The Eureka Miner

Friday, September 25, 2015

$1,156 Home Run for Gold; Updates: General Moly (GMO) & Timberline (TLR)

Oxidized Windfall ores are soft, friable
and easy to recover by cyanide leaching

Windfall Mine, Eureka, Nevada

Latest News

Comments on both the releases are given below in the updates...

Timberline Resources Announces Closing of Non-Brokered Private Placement Financing with Waterton Precious Metals Fund II Cayman, LP (Press release, 09/23/2015)

General Moly Receives Ruling on Mt. Hope Water Rights (Press release, 9/21/2015)

Blasts from the Past

The online version is up and running!

Fall 2015 Mining Quarterly

"Click to read" and the online version looks much like the printed magazine. My column on the Windfall Mine starts on page 62 (page 61 printed version). Press "Esc" to return to the Elko Daily Free Press. There is a handy scroll bar to the pages at the bottom of the screen. The same article appeared in the Elko Daily Free Press September 10:

Eureka’s Windfall – Birth of a modern gold district with community spirit

***
Memorable quotes (lately):

With respect to a pending interest rate hike “[The Federal Reserve needs to] get in front of this and to prevent speculative forces in financial markets that could lead to inappropriate risk-taking that might undermine financial stability” - Fed Chair Janet Yellen (09/24/2015)

“Heightened concerns about growth in China and recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term” - Fed Chair Janet Yellen in her comments following a decision to delay rate hikes (09/17/2015)

"Gold has no sponsor" - Jeff Currie, Goldman Sachs Commodity Guru on CNBC Business News, 8/26/2015, Currie reiterates $1,050 per ounce gold target

On the misgivings of lower oil...

“The problem is when people think of consumers saving a few pennies at the pump, they’re not going to take that money and buy a new house or a new car or send their child to college. They’re probably going to buy extra socks and potatoes...” (Walter Zimmermann Jr, vice president and chief technical analyst at United-ICAP, see Guardian article below)

Debbie Carlson of the Guardian explains the recent plunge in oil prices: US crude oil prices hit lowest since 2009, eliminating thousands of jobs (8/21/2015, The Guardian)

Please checkout Mariana's Eureka, Nevada on Facebook

Numbers used for this morning's early analysis:

Goldman Sachs Commodity Index

S&P GSCI 361.0, 10/15 contract (intaday low 339.40 on 8/24/2015)

Nymex/Comex (most active contracts)

Nymex oil (WTI) $46.07 per barrel (intraday low $37.75 on 8/24/2015)
Brent crude $48.85 per barrel
Comex copper $2.2865 per pound (intraday low $2.209 on 8/24/2015)
Comex gold $1,146.5 per ounce (intaday high $1,169.8 on 8/24/2015)
Comex silver $15.165 per ounce

Latest Nevada gasoline prices

Fossil evidence in Dunderberg shale

from late-Cambrian (500+ million years ago)

Windfall Mine, Eureka, Nevada

$1,156 Home Run for Gold in a Late Season Game

Gold regains value on metals and currencies

Market drivers: concerns over China & the timing of a U.S. Federal Reserve interest rate rise

Wild Card: possible U.S. government shutdown

Bullish bet for next week: up, $1,160 per ounce.

Morning Miners!

What a news week! The Pope visits Washington and New York in a Fiat, Fed Chair Yellen gives new hints on a pending rate hike yesterday, China's President Xi Jinping arrives at the White House this morning, and Putin talks to President Obama Monday....Oh, and John Boehner just announced that he is resigning from the Senate the end of October with a possible government shutdown in the cards next week.

So what's the future price of gold?

My comments to Kitco News this morning for their Weekly Gold Survey (complete input with charts below):

I must admit gold hit a home run yesterday in a late-season game advancing against not only its US dollar value but showing a respectable step up in value compared to other metals, the euro and the yen.

Although it made a new high for September ($1,156.4) it unfortunately failed to take out its August peak ($1,169.8). With an upward revision to U.S. second quarter GDP and "get in front of this.." comments from Fed Chair Yellen, it is likely the August high will remain unchallenged next week [full quote below headline photo].

Today's wild card is the unexpected resignation of House leader Boehner and what that portends for a possible government shutdown next week. Gold may still have a chance at making the playoffs this month, I'll take the outside bet...

My vote is (an unexpected) up. Target $1,160 per ounce.

I summed up my thoughts on the macro situation for mining and metals for a faithful reader of this report. This is in a partial response to a Wednesday question about General Moly:

Thank you for checking in. I'm not sure anyone has seen this market in recent memory relative to commodities & miners.

There is an interesting contrast with the 2008-2009 Financial Crisis. Benchmark miner Freeport-McMoran (FCX) put in its low in December 2008 but was well on its way up when the S&P 500 made its low in March 2009. For that period, BRICs [Brazil, Russia, India, China] were on the rise with China demand broadly fueling recoveries. This time around FCX fell just below its 2008 low (on a split-adjusted basis, 8/26) and has compounded problems by now having an oil component. The BRICs are in disarray with the exception of India which has been lifted by low oil prices & new government. A real flip-side.

Everything commodities turns on China and I believe the jury is still out. Dismal PMI today [Wednesday, 9/23. PMI =47.0 versus 47.5 expected; a PMI less than 50 indicates contraction] isn't encouraging. We need to see a bottom in copper & oil...

The remainder of my response and thoughts on General Moly is continued in the update below...

Hematite slickensides show evidence of internal faulting
and oxidation of the ore body

Windfall Mine, Eureka, Nevada

Update on General Moly (GMO)

This morning General Moly stock (GMO) stock opened at $0.29 per share and is presently trading at $0.3150 (0838 PDT) down 36% from last Friday's close ($0.490). The downturn this week was caused by Monday's press release:

General Moly Receives Ruling on Mt. Hope Water Rights (Press release, 9/21/2015)

Bruce D. Hansen, Chief Executive Officer, said, “We are surprised and disappointed in the Supreme Court’s decision given the level of analysis and diligence performed prior to the granting of these permits and 3M Plan and the detailed and positive rulings the Company received at the State District Court level..."

