Unemployment Holds at 10%, Gold & Dollar Dance

Morning Miners!

It is 6:10 AM. Scott dropped off a can of his new 2010 TGIF coffee, he thought we might need it for the monthly jobs report. There are no data regarded by economists to be more important than the Labor Department's labor statistics. It is the barometer for economic revival domestically, will someday trigger a Fed decision to raise interest rates and is closely watched abroad to gauge global recovery.

Today's report is a real mind bender. The good news is that the November numbers were revised to show the U.S. economy added jobs for the first time since the recession began two years earlier; the bad news is that the December payroll numbers are worse than forecast:

"Nonfarm payrolls fell by 85,000 last month, compared with a revised 4,000 gain in November, the Labor Department said Friday. Economists surveyed by Dow Jones Newswires had expected a payroll decrease of just 10,000. The November figure originally showed an 11,000 drop in payrolls.

The unemployment rate, calculated using a survey of households as opposed to companies, remained at 10% in December, the same level as the previous month. Economists had forecast the jobless rate would edge higher to 10.1%." (WSJ, 1/8/2009)

Global response? Spot gold on the London Exchange jumped $19 in minutes to $1139 and then retreated. Since gold sold off prior to the report, the day-to-day change is less dramatic. When gold jumped, the dollar dropped; then gold flopped and the dollar hopped - their old familiar dance. The broader markets are down but not by much, The German DAX is only off fractionally. Nobody said this recovery is going to be easy or fast pardner.

Here are charts of spot gold and the U.S. Dollar (UUP). The rise in the dollar corresponds to the fall in gold (EST vs London time):



In local news, a hearing was conducted by District Judge Dan L. Papez on the Eureka Moly LLC water rights issue in Kobeh Valley. The State Engineer’s March 26th, 2009 granting of water rights to Eureka Moly was appealed by the County and some community members. Legal arguments were heard yesterday from both sides and the judge said he will review the case carefully. This may take approximately 60 days.

You may be interested to know that two new Exchange Traded Funds (ETF) will be made available so that the individual investor can participate in the platinum and palladium markets. The Eureka Miner's Grubstake portfolio holds ETFs in gold (GLD) and silver (SLV). Here's the link to more information:

US platinum, palladium ETFs to start trade Friday

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for our fuel gauge with oil above $80

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is down $0.34 in early trading to $82.32 (February contract, most active); Gold is down $5.2 to $1128.5 (February contract, most active); Silver is up $0.020 to $18.365 (March contract); Copper is down $0.0070 to $3.4200 (March contract); Molybdenum is steady at $13.50.

The DOW is down 30.76 points to 10576.10; the S&P 500 is down 1.70 points to 1139.99. The miners are mixed:

Barrick (ABX) $40.83 down 0.83%
Newmont (NEM) $48.68 down 1.24%
General Moly (Eureka Moly, LLC) (GMO) $2.56 up 3.64%
Thompson Creek (TC) $14.02 up 1.89%
Freeport McMoran (FCX) $85.72 up 0.09% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $47.81 down 0.50% - global steel producer
POSCO (PKX) $135.15 up 0.48% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.20% to $1,354,442.67 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Mountains Move Slowly, Time Passes Quickly

Morning Miners!

It is 6:41 AM. Do you have time for a cup of Thor's java with the Colonel and a quick story? On my recent trip to Austin, I was reminded why Eureka County sits in the heart of North America's gold country, an important lesson in motion and time.

As you leave Diamond Valley on Highway 50 and pass through Devil's Gate, look to your right (headline photograph). Those layered rocks above you are are some 350 million years old, once shallow-water beds of Devonian dolomite and limestone. They sit now at an angle after being thrust up by a tremendous collision with siliceous rocks (quartzite, shale and chert) from ancient deep-water seabeds. The line of this Paleozoic fender bender is called the Roberts Mountains Thrust Belt. Along this belt gold mineralization often occurred at the point of contact between the carbonate and siliceous rocks. The Roberts trend extends through Eureka and Elko counties and has recently (at least in geologic time) been very generous to both miners and local governments through the open pit extraction of Carlin-type (microscopic) gold.

What caused this collision? Let's ask Lone Mountain, she's coming up just to the northwest of the Roberts Creek turnoff. Now you say there are grander peaks than this in the local mountain ranges, our own Diamond Peak is some 11,000 feet of towering beauty. This lowly homely mountain to our right isn't even in a range but sits alone in a vast alluvial basin. Well Pardner, don't let this old gal hear you say that! Lone Mountain may have lost her height and looks but she's the oldest around and can tell a story of travel you won't believe.


Plate tectonics is how scientists describe the process and good old Benjamin Franklin was the first to think of it way back in 1782: "The crust of the Earth must be a shell floating on a fluid interior. Thus the surface of the globe would be capable of being broken and disordered by the violent movements of the fluids on which it rested." Say, Ben is talking about our local gold-rich fender bender!

In her youth Lone Mountain grew up in the Southern Hemisphere some 10,000 miles away. She is living proof that the earth's surface is adrift; large rigid plates moving in response to the flow of a heat-softened interior near the surface (asthenosphere) and a molten interior (upper and lower mantle). At Lone Mountain's base is Pogonip limestone that dates back some 500,000,000 years. That works out to be an average of about one and a quarter inches of travel per year. She has witnessed the Roberts Mountain accident and probably many others in her long traveling career. Buckaroos, mountains move slowly but time passes quickly. I'll bet you'll pay my old friend a bit more respect the next time you pass and a little thanks for being a part of what brought gold to Eureka County.

By the by, some of this story was derived from "Traveling America's Loneliest Road" by Joseph V. Tingley and Kris Ann Pizarro (Nevada Bureau of Mines and Geology, Special Publication 26, 2000). A great book for your travels!

Enough tall tales, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for our fuel gauge with oil above $80

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is down $0.23 in early trading to $82.95 (February contract, most active); Gold is down $1.60 to $1134.9 (February contract, most active); Silver is up $0.050 to $18.225 (March contract); Copper is down $0.0260 to $3.4685 (March contract); Molybdenum got a little more jump to $13.50.

The DOW is up 2.95 points to 10576.63; the S&P 500 is up 0.29 points to 1137.43. The miners are mixed:

Barrick (ABX) $41.22 down 1.29%
Newmont (NEM) $49.15 down 0.93%
General Moly (Eureka Moly, LLC) (GMO) $2.45 unchanged
Thompson Creek (TC) $13.68 up 1.11%
Freeport McMoran (FCX) $86.27 down 1.19% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $47.81 up 0.21% - global steel producer
POSCO (PKX) $134.08 down 1.56% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.40% to $1,350,477.92 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus (Devil's Gate, Nevada)

Moly Inches Higher, The Colonel's Outlook for January

Morning Miners!

It is 6:34 AM and the Diamond Valley holds a winter rose. Mother Nature has a way of making our ambitions pale when she brings out her palette of morning colors. Let's grab a cup and enjoy her painting lesson. By contrast the headline photo today is almost devoid of color, taken yesterday on our trip to Austin.

The sun rose hours ago in London and brought gold with her to reach the $1130 level. Molybdenum is feeling this week's metallic levitation too and inched higher to $12.75. Copper continues to soar challenging the $3.50 level in early morning trading.


The Wall Street Journal reported the thoughts of Eugen Weinberg, an analyst at Commerzbank, on the New Year's metal rally:

"As long as sentiment remains this strong, there is no reason to believe we will see a correction [in prices] to a fundamental level..." (WSJ 1/6/2010)

Continuing a trend from last year it seems fundamentals are taking a back seat to renewed investor optimism:

"Analysts said investors bullish on commodities are overwhelming lackluster demand and traditionally bearish trends such as rising inventories." (Matthew Walls, WSJ 1/6/2010)

To underline the importance of investor participation, checkout the mind boggling holdings of the popular Exchange Traded Funds (ETF) in gold and silver:

SPDR Gold Trust (GLD) 1,128.8 metric tons
iShares Silver Trust (SLV) 9,488.8 metric tons

The Eureka Miner's Grubstake Portfolio holds both GLD and SLV.

I just updated my commodity models for the month of January and this is where we sit for silver, copper and oil given this morning's $1130/oz gold:

The fair value of silver is $17.918 in a range of $17.064 to $18.771

The fair value of copper is $3.1105 in a range of $2.8862 to $3.3348

The fair value of oil is $76.610 in a range of $69.98 to $83.24

Given this morning's prices it appears that silver has finally caught up with gold sitting very near fair value at $17.995. This was not the case in November when we asked the question, Why is Silver So Cheap?. Copper is outside its upper limit at $3.4760 emphasizing its stellar rise but also indicating an overvalued condition. A pullback in copper or a jump in gold is required to re-establish equilibrium this month.

