Miss Moly Flies to London

Morning Miners!

It is 5:58 AM, grab a cup and warm up. I drove Miss Moly to the Elko airport yesterday and saw her off for her big debut in London tonight. She and her cousin Cobalt will be honored at a cocktail reception held at the London Metal Exchange's historic trading floor called "The Ring." Starting February 22, minor metals molybdenum and cobalt will be traded right along with the traditional base metals. This will expose molybdenum to a larger group of market participants (including speculators) by creating futures contracts that provide transparent and regulated pricing as well as risk management tools for producers. You can read more about this in our January report, Miss Moly and the Platinum Looking Glass.


The Report stated then, "In the current economic environment of low interest rates and continuing global recovery, the expanded [molybdenum] market will most likely be supportive of molybdenum price in the near term." That assumption has certainly been put to a test with most miners falling into bear correction territory amid growing concerns about China's monetary tightening, European sovereign debt and most recently worries about a Federal Reserve making plans to raise interest rates later this year.




We've got a nice two-day rally in copper and gold as some of the European concerns are easing for the time being. There is little doubt that metals and miners are still walking underneath some shaky timbers. Dennis Gartman, "The Commodity King", was very somber on CNBC Business News yesterday suspecting that the worse is yet to come; a greater than 10% correction in the broader markets and possibly rougher going for commodities. He is watching copper prices very carefully for further signs of deterioration in the global recovery story. On January 28th Gartman announced that Freeport McMoRan (FCX) was a technically broken stock and a harbinger of tough times for the mining sector (Freeport "Broken", Miners in Correction, 1/29/2010). The Commodity King called the collapse in commodities in 2008 so he is someone the ole Colonel listens to while standing at attention. Since I am an incurable optimist, I hope the King is wrong this time.

Did I talk to Miss Moly about any of this on our way to the airport? Hell no, I'm not going to spoil her nice party. We'll keep an eagle eye on copper and other metals while she and Cobalt dance the boogaloo in jolly ole England.

Enough partying, let's walk the walk:

4-WD is ON - the VIX or "fear index" remains above 25 again, rougher markets are expected to continue (what is this?)

Yellow light is ON for concerns about commodity reflation given a stronger dollar (U.S. Dollar Index DXY remains above 80).

Yellow light is ON for diminished investor confidence in the metal and mining sectors.

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 $0.66 in early trading to $72.55 (March contract, most active); Gold is up $7.2 to $1073.4 (April contract, most active); Silver is up $0.135 to $15.220 (March contract); Copper is up $0.0370 to $2.9500 (March contract); Molybdenum is steady at $15.00

The DOW is up 75.05 points to 9983.44; the S&P 500 is up 4.89 points to 1061.63. The miners are feeling better today:

Barrick (ABX) $35.36 up 2.29%
Newmont (NEM) $45.37 up 2.16%
US Gold UXG) $2.29 up 5.35%
General Moly (Eureka Moly, LLC) (GMO) $2.20 up 3.77%
Thompson Creek (TC) $11.99 up 5.45%
Freeport McMoRan (FCX) $71.75 up 3.68% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $39.47 up 4.97% - global steel producer
POSCO (PKX) $114.02 up 5.35% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 3.57% to $1,186,011.28 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

The inset molybdenum symbol was designed for Metalprices.com by the artist Murray Robertson. The design is influenced by historical symbols used in the ancient science of Alchemy. This creative molybdenum symbol is adapted from lead as these elements being of similar appearance were often mistaken for each other.

Nevada Leads U.S. - USGS 2010 Minerals Survey

Morning Miners!

