Copper Shines a Ray of Hope

*** BREAKING NEWS *** The VIX or so-called "fear index" spiked 22.6% to close at 27.31. Any level above 25 indicates rocky market conditions may be ahead putting us in 4-WD on the Eureka Outlook Dashboard to your right. General Moly (GMO) and US Gold (UXG) were the only stocks that ended up for the day in the Eureka Miner's Grubstake Portfolio. The worst performer was POSCO, down 4.98%

Morning Miners!

It is 6:15 AM and that famous Raine's TGIF coffee has never tasted better. It might just be the pause that relieves a week of rough weather and rougher markets. Fears about China's monetary tightening and choppy earnings reports for the last quarter have sent gold below $1100, cratered oil and brought the broader markets to a net loss for the new year. To make matters worse, Goldman Sachs downgraded metals and the steel sector this morning. Ouch, that's a one-two punch for Eureka!

STOCKS NEWS US-Goldman downgrades metals, steel sectors

Aw come on Colonel, give us some hope on a Friday! OK, the weather is going to get better once the fourth Pacific storm passes and our old canary in the global recovery mine shaft, copper, is showing some spirit. Let's start with a short CNBC video of yesterday's interview with Feeport McMoRan (FCX) CEO Richard C. Adkerson. Freeport is the world's number two copper miner (note 1) and Adkerson is considered by some to be one of mining's best CEOs. You can find the video near the bottom of this blog.

This interview was conducted shortly after their quarterly report and FCX stock was down more than 8%. Their stock continues to get pummeled today after the Goldman downgraded FCX from "buy" to "neutral". Adkerson makes the point that last year also started out with a lot of glum opinions about China's economy. This was important then and is still relevant now because the greatest demand growth for copper and other base metals comes from China. Of course, China surprised everyone in 2009 and registered a GDP growth in excess of 10% last quarter. In Adkerson's words, "...for the time being, China looks very strong."

This strength has brought concerns of economic "overheating" and the recent moves by China's leaders to put the brakes on bank lending. From my viewpoint, the question is a matter of degree; if China's growth slows to 8 or 9% does the demand for metals drop off a cliff? For the now, I'll side with Adkerson's cautious optimism for 2010 although it is always scary to bet against Goldman (who have been fairly consistent in predicting a 2010 commodity correction since last fall: The Devil, Oil, Gold & Goldman). Here are some additional thoughts from this morning's Wall Street Journal:

"China bulls remain optimistic about that nation's appetite for commodities such as copper, iron ore, gold and aluminum. A combination of investment and stimulus packages have helped revive China's economy. Recent Chinese trade data showed imports surged 56% in December from a year earlier, while exports grew 17.7%.

But China's growth may face some obstacles of its own. China's central bank recently raised reserve requirements with an eye toward reducing speculative lending. Such moves could curb China's growth and, by extension, its appetite for commodities." (WSJ, 1/22/2010)

What does copper think? In early morning trading, copper was one of the few metals that up as gold and oil tumbled. Several days ago I ran my models of copper versus gold and copper versus oil and these charts are encouraging (a larger and more readable version is included at the bottom of this blog below the Adkerson interview).



In both cases copper is near or outside its expected range with good upward momentum in its 20-day moving average (large white arrow). If this trend continues, the ole Colonel will bet all these China jitters are a bit overdone and metals should recover.

On the other hand, there is caution in the wind. The VIX or "fear index" (what is this?) has moved close to the 25 level where the Report starts turning on caution lights after waddling around comfortably below 20 for most of the new year. Another worrisome sign is a technical "inversion" of gold and oil prices which (on a 3-month basis) began January 6th. An inversion means that oil prices move (on average) in the opposite direction to gold even though there can be days where both move up or down together. There were two inversions last year, 2/12 to 3/20 and 4/14 to 5/26. The first was quite possibly a precursor to the frightening stock market bottom in March (S&P 500 intraday low of 666.79 on 3/9/2009). Let's hope the current inversion does not repeat history.

Enough worrying about everything, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25 but just barely, rougher markets may be ahead (what's this?)