Oil is curious too. It seems $80 oil is in the air, decorrelating from gold in the last 3-months and heading toward a possible inversion. This is a fancy way to say that oil may continue to rise on average as gold falls in the near term. The Colonel gets a little cautious when gold and oil stop moving together. This morning's oil at $81.75 is $5 above its fair value with respect to gold. Stay tuned buckaroos, it might be an exciting time in commodities this quarter.

Let's close with a one-month chart for molybdenum and nickel, another key ingredient in steel production:


Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for our fuel gauge with oil above $80

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is down $0.02 in early trading to $81.75 (February contract, most active); Gold is up $9.8 to $1128.5 (February contract, most active); Silver is up $0.195 to $17.995 (March contract); Copper is down $0.0625 to $3.4760 (March contract); Molybdenum is up at $12.75.

The DOW is up 14.28 points to 10586.30; the S&P 500 is up 0.56 points to 1137.08. The miners are still happy:

Barrick (ABX) $41.88 up 2.42%
Newmont (NEM) $49.66 up 2.22%
General Moly (Eureka Moly, LLC) (GMO) $2.43 unchanged
Thompson Creek (TC) $13.53 up 3.13%
Freeport McMoran (FCX) $86.47 up 2.99% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are down a tad, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $47.04 down 0.74% - global steel producer
POSCO (PKX) $135.33 down 0.15% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.99% to $1,348,818.12 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus (heading out to Austin, Nevada)

Thompson Creek Joins The Eureka Grubstake for 2010

Morning Miners!

It is 6:32 AM, grab a cup and checkout what the Colonel has in the shop this morning. Last May the Report started the Eureka Miner's Grubstake Portfolio to track 10 stocks of companies that directly or indirectly benefit Eureka County plus a gold and silver Exchange Traded Fund (ETF). We invested one million dollars and the readers (yup, that's you) made $274,064.67 as the books closed for 2009. A 27.4% return on your money isn't bad in a year that saw the S&P 500 fall off a cliff in March. If the Grubstake is a local barometer for times to come, last year's performance should bode well for Eureka's future.

One of the sacred laws of repair is, "If it works don't mess with it." OK, so why the heck is the Colonel retooling the Grubstake for 2010? Now that we're in the shop, I think you'll see why. I've unbolted Nucor Corp. (NUE), a domestic steel maker, from the main frame and welded in a bright and shiny Thompson Creek Metals (TC) right next to the General Moly (GMO) transmission mount...oh, you're confused?

Let's look at this rig another way. The top six Grubstake performers for 2009 in terms of stock performance since May were (best, first):

ArcelorMittal ADS (MT) up 59.4%
Freeport-McMoran Copper & Gold Inc. (FCX) up 55.0%
POSCO ADS (PKX) up 47.3%
Caterpillar Inc. (CAT) up 43.8%
EOG Resources Inc. up 26.6%
iShares Silver Trust ETF (SLV) up 19.9%

And the bottom six (worst, first):

Nucor Corp. (NUE) up 7.0%
Newmont Mining Corp. (NEM) up 8.1%
ConoccoPhilips (COP) up 8.9%
General Moly (GMO) up 13.0%
Barrick Cold Corp. (ABX) up 15.7%
SPDR Gold Trust ETF (GLD) up 19.3%

OK, Nucor was the poorest performer and the two international steelmakers, ArcelorMittal and POSCO, were in the top three. The latter two are important because they invest in our General Moly (POSCO has a 20% share in the Eureka Moly Mt. Hope Project). Thompson Creek is a pure play moly producer that we've been looking at for sometime to unravel the mysteries of molybdenum prices (Good Golly Miss Moly, Molybdenum on CNBC News, POSCO & Miss Molly Go Dancing). It seems to me that the Grubstake will gain more from tracking Thompson Creek than Nucor even though domestic steel is important to the overall moly story. Make sense?

Let's take this baby for a spin buckaroos and make some money in 2010!

Enough tinkering with stuff that works, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for our fuel gauge with oil above $80

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is down $0.05 in early trading to $81.46 (February contract, most active); Gold is up $1.0 to $1119.3 (February contract, most active); Silver is up $0.082 to $17.545 (March contract); Copper is down $0.0135 to $3.3925 (March contract); Molybdenum is steady at $12.50.

The DOW is down 23.43 points to 10560.53; the S&P 500 is up 1.24 points to 1134.23. The miners are happy:

Barrick (ABX) $40.99 up 1.49%
Newmont (NEM) $48.98 up 1.09%
General Moly (Eureka Moly, LLC) (GMO) $2.42 up 5.46%
Thompson Creek (TC) $12.80 up 2.81%
Freeport McMoran (FCX) $84.40 up 1.13% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are down a tad, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $47.76 down 0.58% - global steel producer
POSCO (PKX) $135.53 down 0.14% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 1.2% to $1,335,720.75 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

How Good Were the Colonel's Predictions for 2009?

Morning Miners!

It is 5:47 AM, grab a cup of 2010 coffee and let's get to work. Nothing like starting the year with a strong precious metal rally. Gold jumped $26 in early morning trading to $1122 and silver followed at $17.345. Copper is continuing a string of new 16-month highs hitting $3.429 today. Unfortunately, oil is also feeling her oats breaking the $80 mark at $81.32. Colder than expected weather in the northeast of the country is driving fuel costs and I'm afraid higher oil prices may be with us for the new year.



The ole Colonel thought it would be fun to see how well the Report did in 2009 with predictions on stock and commodity prices of interest to Eurekans. We've been keeping track with the Colonel's Beer Derby (lower right column of this blog). In the Derby if I'm wrong, I buy you a beer; if I'm right you buy me a one. In 2009 there were 14 bets; 10 beers for the Colonel, 4 for the Readers for a prediction accuracy of 71%. There were some good calls and some bloopers. We'll do a post game in a moment but first let's checkout a few bets outside the Derby.

In late October the Report predicted 2009 closing numbers for gold and the S&P 500 (The Colonel's Outlook for Year's End):

Gold (COMEX, 1600 EST, March - most active contract) $1096
The Colonel's Call $1080 (error, -1.5%)

S&P 500 close 1115.10
The Colonel's Call 1100.00 (error, -1.3%)

What about the top for gold? After gold hit $1226.30 in overnight trading I said, "I think for the moment gold is on hold" (Gold's On Hold...?, 12/03/09). With the fallout of the Dubai debt crisis, it never returned to those levels slumping to $1096 to close the year. Hopefully this morning's rally will be a sign of recovery for the yeller stuff.

That's all good but what about some bloopers? Here are my worst predictions in 2009:

"Oil sees $52 before $62 on or before 5/30/09"

LESSON: Don't ever bet on declining oil prices even when the fundamentals of supply and demand are with you.

"Gold sees $880 before Thanksgiving, 2009"

LESSON: Although gold started last year in the mid-800s it trended ever higher until December. Doubts about the U.S. dollar and low interest rates led to record investor and sovereign interest in gold as a hedge against the falling greenback. This blooper was a bet that gold would have a good pullback before heading higher. It never did.

"The S&P 500 sees 813 before Christmas, 2009"

LESSON: Sometime after the first strong S&P 500 rally from its March low of 666.79, I called for the S&P 500 to break 1000 before year's end. It seemed likely that the S&P would dip to the low 800s before heading higher (still 20% above the March low which seemed like a pretty bullish call in those dark days). Amazingly, the S&P would rebound a startling 67% to close the year without any significant pullbacks. Never underestimate the resilience of markets!

"Moly sees $16.50 before Christmas, 2009"

LESSON: This was more a good will bet than a prediction based on facts. Molybdenum had a nice run above $18 this summer after earlier lows of $8. It slumped after the Chinese completed their stimulus-driven restocking when I made this call. Moly did have a nice year end bounce to $12.50 and the ability to predict moly prices should improve when it makes its debut on the London Metals Exchange this coming February.

What were my best calls? I think once the new dynamics behind gold were apparent, bets that gold would hit $973 by the Fourth of July and $1050 before Christmas were my two favorites. Yee-ha! There is a complete summary of all 14 bets below the sign off.

Predicting equity and commodity prices is really a fool's errand but as I have said before, I'm a happy fool. The trick is being more right than wrong. 10 for 14 is pretty good but can I be this lucky in 2010? Stay tuned pardner, I might be buying you a beer, on the other hand...

Enough prognostication, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for our fuel gauge with oil above $80

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is up $1.96 in early trading to $81.32 (February contract, most active); Gold is up $26.2 to $1122.4 (February contract, most active); Silver is up $0.500 to $17.345 (March contract); Copper is up $0.0770 to $3.4235 (March contract); Molybdenum is steady at $12.50.

The DOW is up 143.97 points to 10572.02; the S&P 500 is up 16.47 points to 1131.57. The miners are rocking in the new year:

Barrick (ABX) $40.74 up 3.44%
Newmont (NEM) $48.64 up 2.81%
General Moly (Eureka Moly, LLC) (GMO) $2.11 up 1.44%
Freeport McMoran (FCX) $83.28 up 3.72% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are celebrating too, (a "tell" for General Moly):

Nucor (NUE) $48.00 up 2.89% - domestic steel manufacturing
ArcelorMittal (MT) $47.76 up 4.39% - global steel producer
POSCO (PKX) $135.75 up 3.55% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 3.00% to $1,312,325.99 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

The 2009 Colonel's Beer Derby (summary):

The S&P will break 1000 before New Years, 2009 - beer,
Colonel
Gold breaks $1050 before Christmas, 2009 - beer, Colonel
Molybdenum sees $16.50 before Christmas, 2009 - beer, Readers
Silver sees $15.80 before Labor Day, 2009 - beer, Colonel
Gold sees $980 before Labor Day, 2009 - beer, Colonel
Gold breaks $973 before July Fourth - beer, Colonel
Oil sees $52 before $62 on or before 5/30/09 - beer, Readers
Barrick (ABX) sees $39 before $26 on or before 5/31/2010 - beer, Colonel
The S&P 500 sees 813 before Christmas, 2009 - beer, Readers
Gold sees $880 before Thanksgiving, 2009 - beer, Readers
Oil sees $54 before $47 on or before 5/8/09 - beer, Colonel
Gold sees $929 before $844 on or before 5/15/09 - beer, Colonel
Gold closes the week higher than Monday's open, the week of 4/6/09 - beer, Colonel
Copper breaks 2-Bucks the week of 4/6/09 - beer, Colonel

The Colonel Wishes You a Happy New Year!

Morning Miners!

It is 6:44 AM and time for the ole Colonel to wish you all a Happy New Year! You'll have to brew your own Raine's TGIF Red Label coffee tomorrow, the Report will be back on the air bright and early Monday, January 4. Unless a lightning bolt hits the markets latter today, I think we can safely say that 2009 has been a good'un: the S&P 500 is up 68% from its March low, gold is back over $1100/oz, the old greenback is feeling a bit more chipper, our local miner's have had a good run and the Eureka Miner's Grubstake Portfolio has earned more than a quarter million dollars.

In the metals, copper is king posting a new 16-month high of $3.3790 on the COMEX this morning (most active, March contract). This is a good omen for 2010 since copper has been a fairly reliable gauge of global economic recovery. Here is a MineWeb article on the prospects for base metals according to the Royal Bank of Scotland (RBS):

Copper still the favourite base metal - RBS (Mineweb, 12/31/2009)

Certainly metals have been helped in 2009 by significant investor interest which in some cases has displaced supply/demand as a key price driver. Early in 2010 it is expected that molybdenum will launch along with cobalt on the London Metal Exchange (LME):

Cobalt and Molybdenum 2010

Here is a pretty good summary for why this is a good idea:

London Metal Exchange cobalt and molybdenum FAQ

The Brits are great hosts too and it should be fun with cocktails to boot:

"You are invited to join the LME and its members at a cocktail reception to celebrate the launch of the minor metals contracts. Held on the LME’s trading floor known as the ‘Ring’ you will have the opportunity to meet with key individuals from the broader metals community as well as key decision makers in the cobalt and molybdenum markets."

If the Colonel doesn't make this shindig, I do plan to build a molybdenum pricing model next year and share the results with our Eureka Moly LLC. This will be my sixth proprietary model; presently the Report models oil, gold, silver, copper and natural gas.

Loquita looks like she needs to go out, see you on Main Street tonight!


Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is up $0.54 in early trading to $79.82 (February contract, most active); Gold is up $2.5 to $1100.0 (February contract, most active); Silver is up $0.108 to $16.910 (March contract); Copper is up $0.0135 to $3.3585 (March contract); Molybdenum is steady at $12.50 yesterday.

