Word from Adella Harding! Gold touches $1,377, Silver $20.5

Eureka, Nevada

Friday, July 15, 2016 (Latest Update, 4:19 Eureka time)

Comex gold $1,338.0 per troy ounce
Comex silver $20.31 per troy ounce
Comex copper $2.2360 per pound

An unexpected military coup in Turkey has occurred within the last several hours bumping gold & silver prices. Turkey is key in the war on ISIS, a member of the European Union and controls the waterway (Bosphorous Straits) that allows the Russian Black Sea Fleet access to the Mediterranean. The last point is key because Turkey is also a member of NATO. The authority in charge at this hour is unclear. A very tense situation.

Early morning assessment of gold and silver prices (below).

Friday, July 15, 2016 AM (Update)

Comex gold $1,325.2per troy ounce
Comex silver $20.145 per troy ounce
Comex copper $2.2500 per pound

Gold & silver pause with stocks soaring this week, but there is still some glitter to go. My input to this morning's Kitco Gold Survey:

The dynamics of gold price can be described by the Chinese philosophy of Yin-Yang - opposite forces that are complementary, interconnected, and interdependent in the marketplace. The Yang or "sunny side" for the yellow metal began Monday with Shinzo Abe ordering more stimulus following a favorable parliamentary election in Japan. This weakened the yen which competes with gold for safe haven status - a bullish indication for gold. But stimulus coming from any major central bank tends to also elevate equity markets. The Yin or "shady side" gathered momentum as new highs for the DOW & S&P 500 did indeed put the recent gold rally in the shade. 

This trend persists this morning with upbeat U.S. economic news boosting equities still higher but the devastating terror attack in France keeping the precious metal safety trade in play. Gold is net down for the week but this could change quickly in gold's favor. In this Yin-Yang balance, the euro/Japanese yen cross rate [i.e. EURJPY = a euro buys this many yen*] emerges as a key indicator for gold price. For example, if the latest terror attack in France increases the probability of "Frexit" (albiet currently low), the sharp cross rate reversal to the upside on the Abe announcement may fade as the euro plunges and yen regains its safe haven allure. However, such new market uncertainty could also reverse equity rallies bringing more sunshine to gold. I believe the net effect is still bullish gold which should break $1,400 per troy ounce this summer.

My vote is up. Target price for gold is $1,340; target for silver, $20.6 

May your weekend have more yang than yin!

* Nearly a year ago the Japanese yen weakened to 138.8 EURJPY. The yen slowly strengthened with a powerful dip to 111 EURJPY in early July. After the Abe announcement the euro has gathered significant relative strength scoring 117.5 this morning (6% up from low point).

Friday, July 8, 2016 AM

Comex gold $1,362.6 per troy ounce
Comex silver $19.930 per troy ounce
Comex copper $2.1305 per pound

Memorable quote of the morning, "The economy is a healthy tortoise not a sickly hare." (CNBC Business News contributor)

Gold & silver still on a run even with a stronger-than-expected monthly jobs report*. My input to this morning's Kitco Gold Survey:

An excellent week for gold and silver. Both posted levels not seen since 2014 - the yellow metal nearly breaching $1,380 per troy punce in early morning trading and silver moving briefly above $20.5 Wednesday. 

Gold and silver also demonstrated great resiliency following a much stronger-than-expected nonfarm payroll report. Although both dipped briefly after the Labor Department announcement, prices should settle above last Friday's close with good margin. The trend higher remains intact.

My vote is up. Target price for gold is $1,380; target for silver, $20.5

On the currency front, gold preformed well too. The lustrous one outpaced the yen on the week which is important because gold and the yen compete for safe haven investment. As gold posted new 2-year highs in U.S. dollar, gold in euro terms is now 40% above its 2013 low on new highs. The world awaits stimulus from somewhere – more Bank of Japan accommodation to weaken the yen may provide the next catalyst higher for gold prices.

Chart for the Week 

(Click on image for larger size)

* June report : 287,000 jobs added (175,000 expected); Headline unemployment 4.9%; Average hourly wages up 0.1% (0.2% expected); participation rate up slightly at 62.7%

Summer Edition 2016 - Mining Quarterly

The Summer Edition 2016 of Mining Quarterly is on the street!

Marianne Kobak McKown has done another outstanding job of getting the Mining Quarterly in step with this year's Mining Expo! There are excellent columns on Silver Strand's Marigold Mine, Newmont's conservation efforts at IL ranch, Jerritt canyon safety improvements, Barrick' Goldstrike and much, much more.

My column on silver's good year was also carried in the Elko Daily Free Press:

Hi Ho Silver away! Silver steps out from gold's shadow (June 12, 2106)

(Click on this link for the online Mining Quarterly)

Happy reading!

Word from Adella Harding!

Gold price, mining stocks rebound (ADELLA HARDING Free Press Correspondent, Elko Daily Free Press, July 9, 2016)

Numbers used for analysis (July 8 early AM prices):

Goldman Sachs Commodity Index

S&P GSCI 355.05, 07/16 contract (intraday low 279.25 1/20/2015)

Nymex/Comex (most active contracts)

Nymex oil (WTI) $45.65 per barrel 

Brent crude $ 46.94 per barrel 

Comex copper $2.1305 per pound

Comex gold $1,362.3 per troy ounce 

Comex silver $19.930 per troy ounce

Latest Nevada gasoline prices

Flowers among Andesite

South Ranch, Eureka, Nevada

Word from Adella Harding! Gold touches $1,377, Silver $20.5

Morning Miners!

I was contacted this week by Adella Harding - what a terrific surprise!

For years, Adella was a tireless staff writer/reporter for Elko Daily Free Press and editor of the Mining Quarterly before retiring in June, 2012.

I wrote then in Adella Retires (Eureka Miner, June 1, 2012):

Mining Editor par excellence Adella Harding of the Elko Daily Free Press will be retiring today with the publishing of the summer edition of Mining Quarterly. Her "boots-on-the-ground" reporting style and photography are legendary in the northern Nevada mining industry above and below ground. Adella has written daily columns for the Free Press for years and her Mining Quarterly magazines are well respected expositions on the state and progress of mining in the heart of North American gold country - a publication the ole Colonel eagerly awaits every quarter.

Adella told me, "I am probably nuts to retire again, but plan to move to Wyoming later this summer to be near family." This report wishes her all the best on her new adventure and she will be greatly missed in these parts and beyond.

Adella remains happily retired in Cheyenne, Wyoming but was recently asked by Editor Jeff Mullins of the Elko Daily Free Press to write a column on gold prices and share prices of gold miners. When it posts, the ole Colonel will carry the column link at the top of this report - what a delight!

She asked me for my thoughts on the topic and I replied, "You must be an angel of good fortune to re-appear as gold & silver post levels not seen since 2014 and with both Barrick & Newmont share price whistling Dixie!" An angel indeed. Here is the full transcript of what I submitted to Adella:

7 July 2016

With domestic equity markets returned to pre-Brexit levels buttressed by global rallies elsewhere, it is tempting to believe the Brexit storm has passed [“Brexit” is the vote by referendum for the U.K. to leave the European Union]. Gold and currencies tell a different story. Market uncertainty keeps the pound sterling near its 31-year low, yen strength is close to the 100-level [USD/JPY] and the yellow metal is fast approaching $1,400 per troy ounce.

The world awaits stimulus from somewhere – more BOJ [Bank of Japan] accommodation to weaken the yen would provide a catalyst higher for gold since both compete for investor safe havens. In this light, I remain bullish gold.

Perhaps most exciting is the continuing silver story. This morning's dealings have retreated some but yesterday Comex silver touched $20.585 per troy ounce as gold peaked at $1,377.5. Neither of these levels have been seen since 2014. Another bullish sign for silver is the closely watched gold-to-silver ratio (GSR) which has turned in the white metal’s favor. Since silver peaked above $49 per troy ounce in April 2011, it has slowly lost value relative to gold. This trend reversed in April of this year and now silver is gaining on the venerable store-of-wealth. The 10-year average GSR is 62 ounces of silver for an ounce of gold. The current ratio has fallen below 70 after being as high as 83 this March. Although still elevated from the long term average, a smaller number implies strengthening silver. Since silver is an important by-product of Northern Nevada gold mining, the rally of both precious metal prices is very welcome news indeed. 

Barrick Gold and Newmont have certainly benefitted in share price for 2016. Gold miners are among the strongest performers in U.S. stock markets this year. As gold and silver posted new highs yesterday Barrick (ABX) finished at $23.16 per share compared to a lowly closing price of $7.38 for 2015. Newmont (NEM) is up $23.45 from it 2015 close, posting an impressive $41.42 per share.

A big shout out for Adella!

Cheers  - Colonel

Photos by Mariana Titus if not otherwise noted

Gold touches $1,362; Silver, $18.4 on Brexit; Global Markets Plummet; Barrick & Newmont Rock

Hmm...Brexit?

South Ranch - Eureka, Nevada

Friday, July 1, 2016 AM (Update to last report)

Comex gold $1,340.6 per troy ounce
Comex silver $19.445 per troy ounce
Comex copper $2.1950 per pound

Gold & silver still on a run. My input to this morning's Kitco Gold Survey:

With domestic equity markets returned to pre-Brexit levels buttressed by global rallies elsewhere, it is tempting to believe the Brexit storm has passed. Gold and currencies tell a different story. Market uncertainty keeps the pound sterling near its 31-year low, yen strength is approaching the 100-level and the yellow metal fast approaching $1,400 per troy ounce.

The world awaits stimulus from somewhere - either BOE [Bank of England] or BOJ [Bank of Japan] accommodation would provide a catalyst higher. In this light, I remain bullish gold: 

My vote is up. Next week target price $1,360 per troy ounce.

Perhaps more exciting is the continuing silver story. This morning's dealings above $19 per troy ounce have broken a second multi-year gold-to-silver ratio (GSR) trend line in silver's favor (chart below). The ratio has fallen below 70 which implies $20-plus prices if gold can indeed reach $1,400.

I checked with gold and silver trader Sumeru Salla of the renowned Nathabhai Silver Jewelry in Mumbai who informed me, "...INR [Indian rupee] silver had more solid ground than INR gold since the BRexit outcome- a temporary shift from the usual trend. Surprisingly, physical gold is available at a 5% discount to MCX rates [Indian metals & energy futures market]. If given a choice, I would buy silver over gold because of stricter excise norms affecting the gold jewelry industry. Outlook will need to be revised after August festive demand though." 

 Hi-ho silver away!

(Click on image for larger size)

Friday, June 24, 2016 AM

My input to this morning's Kitco Gold Survey (more commentary below):

Gold has behaved more like a currency than a commodity since March 2015 and it proudly displayed that character post-Brexit vote last night [Britain votes to leave the European Union].

Touching $1,350+ levels against a rising U.S. dollar, gold posted a new high against the euro (levels not seen since March 2013) and competed positively with the yen for safe haven status (see chart).

With all the uncertainty the Brexit result will bring to markets in the coming days, gold's new momentum should carry prices higher than this AM's dealings (Comex currently $1,318).

My vote is up. Target price $1,340 per troy ounce. 

Key chart to watch (click on image for larger size)

Summer Edition 2016 - Mining Quarterly

The Summer Edition 2016 of Mining Quarterly is on the street!

Marianne Kobak McKown has done another outstanding job of getting the Mining Quarterly in step with this year's Mining Expo! There are excellent columns on Silver Strand's Marigold Mine, Newmont's conservation efforts at IL ranch, Jerritt canyon safety improvements, Barrick' Goldstrike and much, much more.

My column on silver's good year was also carried in the Elko Daily Free Press:

Hi Ho Silver away! Silver steps out from gold's shadow (June 12, 2106)

(Click on this link for the online Mining Quarterly)

Happy reading!

Numbers used for analysis (June, 24 early AM prices):

Goldman Sachs Commodity Index

S&P GSCI 370.40, 07/16 contract (intraday low 279.25 1/20/2015)

Nymex/Comex (most active contracts)

Nymex oil (WTI) $47.98 per barrel 

Brent crude $ 48.60 per barrel 

Comex copper $2.1205 per pound

Comex gold $1,319.8 per troy ounce 

Comex silver $17.780 per troy ounce

Latest Nevada gasoline prices

Gold touches $1,362; Silver, $18.4 on Brexit Vote; Global Markets Plummet 

Morning Miners!

The U.K. has voted to leave the European Union.

The so called "Brexit vote" started yesterday and was not tallied until the wee hours. Betting parlors held odds highly in favor of a "Remain" outcome - so did global markets. This report also thought a "Leave" result to be unlikely and that gold prices would fall by this Friday. When you are wrong it is nice to have lots of company.

I watched Bloomberg Asia News as results trickled in after polls closed at 10:00 p.m. London time. A reporter called it "squeaky bum time" with the first a wild swing in pound sterling. This is a British expression for a fear-induced contraction of one's posterior region.

The Wall Street Journal reported the rapid descent of the pound:

A victory for Leave in Swansea, in South Wales, helped drive the pound still lower—down below $1.41, off more than 5% from just before the polls closed. Around 2:30 a.m. in London, more than four hours after the polls had closed, Betfair had made Leave the favorite, with odds of 63%.

Earlier in the day the bookies were 80% for Remain. The pound had touched $1.50 per pound on bullish optimism and dipped to a 30-year low of $1.32 as more Leave tallies came in. That's a drop of 12% - currencies typically move much less than 1% in a day [Friday close 1.3684, down 8.8%]. As the Brexit vote tally turned away from Remain, a Bloomberg Asia correspondent watched the pound sterling-based currency board turn from red to magenta remarking, "I've never seen that color before!"

The Comex highs for gold and silver were $1,362.60 per troy ounce and $18.37 for silver. Currently gold is $1,322 and silver $17.805 [10:56 a.m.]. Fortunately copper is hanging in there at a resilient $2.116 per pound [Friday close: $1,322.4 Au, $17.789 Ag, $2.1105; GSR = 77.01 oz/oz, GCR = 626.6 lbs/oz].

I started to have doubts on Thursday when a CNBC Business reporter had trouble finding any Remain voters on the streets of London. She then tried to go into a betting parlor but was given the boot. The pub next door was more friendly but only one Remain punter was found.

Another clue of reversing fortune were long lines queueing up at exchange houses. Wells Fargo's Janet Mirasola remarked this morning, "The smartest man in the room turned out to be that Brit on the street who yesterday flooded banks by cashing in their hard earned pounds at the highest value this year buying Euros for their holidays!!"

U.K. Prime Minister David Cameron resigned this morning. Ouch!

Global equity markets are down by high single-digit or double-digits. Nuts!

The U.S. markets are now open and the DOW is off a whopping 522 points at 17,489; the S&P 500 is down 65.7 points at 2,047.61 [10:17 a.m. Eureka time, Friday close: 17,400.75 DOW, 2037.41 S&P 500]. However, on a percentage basis these losses, down 2.9% and 3.1% respectively,  are much tamer than some foreign exchanges. The Japanese Nikkei Index fell nearly 8%. The U.S. is still perceived to be in a stronger position than an unraveling Europe or wobbly China. Many countries have negative interest rates; our government bonds are in high demand and positive (our 10-year Treasury is presently 1.58%) [Monday 6/27  update - Wells Fargo's Janet Mirasola reports: In dollar terms Friday's loss of $2.08 trillion on global equity markets overtook the previous record from Sept. 29th 2008, the day when Congress rejected a $700 billion bailout package for Wall St. during the financial crisis when global markets lost $1.94 trillion]

It will take quite some time to understand the full global impact of this decision by English voters. Is there light in this market tunnel for Eureka? Perhaps...

Barrick & Newmont Rock

In all the market carnage, gold miners are getting a healthy bounce today. Barrick (ABX) is presently up 5.7% at $20.46 per share; Nemont is up 5.5% at $16.31. Even if these gains are given back when the gold dust settles, Barrick is still up more than 150% from mid-January lows and Newmont around 125%. With negative interest rates and uncertainty about the future of the European Union, gold miners should be in good shape and their product in demand. Let's see if things start changing locally for the better, pardner.

$1,300 is the new $1,250

One gold trader summed up Friday's gold price action, "$1,300 is the new $1,250." There's some truth to this. In the Summer Edition 2016 of Mining Quarterly , I gave $1,350 per troy ounce as a cap for 2016 gold price given anticipated interest rate increases by the U.S. Federal Reserve. The violent market response to Brexit likely puts the Fed in pause mode for some time and $1,400 may be a better target now for higher prices. At $1,400, silver may have a shot at $20 per troy ounce in 2016.

Copper was spared a dramatic selloff Friday reaching a low of $2.0665 per pound to a Friday close of $2.1105. It is important to watch the red metal for a journey below $2 in the coming months. If it is spared significant downside, Brexit may be more of a transient than a lasting shift in the market trade winds.

Remember the U.K. is still "in" the European Union, getting out is at least a 2-year process. David Cameron has resigned but will probably serve until this fall as a new government is formed. Brexit will be around for quite some time.

Cheers  - Colonel

Photos by Mariana Titus if not otherwise noted

A Salute to Eric John Pastorino - A Good Man Passes

Eric John Pastorino

(b. October 3, 1960; d. June 4, 2016)

Update Friday, June 17, 2016 AM

My input to this morning's Kitco Gold Survey:

For the short term, the outcome of the Brexit vote [referendum for the U.K. to leave the European Union] Thursday will determine closing gold prices for next week. I expect that Britons will vote to stay after this week's tragic events and building pressure from major financial institutions (e.g., IMF, JP Morgan). The cold calculus of markets was clear when the death of Labor MP Jo Cox, who favored staying in the EU, pulled gold price quickly away from its 2-year high yesterday. Another decline should follow a confirmed vote to stay.

However, a longer term bullish trend is still intact with bond yields remaining near record lows, flagging faith in central banks, U.S. election turmoil and the reemergence of terror threats. A key trend to monitor is the continued loss of gold value relative to the yen. There is an increasing divergence between gold in euro and yen terms (chart below) - gold in euro briefly peaked above its January 2015 high as gold in USD bolted above the $1,300-level. 

Although gold in yen had a bump, the trend to lower value is clear. Secondly, albeit not center stage, is the startling devaluation of the Chinese yuan - now at levels that scared global markets only last January. Bullish longer term but... 

My vote is down. Target for next week $1,280 per troy oz

Key chart to watch (click on image for larger size)

Summer Edition 2016 - Mining Quarterly

The Summer Edition 2016 of Mining Quarterly is on the street!

Marianne Kobak McKown has done another outstanding job of getting the Mining Quarterly in step with this year's Mining Expo! There are excellent columns on Silver Strand's Marigold Mine, Newmont's conservation efforts at IL ranch, Jerritt canyon safety improvements, Barrick' Goldstrike and much, much more.

My column on silver's good year was also carried in the Elko Daily Free Press:

Hi Ho Silver away! Silver steps out from gold's shadow (June 12, 2106)

(Click on this link for the online Mining Quarterly)

Happy reading!

Numbers used for analysis (June, 17 early AM prices):

Goldman Sachs Commodity Index

S&P GSCI 374.00, 07/16 contract (intraday low 279.25 1/20/2015)

Nymex/Comex (most active contracts)

Nymex oil (WTI) $47.26 per barrel 

Brent crude $ 48.08 per barrel 

Comex copper $2.0645 per pound

Comex gold $1,294.1 per troy ounce 

Comex silver $17.445 per troy ounce

Latest Nevada gasoline prices

A Salute to Eric John Pastorino - A Good Man Passes

[Posted June 10, 2016] Morning Miners,

It has been a sad week in Eureka with the passing of Eric John Pastorino. On June 4, Eric passed away unexpectedly at age 55. All who knew Eric will remember him for his kind and generous spirit. He was active in mining and loved all aspects of its history in Northern Nevada - a truly proud son of the Silver State.

Elko Daily Free Press will carry an obituary for Eric tomorrow.The Free Press archives obits so folks that miss the paper can use this link and search window to find Eric after publication:

Elko Daily Free Press Obituaries

Memorial Services will be held in Eureka Saturday, July 2. There will be a service at the Eureka Opera House beginning at 11:00 a.m. followed by a procession down Main St. that will continue throughout town on the way to the Catholic Cemetery.

Pastorino forebears came to Eureka in the late-1800s from the small mountain villages of Alpicella and Stella in the Varazze region near Genoa, Italy. They participated in the lead-silver boom of that time and local ranching. Eric's father Tom Pastorino was Eureka County's Assessor for many years. He interrupted a long tenure that began in 1938 to serve in the Army overseas during World War II where he met Eric’s mother Marge Pastorino. After the war, Tom married his English sweetheart and they had two sons, David and Eric. The Pastorino family owned the historic Eureka Opera House from 1946 until the early-1990s.

After studying at UNR as a Civil Engineer, Eric worked as a miner and later as a surveyor for a number of mines in the Eureka area including Ruby Hill, Bald Mountain, Pan Project, Gold Bar, Windfall, and Buckhorn. He also worked with his brother in private land development within the Eureka town site.

The Eureka & Palisdade Engine #4 Returns to Eureka (1992)

(courtesy Eureka Restoration Enterprise)

Eric was a lover of trains. In 1992, he was instrumental in bringing the restored Eureka & Palisade locomotive #4 to the Eureka fairgrounds. Fair goers were thrilled to ride the E&P with Eric as engineer on a 600-foot semi-circle of newly laid track. In the old days, the E&P provided the rail link to the mainline at Palisades greatly facilitating both mining and ranching in Eureka County.

E&P on the Durango & Silverton Narrow Gauge Railroad

In 2009, Eric rode the E&P #4 again on the Durango & Silverton Narrow Gauge Railroad for Colorado’s 11th Annual Railfest Event. Eric recalled, "I got to ride in the wood car, my shirt pockets filled with cinders and I have burn holes in my hat and shirt!" His enthusiasm for trains and local history will be greatly missed.

The E&P crosses the Animas River

Eureka Fairgrounds (1992)

Left to right: Dan Markoff (owner of E&P #4), Marge Pastorino, Eric Pastorino, unidentified others

The Eureka Miner Remembers Eric Pastorino

This report has carried news about Eric's train adventures and the Pastorino role in Eureka history over the last several years. Here are the links:

Ruby Hill Pours One Million, E&P Railroad News (August 3, 2009)

Eric Rides the Rails - Gold Scares $1250 (August 31, 2010)

A Salute to Marge Pastorino; The Colonel's Gold, Silver & Copper Prices for Next Week (July 13, 2012)

Christmas Eve with Dave, Eric and Marge Pastorino (2012, Photo by Mariana Titus)

A Windfall Memory for Eric Pastorino

Mariana and I first visited the Windfall Mine with Eric Pastorino in the early 1990s. We packed into his old green Ford 4WD pickup and a stop at the Windfall was just one in Eric's tour of mines in Windfall, Ratto and Secret Canyon. He knew all their history and had worked in the Windfall and Rustler pits some years ago with his brother Dave, and with Pete, Tommy and Ellaree Damele. 

A link to my Elko Daily Free Press column: 

Eureka’s Windfall – Birth of a modern gold district with community spirit (September 10, 2015)

When I started contributing columns to the Elko Daily Free Press and Mining Quarterly, I thought it would be a lot of fun to revisit the Windfall Mine. Eric supplied these photographs and related some terrific stories of mine work in those days. His mother, Marge Pastorino, described Windfall operations in September, 1978 as the Eureka correspondent for the Ely Daily Times. I will very much miss my good friend and neighbor. Nobody could tell a better story than Eric Pastorino. Bless his kind soul.

Old school Euclid and Terex equipment was used to excavate the Windfall pit and then operations moved to create the Rustler pit to the south and the Paroni pits to the north (Photo by Eric Pastorino)

Tommy Damele operates Windfall’s Gardner-Denver Air Track Drill. Sister Ellaree was on the drill team (Photo by Eric Pastorino)

Gold on the Move

Eric would no doubt find it fitting that golf price is on the move again. My input to the Kitco New Gold Survey today:

It's hard to imagine a more favorable environment for higher gold prices near term - global bond yields at record lows, Brexit uncertainty, global growth downgrades & U.S. election turmoil. 

The only bearish indication I can find is a trending loss of gold value relative to the yen where deflationary pressures have anointed cash as king. Gold in euro terms appears to be stabilizing, where the European currency has a high positive correlation with the yellow metal (~1,130 EUR/troy oz; 1-month rolling correlation = +0.8).

Shockingly, the Comex gold-to-copper ratio this AM exceeds the highest level during the financial crisis (2/20/2009) - 630 lb/troy oz vs 621 Even the Shfe ratio is extraordinarily high (519 lb/troy oz) where the Chinese presumably hold gold less dear relative to the red metal. 

My vote is up. Target for next week $1,290 per troy oz

Cheers to Eric - Colonel

Photos by Mariana Titus if not otherwise noted

$16-plus: Silver Steps Out from Gold's Shadow

Ackerman Ranch

Eureka Miner, April 2011

Month-end Update (April 29, 2016): Gold, Silver Soar

I'm preparing to go on the road so this will be a short one, pardner. Had to stop packing to watch gold and silver soar; even copper is above $5,000 per tonne this morning on a falling U.S. dollar.

8:59 AM Eureka time:

Comex gold [6/16] $1,298.4 per ounce (today's high $1,295.5)
Comex silver [7/16] $17.935 per ounce (today's high $18.005)
Comex copper [7/16] $2.2760 per pound (today's high $2.2825 or $5,032 per tonne)

This is how I described market conditions in my input to the Weekly Kitco News Gold Survey:

Never has so much come from nothing. The U.S. Federal Reserve and Bank of Japan announced no change in policy this week sending shock waves through global markets.

The Japanese yen continues to be the currency to watch; from dollar strength earlier this month to an even stronger dip below JPY 107 today. Here's the good news: even with the yen surge, the USD gold rally is gaining strength on the yen. Gold in yen terms is up 1.8% from yesterday, rather impressive.

My big picture remains that gold prices will continue in a trading range, trapped between a floor of negative interest rates (Europe, Japan) and a cap determined by the U.S. interest rate trajectory. This week's monetary inaction has moved the cap higher, perhaps $1,310 per ounce.

The 3-month correlations with oil and copper remain noticeably positive (>+0.5) with shorter term correlations in the green too. This week gold gained a bit on copper but lost ground to rising oil and soaring silver. Importantly, last week the gold-to-silver ratio broke a multi-year trend of higher-lows [chart below]. 

Silver is having a bullish run for 2016 indeed. I believe it likely that gold will pause to catch its breath next week finding some comfort on the $1,280 per ounce veranda.

My vote is down. Target for next week $1,280 per ounce.

Kitco News Editor Neils Christensen responded, "Wow you are a Debbie downer but no lone wolf."

I replied, "Ha! New bull horns and nose ring but I still have my bear pants on!"

Christensen got the last laugh, "Ha ha ha. Sort of like a messed up Minotaur."

Here's the gold-silver chart that got things rolling (click for larger image):

Hi Ho Silver Away!

Please checkout my latest Kitco News commentary: 

Gold & Oil: A Historical Ratio Turns Bad

Mining Quarterly

The Spring 2016 Spring Edition of the Mining Quarterly is here!

Editor Marianne Kobak McKown has down another excellent job with the Spring Edition. Important updates on Newmont, Jerritt Canyon, Pershing Gold at Relief Canyon and much, much more!


Please read my update on gold prices in the latest Mining Quarterly  - gold is showing glitter, pardner.

The online version:

Spring 2016 Mining Quarterly

"Click to read" and the online version looks much like the printed magazine. My column on gold prices for 2016 starts on page 52 (page 50 printed version). Press "Esc" to return to the Elko Daily Free Press. There is a handy scroll bar for page selection at the bottom of the screen. The same article appeared in the Elko Daily Free Press March 3:

Commentary: A Bullish Turn for Gold

***

Please checkout Mariana's Eureka, Nevada on Facebook

Numbers used for analysis (early AM prices):

Goldman Sachs Commodity Index

S&P GSCI 330.70, 04/16 contract (intraday low 279.25 1/20/2015)

Nymex/Comex (most active contracts)

Nymex oil (WTI) $40.11 per barrel 

Brent crude $ 42.82 per barrel 

Comex copper $2.1405 per pound

Comex gold $1,228.4 per ounce 

Comex silver $16.145 per ounce

Canary in the gold mine: Fate of high yield corporate bonds

iShares iBoxx $ High Yield Corporate Bond (HYG) $82.45 ($75.09 52-week low)

Trouble ahead: HYG < $82...promising reversal to the upside

Latest Nevada gasoline prices

Oldies but Goodies

The Eureka Miner celebrates its 7th year of bringing market news to Eureka County. For old times sake, the ole Colonel will feature photos and excerpts from the past in this report and ones to follow. 

Here's an oldie from April 11, 2011:

It was another record breaker over the weekend and in the early morning hours of Monday but a small U.S. dollar bounce has paused the advance. NYMEX oil and COMEX gold running together like twins joined at the hips set new highs on Sunday at 18:00 ET posting $113.46/bbl and $1478.0/oz respectively. Brent oil made its new crisis high at Friday's close at $126.47/bbl. COMEX silver waited for the crowd to leave the room then made a bold run at $42/oz with its new 31-year record of $41.98/oz.

There is a growing consensus that global growth and our own domestic recovery will run into serious headwinds if we spend too much time in the $110-$120/bbl pasture...

Those were the days!

Eureka Miner, April 2011

Silver Steps Out from Gold's Shadow

Macro drivers: Continued concerns about China, commodity-exporting economies; Negative interest rates, U.S. Federal Reserve interest rate trajectory

Wild cards: Terror events, Brexit, "lower for longer" commodity prices, fate of high yield bonds

Gold bet for next week: $1,235 per ounce

Morning Miners!

A good friend of mine collects silver coins. I wrote him on the 29th of December, "I think silver is starting to look a bit interesting. I added to a position yesterday when prices fell near 5-1/2 year lows."

It turned out to be a good call. 

Gold has certainly had a run this year, but so has silver. As of yesterday's closing prices, both metals are up 18% while equity markets struggle to make single digits for 2016. Back in the day (which wasn't that long ago, see today's "Oldies but Goodies"), silver typically raced ahead of gold when both rallied. Daily gains of 1.5 to 2.0 times gold's advance were not uncommon for the white metal. Traders call this "beta" where a beta exceeding 1.0 implies greater percentage moves compared to its reference - in this case gold price. For quite some time, silver performance has lagged gold scoring a lowly 3-month beta of only 0.75. 

All that may be changing  in silver's favor, pardner. Here are my most recent thoughts on both gold and silver for today's Weekly Kitco Gold Survey:

Comex gold charged like a lion Tuesday breaking into $1,260 territory but appears to be exiting the week as a lamb trading this morning at $1,228.4 per ounce. The yellow metal is also weaker against key commodities oil and copper as well as major currencies euro and yen. The FX markets appear to be stabilizing with the yen falling back from recent notable strength (4/12, JPY 107.64) and the euro recovering from its March weakness (3/16, EUR 1.0869). The dollar index (.DXY), down 5% from its late January high, will probably trend somewhat higher. With these cross-currents, gold will likely find some middle ground from its recent high and late-March low. My target for next week is $1,235 per ounce.

Yesterday, Comex silver made its 2016 high at an impressive $16.27 per ounce as gold-to-silver ratio (GSR) transitions from dull to exciting. A trend of higher ratio lows began in late-November 2012 and is key to watch in the coming weeks. Today, the GSR is a strong 76.1 oz/oz; if it breaks below 75, the 3-1/2 year trend of gold gaining value over silver will be broken. Something to watch for silver bulls.

My vote is up. Target gold price $1,235 per ounce.

Let's see if the GSR breaks 75 and the 3-month beta moves back above 1.0 in the coming weeks. Please do your own research, silver can be a widow maker as well as hero my friend!

Chart to Watch

Gold price margins from 2013 lows (euro, yen)

A disturbing aspect of gold's 2015 decline in USD was the concurrent collapse in euro and yen terms.

The yellow metal has stayed above its 2013 lows in terms of both currencies. The percent margin above those bottoms peaked in late January 2015 and then trended down with the divergence of US monetary policy from Europe and Japan, and the associated rise of the US dollar. (click on chart for larger image, an earlier version of this chart appears in Spring 2016 Mining Quarterly ):

Declining value of gold relative to a devalued currency is a red flag. January witnessed a key reversal in this downtrend for both euro and yen and then it was up and away - a bullish turn for gold. We are now witnessing a bearish reversal in this recovery that continues from mid-March.

2013 lows:

879.64 euros per ounce on 12/20/2013
122,443 yen per ounce on 6/28/2013

Friday AM (04/15/2016):

1,087 euros per ounce (+23.6% margin)
133,639 yen per ounce (+9.4%% margin < 10%, worrisome)

Market Stats

Here's the scorecard on the stock market, S&P 500 is at 2,079 (Friday AM):

Market corrections are generally defined as a 10% or greater move to the downside from the top of a key index. I like to use the S&P 500 (.SPX) because it includes a broader swath of America' best companies than the Dow Jones Industrial (.DJIA) - five hundred compared to thirty. Here is the score sheet of ups and downs on an intraday basis since May:

August downdraft:

S&P 500 high: 2,134.72, 5/20/2015

S&P 500 10% correction 1,921.25

S&P 500 low: 1,867.01, on Monday 8/24/2015 down 12.5%

Then from the late December high, the February downdraft:

S&P 500 high: 2,081.56, 12/29/2015
S&P 500 low: 1,810.10, on 2/11/2016 down 13.0% & 15.2% from 5/20/2015 high

S&P 500 bear market begins below 20% at 1,707.78

For Fibonacci folks the December-February "fib box" is:

50.0% retracement from 2/11 low = 1,946

61.8% retracement from 2/11 low = 1,978

Getting inside the "fib box" is generally considered a "bullish" move to the upside; failing the "fib box" is a bearish indication.

We're now above the Dec-Feb fib box and the December high (2,081.56) was breached several times this week.  A sustained rally above this level would be bullish.

Cheers - Colonel

Photos by Mariana Titus

The Lustrous One Loses Some Shine to U.S. Jobs

Curly Horses, Ackerman Ranch

Eureka Miner, April 2011

Please checkout my latest Kitco News commentary: 

Gold & Oil: A Historical Ratio Turns Bad

Mining Quarterly

The Spring 2016 Spring Edition of the Mining Quarterly is here!

Editor Marianne Kobak McKown has down another excellent job with the Spring Edition. Important updates on Newmont, Jerritt Canyon, Pershing Gold at Relief Canyon and much, much more!


Please read my update on gold prices in the latest Mining Quarterly  - gold is showing glitter, pardner.

The online version:

Spring 2016 Mining Quarterly

"Click to read" and the online version looks much like the printed magazine. My column on gold prices for 2016 starts on page 52 (page 50 printed version). Press "Esc" to return to the Elko Daily Free Press. There is a handy scroll bar for page selection at the bottom of the screen. The same article appeared in the Elko Daily Free Press March 3:

Commentary: A Bullish Turn for Gold

***

Please checkout Mariana's Eureka, Nevada on Facebook

Numbers used for analysis (early AM prices):

Goldman Sachs Commodity Index

S&P GSCI 315.90, 04/16 contract (intraday low 279.25 1/20/2015)

Nymex/Comex (most active contracts)

Nymex oil (WTI) $36.95 per barrel 

Brent crude $ 38.68 per barrel 

Comex copper $2.1660 per pound

Comex gold $1,216.7 per ounce 

Comex silver $14.945 per ounce

Canary in the gold mine: Fate of high yield corporate bonds

iShares iBoxx $ High Yield Corporate Bond (HYG) $81.00 ($75.09 52-week low)

Trouble ahead: HYG < $82...tricky area, stay tuned.

Latest Nevada gasoline prices

Oldies but Goodies

This month the Eureka Miner celebrates its 7th year of bringing market news to Eureka County. For old times sake, the ole Colonel will feature photos and excerpts from the past in this report and ones to follow. 

Here's an oldie from April 18, 2011 - note the price levels and two new records for gold and silver that day:

Let's wrap up with an update of our record book for the big three metals together with NYMEX and ICE Brent crude:

COMEX Gold $1,498.0/oz 09:10 ET 04/18/2011, June contract most active (new)
COMEX Silver $43.380/oz 23:30 ET 04/17/2011, May contract most active (new)
COMEX Copper $4.6375/lb 06:15 ET 02/04/2011, March contract most active
NYMEX WTI Crude $113.46/bbl 18:00 ET, 04/10/2011, May contract most active
ICE Brent crude $126.47/bbl 016:45 ET 04/08/2011, June contract most active 

Those were the days!

Eureka Miner, April 2011

The Lustrous One Loses Some Shine to U.S. Jobs

Macro drivers: Continued concerns about China, commodity-exporting economies; U.S. Federal Reserve interest rate trajectory

Wild cards: Terror events, Brexit, "lower for longer" commodity prices, fate of high yield bonds

Gold bet for next week: $1,200 per ounce

Morning Miners!

This morning's monthly jobs report was received as "good" and "solid" by CNBC business pundits in the wee hours on the West Coast. March added 215,000 nonfarm payrolls and the unemployment rate bumped up slightly to 5.0% from 4.9% last month. The rate rise is due to more people looking for work (good news) but not all finding jobs (not so good). All-in-all the numbers were considered "inline." Employment gains occurred in retail trade, construction, and health care, while job losses occurred in manufacturing and mining. From the statistical horse's mouth:

Mining employment continued to decline in March (-12,000) with losses concentrated in support activities for mining (-10,000). Since reaching a peak in September 2014, employment in mining has decreased by 185,000.

Nuts! It is important to note that this category includes everything extracted from the earth including oil and gas. For a more detailed breakdown please refer to Table B-1.

Earlier this week, remarks by Federal Reserve Chair Janet Yellen gave market participants the sense that low interest rates would be lower for longer with fewer 2016 rate hikes than anticipated last December (perhaps 1 or 2 compared to 4 total. Opinions on the expected number widely vary). Today's employment numbers probably won't materially change that sentiment.

Don't ask gold pardner. The dovish Yellen remarks bumped the yellow metal up yesterday only to see it fall down the shaft after the report. This is how I characterized the reaction for today's Weekly Kitco Gold Survey:

In a week filled with dovish remarks from Fed Chair Yellen and packed with economic data, gold has had quite a spread - from $1,208 lows Monday to $1,247 highs yesterday. After the U.S. nonfarm payroll report today, the Lustrous One is losing shine at $1,217 per ounce. Interestingly, the yellow metal is up for the week compared to falling commodities oil and copper as well as companion metal silver. However, gold has lost significant ground to both euro and yen. In this context, gold is behaving more as an unloved currency and less as a fellow traveler in the commodity space (although 3-month correlations with oil, copper and silver are all positive).

With respect to copper, a crossover in China PMI from contraction to expansion [official manufacturing PMI index rose to 50.2 in March vs a Reuters consensus number of 49.3; February was 49.0, PMI greater than 50 denotes expansion] was trumped by a recent credit downgrade causing the red metal to lose ground to gold and the U.S. dollar. Gold is falling further from its March highs in euro and yen terms.

For the near term, I'm keeping on my old moth-eaten bear suit until there is a further increase in gold ratios and reversal in currency trends.

Key levels to watch:

March highs (per ounce): EUR 1,157, JPY 144,680 
January 2015 highs (per ounce): EUR 1,160, JPY 153,270 
This morning: EUR 1,070, JPY 136,325

All-in-all the Lone Wolf is bearish near term. 

My vote is down. Next week’s target $1,200 per ounce.

Copper conundrum

The early year red metal rally is in retreat. However for the year, copper has risen from its February 11 low of $1.998 per pound to this morning's trade at $2.1660, a 8.4% rise. The bump up in China PMI to 50.2 in March from 49.0 in February is potentially bullish for copper.

One curious aspect of the copper market is the difference in inventory at the Shanghai Futures Exchange (SHFE) warehouses compared to London Metal Exchange (LME) and COMEX stocks. As of March 31st:

SHFE 368,725 tonnes (3/24, 394,777 tonnes)
LME 143,400 tonnes (3/24, 151,375 tonnes)
COMEX 71,991 tonnes (3/24 71,541 tonnes)

Last week the SHFE was still building inventory, this week it is shedding stock.

In more normal times the inventories are lower at the SHFE than in Western futures markets. This confuses real and speculative demand for the red metal in China which comprises 45% of global copper demand. Something this report will continue to watch in 2016.

Freeport falling

Copper mammoth and benchmark miner Freeport McMoRan (FCX) follows copper down this morning at $9.86 per share. This is still considerably up from its January low of $3.52 - a 180% improvement. As a point of disclosure, the ole Colonel reduced his position in FCX after the Draghi announcement last month. Please do your own research - markets can turn on you faster than a feral cat.

Barrick & Newmont pause

Nevada's two big mining giants are still recovering from the depths of 2015 and are mixed from last Friday AM prices. From September's low of $5.91 per share, Barrick Gold (ABX) is up 126% to trade at $13.375 this morning. Newmont (NEM) is up 68%; from a September $15.43 to $25.955 per share. Barrick is down for the week; Newmont, up.

Chart to Watch

Gold price margins from 2013 lows (euro, yen)

A disturbing aspect of gold's 2015 decline in USD was the concurrent collapse in euro and yen terms.

The yellow metal has stayed above its 2013 lows in terms of both currencies. The percent margin above those bottoms peaked in late January 2015 and then trended down with the divergence of US monetary policy from Europe and Japan, and the associated rise of the US dollar. (click on chart for larger image, an earlier version of this chart appears in Spring 2016 Mining Quarterly ):

Declining value of gold relative to a devalued currency is a red flag. January witnessed a key reversal in this downtrend for both euro and yen and then it was up and away - a bullish turn for gold. We are now witnessing a bearish reversal in this recovery that continues following today's payroll report.

2013 lows:

879.64 euros per ounce on 12/20/2013
122,443 yen per ounce on 6/28/2013

Friday AM (04/01/2016):

1,069 euros per ounce (+21.5% margin)
136,325 yen per ounce (+11.3% margin)

Market Stats

Here's the scorecard on the stock market, S&P 500 is at 2,062 (Friday AM):

Market corrections are generally defined as a 10% or greater move to the downside from the top of a key index. I like to use the S&P 500 (.SPX) because it includes a broader swath of America' best companies than the Dow Jones Industrial (.DJIA) - five hundred compared to thirty. Here is the score sheet of ups and downs on an intraday basis since May:

August downdraft:

S&P 500 high: 2,134.72, 5/20/2015

S&P 500 10% correction 1,921.25

S&P 500 low: 1,867.01, on Monday 8/24/2015 down 12.5%

Then from the late December high, the February downdraft:

S&P 500 high: 2,081.56, 12/29/2015
S&P 500 low: 1,810.10, on 2/11/2016 down 13.0% & 15.2% from 5/20/2015 high

S&P 500 bear market begins below 20% at 1,707.78

For Fibonacci folks the December-February "fib box" is:

50.0% retracement from 2/11 low = 1,946

61.8% retracement from 2/11 low = 1,978

Getting inside the "fib box" is generally considered a "bullish" move to the upside; failing the "fib box" is a bearish indication.

We're now above the Dec-Feb fib box and the 2,000-level. Bullish move higher after Fed Chair Yellen's dovish remarks on interest rate hikes.

Cheers - Colonel

Photos by Mariana Titus