slightly, 0.61%.

Gold is up $1.6 to $884.9 (June contract); Silver is up $0.045 to $12.225; Copper is just under 2-bucks at $1.9960; Molybdenum remains steady at $8.20.

The DOW is up 40 points to 7,829.38; the S&P 500, up 5.42 points to 820.97. Miners have their visors down:

Barrick (ABX) $28.65 down 1.62%
Newmont (NEM) $41.40 down 2.86%
General Moly (GMO) $1.16 down 0.85%
Quadra (QUA.T) C$5.37 down 2.89%
Freeport McMoran (FCX) $40.18 down 2.85% (a bellwether mining stock spanning gold, copper & molybdenum)

Sunshine for Sunday buckaroos,

Cheers,

Colonel Possum

Copper breaks $2.00

Lunch Break News Miners!

The May contract for high grade copper broke $2.00 around 10:30 (ET) today. Although it has fallen back slightly ($1.9795), this is a yee-ha for improving global demand (especially on a day when the DOW is down 200 points to 7775.86).

Gold is also up $11.2 to $884.0.

Cheers,

Colonel Possum

Just One Sentence to Kill The Party

Morning Miners!

It is 6:36 am. The coffee's hot and there is a lot to chew through this morning. There's a big Pacific storm headed our way and there should be lots of white stuff from tomorrow on. Click the Report's new "Local Weather" and checkout what the NWS has to say. I like the infrared satellite imagery of the Western States with the 4 km resolution to get the big picture. Zoom out to 16 km and you can see the lower tail of the circulation extends from Hawaii to California. Ooooh-weee!

Let's start with markets by looking at yesterday's action. It took just one sentence from Calyon Securities analyst Mike Mayo to end the largest four-week run up on the DOW since 1933:

"...recent government efforts to stabilize the financial system won't prevent Wall Street's loan losses from exceeding those of the Great Depression by late 2010."

I don't know about you but the ole Colonel is sick and tired of living in the 1930s. I believe folks that have skin in the game and analysts usually don't. I'll stick with Dennis Gartman who has a lot of skin in the commodity markets; if you want to know what is really coming at you, track the metals!

So where are we at today? In currency markets the dollar fell against the Japanese yen but rose against the euro, which usually means investors are starting to feel a tightening of the sphincter muscle. Gold futures rose and yields on 10-year Treasury bonds fell. Crude-oil futures slipped below $50 a barrel.

So do we jump down the mine shaft? Hell no buckaroos, copper futures are still going up! Gold is up, silver is up and the commodity index is steady. Metals are your friend; no jumping, more digging!

Enough talk, let's walk the walk:

The dollar ("Dixie" or .DXY) is up 0.64 percent and the commodity index (.CRB) is down a thin flat washer, 0.12%.

Gold is up $9.5 to $882.3 (June contract); Silver is up $0.080 to $12.190; Copper is up $ 0.022 at $1.9810; Molybdenum remains steady at $8.20.

The DOW is down 155 points to 7,820.54; the S&P 500, down 16.15 points to 819.33. Miners are mostly good:

Barrick (ABX) $29.42 up 2.33%
Newmont (NEM) $42.97 up 0.40%
General Moly (GMO) $1.21 down 0.82%
Quadra (QUA.T) C$5.70 down 3.39%
Freeport McMoran (FCX) $42.6705 up 2.20% (a bellwether mining stock spanning gold, copper & molybdenum)

Bring your all-weathers tomorrow,

Cheers,

Colonel Possum

Gold Takes Another Leg Down

Morning Miners!

It is 6:42 am. Grab a cup and let's kick-start the week. The ole Colonel added a new link to the right for local weather. This is the National Weather Service feed from Henderson Summit and has all sorts of satellite imagery too. I'd like this report to be a one stop shop, pardner!

