Red Metal Retrograde, Freeport (FCX) Revival? LME Moly Breaks $15

Lone Horse, Eureka & Palisade Train Depot, Eureka, Nevada

Latest Nevada Gas Prices (click this link)

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My latest Kitco commentary: The 2012 Copper & Gold Conundrum (4/02/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,657.7/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 91.50 (gold value trending higher)
Value Adjusted Gold Price© (VAGP) = $1,513.8/oz
COMEX - VAGP = $143.9/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio breaks its 3-month average to the upside (Cu bearish trend)


Wōdnesdæg
Morning Miners!

It is 6:00 AM. Old Miner Woden just filled my cup with Cold Reality and my ears are ringing from his tiresome I-told-you-sos. Our loveable market bear couldn't be more delighted that the broader markets took a beating yesterday. I reminded the break room curmudgeon that our moly benchmark miner Thompson Creek (TC) got a nice bounce on his delightfully bearish day. What about copper benchmark miner Freeport McMoRan (FCX)?

Red Metal Retrograde...Freeport (FCX) Revival?

WARNING: The following may be utter nonsense

The red metal may be following the red planet in retrograde motion - when planets appear to move in reverse from their normal orbit, bad things can happen. Mars went retrograde on the Colonel's birthday in January and won't return to direct motion until Saturday, April 14 - as any good astrologer worth his charts will warn, "Matters commenced while Mars is retrograde will be frustrated and plagued with disruptions until they finally fizzle out."

Sounds a little bit like the recent fate of copper & gold prices doesn't it?

On a more serious note, COMEX copper dropped out of its 3-month trading range yesterday and is perilously close to breaking below the key psychological level of $8,000/tonne ($3.63/lb vs 3.64/lb intraday low so far today). In my world, the gold-to-copper ratio also broke above its 3-month moving average with conviction - a notably bearish move after a steadfast bullish compression since early December (see Copper & Molybdenum Report below).

This morning there was an 8.6-magnitude earthquake in the proximity of Freeport-McMoRan's giant Grasberg copper mine in Indonesia. Although the early indications are that the impacts will be manageable, the earth from whence much copper comes did move:

Market Nuggets: Barclays: Indonesian Quake Far From Most Base-Metals Mining, But Some Impact Expected (Allen Sykora, Kitco News, 4/11/2012)

Can things get any worse for the red metal and copper miners? Our copper benchmark miner Freeport-McMoRan (FCX) is near the lows of November-December of last year:

This morning, FCX $36.59

Recent lows,

Dec. 29, 2011 closing price $36.54
Dec. 19, 2011 closing price $35.74
Nov. 25, 2011 intraday low $33.77

Here's a rosy contrarian prediction: If the red metal follows the red planet, things should improve after this weekend...

I threw a little FCX in the buckboard today at $36.76 with a stop limit just below the Dec. 19 closing price.

Please do your own research, the Colonel could be committed to the nuthouse for this call....

LME Moly Jumps

Not only is Thompson Creek's (TC) rally extending into its second day ($6.64 up 3.6%), yesterday's London Metal Exchange 3-month seller's contract broke $15/lb up 8% Tuesday at $15.20 per pound ($33,500/metric ton, see Copper & Molybdenum Report below).

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $41.27 down 0.51%
Newmont (NEM) $48.47 down 1.07%
McEwen Mining (MUX) 4.13 up 1.98% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.12 up 2.30%
Thompson Creek (TC) $6.64 up 3.59%
Freeport-McMoRan (FCX) $36.59 up 0.77% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.52 up 1.96%

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

ArcelorMittal (MT) $17.55 up 4.28% - global steel producer
POSCO (PKX) $81.79 up 2.14% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 124.99, up from last report's 124.90 and below the 1-month moving average of 176.03. The 1-month average is falling but still above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $3.0/oz at $1,657.7/oz (June contract, most active)

COMEX silver is down $0.074/oz at $31.605/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 52.451 oz/oz

Silver 1-month CRS© is 1.12% (bullish level); very stable ratio; 1-month & 3-month < 3% (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 91.50, up from last report's 89.78 and above its 1-month average of 88.21. Gold value may return to trending up. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,513.8/oz which is $143.9/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0115/lb at $3.6385/lb (May contract, most active)

The gold-to-copper ratio is 455.60 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"; the ratio has broken its 3-month moving average of 443.81 (a Cu bearish trend in bearishPrice Domain B)

Copper 1-month CRS© is 1.78% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (Cu bullish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.175
As of April 9, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 10, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.13/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$15.20/lb (US$33,500/metric ton)

Daily Oil Watch

Latest Nevada Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $120/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $101.36
ICE North Sea Brent crude $119.52
Spread (ICE- NYMEX) = $18.16 (last report, $19.54)

Here are the July contracts* with a narrower spread:

NYMEX light sweet crude $102.44
ICE North Sea Brent crude $118.74
Spread (ICE- NYMEX) = $16.30 (last report, $17.47)

* NYMEX futures contracts have rolled forward, we now show May and July for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 1.84% (bullish level); CRS© weak divergence (Oil neutral)

Prices are near highs for 2012, we have $115+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we're just below, latest spread is a mix of domestic oversupply and persistent Iran concerns.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI is 82.9 down from last report's 83.5. A level above 200 is time for serious concern - we are now well below that level. The highest level recorded since inception was 271.0 Aug. 9, 2011; the lowest level is 65.1 on Mar. 13, 2012

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is up 123.86 points to 12,839.79; the S&P 500 is up 15.77 points at 1,374.36

The Eureka Miner's Grubstake Portfolio is up 0.88% at $1,384,579.25 (what's this?).

Cheers,

Colonel Possum

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

Thompson Creek (TC) Bounce; Moly Prices Steady, Copper Scary

Survey Marker - Triangle Mill Site, Eureka, Nevada

*** BREAKING NEWS *** COMEX copper plumbed $3.6540/lb at 8:00 AM PDT breaking the lower end of its trading range set Feb. 17 at $3.7025/lb - a decidedly bearish development for the red metal. Presently, COMEX copper is trading at $3.6540/lb and COMEX gold at $1,634.9/oz for a gold-to-copper ratio of 447.4 lb/oz breaking the 3-month average of 444.0 lb/oz - another bearish development.

Latest Nevada Gas Prices (click this link)

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My latest Kitco commentary: The 2012 Copper & Gold Conundrum (4/02/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,645.5/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 89.78 (gold value pause from trending down)
Value Adjusted Gold Price© (VAGP) = $1,513.4/oz
COMEX - VAGP = $114.1/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio moves up to just below its 3-month average (Cu bearish trend)


Morning Miners!

It is 5:44 AM. Have a big mug of Ruby T's Silver Lining. Our favorite market bull somehow always finds something to be happy about - this morning it was a small chunk of news that came across the wires at 4:51 AM PDT, "Thompson Creek (TC) was upgraded to Hold from Sell at Deutsche Bank." Now that may not seem like much for this report's moly benchmark miner but it comes on a day when Spanish bond yields are soaring and the London Metal Exchange (LME) headline is, "Base metals bearish, economic stability questioned." We'll take any good news about miners in this break room.

Molybdenum is a minor metal but its price has held up pretty well too compared to big copper which is precariously teetering at the bottom of a nearly 3-month trading range. Let's dig a little deeper...

Thompson Creek (TC) Bounce; Moly Prices Steady, Copper Scary

The broader markets are now open and are in a sour mood as the European sovereign debt crisis returns from a brief hiatus of calm. Presently the S&P 500 is down only a few points from yesterday but in concert with 15 of 19 other global markets in the red. Ruby is quick to point out that Thompson Creek (TC) is up over 3% at $6.40/share, always a good sign to be up on a down day.

Deutsche Bank maintains their 12-month price target at $7.50. Yesterday shares closed at $6.21, with a 52-week range of $5.44 - $13.63. In the first 10 minutes 190,000 shares traded on a rising price - not bad for a small cap senior miner. General Moly (GMO) appeared to move in sympathy with its benchmark, presently up 1.3% at $3.17/share.

With a background of global uncertainty, moly prices have held pretty steady above $14/lb. In the west, spot moly oxide prices are in range of $14.18-$14.20 per pound; euro-moly is averaging out at $14.13 per pound. The LME 3-month seller's contract has been sitting at $14.06 per pound ($31,000 per metric ton) for quite a while (see Copper & Molybdenum Report below).

In contrast, COMEX copper is trading at $3.7225 per pound perilously close to the $3.7025 per pound low of Feb. 17 and a long way from the intraday high of $3.9950 per pound reached earlier on Feb. 9. If COMEX copper closes below its trading range today there could be some tougher times ahead for all miners.

Ruby is putting on a third copper bracelet for luck...we may need it, pardner.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $41.03 up 0.24%
Newmont (NEM) $48.08 up 0.17%
McEwen Mining (MUX) 4.05 up 0.25% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.17 up 1.28%
Thompson Creek (TC) $6.40 up 3.06%
Freeport-McMoRan (FCX) $37.55 up 0.11% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.51 up 2.00%

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

ArcelorMittal (MT) $17.51 down 1.19% - global steel producer
POSCO (PKX) $81.28 down 0.15% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 124.90, up from last report's 123.47 and below the 1-month moving average of 178.85. The 1-month average is falling but still above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $1.6/oz at $1,645.5/oz (June contract, most active)

COMEX silver is up $0.066/oz at $31.590/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 52.089 oz/oz

Silver 1-month CRS© is 1.14% (bullish level); very stable ratio; 1-month & 3-month < 3% (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 89.78, down from last report's 89.99 and just above its 1-month average of 88.09. Gold value is taking a pause from trending down. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,531.4/oz which is $114.1/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0025/lb at $3.7225/lb (May contract, most active)

The gold-to-copper ratio is 442.04 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"; the ratio is below its 3-month moving average of 444.02 (a Cu bullish trend has stalled in bearishPrice Domain B)

Copper 1-month CRS© is 1.49% (bullish level); very stable ratio; 1-month & 3-month < 3% (Cu bullish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.175
As of April 9, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 3, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.13/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.06/lb (US$31,000/metric ton)

Daily Oil Watch

Latest Nevada Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $120/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $102.05
ICE North Sea Brent crude $121.59
Spread (ICE- NYMEX) = $19.54 (last report, $20.22)

Here are the July contracts* with a narrower spread:

NYMEX light sweet crude $103.14
ICE North Sea Brent crude $120.61
Spread (ICE- NYMEX) = $17.47 (last report, $18.06)

* NYMEX futures contracts have rolled forward, we now show May and July for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 1.84% (bullish level); CRS© weak divergence (Oil neutral)

Prices are near highs for 2012, we have $120+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we're just below, spread today may be more about domestic oversupply than new Iran concerns.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI is 83.5 up from last report's 83.0. A level above 200 is time for serious concern - we are now well below that level. The highest level recorded since inception was 271.0 Aug. 9, 2011; the lowest level is 65.1 on Mar. 13, 2012

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 33.76 points to 12,895.83; the S&P 500 is down 2.34 points at 1,379.86

The Eureka Miner's Grubstake Portfolio is up 0.32% at $1,384,993.02 (what's this?).

Cheers,

Colonel Possum

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

Miners 2012 - Tough Times this Spring?

A good man has passed - Ted Vernes

Latest Nevada Gas Prices (click this link)

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My latest Kitco commentary: The 2012 Copper & Gold Conundrum (4/02/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,647.5/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 89.99 (gold value pause from trending down)
Value Adjusted Gold Price© (VAGP) = $1,529.7/oz
COMEX - VAGP = $117.8/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio moves up to just below its 3-month average (Cu bearish trend)

Morning Miners!

It is 6:09 AM. Have a hot cup of Good Memories. We start this week without the laughter of a good man who loved Eureka and blessed it with his creative hand painted signs and strong Norwegian spirit. The Colonel and Mariana will miss our good friend and neighbor, Ted Vernes.

Miners 2012 - Tough Times this Spring?

As this report continues its Miners 2012 series, we only have to look in the rear view mirror to remember that mining stocks have had a pretty rough ride since early February. A new lunar year rolled in the Dragon and his fiery breath was soon felt in the mineshaft. Chinese traders returning from holiday were lackluster in buying new copper; the red metal stocks fell at the London Metal Exchange but rose in Shanghai as anticipated strong demand evaporated. Precious metals had their own downside with liquidations and diminished chances for further quantitative easing in the U.S.

The Eureka Miner's Index© (EMI) tells the story. Here is a plot of the EMI from Jun. 30, 2011 through Thursday's close (a larger more readable plot can be found near the bottom of this blog page):

A composite index of benchmark miners, interest rates, market volatility and metal prices, the EMI peaked Feb. 9 at a respectable 322.3; a strong rally from the Oct. 4, 2011 multi-year low of 22.88 - surely 2012 would be better than late 2011.

This report sounded an alarm Mar. 29 as the EMI (magenta line) crashed through its lower trend line support (dotted line) - almost always a sign of worse times to come. Alas, Thursday gave us another downdraft to 142.7 and this morning after last Friday's soft jobs report, new fears of debt contagion in Europe and a weak euro the EMI registers 123.5 (see Mining Report below). An EMI of 100 is the border line between hot and cold markets for metals and miners - it is sure getting chilly, pardner.

The report is not only concerned about lower mining stocks, but copper is entering pretty scary territory too. COMEX copper this morning is $3.7205 per pound to gold's $1,647.5 per ounce and the gold-to-copper ratio tells us that one troy ounce of gold buys 442.8 pounds of copper. That by itself is troubling since ratios above 400 pounds per ounce were encountered during some of the worse periods of the 2008-2009 financial crisis. The good news has been that this ratio has been steadily trending down since last October when it peaked at 538 pounds per ounce. The bad news is that this ratio has headed back up and comes close to breaking its 3-month moving average (442.8 versus 444.4 average). If we can stay below this falling average, the miners are probably battered but not broken. If the EMI can stay above 100 into the summer months; better times may lie ahead. The ole Colonel will be watching both of these indicators with an eagle eye, in any case there will be some tough times ahead for miners this spring.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $41.37 up 1.57%
Newmont (NEM) $48.28 up 1.15%
McEwen Mining (MUX) 4.08 up 3.03% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.18 down 0.93%
Thompson Creek (TC) $6.21 down 1.58%
Freeport-McMoRan (FCX) $37.30 down 1.32% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $n/a
Timberline Resources (TLR) $0.50 unchanged

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

ArcelorMittal (MT) $17.58 down 0.68% - global steel producer
POSCO (PKX) $81.26 down 1.73% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 123.47, down from last report's 142.67 and below the 1-month moving average of 180.81. The 1-month average is falling but still above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $17.4/oz at $1,647.5/oz (June contract, most active)

COMEX silver is down $0.040/oz at $31.690/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.988 oz/oz

Silver 1-month CRS© is 1.14% (bullish level); very stable ratio; 1-month & 3-month < 3% (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 89.99, up from last report's 87.77 and just above its 1-month average of 88.05. Gold value is taking a pause from trending down. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,529.7/oz which is $117.8/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.075/lb at $3.7205/lb (May contract, most active)

The gold-to-copper ratio is 442.82 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"; the ratio is below its 3-month moving average of 444.41 (a Cu bullish trend has stalled in Price Domain B)

Copper 1-month CRS© is 1.57% (bullish level); very stable ratio; 1-month & 3-month < 3% (Cu bullish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.175
As of April 9, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 3, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.13/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.06/lb (US$31,000/metric ton)

Daily Oil Watch

Latest Nevada Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $120/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $101.59
ICE North Sea Brent crude $121.81
Spread (ICE- NYMEX) = $20.22 (last report, $20.55)

Here are the July contracts* with a narrower spread:

NYMEX light sweet crude $102.69
ICE North Sea Brent crude $120.75
Spread (ICE- NYMEX) = $18.06 (last report, $18.30)

* NYMEX futures contracts have rolled forward, we now show May and July for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 1.79% (bullish level); CRS© weak divergence (Oil neutral)

Prices are near highs for 2012, we have $120+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we're there, spread today may be more about domestic oversupply than new Iran concerns].

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI is 83.0 up from last report's 71.8. A level above 200 is time for serious concern - we are now well below that level. The highest level recorded since inception was 271.0 Aug. 9, 2011; the lowest level is 65.1 on Mar. 13, 2012

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 136.76 to 12,923.38; the S&P 500 is down 17.56 points at 1,380.52

The Eureka Miner's Grubstake Portfolio is down 0.03% at $1,394,370.41 (what's this?).

Cheers,

Colonel Possum

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

The Colonel's Easter Thoughts on Gold, Silver & Copper

South Ranch, Eureka, Nevada

Latest Nevada Gas Prices (click this link)

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My latest Kitco commentary: The 2012 Copper & Gold Conundrum (4/02/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,625.0/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 88.16 (gold value pause from trending down)
Value Adjusted Gold Price© (VAGP) = $1,540.1/oz
COMEX - VAGP = $84.9/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains below its 3-month average, compression resuming (Cu bullish)


Þūnresdæg
Morning Miners!

It is 6:06 AM. Have a cup of Raine's Red Label a day early with your Easter egg. Markets will be closed tomorrow - Happy Easter Bunny!

The Colonel's Easter Thoughts on Gold, Silver & Copper

Doug Kass of Seabreeze Partners said on CNBC Business News yesterday that with the Fed out of the picture (referring to less chance of QE3), equities will seek their natural prices. I believe the same is true for precious & base metals. Here is my input to the Weekly Kitco Gold Survey:

Q. Where do you see gold’s price headed next week, up, down or unchanged?

A. Up, $1,650 per ounce target assuming no major geopolitical shocks.

Q. Why?

A. With chances for aggressive monetary easing diminished (e.g, QE3), precious and base metals will continue to undergo a major but relatively stable re-pricing exercise given an emerging change in global outlook: better-than expected U.S. recovery, lower-than-expected Chinese demand for raw materials and a Europe that has stabilized but moves forward with serious challenges. Gold-to-silver and gold-to-copper ratios are uncommonly stable with the former near historical norms. There may be some further short-term weakness in copper price but the trend is intact for the gold-to-copper ratio to bullishly fall below 400 pounds per ounce in late spring/early summer. Gold and the dollar are now in a mirror image dance with their longer term averages – bearish for gold and bullish for the US dollar (see notes).


For $1,650 per ounce gold we can expect to see silver in a range of $31-$33 per ounce; and copper, $3.7-$4.0 per pound.

Background Notes:

1. Next week, it is equally likely in my view for COMEX gold to test either its recent intraday low ($1,613.0/oz) or major resistance at ($1,685.4/oz). My target is therefore the geometric mean of the two; $1,650/oz (i.e. $1,648.8/oz)

2. The SPDR Gold Trust (GLD) breached its 300-day moving average yesterday for a short spell as the PowerShares DB US Dollar Index Bullish Fund (UUP) pushed towards breaking its 100-day average. Gold and the dollar are now in a mirror image dance with their longer term averages – bearish for gold and bullish for the US dollar

3. My Gold Value Index© (GVI) equals 88.16 this morning down 19.8% from the Oct. 4 high of 109.97, and at levels of early August, 2011.
The GVI trend lower has paused but should trend lower in the near-term which is bullish for key commodities.

4. The gold-to-copper ratio today is 426.73 pounds per ounce and below its 3-month moving average of 444.83 pounds per ounce. Remaining below this average and heading for the 400 pounds per ounce level is bullish for copper in the near-term. the 3-month rolling correlation is +0.47, relative volatility is 0.99X gold and price sensitivity (beta) is 0.46. Importantly, the 1-month correlation has returned positive at +0.14 after a brief bearish sojourn into negative territory.

5. The gold-to-silver ratio is near historical norms at 51.8; 3-month rolling correlation is +0.85, relative volatility is 1.77X gold and price sensitivity (beta) is 1.51

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $40.90 down 0.99%
Newmont (NEM) $48.28 down 0.52%
McEwen Mining (MUX) 4.03 down 0.49% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.28 up 1.23%
Thompson Creek (TC) $6.42 down 0.93%
Freeport-McMoRan (FCX) $38.19 up 0.42% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $n/a
Timberline Resources (TLR) $0.50 up 6.38%

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

ArcelorMittal (MT) $18.00 up 1.47% - global steel producer
POSCO (PKX) $82.76 up 0.53% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 150.94, up from last report's 149.33 and above the 1-month moving average of 182.53. The 1-month average is falling but still above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $10.9/oz at $1,625.0/oz (June contract, most active)

COMEX silver is up $0.331/oz at $31.375/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.793 oz/oz

Silver 1-month CRS© is 1.15% (bullish level); very stable ratio; 1-month & 3-month < 3% (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 88.16, up from last report's 87.44 and just above its 1-month average of 88.03. Gold value is taking a pause from trending down. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,540.1/oz which is $84.9/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0.0175/lb at $3.8080/lb (May contract, most active)

The gold-to-copper ratio is 426.73 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"; the ratio is below its 3-month moving average of 444.83 (a Cu bullish trend has resumed in Price Domain B)

Copper 1-month CRS© is 1.68% (bullish level); very stable ratio; 1-month & 3-month < 3% (Cu bullish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.175
As of April 9, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of April 3, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.25/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.06/lb (US$31,000/metric ton)

Daily Oil Watch

Latest Nevada Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $120/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $101.59
ICE North Sea Brent crude $122.14
Spread (ICE- NYMEX) = $20.55 (last report, $18.24)

Here are the July contracts* with a narrower spread:

NYMEX light sweet crude $102.70
ICE North Sea Brent crude $121.00
Spread (ICE- NYMEX) = $18.30 (last report, $17.24)

* NYMEX futures contracts have rolled forward, we now show May and July for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 1.72% (bullish level); CRS© weak convergence (Oil neutral)

Prices are near highs for 2012, we have $120+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we're there, spread today may be more about recent domestic pipeline issues than new Iran concerns].

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI is 75.3 down from last report's 80.3. A level above 200 is time for serious concern - we are now well below that level. The highest level recorded since inception was 271.0 Aug. 9, 2011; the lowest level is 65.1 on Mar. 13, 2012

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 7.99 to 13,066.76; the S&P 500 is down 0.23 points at 1,398.73

The Eureka Miner's Grubstake Portfolio is up 0.47% at $1,396,035.34 (what's this?).

Cheers,

Colonel Possum

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

SPECIAL REPORT: General Moly (GMO) Hearing - "Packed house..."

The Colonel's notes

Adella Harding's Elko Daily Free Press Article:
Judge hears arguments over Mt. Hope (April 5, 2012)

Morning Miners!

It is 6:04 AM. We will interrupt our usual daily market report to bring you the latest on the Nevada District Court hearing held yesterday at the Eureka County Courthouse on the ongoing General Moly (Eureka Moly LLC) water rights issue. Let Old Miner Woden pour you a hot cup of Raine's Red Label and let's get started...

SPECIAL REPORT: General Moly Hearing

The next leg of the ongoing water rights conflict between General Moly and Eureka County unfolded yesterday in our 1879 courthouse on Main St. Unfortunately, I was out of town but received an e-mail from a faithful follower of this report at 9:56 AM, "Packed house...Indications are potential for 2-3 months on a decision, but you never know." Big news in these parts.

If you are just coming up to speed, there has been multi-year debate between General Moly and the Eureka County Commissioners together with a dedicated group of ranchers and farmers over water usage in the nearby Diamond and Kobeh valleys. General Moly plans to mine molybdenum at Mt. Hope which lies 22 miles north of the Eureka townsite and sits astride both valleys and their respective water basins. Moly mining is a water intensive process and the local ranchers and farmers are concerned that an additional water burden will adversely affect their livelihoods in an area that is already feeling the effects of water depletion.

The Elko Daily Free Press carried the Commissioner's viewpoint after their recent rejection of a "Good neighbor" offer by General Moly to resolve the conflict and avoid yesterday's hearing:

Eureka County Commissioners affirm support for individual rights (Elko Daily Free Press, submitted by EUREKA COUNTY COMMISSIONERS, Wednesday, March 28, 2012 11:22 am)

The specifics of the offer are given in a General Moly press release posted earlier this month:

General Moly Presents Good Neighbor Offer to Eureka Stakeholders (Press Release)

Zach Spencer, General Moly's media point man, called me around 4:00 PM yesterday to summarize the highlights of the hearing. Zach informed the Eureka Miner that there were about 40 folks in attendance with Judge Papez presiding over the small courtroom not unaccustomed to resolving mining disputes for the last 133 years.

The proceeding began at 9:00 AM. The lawyers representing General Moly and the appellants were "cordial" with the latter presenting points of their case first. According to Zach, "brevity was the key" as briefs had already been exchanged and both the Judge and those in attendance are very familiar with the case. After a short noon recess, The General Moly lawyer presented their side and Deputy Attorney General Bryan Stockton represented the State Water Engineer.

There were at least two local journalists in attendance: Mining Editor Adella Harding of the Elko Daily Free Press and Mining Quarterly and reporter Rudy Herndon of Winnemucca Publishing who submits stories to the Humboldt Sun, the Battle Mountain Bugle and the Lovelock Review-Miner. The Eureka Miner will update this special report as their articles become available.

Judge Papez will take the matter under advisement with both parties having the opportunity to produce further findings of fact and conclusions of law 20 days after the hearing transcript becomes available. The consensus estimate of 2 to 3 months appears to be the best guess for a final ruling. My comment to Zach was, "I hope this is over and done before Eureka's Fourth of July Parade."

With respect to the latest General Moly schedule, Zach expects the Record-of-Decision (ROD) for the Mt. Hope Molybdenum Mine to be this August with mine construction commencing in the fall. Although an unfavorable ruling may produce adverse consequences for General Moly, it is not presently standing in the way of other permitting processes. Also the recently ordered 18 CAT 793s are not needed for the initial work, first delivery is anticipated for late 2013 - early 2014 (Zach will check the actual delivery dates with General Manager Mike Iannacchione).

The Eureka County Commissioners meeting Friday, April 6, in the Commissioners’ meeting room at the County Courthouse will discuss mining housing. Per their agenda:

10:50 – EUREKA CANYON SUBDIVISION – Ron Damele, Public Works Director, and Mike Iannachionne, General Moly
1. Report on the intentions of General Moly (EMLLC) for use of a portion of the Eureka Canyon Subdivision commercial property to be used for EMLLC’s temporary construction worker housing. Discussion and possible action will include timeframes, types of temporary housing, fees and costs, infrastructure requirements, and possible conflicts with existing or proposed development of the overall site, and all matters properly relating thereto. (Action)

11:00 - NEVADA RURAL HOUSING AUTHORITY – Gary Longaker, Executive Director, and Tom Stone, Real Estate Mgr.
1. Review and discuss proposed Eureka Canyon Agreement between NRHA and Eureka County for multifamily modifications and single family settlement. (Discussion)
2. Discuss, approve, deny, or modify the Eureka Canyon Agreement between NRHA and Eureka County. (Action)

The Eureka Miner respects the views of all miners, farmers and ranchers and their valuable contribution to Eureka County and looks forward to a resolution of the Mt. Hope water rights issue that provides an equitable solution for all concerned.

Please watch for further updates throughout the day.

Cheers,

Colonel Possum

The 2012 Copper & Gold Conundrum; General Moly (GMO) Hearing Today

Bluer Skies for the Red Metal

Latest Nevada Gas Prices (click this link)

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My latest Kitco commentary: The 2012 Copper & Gold Conundrum (4/02/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,680.9/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 88.0 (gold value pause from trending down)
Value Adjusted Gold Price© (VAGP) = $1,596.0/oz
COMEX - VAGP = $84.9/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains below its 3-month average, compression resuming (Cu bullish)


Morning Miners!

It is 5:50 AM. Have a cup of Ruby T's famous Blue Skies java. Our favorite market bull has double copper bracelets on her arms this morning. Not to put a damper on Ruby's enthusiasm, I just noticed the front month price spread between Brent crude and West Texas intermediate has crested the $20/bbl "oh-oh" threshold. This could be a market sign that things are brewing again in the Persian Gulf region (see Oil Watch below) - need to do some checking on this [9:34 AM, $20/bbl spread today may be more about recent domestic pipeline issues than new Iran concerns]

The 2012 Copper & Gold Conundrum

My latest Kitco commentary: The 2012 Copper & Gold Conundrum presents a case for bluer skies for the red metal and also a puzzle:

The good news is that a consistent trend to lower levels [for the gold-to-copper ratio] should revive copper mining equities and support a gradual increase in copper prices. However, this may be at the expense of gold prices – breaking the psychologically important $4 per pound level implies a lower gold price of $1,600 per ounce if the bull/bear threshold is achieved. Even with further quantitative easing (e.g., QE3), it is unlikely that copper prices would exceed $4.5 per pound in 2012 implying a $1,800 per ounce ceiling for the yellow metal by the same line of reasoning. A geopolitical shock may spike gold to $1,900+ per ounce but the red metal would surely respond with bearishly lower prices – a real puzzle for both metals to solve in the months ahead. (Richard Baker, Kitco News Commentary, 4/02/2012

Have a good read and see if you agree with the ole Colonel. COMEX copper is certainly feeling chipper for this new quarter - up a penny more from yesterday's rally at $3.9310 per pound. Reuters carries a good piece on how better China and U.S. manufacturing data has given the red metal some new color:

METALS-Copper steady near 2-month high on China, U.S. data (Susan Thomas and Manolo Serapio Jr, Reuters, Tue Apr 3, 2012 9:56am GMT)

One sobering data point is a halt in the decline of London Metal Exchange (LME) warehouse stocks as shown in this 30-day chart:

I'm not too worried since China's over-stocked warehouses are starting to see demand and the LME number is nearly half what it was several years ago. Supply restriction against a backdrop of moderate demand is not a bad story for 2012. Go copper, go metals, go miners!

General Moly (GMO) Hearing Today

Today at 9 AM Eureka County and General Moly will be at the Nevada District Court hearing at the Eureka County Courthouse for another round of water rights with Judge Papas. The ole Colonel has his ears on the ground...stay tuned.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $43.77 down 1.00%
Newmont (NEM) $51.13 down 1.88%
McEwen Mining (MUX) 4.41 down 2.43% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.35 down 2.90%
Thompson Creek (TC) $6.83 down 1.44%
Freeport-McMoRan (FCX) $38.78 down 0.84% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $n/a
Timberline Resources (TLR) $0.50 unchanged

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

ArcelorMittal (MT) $18.80 down 2.03% - global steel producer
POSCO (PKX) $84.35 down 0.76% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 185.58, up from last report's 183.74 and above the 1-month moving average of 183.63. The 1-month average is falling but still above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is up $1.2/oz at $1,680.9/oz (June contract, most active)

COMEX silver is down $0.143/oz at $32.955/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.06 oz/oz

Silver 1-month CRS© is 1.18% (bullish level); convergence (Ag bullish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 88.0, down from last report's 89.19 and just above its 1-month average of 88.12. Gold value is taking a pause from trending down. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,596.0/oz which is $84.9/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0.0100/lb at $3.9310/lb (May contract, most active)

The gold-to-copper ratio is 427.00 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"; the ratio is below its 3-month moving average of 446.34 (a Cu bullish trend has resumed in Price Domain B)

Copper 1-month CRS© is 1.65% (bullish level); very stable ratio; 1-month & 3-month < 3% (Cu bullish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.10
As of April 2, 2012
(updated weekly)

Ryan's Notes Average:
US$14.10
As of Mar 30, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.13/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.06/lb (US$31,000/metric ton)

Daily Oil Watch

Latest Nevada Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $120/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $104.77
ICE North Sea Brent crude $125.41
Spread (ICE- NYMEX) = $ (last report, $18.24)

Here are the July contracts* with a narrower spread:

NYMEX light sweet crude $105.84
ICE North Sea Brent crude $124.28
Spread (ICE- NYMEX) = $ (last report, $17.24)

* NYMEX futures contracts have rolled forward, we now show May and July for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 1.50% (bullish level); CRS© weak convergence (Oil neutral)

Prices are near highs for 2012, we have $120+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign; we just got there - let's see what shakes out tomorrow [9:34 AM, $20/bbl spread today may be more about recent domestic pipeline issues than new Iran concerns].

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI is 71.0 down from last report's 73.0. A level above 200 is time for serious concern - we are now well below that level. The highest level recorded since inception was 271.0 Aug. 9, 2011; the lowest level is 65.1 on Mar. 13, 2012

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 17.07 to 13,247.42; the S&P 500 is down 2.57 points at 1,416.47

The Eureka Miner's Grubstake Portfolio is down 1.04% at $1,445,252.97 (what's this?).

Cheers,

Colonel Possum

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

Miners 2012 - First Quarter Ups & Downs; McEwen, General Moly Beat

Bow tie windshield

*** BREAKING NEWS *** COMEX gold touched $1,685.4/oz at 11:10 PM ET

Latest Nevada Gas Prices (click this link)

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

My latest Kitco commentary: Copper Bids Adieu to Gold and Silver (3/19/2012)

This morning's...
COMEX Gold price = $1,668.3/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 89.19 (gold value pause from trending down)
Value Adjusted Gold Price© (VAGP) = $1,562.9/oz
COMEX - VAGP = $105.4/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains below its 3-month average, compression resuming (Cu bullish)

Morning Miners!

It is 5:51 AM. Have a hot cup of Monday Dragon Breath. Let's kickoff a new quarter with a little blue sky for miners...



Miners 2012 - First Quarter Ups & Downs; McEwen, General Moly Beat

As another leg in this report's ongoing "Miners 2012" series, the Colonel thought it would be good to look at the end-of-quarter performance for some key mining equities and Eureka Miner indices. In my latest Kitco commentary, which should be posted later today, I said,

The first quarter of 2012 witnessed some chilling downdrafts for gold and considerable price resilience for copper. Precious and base metals are undergoing a major but relatively stable re-pricing exercise given an emerging change in global outlook: better-than expected U.S. recovery, lower-than-expected Chinese demand for raw materials and a Europe that has stabilized but moves forward with serious challenges. By Friday, COMEX gold closed at $1,671.9 per ounce up 7% for the year; COMEX copper, at $3.8250 per pound up 11%. Not a bad showing for the two metals given the shifting sentiment from hard asserts to the exuberance that pushed the S&P 500 up an impressive 12% so far for 2012.

Given the gains in gold, copper and the S&P 500 here's how some of our benchmark and local miners did:

Benchmarks for copper, gold & molybdenum

Freeport-McMoRan (FCX) $36.79 (12/30/11) 38.04 (3/30/120) up 3.4%
Barrick gold (ABX) $45.25 (12/30/11) 43.48 (3/30/120) down 3.9%
Thompson creek (TC) $6.96 (12/30/11) 6.76 (3/30/120) down 2.9%

Local Miners

General Moly (GMO) $3.09 (12/30/11) 3.35 (3/30/120) up 8.4%
Newmont (NEM) $60.1 (12/30/11) 51.27 (3/30/120) down 14.7%
McEwen (MUX) $3.36 (12/30/11) 4.44 (3/30/120) up 32.1%
Timberline (TLR) $0.5699 (12/30/11) $0.51 (3/30/120) down 10.5%

The junior (but more volatile) miners beat the pack with McEwen posting an impressive 32% and General Moly 8%. Newmont trailed everyone at a dismal 14.7% down to Barrick's fall of 3.9%; not very terrific considering gold did register a 7% gain. Molybdenum oxide is up roughly 5% which makes Thompson Creek's negative 2.9% look pretty rocky and General Moly's positive 8.4% pretty solid - of course, the former actually produces moly and the latter presently produces hope for Mt. Hope.

Speaking of Mt. Hope, South Korean steelmaker POSCO (sticker PKX and 20% owner of that mountain 22 miles north of town) posted a respectable 2% gain, at least relative to 10-year Treasurys.

All-in-all a pretty shaky quarter for the mining sector which fell in the shadows of the S&P 500's sterling 12% performance. Let's hope for Mt. Hope and a much better quarter going forward for the local and benchmark miners.

Here's how this report's three indices fared:

EMI 77.61 (12/30/11) 178.47 (3/30/120) above 100 is better times for miners
GVI 92.16 (12/30/11) 89.33 (3/30/120) below 100 indicates declining gold value, typically positive for miners
DCI 105.1 (12/30/11) 72.9 (3/30/120) below 100 indicates less worry about the sovereign debt issues that weigh on all the markets

The Colonel did light a warning flare on the EMI last week as it broke a lower trend line but thankfully it has recovered some today posting 183.7.

To end on a positive, the Eureka Miner's Grubstake Portfolio which includes the above miners had a decent 7.8% for the first quarter boosted by the junior miner's solid gains.

Daily Market Roundup

Mining Report

This morning's mining stocks...

Barrick (ABX) $43.94 up 1.06%
Newmont (NEM) $51.94 up 1.31%
McEwen Mining (MUX) 4.48 up 0.90% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.43 up 2.39%
Thompson Creek (TC) $6.85 up 1.48%
Freeport-McMoRan (FCX) $38.49 up 1.21% (a bellwether mining stock spanning copper, gold & molybdenum)
Quadra FNX (TSE:QUX) $n/a
Timberline Resources (TLR) $0.50 down 1.96%

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

ArcelorMittal (MT) $18.78 down 1.83% - global steel producer
POSCO (PKX) $84.56 up 1.03% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is above-par at 183.74, up from last report's 178.47 and below the 1-month moving average of 184.86. The 1-month average is falling but still above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $3.6/oz at $1,668.3/oz (June contract, most active)

COMEX silver is down $0.044/oz at $32.520/oz (May contract, most active)

The gold-to-silver ratio (Au:Ag) is 51.306 oz/oz

Silver 1-month CRS© is 1.32% (bullish level); convergence (Ag neutral)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 89.19, up from last report's 89.33 and just above its 1-month average of 88.13. Gold value is taking a pause from trending down. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,562.9/oz which is $105.4/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is up $0.0.0270/lb at $3.8520/lb (May contract, most active)

The gold-to-copper ratio is 433.10 lb/oz; ratios in excess of 400 lb/oz are considered "recession levels"; the ratio is below its 3-month moving average of 446.89 (a Cu bullish trend has resumed Price Domain B)

Copper 1-month CRS© is 1.59% (bullish level); very stable ratio; 1-month & 3-month < 3% (Cu bullish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.10
As of April 2, 2012
(updated weekly)

Ryan's Notes Average:
US$14.10
As of Mar 30, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.13/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.06/lb (US$31,000/metric ton)

Daily Oil Watch

Latest Nevada Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $120/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $102.19
ICE North Sea Brent crude $121.79
Spread (ICE- NYMEX) = $18.24 (last report, $19.89)

Here are the July contracts* with a narrower spread:

NYMEX light sweet crude $104.47
ICE North Sea Brent crude $121.79
Spread (ICE- NYMEX) = $17.24 (last report, $17.32)

* NYMEX futures contracts have rolled forward, we now show May and July for a 2-month look-ahead

NYMEX WTI 1-month CRS© is 1.50% (bullish level); CRS© weak convergence (Oil neutral)

Prices are near highs for 2012, we have $120+ Brent and $100+ NYMEX in July favoring high oil prices this spring into summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign, backing off from scary.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI is 73.0 up from last report's 72.9. A level above 200 is time for serious concern - we are now well below that level. The highest level recorded since inception was 271.0 Aug. 9, 2011; the lowest level is 65.1 on Mar. 13, 2012

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 18.58 to 13,193.46; the S&P 500 is up 1.76 points at 1,410.23

The Eureka Miner's Grubstake Portfolio is up 0.60% at $1,448,352.10 (what's this?).

Cheers,

Colonel Possum

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