CAT Adds Another Hat, GMO Breaks $3.00

Morning Miners!

It is 5:48 AM and the ole Colonel is making a new pot. The first passed quickly when the break room was filled with gold experts earlier this morning. It's amazing how $1000 gold brings'em out of the wood work. Alan Greenspan was even here in a new pair of Raine's Wranglers and an oversize Resistol. I think they're all headed out to Barrick for a mine tour. We'll close on that in a moment, check this out first buckaroos.



For those of you that wear the CAT hat or carry a fondness for the old timer International Harvester trucks, there is some breaking news for you this morning. Although the deal has been in the works for some time, Caterpillar and Navistar just announced that they closed a joint venture transaction resulting in a new company, NC2 Global LLC (see note 1 below). It will serve the global commercial truck market and establish its headquarters in the Chicago area. Here is the press release:

NC2 Global LLC Press Release (09/10/09)

I can't think of a better example of two companies that "get it" when it comes to America's rightful and proud tire tracks in the global economy. Let's give them a Colonel Yee-ha!

Back to the world of gold which is certainly the buzz this week. Both gold and silver stumbled on the London spot market this morning but have recovered since. The yeller stuff dipped below $985 and then returned to $990; well below the $1000 mark but some profit taking is to be expected given the recent rally. The Colonel is sticking with his prediction of $1050 before Christmas. Silver followed gold to test $16.10 before bouncing back to $16.40. It will take a few days to see where we go next on precious metals. Not surprisingly the greenback reached new 52-week lows yesterday and I used that opportunity to buy more dollars through the Exchange Traded Fund UUP (someone needs to swim upstream, water wings advised).

After halting trading on two exchanges yesterday, Barrick is back on its feet nicely since its de-hedging announcement (Barrick Makes Bold Move, Moly Drops).

General Moly is screaming this morning jumping more than 9% to break $3.00. The intraday high is $3.15 so far. That deserves another Colonel Yee-ha!

Unfortunately molybdenum took another leg down to $15.10 and copper continues to struggle below $3. Metals don't lie buckaroos, I'd feel a whole lot better if these canaries would start flying north again. Here's a one month chart of our two little birdies in the global recovery mineshaft:


OK. Let's clear the decks and see what Alan Geenspan has to say about gold and currencies. Yeah, he probably did help crater the global economy but he was our monetary grandpa for all those years. If you want to ditch the link and show that old pa-pa how to wear a hat, I'm not tellin':

Gold Rally Signals Move Away From Currencies, Greenspan Says (Bloomberg, 9/9/09)

Let's skip the mine tour and walk the walk:

CAUTION: 4-WD ON, Off-Road Market Conditions Ahead

Yellow light on for declining molybdenum price (less than magic number: $16.50)

Yellow light on for possible adverse legislation (mercury emissions)

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is up $0.61 in early trading to $71.92 (October contract); Gold is down $4.7 to $992.4(December contract, most active); Silver is down $0.055 to $16.415 (December contract); Copper is up $0.0650 to $2.8590 (December contract); Molybdenum drops to $15.10.

The DOW is up 20.33 points to 9567.55; the S&P 500, up 2.18 points to 1035.55. The miners are rocking:

Barrick (ABX) $37.45 up 1.35%
Newmont (NEM) $46.11 up 2.74%
General Moly (Eureka Moly, LLC) (GMO) $3.14 up 9.03%
Freeport McMoran (FCX) $67.96 up 0.41% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are dancing too, (a "tell" for General Moly):

Nucor (NUE) $46.03 up 0.88% - domestic steel manufacturing
ArcelorMittal (MT) $37.94 up 0.15% - global steel producer
POSCO (PKX) $97.44 up 2.22% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 1.85% to $1,177,020.05(what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Note 1 - In 1986 Harvester changed the corporate name to Navistar International Corporation (Harvester had sold the International Harvester name and the IH symbol to Tenneco Inc. as part of the sale of its Ag division). Navistar International Corporation continues to manufacture medium- and heavy-duty trucks, school buses, and engines under the International brand name. (Wikipedia)

Barrick Makes Bold Move, Moly Drops

Morning Miners!

It is 5:49 AM, have a cup and note that today is "nine-nine-nine", I don't know what this portends but it happens only once!

A faithful reader alerted the ole Colonel to a bold move made by Barrick yesterday. I appreciate this, many eyes make a better report. Barrick announced a plan to eliminate all of their gold hedge contracts within a year. Here are the key links:

Barrick Announces Plan to Eliminate Gold Hedges; Launches $3 Billion Public Equity Offering (Barrick Website, 9/08/09)

Barrick Gold to Sell $3 Billion in Stock, Buy Back Hedges (CNBC, 9/08/09)

They are offering $3 billion in stock to buy back both fixed priced contracts and a portion of their spot price gold contracts. Why is this important? In their words:

"Barrick has made this strategic decision to gain full leverage to the gold price on all future production due to:

• an increasingly positive outlook on the gold price. The Company expects global monetary and fiscal reflation will be necessary for years to come, resulting in an increased risk of higher inflation and a future negative impact on the value of global currencies; and
• continuing robust gold supply/demand fundamentals.

In addition, Barrick believes that the Gold Hedges and the Floating Contracts were adversely impacting the Company's appeal to the broader investment community and hence, its share price performance."

This will no doubt cause some volatility in Barrick's share price (ABX) and I've just noticed that trading has been halted on the Toronto and New York exchanges. Now that's what I call a whooper-dooper press release!

This offer is called a "dilution" because the present value of the company will be spread over more shares. The hope for investors is that future value without hedges will increase with rising gold prices so that the net affect will be positive for everyone.

Moves like this cause considerable discussion by the talking heads. There are least two camps so far. The first sees this news as yet another example of gold's expected rise beyond $1000 to higher prices and a positive for gold miners; the opposing view is that Barrick was pushed into this decision by shareholders, that they were one of the last big gold miners to do so (see note 1 below) and it marks a near term top for both gold and miners. The latter view is based on the old "sell the news, buy the rumor" logic in markets. Confused? We won't know the answer for awhile, ABX is frozen at yesterday's close of $39.30. Newmont is up this morning and gold is hovering just slightly below $1000 on the London exchange.

While we wait for that kettle to boil, I'm a little concerned about the recent fall in molybdenum prices. Please notice that I've turned one of the Eureka Outlook Dashboard lights to yellow this morning since moly closed below $16.50 yesterday to settle at $15.83.


I don't the reason for this and it hasn't affected General Moly (GMO) share price which steadily chugs closer to $3. The Report will sort out whether this is weakening demand or new supply in the next few weeks. There is one more troubling sign, however, that may be related to the price decline. In the past 3-months South Korean steel producer, POSCO, has lead both ArcelorMittal and Nucor in performance. These are the three steelmakers that the Report tracks on a daily basis. POSCO is important since they own a 20% share in our Mt. Hope Project. In the last month, POSCO has fallen behind the other two and the S&P 500:

S&P 500 up 1.8%
ArcelorMittal (MT) up 3.2%
Nucoe (NUE) down 3.5%
POSCO (PKX) down 5.1%

Since China is POSCO's biggest customer it is not unreasonable to wonder if something is weakening in the China recovery story. The Colonel would feel a whole lot better if copper broke $3 which would support the sustained Asian rebound argument. Too early to tell buckaroos but everything is connected these days. Stay tuned.

OK. Barrick resumed trading at 10:15 AM (EDT) and is presently only down a bit over 3% for the day. Salman Partners has just raised Barrick's price target (for the next 12 months) to $C48 from $C44.75. How's that for real time reporting! I'm hanging onto my Barrick stock pardner.

Enough talk, let's walk the walk:

CAUTION: 4-WD ON, Off-Road Market Conditions Ahead

Yellow light on for declining molybdenum price (less than magic number: $16.50)

Yellow light on for possible adverse legislation (mercury emissions)

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is up $0.50 in early trading to $71.60 (October contract); Gold is up $0.4 to $1000.2 (December contract, most active); Silver is up $0.060 to $16.520 (December contract); Copper is up $0.0125 to $2.9435 (December contract); Molybdenum drops to $15.83.

The DOW is up 25.24 points to 9522.58; the S&P 500, up 4.07 points to 1029.46. The miners are mixed:

Barrick (ABX) $37.87 down 3.64%
Newmont (NEM) $45.93 up 0.50%
General Moly (Eureka Moly, LLC) (GMO) $2.89 up 1.40%
Freeport McMoran (FCX) $67.66 down 0.50% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $45.61 up 0.48% - domestic steel manufacturing
ArcelorMittal (MT) $38.07 up 1.71% - global steel producer
POSCO (PKX) $95.46 up 1.68% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.28% to $1,160,280.19(what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Note 1 - AngloGold Ashanti now sticks out as the last big miner with a significant hedge book.

Gold Breaks $1007, Attack of the Ninja Miners (& EPA)

Morning Miners!

It is 5:39 AM, grab a cup and welcome back. I hope you had a relaxing Labor Day because there is a pile of stuff in our in-basket. To start a long haul with new tires, we've got a precious metal rally buckaroos! By mid morning London time gold broke $1007, silver danced with $16.80 and platinum leapt to $1,285. That deserves a Colonel Yee-ha! The question for the morning is whether gold can hold above the elusive $1000 mark. We'll close on that thought in a moment.


Let's do something fun to get back in shape. A faithful reader sent a link to a time lapse drive through Austin on YouTube. This will take your breath away and it's set to music to get your feet a'tappin':

Austin Nevada Timelapse Drive

By the by, if you hear this music coming out of your supervisor's office you don't need to worry about that lousy Friday report you cobbled together to get out of the office early.

For some entertaining reading on your break check out the "Ninja Miners" courtesy of Mineweb and NPR:

A 21st-century gold rush is taking place in Mongolia (Mineweb: NPR, 9/8/2009)

The Report has covered Mongolia before (Dondog's Find in Oyo Tolgoi) and it is clearly the new Wild West (Wild East?) for gold miners. There is a short video and 11 photographs of the most basic gold mining you can imagine. Former goat herders are tearing at the landscape in ways that remind me of our own gold rush days in early California. There is a picture of miners playing pool in front of their yurts that proves miners are a crazy lot no matter where you find them on our globe!

On a more serious note, the Las Vegas Sun carried an article on mercury emissions last week:

Feds consider taking lead on mercury emissions (Las Vegas Sun, 9/03/2009)

This is a story that has been around for a long time but the chilling new turn is a focus on Nevada gold mines by a re-energized Environmental Protection Agency (EPA). The EPA is moving forward with the nation’s first-ever regulation of mercury emissions from gold mines and the agency’s top administrator vows stricter monitoring of the toxin — which continues to accumulate in streams, air and fish. It is feared that the new Federal approach will be at odds with our State's own efforts to control mercury emissions. An EPA on steroids could have a serious impact on the mining future of Eureka County. The Colonel will keep his eyes open on this one.

Nuts, just when we were having fun. Let's close on a positive. We've crossed $1000 on gold before only to see it fall down the mineshaft faster than it came up in the elevator. What might be different this time? Here is a brief summary:

1) Dollar strength - The US dollar is seen by many as weak with unemployment continuing to increase and serious concerns being expressed over the economic path taken by the administration. The ole Colonel has hedged his gold position by buying the dollar (i.e., Exchange Traded Fund UUP) which takes the opposite side of this trade. I agree the dollar should continue to weaken next year but believe a dollar rally is in the cards if there is a market dipsy-doodle-down this Fall. In that event we might see the dollar and gold rise together.

3) Supply-side - global production continues to fall

4) China factor - Chinese domestic gold holdings are increasing together with a Chinese government that continues to boost its own gold holdings to hedge their massive US dollar reserves.

5) Investment safe-haven - If buying in the U.S. and Europe continues this time gold may hold its higher level and $1,000 could be the platform for further growth in price.

There are of course downsides such as reduced jewelry buying in India due to the economic impact of drought and the high price of gold. Jewelry buying tends to be seasonal (now is the beginning of peak India demand) and the expected decrease is dwarfed by the safe-haven investment demand seen so far this year.

Looks pretty honky dory for sustaining gold price buckaroos. Let's walk the walk:

CAUTION: 4-WD ON, Off-Road Market Conditions Ahead

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is up $2.11 in early trading to $70.13 (October contract); Gold is up $6.8 to $1003.5 (8:26 AM update, December contract, most active); Silver is up $0.445 to $16.730 (December contract); Copper is up $0.1030 to $2.9730 (December contract); Molybdenum dropped to the magic number $16.50 (what's this?). Further drops from this level will trigger a yellow light on the Dashboard.

The DOW is up 54,56 points to 9495.83; the S&P 500, up 8.25 points to 1024.65. The miners are rocking:

Barrick (ABX) $41.35 up 3.27%
Newmont (NEM) $47.39 up 2.51%
General Moly (Eureka Moly, LLC) (GMO) $2.86 up 1.78%
Freeport McMoran (FCX) $68.57 up 3.89% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are happy-pappy too, (a "tell" for General Moly):

Nucor (NUE) $44.96 up 1.79% - domestic steel manufacturing
ArcelorMittal (MT) $37.23 up 4.02% - global steel producer
POSCO (PKX) $93.75 up 0.39% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up a big 2.49% to $1,167,598.68(what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus: Pete Damele and Horse, Ackerman Ranch

Unemployment Jumps to 9.7% but...

Morning Miners!

It is 5:26 AM, I've got my cup topped up with some delicious Raine's TGIFLDW coffee (Thank God It's Finally Labor Day Weekend!). The Labor Department's Jobs Report is coming up in a few minutes, I'll be right back.

Hmmm...a bit mixed buckaroos. Entering our twentieth month of job losses, unemployment jumped to 9.7% (that's not good) but total jobs lost in August is less than expected (216,000 versus 230,000, that's less bad). But...the June and July numbers for job losses were 50,000 more than previously reported (euphemistically called an "up revision" by government number crunchers). Hey, if one person loses a job, that's not good!


CNBC Business News tries their best to make these monthly trips to the economic dentist as painless as possible. For those of us that get up before the chickens to watch this nonsense, the lovely Becky Quick reads the Jobs Report and this time was joined by Australian Business News anchor, Amanda Drury. Her "down under" accent is akin to the songs of morning birds. All very pleasant.

The comments by the commentators are, of course, less pleasant: "sea of lesser negatives", "worrisome numbers" and "horrific to obvious improvement". I think without Becky and Amanda hosting these early shows, folks would throw bricks at their televisions.

So what does this all mean? Losing 216,000 jobs a month is certainly better than 750,000 at the beginning of the year. The new buzzword this moning is "trajectory." Some analysts see an improved "trajectory" to zero job loss. That's encouraging but it is hard to feed your family trajectories.


Dr. Mohamed Abdulla El-Erian was Becky and Mandy's VIP guest this morning. He is the CEO and co-CIO of PIMCO, the world’s largest bond investor with $850 billion of assets under management. He is credited with the "sugar high" analogy to the present economic times which has become another news buzzword. According to the good Doc, 2009 should close with a "nice bounce" due to stimulus but then 2010 becomes the rough crash from the sugar high. El-Erian sees the recovery as having three stages: stimulus, rebuilding of inventories and demand. If strong demand does not return in 2010, watch out. Since 10 trillion dollars of our 14 trillion dollar economy rely on the consumer, a weak consumer translates to weak growth. If you're not employed, you're not consuming (as much) and El-Erian believes this is aggravated by "lacking credit in the recovery".

OK, OK, enough already! Returning to our "sugar coated bouncy" phase we see the markets are up this morning, gold is down and the gold miners are retreating a bit from a spectacular 2-day run. Duke and the film crew are back from their prospectin' adventure with no gold in their saddle bags. Given today's news, they will return to filming "The Long Dusty Trail" when we return from Labor Day (what is this?).

Have a great holiday buckaroos and don't let any economists come into your campground!

Enough talk, Becky and Mandy will help us walk the walk:

CAUTION: 4-WD ON, Off-Road Market Conditions Ahead

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what is this?)

Oil is down $0.45 in early trading to $67.51 (October contract); Gold is down $7.3 to $990.4 (December contract, most active); Silver is down $0.245 to $16.045 (December contract); Copper is down $0.0115 to $2.8535 (December contract); Molybdenum holds at $17.00.

The DOW is up 27.13 points to 9371.74; the S&P 500, up 4.38 points to 1007.62. The miners are mixed:

Barrick (ABX) $39.31 down 0.56%
Newmont (NEM) $45.55 down 0.48%
General Moly (Eureka Moly, LLC) (GMO) $2.83 up 0.71%
Freeport McMoran (FCX) $64.63 up 0.23% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $44.02 down 0.11% - domestic steel manufacturing
ArcelorMittal (MT) $35.11 down 0.06% - global steel producer
POSCO (PKX) $92.46 down 0.45% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.34% to $1,123,337.52 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Gold Breaks $980, Barrick Soars

Morning Miners!

It is 5:44 AM and the coffee is ready! What a great move in gold yesterday and it appears to have a little steam left today. The yeller stuff broke $980 and spot silver passed $15.80 shortly after lunch London time. Those were my two Labor Day bets so the readers owe the Colonel two beers (The Colonel's Beer Derby, what's this?). The score so far this year for 13 bets is 8 beers for the Colonel, 2 for the readers and 3 open - Yee-ha! Silver has retreated at bit from the highs but there should be more legs to this precious metal rally. The gold miners also took off with Barrick (ABX) jumping an amazing 8% in a single day. (Mid morning UPDATE: Barrick breaks $39 at 12.22 PM EDT, a triple play gives the Colonel one more beer; 13 bets - 9 wins, 2 losses, 2 open)


How do I fell about the rest of my gold predictions for the year? I'll stand by $1050 before Christmas but a drop to $880 before Thanksgiving is probably out of the cards. I made the latter bet earlier this year when gold appeared soft and headed for a correction - hey, you can't win'em all! If we do have any pullbacks, the Colonel would be a buyer somewhere below $950.


Gold is a wonderful way to diversify and a traditional hedge against inflation but I am not a "goldbug". Dennis Gartman, the "Commodity King", suggests 2-3% is a sensible proportion for an individual's liquid assets and I agree. In his words, "...you can't eat the stuff!" I try not to chase rallies and buy on the dips. To hedge my gold position I have been buying the dollar through the UUP Exchange Traded Fund (ETF) since they historically move in opposite directions. I believe the dollar is headed for a rough ride next year but it wouldn't surprise me to see a dollar rally this Fall if the markets head south. Just some food for thought.

If you are a "goldbug" and there's nothing wrong with that, you may find this article interesting:

China pushes silver and gold investment to the masses
(Lawrenece Williams, Mineweb, 09/03/09)

Apparently, the Chinese government is now encouraging its citizens to invest in gold via television ads. Whoa, these folks are sounding more like us everyday. I take this news with a grain of salt; if everybody in the world is rushing to gold, it might be time to check where the doors are in the theater. The ole Colonel doesn't believe this to be the case.

For now, let's be happy we live in gold country and celebrate the rally! The Duke and the boys went prospectin' out by the Eldorado yesterday and haven't been heard from since. Looks like we've got another good day for the miners.

Enough talk, let's walk the walk:

CAUTION: 4-WD ON, Off-Road Market Conditions Ahead

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what is this?)

Oil is up $0.15 in early trading to $68.20 (October contract); Gold is up $3.8 to $982.3 (8:26 AM update, December contract, most active); Silver is up $0.325 to $15.690 (December contract); Copper is up $0.0345 to $2.8355 (December contract); Molybdenum holds at $17.00.

The DOW is down 2.87 points to 9277.80; the S&P 500, down 0.27 points to 994.48. The miners are happy campers:

Barrick (ABX) $38.52 up 1.66%
Newmont (NEM) $43.78 up 1.51%
General Moly (Eureka Moly, LLC) (GMO) $2.70 up 1.12%
Freeport McMoran (FCX) $63.07 up 2.06% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are happy too, (a "tell" for General Moly):

Nucor (NUE) $43.41 up 0.16% - domestic steel manufacturing
ArcelorMittal (MT) $34.83 up 2.38% - global steel producer
POSCO (PKX) $91.49 up 1.18% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 1.09% to $1,05,711.16 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Off-Road Conditions Ahead, a Golden Opportunity?

Morning Miners!

It is 5:38 AM and the ole Colonel has made the coffee extra strong this morning. We may need it. The Dow Jones Industrial Average dropped 185 points after financial stocks cratered yesterday setting off an across-the-board selloff. There are two key employment reports coming up which should add to a bumpy ride this week. I've added a 4-WD switch to the Eureka Outlook Dashboard (to your right). I've turned it "ON" for off-road conditions ahead after reading the first employment report this morning. Private-sector jobs in the U.S. fell 298,000 in August, according to payroll giant Automatic Data Processing Inc. (ADP). The projected number was 213,000. Nuts.

The ADP numbers are of course the warm up band for the big government report on Friday rolling out at 5:30 AM, the Colonel will be up and at'em. The Eureka Miner's Market Report has been throwing out some warning flares for the last few weeks as we've watched Chinese markets fizzle and our favorite metals (except gold) top out. What about gold? Look what happened in London this morning as the spot price broke $970:


The return to safe havens has come and none too early. I made a beer bet with you that gold would hit $980 before Labor day and we only have three market days left (what is this?). Silver is back over $15 and I need to get it to $15.80 for the second Labor Day bet. Phew, things are getting exciting.

Here are two bullish reports on gold that you may find interesting reading on your break:

Gold price could still hit $1,200 this year (The Gold Report, 9/02/09)

Turning point for gold as Central Banks become buyers (Lawrence Williams, Mineweb, 9/01/09)

The first is a Gold Report interview with Blue Phoenix Chief Investment Strategist John Licata. He is convinced that gold remains one of the best asset plays in the world and is also quite high on silver. There is a good discussion of the global recovery to support his strategies.

The second article is a pleasant surprise. There are some indications that Central Banks and sovereign wealth funds are rethinking future sales of gold. A switch to purchasing may occur as attitudes towards gold as a reserve asset become much more positive. In particular, Russia and Asian countries might be in a catch up mode holding only about 1.5 to 2% of their reserve assets in gold compared to European banks which hold an average of 55%. All these players can move enough gold to make a market impact. Let's hope it's price positive.

How's John Wayne doing? One of the crew dropped by this morning to say they had taken the day off to do a little gold panning out by the Eldorado. It can't remember any water out there, must be a mirage.

Enough talk, let's walk the walk:

CAUTION: 4-WD ON, Off-Road Market Conditions Ahead

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what is this?)

Oil is down $0.37 in early trading to $67.68 (October contract); Gold is up $16.8 to $973.3 (8:26 AM update, December contract, most active); Silver is up $0.045 to $15.105 (December contract); Copper is down $0.0405 to $2.7780 (December contract); Molybdenum holds at $17.00.

The DOW is down 21.62 points to 9288.98; the S&P 500, down 3.23 points to 994.81. The miners are mixed:

Barrick (ABX) $36.12 up 3.05%
Newmont (NEM) $41.41 up 3.06%
General Moly (Eureka Moly, LLC) (GMO) $2.58 down 2.62%
Freeport McMoran (FCX) $60.43 down 0.30% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $43.30 down 0.84% - domestic steel manufacturing
ArcelorMittal (MT) $34.09 down 0.79% - global steel producer
POSCO (PKX) $90.15 up 0.16% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.02% to $1,074,820.67 (what is this?).

Cheers,

Colonel Possum

Eureka's Two Aces in the Hole

Morning Miners!

It is 5:53 AM, the coffee is hot and it is time to put on our thinking caps. There's a safety inspection going on in the shop this morning so we've got a little time to reflect on the last several weeks. Things got exciting on Monday, August 17th when the world decided to have a broad market sell off as reported in Shoot-out at the O.K. Corral. By Friday the 21st, the Report suggested we may be in a giant game of Texas Hold'em; the Turn Card was the Ace of China and Eureka had two aces in the hole, gold and molybdenum (Slow and Easy or Texas Hold'em). The River Card was oil and it hadn't been dealt. We hoped at that time that it showed less than $80 or global recovery might be in trouble. Three aces and a low card for oil looked like a winning hand for Eureka.


Central to playing this round of cards is that Turn Card, China. They've cushioned the recession with a quick and efficient stimulus plan; bought all manner of raw materials, given their folks vouchers to buy washing machines and reluctantly still show up at Treasury auctions to buy our debt. There have been some signs recently that this happy dragon is suffering a little indigestion (if you'll pardon my mixed metaphor of cards and dragons). China's Shanghai stock market has mostly been on a nose dive for the last several weeks. The first big drop was largely dismissed by reporter's comments (including the Colonel's) about the shakiness of the Shanghai as a leading indicator: it is not a mature market, is subject to government influence, lacks institutional investors and is comprised of individual Chinese investing with a gambler's zeal. Hmm...maybe. For all its alleged flakiness, it is funny that yesterday's leg down on the Shanghai caused another panic in the broader markets jerking oil below $70 and holding copper from the ever-elusive $3 benchmark. The response from the talking heads yesterday was yes, the Shanghai is unreliable but it does have a "pyschological" influence on more "sophisticated" markets. This is starting to sound like a lot of bull poop to the ole Colonel.

What's really going on? Let's ask the metals, no B.S. there. Here are three 15-day charts of our favorite metals; copper, gold and molybdenum. Copper is looking a little soft with a downward trend.


Gold is starting to trend up, is a return to safe havens underway?


Molybdenum has stepped down three times from its $18.25 high this year, falling 7% to $17. If it drops below $16.50, I'm turning one dashboard light from green to yellow buckaroos. On a positive note, it looks like General Moly is getting a nice pop in share price today.


Pick your poison, the Shanghai or key metals, I think it is difficult to argue that something isn't setting up for the Fall. Fortunately, oil has suffered too so we might get that low card after all. Is it Dr.Doom's "commodity dip" or just a pause before a year end rally? Stay tuned buckaroos. I wonder how the Duke is doing in the long dusty valley? We'll check with the film crew tomorrow.

Enough talk, let's walk the walk:

All lights are green on the Eureka Outlook Dashboard (upper right, what is this?)

Oil is down $0.14 in early trading to $69.81 (October contract); Gold is down $0.7 to $952.8 (December contract, most active); Silver is down $0.103 to $14.820 (December contract); Copper is down $0.0260 to $2.8525 (December contract); Molybdenum holds at $17.00.

The DOW is down 77.23 points to 9419.05; the S&P 500, down 8.29 points to 1012.33. The miners are mixed:

Barrick (ABX) $35.04 up 0.98%
Newmont (NEM) $40.52 up 0.82%
General Moly (Eureka Moly, LLC) (GMO) $2.88 up 5.11%
Freeport McMoran (FCX) $62.69 down 0.46% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $40.52 up 0.82% - domestic steel manufacturing
ArcelorMittal (MT) $35.45 down 0.51% - global steel producer
POSCO (PKX) $92.13 down 0.73% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.75% to $1,101,406.76 (what is this?).

Cheers,

Colonel Possum