Gold stumbled another $20 in early trading to bring us to solid 8-handle country at $877.9 (June contract). Am I discouraged? Hell no. The Colonel bought a little chunk Friday and I'll buy a little more if we fall further. Does anyone really believe there won't be any inflation down the road? Earnings season will start tomorrow with Alcoa (AA)reporting at 5:00 pm (ET). This should sour the lemonade a bit. I'll stick my neck out; gold will head back up and copper will bust two-bucks before the end of this week. See you at the Owl Club Friday, I'm buying if I'm wrong.

The dollar ("Dixie" or .DXY) is up a quarter percent and the commodity index (.CRB) is down a splinter under 1 percent.

Let's walk the walk:

Silver is following gold down at $12.285; Molybdenum steady at $8.20.

The DOW is down 51 points to 7,966.45; the S&P 500, down 8.07 points to 833.30. Here's the miners (ouch!):

Barrick (ABX) $28.92 down 4.96%
Newmont (NEM) $42.63 down 2.26%
General Moly (GMO) $1.21 down 6.20%
Quadra (QUA.T) C$5.98 down 3.55%
Freeport McMoran (FCX) $41.46 down 2.84% (a bellwether mining stock spanning gold, copper & molybdenum)

I know most of you need to get back to work, have a good'un. If you got equipment in the shop and can stick around a bit, I'll talk charts.

At the bottom of this blog page are the Colonel's five charts. I track gold, silver, copper, oil and natural gas futures on a daily basis and update my models every month based on the last 3-months of data. There is a brief explanation below on what these charts can tell you. The ole Colonel will explain more in future blogs. Today's charts include a new model for April and I'm seeing some encouraging news. Checkout "Copper vs Gold" and "Copper vs Oil" buckaroos! Who said global demand is not picking up?

Cheers,

Colonel Possum

Spring Mud in Bean Flat

Morning Miners!

It is 6:29 am. Grab a cup and remind me to buy another can of Joe at Raine's for Monday morning.

The ole Colonel started the report a minute before the markets open because I need a little suspense in my life. The action lately reminds me of spring mud in Bean Flat. As long as the ground is frozen, you can tool around out there in the F-250 without a care in the world. When things warm up, it is a high-center nightmare with Handyman jacks front and rear. Eric got me laughing one day when he told me Bean Flat was North Central Nevada's "Bermuda Triangle." More than one tourist has disappeared out there in their Honda Civic looking for Jackalopes!

I've been wrong about market direction several times this week. Bad news has not stopped rallies in both stocks and commodities (DOW above 8,000 at least for a bit, copper heading for $2.00, oil back above $50). The ground is solid and I can hear the sage slapping on my bumper. This morning might bring a quick thaw. The Friday job report shows a loss of more than 5 million jobs in the last 16 months, non-farm payrolls dropped another 663,000 in March with unemployment now pegging 8.5%.

OK, enough suspense. Let's take a peek. Hmm...DOW hanging in there...S&P steady. Both down a tad but so far so good. Let's walk the walk:

The commodity index (.CRB) is down a bit 0.17%; gold is down 0.8 at 908.1 (June contract) with silver following at $12.885. Molybdenum has dropped to $8.20 from a pretty steady $8.75.

The DOW is down 33 points to 7,945; the S&P 500, down 2.82 points to 831.56. Here's the miners:

Barrick (ABX) $31.90 down 1.24%
Newmont (NEM) $45.72 down 1.12%
General Moly (GMO) $1.14 down 4.20%
Quadra (QUA.T) C$6.00 (at open)
Freeport McMoran (FCX) $42.11 up 1.30% (a bellwether mining stock spanning gold, copper & molybdenum)

So far, so good. Earnings season starts with Alcoa reporting Tuesday, get your Handyman ready buckaroos. In the meantime, have a good weekend. Oh, yeah...don't forget the coffee for Monday...

Cheers,

Colonel Possum

General Moly Announces Water Rights

Morning Miners!

It is 6:35 am and it is always a good day when there is positive news from General Moly! Checkout their news release on water right approval in Kobeh Valley for the Mt. Hope Project. It is on their homepage (click on their link to the right of this report). That's a yee-ha for GMO.

Markets have opened up in early trading with all sorts of screwy things going on. The European Central Bank lowered interest rates a stingy 0.25% (less than expected) to 1.25%. This strengthened the euro but cratered the dollar (down more than 1%) and oddly gold is down $15.5 to $912.2. This has had an adverse effect on the gold miners but other miners are in rally mode. General Moly started with a nice pop to $1.16. Given yesterday's broad rally, oil has jumped over $3 to land back in fifty dollar land at $52.05. Somehow we have gone from the world is doomed to the world is saved in a day...hmm?

The commodity index (.CRB) is up a healthy 1.82% and silver is following gold down entering 12-handle territory at $12.870. Molybdenum has been holding steady at $8.75 for the last week (you can check on Moly prices by clicking on the Infomine link to the right).

The DOW is up nearly 190 points (7,951)and S&P 500, up 22 points to 832.90. Hey, those aren't small moves given yesterday's uptick. Here's the action for the miners:

Barrick (ABX) $32,63 down 3.72%
Newmont (NEM) $45.40 down 4.22%
General Moly (GMO) $1.16 up 1.75%
Freeport McMoran (FCX) $42.27 up 6.45% (a bellwether mining stock spanning gold, copper & molybdenum)

Let's cross our fingers.

Cheers,

Colonel Possum

Strong South Wind from a Tonopah Low

Morning Miners!

April fools! It is 6:57 am and this ain't no weather report (but I will make a few storm analogies in a minute). Grab a cup and let's talk metals.

For starters, why aren't we talking about the markets? It is the first of the month and private-sector jobs in the U.S. fell a steeper-than-expected 742,000 in March, according to a national employment report published by payroll giant ADP (storm #1). Let's not even go there, so much for all the end-of-March lemonade. I'll close with the markets so just sit tight.

Jobs are a lagging indicator, metals futures are a leading indicator of things to come. My hero, Dennis Gartman, says it best, "Metals have a Phd in economics." Now if you've just got laid off from General Moly you might be thinking, "Lag my ass, Colonel..." Hold that thought and let's look down the road a piece.

Tom Albanese, CEO of Rio Tinto, told CNBC some interesting stuff. There is a lot of buzz about BHP coming back with a second offer and Rio has lined up a big chunk of change with China's CHINALCO. I was less interested in that than his thoughts on the future. According to Albanese, things might be looking up for metals as soon as the second half of this year. We know the collapse of global demand is how miners spell R-E-C-E-S-S-I-O-N. There may be some improvement ahead with all the new infrastructure spending governments are planning, especially in the US and China. Albanese stated the well known axiom that there will be a day when China will need more metals than world can produce. Months, years, decades...who knows?

There have been some encouraging signs. My charts below have been showing a dramatic rise in copper futures prices lately with respect to gold and oil. The world's greatest growth demand for copper is China...hmm. I learned from Gartman that it is good to look at commodity prices in terms of other commodities (e.g. gold, oil) since it removes currency fluctuation. That brings us to storm #2: with everybody printing money, inflation will some day return like a strong south wind from a Tonopah low. Guess what happens to commodity prices? Mining might get better sooner than folks think if we can KEEP oil below $150 - ha!

Now for today in early morning trading:

The commodity index (.CRB) is down more than one percent and gold is up $6.10 to $931.1 (June contract). The Dollar is flat.

The DOW and S&P 500 have recovered to positive territory (7,615.69 & 789.39) with mostly good action for the miners:

Barrick (ABX) $33.10 up 2.10%
Newmont (NEM) $45.18 up 0.94%
General Moly (GMO) $1.04 down 0.94%
Freeport McMoran (FCX) $38.64 up 1.39%

See aren't you glad we had that cup before we peeked at the numbers?

Cheers,

Colonel Possum