A Little Advice from Mark Twain

Morning Miners!

It is 5:36 AM, clean cups are on the hook and the coffee is hot. The ole Colonel is going to chat a bit with the old timers this morning but the young folks are welcome to stay in the break room, there might be something here for everyone. I was sitting on my favorite bench in front of Raine's Market the other day with my faithful sidekick, Loquita. By the by, if you're having a difficult day go sit there a spell, I swear that bench has magical qualities for soothing the soul. I must ask Scott about its history, maybe it has been there since the old Kitchen Market days.

A reader of the Report passed by with two great questions for the Colonel. We're both retired and neither of us are looking forward to returning to the salt mines if we can avoid it. The first question was about the recent rally in the stock market (can it last?); and the second, about the possibility of debilitating inflation in our future. These are important concerns even if you're not retired but getting close to going fishing.

I am reluctant to give anyone advice on what they should do with their money but am not shy about telling you what I'm doing. I'll leave the advice part to Mark Twain who once remarked, "I am more concerned with the return of my money than the return on my money." This is such a sage quote that it was repeated by Will Rogers during the Great Depression and is sometimes attributed (incorrectly) to the famous British economist, John Maynard Keynes. Keynes is important to my story because he had the radical idea that governments should spend money they don't have in hard times to save the ship. More on that in a moment.



Last Fall, it was not unreasonable to fear a massive run on the banks. That didn't happen and I'm convinced our government will sell George Washington's false teeth on E-Bay before they allow that to occur. The Colonel had money in two failed banks, Silver State in Henderson and Washington Mutual, and it was quickly returned by the FDIC. Kudos to Sheila Bair.

That covers the "return of my money" part, what about the "return on my money"? I once explained a conservative approach to investing to a young buck and he remarked, "If you're not making double-digit returns in the stock market, you're an idiot!" I have often wondered how that feller fared in 2008.

I believe there is too much emphasis on getting big returns on your investments especially for older folks. You hear all sorts of crazy stuff like, "you must get at least a 7% return or inflation will eat your life savings away." Talk like that pushes people into the stock market and some poor souls lost 40-50% of their dough last year. Let's face it, even with the recent rally, we're still in a bear market and will probably stay there for a while longer. My rule-of-thumb is no more than 10% of your savings should sit in stocks during such times and no more than 20% in the best of times.

Don't fret too much about your lousy CD returns at the bank for now. Remember it is the difference between yield and inflation rate that counts. Few people complained when inflation was 3% and CDs yielded 5%. Presently inflation is zip (and there is a chance the economy could deflate) so that lousy 2% CD is just fine.

Inflation down the road is a big concern since the government has been borrowing and printing money like A-students in John Keyne's Eco-101. If the economy rebounds and the government can quickly reduce all this funny money at the proper time, books will be written for decades about their success. If their timing is off; books will be written for decades about their failure and the return of double-digit inflation.

Gold is still the best hedge against inflation and it is a wise move to include some in your portfolio. The standard rule-of-thumb is no more than 10% but if things start spinning out of control, I might head a little north of that number. Gold is threatening $1000/oz lately so I'd wait for a good pullback this summer to buy. The ole Colonel will stick to his prediction of $1050/oz by Christmas. These were my thoughts April 6 in the Report:

"Gold stumbled another $20 in early trading to bring us to solid 8-handle country at $877.9 (June contract). Am I discouraged? Hell no. The Colonel bought a little chunk Friday and I'll buy a little more if we fall further. Does anyone really believe there won't be any inflation down the road?"

If we fall back to $920 it might be time for another little chunk.

Have I answered my good friend's questions? There will probably be a good dip in both the stock markets and gold this summer but probably not at the same time. Low rate CDs are good for now but I wouldn't commit to more than a 6-month to 1-year CD at these low yields. Buy gold a little bit at a time on pullbacks, sleep tight at night and join the Colonel on the Raine's bench if you're feeling a little stressed out.

Enough old timer talk, let's walk the walk:

Oil is up $1.66 to $67.78 (July contract); Gold is up $8.0 to $973.6 (August contract); Silver up $0.200 at $15.510 (July contract); Copper is up 0.0365 to $2.2485(July contract); Molybdenum holds at $10.25.

The DOW is down 36.17 points to 8639.11; the S&P 500, down 1,74 points to 930.02. The miners are mixed:

Barrick (ABX) $37.17 up 1.72%
Newmont (NEM) $46.70 up 0.60%
General Moly (Eureka Moly, LLC) (GMO) $2.60 down 3.08%
Freeport McMoran (FCX) $54.51 up 1.58% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are mixed (a "tell" for General Moly):

Nucor (NUE) $44.15 down 1.30% - domestic steel manufacturing
ArcelorMittal (MT) $33.58 up 0.09% - global steel producer
POSCO (PKX) $81.00 down 1.85%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.14% at $1,061,862.

Cheers,

Colonel Possum

The Drought Down Under

Morning Miners!

It is 5:52 AM and the ole Colonel just watched a pink sky over the Diamond Valley turn to gray. If we were sailors, we'd be taking warning and that's the theme of this blog for what may lay in store for the future of Eureka County's water supply. I am not an alarmist but it is often helpful to look ahead, anticipate the worst and be happy when things turn out better than expected. By now, you may have had a chance to look at the Nevada Drought Monitor link in the Local Weather & Climate section to your right below the sky picture. This information is supplied by the Western Regional Climate Center with updates every week. Presently most of the County is "abnormally dry" or drought level zero (D0). Our southern border with Nye County is "drought-moderate" or level D1 and a bit further south, Nye is experiencing "drought-severe" or D2. The scale goes up to D4 which is time to trade your horse for a camel and watch for happy buzzards.

The Colonel has been anxious to do this piece but a ton of market news got in the way earlier this week: soaring stock prices, $70 oil and gold rapidly approaching the mythical $1000 mark. I think that is typical of most water supply discussions, there is always something else to talk about until it is too late. Ironically, climate change induced water shortages may someday become a much larger impediment to global recovery than the price of oil.

As I said yesterday, local folks are quite familiar with the impact of water on their livelihoods and it seems that good planning is already underway. There is a second water tank under construction for the township and discussions on water were at the forefront during a recent Natural Resources Advisory Commission Meeting I attended. It might be helpful to look at a region of the world that is already experiencing extreme drought.


Many rural areas of Southern Australia are similar to Northern Nevada; they have ranchers, farmers and miners. Unfortunately, they are experiencing the worst drought in over a century. Let's set the stage for further comparison. Australia has states like we do in the U.S. and there are three big ones in its southeast corner: New South Wales (NSW), South Australia to the west and Queensland to the north. I like to think of the more populous NSW as California; and South Australia, as Nevada. Together they share with Queensland a vast water resource called the Murray-Darling Basin. The Murray and and its tributary, the Darling, are large rivers that flow north to south and reach the Southern Ocean in South Australia near the state capital of Adelaide.

Although California/Nevada have a different topography, one thing is as true in Australia as in the States: when there is a water shortage guess who gets the shaft (or perhaps more appropriately, the mineshaft)? The more populous Queensland and NSW comprise four-fifths of the Murray-Darling water resource. Farmers, especially cotton and rice growers in those upstream states account for 83% of the basin's consumed water. You can imagine why it could be approaching "lock n' load" time near the more rural areas at the drying mouth of the river. Government officials just warned Adelaide that there might not be enough water for over one million people to meet "critical human needs". Can you imagine getting that news flash from Carson City?

In fairness, our Humboldt River Basin doesn't directly compare with the Murray-Darling system. However, the High Sierras do their share of grabbing water for the Golden State and there is always that straw that keeps coming our way from a very thirsty Las Vegas. The Humboldt River Basin River Water Authority reports that in 20 years, the population it does serves has more than doubled with further stresses from industrial and mining use. Even with these differences in comparison, it is not unreasonable to assume that an extended drought in the West may very well result in conditions now found in South Australia.

So what are folks doing down under? Here's the good news; the farmers in Adelaide are not stringing up their upstream neighbors, instead they are working together. In the face of crisis it seems innovation and cooperation are saving the day until the drought-breaking rains come. The growers at Langhorne Creek near the mouth of the now salty Murray have formed a company to build a pipeline to secure water from a cleaner (less saline) point on the Murray further east. Australia has devised an interstate water-trading scheme to allow South Australia to buy water from distant farmers in NSW. They have in turn switched to less thirsty crops and keep the difference in store for Adelaide. The wine growers in Adelaide have also discovered new drought resistance vines that still produce quality wine. How's that for turning water to wine buckaroos! There may be lessons here for our county and Nevada my friend although I don't expect too many wine growers in Diamond Valley.

I'll close with another possible turn of events for Australia. There have been recent torrential rains which have brought havoc but also water to this dry land. Eric sent me this picture of submerged haul trucks in an Aussie open pit mine.



Enough dancing in the rain, let's walk the walk:

Oil is down $1.48 to $67.07 (July contract); Gold is down $5.5 to $978.9 (August contract); Silver is down $0.145 at $15.810 (July contract); Copper is down 0.040 to $2.22565(July contract); Molybdenum holds at $10.25.

The DOW is down 84.43 points to 8656.44; the S&P 500, down 13.57 points to 931.17. The miners are down today:

Barrick (ABX) $37.07 down 2.16%
Newmont (NEM) $47.62 down 1.65%
General Moly (Eureka Moly, LLC) (GMO) $2.54 down 5.22%
Freeport McMoran (FCX) $54.95 down 3.39% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are also down (a "tell" for General Moly):

Nucor (NUE) $45.22 down 4.56% - domestic steel manufacturing
ArcelorMittal (MT) $34.13 down 6.13% - global steel producer
POSCO (PKX) $83.40 down 3.01%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 3.13%.

Cheers,

Colonel Possum

Information for this article was derived from the article "In Need of a Miracle", The Economist, 5/9/2009.

General Moly Price Target Raised to $3.35 from $2.00

Morning Miners!

It is 5:41 AM and the sun just winked at the Diamond Valley. Before we return to this week's water story, a few comments on breaking news. At 7:41 AM (ET) this morning, National Bank raised its price target for General Moly (GMO) from $2.00 to $3.35 after an amazing rally yesterday that brought a closing price of $2.64. That gets a Colonel Yee-ha! This follows yesterday's good news in the broader markets:

"The Dow Jones Industrial Average jumped by 221 points after data on U.S. manufacturing, construction spending and personal incomes further solidified investors' growing belief that the economy is stabilizing. The S&P 500 surged to its highest level so far this year, powered by gains in its industrial, consumer-discretionary and energy sectors." (WSJ, 6/1/09)

What about metals? The Report regularly looks at copper prices to monitor the health of the global recovery, check this out:

"Strong stocks, a weak dollar, better-than-forecast economic data and technical chart buying combined to send copper to its strongest level since October.'We have the best of all possible worlds,' said Sterling Smith, vice president at FuturesOne." (WSJ, 6/1/09)

A little different tone than this March buckaroos! The Eureka Miner's Million Grubstake Portfolio had a 5.09% daily jump for a net gain of $101,934 since its kickoff May 10th. If the Grubstake is a barometer for Eureka County's good (or bad) fortunes, it looks like we are at least pointed in the direction of better times.

And all of this whirlwind of happy news on the day after General Motors entered bankruptcy and imminent expulsion from the DOW Industrials! What would my poor daddy say? Strange times indeed.

The Report looks at global trends to see what's coming next for Eureka County. We did two articles on the Canadian dollar (Loonie) and Australian dollar (Aussie) rallies to forecast the recent rise in gold price and fall in the U.S. dollar. The articles were tongue-in-cheek but illustrate the importance of looking at other commodity-sensitive economies to gauge what might pop out from behind the sagebrush:

Eureka Looney Tunes (5/19/09)

Is There a Loonie Aussie in Your Future? (4/9/09)

Besides being resource-rich countries, Canada and Australia for the most part have a similar rule-of-law, governance and capitalist philosophy to our own. This makes them particularly good choices for economic comparisons as opposed to say Venezuela with a popularly elected nut case dictator who got his economics degree from Havana U.

Tomorrow we'll examine the water crisis in Australia to understand what might be in the cards for Nevada in the coming years.

Enough talk, let's walk the walk:

Oil is down $0.49 to $68.09 (July contract); Gold is up $3.00 to $983.0 (August contract); Silver up $0.060 at $15.795 (July contract); Copper is down 0.0185 to $2.3005(July contract); Molybdenum holds at $10.25.

The DOW is down 2.57 points to 8718.87; the S&P 500, down 0.39 points to 942.48. The miners are resting after yesterday:

Barrick (ABX) $37.25 up 0.57%
Newmont (NEM) $48.11 up 0.25%
General Moly (Eureka Moly, LLC) (GMO) $2.64 down 0.07%
Freeport McMoran (FCX) $57.69 down 0.74% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are down (a "tell" for General Moly):

Nucor (NUE) $46.40 down 1.23% - domestic steel manufacturing
ArcelorMittal (MT) $35.95 up 7.26 down 0.44% - global steel producer
POSCO (PKX) $85.11 down 2.82%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is up 0.09% to $1,102,880.5 for a daily gain of $946.76.

Cheers,

Colonel Possum

1960 Chevrolet Impala photo by Taringa

The Future of Water in Eureka?

Morning Miners!

*** 7:07 AM UPDATE ***
GENERAL MOLY JUMPS OVER 20% TO $2.63

It is 5:34 AM and a bit gray outside. The ole Colonel has waited until the first of June to say this: May was a weird month. Now, I’m not complaining that there wasn’t snow to shovel from a freak but not infrequent Memorial Day snow storm. My sweetheart of 31 years has a birthday on the 9th of May and I can remember barbecuing a rack of ribs in the snow a few years back for her birthday party. The sun room project last May brought on every element of weather in Mother Nature’s bag of tricks after the roof was off; high wind, rain, sleet and yes, snow. More than one Eureka old timer has commented to me that this has been a May like no other in recent memory. There has been the occasional afternoon thunderstorm but it seems trustees have used more water washing county vehicles than rain has wet our sage.

“Wait a darn minute!” some of you are no doubt saying, “The sage is green, there was a ton of snow in April and it rained like the dickens last night!” You're right and that makes my first point: local weather and climate are like markets, fickle and unpredictable. There does, however, seem to be something changing in our global climate as average temperatures creep steadily upwards in recent years. Without entering the debate of man-made versus natural cycle, there is little argument that global warming threatens future water supply in nearly every region of our globe.

Water is central to economic activity in Eureka. For miners it is always in the way of the next strike; for farmers and ranchers, there never seems to be enough. The Eureka folks that work on the ground (or below it) know these issues first hand whether it be a lower water table at Devil's Gate or the dewatering plan for Mt. Hope. The mission of this Report is to take a higher altitude view and peek at what might be coming at us in the future. One way to do this is to look at other commodity-sensitive economies that are dealing with extreme water issues today. Australia is a good example as they struggle with the worst drought in over a century. This week, we will look at some of the water shortage impacts in South Australia.

Before closing, please notice that I have expanded "Local Weather" (to your right) to include links to the Western Regional Climate Center and their Nevada Drought Monitor. From now on we'll call this section "Local Weather & Climate".

Enough talk, let's walk the walk:

Oil is up $1.11 to $67.42 (July contract); Gold is down slightly $0.5 to $979.8 (August contract); Silver up $0.155 at $15.765 (July contract); Copper is up 0.0680 to $2.2655(July contract); Molybdenum holds at $10.25.

*** BREAKING NEWS ***
General Motors and Citigroup will be removed from the DOW Industrials effective June 8. GM filed for Chapter 11 bankruptcy at 8:00 AM (ET) this morning.

The DOW is up 156.99 points to 8657.32; the S&P 500, up 18.30 points to 937.44. The miners are kicking butt:

Barrick (ABX) $38.43 up 0.92%
Newmont (NEM) $49.43 up 1.15%
General Moly (Eureka Moly, LLC) (GMO) $2.55 up 19.72%
Freeport McMoran (FCX) $57.41 up 5.47% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are doing cartwheels (a "tell" for General Moly):

Nucor (NUE) $45.44 up 3.48% - domestic steel manufacturing
ArcelorMittal (MT) $35.59 up 7.26% - global steel producer
POSCO (PKX) $86.30 up 2.87%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio rips, up 4.55% to $1,096,278.05 for a daily gain of $47,709,09!

Cheers,

Colonel Possum

Gold Breaks $973 - Beer, Colonel!

Morning Miners!

It is 5:28 AM and the coffee is ready! We've got a happy Colonel this morning who woke to the news that gold broke $973 on the COMEX in very early morning trading (04:30 GMT, 05:30 London time). Pardners, we've got a genuine precious metals rally underway. I had predicted $973 before July Fourth and we're still in the last innings of May (see the Colonel's Beer Derby to the bottom right of this blog). It picked up steam yesterday when silver spiked above $15 on the London Spot Market and the momentum gave gold a healthy push higher.

It has been a short but wild and crazy week starting out with our brand new "Rancher's Corner" (to your right). If you have been away check it out, there are nine links that give local farmers and ranchers direct access to the markets that affect their livelihood.

The Rancher's Corner

The Eureka Miner's Million Dollar Grubstake portfolio went in the black for the first time since we put it together earlier this month. For newcomers, the Grubstake is a $1,000,000 investment in companies that directly or indirectly contribute to the future of Eureka County Mining. There are 12 stocks in the portfolio and we post the progress of our investment after the market close every Friday. It looks like we're on track to make some moolah today!

The Eureka Miner's Million Dollar Grubstake Portfolio

The biggest news this week has been the Bond Vigilantes attack on the economic policies of Congress and the Federal Reserve. They banded with the Inflationistas (which includes most precious metal investors) for a real Wild West showdown. The Vigilantes bid up the 10-year T-Bill yield to a startling 3.70% as the Inflationistas kicked off the current silver and gold rallies. Yee-ha!

The response of the Fed has been rather stoic as wounded government troops made a tactical retreat to Fort Apache:

WASHINGTON -- Federal Reserve officials believe the recent sharp rise in yields on U.S. Treasury bonds could reflect a mending economy and a receding risk of financial catastrophe, suggesting the central bank won't rush to react -- even though some investors see danger in the government's rising cost of borrowing. (WSJ, 5/28/09)

International reaction to the skirmishes is mixed but mostly positive:

Australia

"The accumulation of positive U.S. economic data certainly supports the green shoots theory. It's pointing to a "V" shaped recovery," said Macquarie Private Wealth associate director David Halliday. (WSJ, 5/29/09)

Japan

"Upside still depends on the U.S. market [and] U.S. sentiment seems to change every day," said Tachibana Securities analyst Kenichi Hirano. (WSJ, 5/29/09)

South Korea

"The market is not moving in a certain direction. There are no definite signs of the U.S. housing market bottoming yet. But foreigners continue to buy Korean stocks, preventing a sharp correction," said Kim Hak-kyoon at Korea Investment & Securities. (WSJ, 5/29/09)

What does it all mean? Stay tuned buckaroos, the ole Colonel has got you covered!

Enough talk, let's walk the walk:

Oil is up $1.27 to $66.35 (July contract); Gold is up $13.5 to $976.7 (August contract); Silver up $0.310 at $15.470 (July contract); Copper is up 0.0550 to $2.1920 (July contract); Molybdenum holds at $10.25.

The DOW is down 8.36 points to 8395.44; the S&P 500, down 2.00 points to 904.83. The miners are still on fire:

Barrick (ABX) $38.59 up 3.79%
Newmont (NEM) $48.99 down 3.46%
General Moly (Eureka Moly, LLC) (GMO) $1.99 up 4.74%
Freeport McMoran (FCX) $53.50 up 2.48% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are jolly (a "tell" for General Moly):

Nucor (NUE) $43.44 up 1.45% - domestic steel manufacturing
ArcelorMittal (MT) $33.52 up 0.65% - global steel producer
POSCO (PKX) $83.66 up 1.95%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio continues in the black, up 2.48% to $1,043,302.43 for a daily gain of $25,266.60. Isn't it fun to be a millionaire!

Cheers,

Colonel Possum

Where's the Duke When We Need Him?

Morning Miners!

It is 5:42 AM and we have a beautiful pink sky over Diamond Valley. Across the pond, spot silver prices just broke $15.00 at 13:42 London time with an impressive spike up. Exactly eight hours ahead in a land far away, something "unexpected" has occurred. What the tarnation is going on buckaroos? In the days of the Wild West, at least in the movies, our heroes like John Wayne would come in every once in awhile to clear the prairie of evil-doers and scalawags. Today, there are no shortage of scoundrels in financial markets and far too few heroes to set things straight.

Let's start with the word "unexpected". When used in the context of markets, especially bear markets, grab your Model 94 and take cover. Unexpected occurred yesterday when the 10-year Treasury Note yield jumped above 3.70%, a level last seen in November. So what? The 10-year note is key in setting mortgage and other consumer credit interest rates which the government has been working like the dickens to keep contained. The Fed has gone beyond cutting rates to directly purchasing such financial assets such as mortgage-backed securities, as well as printing new money to buy Treasury notes for the first time in half a century. Yikes!

All of this effort is to reflate housing and get us back on track economically. So who screwed up the plan yesterday? The Bond Vigilantes! Folks, I'm not making this up, that's what the group of investors are called on Wall Street that have declared war on Congress and the Federal Reserve's policy of flooding the world with dollars to beat the recession. Yesterday, they flexed their muscles by bidding up yields on T-Notes which killed the recent rally in the stock market dropping the DOW 171 points. The ole Colonel is willing to bet this morning's pop in silver is a metallic reaction to the first shots fired in a financial range war. My problem is that I can't tell good guys from bad guys in this movie!

Let's keep track of this brouhaha and watch where interest rates (that affect you and me) go in the next month. Today's national averages (WSJ, 5/28/09):

Money Market 1.33%
5-year Bank CD 2.73%
30-yr mortgage, fixed 5.09%
15-yr mortgage, fixed 4.71%
New-car loan, 48-month 7.48%
Home-equity LOC, $30K 5.79%

The Report will compare these in June, stay tuned.

Enough talk, let's walk the walk:

Oil is up $0.40 to $63.85 (July contract); Gold is up $5.8 to $961.0 (August contract); COMEX Silver follows London Spot up $0.265 at $15.130 (July contract); Copper is up 0.0155 to $2.1365 (July contract); Molybdenum holds at $10.25.

The DOW is down 13.46 points to 8286.56; the S&P 500, down 0.49 points to 892.57. The miners are on fire:

Barrick (ABX) $36.93 up 2.44%
Newmont (NEM) $47.33 down 3.18%
General Moly (Eureka Moly, LLC) (GMO) $1.85 up 3.35%
Freeport McMoran (FCX) $51.11 up 2.37% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are screaming (a "tell" for General Moly):

Nucor (NUE) $43.06 up 3.18% - domestic steel manufacturing
ArcelorMittal (MT) $32.36 up 5.54% - global steel producer
POSCO (PKX) $80.83 up 3.80%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio has gone in the black, up 2.18% to $1,002,795.13 for a gain of $2,795.13.

Cheers,

Colonel Possum

Barrick, General Moly Ride the Global Tide

Photo by Reuters

Morning Miners!

It is 5:23 AM and the coffee is hot! We had the ranchers in the break room yesterday and kicked off the new "Rancher's Corner" to your right. Gary McCuing gave me a holler after the meeting and reminded me that I forgot one link and then he added another. You'll find the Fallon Livestock Exchange, Inc. and the Livestock Marketing Information Center in the new list for a total of nine links to great market information for farming and ranching in our area. Thanks Gary!

By the by, one of the ranchers brought us over a new can of Folgers from Raine's. While you're enjoying that cup of joe, just remember that Eureka pulls out of this downturn when miners, farmers and ranchers pull together.

Enough preaching, how is that recovery coming along? I thought we'd look at Barrick and General Moly together this morning since both are riding the global tide. There is a lot of ebb and flow and each is pulled by different currents. In this context; gold price pulls Barrick, the health of international and domestic steel producers (and therefore, the price of molybdenum) pull General Moly.

Both have had impressive runs in stock price from their March lows:

Barrick (ABX) up 34.5%
General Moly (GMO) up 217%

That beats the return on a bank CD buckaroos, but can it last? Here are the price movements of the underlying metals compared to their 2009 lows:

Gold up 15.1%
Molybdenum up 28.1%

Yesterday, two key ratings agencies gave their 12-month price predictions for both miners:

Barrick (ABX) raised to $47.50 from $40 by BMO Capital markets; yesterday's close $36.80

General Moly (GMO) cut to $2.00 from $2.50 by the Bank of Nova Scotia; yesterday's close $1.90

The gold price argument has broken into two basic camps: inflationistas versus the deflationistas:

...'there are still plenty of problems out there, and I think you are going to continue to see flight to safety be an important factor,' said Bill O'Neill, one of the principals with Logic Advisors. He suggested that by year-end, gold will again test $1,000, which it topped for the first time in 2008...'Inflation seems to be an inevitable development,' he said. 'I think demand for hard assets will continue to be strong, and gold will slowly but surely benefit from that.' (WSJ, 5/25/09)

and,

Among the skeptics is Leonard Kaplan, president of Prospector Asset Management. He said he expects gold to decline in the months ahead as the global economy remains soft, dismissing ideas that signs of growth may be emerging in the economy. "In a deflationary recession," he said, "everything goes down. (WSJ, 5/25/09)

Then there is a middle-of-the-road view:

But before gold hits $1,000, it could dip below $900, some analysts say. Prices could head toward $800 as seasonal weakness sets in from mid-June to the end of the summer, said CPM Group analyst Carlos Sanchez. (WSJ, 5/25/09)

The Colonel sticks with his prediction: $973 by the Fourth of July, $1050 by Christmas!

Now for General Moly, there is a lot of activity in the world of steel:

The China Iron and Steel Association has said Chinese mills want a price cut of between 40% and 45% to reflect weaker market conditions, and that if the benchmark was set offshore, China wouldn't accept a cut of less than 40%. When contacted, a POSCO [20% stakeholder in Mt. Hope] official in Seoul said the Korean steel maker is yet to agree on prices with any of the miners. "Iron ore talks for this year are not over yet," company spokesman Kim Dong-ho said, without elaborating. (WSJ, 5/26/09)

Don't you wish you could demand a 40% discount from WalMart the next time you went shopping for Chinese goods? Some miners have already caved to price pressure:

MELBOURNE -- Rio Tinto Ltd. said it has struck a deal with Japan's Nippon Steel Corp. for a 33% to 44% drop in iron ore term prices for the 2009-10 contract year that started April 1. (WSJ, 5/26/09)

Lots to think about folks. The ole Colonel will try to sort it all out for you in the coming months. I'm still bullish on gold, Barrick and General Moly. Go with the flow, ride the tide!

Enough talk, let's walk the walk:

Oil is up $0.49 in early trading at $62.94 (July contract). Gold is down $0.4 to $952.9 (June contract); Silver is up $0.030 at $14.630; Copper is up 0.0615145 to $2.1265 (July contract); Molybdenum holds at $10.25.

The DOW is down 2.39 points to 8471.10; the S&P 500, up 0,31 points to 910.64. The miners are so-so:

Barrick (ABX) $36.63 down 0.46%
Newmont (NEM) $46.88 down 0.66%
General Moly (Eureka Moly, LLC) (GMO) $1.88 down 1.05%
Freeport McMoran (FCX) $50.67 up 1.36% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are up (a "tell" for General Moly):

Nucor (NUE) $41.89 up 1.80% - domestic steel manufacturing
ArcelorMittal (MT) $31.04 up 2.07% - global steel producer
POSCO (PKX) $79.13 down 0.09%- South Korean integrated steel producer

The venerable Eureka Miner's Grubstake Portfolio is up 0.32%

Cheers,

Colonel Possum