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

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

Oil is down $0.44 in early trading to $75.64 (March contract, most active); Gold is down $17.4 to $1085.8 (February contract, most active); Silver is down $0.450 to $17.060 (March contract); Copper is up $0.0055 to $3.30.05 (March contract); Molybdenum is steady at $15.50

The DOW is down 25.01 points to 10364.87; the S&P 500 is down 4.22 points to 1112.26. The miners are mixed:

Barrick (ABX) $37.24 up 1.97%
Newmont (NEM) $45.46 up 2.30%
US Gold UXG) $2.36 up 0.21%
General Moly (Eureka Moly, LLC) (GMO) $2.74 up 4.58%
Thompson Creek (TC) $12.23 down 0.61%
Freeport McMoRan (FCX) $75.64 down 0.84% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are mixed, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $42.58 up 0.50% - global steel producer
POSCO (PKX) $127.58 down 1.52% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.27% to $1,276,030.89(what is this?).

Cheers,

Colonel Possum

Note 1: Freeport McMorRan is the world's number two copper miner (after Chile's state-owned Codelco), a top five global gold miner, number one in molybdenum, and an upcoming leader in cobalt.

Headline Photograph by Mariana Titus

Miss Moly and the Platinum Looking Glass

Morning Miners!

It is 6:22 AM, grab a cup and let's see what's up for molybdenum in the next several months. As reported at the tail end of last year (The Colonel Wishes You a Happy New Year), minor metals moly and cobalt will make their debut in early February on the London Metal Exchange (LME):

Cobalt and Molybdenum 2010

This will expose these metals to a larger group of market participants (including speculators) by creating futures contracts similar to those of more well known commodities such as gold, copper and oil. In the current economic environment of low interest rates and continuing global recovery, the expanded market will most likely be supportive of molybdenum price in the near term.

The futures contracts are "physically delivered" which in the literal sense means if you bought it you got it although this rarely happens at the LME. Traders on the LME usually sell their contracts to someone else to avoid delivery of the physical metal. In the words of the Exchange:

"The LME is primarily a financial, rather than a physical market, where trading is used to manage risks rather than secure metal. Less than 1 percent of contracts traded on the LME result in physical delivery, so the chances of being stuck with metal you cannot use are very low. In the unlikely event that a contract goes to physical settlement, lots can be swapped or sold at a premium or discount to the LME price. The cobalt industry is already used to this way of doing business, as it already trades metal at a premium or discount to the Metal Bulletin cobalt price."

The LME will enable a moly miner in production like Thompson Creek Metals (TC) to hedge against volatility in prices. From the LME's view, "Hedging is the process of managing the risk of a price change by offsetting it in the futures market. The ability to hedge gives producers, consumers and merchants in the industry the choice of how much price risk they are prepared to accept. The process of hedging will also create for the first time a truly transparent and representative market price."

We have recently witnessed the downside to carrying a hedge book by the example of Barrick Gold (ABX). As they now perceive an increasing gold price trend, Barrick reduced their hedges to zero to take the fullest advantage of current market prices. The choice between low price volatility and greatest return is made by all producers; the LME adds a powerful tool for managing this risk/reward trade-off.

For a molybdenum miner in a pre-production phase like General Moly (GMO), the LME should help boost current moly prices given recent investor interest in metals as a "pseudo-asset" class. Higher future metal prices will improve GMO's estimated margins with respect to estimated production cost. This in turn strengthens their position in the eyes of investors and the ability to borrow capital.

This is the point at which Miss Moly passes into a somewhat surreal environment similar to Alice passing through the looking glass. Although only members of the LME will be allowed to participate in molybdenum futures contracts this will include speculators who see opportunity in putting easy money to work to bid up metal prices and reap handsome rewards. These folks are not evildoers, speculation adds liquidity to markets and in the end is always dampened by the laws of true supply and demand. Speculators with a natural sense (or luck) to know when to get in and out do well; those that bet poorly are crushed. That's the fun of markets, pardner.