It is 6:05 AM, let's start this week out with some good news. Copper and gold are both up this morning after a horrendous sell-off last week. There is a belief that the retreat in metals was overdone and that bargain hunting among traders and industry consumers will help push prices higher:

METALS-Copper rebounds on industry buying, dollar (Reuters, 2/8/2010)

The Wall Street Journal reports on gold this morning:

"The selloff in gold in recent days has brought the price of the metal closer to what some investors consider to be a more rational level. Though prices could fall more, there appears to be plenty of support for gold around $1,000 an ounce. The recent decline has cleared some of the short-term speculators out of the market, and could spur demand from buyers in India and China." (WSJ, 2/8/2010)


I remember even economist Nouriel Roubini (aka Dr. Doom) saying last month that $1000/oz was a reasonable floor. There is an expected pickup in consumer gold buying from India, the world's largest gold jewelry market and gold sales will no doubt increase in China with the coming Lunar New Year. Gold miners won't starve at $1000+ prices.

The latest USGS Minerals Survey is out and reports that Nevada led the U.S. in the value of nonfuel mineral commodities production in 2009. The USGS, however, estimated that domestic gold mine production in 2009 was 10% less than in 2008:

"Reduced production from several mines in Nevada, and the closure of one mine in Montana and one in Nevada, accounted for most of the decrease. These decreases were partially offset by an increase in production from one new mine in Washington and increases from several mines in Nevada. Because of the decrease in production, the United States fell to the fourth leading gold-producing nation; however, the United States was still a net exporter of gold." (USGS)

Let's take a look at the top big dogs in gold production last year (in metric tons) and their change from 2008:

China 300 tons up 5.3%
Australia 220 tons up 2.3%
South Africa 210 tons down 1.4%
United States 210 tons down 10%
Russia 185 tons up 5.1%

I'd say it is high time to get Cortez Hills rolling full tilt, pardner! There are also some great one-page summaries provided by the report with a handy mineral index:

USGS Mineral Commodity Summaries

Now go study up a bit, but first let's walk the walk:

4-WD is ON - the VIX or "fear index" remains above 25 again, rougher markets are expected to continue (what is this?)

Yellow light is ON for concerns about commodity reflation given a stronger dollar (U.S. Dollar Index DXY remains above 80).

Yellow light is ON for diminished investor confidence in the metal and mining sectors.

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 $0.06 in early trading to $71.25 (March contract, most active); Gold is up $12.7 to $1065.5 (April contract, most active); Silver is up $0.215 to $15.045 (March contract); Copper is up $0.0250 to $2.8825 (March contract); Molybdenum is steady at $15.00

The DOW is down 21.54 points to 9990.69; the S&P 500 is up 0.62 points to 1066.81. The miners are mixed:

Barrick (ABX) $35.25 down 1.62%
Newmont (NEM) $45.13 down 2.38%
US Gold UXG) $2.17 down 1.81%
General Moly (Eureka Moly, LLC) (GMO) $2.20 up 0.46%
Thompson Creek (TC) $11.76 up 0.09%
Freeport McMoRan (FCX) $70.50 up 0.38% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $37.95 down 0.29% - global steel producer
POSCO (PKX) $109.72 down 1.95% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.65% to $1,162,957.01 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Unemployment Drops to 9.7%, Dollar Strong

Morning Miners!

It is 5:41 AM. Have a strong cup of that delicious Raine's Red Label TGIF coffee, we've earned it this week. Let's set the record straight, the Colonel made a bad call on Tuesday:

"There is a sense by some that the dollar rally needs some rest which is supportive of gold price in February. I've picked $1,120 as a nominal price for this month and would be surprised to see any dramatic moves as gold comes back to its 1-year trend-line." (The Eureka Miner's Market Report, 2/2/2010)

The no "dramatic moves" part turned out to be a big blooper as we've watched the dollar strengthen and gold head down the mineshaft on increasing concerns about the euro-zone's fiscal health and monetary tightening policy in China. I underestimated the former when it appeared the Greek problem was contained given reassuring statements from the European Union chiefs early in the week. Don't believe everything you hear and only half of what you read, buckaroos!