This is what I wrote a longtime Eureka Miner follower after the press release (continued from headline discussion):

With respect to [General Moly] GMO, I'd like to see the reaction of AMER to the water rights ruling. I reduced my GMO position by 1/2 but would probably go back in if positive words are forthcoming come from AMER and/or POSCO.

Other than a timeline issues (which, of course, will be resolved eventually - shortages follow gluts, gluts follow shortages) all the fundamentals remain unchanged - Mt. Hope remains a terrific resource for molybdenum and other critical/strategic minerals, POSCO is the highest tech steel manufacturer in the world & GMO has overcome major obstacles.

No real answers here, but these are my thoughts. As a proxy for the fate of the mining sector, I believe it was encouraging to see Carl Icahn invest in FCX and then increase his position recently.

The price for a pound of moly oxide is still competing with a pound of hamburger. On the LME futures exchange (9/24):

3-month seller $12,300 per tonne ($5.58 per pound)
15-month seller $13,025 per tonne ($5.91 per pound)

$5.85 (Metals Weekly, 9/18)

Please do your own research, markets can turn on you faster than a feral cat.

Update on Timberline Resources (TLR)

Timberline Resources Corp. (TLR) owns a 23 square-mile South Eureka land package which includes the old Windfall mine properties - the subject of my recent Mining Quarterly column (below headline photo).

South Eureka also features Timberline's flagship Lookout Mountain Project along with a pipeline of earlier-stage projects. Timberline describes South Eureka as one of the largest undeveloped gold properties in Nevada.

Timberline made this announcement Wednesday:

Timberline Resources Announces Closing of Non-Brokered Private Placement Financing with Waterton Precious Metals Fund II Cayman, LP (Press release, 09/23/2015)

Coeur d'Alene, Idaho - September 23, 2015 (click here to view this press release in pdf format) - Timberline Resources Corporation (NYSE MKT: TLR; TSX-V: TBR) ("Timberline" or the "Company"), announced today that it has closed the previously announced non-brokered private placement of 1,331,861 shares of common stock of the Company at a price of US$0.375 per share to Waterton Precious Metals Fund II Cayman, LP, for total proceeds of US$499,447.87...Timberline intends to use the net proceeds from the private placement for the continued advancement of the Company's projects in Nevada and for general working capital purposes.

Last week Timberline made the initial announcement:

Timberline Announces Non-Binding Letter Agreement for Acquisition by Waterton Precious Metals Fund II Cayman, LP and Private Placement Financing (Press release, 09/15/2015)

TLR is presently trading at $0.475 [09:13 AM PDT]

Another chapter to the Windfall story? Stay tuned, pardner.

Market Stats

Here's the scorecard on the stock market, S&P 500 is presently trading at 1,946.23 [8:56 AM PDT]:

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:

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

Key "next level" to watch going down is 1,820.66 (low on 10/15/2014, down 14.7%)

For Fibonacci folks the "fib box" is:

50.0% retracement from 8/24 low = 2,000.87
61.8% retracement from 8/24 low = 2,032.45

In the coming weeks, getting inside the "fib box" is generally considered a "bullish" move to the upside; failing the "fib box" is a bearish indication.

Sept. 17, the S&P 500 bullishly entered the box after the Fed announcement touching 2,020.86 but then bearishly closed out of the box at 1,990.20. Last Friday's's close put us further away from redemption at 1,958.03 [Today's close at 1,931.43, even further away]

Kitco News Gold Survey

My (full) input to the Kitco News Weekly Gold Survey:

I must admit gold hit a home run yesterday in a late-season game advancing against not only its US dollar value but showing a respectable step up in value compared to other metals, the euro and the yen (chart).

Although it made a new high for for September ($1,156.4) it unfortunately failed to take out its August peak ($1,169.8). With an upward revision to U.S. second quarter GDP and "get in front of this.." comments from Fed Chair Yellen, it is likely the August high will remain unchallenged next week. Today's wild card is the unexpected resignation of House leader Boehner and what that portends for a possible government shutdown next week. Gold may still have a chance at making the playoffs this month, I'll take the outside bet...

My vote is (an unexpected) up. Target $1,160 per ounce.

Discussion:

A comparison of gold's rally with last Friday's numbers.

This morning's trades (click on chart for larger image):

Last Friday AM:

With the exception of its comparison to oil, gold made considerable progress this week. A future of rising rates and low inflation with a possible resumption of losses to key commodities and major currencies still weighs on the yellow metal.

Bullish for gold, the gold/copper ratio on the Shanghai futures exchange remains above 400 lb per ounce today at 417.1 (401.4 last week, units chosen for comparison to the above chart). The Chinese hold gold less dear relative to copper (e.g., today's 501.4 on the Comex compared to 417.1 on the SHFE). Nonetheless, the ratio was above 400 for some time until the dipping bearishly below 400 two weeks ago.

Cheers - Colonel

Photos by Mariana Titus with Nevada geologist Larry McMaster

Friday, September 18, 2015

Gold Bounces $1,140 but...; Good News for South Eureka Properties (TLR)?

Fall 2015 Mining Quarterly

Latest News

This morning (9/22/2015) General Moly stock (GMO) stock opened at $0.34 per share and is presently trading at $0.2625 (0732 PDT) down 44% from yesterday's close. The price for a pound of moly oxide is starting to compete with a pound of hamburger. On the LME futures exchange (9/21):

3-month seller $12,400 per tonne ($5.62 per pound)
15-month seller $13,125 per tonne ($5.95 per pound)

$5.70 (Metals Weekly, 9/11)

Not a great last day of summer for General Moly

General Moly Receives Ruling on Mt. Hope Water Rights (Press release, 9/21/2015)

Blasts from the Past

The online version is up and running!

Fall 2015 Mining Quarterly

"Click to read" and the online version looks much like the printed magazine. My column on the Windfall starts on page 62 (page 61 printed version). Press "Esc" to return to the Elko Daily Free Press. There is a handy scroll bar to the pages at the bottom of the screen. The same article appeared in the Elko Daily Free Press September 10:

Eureka’s Windfall – Birth of a modern gold district with community spirit

***
Memorable quotes (lately):

“Heightened concerns about growth in China and recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term” - Fed Chair Janet Yellen in her comments following a decision to delay rate hikes (09/17/2015)

"Gold has no sponsor" - Jeff Currie, Goldman Sachs Commodity Guru on CNBC Business News, 8/26/2015, Currie reiterates $1,050 per ounce gold target

On the misgivings of lower oil...

“The problem is when people think of consumers saving a few pennies at the pump, they’re not going to take that money and buy a new house or a new car or send their child to college. They’re probably going to buy extra socks and potatoes...” (Walter Zimmermann Jr, vice president and chief technical analyst at United-ICAP, see Guardian article below)

Debbie Carlson of the Guardian explains the recent plunge in oil prices: US crude oil prices hit lowest since 2009, eliminating thousands of jobs (8/21/2015, The Guardian)

Please checkout Mariana's Eureka, Nevada on Facebook

Numbers used for this morning's early analysis:

Goldman Sachs Commodity Index

S&P GSCI 361.1, 10/15 contract (intaday low 339.40 on 8/24/2015)

Nymex/Comex (most active contracts)

Nymex oil (WTI) $45.76 per barrel (intraday low $37.75 on 8/24/2015)
Brent crude $48.35 per barrel
Comex copper $2.3870 per pound (intraday low $2.209 on 8/24/2015)
Comex gold $1,139.3 per ounce (intaday high $1,169.8 on 8/24/2015)
Comex silver $15.205 per ounce

Latest Nevada gasoline prices

Windfall Pit

Windfall Mine, Eureka Mining District, Nevada

Gold Bounces

Gold regains value on key commodities and currencies

Market drivers: concerns over China & the timing of a U.S. Federal Reserve interest rate rise

A lone wolf in a bull pasture, target price for next week down, $1,120 per ounce.

Morning Miners!

Whoa! I was on the wrong side of that trade!

Last week I predicted the U.S. Federal Reserve would announce a rate hike Thursday and gold would fall to $1,090 per ounce. Federal Reserve Chair Janet Yellen delayed the hike on global concerns. In her own words:

“Heightened concerns about growth in China and recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term”

This morning, Comex gold surged to $1,141.5 per ounce but fell short of taking out the September high at $1,147.9 - when I did my morning analysis, gold was still up at a respectable $1,139.3.

Hey, I don't want to be bearish in gold country - it's no fun. So why isn't the Colonel running with the bulls to higher prices? I submitted a Debbie Downer input to the Kitco Weekly Gold Survey (see below) just before the deadline and quickly received this reply from Kitco's Editor Neils Christensen,

"Darn it Rick you have ruined my survey this week! You are the only one to be bearish in this week’s gold survey. Now I have to start writing all over again. Just kidding thanks for the vote...But you are the lone wolf in the pack. Everyone is either neutral or bullish – Is now the time to be contrarian?

Neils was very gracious to the ole Colonel in his otherwise bullish report:

"The only analyst in the bear camp this week is Richard Baker, editor of the Eureka Miner. Despite the Fed’s monetary policy decision, he said that he thinks gold’s high for September is in place and is expecting prices to fall back to $1,120 an ounce."

I must admit there are some nice flowers in this week's pasture.

On the positive side, gold's bounce following the decision to delay rate hikes has reversed recent comparative loses to key currencies & commodities. You can take a look at the admittedly upbeat chart below for a comparison with last week's malaise.

Why then be so gloomy? Even gold's fortunes have turned red on the Shanghai futures exchange regaining a key level relative to copper (in China red is good, green is bad).

OK. This is what worries me - it's the worst case outlook: A future of rising rates and low inflation with a likely resumption of losses to key commodities and major currencies will weigh heavily on the yellow metal in 2016.

The Fed didn't move Thursday but they may in October or December, there are some that say 2016 - rates are going up sometime, pardner. Positive real rates prove kryptonite to gold price - roughly the difference between interest and inflation rates. Yellen's 2016 inflation expectations are "under pressure" so real rates should be positive and on the rise next year.

With big players like Glencore and Freeport McMoRan cutting back operations, copper prices will trend higher someday too. Citibank foresees a 2016 copper shortage of 248 K-tons due to a broad array of mine disruptions. Although this is at odds with a Goldman Sach's surplus estimate of 673 K-tons, the laws of supply and demand will re-balance eventually: shortages follow gluts, gluts follow shortages. This will erode the premium gold presently has over the red metal - copper up, gold down.

Lastly, gold must not return to its 2013 lows relative to the devalued euro and yen. So far so good on this account. With this week's gains gold is up nearly 14% from its euro-denominated low; up 11-plus % in yen terms...

Hey, maybe I am worrying too much!

Let's join Ferdinand and sniff the flowers of continued monetary accommodation. My gold target may be dead wrong next week too...but maybe not!

Good News for South Eureka Properties?

Timberline Resources Corp. (TLR) owns a 23 square-mile South Eureka land package which includes the old Windfall mine properties - the subject of my recent Mining Quarterly column (below headline photo).

South Eureka also features Timberline's flagship Lookout Mountain Project along with a pipeline of earlier-stage projects. Timberline describes South Eureka as one of the largest undeveloped gold properties in Nevada. This week Timberline made this announcement:

Timberline Announces Non-Binding Letter Agreement for Acquisition by Waterton Precious Metals Fund II Cayman, LP and Private Placement Financing (Press release, 09/15/2015)

Kiran Patankar, President and CEO of Timberline comments, "We are very pleased to announce this agreement with Waterton, which addresses Timberline's immediate financing requirements and, subject to completion of the Transaction, also provides cash consideration to Timberline shareholders at a significant premium to the current trading price in a difficult market for junior gold companies."