I thought it might be interesting this morning to look at the platinum group metals to draw a comparison for what might be in store for molybdenum and cobalt. A U.S. subsidiary of London's Exchange Traded Fund Securities launched platinum and palladium exchange-traded funds (ETF) earlier this month, PPLT and PALL. Both of these metals are traded on the London Platinum and Palladium Market (not the LME) and now the ETFs expand participation to a massive base that includes retail investors like you and me. It is highly unlikely that there will be a moly or cobalt ETF launch any time soon; the point of this comparison is to illustrate how an expanded investor base can influence metal price in the near term.

Let's give this some perspective. Moly and cobalt are about to enter the financial high school of metals, platinum and palladium are seniors earning their own ETFs and gold and silver have graduated to become ETF mega-asset pools. Here's a comparison of ETF market capitalization (ETF share price x outstanding shares):

Platinum (PPLT) $0.0165B
Palladium (PALL) $0.0915B
Silver (SLV) $5.3B
Gold (GLD) $40.7B

The Gold ETF alone represents more than 1,100 metric tons of gold; the two new funds have accumulated a bit more than 100,000 ounces each of platinum and palladium to date. The platinum market is about 6 million ounces, and showed a small surplus last year. A 100,000-ounce swing is big enough to turn the market to a deficit. Platinum has just stepped through the looking glass - investors can easily trump supply and demand (at least for awhile) in a thinly traded market. And guess what happened? The price of platinum and palladium have shot up even even as gold has pulled back:

Platinum and palladium prices rocket (MineWeb, 1/19/2010)

So Colonel what's your point? Molybdenum will not have ETF exposure but its LME launch next month will broaden it's investor base through LME membership. As long as the "China/India will help recover the steel industry" story rings true, moly prices should be on an uptrend for 2010. With molybdenum listed on the LME, this uptrend may get an additional boost from speculative money seeking high return. Of course markets giveth and taketh away, so increased volatility in LME moly prices may result if the "China is tightening monetary policy and we're headed for trouble" story gains momentum. Not to worry, soon moly producers can hedge their bets with LME futures contracts. Aren't markets awesome?...oh, oh here comes the Mad Hatter!


If you just can't get enough of this metallic wonderland, here are some additional reasons why launching molybdenum and cobalt on the LME is a good idea:

London Metal Exchange cobalt and molybdenum FAQ

Here comes the Red Queen, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

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

Oil is up $0.25 in early trading to $77.99 (March contract, most active); Gold is down $4.4 to $1108.2 (February contract, most active); Silver is down $0.030 to $17.850 (March contract); Copper is up $0.0070 to $3.3620 (March contract); Molybdenum is steady at $15.25

The DOW is down 201.03 points to 10402.12; the S&P 500 is down 19.14 points to 1118.90. The miners are still hunkered down:

Barrick (ABX) $37.25 down 1.63%
Newmont (NEM) $45.40 down 2.18%
US Gold UXG) $2.37 down 4.44%
General Moly (Eureka Moly, LLC) (GMO) $2.75 down 7.72%
Thompson Creek (TC) $13.46 down 4.27%
Freeport McMoran (FCX) $82.62 down 1.85% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are still in the same foxhole, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $42.60 down 5.06% - global steel producer
POSCO (PKX) $130.70 down 3.58% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 3.78% to $1,290,289.06(what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Hunker Down or Stand and Fight?

Morning Miners!

It is 6:13 AM. The coffee's extra strong this morning, the Colonel is all for a good fight but some days it is just good to hunker down. There are two storms a brewin'; one west of here and the other east. On the weather front checkout the colors on the latest NOAA radar animation. In the markets, spot gold took a trouncing in London dropping more than $20 on further news that China is tightening its economic policy and a new housing report showed new-home construction fell far more than expected in December. Ouch, be right back.


OK, the markets are open in New York and predictably with gold down our poor miners are being taken to the wood shed. Now wait a durn minute! Yesterday the S&P 500 hit a new intraday high at 1150.45, we haven't been at these levels since October, 2008. The VIX or so-called "Fear Index" (what is this?) has been below 20 for the last several weeks and the Report doesn't start turning on warning lights until it breaks 25. This morning it is only a thin flat washer above 19. Buckle up, buckaroos!


Today, the approaching weather is probably more concerning than the fickle markets. From my view, as long as interest rates are low and the VIX is low, there is less resistance for equity and commodity prices to go up than down. I'm betting some folks are taking profits today and like storm fronts, this too shall pass. I say we stand and fight...or at least get ready to shovel snow!

Enough shaking in our boots, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

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

Oil is down $1.51 in early trading to $77.81 (March contract, most active); Gold is down $18.5 to $1121.5 (February contract, most active); Silver is down $0.510 to $18.290 (March contract); Copper is down $0.0615 to $3.3850 (March contract); Molybdenum is steady at $15.25

The DOW is up 149.56 points to 10575.87; the S&P 500 is down 13.94 points to 1136.29. The miners are hunkered down:

Barrick (ABX) $38.22 down 3.63%
Newmont (NEM) $46.55 down 3.90%
US Gold UXG) $2.53 down 2.32%
General Moly (Eureka Moly, LLC) (GMO) $2.97 down 3.51%
Thompson Creek (TC) $13.95 down 5.49%
Freeport McMoran (FCX) $82.62 down 1.85% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are in the same foxhole, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $44.88 down 4.63% - global steel producer
POSCO (PKX) $134.37 down 1.21% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 2.87% to $1,343,646.29(what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Buffet Wants More POSCO, Both Want Lithium

Morning Miners!

It is 6:39 AM. Let the Colonel pour a cup and brace you up for a few more Pacific storms. We've got some exciting news on the wires this morning but first a word about the Christmas Child, El Niño. You may have taken down your holiday lights but El Niño doesn't want you to forget the season. The readers are reminded that the Report has links to NOAA's El Niño Page as well as the National Weather Service Report for Eureka in the Local Weather and Climate section in the lower right column. For the latter, checkout the 28km infared radar animation for the Western states. This gives you the big picture for what is going on, a climate drama stretching from Japan to Nevada.


I like to think of this weather pattern as the tracks on a bulldozer. The upper track moves from west to east bringing us a series of storms often called the "Pineapple Express" due to their proximity to the Hawaiian Islands. Like road wheels, each storm rotates counterclockwise as it rolls closer to our neck of the woods. The lower track returns along the equator moving in the opposite direction, east to west. This bulldozer has a mean drive sprocket, four road wheels wheels and a big snow plow, pardner.


Now for some really great news that could affect our County. The venerable Sage of Omaha, billionaire Warren Buffet, has expressed a desire to invest more in South Korean steelmaker, POSCO (PKX). POSCO is an investor in General Moly (GMO) and presently owns a 20% share in our Eureka Moly Mt. Hope project.


Buffett wants to buy more POSCO stock - POSCO

Let's connect the dots and there are several. As announced today, Mr. Buffet presently owns 4.5 percent of the world's No.4 steelmaker and has indicated he wants to buy more POSCO stocks. Let's look at some more news. Last week POSCO announced that it is planning to invest $5 million in Pan American Lithium Corp. (TSX-V: PL).

AXcess News: POSCO to Invest in Pan American Lithium

Lithium? Hmm, that's a favorite metal of this Report. Lithium is a key strategic material in advanced battery chemistries for future electric and electric hybrid vehicles. The Report has covered how emerging battery technologies may become very important to our County and State (a complete list of links to these reports is given below the signoff). Who else likes lithium?

Why Warren Buffet is investing in lithium

And how does POSCO think about lithium? From today's announcement:

POSCO CEO Joon-yang Chung said during a signing ceremony in late November for a letter of understanding relating to a magnesium refinery business to be built in Gangwon Province South Korea, "POSCO will be aggressively pursuing projects and future materials like lithium as the new growth engines for the next generation of the company." (Axcess News, 1/18/2010)

The Colonel believes it is not unreasonable to conclude that Warren Buffet isn't just picking a up little more of an Asian steelmaker but seriously investing in a company with a vision of the future. Incidentally, he didn't buy POSCO stock when it was half of what it is today last year. No, Mr. Buffet will probably buy more POSCO near 52-week highs. He is no fool and I'm inclined to believe he now sees promise in a company aligned not only with the expected uptrend in steel production but the demands of future technologies for strategic materials.

A recurring theme of this report is the importance of strategic metals like lithium, vanadium and molybdenum, to the future of Northern Nevada. I believe what has been on the wires lately is encouraging news for the kids and grandkids of Eureka. The next time you drive by Mt. Hope find some comfort in the fact that America's grandpa from Nebraska owns 1% of that mountain and that interest is likely to increase.

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

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

Oil is down $0.44 in early trading to $79.93 (March contract, most active); Gold is up $5.8 $1136.3 (February contract, most active); Silver is up $0.238 to $18.665 (March contract); Copper is up $0.0530 to $3.4190 (March contract); Molybdenum is steady at $15.25

The DOW is up 77.47 points to 10687.12; the S&P 500 is up 9.14 points to 1145.17. The miners are mixed:

Barrick (ABX) $39.19 down 1.28%
Newmont (NEM) $47.79 up 0.38%
US Gold UXG) $2.56 up 0.39%
General Moly (Eureka Moly, LLC) (GMO) $3.10 up 3.16%
Thompson Creek (TC) $14.43 down 1.22%
Freeport McMoran (FCX) $84.02 down 0.34% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are up, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $46.63 up 0.73% - global steel producer
POSCO (PKX) $135.50 up 3.40% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.75% to $1,374,709.30(what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

If you're just catching up with this exciting story on strategic metals, here are some background articles on how emerging battery technologies may become very important to our County and State:

The Next Big Thing in Northern Nevada (The Eureka Miner's Market Report, 9/28/2009)

A Big Step into the Future for Eureka County (The Eureka Miner's Market Report, 10/23/2009)

A Silver Lining for the Silver State? (The Eureka Miner's Market Report, 11/16/2009)

What's in a Battery for Eureka County? (The Eureka Miner's Market Report, 11/23/2009)

The Colonel Hits the Open Road

Morning Miners!

It is 6:42 AM, have a cup and let's check the NOAA weather radar. I plan to hit the open road after this snow storm and will be back on the air bright and early next Tuesday, 1/19/10. Late is never good especially with storms and this one has been a slowpoke getting here. It looks like we've got colors coming in from the south southwest:


The markets are pretty quite today so I think I'm leaving you in good shape. Oil has edged below $80, molybdenum has moved up to $15.25 and gold is fairly stable near the $1130 level. Gold has returned to where we did our price predictions earlier this month (Moly Inches Higher, The Colonel's Outlook for January):

The fair value of silver is $17.918 in a range of $17.064 to $18.771 (Today, $18.405)

The fair value of copper is $3.1105 in a range of $2.8862 to $3.3348 (Today, $3.3615)

The fair value of oil is $76.610 in a range of $69.98 to $83.24 (Today, $79.58)

Traders are expecting large increases in U.S. oil and fuel inventories which has taken some shine off the recent run up in oil. Moly has popped 22% this month and I wouldn't be surprised if it stays put for a while given recent concerns about China's growth and a down tick in nickel prices. Silver is looking at little toppy with respect to gold and copper is moving back towards its expected range after a shot at $3.50 failed.

The Colonel will call this a pretty stable market after a lot of giddy-up go for the last two weeks. Stable is good.

Enough watching paint dry, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

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

Oil is down $1.21 in early trading to $79.58 (February contract, most active); Gold is flat at $1129.4 (February contract, most active); Silver is up $0.150 to $18.405 (March contract); Copper is up $0.0120 to $3.3615 (March contract); Molybdenum moves to $15.25

The DOW is up 8.63 points to 10635.88; the S&P 500 is downup 0.42 points to 1136.64. The miners are resting:

Barrick (ABX) $40.06 down 0.60%
Newmont (NEM) $48.40 down 0.25%
US Gold UXG) $2.56 down 0.39%
General Moly (Eureka Moly, LLC) (GMO) $2.76 up 2.22%
Thompson Creek (TC) $14.00 up 1.08%
Freeport McMoran (FCX) $88.61 up 0.58% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are resting too, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $46.48 down 0.45% - global steel producer
POSCO (PKX) $134.18 down 0.86% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.24% to $1,359,232.35 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

More News on US Gold & Western Lithium

Morning Miners!