The market damage has been substantial on fears that other countries in the euro-zone are at risk. As reported by the Wall Street Journal yesterday:

"Behind the turmoil are worries that a collection of European countries including Portugal, Ireland, Greece and Spain, known derisively as PIGS, won't be able to finance budget deficits that have ballooned to around 10% of gross domestic product. That has sparked fears that Europe's decade-old monetary union could unravel." (WSJ, 2/4/2010)

How bad was yesterday? The Eureka Miner's Grubstake portfolio has shed nearly a quarter of a million dollars since mid-January when metals and miners were on roll. The S&P 500 dropped 7.6% from its January 19th high, fear has returned to the marketplace (the VIX is up 50% from 1/19) and gold stumbled to 3-month lows. With the U.S. Dollar Index above $80, there is talk that commodity reflation, which has been very strong since last April, is now in jeopardy. As a caution I've switched on the YELLOW light for this vital sign on our Eureka Outlook Dashboard to your right.

I just watched CNN report on the Labor Department's monthly employment report. Non-farm payrolls dropped 20,000 folks but the new unemployment number is 9.7% down from last month's 10% and quite a bit better than economists expected rate of 10.1%. Manufacturing job growth has turned positive while construction related work is still in the red. The markets are digesting this news and it looks like the dollar is strengthening, gold is falling (but not precipitously) and the broader markets are mixed.


Let's have a little more Raine's coffee and regroup. If you remember how far we've come from the dark days of last March a pullback in the markets is not the end of the world and some consolidation is healthy. The Report supports a strong dollar and thankfully the world still respects it as a safe haven when dark clouds appear on the global horizon. As long as gold remains above $1000/oz, gold miners will still make a lot of money. Although copper has fallen to the bottom of the expected range we reported Tuesday, companies like Freeport McMoRan (FCX) can continue to profit at these levels (thankfully Freeport, Barrick, Newmont and Thompson Creek are trading up this morning). There is also buzz coming from Europe that moly prices are positioning for a rise in anticipation of the LME introduction this month, a position taken by this Report.

The Colonel is no fan of panic and we should remember that markets typically overact to scary news. The question before us is whether the debt concerns in Europe are aftershocks from the global credit crisis or a new earthquake. Nobody knows for sure and time will tell. At this point it seems to me that 2010 may turn out to be a scaled down 2009 with a market low in the first quarter followed by commodity reflation, and less likely a repeat of 2008 with all kinds of skeletons falling out of the financial closet.

Yesterday, I heard an interesting take on recent events. The world has swapped personal and corporate debt for sovereign debt and that will take a long time to unwind. At least the large developed countries (e.g., United States, Japan and the U.K) can still print money so their default is not in question. The currency devaluation in these countries and related inflation is a concern but not in the near term. If we can demonstrate some fiscal discipline and keep our recovery intact, the U.S. should do just fine. If the consequence of a stronger dollar (i.e. weaker commodities, pressure on U.S. exporters) is the price to pay for now, that's not all bad. I enjoy seeing a little respect return for Uncle Sam's greenback. Stand proud, pardner.

Enough talk, let's walk the walk:

4-WD is ON - the VIX or "fear index" is above 25 again, rougher markets are expected (what is this?)

Yellow light is ON for concerns about commodity reflation given a strengthening dollar (U.S. Dollar Index DXY above 80).

Yellow light is ON for cautionary investor confidence in the metal and mining sectors.

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 $0.18 in early trading to $73.32 (March contract, most active); Gold is down $5.7 to $1057.3 (April contract, most active); Silver is down $0.195 to $15.155 (March contract); Copper is down $0.0295 to $2.8495 (March contract); Molybdenum steady at $15.00

The DOW is down 7.18 points to 9995.00; the S&P 500 is up 0.37 points to 1063.48. The miners are mixed:

Barrick (ABX) $34.52 up 1.54%
Newmont (NEM) $44.19 up 1.49%%
US Gold UXG) $2.07 down 2.62%
General Moly (Eureka Moly, LLC) (GMO) $2.25 down 1.75%
Thompson Creek (TC) $11.11.51 up 2.22%
Freeport McMoRan (FCX) $68.32 up 2.37% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $37.77 down 1.56% - global steel producer
POSCO (PKX) $111.06 down 1.09% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.13% to $1,151,401.93 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

If Wishes Were Horses - Gold, Metals & Miners Stumble

*** BREAKING NEWS *** Continuing slide in the broader markets as well as metals & miners has caused the ole Colonel to switch the "Investor Confidence" indicator from GREEN to YELLOW on the Eureka Outlook Dashboard to your right ***

Morning Miners!

