Gartman Bearish on Metals; Freeport Broken; EMI Dives

Morning Miners!

It is 5:44 AM. Happy Mardi Gras! Have a cup of Community Coffee, Louisiana's finest. The ole Colonel is taking Ruby T, Mariana and Thor to Reno tonight for a little celebration. Old miner Woden will stay here to bring in Wednesday but don't count on a Report tomorrow. Laissez les bons temps rouler!

Gartman Bearish on Metals

Let's keep it simple - this is not a great morning for the metals and miners. Dennis Gartman, Commodity King and author of the respected Gartman Letter, declared he was bullish on gold last Thursday. That's good.

Gartman threw up a red flag on copper and the base metal complex this Tuesday. That's bad. Kitco carried his assessment this morning in their Market Nuggets:

Newsletter writer Dennis Gartman cites concern about copper and its implications for the economy. Comex copper gapped lower Monday and is at risk of breaking below an upward sloping trendline extending back into last year. “Worse, for copper is the fact that the charts of the other industrial metals are beginning to turn bearish,” he says in The Gartman Letter. And, he points out, copper inventories have been rising, with Shanghai Futures Exchange stocks now just over 150,000 metric tons and approaching the highs made nine months ago. “This cannot be bullish news,” he says. He cites a commodity adage that copper, zinc, tin and aluminum collectively have a “Ph.D.” in economics due to their tendency to reflect future economic trends through their price movement. “At the moment, copper is looking manifestly bearish and argues for a slowing of global economic circumstances,” Gartman says. “Tin is turning quietly so; tin and aluminum have not yet, so the economic jury is still out. Nonetheless, copper’s weakness has our interest.” As of 8:19 a.m. EST, Comex May copper was 4.85 cents lower at $4.2785 a pound. (Kitco Market Nugget, 3/8/2010)

Here's how Bloomberg News reported the story on copper's decline:

Copper Falls to Two-Week Low as Higher Oil Prices May Curb Economic Growth (Agnieszka Troszkiewicz, 3/8/2011, 4:06 AM PT)

Gold trending up, copper trending down. This Report has been pointing out this "inverted" relation for several weeks; a bearish relation for the metals & mining sector. Here is how it looks graphically using my latest copper/gold model for March (a larger, more readable plot is given near the bottom of this blog page):



The straight magenta line is copper's "fair value" of COMEX copper with respect to COMEX gold given the last 3-months of data. It is going from the upper left to the lower right of the graph - this Report (and Dennis Gartman) likes things that go from the lower left to the upper right. The aqua lines represent the upper and lower bounds for copper price above and below fair value for different gold prices. The dark blue line is the actual futures data; the yellow line shows the most recent price action. The 1-month moving average (light blue) is topped out and moving sideways. For last Friday (March 4th), copper is showing an overvalued state with respect to gold falling just below the upper limit.

This morning (not shown), copper price is falling back toward fair value at $4.2840/lb (+0.52 standard deviations for the statistics buffs). If we pick $1440/oz gold as a nominal price for March then:

The fair value of copper is $4.1732/lb within a range of $3.8246 to $4.5218/lb

Copper has been our faithful canary in the global mineshaft, if she's flying down the shaft we may be in trouble. Oh, and another thing...

Freeport McMoRan (FCX) is technically broken

The broader markets are now open and our bellwether miner Freeport-McMoRan (FCX) has just fallen though its 150-day moving average (present price is $48.76; 150-day point is $49.11). In late January of last year a similar condition occurred and our friend Dennis Gartman declared Freeport to be "technically broken." This is how we reported that event:

"The fate of Freeport is important because it is often considered the bellwether of mining stocks by the investment community. Yesterday on CNBC, Dennis Gartman, the 'Commodity King', declared Freeport 'technically broken' and saw rocky roads ahead for metals and miners in the near term." (Eureka Miner's Market Report, 1/29/2010)

Although Freeport managed an April rally last year it fell to new depths mid-year hitting its low for the year in early July. Copper and gold were in the bearish "inverted" state through much of this period. But wait, there's more...

The Eureka Miner's Index Dives

The Eureka Miner's Index(EMI), which tells us the market temperature for the factors that influence mining in Eureka County, just plumbed a new low for the year at 328.9 (see below). This reinforces a downward trend since the high of 816.8 on January 4th. When Freeport was in decline last year, the EMI hit a low of 50.7 on 6/7/2010. We're a lot better off than those days but the Colonel doesn't like the trend - let's put on our beads and head to Reno! Laissez les bons temps rouler!

Daily Oil Watch

On February 1st we identified North Sea Brent crude oil as a good barometer for the developing crisis in the Middle East and North Africa. The most active front month contract remains above $100/bbl with a large spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX (see note 1). The Report normally follows the latter but will track both until things settle out in this volatile region.

Here are the most active front month contracts as of this morning:

NYMEX light sweet crude $105.53
ICE North Sea Brent crude $113.70
Spread (ICE- NYMEX) = $8.17 (yesterday $11.39)

Here are the June contracts with a narrower spread:

NYMEX light sweet crude $107.33
ICE North Sea Brent crude $113.99
Spread (ICE- NYMEX) = $6.66 (yesterday $9.08)

Although prices are off their crisis highs, we still have $100+ Brent and NYMEX in June favoring higher oil prices for the summer. The Colonel's December prediction that we would see NYMEX $100/bbl oil before the Fourth of July came true on February 23rd.


Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Miner's Index(EMI)

This morning the Eureka Miner's Index(EMI) is above-par at 328.88 diving from yesterday's 412.60 and below the 1-month moving average of 527.04. The EMI continues to be down from the high set on January 4th and a trend reversal in the short term is now unlikely.

The record high for the EMI is 816.78 set 01/04/2011; the low was set 6/7/2010 at 50.7. An EMI greater than 100 signals better times for the metals & miners relevant to Eureka County.

200-day averages are used in the EMI to normalize current mining company share price and are updated monthly. Upper and lower trend lines are updated weekly.

Eureka Outlook Dashboard

4-WD is ON - The miners are in a rough patch; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) just dropped its 150-day moving averages but is still above its 200-day average of $43.06 (our new warning level, 02/02 update after the FCX 2:1 stock split); 10-year Treasurys are safely below 4% preserving a low-interest rate environment.

The GREEN light is turned back on for Commodity Reflation with copper trading comfortably above $3.50/lb

The GREEN light is turned on for Stable Markets with the VIX below the 30 level (what's this?)