It is 6:37 AM, grab a cup and get ready for a little snow coming our way. The markets woke up grumpy this morning snapping the broader market rally of the past several days. Apparently that old bugaboo Reality crept in and put a damper on our new year surge of optimism. Aluminum giant Alcoa (A) announced disappointing results after the market close, China did a pinch of monetary tightening and the U.S. trade deficit widened more than expected in November as surging oil prices helped imports to out gain exports.

What do we do now, pardner? The ole Colonel picked up a little US Gold (UXG) on the pullback and I feel better already. In fact, yesterday's Dahlman Rose report on US Gold's prospects in Eureka County (Eureka Good News: US Gold, General Moly & POSCO) got me so fired up, I added them to the Eureka Miner's Grubstake for 2010 . A little sour news isn't going to slow us down!


For those of you that have been tracking Western Lithium's (WLC) progress in Humboldt County, there is some encouraging news on the wire this morning. Western Lithium will hold a conference call today to discuss their positive scoping study results. Here's the information if you've got a little time this afternoon:

Date: Tuesday, January 12, 2010
Time: 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
Webcast: www.westernlithium.com
Dial in: 1-416-340-8018 or toll-free 1-866-223-7781
Replay: 1-416-695-5800 or toll-free 1-800-408-3053
Replay Passcode: 3211655

Their deposits of lithium carbonate in King's Valley could prove very beneficial to Northern Nevada as future electric and electric hybrid vehicles become a greater part of America's transportation story. In their words today:

"Western Lithium’s Kings Valley property has one of the largest known lithium deposits in the world, based on a historical resource estimate done by Chevron Resources of 11 million tonnes of LCE(2). The NI 43-101 compliant PAEE results for Stage I considers only 8% of the historical near-surface lithium deposit. Successful development of Stage I will allow the company to consider further expansion of production to meet anticipated growth of the lithium-ion battery industry. In December 2009, drilling was completed on the Stage II lithium historical resources and results are expected later in 2010. The company believes that its Nevada property has the potential to become a major USA-based global supplier of high quality lithium carbonate that can economically compete with other global producers of LCE." (WLC press release, 1/12/2010)

If you're just catching up with this exciting story here are some background articles on how emerging battery technologies may become very important to our County and State:

The Next Big Thing in Northern Nevada (The Eureka Miner's Market Report, 9/28/2009)

A Big Step into the Future for Eureka County (The Eureka Miner's Market Report, 10/23/2009)

A Silver Lining for the Silver State? (The Eureka Miner's Market Report, 11/16/2009)

What's in a Battery for Eureka County? (The Eureka Miner's Market Report, 11/23/2009)

Something for the kids and grand kids buckaroos!

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for our fuel gauge with oil above $80

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

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

Oil is down $1.08 in early trading to $81.44 (February contract, most active); Gold is up $0.1 to $1151.1 (February contract, most active); Silver is down $0.125 to $18.570 (March contract); Copper is down $0.0525 to $3.3885 (March contract); Molybdenum is steady at $14.25.

The DOW is down 30.68 points to 10633.31; the S&P 500 is down 6.56 points to 1140.22. The miners are grumpy too:

Barrick (ABX) $41.16 down 1.15%
Newmont (NEM) $49.26 down 1.83%
US Gold (UXG) $2.66 down 0.38%
General Moly (Eureka Moly, LLC) (GMO) $2.82 down 4.42%
Thompson Creek (TC) $14.02 down 0.43%
Freeport McMoran (FCX) $85.50 down 2.94% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are mixed, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $46.86 down 2.34% - global steel producer
POSCO (PKX) $136.86 down 2.31% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 2.10% to $1,372,426.25 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Eureka Good News: US Gold, General Moly & POSCO

Morning Miners!

It is 6:37 AM, grab a cup and let's get to work. Nothing like starting out the week out with a buckboard loaded with good news. For the big picture the 2010 metals rally continues to rock with COMEX gold moving up $17 to $1156 and copper only a few pennies from $3.50. For Eureka County, there is positive news about US Gold, General Moly and POSCO. Let's take these in order:

US Gold

Investment Banker Dahlman Rose is sponsoring an Emerging Miners CEO Conference this week in New York City. There is a a MineWeb report this morning about their thoughts on junior mining in Nevada:

Nevada still offers excellent potential for discovering and developing gold assets (MineWeb, 1/11/2009)

Adam Graf, director of equity research for Dahlman Rose, suggests that when compared to mining giants Barrick and Newmont, "junior miners stand to gain from existing processing facilities and well developed infrastructure, as well as the desire of major gold producers to replace existing assets."

One of Graf's top picks is US Gold (Amex, TSX: UXG) which includes their Tonkin and Gold Bar projects in Eureka, "US Gold holds one of the largest land positions on Nevada's gold trends, consolidating most of the southern portion of the Battle Mountain-Eureka trend, just south of the Cortez district and Barrick's Cortez Hills deposit." (the geology of this trend was recently covered in the Report's Mountains Move slowly, Time Passes Quickly).

"We believe the company's land position encompasses several prospective areas with the potential to discover new Carlin-type ounces," Graf said and has faith that US Gold head, Rob McEwen, makes "no secret of his goal to build another U.S. domiciled gold major and S&P 500 listed gold miner."

Here is a link to the US Gold website discussing the status of their projects in Eureka County:

Exploration Overview: Cortez Trend

The Gold Bar deposits were mined in the late 1980’s and early 1990’s by Atlas Gold Corporation (Atlas) and remain some of my fondest memories of Eureka:

Johnny Horton and Atlas Mine Memories (Eureka Miner's Market Report, 11/02/2009)

General Moly (Eureka Moly LLC)

General Moly (GMO) broke $3 in early morning trading. In late December the Report indicated that it may be a good time to buy some GMO stock since their share price had dipped below its 200-day moving average (POSCO & Miss Moly Go Dancing). We also warned that GMO stock needed to move quickly above the 200-day line to maintain momentum for 2010. Last Friday General Moly made a 13.4% move up on high trading volume. Predictably, momentum traders moved in this morning to jump on the band wagon to break the $3 mark. That deserves a Colonel Yee-ha!


Moly prices have been steadily moving upwards too hitting $14.25 Friday:


POSCO Goes to India

In addition to positive price action for molybdenum there is encouraging news from our favorite steelmakers, ArcelorMittal (MT) and POSCO (PKX). Both have investments in General Moly (South Korean steel producer POSCO has a 20% share in our own Mt. Hope) and are presently expanding their presence in India:

Arcelor, POSCO gear up for new India ventures (Reuters, 01/07/2010)

As reported, "The global steel industry is expected to experience a long-awaited recovery in demand this year, but the revival will vary across regions, with mature economies facing a slow and painful improvement and emerging markets enjoying a robust comeback." With this backdrop, demand growth in China and India are key to maintaining investor interest in the steel sector and derivative plays like General Moly.

There is an additional MineWeb article on the India developments:


POSCO plans $7.1bn steel plant in India (MineWeb, 01/07/2010)

I think all this positive news deserves another Colonel Yee-ha for the morning!

Enough hollering, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for our fuel gauge with oil above $80

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

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

Oil is up $0.55 in early trading to $83.30 (February contract, most active); Gold is up $17.3 to $1156.2 (February contract, most active); Silver is up $0.300 to $18.770 (March contract); Copper is down $0.0730 to $3.4735 (March contract); Molybdenum is steady sits at $14.25.

The DOW is down 2.19 points to 10616.00; the S&P 500 is down 1.48 points to 1143.55. The miners are happy-pappy except for Thompson Creek:

Barrick (ABX) $41.82 up 0.95%
Newmont (NEM) $50.17 up 1.11%
General Moly (Eureka Moly, LLC) (GMO) $3.08 up 9.97%
Thompson Creek (TC) $14.07 down 1.68%
Freeport McMoran (FCX) $88.61 up 0.58% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are mixed, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $48.03 down 1.90% - global steel producer
POSCO (PKX) $139.06 up 1.80% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up a strong 1.27% to $1,404,720.23 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus