Sunny Weather for the Eureka Fourth!

Morning Miners!

It is 5:45 AM and the coffee machine just beeped. Looks like the National Weather Service predicts sunny weather and clear skies for the Fourth! The markets are pretty quiet on this holiday week so the ole Colonel thought it's a good day to introduce some exciting new features for the Report. Eric Pastorino has created a blog site for Mountain View Estates which I have included in the "Discover Eureka, Nevada!" section to your bottom right. The headline photo today is a panoramic view from 10 prime view lots at the northwest end of town that he and his brother Dave have been busy preparing for sale including over 1000 feet of new sewer line. Check it out!





At the bottom of this page you will find real time stock quotes together with live updates for 36 domestic stock and international stock markets. Let's say you wanted to track General Moly performance throughout the day. You would type 'GMO' in the stock quote window and the price quote will appear alongside the ticker symbol. If you place your cursor over the symbol, a minute-by-minute graph appears of general Moly's price performance during the trading day.

If you wanted to see how Eureka Moly's major investor, POSCO, is doing you'd add 'PKX' to your stock quote list. Since POSCO is a South Korean steelmaker, you can track that country's stock market, the KOSPI, by looking for the Korean Flag in the list of major markets. How cool is that? Who needs the Colonel anymore? Shucks, I'm going fishing.

Before throwing a line, let's walk the walk:

Oil is down $0.46 to $71.03 in early trading (August contract); Gold is down $4.2 to $936.5 (August contract); Silver is down 0.005 to $13.970 (September contract); Copper is down $0.009 to $2.3170 (September contract); Molybdenum is steady-eddy at $10.58.

The DOW is down 103.77 points to 8425.61; the S&P 500, down 11.11 points to 916.12. The miners are mixed:

Barrick (ABX) $34.04 down 2.61%
Newmont (NEM) $41.52 down 1.91%
General Moly (Eureka Moly, LLC) (GMO) $2.34 down 0.43%
Freeport McMoran (FCX) $50.83 up 0.99% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $45.00 down 0.55% - domestic steel manufacturing
ArcelorMittal (MT) $33.24 down 0.36% - global steel producer
POSCO (PKX) $83.03 up 0.55%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.60% to $999,465.25.

Cheers,

Colonel Possum

The Duke Returns One Month Later, Newmont News

Morning Miners!

It is 5:57 AM, the coffee is hot and it's a short week for some as the Fourth heads our way. Last month there was a lot of excitement in the credit markets. This is akin to saying loud rock music was heard coming from the nunnery. Credit or bond markets are usually the shy retiring sister to their flamboyant sibling, the stock markets. Lately, the action has been in the former stirred up by periodic government auctions of Treasurys to raise money for our ailing economy. This affects practically everything from the price of gold to consumer credit; notably mortgage and credit card rates, new car loans and CD yields at your bank.

The Report promised in the blog, Where's The Duke When We Need Him?, to report key interest rates so you can track where we're going as time marches on. Here are last month's numbers compared to today's national averages (WSJ Market Data, 6/29/09):

10-yr Treasury Note 3.70% vs 3.47%, down
Money Market 1.33% vs 1.29%, down
5-year Bank CD 2.73% vs 2.65%, down
30-yr mortgage, fixed 5.09% vs 5.68%, up
15-yr mortgage, fixed 4.71% vs 5.04%, up
New-car loan, 48-month 7.48% vs 7.30%, down
Home-equity LOC, $30K 5.79% vs 5.81%, up


Ohh Nooo Mr. T-Bill !!! If you're saving money, you're making less and if you're fixin' to buy a home you'll pay more than a month ago. The only good news for the consumer are car loan rates which have dropped slightly. This makes some sense since the government really wants you to buy a new car now that they own two of the three U.S. automakers. The ole Colonel is not even going to talk about credit card rates which presently live in a house of mirrors reflecting bank desires to raise them and confusing legislation to protect the consumer.

Is the government plan for the credit markets working? This is what the Report said last month:

"...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." (Eureka Miner's Market Report, 5/28/09)

OK, the 10-year T-Note rate is now lower but mortgage rates are moving higher. Am I missing something here? We'll watchdog these rates at the end of every month until Gentle Ben and Tiny Tim show up at our party with champagne. The Colonel actually wishes them the best, I'd love to see all of this magically work at the end of the day (or year or years or decade?).

Now a little catch up on two other news items that could impact Eurekans:

BEIJING -- China will push reform of the international currency system to make it more diversified and reasonable, and to reduce excessive reliance on the current reserve currencies, the People's Bank of China said Friday. (WSJ, 6/27/09)

Last week this was the idea of Li Lianzhong who heads the economic department of the Party's policy research office. Now it looks like an official party line. Remember this effort will no doubt cause China to increase their considerable gold reserves which supports higher gold prices (i.e. less supply and more demand from the world's largest gold producer, China - bingo!).

By the by, here is a link to a ranking of buyers and sellers of gold from fellow blogger, NSE 955 . I can't attest to its accuracy but it appears to be good and fairly recent data:

World's top 10 buyers & producers of gold

The last item is a big step for Newmont:

DENVER, June 25, 2009 -- Newmont Mining Corporation (NYSE: NEM) is pleased to announce that it has successfully completed the acquisition of the remaining 33.33% interest in the Boddington project from AngloGold Ashanti Australia Limited, a wholly-owned subsidiary of AngloGold Ashanti Ltd. Newmont now owns 100% of the Boddington project, which is the largest gold project in Australia.

The BIG news coming at us this week will be the June employment report, which will be announced earlier than usual on Thursday. The U.S. markets will be closed Friday for the Independence Day holiday.

Enough talk, let's walk the walk:

Oil is up $1.70 to $70.86 in early trading (August contract); Gold is down $5.3 to $935.7 (August contract); Silver is down 0.272 to $13.890 (September contract); Copper is down 2.95 to $2.3385 (September contract); Molybdenum is steady-eddy at $10.58.

The DOW is up 76.78 points to 8515.17; the S&P 500, up 5.88 points to 924.78. The miners are mixed:

Barrick (ABX) $35.05 up 0.06%
Newmont (NEM) $42.43 down 0.16%
General Moly (Eureka Moly, LLC) (GMO) $2.50 down 3.85%
Freeport McMoran (FCX) $50.67 up 0.24% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $45.55 up 0.89% - domestic steel manufacturing
ArcelorMittal (MT) $33.64 up 0.99% - global steel producer
POSCO (PKX) $83.50 up 1.51%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.06% to $1,016,544.65.

Cheers,

Colonel Possum

Guns-A-Blazin', Oil & Gold-A-Risin'

Morning Miners!

It is 6:17 AM and TGIF! The coffee is hot and we have an exciting Eureka Fourth of July celebration to look forward to next week. Today, The Report introduces a "Eureka Upcoming Events" section located beneath the "Rancher's Corner" to your right. We're kicking things off with Joe Swanson's Wild West Show, "Guns-A-Blazin". Pardners, this is a good'un! Bullets will start whizzin' at noon and 2 PM to make this an extra special Fourth. Send in more events and the Colonel will post them.

(BBC/AFP Image, 6/26/09)

Speaking of guns-a-blazin':

"Oil prices rose above $71 a barrel Friday as renewed attacks on oil facilities in Nigeria raised supply concerns and as the dollar slipped further against the euro, drawing investors into commodities." (WSJ, 6/26/09)

Here come the bad ole good days again; London spot gold broke $948 after lunch London time. Although both gold and oil are now pulling back we are reminded how sensitive the markets are to geo-political as well as global recovery woes:

"Nigerian militants said they attacked a Royal Dutch Shell wellhead in the southern Delta state in response to a government operation against them, hours after the nation's president offered them amnesty in exchange for laying down their arms.

The militant Movement for the Emancipation of the Niger Delta has been battling for a larger share of the country's oil revenues.

'One way or another, Nigerian disruptions should lead to an acceleration in the reduction of ... crude oil stock,' said Olivier Jakob of Petromatrix in Switzerland.

Oil was also boosted by a drop in the value of the dollar, against which it typically trades inversely. Commodities like oil and gold are used by investors as a hedge against inflation and dollar weakness." (WSJ, 6/26/09)

One more item to support the "Love the Treasurys, hate the dollar" sentiment that has become the rallying cry of investors lately:

"Treasury prices soared as strong demand for the government's $27 billion seven-year-bond auction completed the Treasury Department's hat trick in a week of record supply.

'One thing is quite clear," said Dan Greenhaus, strategist at Miller Tabak & Co. 'The Treasury is having relatively few, if any, issues selling its debt.'" (WSJ, 6/26/09)

Maybe gold will pick the UP elevator sooner than the Colonel thought given all this week's news. Nuts, I'll stick with my predictions:

Gold will see $880 before Thanksgiving

Gold will break $1050 before Christmas

Enough blazin' prognostication, let's walk the walk:

Oil is down $0.66 to $69.567 in early trading (August contract); Gold is up $5.6 to $945.1 (August contract); Silver is up $0.185 to $14.190 (July contract); Copper is up $0.0090 to $2.3105(July contract); Molybdenum is steady-eddy at $10.58.

The DOW is down 36.73 points to 8435.67; the S&P 500, down 3.28 points to 916.98. The miners are mixed:

Barrick (ABX) $35.57 up 0.88%
Newmont (NEM) $42.83 down 0.58%
General Moly (Eureka Moly, LLC) (GMO) $2.40 up 0.84%
Freeport McMoran (FCX) $50.83 up 0.16% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $45.73 up 2.28% - domestic steel manufacturing
ArcelorMittal (MT) $33.51 up 0.60% - global steel producer
POSCO (PKX) $82.56 up 0.27%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio update is unavailable for technical reasons this morning. Maybe it got hit by one of Joe Swanson's whizzin' bullets!

Cheers,

Colonel Possum

Even More Gold for China?

Morning Miners!

It is 8:25 AM, the coffee is cold and it was all hands on deck in the shop this morning! We'll make this a short one so you can get back to work. There is some interesting news coming out of China this morning that may prove supportive of higher gold prices as it plays out. The Report signaled that China had more gold reserves than the world thought last April in the blog, Lower Propane Bills and More Gold in China. Before April the reserve estimate was 600 metric tons; on April 25th, the China News Agency Xinhua announced that current reserves were actually 1,054 metric tons. The Eureka Miner's Market Report said then:

"This puts China on par with present investor holdings in the gold ETF, GLD (1,105 metric tons as of 4/22) and number seven in the gold reserve list (the United states is still number one at 8,133 tons). So now, the awaking dragon is not only the world's largest gold producing country but has also been putting it away on the sly. The good news is that China demand supports gold prices and may offset the potential volatility of large investor holdings."

This morning, Reuters reports:

BEIJING (REUTERS)- China should buy more gold because the dollar is poised for a fall and the metal is needed to support the greater international role envisaged for the yuan, a senior researcher with the ruling Communist Party said on Thursday.

Li Lianzhong, who heads the economic department of the Party's policy research office, said China should use more of its $1.95 trillion in foreign exchange reserves to buy energy and natural resource assets.

Speaking at a foreign exchange and gold forum, Li also said that buying land in the United States was a better option for China than buying U.S. Treasury securities.

"Should we buy gold or U.S. Treasuries?" Li asked. "The U.S. is printing dollars on a massive scale, and in view of that trend, according to the laws of economics, there is no doubt that the dollar will fall. So gold should be a better choice." (Reuters, 6/25/09)


There is no suggestion in this article that Li is revealing an agreed party line but there does seem to be a favorable sentiment developing towards gold given the revelations of last April. Down the road it seems China also has plans for the yuan:

"If the yuan should go international or become a reserve currency, China needs more gold to back that," Li said. When the yuan does become an international currency, which Li acknowledged was a long way off, he said the composition of the SDR should be reformed to include the Chinese currency. (Reuters, 6/25/09)

The SDR stands for "special drawing rights" and refers to a basket of currencies established by the International Monetary Fund every four years. Presently its composition for 2006-2010 is:

USD (dollar) - 44%
EUR (euro) - 34%
JPY (yen) - 11%
GBP (pound sterling) - 11%

Apparently China wants more gold and a chance to add the Yuan to the SDR basket. Let's get this all down to where the goat can get at it. Whether it is inflation fears or the Chinese, demand support for gold should grow. The ole Colonel said a few weeks ago that if gold dropped to $920 he would buy, and he did.

Enough talk, let's walk the walk:

Oil is up $1.67 to $70.34 in midday trading (August contract); Gold is up $3.3 to $937.7 (August contract); Silver is up $0.075 to $13.985 (July contract); Copper is up $0.0520 to $2.3195(July contract); Molybdenum is steady-eddy at $10.58.

The DOW is up 153.79 points to 8453.65; the S&P 500, up 31.78 points to 917.92. The miners are still rocking:

Barrick (ABX) $33.18 up 1.76%
Newmont (NEM) $42.53 up 1.21%
General Moly (Eureka Moly, LLC) (GMO) $2.35 up 2.62%
Freeport McMoran (FCX) $50.28 up 3.03% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $45.07 up 2.01% - domestic steel manufacturing
ArcelorMittal (MT) $33.08 up 1.82% - global steel producer
POSCO (PKX) $81.87 up 2.79%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is back in the black, up 1.81% to $1,002,280.55.

Cheers,

Colonel Possum

Update for Eureka Ranchers, A Jump in Gold

Morning Miners! Morning Ranchers!

It is 6:07 AM and we have a full break room this morning. Lee sent us over some fresh coffee and donuts from Raine's this morning and the ole Colonel must admit that it tastes a lot better than what comes out of our boiler maker. She also informed me of two great links to add to the Report's Rancher's Corner:

Nevada Livestock Marketing, LLC

Superior Livestock Auction

The first provides full-service cattle sales & marketing serving the Fallon, Nevada and Outlying Areas; the second, a video auction service used by many Nevadans and similar to Western Video. For the ranchers and farmers that missed our kickoff in May, here's the link:

Checkout Our New Feature: "Rancher's Corner"

You can find the Rancher's Corner to your right. Thanks to Lee and all the other contributors that have made the Report better with their ideas and links. Keep'em coming!

This may prove to be an interesting day for the markets with the Federal Reserve statement expected at 2:15 AM (ET) concluding their two-day meeting. London spot gold is sensing something in the air jumping to $940 after traders returned from their pub lunch (London time). Other Fed-sensitive contracts demonstrated a slightly stronger U.S. dollar with respect to the euro and yen, and weaker compared to the Canadian loonie. All these trends could amplify or reverse depending on what Ben and the Boys have to say about inflation and the economic recovery this afternoon.

I'll close today with a currency chart missing from yesterday's discussion (Ask the Loonie Bird, Ask the Metals). Given the recent enthusiastic participation in our debt auctions, there is buzz about foreign investor sentiment: "Love the Treasurys, hate the dollar." Yesterday, we observed a weakening in commodity-sensitive currencies (loonie and aussie) and a mild recovery in the dollar. A reasonable question is why the dollar rally hasn't been stronger. The answer is that inflation fears in the U.S. are moving money into the euro (QEC U9) instead of our dollar (DX U9). Here's a chart of both for the last 3-months:


Oh-oh, a few ranchers just dozed off. Let's get them some more of that good Raine's coffee!

Enough talk, let's walk the walk:

Oil is down $0.26 to $68.98 in early trading (August contract); Gold is up $16.5 to $940.8 (August contract); Silver breaks $14 up $0.255 to $14.100 (July contract); Copper is up $0.0630 to $2.2615(July contract); Molybdenum is steady-eddy at $10.58.

The DOW is up 87.67points to 8410.58; the S&P 500, up 12.78 points to 907.88. The miners are rocking:

Barrick (ABX) $33.61 up 1.27%
Newmont (NEM) $41.82 up 1.21%
General Moly (Eureka Moly, LLC) (GMO) $2.32 up 5.45%
Freeport McMoran (FCX) $49.56 up 5.04% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $45.09 up 2.52% - domestic steel manufacturing
ArcelorMittal (MT) $33.31 up 4.26% - global steel producer
POSCO (PKX) $80.77 up 2.89%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is rebounding nicely, up 3.05% to $999,562.52.

Cheers,

Colonel Possum

Ask the Loonie Bird, Ask the Metals

Morning Miners!

It is 6:19 AM and we're firing up a second pot. The ole Colonel is a little late this morning because there has been so much data to sort through after yesterday's commodity massacre. The Eureka Miner's Grubstake Portfolio was down 6.91% shedding $70,384 for its largest daily loss - ouch! This quote from Metals Monthly pretty much sums up the situation:

"Are the green shoots of spring turning into the full blossoms of summer? Or is a late frost about to descend?" asks the VM Group, a specialist London-based metals analytics organisation, in its latest Metals Monthly for Fortis Bank.

The Report has been expecting a a summer slump in gold and the broader markets; yesterday may very well have been the warning shot for more to come. Fortunately, gold reversed early this morning (London time) after flirting with $914. There will probably be a relief rally today but the larger question is what next? I don't know the answer but it is always good to look at the metals and commodity-sensitive currencies for clues. The following charts suggest a weakening in the commodity reflation story may have started early this month. Here is a plot of the Canadian dollar ("Loonie", QCD U9)) versus the Australian dollar ("Aussie", QAD U9) for the last 3-months:


Although they are a hemisphere apart, the currencies of these two resource-rich countries are nearly identical in their performance. Note that both started to reserve their upward trend in early June. The story of the U.S. dollar (DX U9) is the inverse as shown in this chart plotted against the Aussie (QAD U9). This relation is not unexpected since the dollar index is based on a basket of global currencies but the counter-trend character with a commodity-sensitive currency is pronounced:


As the U.S. dollar has strengthened, gold has declined in their classic relation. Here are gold and copper, our favorite canaries in the global recovery mineshaft, for the last 3-months. The copper trend remains positive but weakening as doubts about the real strength of China's recovery emerge:


Where do we go from here? Stay tuned, the Colonel has got you covered.

Enough chart talk, let's walk the walk:

Oil is up $0.33 to $67.82 in early trading (August contract); Gold is up $2.3 to $923.3 (August contract); Silver is up $0.100 to $13.805 (July contract); Copper is up $0.0535 to $2.1855(July contract); Molybdenum holds steady at $10.58.

The DOW is down 23.28 points to 8315.73; the S&P 500, down 1.59 points to 891.45. The miners are recovering somewhat:

Barrick (ABX) $32.06 up 0.60%
Newmont (NEM) $40.22 up 0.88%
General Moly (Eureka Moly, LLC) (GMO) $2.07 down 2.82%
Freeport McMoran (FCX) $46.71 up 3.39% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $43.21 down 0.48% - domestic steel manufacturing
ArcelorMittal (MT) $31.13 up 1.83% - global steel producer
POSCO (PKX) $78.42 up 0.09%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is shaking off a little dust, up 0.34% to $952,168.11.

Cheers,

Colonel Possum

Is Gold Ready for the Down Elevator?

Morning Miners!

It is 6:08 AM, the coffee is hot and clean cups are on the hook. My sweetheart took the headline picture a few years ago. We were on the north side of Lone Mountain looking down a long dusty road to Devil's Gate. I thought this to be a fitting image to start the week; economic recovery is in view but there's still a long way to get beyond the Devil's Gate.

This could be a tricky week for gold and stocks. The ole Colonel has warned in previous blogs that this summer and fall could have a few speed bumps for both. One catalyst is the outcome the Federal Reserve meeting this week:

"...the Federal Open Market Committee will hold a two-day policy meeting, ending Wednesday with a statement expected to walk the fine line between the need to continue goosing the economy and the need to keep inflation at bay." (WSJ, 6/22/09)

Other influences are the recent cautious to gloomy remarks from the European Central Bank and World Bank:

WASHINGTON -- Developing countries' net private capital inflows fell 41% last year and will be cut nearly in half this year, the World Bank said in a report that offers little hope that the countries will provide the spark for the global economic engine.

Meanwhile, European Central Bank Gov. Jean-Claude Trichet said Sunday that the ECB expects the global economy to moderate its slide over the remainder of the year and resume climbing in 2010.

The World Bank estimated in its annual development-finance review that gross domestic product in developing countries will grow just 1.2% this year, well off the 8.1% pace in 2007 and the 5.9% gain in 2008. (WSJ, 6/22/09)


The London spot market appears to be anticipating something with gold dropping from a $934 open to sub-$920 just several minutes ago. We'll see what happens later this morning but I'm prepared to buy little chunks on the way down and will stick with my prediction that gold will hit $1050 before Christmas. How about a Colonel "tweener" prediction between now and a bump up:

Gold will see $880 before Thanksgiving 2009

I think stocks are looking a little scary too. We've seen a greater than 40% gain in the S&P 500 since the "Devil's Triple Six" low of March 6 (S&P intraday low, 666.79) to an intraday high of 956.3 on June 11th. That's a big bounce for an economic ball that's still losing air. There will no doubt be a rally in stocks late this year when fund managers try to dress up their books, so there should be some buying opportunities for equities in the summer slump. I'll talk about a conservative approach to buying a falling market for us old timer's later this week. How about some more market predictions?

The S&P 500 will see 813 before Christmas 2009
The S&P 500 will break 1000 before New Years 2009

In the meantime, put on your seat belts. We're off to Devil's Gate!

Oil is down $2.16 to $67.86 in early trading (July contract); Gold is down $16.1 to $920.1 (August contract); Silver is down $0.420 at $13.780(July contract); Copper is down 0.0665 to $2.1840(July contract); Molybdenum holds at $10.55.

The DOW is down 129.76 points to 8409.97; the S&P 500, down 17.81 points to 903.42. The miners are down big time:

Barrick (ABX) $32.23 down 5.18%
Newmont (NEM) $40.16 down 4.11%
General Moly (Eureka Moly, LLC) (GMO) $2.47 down 3.52%
Freeport McMoran (FCX) $46.85 down 8.10% (a bellwether mining stock spanning gold, copper & molybdenum)

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

Nucor (NUE) $45.00 down 3.60% - domestic steel manufacturing
ArcelorMittal (MT) $31.30 down 6.09% - global steel producer
POSCO (PKX) $79.81 down 4.09%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is back in the red, down 3.82% to $980,386.08.

Cheers,

Colonel Possum