Hmm...

Waterton has offered to acquire all of the issued and outstanding shares of Timberline's common stock for cash consideration of US$0.58 per share. A little bird whispered in my ear that Waterton may be in town for a look see next week. Another chapter to the Windfall story? Stay tuned, pardner.

Market Stats

Here's the scorecard on the stock market, S&P 500 closed Friday at 1,958.03

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:

S&P 500 high: 2,134.72, 5/20/2015
S&P 500 low: 1,867.01, on Monday 8/24/2015 down 12.5%
S&P 500 bear market begins below 20% at 1,707.78

Key "next level" to watch going down is 1,820.66 (low on 10/15/2014, down 14.7%)

For Fibonacci folks the "fib box" is:

50.0% retracement from 8/24 low = 2,000.87
61.8% retracement from 8/24 low = 2,032.45

In the coming weeks, getting inside the "fib box" is generally considered a "bullish" move to the upside; failing the "fib box" is a bearish indication.

Thursday, the S&P 500 bullishly entered the box after the Fed announcement touching 2,020.86 but then bearishly closed out of the box at 1,990.20. Friday's's close puts us further away from redemption at 1,958.03

Kitco News Gold Survey

My input to the Kitco News Weekly Gold Survey:

I was on the wrong side of this trade - no Fed rate hike, gold bounces! I'm still bearish and think the September highs are in with this morning's trade falling short of the high on the first ($1,141.5 versus 9/01/15 $1,147.3: Comex, 12/15).

My vote is down. Target for next week $1,120 per ounce.

Discussion:

On the positive side, gold's bounce following the Federal Reserve's decision to delay rate hikes has reversed recent comparative loses to key currencies & commodities:

This morning's trades (click on chart for larger image):

Last Friday AM:

Only silver is showing a slight decrease in relative value but is still up from its August average. Gold compared to copper, oil, euro and yen remain in the red but the losses to August's levels are small except for WTI (>5%). A future of rising rates and low inflation with a likely resumption of losses to key commodities and major currencies weigh on the yellow metal.

Thankfully, the gold/copper ratio on the Shanghai futures exchange has crept back above 400 lb per ounce today at 401.4 pounds per ounce (units chosen for comparison to the above chart). The Chinese hold gold less dear relative to copper (e.g., today's 477.3 on the Comex compared to 401.4 on the SHFE). Nonetheless, the ratio has stayed above 400 for some time. Last week the gold ratio dipped bearishly below 400.

Cheers - Colonel

Photos by Mariana Titus

Friday, September 11, 2015

Eureka's Windfall; Gold Falls Below $1,100 - What's Up (or Down)?

Windfall Shaft Locations (click for larger image)

Windfall Mine, Eureka Mining District, Nevada

(embedded images courtesy of Sentinel Museum & Gary Edmondo)

Blasts from the Past

My latest article on the early mines of Eureka, Nevada appeared in the Elko Daily Free Press this week (9/10):

Eureka’s Windfall – Birth of a modern gold district with community spirit

It also appears in the printed edition of the Fall 2015 Mining Quarterly which came out Wednesday; the online ISSUU will be posted soon. Have a good read!

***

Memorable quotes (lately):

"Gold has no sponsor" - Jeff Currie, Goldman Sachs Commodity Guru on CNBC Business News, 8/26/2015, Currie reiterates $1,050 per ounce gold target

In the jargon of economists...

“There will have to be a re-pricing and that might be destructive,” IMF economists warning (Janet Mirasola Pre-market brief, 8/26/2015)

Freeport on China...

Windfall Shaft Locations (click for larger image)

Windfall Mine, Eureka Mining District, Nevada

(embedded images courtesy of Mariana Titus)

Gold Loses Friends

Gold loses value to key commodities and currencies

Market drivers: concerns over China & the timing of a U.S. Federal Reserve interest rate rise

Morning Miners!

It is a rare day indeed when I submit an early input to the Friday Kitco Weekly Gold Survey. There was a change in the ether for gold Wednesday (9/9) as explained in my survey input below.

For all of August, gold price in US dollars was loosely tied to the euro exchange rate - the euro went up, gold went up; the euro stumbled, gold stumbled. The good thing about this currency-like behavior was stability. The Eureka Miner has warned in the past that if the yellow metal trends lower relative to devalued currencies euro and yen, triple-digit US dollar price may be in the offing. It's too early to declare such a trend but on Wednesday, gold lost almost all of its friends. With the exception of silver, it fell in value relative to the euro and yen together with key commodities copper and oil (see table near the end of this report).

For currencies, gold is now down more that 3% from its August average for both euro and yen.

My target for next week is $1,090 per ounce unless the Federal Reserve delays a rate hike. This morning Comex gold plumbed $1,097.7 in early morning trading. Since August 24, gold has been trending down and copper has revived to the upside (presently $2.4325 per pound). The ratio of these two numbers is 452, that is an ounce of gold buys 452 pounds of copper. While this suggests a pretty healthy premium to the red metal historically, it is down from an August average of 481 (- 6%). Perhaps more ominously for gold, this ratio fell below a key level on the Shanghai futures exchange Wednesday. The Chinese hold gold less dear relative to copper but nonetheless, their ratio has stayed above 400 pounds per ounce for sometime - Wednesday it fell below.

Anything should be able to beat oil these days in a value match-up. Unfortunately, gold slipped in the goo even though Nymex WTI has returned to $44 per barrel this morning. It scores a 5.5% loss compared to August (last month an ounce purchased a respectable 26-plus barrels; this AM, less than 25).

My Kitco summary, "We could of course get a bounce if the Fed delays a rate hike next week but I think a future of rising rates and low inflation with continued losses to key commodities and major currencies would be about as rough as it gets for our shiny friend...(worst case)."

Ouch! Let's hope we see some trend reversals for our lustrous friend in the coming weeks.

To end on a positive note:

Gold is still up in euros & yen from its 2013 lows (+10.7% & +8,3% respectively) although these margin have narrowed this week
An ounce of gold buys considerably more barrels of oil & pounds copper than last November and many more compared to 2013
It is still struggling to find a bottom in value relative to US equities (wait, that's not very positive unless stocks correct more and gold gets a bounce!)

Hang in there, pardner!

Market Stats

Here's the scorecard on the stock market, S&P 500 presently 1,944.36

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:

S&P 500 high: 2,134.72, 5/20/2015
S&P 500 low: 1,867.01, on Monday 8/24/2015 down 12.5%
S&P 500 bear market begins below 20% at 1,707.78

Key "next level" to watch going down is 1,820.66 (low on 10/15/2014, down 14.7%)

For Fibonacci folks the "fib box" is:

50.0% retracement from 8/24 low = 2,000.87
61.8% retracement from 8/24 low = 2,032.45

In the coming weeks, getting inside the "fib box" is generally considered a "bullish" move to the upside; failing the "fib box" is a bearish indication.

Kitco News Gold Survey

My input to the Kitco News Weekly Gold Survey:

My vote is down. Target price $1,090 per ounce.

Discussion [submitted Wednesday 9/9, table updated with this morning's numbers]:

Something has changed in the ether for gold today. We could of course get a bounce if the Fed delays a rate hike next week but I think a future of rising rates and low inflation with continued losses to key commodities and major currencies would be about as rough as it gets for our shiny friend...(worst case).

With the exception of silver, gold is quickly losing value to copper, oil, euro & yen. In August, gold held considerable premium over copper & oil and was loosely tied to the euro (high positive correlation). It appears things are breaking down quickly across the board (click on table for larger view).

Interestingly, the gold/copper ratio on the Shanghai futures exchange dropped below 400 lb per ounce today (units chosen for comparison to the above chart). The Chinese hold gold less dear relative to copper. Nonetheless, the ratio has stayed above 400 for some time. This a bearish development for gold.

Cheers - Colonel

Photos by Mariana Titus

Friday, August 28, 2015

Yellow Metal Fades from Monday's $1,170; Gold is the Euro; Freeport on an Angel's Wing

Old Diggings in the Pit Wall

Windfall Pit, Eureka Mining District, Nevada

*** Friday 9/4/2015 Update ***

Another volatile market week but not much has changed from last Friday's report and analysis (below, 8/28/2015). The world awaits the outcome of the Federal Reserve meeting Thursday, 9/17/2015.

This morning's input to the Kitco Weekly Gold Survey (Comex gold, $1,127.9 down $5.7, December contract):

My vote is down. Target price $1,100 per ounce.

Discussion: "just another currency?"

Gold price remains loosely tied to the euro. Yesterday when Mario Draghi made dovish comments about European monetary policy, gold and the euro notched down 1%. The reaction to the release of the monthly US jobs report was more mixed. The 5.1% unemployment rate suggests to many that the Fed will raise interest rates in September; for others, the lower-than-expected jobs gain hints further delay. After initially bouncing, gold is now lower in morning trading along with the euro.

Higher US interest rates and stronger US dollar are bedfellows - both gold and the euro retreat from that union.
On a 1-month basis: Gold in USD is 1.7-times more volatile than gold in euros The rolling correlation of gold and euro remains strong (> +0.8)
Gold continues to hover about the €1000-level*

Have a relaxing weekend, mine will be loosely tied to the BBQ! Cheers...

* mean since 8/3 = €1005, standard deviation €9.72

***
Memorable quotes (lately):

"Gold has no sponsor" - Jeff Currie, Goldman Sachs Commodity Guru on CNBC Business News, 8/26/2015, Currie reiterates $1,050 per ounce gold target

In the jargon of economists...

“There will have to be a re-pricing and that might be destructive,” IMF economists warning (Janet Mirasola Pre-market brief, 8/26/2015)

Freeport on China...

Windfall Memories

Rustler Pit, Eureka Mining District, Nevada

(Photo courtesy of Eric Pastorino)

Gold is the Euro

The yellow metal will continue to behave as a currency that closely tracks the euro in price movement...

If you want to guess gold price just multiply the euro/dollar currency rate by 1,000...

Market drivers: concerns over China & the timing of a U.S. Federal Reserve interest rate rise

Morning Miners!

A historic week in the markets*. When the DOW drops nearly 1,100 points on a Monday morning, you know you're in for a looper-dooper. In response Comex gold popped to $1,169.8 per ounce and the S&P 500 Volatility Index (often called the "fear gauge") surged to levels not seen since the post-US debt downgrade in 2011. Blood in the streets...gold gets a safe haven bid...Freeport falls below 2008 price levels...the good ole bad days are here again!!

Whoa not so quick, pardner. The 2008-2009 financial crisis and the US debt crisis were self-inflicted wounds, this week was all about collateral damage from other shores. As this report pointed out last week, the Chinese devaluation of the yuan set off a chain reaction of currency panic in emerging markets that cascaded into havoc for our domestic markets this week. News flash - China is slowing!

The S&P 500 and the DOW have not regained all the wealth lost earlier this week and fear levels are still elevated...BUT...the sky is not falling. Both markets have needed a correction for months, they got one*. Next Friday we'll take a peak at the monthly jobs report and see if the US economy is on tract - for now, take a deep breath. China has been slowing for a long, long time, commodities are in the tank and mining is in the deep doldrums - these are not new news items (a ray of light in a moment).

Gold quickly faded from its Monday peak to plumb $1,117 on Tuesday and has a little mojo today trading presently at $1,133.7 per ounce. The Eureka Miner price target was $1,130, missed by a couple of bucks - ho-hum. No one is running from a burning theater, but nobody is buying tickets for the Gold Show either. Goldman Sach's commodity guru Jeff Currie said it best Wednesday on CNBC News, "Gold has no sponsor."

Besides blood in the streets, gold responds well to inflation expectations. Japan and Germany just turned in zeroes for their core inflation numbers. Lower commodity prices present deflating pressures in the US while the Federal Reserve has been trying like crazy to meet a 2% target. In the meantime, US interest rates are expected to rise (sometime) which can be kryptonite for gold against a backdrop of low inflation. A better than expected US GDP which came in at 3.7% put the possibility of a September rate hike back on the table.

But don't despair, there are some positives here. First, gold price in euro terms is pretty stable; stability trumps decline (no candidate pun intended). There's logic here - higher US interest rates and stronger US dollar are bedfellows - both the euro and gold retreat from that union. As I discuss in my gold note to the Weekly Kitco Gold Survey, Gold price in US dollars is over 2-times more volatile than gold in euros.

If you want to guess gold price just multiply the euro/dollar currency rate by 1,000 - it's worked pretty well for the entire month of August. For example this morning's rate was 1.1235 dollars per euro, multiply that by 1,000 and you have $1,123 per ounce versus $1,133. I'll take the difference and buy the house a round (see plot near the end of the report). Gold is the euro.

If this relation changes and gold falls in value relative to the euro and yen then you have cause for concern. So far so good. The positives:

Gold is still up in euros & yen from its 2013 lows (+14.7% & +12.0% respectively)
An ounce of gold buys considerably more barrels of oil & pounds copper than last November and many more compared to 2013
It may finally be bottoming in value relative to US equities

That's not all bad!

Freeport on an Angel's Wing

Activist billionaire investor Carl Ichan is hardly an angel, perhaps a dark angel for some management teams. In his own words, "A CEO should probably cancel the afternoon golf game when they get a call from me."

Ichan is an activist investor known for taking CEOs and board members to the woodshed when he senses company value is being mismanaged. Mining benchmark Freeport-McMoRan (FCX) fell below its 2008 lows earlier this week to plumb $7.76 per share on Wednesday. It has moved since to trade at $10.50 this morning. Two things happened to explain a 35% leap from its deepest shaft: FCX made a commitment to stop wasting cash and news got out that Carl was planning to visit. Carl Icahn disclosed a near 8.5% stake in the company (about $1.2 billion) and unveiled plans for aggressive activism, to further cost savings and higher profits.

Investors hoping Icahn can bring sale of energy assets (Seeking Alpha, 8/28/2015)

Carl Icahn’s Latest Bold Bet on Commodities and Energy (By MAUREEN FARRELL, Wall Street Journal, 8/28/2015)

Here's the ray of light for Friday. When "smart money" starts piling into beaten down sectors the bottom is probably near. A similar phenomena is occurring in the oil sector. Caution - their time horizons can be a lot longer than yours.

Stay tuned.

*Market Stats

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:

S&P 500 high: 2,134.72, 5/20/2015
S&P 500 low: 1,867.01, on Monday 8/24/2015 down 12.5%
S&P 500 bear market begins below 20% at 1,707.78

Key "next level" to watch going down is 1,820.66 (low on 10/15/2014, down 14.7%)

For Fibonacci folks the "fib box" is:

50.0% retracement from 8/24 low = 2,000.87
61.8% retracement from 8/24 low = 2,032.45

In the coming weeks, getting inside the "fib box" is generally considered a "bullish" move to the upside; failing the "fib box" is a bearish indication.

Kitco News Gold Survey

My input to the Kitco News Weekly Gold Survey:

My vote is down. Target price $1,110 per ounce.

Discussion: What a week! The S&P 500 Volatility Index peaked 50 on Monday, frightening levels not seen since post-US debt downgrade in 2011. Heightened volatility remains the theme through this morning's trading, still above 25. This is in stark contrast with gold price volatility, especially in terms of the euro which shows less than 1% (0.97%) variation on a 1-month basis*.

Interestingly, Comex gold in US dollar terms is more than 2 times more volatile (2.1X) when compared to denomination in euros. This suggests that gold remains metastable about the €1000-level (attached chart), a condition that has been true since the price downdraft from the €1050-level July 20 with a 1-month rolling correlation of gold and euro at a very high +0.88.

Goldman Sach's commodity guru Jeff Currie said Wednesday on CNBC News that "gold has no sponsor." As such, I believe the yellow metal will continue to behave as a currency that closely tracks the euro in price movement. An interesting twist this week was suspected Chinese selling of US debt causing a bump in Treasury yields and the US dollar. The euro fell accordingly and drug its new companion gold along with it.

(click on chart for a larger image)

Whether it is the Fed or supply & demand dynamics in US Treasurys, gold and the euro will continue to see downward pressure going forward. As such gold will likely drift towards support at $1,109 per ounce and maintain the €1000-level.

*day-to-day price standard deviation normalized by the mean over one month.

TGIF!

Cheers - Colonel

Photos by Mariana Titus

Friday, August 21, 2015

Gold Touches $1,168 - Rumble in the Currency Jungle

Eureka-Windfall Mill Site

Near Windfall Pit, Eureka, Nevada

Memorable quotes (lately):

"Gold has no sponsor" - Jeff Currie, Goldman Sachs Commodity Guru on CNBC Business News, 8/26/2015, Currie reiterates $1,050 per ounce gold target

In the jargon of economists...

“There will have to be a re-pricing and that might be destructive,” IMF economists warning (Janet Mirasola Pre-market brief, 8/26/2015)

In the glass-is-half-full jargon of mining CEOs...

“We don’t see China having a hard-landing type situation as some are predicting,” Richard Adkerson, CEO of Freeport-McMoRan Inc., the largest publicly traded copper miner, said in July. “We see requirements for copper growing in absolute terms and China continuing to be a significant consumer.” (Bloomberg News, 08/25/2015)

On the misgivings of lower oil...

“The problem is when people think of consumers saving a few pennies at the pump, they’re not going to take that money and buy a new house or a new car or send their child to college. They’re probably going to buy extra socks and potatoes...” (Walter Zimmermann Jr, vice president and chief technical analyst at United-ICAP, see Guardian article below)

** Breaking News (1:08 AM Eureka Time, August 21, 2015) **

U.S. equities fall down the mine shaft:

DOW Industrial Average (.DJI) 16,459.55 down 531.14 -3.13%

S&P 500 1,970.89 down 64.84 -3.19%

Gold closes up but not impressively given market turmoil:

Comex gold (Dec. contract) $1,159.6 per ounce up $5.4 +5.5%

** Breaking News (11:32 AM Eureka Time, August 21, 2015) **

Nymex WTI crude oil briefly fell below $40 per barrel; intraday low is $39.86/bbl, presently trading at $40.37/bbl [Update: closing price $40.45/bbl]

Bullishly, Dennis Gartman of the respected Gartman Letter called a bottom with this quick venture into 3-handle territory....could this be it? [Update Sunday night 9:20 PM PT, sorry Dennis WTI futures just plumbed $39.00/bbl; Update Monday, 8/24 low $37.75/bbl)]

Debbie Carlson of the Guardian explains the recent plunge in oil prices: US crude oil prices hit lowest since 2009, eliminating thousands of jobs (8/21/2015, The Guardian)

*****

Please checkout Mariana's Eureka, Nevada on Facebook

Numbers used for this morning's early analysis:

Goldman Sachs Commodity Index

S&P GSCI 305.5, 9/15 contract - a new low this AM

Nymex/Comex

Nymex oil (WTI) $41.31 per barrel (new low $39.86 intraday)
Brent crude $54.63 per barrel
Comex copper $2.2945per pound (new low $2.2605 on 8/19)
Comex gold $1,156.1 per ounce
Comex silver $15.330 per ounce

Latest Nevada gasoline prices

Rumble in the Currency Jungle

Uncertainty about US monetary tightening in a world of collapsing growth prospects puts a cap on gold rallies...

Morning Miners!

I wish I wrote this note yesterday - the Colonel was running with the gold bulls. Today, not so sure.

There are many things going in the yellow metal's favor - tumbling global equities and a fast-spreading currency devaluation contagion. A witches' brew a brewin' - for flavor, add in geo-political boogie bears of North Korea nuclear-tipped saber rattling, Bangkok bombings and escalating dysfunction in the Middle East. Oh, I forgot Russia. The ruble is fast approaching 70 per US dollar on falling oil; in early-2014 a buck fetched only 30 or so. Watch for Putin to do something crazy in the Ukraine or elsewhere. Nothing like a little mischief to keep Ivan and Svetlana from worrying about a teetering Russian economy. Then there is political instability and corruption in Brazil....

Hey, this is the stuff gold loves. Four years ago we'd be testing $2,000 per ounce on these headlines!

This isn't to say the latest rally has not been impressive. On July 24, Comex gold plumbed $1,074 per ounce. Last night it nearly touched $1,168 - that's an almost 9% pop in a month. Over the same time period Apple stock (AAPL) has fallen 13%; Facebook (FB) is down 12%. Benchmark miner Freeport-McMoRan (FCX) is down another 21% courting levels during its worst week in Great Recession (December, 2008)...ouch! [Update: FCX closed Friday at $9.58 per share; its closing low during the Great Recession was $8.76 on December 4, 2008, split-adjusted basis]

Comex gold is trading up $2.9 at $1,156.1 per ounce this morning - so why am I not happy with the yellow metal?

Everything comes back to currencies and interest rates. I believe the Debbie Downer for gold is Fed Chair Janet Yellen. The Federal Reserve didn't really say anything different this week during the release of their minutes - more looking at the data. Market consensus believes rates will probably not be raised in September with all the current global oopsy-doopsy (i.e. bullish gold & bearish US dollar; less than a one-in-three chance of a 25 basis point rate hike in September). Next hike will likely be delayed until December because no one is crazy enough to raise interest rates in an election year (consensus opinion, not mine - good for gold?).

Truthfully, no one really knows and that's the problem - uncertainty about US monetary tightening in a world of collapsing growth prospects puts a cap on gold rallies.

The latest market turmoil began when China devalued the yuan on July 10th. In absolute terms it wasn't much, about 3% so far after a couple of adjustments since. Because the yuan is loosely tied to the US dollar, the People's Bank of China doesn't want to import US monetary tightening (think stronger dollar) when their faltering economy needs monetary accommodation (think weaker yuan). A weaker yuan is terrific for Chinese exporters but not so hot for everyone else who buys their stuff. Vietnam responded by devaluing their currency to buffer the Chinese shock. This was followed by a Kazakhstan devaluation of the tenge to offset both the yuan and falling oil prices, their key export.

Let the currency war begin.

Actually the currency war started some time ago. Europe and Japan started aggressively devaluing their currencies with loose monetary policy modeled after the U.S. quantitative easing policies of the last few years. Remember last Halloween when Japan put the yen printing press in high gear - the U.S. dollar soared and gold crashed to new lows by early-November.

Today the U.S. dollar is falling against the euro and yen as gold moves higher. This may be short-lived as I explain in my Kitco Weekly Gold Survey input (see below, "Out of 35 market experts contacted, 18 responded, of which 11, or 61%, said they expect to see higher prices next week. At the same time, four professionals [which includes my input], or 22%, said they see lower prices, and three people, or 17%, are neutral on gold."). The key takeaway is that the gold euro rally stalled yesterday even though the gold US dollar rally continued into Friday. Yellow metal performance relative to a major devalued currency (like the euro) is important to monitor, pardner.

If all of this has given you a headache, take an aspirin. Currency wars are not resolved overnight. Let's enjoy this gold rally while it lasts and have a good weekend!

My target price for next week? $1,130 per ounce...nuts!

Mining hangs tough on a down day...