The DOW is down 52.60 points to 10495.91; the S&P 500 is down 4.17 points to 1122.25. The miners are mixed:

Barrick (ABX) $39.80 up 0.61%
Newmont (NEM) $47.65 up 0.13%
General Moly (Eureka Moly, LLC) (GMO) $2.07 down 0.48%
Freeport McMoran (FCX) $80.92 up 0.05% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are mixed, (a "tell" for General Moly):

Nucor (NUE) $47.00 down 0.12% - domestic steel manufacturing
ArcelorMittal (MT) $46.08 down 0.41% - global steel producer
POSCO (PKX) $131.61 up 0.11% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.11% to $1,280,489.96 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

POSCO & Miss Moly Go Dancing

Morning Miners!

It is 6:04 AM, more snow and the coffee is hot. Make yourself comfortable and the Colonel will return after the market open.

OK, pardner, this is setting up to be an interesting day. The U.S. dollar is rising on increased concerns about European debt and gold is falling in turn. The broader markets are mixed as we race to the year's end but wait, not everything is heading south. It is often the case that strength can be found on weak market days. Today's outstanding stock in the Eureka Miner's Grubstake is steel maker POSCO (PKX), 20% investor in our Mt. Hope project. In fact, POSCO is flirting with a new 52-week high on a day when the world's largest steel producer, ArcelorMittal (MT) is down more than 2%.

What about molybdenum? The gains are small but steady with moly picking up another quarter yesterday to make $12.50. Here's a 1-month chart of molybdenum and nickel, another key ingredient in making steel.


I'd say that's a pretty encouraging trend up. So what's up with General Moly (GMO)? Recently GMO took a dip below $2, recovered nicely to a $2.25 level and today is headed back to 2-bucks. Let's look at a chart of GMO compared to its 200-day moving average:


The average line bottomed this August and has been on a modest uptrend (see Note 1). Today's price is below that line and possibly signaling a good time to buy given the positive action of POSCO and molybdenum together with an improving global demand story for steel. Let's see how Thompson Creek (TC) is doing. TC is another pure play moly mining company that is presently in production;


OK, there is a similar shape to the 200-day average except TC is sitting a little above line (see Note 2). The Colonel has a feeling (and I might be wrong) that both TC and GMO have a reasonable prospect of heading north with moly in the first quarter of the new year. As I mentioned the other day, I bought a little GMO at $2.05 and $2.17 both below the present 200-day average price of $2.40.

I'll close with one more positive indicator. The March (most active) COMEX contract for copper hit a new 52-wk intraday high of $3.362 in early morning trading on a strong dollar day. Last year at this time, copper traded as low as $1.4370. Copper has been our faithful canary in the global recovery mineshaft and she looks like she's going to the New Year dance with POSCO and Miss Moly!

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is up $0.21 in early trading to $79.08 (February contract, most active); Gold is down $8.6 to $1089.5 (February contract, most active); Silver is down 0.195 to $16.915 (March contract); Copper is up $0.0275 to $3.3410 (March contract); Molybdenum closed up at $12.50 yesterday.

The DOW is down 7.93 points to 10537.78; the S&P 500 is down 1.89 points to 1124.31. The miners are down:

Barrick (ABX) $39.62 down 0.23%
Newmont (NEM) $47.43 down 0.69%
General Moly (Eureka Moly, LLC) (GMO) $2.07 down 2.36%
Freeport McMoran (FCX) $80.98 down 0.14% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are mixed, (a "tell" for General Moly):

Nucor (NUE) $46.06 unchanged - domestic steel manufacturing
ArcelorMittal (MT) $45.79 down 2.10% - global steel producer
POSCO (PKX) $131.56 up 0.63% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.72% to $1,277,012.74 (what is this?).

Cheers,

Colonel Possum

Headline Photograph by Mariana Titus

Note 1: A 200-day moving average is a 200-market-day average that includes the most recent price in the average and tosses out the oldest. Two hundred market days is roughly 10 months in calendar time. This average smooths the data but lags actual price by 1/2 the averaging interval; in this case, 5-months. The low in July-August therefore reflects the bottoming of GMO share price earlier in February-March. To maintain the current upward trend, GMO actual price needs to stay above the 200-day line. If GMO doesn't move above the 200-day line soon, all bets are off.

Note 2: By comparison, TC is technically a much healthier chart than GMO since the actual share price has remained above the 200-day moving average. A move below this line would probably not bode well for TC or GMO. The positive moly price and POSCO trend should, however, lift both TC and GMO if the steel industry continues to recover in 2010.