It is 6:01 AM, grab a cup of Thor's java and let's checkout the Colonel's wishing well. The end of November brought a new worry to the world stage, sovereign debt. It all began with a debt crisis in Dubai (Dubai World, A World Away?) and quickly spread to doubts about the credit worthiness of several European Union countries. Greece was first euro-zone member in the hot seat and just this week it seemed a plan was coming together to shore up their national balance sheet. The fear was that if quick action failed to save the Greeks, Portugal and Spain may be the next to fall. This morning's news added substantially to those fears. As reported by the Wall Street Journal:

"The cost of insuring the debt of euro-zone members with large budget deficits against default rose Thursday, dashing hopes that the European Commission's qualified endorsement of Greece's budget plan would calm investor fears. Greece, Portugal and Spain were in focus, with their five-year sovereign credit default spreads moving sharply wider." (WSJ, 2/4/2010)

Pardner, I wish this would all go away! Every time the sovereign debt snakes resurface in my wishing well, metals and miners get big snakebites. If you think the wayward finances of far away countries aren't your concern, think again. After this morning's news, gold dropped $30 and copper is solidly below the key $3 level. The miners and steelmakers are in retreat dropping 3 to 5%. This is not encouraging for a Nevada county with a commodity-sensitive economy.



Of course as market fears go this may be all overblown. The VIX (what is this?) has bounced back up to the fear level today but it may be down again tomorrow. Who knows. These credit crises are like slow motion train wrecks (remember sub-prime mortgages), I just wish we didn't have to watch another. Oh-oh there I go again wishing, say is that a beggar riding my horse?

On the positive side, global folks are liking the U.S. dollar again and oil took a notch south on the Europe news.

Enough hand wringing, let's walk the walk:

4-WD is ON - the VIX or "fear index" is courting 25 again, rougher markets are expected (what is this?)

Green light is ON for investor confidence in the metal and mining sectors but it is starting to flicker yellow again, let's see what tomorrow brings.

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 $1.68 in early trading to $75.30 (March contract, most active); Gold is down $30.4 to $1081.6 (April contract, most active); Silver is down $0.552 to $15.795 (March contract); Copper is down $0.0645 to $2.9090 (March contract); Molybdenum steady at $15.00

The DOW is down 176.47 points to 10094.08; the S&P 500 is down 21.68 points to 1075.60. The miners are in the down elevator:

Barrick (ABX) $34.62 down 3.59%
Newmont (NEM) $44.54 down 2.90%
US Gold UXG) $2.19 down 3.95%
General Moly (Eureka Moly, LLC) (GMO) $2.35 dowm 5.25%
Thompson Creek (TC) $11.63 down 4.66%
Freeport McMoRan (FCX) $67.87 down 3.68% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $38.76 down 4.20% - global steel producer
POSCO (PKX) $114.96 down 3.61% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down a jaw dropping 3.69% to $1,175,537.64 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Molybdenum North of $20/lb in 2010?

Morning Miners!

