Gold Breaks $973 - Beer, Colonel!

Morning Miners!

It is 5:28 AM and the coffee is ready! We've got a happy Colonel this morning who woke to the news that gold broke $973 on the COMEX in very early morning trading (04:30 GMT, 05:30 London time). Pardners, we've got a genuine precious metals rally underway. I had predicted $973 before July Fourth and we're still in the last innings of May (see the Colonel's Beer Derby to the bottom right of this blog). It picked up steam yesterday when silver spiked above $15 on the London Spot Market and the momentum gave gold a healthy push higher.

It has been a short but wild and crazy week starting out with our brand new "Rancher's Corner" (to your right). If you have been away check it out, there are nine links that give local farmers and ranchers direct access to the markets that affect their livelihood.

The Rancher's Corner

The Eureka Miner's Million Dollar Grubstake portfolio went in the black for the first time since we put it together earlier this month. For newcomers, the Grubstake is a $1,000,000 investment in companies that directly or indirectly contribute to the future of Eureka County Mining. There are 12 stocks in the portfolio and we post the progress of our investment after the market close every Friday. It looks like we're on track to make some moolah today!

The Eureka Miner's Million Dollar Grubstake Portfolio

The biggest news this week has been the Bond Vigilantes attack on the economic policies of Congress and the Federal Reserve. They banded with the Inflationistas (which includes most precious metal investors) for a real Wild West showdown. The Vigilantes bid up the 10-year T-Bill yield to a startling 3.70% as the Inflationistas kicked off the current silver and gold rallies. Yee-ha!

The response of the Fed has been rather stoic as wounded government troops made a tactical retreat to Fort Apache:

WASHINGTON -- Federal Reserve officials believe the recent sharp rise in yields on U.S. Treasury bonds could reflect a mending economy and a receding risk of financial catastrophe, suggesting the central bank won't rush to react -- even though some investors see danger in the government's rising cost of borrowing. (WSJ, 5/28/09)

International reaction to the skirmishes is mixed but mostly positive:

Australia

"The accumulation of positive U.S. economic data certainly supports the green shoots theory. It's pointing to a "V" shaped recovery," said Macquarie Private Wealth associate director David Halliday. (WSJ, 5/29/09)

Japan

"Upside still depends on the U.S. market [and] U.S. sentiment seems to change every day," said Tachibana Securities analyst Kenichi Hirano. (WSJ, 5/29/09)

South Korea

"The market is not moving in a certain direction. There are no definite signs of the U.S. housing market bottoming yet. But foreigners continue to buy Korean stocks, preventing a sharp correction," said Kim Hak-kyoon at Korea Investment & Securities. (WSJ, 5/29/09)

What does it all mean? Stay tuned buckaroos, the ole Colonel has got you covered!

Enough talk, let's walk the walk:

Oil is up $1.27 to $66.35 (July contract); Gold is up $13.5 to $976.7 (August contract); Silver up $0.310 at $15.470 (July contract); Copper is up 0.0550 to $2.1920 (July contract); Molybdenum holds at $10.25.

The DOW is down 8.36 points to 8395.44; the S&P 500, down 2.00 points to 904.83. The miners are still on fire:

Barrick (ABX) $38.59 up 3.79%
Newmont (NEM) $48.99 down 3.46%
General Moly (Eureka Moly, LLC) (GMO) $1.99 up 4.74%
Freeport McMoran (FCX) $53.50 up 2.48% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are jolly (a "tell" for General Moly):

Nucor (NUE) $43.44 up 1.45% - domestic steel manufacturing
ArcelorMittal (MT) $33.52 up 0.65% - global steel producer
POSCO (PKX) $83.66 up 1.95%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio continues in the black, up 2.48% to $1,043,302.43 for a daily gain of $25,266.60. Isn't it fun to be a millionaire!

Cheers,

Colonel Possum

Where's the Duke When We Need Him?

Morning Miners!

It is 5:42 AM and we have a beautiful pink sky over Diamond Valley. Across the pond, spot silver prices just broke $15.00 at 13:42 London time with an impressive spike up. Exactly eight hours ahead in a land far away, something "unexpected" has occurred. What the tarnation is going on buckaroos? In the days of the Wild West, at least in the movies, our heroes like John Wayne would come in every once in awhile to clear the prairie of evil-doers and scalawags. Today, there are no shortage of scoundrels in financial markets and far too few heroes to set things straight.

Let's start with the word "unexpected". When used in the context of markets, especially bear markets, grab your Model 94 and take cover. Unexpected occurred yesterday when the 10-year Treasury Note yield jumped above 3.70%, a level last seen in November. So what? The 10-year note is key in setting mortgage and other consumer credit interest rates which the government has been working like the dickens to keep contained. The Fed has gone beyond cutting rates to directly purchasing such financial assets such as mortgage-backed securities, as well as printing new money to buy Treasury notes for the first time in half a century. Yikes!

All of this effort is to reflate housing and get us back on track economically. So who screwed up the plan yesterday? The Bond Vigilantes! Folks, I'm not making this up, that's what the group of investors are called on Wall Street that have declared war on Congress and the Federal Reserve's policy of flooding the world with dollars to beat the recession. Yesterday, they flexed their muscles by bidding up yields on T-Notes which killed the recent rally in the stock market dropping the DOW 171 points. The ole Colonel is willing to bet this morning's pop in silver is a metallic reaction to the first shots fired in a financial range war. My problem is that I can't tell good guys from bad guys in this movie!

Let's keep track of this brouhaha and watch where interest rates (that affect you and me) go in the next month. Today's national averages (WSJ, 5/28/09):

Money Market 1.33%
5-year Bank CD 2.73%
30-yr mortgage, fixed 5.09%
15-yr mortgage, fixed 4.71%
New-car loan, 48-month 7.48%
Home-equity LOC, $30K 5.79%

The Report will compare these in June, stay tuned.

Enough talk, let's walk the walk:

Oil is up $0.40 to $63.85 (July contract); Gold is up $5.8 to $961.0 (August contract); COMEX Silver follows London Spot up $0.265 at $15.130 (July contract); Copper is up 0.0155 to $2.1365 (July contract); Molybdenum holds at $10.25.

The DOW is down 13.46 points to 8286.56; the S&P 500, down 0.49 points to 892.57. The miners are on fire:

Barrick (ABX) $36.93 up 2.44%
Newmont (NEM) $47.33 down 3.18%
General Moly (Eureka Moly, LLC) (GMO) $1.85 up 3.35%
Freeport McMoran (FCX) $51.11 up 2.37% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are screaming (a "tell" for General Moly):

Nucor (NUE) $43.06 up 3.18% - domestic steel manufacturing
ArcelorMittal (MT) $32.36 up 5.54% - global steel producer
POSCO (PKX) $80.83 up 3.80%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio has gone in the black, up 2.18% to $1,002,795.13 for a gain of $2,795.13.

Cheers,

Colonel Possum

Barrick, General Moly Ride the Global Tide

Photo by Reuters

Morning Miners!

It is 5:23 AM and the coffee is hot! We had the ranchers in the break room yesterday and kicked off the new "Rancher's Corner" to your right. Gary McCuing gave me a holler after the meeting and reminded me that I forgot one link and then he added another. You'll find the Fallon Livestock Exchange, Inc. and the Livestock Marketing Information Center in the new list for a total of nine links to great market information for farming and ranching in our area. Thanks Gary!

By the by, one of the ranchers brought us over a new can of Folgers from Raine's. While you're enjoying that cup of joe, just remember that Eureka pulls out of this downturn when miners, farmers and ranchers pull together.

Enough preaching, how is that recovery coming along? I thought we'd look at Barrick and General Moly together this morning since both are riding the global tide. There is a lot of ebb and flow and each is pulled by different currents. In this context; gold price pulls Barrick, the health of international and domestic steel producers (and therefore, the price of molybdenum) pull General Moly.

Both have had impressive runs in stock price from their March lows:

Barrick (ABX) up 34.5%
General Moly (GMO) up 217%

That beats the return on a bank CD buckaroos, but can it last? Here are the price movements of the underlying metals compared to their 2009 lows:

Gold up 15.1%
Molybdenum up 28.1%

Yesterday, two key ratings agencies gave their 12-month price predictions for both miners:

Barrick (ABX) raised to $47.50 from $40 by BMO Capital markets; yesterday's close $36.80

General Moly (GMO) cut to $2.00 from $2.50 by the Bank of Nova Scotia; yesterday's close $1.90

The gold price argument has broken into two basic camps: inflationistas versus the deflationistas:

...'there are still plenty of problems out there, and I think you are going to continue to see flight to safety be an important factor,' said Bill O'Neill, one of the principals with Logic Advisors. He suggested that by year-end, gold will again test $1,000, which it topped for the first time in 2008...'Inflation seems to be an inevitable development,' he said. 'I think demand for hard assets will continue to be strong, and gold will slowly but surely benefit from that.' (WSJ, 5/25/09)

and,

Among the skeptics is Leonard Kaplan, president of Prospector Asset Management. He said he expects gold to decline in the months ahead as the global economy remains soft, dismissing ideas that signs of growth may be emerging in the economy. "In a deflationary recession," he said, "everything goes down. (WSJ, 5/25/09)

Then there is a middle-of-the-road view:

But before gold hits $1,000, it could dip below $900, some analysts say. Prices could head toward $800 as seasonal weakness sets in from mid-June to the end of the summer, said CPM Group analyst Carlos Sanchez. (WSJ, 5/25/09)

The Colonel sticks with his prediction: $973 by the Fourth of July, $1050 by Christmas!

Now for General Moly, there is a lot of activity in the world of steel:

The China Iron and Steel Association has said Chinese mills want a price cut of between 40% and 45% to reflect weaker market conditions, and that if the benchmark was set offshore, China wouldn't accept a cut of less than 40%. When contacted, a POSCO [20% stakeholder in Mt. Hope] official in Seoul said the Korean steel maker is yet to agree on prices with any of the miners. "Iron ore talks for this year are not over yet," company spokesman Kim Dong-ho said, without elaborating. (WSJ, 5/26/09)

Don't you wish you could demand a 40% discount from WalMart the next time you went shopping for Chinese goods? Some miners have already caved to price pressure:

MELBOURNE -- Rio Tinto Ltd. said it has struck a deal with Japan's Nippon Steel Corp. for a 33% to 44% drop in iron ore term prices for the 2009-10 contract year that started April 1. (WSJ, 5/26/09)

Lots to think about folks. The ole Colonel will try to sort it all out for you in the coming months. I'm still bullish on gold, Barrick and General Moly. Go with the flow, ride the tide!

Enough talk, let's walk the walk:

Oil is up $0.49 in early trading at $62.94 (July contract). Gold is down $0.4 to $952.9 (June contract); Silver is up $0.030 at $14.630; Copper is up 0.0615145 to $2.1265 (July contract); Molybdenum holds at $10.25.

The DOW is down 2.39 points to 8471.10; the S&P 500, up 0,31 points to 910.64. The miners are so-so:

Barrick (ABX) $36.63 down 0.46%
Newmont (NEM) $46.88 down 0.66%
General Moly (Eureka Moly, LLC) (GMO) $1.88 down 1.05%
Freeport McMoran (FCX) $50.67 up 1.36% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are up (a "tell" for General Moly):

Nucor (NUE) $41.89 up 1.80% - domestic steel manufacturing
ArcelorMittal (MT) $31.04 up 2.07% - global steel producer
POSCO (PKX) $79.13 down 0.09%- South Korean integrated steel producer

The venerable Eureka Miner's Grubstake Portfolio is up 0.32%

Cheers,

Colonel Possum

Checkout Our New Feature: "Rancher's Corner"

Morning Miners! Morning Ranchers!

It is 6:04 AM and life is good in the Great Basin! I hope you had a good Memorial Day weekend and it looks like we have some sunny weather ahead. I've invited a few ranchers to the coffee room this morning. Now don't y'all start fighting over water, there is plenty in the cooler by the coffee maker. In fact, mining, farming and ranching have existed in some form together since the Territorial days. F.D. Coburn, author of The Book of Alfalfa (1907), said in 1908:

"Gold could not always be found with pick and shovel, it could without fail be found by alfalfa roots."

Well pardners, since we've got plenty of gold, high-grade alfalfa and cattle in Eureka County, the ole Colonel thought it high time to include a "Rancher's Corner" in this market report. You'll find it to the right directly below the "Miner's Corner." Now, don't start fighting again, I couldn't figure out how to put them side-by-side!

Gary McCuing helped me put this together and I got a lot of support from Jake Tibbitts and Kathy Porter. It is a work in progress so let me know how it can be improved to get you the best market news on a daily basis.

The first three links take you to the Agricultural Marketing Service of the USDA. You'll find the latest news and Livestock & Grain Hay Reports for Northern Nevada there. The next are the Western Livestock Journal, Burely Livestock Report and Producers Livestock Marketing Association that provide livestock auction information from Shasta, California, to Jerome, Idaho. The Western Video Market gives you access to live video feeds.

Below the "Rancher's Corner" is a link to the local weather with National Weather Service maps and satellite imagery. The Report also has a "Discover Eureka" section and "Readers Tips - Hot Links." Let me know if you have some favorite links or upcoming news and the Colonel will post them.

Thank you ranchers for coming this morning and joining the Report!

OK folks, this is where we stop the talk and walk the walk:

Oil is down $1.65 in early trading at $60.02 (July contract). Gold takes a tumble, down $11.4 to $947.5 (June contract); Silver stays above $14 at $14.495; Copper is down 0.0275 to $2.0700 (July contract); Molybdenum holds at $10.25.

The DOW is up 144.48 points to 8421.80; the S&P 500, up 14.55 points to 901.55. The miners are mixed on an up day:

Barrick (ABX) $36.46 down 4.05%
Newmont (NEM) $45.62 down 3.02%
General Moly (Eureka Moly, LLC) (GMO) $1.75 up 1.16%
Freeport McMoran (FCX) $48.86 up 1.08% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are so-so (a "tell" for General Moly):

Nucor (NUE) $40.79 up 1.75% - domestic steel manufacturing
ArcelorMittal (MT) $29.17 up 0.62% - global steel producer
POSCO (PKX) $77.61 down 2.99%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.73%

Cheers,

Colonel Possum

The Colonel Wishes You a Happy Memorial Day!

Howdy Miners!

The Colonel wishes you a happy and safe Memorial Day. The domestic markets will be closed Monday so I'll see you all bright and early Tuesday morning. We've got a short but full week ahead kicked off with a brand new "Rancher's Corner" feature to the Report. This has been in the works for a bit with a lot of help and encouragement from Gary McCuing, Jake Tibbitts and Kathy Porter.

Look for my nine foot Old Glory on the west side of the canyon as you drive into Eureka from the north on HWY 50.

Cheers,

Colonel Possum

The Colonel's New Gold Price Predictions

Morning Miners!

It is 5:31 AM and my Chihuahua, Loquita, just chased a deer out of the yard. I guess that proves attitude trumps size, pardner! The ole Colonel has just added a new feature to the Report. If you look below the "Miner's Corner" to your right you will find "Reader's Tips - Hot Links." Eric sent in the coolest link to the construction progress on the I-580 connecting Reno and Carson City. There are four live Web cams and I just finished watching the sun rise on the I-580 bridge over Galena (south cam). Talk about government accountability; if you see someone dogging the job, give a holler!

OK, I promised some predictions on the future price of gold today. Such things are folly but there's no fool like an old fool. This prediction business is tricky at best and I must admit that I owe the reader a beer on oil prices. If you checkout the Colonel's Beer Derby to the right (below the copper price chart), you'll see my bet that oil would see $52 before $62 on or before 5/30/09. Wednesday, the intraday trading on the July contract hit $62.26 before falling back. It happened so fast, the Colonel didn't catch it until last night. Twenty six cents blew my winning streak (4 for 5, 1 open) and I still believe we're headed south from here.

Enough whining, here are my new gold predictions:

Gold breaks $973 before the Fourth of July, 2009

Gold breaks $1050 before Christmas, 2009

Now did I just pull these numbers from where the sun don't shine? Heck no buckaroos, we've been chewing on this topic since April:


Where Does Gold Go Next? (5/18/2009)

Lower Propane Bills and More Gold in China (4/27/2009)

Who’s Got the Gold? (4/17/2009)

A Fool’s Errand (4/15/2009)

What’s up (or down) with Gold? (4/13/2009)

Gold Takes another Leg down (4/6/2009)

Of course, my bet might be worth just so much Fool's Gold!

Enough talk, let's walk the walk:

Oil is up $0.71 at $61.76 (July contract). Gold is up $5.0 to $956.2 (June contract); Silver closes on $15 at $14.710; Copper is up 0.0615 to $2.1125 (July contract); Molybdenum holds at $10.25.

The DOW is down 25 points to 8266.57; the S&P 500, down 3.44 points to 884.89. The miners are happy on a down day:

Barrick (ABX) $37.46 up 1.55%
Newmont (NEM) $46.87 up 0.54%
General Moly (Eureka Moly, LLC) (GMO) $1.73 up 2.36%
Freeport McMoran (FCX) $49.62 up 1.99% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are recovering (a "tell" for General Moly):

Nucor (NUE) $39.75 up 1.30% - domestic steel manufacturing
ArcelorMittal (MT) $29.38 up 1.70% - global steel producer
POSCO (PKX) $80.92 up 0.30%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 1.03%

Cheers,

Colonel Possum

I Ran into the Governor Yesterday...

Morning Miners!

It is 5:53 AM and the sun is shining in Eureka! I ran into the Governor yesterday while I was walking my dog, Loquita. He had just arrived at the Opera House for a town hall meeting. The ole Colonel sensed the Governor might be asking me for more money so Loquita and I walked down to Raine's to buy some salted peanuts.


I did look forward to the Natural Resources Advisory Commission monthly meeting last night. Jake Tibbitts and the boys had a lively discussion and Kathy kept everyone in the corral. The topics included a passel of new legislation; the Wild Free-Roaming Horses and Burros Act, Clean Water Restoration Act, Hard Rock Mining and Reclamation Act of 2009 and the Blair Holt's Firearm Licensing and Record of Sale Act. Pardner, if you think the government is in your back forty just wait, they'll be sitting at your table for dinner before you can spell R-E-G-U-L-A-T-I-O-N!

By the by, Jake is looking for someone to fill a vacancy to represent mining in Eureka County. Member Carl Wagner has apparently left to work at Kennecott in Arizona. If you're interested, give Jake a holler (natresmgr@eurekanv.org).

During the Public Comment & Discussion, I introduced myself to the members I didn't know already know and asked for their input on this report. The Colonel has been kicking around the idea of adding a "Rancher's Corner" together with some related daily market data and links. I look forward to their input and yours.

International news is really a bruiser this morning and markets are going in the tank around the world. For starters:

"Steep declines in the economies of three of the U.S.'s biggest trading partners -- Mexico, Japan and Germany -- underscored the severity of the global recession and put pressure on major industrialized nations to revive moribund global trade talks" (WSJ, 5/21/09)

Recent data shows that Mexico's GDP sank 21.5% for the first quarter of this year and Japan dropped 15.2%, the worst since 1955. If that isn't bad enough it looks as though the U.K. might be ready to sell the Queen's crown jewels:

"Ratings agency Standard & Poor's shocked investors Thursday with a formal warning that the U.K. must get its finances in order or lose its coveted triple-A credit rating, underscoring the monumental challenges the country faces as it seeks to dig its economy out from under the wreckage of the financial crisis." (WSJ, 5/21/09)

Tomorrow, the ole Colonel will reveal his gold price predictions given all the global events coming at us. To that end checkout this last bit of news from India:

"MUMBAI -- India, the world's largest importer of gold, turned net exporter for the first time, exporting 20 metric tons during the quarter ended Mar. 31, the World Gold Council said Wednesday...India usually imports 700 to 800 tons of gold annually." (WSJ, 5/21/09)

What's it all mean? Stay tuned buckaroos!

Enough talk, let's walk the walk:

Oil is down $1.68 at $60.36 (July contract). Gold is up $3.0 to $940.4 (June contract); Silver keeps above $14 at $14.210; Copper is down 0.0735 to $2.033 (July contract); Molybdenum holds at $10.25.

The DOW is down 122 points to 8300.26; the S&P 500, down 12.23 points to 891.24. The miners wish they stayed in the bunk today:

Barrick (ABX) $35.51 down 1.96%
Newmont (NEM) $44.52 down 2.26%
General Moly (Eureka Moly, LLC) (GMO) $1.69 down 5.59%
Freeport McMoran (FCX) $48.38 down 3.24% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are in the scrap heap (a "tell" for General Moly):

Nucor (NUE) $39.38 down 3.03% - domestic steel manufacturing
ArcelorMittal (MT) $28.92 down 3.98% - global steel producer
POSCO (PKX) $81.05 down 4.16%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 2.78%

Cheers,

Colonel Possum