The YELLOW light is turned on for Inflation Watch as the Federal Reserve resumes buying Treasurys (aka QE2)

The GREEN light is turned back on for Investor Confidence as investment returns to the equity markets

The RED light is turned on our Fuel Gauge with oil above $100

A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions , General Moly Mt. Hope Water Rights, U.S. House committee debates miner workplace safety bill, R&R Partners parts ways with Nevada Mining Association, Obama budget includes mining royalty , Mineral commission fights consolidation

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

Commodity Market Morning Update

NYMEX/COMEX: Oil is up $0.09 in early trading at $105.53 (April contract, most active); Gold is down $2.9 to $1431.6 (April contract, most active); Silver is up $0.235 to $36.100 (May contract, most active); Copper is down $0.0430 to $4.2840 (March contract, most active)

Western Molybdenum Oxide is $17.00; European Molybdenum Oxide is $17.75; LME moly 3-month seller's contract is $17.51, LME cash seller is $17.30

Stock Market Morning Update

The DOW is down 69.85 points to 12,188.35; the S&P 500 is down 8.75 at 1322.22

Miners are not happy:

Barrick (ABX) $52.46 down 1.00%
Newmont (NEM) $53.04 down 1.19%
US Gold (UXG) $7.78 down 4.31%
General Moly (Eureka Moly, LLC) (GMO) $5.05 down 2.32%
Thompson Creek (TC) $12.47 down 1.81%
Freeport-McMoRan (FCX) $48.76 down 2.75% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $35.01 down 2.12% - global steel producer
POSCO (PKX) $102.29 up 0.68% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 1.70% at $1,783,705.93 (what's this?).

Cheers,

Colonel Possum

Note 1 - West Texas intermediate (WTI), also known as Texas light sweet, is a type of crude oil used as a benchmark in oil pricing and is the underlying commodity of New York Mercantile Exchange's (NYMEX) oil futures contracts. The price of WTI is often referenced in North American news reports on oil prices, alongside the price of North Sea Brent crude (Wiki).

Headline photograph by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

$1445+ Gold, $36+ Silver, $106+ Oil - Metals & Miners Weekly Roundup

Morning Miners!

It is 5:39 AM. Grab a cup of Monday ether and let's get your diesel started - we've got a lot of work to do...

Mining Quarterly Spring of 2011

Before we get rolling, here's something fun. Look to your right and you will find updated links to Adella Harding's terrific Mining Quarterly. The Spring 2011 issue has just been published and you can access it through a new interactive full-color/full-page application on the Elko Daily Free Press website. There are articles and updates on Long Canyon, Bald Mountain, Robinson Mine, Round Mountain and much more.

If you missed the Winter 2011 edition, click on "Mining Quarterly Archive" and you can view it in this improved format. The ole Colonel prefers to read his hard-copy Quarterly in his rocker by the the wood stove but these links give you a great sneak preview of what's coming and what's in the rear view mirror. Happy reading, pardner.

Oil & Metals Outlook

The unresolved crisis in North Africa and Middle East trumped a good U.S. jobs report last Friday. More jobs, recovering economies but higher oil prices - the yin-yang of markets today and perhaps many more days to come.

When I made my December predictions for 2011, I felt some change in the global economy would bring $100+/bbl oil sometime before mid-year and those same conditions would drive silver and gold prices higher. We now know that trouble in the Arab world was the catalyst to higher oil. This morning oil, gold and silver all posted new records.

The action started at 7:50 AM ET when silver spiked to a new 31-year top at $36.735/oz; my December prediction was $36/oz. NYMEX light sweet crude followed silver to hit $106.95/bbl 15-minutes later. Brent crude, our barometer for the present oil crisis, didn't register a new record but is sitting comfortably above $116/bbl (see Daily Oil Watch below).

COMEX gold was the last tail in the barn making its new high 30-minutes after silver by nearly breaking $1450/oz at $1445.70/oz. This gives us a new low of 39.4 in the closely watched gold/silver ratio. The timing and low ratio underscore the growing strength of silver compared to gold. Here is a 10-year chart of the gold/silver ratio, we're in new pasture buckaroos:



I'll stick with my $1570/oz gold prediction although there are now indications gold could move higher this year. Bloomberg News carried a good video of T. Boone Pickens talking about oil prices against a growing backdrop of turmoil in the Middle East and North Africa:

Pickens on Oil Prices, Middle East Turmoil (Bloomberg News, 2/28/2011)

Boone's oil call for $120/bbl to $150/bbl or even higher supports rising precious metals prices in my book. This Report has noticed a downward trend in the gold/oil ratio and the one-month correlation is a tight 0.86 (see analysis below). If we take this morning's number ratio of 13.6 bbl/oz instead of the 3-month average ratio of 15.2 bbl/oz, Boone's numbers give us a possible range for gold prices of $1,630/oz to 2,040/oz. Using the above gold/silver ratio, this suggests a range for silver prices of $41/oz to $52/oz. The ardent goldbugs have been talking about $2,000/oz gold and $50/oz silver for some time. Something to think about pardner, stay tuned.

Here is the record book for our big three metals together with NYMEX and ICE Brent crude oil after today's trifecta:

COMEX Gold $1445.70/oz 08:20 ET 03/07/2011, April contract most active
COMEX Silver $36.745/oz 07:50 ET 03/07/2011, May contract most active
COMEX Copper $4.6375/lb 06:15 ET 02/04/2011, March contract most active
NYMEX WTI Crude $106.95/bbl 08:05 ET, 03/07/2011, April contract most active
ICE Brent crude $119.79/bbl 02:45 ET 02/24/2011, April contract most active

Eureka Miner's Index (EMI)

The Eureka Miner's Index (EMI) gives us the market temperature for the sectors that have the greatest impact on mining in Eureka County. Below is a chart of the EMI at Friday's close. The magenta line is the EMI with a low interest cap of 3% on 10-year Treasurys (LIRC) and adjustments for gold and silver prices (i.e., Au:Ag ratio). A 1-month moving average is given by the blue line (a larger, more readable chart can be found near the bottom of the blog page):


This morning the Eureka Miner's Index(EMI) is above-par at 412.60, down from from Friday's close at 416.84 and below the 1-month moving average of 536.29. The EMI continues to be down from the high set on January 4th and moving sideways with a new 2011 low set February 24th of 408.67.

The record high for the EMI is 816.78 set 01/04/2011; the low was set 6/7/2010 at 50.7. An EMI of 100 is the boundary between good lands and bad lands for the metals & miners relevant to Eureka County.

200-day averages are used in the EMI to normalize current mining company share price and are updated monthly. Upper and lower trend lines are updated weekly.

Daily Oil Watch

On February 1st we identified North Sea Brent crude oil as a good barometer for the developing crisis in the Middle East and North Africa. It is still above $100/bbl with a large but narrowing spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX (see note 1). The Report normally follows the latter but will track both until things settle out in the region.

Here are the most active front-month contracts as of this morning:

NYMEX light sweet crude $105.50
ICE North Sea Brent crude $116.89
Spread (ICE- NYMEX) = $11.39 (Last Friday $12.45)

Here are the June contracts with a narrower spread:

NYMEX light sweet crude $107.54
ICE North Sea Brent crude $116.62
Spread (ICE- NYMEX) = $9.08 (Last Friday $10.61)

Although prices are off their crisis highs, we have $100+ Brent and NYMEX in June favoring higher oil prices for the summer. My December prediction that we would see NYMEX $100/bbl oil before the Fourth of July came true on February 23rd.

Oil & Copper Correlations with Gold

Oil & copper correlations with gold give us insight into what may happen next for the metals & miners. With supply and demand fundamentals returning to the commodity space, diminishing correlations between key commodities are less alarming but trends should still be carefully monitored especially with spiking oil prices.

Here are the latest correlations given this morning's NYMEX/COMEX trading:

Oil/Au correlation +0.8605 (1-month) +0.6433 (3-month)
Cu/Au correlation -0.5155 (1-month) -0.1000 (3-month)
Cu/Oil correlation -0.4976 (1-month) +0.1780 (3-month)

Here are the numbers from the last roundup (2/28/2011):

Oil/Au correlation +0.6258 (1-month) +0.3941 (3-month)
Cu/Au correlation -0.3356 (1-month) -0.3349 (3-month)
Cu/Oil correlation -0.6059 (1-month) +0.1798 (3-month)

We still have as many negative as positive correlations. Oil and gold have moved in a strong positive direction; copper and gold remain in a solid inversion (i.e. both one-month & three-month value correlations are negative). Copper and oil remain mixed with only a small change in the 3-month. The metals & miners tend to do best when all correlations are positive.

According to my new March models (see bottom of blog page): oil is presently overvalued with respect to gold by +4.66-standard deviations and copper is overvalued by 1.69-standard deviations. Copper is presently under-valued with respect to oil by -0.12-standard deviations.

One way to visualize these correlations over time is to plot the "near-term" 3-month versus the "short-term" 1-month correlations (aka "rho") as shown below in a graph of oil versus gold and copper versus gold. The blue line indicates the correlation trajectory since October 1st; the magenta line is more recent data (ref: China to the Rescue?):




In the case of oil versus gold, we start out on 10/1/10 in the "+,-" or "yellow" quadrant and move upward until both are positively correlated (i.e. in the "+,+" or "green" quadrant). Copper correlated positively faster than oil last fall and has was initially in the green quadrant longer. Correlation data in this region is typically considered bullish. After a brief venture into the "-,+" quadrant, the return of oil vs gold to the "+,+" side is bullish; the movement of copper vs gold into the "-,-" inversion region is a bearish development. There does seem to be movement towards the "-,+" region now which is less bearish for copper/gold.

Gold:Oil, Oil:Copper & Gold:Copper Ratios

The Report has been tracking the stability of the gold:oil, oil:copper & gold:copper ratios. Although they ended last year rock solid (<3% variation, 1-standard deviation/mean) the ratios diverged and now appear to be stabilizing. The period of divergence is what prompted my January 14th comment to Adella Harding, Elko Daily Free Press, "The recent divergence of our lustrous friend [gold] from copper and oil...may signal a near-term correction for the overall metals and mining sector.". The mining sector remains in correction except gold miners are getting some lift with rising gold prices.

Here is a plot of the variation for both ratios as well as the copper/oil ratio (a larger, more readable chart can be found near the bottom of the blog page):



Once the ratios exceed 3% error, they become less useful in predicting the price moves of one commodity with respect to the another in the ratio pair.

For the past 3-months we have these statistics given this mornings' numbers:

Gold:Oil ratio

mean 15.21 bbl/oz
variation > 3.0% limit at 3.69% (1-standard deviation/mean)

Oil:Copper ratio

mean 20.80 lbs/bbl
variation > 3.0% limit at 5.27% (1-standard deviation/mean)

Gold:Copper ratio

mean 316.0 lbs/oz
variation > 3.0% limit at 4.05% (1-standard deviation/mean)

Weekly Molybdenum Roundup



Spot prices for molybdenum oxide remain in $17/lb territory out West and in Europe. Euro moly spot is now in backwardation with both 3-month and 15-month London Metal Exchange (LME) seller contracts. Western Moly is in a weak contango with both contracts (contango occurs when the price of a commodity for future delivery is higher than the spot price, or a far future delivery price is higher than a nearer future delivery; backwardation is the opposite of contango).

On February 23rd I suggested a drop in London Metal Exchange molybdenum futures prices may be a harbinger for lower prices in the moly oxide spot markets in the short term. Here is an article from Platts Resources that backs up that concern:

Moly oxide slides on slow end-user buying and trader liquidations (Platts Metals, 2/24/2011)

The 3-month seller at $17.24/lb is comfortably above the Colonel's mid-range moly price target for 2010 of $15.71/lb but below my target of $20.21/lb for 2011. The Report will give moly prices a "yellow-green" light on the Eureka Outlook Dashboard for now because I do believe we could see much higher prices this year although the Middle East crisis must be watched closely. There is an excellent analysis of the supply/demand argument for $20+/lb moly provided by General Moly's Seth Foreman in the General Moly Update.

Here is a detailed pricing summary for last week:

Western Moly Oxide $17.00/lb (the price tracked by Base Metals on the General Moly Website)

Moly Oxide, Europe (Mo Drummed Molydbic Oxide EU) $17.75/lb (the price reported in the Metals Bulletin)

LME Futures Contracts

LME cash seller is at $37,500/metric ton $17.01/lb

3-Month (Buyer) $36,000/metric ton $16.33/lb
3-Month (Seller) $38,000/metric ton $17.24/lb

15-Month (Buyer) $37,775/metric ton $17.13/lb
15-Month (Seller) $38,775/metric ton $17.59/lb

Here is a 1-year chart of the LME 3-month contract (seller):



Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Outlook Dashboard

4-WD is ON - The miners are still in a rough patch; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) remains trapped between its 100-day and 150-day moving averages but still above its 200-day average of $44.85 (our new warning level, 03/04 update); 10-year Treasurys are safely below 4% preserving a low-interest rate environment.

The GREEN light is turned back on for Commodity Reflation with copper trading comfortably above $3.50/lb

The GREEN light is turned on for Stable Markets with the VIX below the 30 level (what's this?)

The YELLOW light is turned on for Inflation Watch as the Federal Reserve resumes buying Treasurys (aka QE2)

The GREEN light is turned back on for Investor Confidence as investment returns to the equity markets

The RED light is turned on our Fuel Gauge with oil above $100

A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions , General Moly Mt. Hope Water Rights, U.S. House committee debates miner workplace safety bill, R&R Partners parts ways with Nevada Mining Association, Obama budget includes mining royalty , Mineral commission fights consolidation

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

Commodity Market Morning Update

NYMEX/COMEX: Oil is up $1.08 in early trading at $105.50 (April contract, most active); Gold is up $8.5 to $1437.1 (April contract, most active); Silver is up $1.103 to $36.430 (May contract, most active); Copper is down $0.0100 to $4.4755(May contract, most active)

Western Molybdenum Oxide is $17.00; European Molybdenum Oxide is $17.75; LME moly 3-month seller's contract is $17.24, LME cash seller is $17.01

Stock Market Morning Update

The DOW is up 20.17 points to 12,190.05; the S&P 500 is up 1.01 at 1322.16

Miners are mixed:

Barrick (ABX) $53.39 up 1.06%
Newmont (NEM) $54.77 up 0.92%
US Gold (UXG) $8.28 up 2.73%
General Moly (Eureka Moly, LLC) (GMO) $5.23 up 0.77%
Thompson Creek (TC) $13.01 down 0.91%
Freeport-McMoRan (FCX) $52.07 up 0.70% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $36.49 down 0.16% - global steel producer
POSCO (PKX) $102.63 down 1.62% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 1.10% at $1,843,337.87 (what's this?).

Cheers,

Colonel Possum

Note 1 - West Texas intermediate (WTI), also known as Texas light sweet, is a type of crude oil used as a benchmark in oil pricing and is the underlying commodity of New York Mercantile Exchange's (NYMEX) oil futures contracts. The price of WTI is often referenced in North American news reports on oil prices, alongside the price of North Sea Brent crude (Wiki).

Headline photograph by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Jobs, "A Very, Very Good Report"; NYMEX Oil 2 1/2-Year High

*** BREAKING NEWS *** New records for COMEX silver & NYMEX OIl:
COMEX Silver $35.405/oz 13:20:00 ET 03/02/2010, May contract most active
NYMEX WTI Crude $104.60/bbl 14:10:00 ET, 03/04/2011, April contract most active

Morning Miners!

It is 5:45 AM. Have a cup of that terrific Raine's Red Label TGIF. The ole Colonel just finished watching the CNBC Business News coverage of the U.S. Labor Department's monthly jobs report. On a day of rising oil prices, it is good to hear some good news...

Jobs, "A Very, Very Good Report"

It is funny how one quote always stands out from the CNBC morning commentary on one of our most important pieces of economic data, the monthly jobs report. February's release was mixed, complicated with the impact of bad January weather - CNBC bond market reporter Rick Santelli summarized last month's report simply, "It stinks!" He went on to say those that portrayed the data differently were a bunch of "Kool-Aid drinkers."

This morning it was Chief Economist Mark Zandi of Moody's Analytics turn. He excitedly exclaimed that the numbers represented a "very, very good report." Why? Nonfarm payrolls rose by 192,000 in February, private-sector employers added 222,000 jobs and the unemployment rate fell to 8.9%. Economists surveyed by Dow Jones Newswires had expected the jobless rate would inch up to 9.1% from the previous month's 9.0%. Even the ever-skeptical Santelli begrudged that "U6", a measure of broader unemployment, was better than he expected falling to 15.9% (see note 2 below).

The economist's expectation for nonfarm payrolls was 200,000 a little higher than the actual figure but the January number was revised to show an increase of 63,000 jobs from a previous estimate of 36,000. All in all not too bad except six million Americans were still out of work for more than six months in February. Nuts.

There was a nearly unanimous view that the markets had already priced in the results with yesterday's rallies. Gold and silver popped a little on the news, the U.S. dollar and Treasuries were mostly unperturbed and we'll see how the broader markets fare in a few minutes.

COMEX gold is presently trading at $1420.6/oz; silver at $34.605/oz and copper at $4.5320/oz. Here is the price action on the London spot markets for gold and silver, the right side of chart is just after the jobs report release:




Markets fall on rising oil prices


It looks like the unresolved crisis in North Africa and Middle East has trumped a good U.S. jobs report. As I write this section the DOW has dropped 69.85 points to 12,188.35 and the S&P 500, 8.75 points to 1,322.22 after both enjoyed solid rallies yesterday. More jobs, higher oil prices - the yin-yang of markets today and perhaps many more days to come.

The gold miners are up with gold but the mining sector is mixed. The Eureka Miner's Index(EMI) is down slightly from yesterday at an unremarkable 480.5 and down from the 1-month moving average of 545.1. The EMI gives us the market temperature for the sectors that have the greatest impact on mining in Eureka County.

The EMI has pretty much been moving sideways lately waiting for an excuse to return to January highs or descend to new lows for the year. Yin-yang, high oil prices place a real cloud over an otherwise good recovery story domestically and globally. Stay tuned.

NYMEX Oil breaks $104/bbl

NYMEX light sweet crude just made a 2 1/2-year high breaking $104/bbl at 7:20 AM PT. Here's an update of the record books for the big three metals together with NYMEX and Brent crude oil:

COMEX Gold $1441.0/oz 11:30:00 ET 03/02/2010, April contract most active
COMEX Silver $34.975/oz 11:30:00 ET 03/02/2010, May contract most active
COMEX Copper $4.6375/lb 06:15:00 ET 02/04/2011, March contract most active
NYMEX WTI Crude $104.09/bbl 10:20:00 ET, 03/04/2011, April contract most active
ICE Brent crude $119.79/bbl 02:45:00 ET 02/24/2011, April contract most active

Daily Oil Watch

On February 1st we identified North Sea Brent crude oil as a good barometer for the developing crisis in the Middle East and North Africa. The most active front month contract remains above $100/bbl with a large spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX (see note 1). The Report normally follows the latter but will track both until things settle out in this volatile region.

Here are the most active front month contracts as of this morning (6:22 AM PT before new NYMEX high at 7:20 AM PT):

NYMEX light sweet crude $102.99
ICE North Sea Brent crude $115.44
Spread (ICE- NYMEX) = $12.45 (yesterday $13.36)

Here are the June contracts with a narrower spread:

NYMEX light sweet crude $104.80
ICE North Sea Brent crude $115.41
Spread (ICE- NYMEX) = $10.61 (yesterday $11.30)

Although prices are off their crisis highs, we still have $100+ Brent and NYMEX in June favoring higher oil prices for the summer. The Colonel's December prediction that we would see NYMEX $100/bbl oil before the Fourth of July came true on February 23rd.


Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Miner's Index(EMI)

This morning the Eureka Miner's Index(EMI) is above-par at 480.48 slightly down from yesterday's 485.54 and below the 1-month moving average of 545.06. The EMI continues to be down from the high set on January 4th and a trend reversal in the short term is now uncertain.

The record high for the EMI is 816.78 set 01/04/2011; the low was set 6/7/2010 at 50.7. An EMI greater than 100 signals better times for the metals & miners relevant to Eureka County.

200-day averages are used in the EMI to normalize current mining company share price and are updated monthly. Upper and lower trend lines are updated weekly.

Eureka Outlook Dashboard

4-WD is ON - The miners are still in a rough patch but conditions are improving; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) remains trapped between its 100-day and 150-day moving averages but still above its 200-day average of $43.06 (our new warning level, 02/02 update after the FCX 2:1 stock split); 10-year Treasurys are safely below 4% preserving a low-interest rate environment.

The GREEN light is turned back on for Commodity Reflation with copper trading comfortably above $3.50/lb

The GREEN light is turned on for Stable Markets with the VIX below the 30 level (what's this?)

The YELLOW light is turned on for Inflation Watch as the Federal Reserve resumes buying Treasurys (aka QE2)

The GREEN light is turned back on for Investor Confidence as investment returns to the equity markets

The RED light is turned on our Fuel Gauge with oil above $100

A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions , General Moly Mt. Hope Water Rights, U.S. House committee debates miner workplace safety bill, R&R Partners parts ways with Nevada Mining Association, Obama budget includes mining royalty , Mineral commission fights consolidation

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

Commodity Market Morning Update

NYMEX/COMEX: Oil is up $1.08 in early trading at $102.99 (April contract, most active); Gold is up $4.2 to $1423.7 (April contract, most active); Silver is up $0.278 to $34.605 (May contract, most active); Copper is up $0.0420 to $4.5320(March contract, most active)

Western Molybdenum Oxide is $17.00; European Molybdenum Oxide is $17.75; LME moly 3-month seller's contract is $17.24, LME cash seller is $17.01

Stock Market Morning Update

The DOW is down 69.85 points to 12,188.35; the S&P 500 is down 8.75 at 1322.22

Miners are mixed:

Barrick (ABX) $53.32 up 1.37%
Newmont (NEM) $54.53 up 1.74%
US Gold (UXG) $8.01 up 2.04%
General Moly (Eureka Moly, LLC) (GMO) $5.16 down 2.09%
Thompson Creek (TC) $13.14 up 0.31%
Freeport-McMoRan (FCX) $52.50 up 0.19% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $36.60 down 1.61% - global steel producer
POSCO (PKX) $103.68 down 0.96% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.27% at $1,821,408.54 (what's this?).

Cheers,

Colonel Possum

Note 1 - West Texas intermediate (WTI), also known as Texas light sweet, is a type of crude oil used as a benchmark in oil pricing and is the underlying commodity of New York Mercantile Exchange's (NYMEX) oil futures contracts. The price of WTI is often referenced in North American news reports on oil prices, alongside the price of North Sea Brent crude (Wiki).

Note 2 - The Bureau of Labor Statistics calculates five alternate measures of unemployment, U1 through U6, that measure different aspects of unemployment:

* U1: Percentage of labor force unemployed 15 weeks or longer.
* U2: Percentage of labor force who lost jobs or completed temporary work.
* U3: Official unemployment rate per the ILO definition occurs when people are without jobs and they have actively looked for work within the past four weeks.
* U4: U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
* U5: U4 + other "marginally attached workers", or "loosely attached workers", or those who "would like" and are able to work, but have not looked for work recently.
* U6: U5 + Part time workers who want to work full time, but cannot due to economic reasons (underemployment). (source: Wikipedia)

Headline photograph by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Gartman Bullish on Gold

Þūnresdæg
Morning Miners!

It is 5:51 AM. Have a cup of Thursday thunder and please close the door. Our favorite Norseman Thor is making a racket in the machine shop hammering out some new battle axes. There's not much fight left in that ole boy but his tools are handy for chopping wood. Looks like there's still some fight left in North Africa...

Gold & silver rise to new records then fall, copper bounces

Gold and silver were at it again late last night setting more new records. One-half hour before midnight COMEX electronic trading witnessed COMEX gold hit 1441.0/oz and silver bested its 31-year high point at $34.975/oz. The closely watched gold/silver ratio is a lowly 41.2. My December predictions for gold and silver are $1570/oz and $36/oz before the Fourth of July, looks like we're still headed in that direction, pardner.

A drop in oil prices came after Hugo Chavez presented a goofy plan to mediate the Libyan crisis but Brent and NYMEX crude are still well into $100/bbl territory (see the Daily Oil Watch below). A more positive sign than the plans of two of the planet's craziest dictators came from an unexpected drop in the number of workers filing new unemployment claims. The Labor Department said claims fell by 20,000 to 368,000 in the week ended Feb. 26. This marks the lowest level since May 2008. Economists surveyed by Dow Jones Newswires had expected claims would rise by 9,000 to 400,000.

Hey, I'll take some good news! Yesterday's upbeat ADP payroll numbers and today's unemployment claims numbers are beating drums for tomorrow's big labor report. Last month's unemployment data was so mixed and dismal that the ole Colonel will bet we can expect a good'un from the U.S. Labor Department. I'll be up and at'em for the 5:30 AM PT release.

The Chavez plan and employment data apparently lifted investor optimism for the day putting downward pressure on gold and silver. Off their new records; gold is presently trading at $1423.7/oz and silver, $34.430/oz. COMEX copper got a nice bounce on the Chavez news but the specter of higher interest rates in Europe may soon spoil the party. This is all explained by our fearless Bloomberg metals reporter Maria Kolesnikova:

Copper Advances as Oil Prices Decline on Chavez Offer to Mediate in Libya (Maria Kolesnikova, Bloomberg News, 03/03/2011 5:30 AM PT)

COMEX copper is presently trading at a respectable $4.5385/lb. Here's an update of the record books for the big three metals together with NYMEX and Brent crude oil:

COMEX Gold $1441.0/oz 11:30:00 ET 03/02/2010, April contract most active
COMEX Silver $34.975/oz 11:30:00 ET 03/02/2010, May contract most active
COMEX Copper $4.6375/lb 06:15:00 ET 02/04/2011, March contract most active
NYMEX WTI Crude $103.41/bbl 02:45:00 ET, 02/24/2011, April contract most active
ICE Brent crude $119.79/bbl 02:45:00 ET 02/24/2011, April contract most active

Gartman bullish on gold


Followers of this report know there are few market voices the Colonel respects more than that of Dennis Gartman, "Commodity King" and author of the respected author of the Gartman Letter. He appeared on CNBC Business yesterday with his latest thoughts and advice on commodities and gold:

Dennis Gartman: Gold Remains Strong for Quite Some Time (CNBC Business News, Halftime Report, 3/2/2011)

You may remember that Dennis called a bottom for gold at $1309.1/oz as the crisis in Egypt erupted. He became a buyer then and its been up-up-and-away ever since. It is important to note that the Commodity King is not a "goldbug" and he often tells his audience that he is not a particular fan of gold compared to other opportunities in the commodity space. When he turns bullish on glitter, the ole Colonel listens.

His gold thesis is simple, "Gold has become the world’s second most reservable currency. It’s gaining relative to the euro and yen. It’s quite strong and will likely continue to be for some time to come."

Gartman has been skeptical of the euro currency for many months and sees the U.S. dollar as retaining its position as the number one reserve currency. This is not the popular argument of many experts as the U.S. dollar index (.DXY) continues to fall on recent euro strength. Phooey, I'll bet with Gartman.

Daily Oil Watch

On February 1st we identified North Sea Brent crude oil as a good barometer for the developing crisis in the Middle East and North Africa. The most active front month contract remains above $100/bbl with a large spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX (see note 1). The Report normally follows the latter but will track both until things settle out in this volatile region.