It is 6:00 AM sharp. The drums are beating for molybdenum lately as we are only a few days away from Miss Moly's debut on the London Metal Exchange (LME). The Report remains bullish on this event (Miss Moly and the Platinum Looking Glass) as more participants looking to put money to work will be drawn into the molybdenum marketplace. There is new excitement on the wires about the prospects for this minor metal and molybdenum focused miners such as our General Moly (GMO). This morning's article on a junior moly miner in Poland with interests in Australia is a good example:

Rising molybdenum price should be good news for Strzelecki Metals (Proactive Investors USA & Canada, 2/3/2010)

Last month JP Morgan analysts forecast that molybdenum would rise from around $15/lb currently to $21/lb by the end of the year, and could rise to $24/lb by the end of 2011. This is good for producers like Thompson Creek Metals (TC) but should also raise investor confidence in companies in the pre-production phase such as General Moly. As this article points out, other juniors like Strzelecki are just beginning to generate interest. Here's another bullish article from last month:

Big Time Rebound Set For Moly (Moly Investing News, 1/24/2010)

This article expands on the JP Morgan view:

'Moly inventories remain very lean,' they [JP Morgan] wrote. 'We also see more sustainability in the recent surge in moly prices compared to the spike this summer,' they [JP Morgan] have said in a report on Canadian molybdenum miner Thompson Creek Metals (TC).

The article notes that Haywood Securities has a less bullish outlook for molybdenum prices predicting $15/lb level this year (we're there) and $20/lb in 2011. Their long-term estimate is $15/lb in +2013.

'Looking ahead, we believe global molybdenum roasting capacity, currently at 480 million pounds per annum, is an important consideration, with some (arguably bullish) market commentators forecasting world consumption in excess of 480 million pounds within the next two years,” the [Hayward] analysts said, '…we expect growing demand fundamentals to dominate the molybdenum market, noting that the current list of greenfields projects lacks a significant number of large-scale ventures to potentially fill the expected supply deficit.'

Say pardner, let's get Eureka Moly's Mt. Hope project online and start filling that future supply deficit! I'm not ready to make any moly price predictions yet but I am willing to bet that next week's LME hoopla will push molybdenum north of $15/lb. How about a Colonel Yee-ha!

Say that sounds like another one for the Colonel's Beer Derby (lower right column of this blog).

Molybdenum will be north of $15/lb before Chinese New Year

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25 for several days, smoother roads ahead (what's this?)

Green light is ON for a cautious return of investor confidence in the metal and mining sectors

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 $0.12 in early trading to $77.35 (March contract, most active); Gold is down $1.9 to $1116.1 (April contract, most active); Silver is down $0.173 to $16.570 (March contract); Copper is down $0.0360 to $3.0535 (March contract); Molybdenum is steady at $15.00

The DOW is down 22.07 points to 10274.78; the S&P 500 is down 4.57 points to 1098.75. The miners are mixed:

Barrick (ABX) $36.21 unchanged
Newmont (NEM) $45.90 up 1.39%
US Gold UXG) $2.29 down 2.55%.
General Moly (Eureka Moly, LLC) (GMO) $2.54 down 1.17%
Thompson Creek (TC) $12.22 down 1.93%
Freeport McMoRan (FCX) $72.44 down 0.10% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $40.84 down 0.90% - global steel producer
POSCO (PKX) $118.87 up 0.39% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.42% to $1,232,142.49 (what is this?).

Cheers,

Colonel Possum

Headline photograph by Mariana Titus

Courageous Tiger, The Colonel's Outlook for February

Morning Miners!

It is 6:05 AM. Grab a cup and let's take a peek at what's coming at us in February.The 14th will bring in the Chinese New Year, the Year of the Tiger. The Chinese Lunar New Year occurs every year on the New Moon of the first lunar month, which is the second New Moon after the Winter Solstice. Mardi Gras follows close behind falling on the 16th of February this year. Sounds like a party month to me, maybe its time to cheer up about the markets.

Let's start with an unscientific, astrologically-based prediction. The so-called Great Recession had its worst year in 2008; the Year of the Rat, how fitting. As we enter the Year of the Tiger do you honestly think the Chinese Government intends to be a global party pooper? This is important because the fate of metals and miners this year has a lot to do with continuing Chinese demand. There has been much nervousness about their monetary tightening policy which has put massive pressure on these sectors for the last few weeks. Let's checkout the attributes of the Tiger:

The Tiger is the third sign of the Chinese Zodiac. It is a courageous, authoritative, charismatic, initiating, competitive, dynamic, adventurous, and dramatic sign. Ruling over the first month of spring, other themes associated with the Tiger are renewal, initiative, changefulness, and new beginnings.

Hmmm...sounds like miners are going to be riding with the Tiger to me!

OK Colonel, enough astrology let's do some real science. In January, I tempered earlier enthusiasm for 2010 (Copper Shines a Ray of Hope) with the curious behavior of oil and gold:

"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." (The Eureka Miner's Market Report, 1/22/2010)

Here's the good news. The inversion turned out to be shallow and ended January 28th. There was a broader market downturn and metals and miners were taken to the woodshed. Hopefully this is past us as gold, copper and our favorite miners enjoy a second day of recovery. Freeport McMoRan (FCX), a bellwether miner for investors, was nearly laid to rest last Friday. In early morning trading FCX has come up 9% from its lows last week and awarded by a "Buy" recommendation from Citigroup today. General Moly (GMO) has seen a similar bounce and sits above the key 200-day average at $2.54 this morning. Rock on Tiger!

I just updated my commodity models for the month of February and this is where we are for silver, copper and oil assuming $1,120/oz gold:

The fair value of silver is $17.662 in a range of $16.959 to $18.366

The fair value of copper is $3.1856 in a range of $2.8853 to $3.4860

The fair value of oil is $77.263 in a range of $71.101 to $83.424

Given this morning's prices it appears that silver has has fallen behind gold again lying below its expected range at $16.790. This is similar to the case in November when we asked the question, Why is Silver So Cheap?. If you think gold is headed higher, this may be a good entry point for silver.

Copper is slightly undervalued with respect to gold at $3.1025 but has recovered from its death spiral last week. Concerns about rising London Metal Exchange (LME) inventories and China jitters have been moderated by a rush of new fund money as reported by Reuters this morning:

METALS-Copper gains on funds, China concerns persist (Reuters, 2/2/2010)

Oil will be important to watch in the coming months. As it slowly re-correlates with gold it appears there is less resistance for going up than down. At $75.21 this morning it still has a ways to go to reach "fair value" with the yeller stuff. I'm going to stick my neck out with my first prediction for the new year:

Oil will see $80 before $70 by April Fools Day

Hopefully the ole Colonel won't be an April fool!

Molybdenum at $15 presently sits very near its 3-month and 1-year trend-line. The wild card will be Miss Moly's introduction on the LME next week. If the present commodity recovery has any steam, I believe moly price could see a nice bounce given the broader base of market participants (which includes speculators).

Finally, what happens to gold? There is a sense by some that the dollar rally needs some rest which is supportive of gold price in February. I've picked $1,120 as a nominal price for this month and would be surprised to see any dramatic moves as gold comes back to its 1-year trend-line. Interestingly, the 3-year and 5-year trend-lines are also close to its present value ($1,050 and $1,100 respectively). This is inline with VM Metals forecast for 2010 that we discussed yesterday: $1,050/oz to $1,150/oz

Stay tuned Buckaroos!

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" has dropped below 25 for several days, smoother roads ahead (what's this?)

Green light is ON for a return of investor confidence in the metal and mining sectors

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 $0.78 in early trading to $75.21 (March contract, most active); Gold is up $10.5 to $1115.5 (April contract, most active); Silver is up $0.110 to $16.790 (March contract); Copper is up $0.0190 to $3.1025 (March contract); Molybdenum is steady at $15.00

The DOW is up 69.98 points to 10255.51; the S&P 500 is up 8.59 points to 1097.78. The miners are mostly up:

Barrick (ABX) $36.66 up 0.44%
Newmont (NEM) $45.60 up 0.14%
US Gold UXG) $2.38 down 1.22%.
General Moly (Eureka Moly, LLC) (GMO) $2.54 up 4.96%
Thompson Creek (TC) $12.49 down 0.24%
Freeport McMoRan (FCX) $72.03 up 0.61% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $41.38 up 1.66% - global steel producer
POSCO (PKX) $118.55 up 1.19% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.88% to $1,237,392.75 (what is this?).

Cheers,

Colonel Possum

Trees Do Not Grow to Heaven

They have in Turkey a drink called coffa [coffee]...This drink comforteth the brain and heart, and helpeth digestion - Bacon


Morning Miners!

It is 5:54 AM, let the ole Colonel pour you a Monday cup of coffa to kick off a new month in this still new year. This morning's quote comes from Sir Francis Bacon English philosopher, statesman, scientist, lawyer, jurist, and author. Although his accomplishments were many, bringing coffee to the attention of the western world in my opinion is one of his finest. How could we face Monday mornings without it!

We certainly drank a lot of coffee in the break room last week as we watched the metals and miners get crushed by a haul truck of heavy economic overburden. In all fairness, we witnessed a pretty amazing run-up in both last year as the global economy struggled to regain its footing. Copper price alone rose 140%. There was bound to be a pullback, pardner. Alex Heath, head of base metals and RBC Capital Markets, puts it this way:

"It's just a change in sentiment really...I don't think anybody was under any misapprehension that metals had got ahead of themselves in terms of actual demand and growth ... Trees do not grow to heaven."

You can read the entire article from the Toronto Globe and Mail:

Copper drops on concerns over China (The Globe and Mail, 2/01/2010)

There is another interesting piece on the fate of metals drawn from observations by the VM Metals Group based in London:

2010: A gap year for metal prices - VM Group (MineWeb, 2/01/2010)

A common theme in both articles is a mixed hand for metal prices in 2010 with China as the wild card. VM has the following forecasts for some of the metals we watch daily in the Report:

Gold - $1,050/oz-$1,150/oz
Silver - $16.00/oz-$18.00/oz
Copper - $7,300/t-$7,475/t ($3.3182/lb - 3.3977/lb)

I am presently working on my own price models and will have a outlook for February posted soon.

Let's close with a related contribution from Sir Francis Bacon which forms the basis of modern science. It is called the "scientific method":

A scientific method consists of the collection of data through observation and experimentation, and the formulation and testing of hypotheses.

Many of us that watch the markets also apply the scientific method. With all manner of number crunching and fancy charts we develop hypotheses about the future of prices. The problem with our pursuits is the "science" behind the behavior of markets. Unlike apples falling from trees governed by the law of gravity, our subject of study involves people as well as things.

People driven by fear and greed as well as rational sense can wreack havoc on any sensible laws of physics. Our apples often fall up as well as down although both the trees and apples of markets respond to some manner of "gravity" in the long run; our trees don't grow to heaven, our apples don't fall to the stars. Let's see what direction metals fall in 2010, this morning they appear to be thankfully falling up.

Enough talk, let's walk the walk:

4-WD is ON - the VIX or "fear index" has dropped below 25 but the Colonel is going to expect rougher markets to continue until we see several days of lowered VIX levels (what's this?)

Yellow light is ON for cautious investor confidence in the metal and mining sectors

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 $0.90 in early trading to $73.79 (March contract, most active); Gold is up $12.9 to $1096.7 (April contract, most active); Silver is up $0.280 to $16.470 (March contract); Copper is up $0.0245 to $3.070 (March contract); Molybdenum is steady at $15.00

The DOW is up 65.67 points to 10133.00; the S&P 500 is up 8.99 points to 1082.86. The miners singing in the mineshaft:

Barrick (ABX) $35.90 up 3.10%
Newmont (NEM) $44.86 down 4.67%
US Gold UXG) $2.35 up 5.38%.
General Moly (Eureka Moly, LLC) (GMO) $2.36 up 0.43%
Thompson Creek (TC) $12.17 up 4.91%
Freeport McMoRan (FCX) $69.74 up 4.57% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $40.41 up 4.47% - global steel producer
POSCO (PKX) $116.78 up 3.39% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up a healthy 3.18% to $1,208,378.43 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus