Year of the Snake; The Colonel's Gold, Silver & Copper prices for Next Week

Angel Light, Eureka, Nevada
 
Latest Nevada Gas Prices (click this link)

My latest Kitco commentary: Oil, Copper & Gold – Beware the Snake? (02/11/2013)

Friday's morning prices...

COMEX Gold price = $1,668.1/oz (April contract most active)
COMEX Silver = $31.445/oz (March)
COMEX Copper = $3.7565/lb (March)
NYMEX WTI crude = $96.31/bbl (March)
ICE Brent crude = $118.67/bbl (March)
Eureka Miner’s Gold Value Index© (GVI) = 92.74 (gold value is elevated but falling with respect to key commodities oil, copper and silver)
Value Adjusted Gold Price© (VAGP) = $1,502.9/oz
COMEX - VAGP = $165.2/oz; gold is trading at a decreasing premium to key commodities.

Morning Miners!

A mixed week for gold prices which are trading near the middle of their range while silver and copper get a boost this morning from some upbeat data from China (see Kitco Gold Survey below). China's exports surged 25% and imports climbed 29%, both well ahead of the previous month's increases. As we begin the Chinese Lunar New Year holiday next week, it is not expected that the metals will vary too much from current prices. We will see where the Year of the Snake takes us after Chinese traders return to the marketplace.

The broader markets continue to move skyward with the S&P 500 at new highs this morning presently posting 1,517.14. To give this some perspective, the S&P closing high of October 9, 2007 was 1,565.15 which then fell all the way down to a close at 676.53 on March 9, 2009 during the Great Recession. Markets are resilient, we've come a long way back, pardner.

The moly miners are struggling to regain ground lost to earlier highs this year. Moly benchmark miner Thompson Creek (TC) and General Moly (GMO) both made intraday highs on Jan. 7 but have fallen since:

Thompson Creek (TC) $4.55 (01/07) $4.02 (this morning) down 11.5%
General Moly (GMO) $4.25 (01/07) $3.52 (this morning) down 22.1%

Bellwether miner Freeport McMoran (FCX) which produces copper, gold and moly has fared much better:

Freeport McMoran (FCX) $31.10 (01/07) $35.69 (this morning) up 14.8%

One of the overhangs for pure play moly miners is the lackluster steel consumption outlook for Europe as reported by Steel Business Briefing February 5:

2013 prospects remain bleak, mild recovery in 2014, Eurofer

"European apparent steel consumption will fall again slightly in 2013, before improving in 2014, the European steel association Eurofer said on Tuesday.

In a new report it said activity in the main steel-using sectors is expected to register a further decline this year due to the continuation of difficult operating conditions in the EU, particularly in construction and automotive. A mild rebound is forecast for 2014, in line with the expected economic recovery in the EU."

A lot rests on the U.S., China and Japan to fill the gap in steel demand. South Korean steelmaker POSCO (PKX) and 20% owner of Mt. Hope is less sensitive to Europe but has also struggled since the begining of 2013:

POSCO (PKX) $86.8 (01/07) $81.58 (this morning) down 6.0%

Molybdenum spot prices have stabilized below $12 per pound level. Here are the latest numbers compliments of Thompson Creek Metals (TC):

Metals Week Weekly Average:
US$11.545
As of February 4, 2013
(updated weekly)

Ryan's Notes Average:
US$11.50
As of February 5, 2013
(updated twice weekly)

The London Metal Exchange (LME) futures contracts also remains below $12 per pound, slightly higher than spot prices.

3-month seller's contract $25,800 per metric ton ($11.70 per pound)

15-month seller's contract $26,280 per metric ton ($11.92 per pound)

Where do gold, silver and copper prices go next week? Checkout my today's input to the weekly Kitco Gold Survey below.

Enjoy another cup of Raine's delicious Red Label TGIF and have a great weekend.

The Colonel's Gold, Silver & Copper Prices for Next Week

Last week the ole Colonel was on the road. For the record this was this was the input to the Kitco Gold Survey last week:

For $1,665 per ounce gold we can expect to see silver in a range of $29.6-$31.8 per ounce; and copper in a range of $3.59-$3.77 per pound. Silver and copper are expected to have a positive bias above their range means ($30.704 & $3.6830 respectively) while gold remains in neutral position.

Here is my input to the Kitco Gold Survey this morning:

02/08/2013 (10:18AM CT)

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

A. Sideways, $1,670 per ounce target.

Q. Why?

A. Gold was whipsawed this week by comments of ECB president Mario Draghi especially his inference that the euro’s strength could hamper an economic recovery. Since then the euro has fallen below 1.34 after reaching a high last Friday of 1.3771 and gold has returned to its trading range mean. Upbeat China data this morning has boosted copper and silver but has had little material effect on the yellow metal. With next week’s break for China’s Lunar New Holiday, not much is on the horizon to move gold higher or lower. My target of $1,670 per ounce is therefore the range mean of the Jan. 31 high and Feb. 5 low ($1,687.0 and $1,653.2 per ounce).

Technically, negative 3-month rolling correlations between gold and global commodities oil and copper continue to be troubling exacerbated by weakening 1-month correlations (Ref 6). Oil, copper and gold do best as a group when gold behaves as a commodity (i.e. positive correlations).

For $1,670 per ounce gold we can expect to see silver in a range of $30.1-$31.8 per ounce; and copper in a range of $3.63-$3.86 per pound. Silver and copper are expected to have a positive bias above their range means ($30.970 & $3.7459 respectively) while gold remains in neutral position.

The yellow metal has recovered some value relative to oil and copper as well as the broader markets this week.

As measured by the Eureka Miner’s Gold Value Index (GVI, Ref 1), the value of gold relative to global commodities copper and oil and companion metal silver is 92.74, staying below the key-100 level and 1-month moving average of 93.77 (bearish gold trend). The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) is now 13.5% below its 2012 high (1.2710, Nov.15) at 1.0997. The latest price action indicates gold has lost considerable value relative to the broader market but may be forming a bottom.

Background Notes:

1. My gold target price of $1,670 per ounce is the geometric mean of the given highs and lows
2. Given the target gold price, the silver price ranges are derived from the 1-month gold ratio mean (GSR) and its respective ratio stability (CRS©). A similar technique was used to predict the price range for copper.
3. My Gold Value Index© (GVI) equals 91.76 or 11.5% below the 2012 high of 103.73. Today gold value is below its 1-month moving average of 93.77; a value of 100 represents a historically high-value of gold relative to key commodities oil, copper and silver.
4. The gold-to-copper ratio today is 444.06 pounds per ounce and below its 3-month moving average of 466.51 and 6-1/2 year trend of 486.89. Falling below the long-term trend line is a bullish indication for the red metal; trending above 500 pounds per ounce, bearish (Ref 3).  The 1-month gold-to-copper ratio stability is a very low 1.56%. The 1-month rolling correlation is -0.12; 3-month is -0.54. 3-month relative volatility is 2.67X gold and price sensitivity (beta) is -0.81
5. The gold-to-silver ratio (GSR) is above its historical norm at 53.031; the 3-month rolling correlation is +0.87, relative volatility is 2.28X gold and price sensitivity (beta) is +1.98. The GSR is near its 3-month average of 53.02; the 1-month gold-to-silver ratio stability is a very low 1.33%.

Ref 1: Gold Versus Copper, Oil and Silver: The Value Trend Is Your Friend (Kitco News, 7/23/2012)

Ref 2: Copper and Gold - In the Eye of the Storm (Kitco News, 10/30/2012)

Ref 3: Copper and Gold - The Bank Shot (Kitco News, 11/19/2012)

Ref 4: Copper & Gold – Fast Eddie’s Lucky Run (Kitco News, 12/03/2012)

Ref 5: The 2013 Copper & Gold Conundrum (Kitco News, 01/07/2012)

Ref 6: Oil, Copper & Gold – All in the Family (Kitco News, 01/22/2012)

Cheers,

Colonel Possum

Headline photograph by Mariana Titus

Please checkout bayoutales.com for books and book orders

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

Gold Stumbles; The Colonel's Gold, Silver & Copper Prices for Next Week

Winter sports, Eureka, Nevada
 
Latest Nevada Gas Prices (click this link)

My latest Kitco commentary: Oil, Copper & Gold – All in the Family (01/22/2013)

Friday's morning prices...

COMEX Gold price = $1,656.0/oz (February contract most active)
COMEX Silver = $31.465/oz (March)
COMEX Copper = $3.6650/lb (March)
NYMEX WTI crude = $96.41/bbl (March)
ICE Brent crude = $113.69/bbl (March)
Eureka Miner’s Gold Value Index© (GVI) = 92.93 (gold value is elevated but falling with respect to key commodities oil, copper and silver)
Value Adjusted Gold Price© (VAGP) = $1,489.0/oz
COMEX - VAGP = $167.0/oz; gold is trading at a decreasing premium to key commodities.

Morning Miners!

Gold prices stumbled this week as the yellow metal steadily loses its safe-haven allure with respect to currencies as I explain in the Kitco Gold Survey input (see below). There are also is a loss of premium with respect to two key global commodities which you can read about in my latest Kitco commentary, Oil, Copper & Gold – All in the Family.

Not a dazzling week for the metals and miners but most global equity markets continue to be on a tear with Japan's Nikkei showing 11-weeks of gains and longest winning streak since 1977. The S&P 500 is also at pre-recession levels not seen since late 2007 (presently 1,497.47 breaching the 1,500-level twice this week).

Molybdenum spot prices are slightly lower than last week but still close to the $12 per pound level which is OK but the futures market is throwing up some warning flares.  Here are the latest numbers compliments of Thompson Creek Metals (TC):

Metals Week Weekly Average:
US$11.875
As of January 18, 2013
(updated weekly)

Ryan's Notes Average:
US$11.85
As of January 22, 2013
(updated twice weekly)
The London Metal Exchange (LME) futures contracts fell below $12 per pound and are now near or below spot prices which is rarely a good sign:

3-month seller's contract $25,500 per metric ton ($11.57 per pound)

15-month seller's contract $26,210 per metric ton ($11.89 per pound) 

General Moly (GMO) stock is trading at $4.81 per share, nearly 6% lower than last Friday's close. Moly benchmark miner Thompson Creek (TC) is roughly flat for the week.

Where do gold, silver and copper prices go next week? Checkout my today's input to the weekly Kitco Gold Survey below.

Enjoy another cup of Raine's delicious Red Label TGIF and have a great holiday weekend.

The Colonel's Gold, Silver & Copper Prices for Next Week

Here is my input to the weekly Kitco Gold Survey:

01/25/2012 (10:57AM CT)

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

A. Up, $1,660 per ounce target.

Q. Why?

A. Gold has had a difficult week falling this morning by more than $30 below last Friday’s close. Technically there are bearish trends emerging that challenge a return to January’s highs. It does appear, however, that gold is presently oversold and should see some recovery next week. My target of $1,660 per ounce is the range mean of January highs and lows ($1,695.0 and $1,626.0 per ounce) which offers some relief from an intraday low this morning of $1,655.0

As the S&P 500 enjoys its eighth day in the green, rallying to levels not seen since late-2007, gold is having trouble holding ground within its January trading range. As investors find new confidence in the strengthening euro (1.3453) interest in gold as a monetary safe-haven is rapidly fading. This is in marked contrast to 2012 when the fortunes of the yellow metal and European currency often moved together.

Technically, negative 3-month rolling correlations between gold and global commodities oil and copper continue to be troubling exacerbated by weakening 1-month correlations (Ref 6).

For $1,660 per ounce gold we can expect to see silver in a range of $29.5-$31.9 per ounce; and copper in a range of $3.52-$3.71 per pound. Silver and copper are expected to have a positive bias above their range means ($30.731 & $3.6111 respectively) while gold is in neutral position.

The yellow metal has bearishly lost more value relative to oil and copper as well as the broader markets this week.

As measured by the Eureka Miner’s Gold Value Index (GVI, Ref 1), the value of gold relative to global commodities copper and oil and companion metal silver is 92.93, staying below the key-100 level and 1-month moving average of 95.34 (bearish gold trend). The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) is now a full 13.0% below its 2012 high (1.2710, Nov.15) at 1.1059. The latest price action indicates gold has lost considerable value relative to the broader market and is at a new low this morning.

Background Notes:

1. My gold target price of $1,660 per ounce is near the geometric mean of the January highs and lows
2. Given the target gold price, the silver price ranges are derived from the 1-month gold ratio mean (GSR) and its respective ratio stability (CRS©). A similar technique was used to predict the price range for copper.
3. My Gold Value Index© (GVI) equals 92.93 or 10.4% below the 2012 high of 103.73. Today gold value is below its 1-month moving average of 95.34; a value of 100 represents a historically high-value of gold relative to key commodities oil, copper and silver.
4. The gold-to-copper ratio today is 451.84 pounds per ounce and below its 3-month moving average of 472.45 and 6-1/2 year trend of 485.92. Falling below the long-term trend line is a bullish indication for the red metal; trending above 500 pounds per ounce, bearish (Ref 3).  The 1-month gold-to-copper ratio stability is a very low 1.31%. The 1-month rolling correlation is +0.33; 3-month is -0.44. 3-month relative volatility is 1.56X gold and price sensitivity (beta) is -0.69
5. The gold-to-silver ratio (GSR) is above its historical norm at 52.630; the 3-month rolling correlation is +0.87, relative volatility is 2.36X gold and price sensitivity (beta) is +2.06. The GSR is below its 3-month average of 53.17; the 1-month gold-to-silver ratio stability is a low 1.93%.

Ref 1: Gold Versus Copper, Oil and Silver: The Value Trend Is Your Friend (Kitco News, 7/23/2012)

Ref 2: Copper and Gold - In the Eye of the Storm (Kitco News, 10/30/2012)

Ref 3: Copper and Gold - The Bank Shot (Kitco News, 11/19/2012)

Ref 4: Copper & Gold – Fast Eddie’s Lucky Run (Kitco News, 12/03/2012)

Ref 5: The 2013 Copper & Gold Conundrum (Kitco News, 01/07/2012)

     Ref 6: Oil, Copper & Gold – All in the Family (Kitco News, 01/22/2012)

Cheers,

Colonel Possum

Headline photograph by Mariana Titus

Please checkout bayoutales.com for books and book orders

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

The Colonel's Gold, Silver & Copper Prices for Next Week

Warming up in the Diamond Valley, Eureka, Nevada
 
Latest Nevada Gas Prices (click this link)

My latest Kitco commentary: Oil, Copper & Gold – All in the Family (01/22/2013)

Friday's closing prices...

COMEX Gold price = $1,687.0/oz (February contract most active)
COMEX Silver = $31.932/oz (March)
COMEX Copper = $3.6790/lb (March)
NYMEX WTI crude = $95.94/bbl (March)
ICE Brent crude = $111.89/bbl (March)
Eureka Miner’s Gold Value Index© (GVI) = 94.39 (gold value is elevated but falling with respect to key commodities oil, copper and silver)
Value Adjusted Gold Price© (VAGP) = $1,493.4/oz
COMEX - VAGP = $193.6/oz; gold is trading at a decreasing premium to key commodities.

Morning Miners!

Gold prices gained some momentum this week and should head higher next week as I explain in my weekly Kitco Gold Survey input (see below) and latest commentary, Oil, Copper & Gold – All in the Family.

It's a short report this morning as the ole Colonel is still trying to thaw out from our subzero cold snap. I keep an ice cooler in an enclosed breezeway between the house and workshop to keep my beer from freezing. That works but the other night I opened the cooler and the hinges shattered like glass - that's cold, pardner.

Molybdenum spot prices are a thin flat washer below the $12 per pound level which is encouraging but not much changed from last week. Here are the latest numbers compliments of Thompson Creek Metals (TC):

Metals Week Daily Average:
US$11.95
As of January 11, 2013
(updated weekly)

Ryan's Notes Average:
US$11.85
As of January 18, 2013
(updated twice weekly)

The London Metal Exchange (LME) futures contracts have crested $12 per pound but have also seen little change this week:

3-month seller's contract $26,500 per metric ton ($12.02 per pound)

15-month seller's contract $27,220 per metric ton ($12.35 per pound) 

General Moly (GMO) stock closed the week at $4.05 per share.

Where do gold, silver and copper prices go next week? Checkout my today's input to the weekly Kitco Gold Survey below.

Enjoy another cup of Raine's delicious Red Label TGIF and have a great holiday weekend.

The Colonel's Gold, Silver & Copper Prices for Next Week

Here is my input to the weekly Kitco Gold Survey:

01/18/2012 (10:56AM CT)

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

A. Up, $1,705 per ounce target.

Q. Why?

A. Although range bound between January highs and lows ($1,695.0 and $1,626.0 per ounce), gold has found momentum to the upside this week. In the short-term, gold is expected to break the range reaching new highs for the month. My target is $1,705 per ounce.

This morning is a study in market contrasts. Better-than-expected China GDP and industrial output data together with an upbeat General Electric report bode well for global outlook. The S&P 500 volatility index, sometime referred to as the “fear index”, is at levels not seen since June, 2007. As a consequence, risk-on plays like copper are in rally mode today. However, as another U.S. debt ceiling fast approaches, the Treasury market and the U.S. dollar are in the green signaling safe-haven plays. This presents a mixed picture for gold but I believe the yellow metal should participate to the upside with the risk assets for the time being.

Technically, negative 3-month rolling correlations between gold and global commodities oil and copper are troubling but may be soon relieved by shorter term positive relations (Ref 4).

For $1,705 per ounce gold we can expect to see silver in a range of $31.2-$33.3 per ounce; and copper in a range of $3.61-$3.83 per pound. Silver and copper should have a positive bias above their expected range means ($32.260 & $3.7187 respectively).

The yellow metal has bearishly lost value relative to oil and copper as well as the broader markets but has recovered some this week for the latter.

As measured by the Eureka Miner’s Gold Value Index (GVI, Ref 1), the value of gold relative to global commodities copper and oil and companion metal silver is 94.55, staying below the key-100 level and 1-month moving average of 96.07(bearish gold trend). The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) is now 10.3% below its 2012 high (1.2710, Nov.15) at 1.1403. The latest price action indicates that although gold has lost considerable value relative to the broader market it may have bottomed Jan. 4 and is now trending up (bullish gold trend).

Background Notes:

1. My gold target price of $1,705 per ounce follows a recent upward trend which should break the psychologically important $1,700 per ounce level.
2. Given the target gold price, the silver price ranges are derived from the 1-month gold ratio mean (GSR) and its respective ratio stability (CRS©). A similar technique was used to predict the price range for copper.
3. My Gold Value Index© (GVI) equals 94.55 or 8.8% below the 2012 high of 103.73. Today gold value is below its 1-month moving average of 96.07; a value of 100 represents a historically high-value of gold relative to key commodities oil, copper and silver.
4. The gold-to-copper ratio today is 457.98 pounds per ounce and below its 3-month moving average of 473.63 and 6+year trend of 485.93. Falling below the long-term trend line is a bullish indication for the red metal; trending above 500 pounds per ounce, bearish (Ref 3).  The 1-month gold-to-copper ratio stability is a very low 1.43%. The 1-month rolling correlation is +0.43; 3-month is -0.41. 3-month relative volatility is 1.54X gold and price sensitivity (beta) is -0.63
5. The gold-to-silver ratio (GSR) is above its historical norm at 52.803; the 3-month rolling correlation is +0.88, relative volatility is 2.39X gold and price sensitivity (beta) is +2.11. The GSR is below its 3-month average of 53.2; the 1-month gold-to-silver ratio stability is a very low 1.61%.

Ref 1: Gold Versus Copper, Oil and Silver: The Value Trend Is Your Friend (Kitco News, 7/23/2012)

Ref 2: Copper and Gold - In the Eye of the Storm (Kitco News, 10/30/2012)

Ref 3: Copper and Gold - The Bank Shot (Kitco News, 11/19/2012)

Ref 4: Copper & Gold – Fast Eddie’s Lucky Run (Kitco News, 12/03/2012)

Ref 5: The 2013 Copper & Gold Conundrum (Kitco News, 01/07/2012)

Cheers,

Colonel Possum

Headline photograph by Mariana Titus

Please checkout bayoutales.com for books and book orders

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

General Moly Revenue for Eureka County; The Colonel's Metal Prices for Next Week

A few months before this tree has apples, Eureka, Nevada
 
Latest Nevada Gas Prices (click this link)

My latest Kitco commentary: The 2013 Copper & Gold Conundrum (01/07/2013)

This morning's...
COMEX Gold price = $1,663,8/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 95.34 (gold value is elevated but falling with respect to key commodities oil, copper and silver)
Value Adjusted Gold Price© (VAGP) = $1,458.2/oz
COMEX - VAGP = $205.6/oz; gold is trading at a decreasing premium to key commodities.

Morning Miners!

Gold prices stumbled this morning the day after the S&P 500 touched levels not seen since December, 2007. A falling U.S. dollar, falling gold prices and stock markets that feel little pain is a mixed bag for precious and base metals as I explain in my weekly Kitco Gold Survey input (see below) and latest commentary, The 2013 Copper & Gold Conundrum.

Monday, I had the pleasure of going to the first 2013 working session of the Eureka Commissioner's  twice-monthly meeting with newly elected members J.J. Goicoechea, Pat Dempsey and returning member Jim Ithurralde. Alan London and Zach Spencer of General Moly gave a mid-morning presentation on the Mt. Hope molybdenum mine revenue projection for Eureka County as well as status and schedule of ongoing operations. Alan London is the new Administrative Services Manager and Zach Spencer is the Director of External Communications. 

Alan began by identifying the Eureka County "stakeholders" who are representatives from Public Works (Ron Damele), Public Safety (Mike Sullivan) and Tax and Fiscal (Mike Mears and Mike Rebaleati). All three groups met separately in November with their Eureka Moly LLC counterparts (Eureka Moly LLC or EMLLC is the local subsidiary of General Moly responsible for the Mt. Hope mine). They include Alan, Lee Shumway, GMI Corporate Controller and Treasurer, Sarge Warrick, EMLLC Health and Safety Manager, Mike Iannacchione, EMLLC General Manager, and Randy Johnson, EMLLC Mine Manager.

Mine construction begins this spring in earnest but clearing and grubbing activities are underway now. This includes archeological clearing and identification of cultural sites with BLM approvals as outlined in a Jan. 9, 2012, press release:

 General Moly Initiates Preliminary Construction Activities at Mt. Hope


Alan says that we can look forward to seeing the delivery of haul trucks and drilling equipment towards the end of this year followed by electric shovels in early 2014 - pardner, that's heavy metal!  

Molybdenum production is planned for the first quarter of 2015. Even before the first pound of  moly is mined, the County and School District will benefit from property and sales tax revenue. Alan projected that pre-production revenue will be a total of $20M; $16M for Eureka County and $4M for the School District. Estimated County Sales and Property taxes will be a grand total of $122M which includes the construction phase and 44-year life of mine (32 years of mining followed by 12 years of processing low-grade stockpiles). $250M is the cumulative total when estimated proceeds from the Net Proceeds of Mineral Tax are included. These estimates assume a $15 per pound moly price

Zach Spencer closed the presentation with a status on hiring. The latest new employees are Angela Martin, EMLLC Environmental Compliance Manager; Sam Street, HR Manager and Patty Maloney, Mine Engineer.

Overall, I thought the review was well received by the Commissioners who are no doubt pleased that significant revenue will soon hit the books long before production begins. During the discussion period, Jim Ithurralde was assured that all the sales tax revenue will be within the Eureka and not neighboring counties. Apparently, Nye county received tax revenue several years ago when some General Moly equipment was stored there.

Pat Dempsey voiced a concern about the firewood that is being harvested from the present clearing operations. Pat thought Eureka County seniors should get first dibs and Zach agreed recounting that General Moly had distributed firewood previously reaffirming the company's ongoing commitment to the community.

J.J initiated discussion about the impact of mine construction traffic on HWY 278. Traffic patterns are presently being studied for a 15 mile stretch. After the meeting, Tax Assessor Mike Mears explained to me that there had been some concern last year about a "gap" in pre-production revenues versus service demands. For example, he cited the public safety aspect given the anticipated traffic load on HWY 278. Accordingly, the Eureka volunteer EMS and fire may find themselves responding to a greater volume of incidents in the near future which could exhaust their resources. General Moly does plan to have emergency services at the mine site that will eventually ramp up to 24-hour duty. Mike cautions that no one has a "crystal ball" but I believe he remains optimistic that these challenges can be met and early revenue will be a welcome boost for the County.

Moly spot prices are starting to crowd the $12 per pound level which is encouraging. Here's the latest numbers compliments of Thompson Creek Metals (TC):

Metals Week Daily Average:
US$11.79
As of January 7, 2013
(updated weekly)

Ryan's Notes Average:
US$11.90
As of January 8, 2013
(updated twice weekly)  

The London Metal Exchange (LME) futures contracts have already crested $12 per pound:

3-month seller's contract $26,500 per metric ton ($12.02 per pound)

15-month seller's contract $27,230 per metric ton ($12.35 per pound) 

General Moly (GMO) stock is presently trading at $4.03 per share.

The ole Colonel can't wait to see the first Mt. Hope haul truck! Good luck to the EMLLC team.

Where do gold, silver and copper prices go next week? Checkout my today's input to the weekly Kitco Gold Survey below.

Enjoy another cup of Raine's delicious Red Label TGIF and have a great weekend.

The Colonel's Gold, Silver & Copper Prices for Next Week

Here is my input to the weekly Kitco Gold Survey:

01/11/2012 (10:51CT)

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

A. Down, $1,640 per ounce target.

Q. Why?

A. Gold has been range bound between January highs and lows this week ($1,695.0 and $1,626.0 per ounce) and fell sharply this morning to its range mean of $1,660 per ounce.

There is a very mixed picture for the yellow metal today. Recently released Chinese CPI data was higher than expected for December placing downward pressure on gold and metals. It is feared that higher inflation there will result in less monetary accommodation (bearish) but a faster pace economy could ultimately increase demand for raw materials (bullish). A strong euro/weak dollar has not been enough to blunt the impact of gold’s retreat.

Gold is also being pressured by the rising 10-year Treasury rate which is fast approaching 2% as money moves from bonds to equities and the S&P 500 closed at levels yesterday not seen since December 2007. Japan’s stock market is also in rally mode hitting 22-month highs.

Technically, negative 3-month correlations between gold and global commodities oil and copper do not form a particularly favorable environment for the trio (Ref 5). Although gold will probably stay above its January low next week, my target is a negative bias below the range mean at $1,640 per ounce.

For $1,640 per ounce gold we can expect to see silver in a range of $29.3-$32.3 per ounce; and copper in a range of $3.47-$3.68 per pound. Silver and copper are expected to be negatively biased below their means [the ranges for silver and copper were misstated Friday and have been corrected].

The yellow metal has bearishly lost value relative to oil and copper as well as the broader markets but has recovered some this week.

As measured by the Eureka Miner’s Gold Value Index (GVI, Ref 1), the value of gold relative to global commodities copper and oil and companion metal silver is 95.34, staying below the key-100 level and 1-month moving average of 96.92(bearish gold trend). The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) is now 10.9% below its 2012 high (1.2710, Nov.15) at 1.1327. The latest price action indicates gold has lost considerable value relative to the broader market.

Background Notes:

1. My target price of $1,640 per ounce is a negative bias below the geometric mean of the given highs and lows for January to date.
2. Given the target gold price, the silver price ranges are derived from the 1-month gold ratio mean (GSR) and its respective ratio stability (CRS©). A similar technique was used to predict the price range for copper.
3. My Gold Value Index© (GVI) equals 95.34 or 8.1% below the 2012 high of 103.73. Today gold value is below its 1-month moving average of 96.92; a value of 100 represents a historically high-value of gold relative to key commodities oil, copper and silver.
4. The gold-to-copper ratio today is 453.35 pounds per ounce and below its 3-month moving average of 474.43 and 6-year trend of 484.07. Falling below the long-term trend line is a bullish indication for the red metal; trending above 500 pounds per ounce, bearish (Ref 3).  The 1-month gold-to-copper ratio stability is a very low 1.45%. The 1-month rolling correlation is +0.52; 3-month is -0.21. 3-month relative volatility is 1.52X gold and price sensitivity (beta) is -0.31
5. The gold-to-silver ratio (GSR) is above its historical norm at 54.62; the 3-month rolling correlation is +0.87, relative volatility is 2.28X gold and price sensitivity (beta) is +1.99. The GSR is above its 3-month average of 53.2; the 1-month gold-to-silver ratio stability is 2.45%.

Ref 1: Gold Versus Copper, Oil and Silver: The Value Trend Is Your Friend (Kitco News, 7/23/2012)

Ref 2: Copper and Gold - In the Eye of the Storm (Kitco News, 10/30/2012)

Ref 3: Copper and Gold - The Bank Shot (Kitco News, 11/19/2012)

Ref 4: Copper & Gold – Fast Eddie’s Lucky Run (Kitco News, 12/03/2012)

Ref 5: The 2013 Copper & Gold Conundrum (Kitco News, 01/07/2012)

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

Mt. Hope Power Lines; The Colonel's Gold, Silver & Copper Prices for Next Week

Bobcat tracks by the Colonel's gate, Eureka, Nevada
 
Latest Nevada Gas Prices (click this link)

My latest Kitco commentary: The 2013 Copper & Gold Conundrum (01/07/2013)

This morning's...
COMEX Gold price = $1,650.4/oz (February contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 94.84 (gold value is elevated but falling with respect to key commodities oil, copper and silver)
Value Adjusted Gold Price© (VAGP) = $1,454.0/oz
COMEX - VAGP = $196.4/oz; gold is trading at a decreasing premium to key commodities.

Morning Miners!

It has been quite a beginning to the New Year. In four market days gold nearly broke the elusive $1,700 per ounce level only to fall perilously close to $1,600 support. Thankfully we've recovered to near the middle of this range as I explain in my weekly Kitco Gold Survey input (see below).

Copper has had a terrific run this week bolting to $3.75+ per pound before retreating a bit to trade at $3.6965 per pound this morning. To give this perspective, COMEX copper prices were at in lowly $3.40 territory in mid-November before investors had more evidence that the Chinese economy was on the mend and Japan may spend more on infrastructure projects with the new Abe government and looser monetary policy.

Today the U.S. jobs report was positive adding 155,000 jobs and scoring a 7.8% unemployment rate. Although slightly below expectations (160,000 and 7.7%), the employment numbers suggest the U.S. economy continues to slowly gather steam. This and a hawkish FOMC meeting this week brought gold falling of its peak with nearly a $70 per ounce spread between intraday highs and lows.

Molybdenum prices continue to inch higher by the week passing the mid-$11 per pound level to price $11.60 per pound on the spot market. As reported by moly benchmark miner Thompson Creek (TC):

Metals Week Daily Average:
US$11.60
As of December 31, 2012
(updated weekly)

Ryan's Notes Average:
US$11.60
As of December 28, 2012
(updated twice weekly)

The uptrend appears intact as the London Metal Exchange (LME) futures contracts head north:

3-month seller's contract US$26,000 per metric ton (US$11.79 per pound)
15-month seller's contract US$26,740 per metric ton (US$12.13 per pound)

General Moly (GMO) announced more good news on the Mt. Hope molybdenum project with the approval of power lines from the Machaeck Substation:

General Moly Granted Permit to Construct Transmission Line Powering Mt. Hope Project
(Press Release, 1/02/2013)

Bob Pennington, Chief Operating Officer of General Moly, said, “This permit allows us to build the transmission infrastructure in a timely manner and provide the necessary capacity to power everything from the electric shovels we will begin to use during pre-stripping operations to the 60,000 ton per day mill which will start up when Mt. Hope begins production. Construction of the transmission line will also include upgrades to an existing substation near Eureka that will improve the reliability of electrical power to that community. We appreciate the focus and diligence the PUCN and BLM showed in expediting these approvals.”

POSCO (PKX), South Korean steelmaker and 20% owner of Mt. Hope, continues to show strength against a backdrop of improving economic conditions in Asia:

PKX today $86.08 up 19.8% from its Nov. 21 closing low

And, General Moly (GMO) has wasted no time moving higher either:

GMO today $4.24 up 27.7% from its Nov. 15 closing low

Although gold prices have been volatile, Barrick Gold (ABX) has shown resilience:

ABX today $34.19 up 3.6% from its Nov. 15 closing low

Where do gold, silver and copper prices go next week? Checkout my today's input to the weekly Kitco Gold Survey below.

Enjoy another cup of Raine's delicious Red Label TGIF and have a great weekend.

The Colonel's Gold, Silver & Copper Prices for Next Week

Not cold in the Eureka County swimming pool!

Here is my input to the weekly Kitco Gold Survey:

01/04/2012 (10:25AM CT)

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

Up, $1,660 per ounce target.

2.      Why?

Gold price volatility is typical for the start of a new year and 2013 is proving no exception. In the first week, intraday COMEX futures have swung nearly $70 per ounce within the key psychological levels of $1,600 (support) and $1,700 per ounce (resistance). The recent hawkish FOMC meeting and this morning’s positive, although slightly below expectation, U.S. jobs report finds gold trading closer to the low side at $1,650.4 per ounce.

Importantly, a mean of $1,660 per ounce between the January highs and lows is very near the closing prices for gold prior to resolution of the so-called fiscal cliff (note 1). My target for next week is therefore a neutral bias on the mean until there is more clarity on the direction of the economy and fiscal and monetary policy for 2013.

The yellow metal continues to bearishly lose value relative to key commodities oil and copper as well as the broader markets. However, the underpinnings for gold and base metals remain supportive given worldwide accommodative monetary policies, a Chinese economy on the mend and signs of stabilization in Europe.

For $1,660 per ounce gold we can expect to see silver in a range of $29.2-$33.2 per ounce; and copper in a range of $3.57-$3.74 per pound. Silver is expected to have a negative bias below its means; copper, a positive bias.

As measured by the Eureka Miner’s Gold Value Index (GVI, Ref 1), the value of gold relative to global commodities copper and oil and companion metal silver is 94.84, staying below the key-100 level and 1-month moving average of 97.71 (bearish gold trend). The 2012 high was 103.73 on Nov. 13.

The ratio of gold-to-the S&P 500 (AUSP) scores a new multi-month low this morning falling below mid-August levels. It is now 11.2% below its 2012 high (1.2710, Nov.15) at 1.1285. The ratio with respect to S&P 500 futures (AUSPF, March contract) fares only slightly better at 1.1345. The latest price action indicates gold continues to lose considerable value relative to the broader market.

Yes.

Background Notes:

1. My target price of $1,660 per ounce is a neutral bias from the geometric mean of the given highs and lows for January to date.
2. Given the target gold price, the silver price ranges are derived from the 1-month gold ratio mean (GSR) and its respective ratio stability (CRS©). A similar technique was used to predict the price range for copper.
3. My Gold Value Index© (GVI) equals 94.84 or 8.6% below the 2012 high of 103.73. Today gold value is below its 1-month moving average of 97.71; a value of 100 represents a historically high-value of gold relative to key commodities oil, copper and silver.
4. The gold-to-copper ratio today is 446.48 pounds per ounce and below its 3-month moving average of 476.24 and 6-year trend of 484.53. Falling below the long-term trend line is a bullish indication for the red metal; trending above 500 pounds per ounce, bearish (Ref 3).  The 1-month gold-to-copper ratio stability is a very low 1.14%. The 1-month rolling correlation is +0.72; 3-month is +0.15. 3-month relative volatility is 1.49X gold and price sensitivity (beta) is +0.22
5. The gold-to-silver ratio (GSR) is above its historical norm at 55.160; the 3-month rolling correlation is +0.87, relative volatility is 2.11X gold and price sensitivity (beta) is +1.84. The GSR is above its 3-month average of 53.0; the 1-month gold-to-silver ratio stability is 3.16%.

Ref 1: Gold Versus Copper, Oil and Silver: The Value Trend Is Your Friend (Kitco News, 7/23/2012)

Ref 2: Copper and Gold - In the Eye of the Storm (Kitco News, 10/30/2012)

Ref 3: Copper and Gold - The Bank Shot (Kitco News, 11/19/2012)

      Ref 4: Copper & Gold – Fast Eddie’s Lucky Run (Kitco News, 12/03/2012)

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