Here are the most active front month contracts as of this morning:

NYMEX light sweet crude $101.28
ICE North Sea Brent crude $114.64
Spread (ICE- NYMEX) = $13.36 (yesterday $15.10)

Here are the June contracts with a narrower spread:

NYMEX light sweet crude $103.21
ICE North Sea Brent crude $114.51
Spread (ICE- NYMEX) = $11.30 (yesterday $12.51)

Although prices are off their crisis highs, we still have $100+ Brent and NYMEX in June favoring higher oil prices for the summer. The Colonel's Dcember prediction that we will see NYMEX $100/bbl oil before the Fourth of July came true on February 23rd.


Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Miner's Index(EMI)

This morning the Eureka Miner's Index(EMI) is above-par at 485.54 slightly down from yesterday's 486.13 and below the 1-month moving average of 548.63. The EMI continues to be down from the high set on January 4th and a trend reversal in the short term may again be in the works.

The record high for the EMI is 816.78 set 01/04/2011; the low was set 6/7/2010 at 50.7. An EMI greater than 100 signals better times for the metals & miners relevant to Eureka County.

200-day averages are used in the EMI to normalize current mining company share price and are updated monthly. Upper and lower trend lines are updated weekly.

Eureka Outlook Dashboard

4-WD is ON - The miners are still in a rough patch but conditions are improving; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) remains trapped between its 100-day and 150-day moving averages but still above its 200-day average of $43.06 (our new warning level, 02/02 update after the FCX 2:1 stock split); 10-year Treasurys are safely below 4% preserving a low-interest rate environment.

The GREEN light is turned back on for Commodity Reflation with copper trading comfortably above $3.50/lb

The GREEN light is turned on for Stable Markets with the VIX below the 30 level (what's this?)

The YELLOW light is turned on for Inflation Watch as the Federal Reserve resumes buying Treasurys (aka QE2)

The GREEN light is turned back on for Investor Confidence as investment returns to the equity markets

The RED light is turned on our Fuel Gauge with oil above $100

A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions , General Moly Mt. Hope Water Rights, U.S. House committee debates miner workplace safety bill, R&R Partners parts ways with Nevada Mining Association, Obama budget includes mining royalty , Mineral commission fights consolidation

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

Commodity Market Morning Update

NYMEX/COMEX: Oil is down $0.95 in early trading at $101.28 (April contract, most active); Gold is down $14.0 to $1423.7 (April contract, most active); Silver is down $0.405 to $34.430 (May contract, most active); Copper is up $0.0405 to $4.5385(March contract, most active)

Western Molybdenum Oxide is $17.00; European Molybdenum Oxide is $17.75; LME moly 3-month seller's contract is $17.24, LME cash seller is $17.01

Stock Market Morning Update

The DOW is up 154.09 points to 12,220.89; the S&P 500 is up 15.89 at 1324.33. Miners are mixed:

Barrick (ABX) $52.62 down 2.34%
Newmont (NEM) $53.44 down 2.36%
US Gold (UXG) $7.75 down 3.25%
General Moly (Eureka Moly, LLC) (GMO) $5.10 up 0.20%
Thompson Creek (TC) $13.11 up 0.92%
Freeport-McMoRan (FCX) $52.74 up 1.46% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $37.30 up 2.70% - global steel producer
POSCO (PKX) $103.58 up 0.37% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.38% at $1,801,640.12 (what's this?).

Cheers,

Colonel Possum

Note 1 - West Texas intermediate (WTI), also known as Texas light sweet, is a type of crude oil used as a benchmark in oil pricing and is the underlying commodity of New York Mercantile Exchange's (NYMEX) oil futures contracts. The price of WTI is often referenced in North American news reports on oil prices, alongside the price of North Sea Brent crude (Wiki).

Headline photograph by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Gold & Silver New Records; General Moly (GMO) Reports

Wōdnesdæg
Morning Miners!

It is 5:59 AM. Have a brimming cup of hump day record breaker. I'll have to chain Old Miner Woden to the hoist in the hi-bay to keep him from returning to his diggings before the snow melts. With gold at $1437/oz he's got the energy of a single jack champion...

Gold & Silver New Records

The United States may have frozen $30 billion worth of assets of Libyan dictator Moammar Gadhafi but if he's buried some gold and silver in the sand dunes, he'll probably do just fine. His recent shenanigans coupled with growing inflation concerns surged the oil markets and sent gold and silver to new records yesterday and this morning. COMEX silver led the charge in the AM pegging $34.875/oz and was followed five minutes later by a new record for gold of $1437.20/oz. Both have fallen back some with gold presently at $1435.3/oz and silver at $34.820/oz. My December predictions for gold and silver are $1570/oz and $36/oz before the Fourth of July, looks like we're on track, pardner.

With all this geo-political drama, COMEX copper has bravely held its ground trading now at $4.4715/lb. NYMEX oil crested $100/bbl again at $100.43/bbl on the most active April futures contract (see below). Amazingly, a barrel of Texas light sweet crude still buys about 22 pounds of the red metal, roughly the same level as last Thanksgiving. Oil (blue) and gold (red) have moved up approximately 25% and 15% in the last three months as shown in this chart:



In dollar terms, gold is regaining its mojo. This is the 3-month chart for gold in U.S. dollars per ounce:


Remember when $1,200/oz gold was a big deal? Or $1,100/oz or breaking the BIG $1,000/oz? I remember getting pretty durn excited when gold broke $575/oz in November 2005. After that it has been up-up and away for our lustrous hero.

Although Fed Chairman Ben Bernanke tried to play down domestic inflation fears yesterday, folks that actually buy fuel and food to survive are forming a different expectation. The craziest item in the morning news was how an upbeat report from payroll giant Automatic Data Processing Inc. (ADP) apparently fanned inflation fears for some investors and was cited by the Wall Street Journal as a another reason for gold's rise. ADP said private-sector jobs in the U.S. rose by 217,000 last month. Economists were expecting the report to show a job gain of just 170,000 in February. Go figure.

Here was the action at the London gold and silver spot markets as the Libyan crisis and economic data spooled out this morning:




Let's close this discussion with an update of the record books for the big three metals together with NYMEX and Brent crude oil:

COMEX Gold $1437.2/oz 08:30:00 ET 03/02/2010, April contract most active
COMEX Silver $34.875/oz 08:25:00 ET 03/02/2010, May contract most active
COMEX Copper $4.6375/lb 06:15:00 ET 02/04/2011, March contract most active
NYMEX WTI Crude $103.41/bbl 02:45:00 ET, 02/24/2011, April contract most active
ICE Brent crude $119.79/bbl 02:45:00 ET 02/24/2011, April contract most active

Platts joins the Eureka Miner


I've added a terrific resource with the latest news and analysis on metals and oil to our morning market report. In the right column you will find the Platts logo and links to their daily articles and reports.

In their words:

"Our goal at Platts is to provide the highest quality, most timely, insightful and relevant news and price assessments possible. We work with all our customers to ensure that we provide the best product solution for their particular needs, and that we deliver it in such a way that it is easy for them to embed into their daily workflow. View Solutions for Oil, Natural Gas, Electric Power, Coal, Shipping, Petrochemicals, and Metals."

Welome aboard!

General Moly(GMO) Reports Fourth Quarter & 2010 Results

General Moly released its fourth quarter and full year report for 2010 early this morning:

GENERAL MOLY ANNOUNCES FOURTH QUARTER AND FULL YEAR 2010 RESULTS (Press release, 03/02/2011, 5:50 AM PT)

I haven't gone through every detail yet but I don't think there are too many surprises if you have been following the frustrating Mt. Hope permitting process. Here is their latest update on that topic:

"The Bureau of Land Management (BLM) and its independent EIS contractor are continuing progress toward finalizing the Mt. Hope project's Draft Environmental Impact Statement (DEIS) for publication. The Preliminary DEIS is anticipated to be released for the second round of Cooperating Agency Review shortly. The Company estimates the BLM will complete the Draft Environmental Impact Statement (DEIS) within the second quarter and that it will be published in the Federal Register in the third quarter. Following publication of the DEIS, full permits are anticipated within 6-9 months." (Press release, 03/02/2011)

The ole Colonel would be lying if he said he won't miss former General Manager Tim Arnold's engineering contributions to these reports. If you have not heard, Tim moved on to cobalt miner Geovic earlier this year. Good luck Tim!

Arnold new COO of Geovic
(Adella Harding, The Elko Daily Free Press, Tuesday, February 1, 2011 4:10 pm)

Daily Oil Watch

On February 1st we identified North Sea Brent crude oil as a good barometer for the developing crisis in the Middle East and North Africa. The most active front month contract remains above $100/bbl with a large spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX (see note 1). The Report normally follows the latter but will track both until things settle out in this volatile region.

Here are the most active front month contracts as of this morning:

NYMEX light sweet crude $100.43
ICE North Sea Brent crude $115.53
Spread (ICE- NYMEX) = $15.10 (yesterday $15.32)

Here are the June contracts with a narrower spread:

NYMEX light sweet crude $102.70
ICE North Sea Brent crude $115.21
Spread (ICE- NYMEX) = $12.51 (yesterday $12.46)

Although prices are off their crisis highs, we still have $100+ Brent and NYMEX in June favoring higher oil prices for the summer. The Colonel's Dcember prediction that we will see NYMEX $100/bbl oil before the Fourth of July came true on February 23rd.


Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Miner's Index(EMI)

This morning the Eureka Miner's Index(EMI) is above-par at 486.13 down from yesterday's 532.89 and below the 1-month moving average of 548.01. The EMI continues to be down from the high set on January 4th and a trend reversal in the short term may again be in the works.

The record high for the EMI is 816.78 set 01/04/2011; the low was set 6/7/2010 at 50.7. An EMI greater than 100 signals better times for the metals & miners relevant to Eureka County.

200-day averages are used in the EMI to normalize current mining company share price and are updated monthly. Upper and lower trend lines are updated weekly.

Eureka Outlook Dashboard

4-WD is ON - The miners are still in a rough patch but conditions are improving; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) remains trapped between its 100-day and 150-day moving averages but still above its 200-day average of $43.06 (our new warning level, 02/02 update after the FCX 2:1 stock split); 10-year Treasurys are safely below 4% preserving a low-interest rate environment.

The GREEN light is turned back on for Commodity Reflation with copper trading comfortably above $3.50/lb

The GREEN light is turned on for Stable Markets with the VIX below the 30 level (what's this?)

The YELLOW light is turned on for Inflation Watch as the Federal Reserve resumes buying Treasurys (aka QE2)

The GREEN light is turned back on for Investor Confidence as investment returns to the equity markets

The RED light is turned on our Fuel Gauge with oil above $100

A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions , General Moly Mt. Hope Water Rights, U.S. House committee debates miner workplace safety bill, R&R Partners parts ways with Nevada Mining Association, Obama budget includes mining royalty , Mineral commission fights consolidation

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

Commodity Market Morning Update

NYMEX/COMEX: Oil is up $0.80 in early trading at $100.43 (April contract, most active); Gold is up $4.1 to $1435.3 (April contract, most active); Silver is up $0.393 to $34.820 (May contract, most active); Copper is down $0.0500 to $4.4715(March contract, most active)

Western Molybdenum Oxide is $17.00; European Molybdenum Oxide is $17.75; LME moly 3-month seller's contract is $16.32, LME cash seller is $16.10

Stock Market Morning Update

The DOW is up 47.45 points to 12,105.62; the S&P 500 is up 6.57 at 1312.90. Miners are mixed:

Barrick (ABX) $53.71 down 0.11%
Newmont (NEM) $55.24 down 1.52%
US Gold (UXG) $8.01 up 0.63%
General Moly (Eureka Moly, LLC) (GMO) $5.18 up 0.97%
Thompson Creek (TC) $13.32 up 2.30%
Freeport-McMoRan (FCX) $52.20 up 1.12% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $36.44 up 1.33% - global steel producer
POSCO (PKX) $103.50 up 1.82% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.58% at $1,815,486.50 (what's this?).

Cheers,

Colonel Possum

Note 1 - West Texas intermediate (WTI), also known as Texas light sweet, is a type of crude oil used as a benchmark in oil pricing and is the underlying commodity of New York Mercantile Exchange's (NYMEX) oil futures contracts. The price of WTI is often referenced in North American news reports on oil prices, alongside the price of North Sea Brent crude (Wiki).

Headline photograph by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Silver, Gold & Oil Surge; Moly Drops; General Moly (GMO) & Quadra FNX (QUX.TO) Updates

Come gather 'round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone.
If your time to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'.

Bob Dylan

*** UPDATE ***

COMEX gold & silver made new records at the same time a short while ago:

COMEX gold $1433.40/oz 14:35:00 ET April contract most active
COMEX silver $34.590/oz 14:35:00 ET May contract most active

The closely watched gold/silver ratio was an incredibly low 41.44 at this time, my records on ratios only go back 10 years so this may be a new record too. A lower ratio is another sign of silver's strength relative to gold.

*** BREAKING NEWS *** COMEX gold came within one dollar of breaking its December Pearl Harbor Day record hitting $1431.5/oz at 12:40:00 ET, April contract most active


Morning Miners!

It is 5:51 AM. Have a hot cup of global turmoil. Let's help Sweet Ruby T change a tire - she hauled in a new record for silver but that flat on Pancake Summit may signal trouble ahead for molybdenum...

Silver, Gold, Oil Surge

Whatever you may think of Libyan dictator Moammar Gadhafi, nobody can say he hasn't been good for silver, gold and oil prices. Government opponents held on to the rebel-held oil city of Zawiya after six hours of fighting overnight while China sent four military transport planes to help extract the last of its citizens. Apparently that drama and anticipation of what Fed Chairman Bernake may say about inflation later today sent silver to new 31-year record, shoved gold closer to its December watermark and returned NYMEX crude to $100+/bbl for its June contract (see below).

Phew. Did you know there were 30,000 Chinese in Libya? Chinese media reported that by Monday morning 29,000 have already been rescued. These times they are a-changin', pardner. This is the first time that the Chinese air force has participated in a civilian evacuation mission overseas. Didn't we rent a ferry for our folks?

This morning COMEX silver has settled back to $34.335/oz after hitting $34.485/oz for the new record earlier this morning. COMEX gold is up $10.7 to $1420.6/oz and copper fell to $4.4960/lb. As usual the London Metal Exchange (LME) headline has a knack for putting it all very simply, "Geopolitics and inflation woes haunt metals markets."

Let's tidy up the record books for the big three metals and the oil Bobbsey twins:

COMEX Gold $1432.5/oz 08:25:00 ET 12/7/2010, February contract most active
COMEX Silver $34.485/oz 08:15:00 ET 03/01/2011, May contract most active
COMEX Copper $4.6375/lb 06:15:00 ET 02/04/2011, March contract most active
NYMEX WTI Crude $103.41/bbl 02:45:00 ET, 02/24/2011, April contract most active
ICE Brent crude $119.79/bbl 02:45:00 ET 02/24/2011, April contract most active

Moly Drops


Speaking of haunting ghosts at the LME, something spooked molybdenum futures contracts yesterday. Western and European spot prices are now both in backwardation with respect to futures prices; the 3-month and 15-month contracts both fell 4%. We have been tracking a down trend in the futures contracts for several weeks. On February 23rd, the ole Colonel predicted that Euro moly oxide would drop below $17.50/lb before we lift a Guinness on Saint Paddys. Presently Euro Moly is steady at $17.75/lb and its Western cousin remains unchanged at $17.00/lb (as reported by Base Metals on the General Moly website).

Here are the latest futures prices:

3-month seller $36,100/metric ton or $16.37/lb
15-month seller $37,275/metric ton or $16.91/lb

You may be inclined to say, "so what?" Moly prices were supposed to be going up not down, good buddy. Remember $20/lb? - I haven't given up but I think Miss Moly is catching a winter cold or maybe a touch of the Libyan flu.

The 3-month seller at $16.37/lb is still above the Colonel's mid-range moly price target for 2010 of $15.71/lb but below my target of $20.21/lb for 2011.

General Moly & Quadra Updates

Mining Editor Adella Harding of the Elko Daily Free Press has put together two good summaries on the latest press releases from General Moly (GMO) and Ely Robinson Mine operator/owner, Quadra FNX (QUX.TO):

General Moly names new director (Adella Harding, Elko Daily Free Press, 2/28/2011, 2011 12:44 pm)

Quadra reports $57.9 million profit (Adella Harding, Elko Daily Free Press, 2/28/2011 5:40 pm)

Daily Oil Watch

On February 1st we identified North Sea Brent crude oil as a good barometer for the developing crisis in the Middle East and North Africa. The most active front month contract remains above $100/bbl with a large spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX (see note 1). The Report normally follows the latter but will track both until things settle out in this volatile region.

Here are the most active front month contracts as of this morning:

NYMEX light sweet crude $97.62
ICE North Sea Brent crude $112.94
Spread (ICE- NYMEX) = $15.32 (yesterday $14.33)

Here are the June contracts with a narrower spread:

NYMEX light sweet crude $100.27
ICE North Sea Brent crude $112.73
Spread (ICE- NYMEX) = $12.46 (yesterday $11.65)

Although prices are off their crisis highs, we still have $100+ Brent and NYMEX in June favoring higher oil prices for the summer. The Colonel's Dcember prediction that we will see NYMEX $100/bbl oil before the Fourth of July came true on February 23rd.


Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Miner's Index(EMI)

This morning the Eureka Miner's Index(EMI) is above-par at 532.89 up from yesterday's 532.34 and just below the 1-month moving average of 546.25. The EMI continues to be down from the high set on January 4th and a trend reversal in the short term may again be in the works.

The record high for the EMI is 816.78 set 01/04/2011; the low was set 6/7/2010 at 50.7. An EMI greater than 100 signals better times for the metals & miners relevant to Eureka County.

200-day averages are used in the EMI to normalize current mining company share price and are updated monthly. Upper and lower trend lines are updated weekly.

Eureka Outlook Dashboard

4-WD is ON - The miners are still in a rough patch but conditions are improving; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) remains trapped between its 100-day and 150-day moving averages but still above its 200-day average of $43.06 (our new warning level, 02/02 update after the FCX 2:1 stock split); 10-year Treasurys are safely below 4% preserving a low-interest rate environment.

The GREEN light is turned back on for Commodity Reflation with copper trading comfortably above $3.50/lb

The GREEN light is turned on for Stable Markets with the VIX below the 30 level (what's this?)

The YELLOW light is turned on for Inflation Watch as the Federal Reserve resumes buying Treasurys (aka QE2)

The GREEN light is turned back on for Investor Confidence as investment returns to the equity markets

The ORANGE light is turned on our Fuel Gauge with oil above $90

A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions , General Moly Mt. Hope Water Rights, U.S. House committee debates miner workplace safety bill, R&R Partners parts ways with Nevada Mining Association, Obama budget includes mining royalty , Mineral commission fights consolidation

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

Commodity Market Morning Update

NYMEX/COMEX: Oil is up $0.65 in early trading at $97.62 (April contract, most active); Gold is up $10.7 to $1420.6 (April contract, most active); Silver is up $0.515 to $34.335 (May contract, most active); Copper is up $0.0500 to $4.4960 (March contract, most active)

Western Molybdenum Oxide is $17.00; European Molybdenum Oxide is $17.75; LME moly 3-month seller's contract is $16.37, LME cash seller is $15.88

Stock Market Morning Update

The DOW is down 12.64 points to 12,213.70; the S&P 500 is down 3.11 at 1324.11. Miners are mixed:

Barrick (ABX) $53.62 up 1.51%
Newmont (NEM) $56.03 up 1.38%
US Gold (UXG) $7.45 up 2.62%
General Moly (Eureka Moly, LLC) (GMO) $5.25 up 0.19%
Thompson Creek (TC) $13.42 up 1.82%
Freeport-McMoRan (FCX) $52.61 down 0.64% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $36.64 down 0.08% - global steel producer
POSCO (PKX) $102.74 down 0.33% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.74% at $1,805,515.78 (what's this?).

Cheers,

Colonel Possum

Note 1 - West Texas intermediate (WTI), also known as Texas light sweet, is a type of crude oil used as a benchmark in oil pricing and is the underlying commodity of New York Mercantile Exchange's (NYMEX) oil futures contracts. The price of WTI is often referenced in North American news reports on oil prices, alongside the price of North Sea Brent crude (Wiki).

Headline photograph by Mariana Titus

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market