For the most part, mining stocks are hanging tough today. Here are this report's tracking stocks (click on chart for a larger image):

Mining stocks, Yahoo Finance

Big gold miners Newmont (NEM) and Barrick Gold (ABX) are trading at $18.56 and $8.24 per share. Midway Gold has been delisted since filing for Chapter 11 protection but still trades over the counter (OTC) as MDWCQ, presently at 7 cent per share. Timberline Resources (TLR) is down 4.2% at $0.37 per share. Benchmark Moly Miner Thompson Creek (TC ) remains below "continuing listing standards" but hanging on at $0.4787 per share. General Moly (GMO) is also fairly solid at $0.48. As of yesterday, moly oxide price was $6.03 per pound.

Finally, benchmark miner and copper giant Freeport-McMoRan (FCX) is $9.73 per share near its December 2008 split-adjusted low.

Kitco News Gold Survey

My input to the Kitco News Weekly Gold Survey:

My vote is down. Target price $1,130 per ounce

Discussion:

I turned decidedly bullish this week on gold amid tumbling global equities and currency devaluation contagion spreading from China to Vietnam to Kazakhstan. That is until gold's impressive rise in US dollars was blunted by a reversal in its euro rally this morning. Alas, I believe gold rallies will remain short-lived until there is further clarity from the Federal Reserve on the timing and pace on interest rates.

(click on chart for a larger image)

Reluctantly, I return to the idea that gold is "metastable" in euro terms around the €1000-level until sufficiently kicked to a higher (or lower) state by more specific Fed direction (see attached chart). The first test of this thesis is to see whether Comex gold closes above or below yesterday's close at $1,153.2 per ounce. The latter case suggests downside for the yellow metal next week after some of the Friday global jitters subside. If gold continues an inexorable rise to higher dollar levels, my metastable model goes in the bin.

On the positive, gold has shown a substantial rise in value this week relative to US equities and key commodities oil and copper.

TGIF!

Cheers - Colonel

Photos by Mariana Titus

Friday, July 24, 2015

Gold Plumbs $1,072; Red Metal Blue at $2.35...TGIF! (Update 07/31/15)

Did anyone remember to put the spare Gardner Denver injection pump in the truck?

Near Windfall Pit, Eureka, Nevada

*** UPDATE 07/31/2015 ***

Eureka Miner input to the Kitco Weekly Gold Survey

My vote is down. Target $1,085 per ounce.

In morning trading, it appears gold is breaking the Friday curse of the last few weeks. Moving slightly higher on a weakening U.S. dollar and gap down in the 10-year Treasury yield, the yellow metal moves closer to the key-$1,100 level (at $1,097.1 per ounce for this analysis, Comex December contract).

However, lacking some new catalyst, the bounce may be fleeting. In July, gold has become increasingly more correlated with copper and oil which continue their downward trend. The 1- and 3-month correlations are highly positive (>+0.8) for both key commodities. Gold is also growing more negatively correlated with the US dollar (5-day~-0.8 compared to 1-month~-0.4). If the dollar regains its strength and/or commodities drift lower, gold will likely fall to lower prices.

The positive takeaway is that with these levels of correlations, gold ratios will remain very stable preserving gold's considerable premium over both copper & oil. These premia maintain gold price above its commodity value which is presently $800 per ounce*.

This week gold has stabilized relative to devalued currencies euro and yen (dashed lines) staying above its 2013 lows for each. This is bullish for gold going forward. If the yellow metal returns to losing value to the euro and yen and falls below the 2013 lows, it is likely to see triple digits in U.S. dollar terms (click on plot for larger image).

* based on Nymex WTI, Comex copper & Comex silver prices together with historical norms.

Today's tracking stocks (07/31/2015) AM, click for larger image:

**** BREAKING NEWS (7/24/2015) ****

Comex futures briefly dipped to $1,072.3 per ounce at 22:00 Thursday ET; presently trading at $1,080.4

Comex futures touched $2.3505 per pound at 02:45 Friday ET; presently trading at $2.3750

**************************

Please checkout Mariana's Eureka, Nevada on Facebook

The Colonel's latest Kitco News commentary:

Oil, Copper & Gold: Together Again? (Kitco News, 07/13/2015)

The Colonel's column in the Summer 2015 Edition of Mining Quarterly:

"Gold: Are the lows in the rear view mirror?" Online edition pages 49 to 51

*** Friday AM Prices (05/08/2015) ***

Numbers used for this morning's early analysis:

Goldman Sachs Commodity Index

S&P GSCI 388.9, 8/15 contract (ominously less than 392.20 low on 03/18/2015, 5/15 contract)

Nymex/Comex

Nymex oil (WTI) $48.15 per barrel
Brent crude $54.63 per barrel
Comex copper $2.3705 per pound
Comex gold $1,080.4 per ounce
Comex silver $14.40 per ounce

Latest Nevada gasoline prices

St. Paddy's Day Memories

Morning Miners!

St. Paddy Day memories?

No, I'm not talking about the St. Paddy's low this year that gold stumbled below last week. Let's remember better times, the glitter at the end of the rainbow on March 17, 2008. Brimming with Irish luck and green beer, Comex gold briefly hailed $1,082.9 per ounce - a benchmark record at the time. As I did my morning analysis gold was trading at $1,080.4. Late last night Comex plumbed $1,072.3 - something to think about.

My good friend John Brown called me early this morning, "What the heck is going on with gold?"

Not a bad question, not an easy answer. Always the optimist, I replied, "It's doing a lot better than copper or oil!"

Silence at the other end.

Comex copper dropped briefly to a 6-year low in the wee hours at $2.35 and Nymex (WTI) oil is now nearly $2 below 50 bucks trading at $48.15 per barrel.

"Even though gold is falling off a cliff, an ounce still buys about as many pounds of copper and barrels of oil as it did last week and a whole lot more than last November!"

"Hmm..." John wants to hear some straight talk.

"OK, what's got me worried? Since Monday, gold has lost considerable value to both the euro and the yen. If it can't keep its head above 2013 lows in reserve currencies that are being devalued by their central banks, the yellow metal is in deep trouble - we could enter triple digit territory."

"Hmm...OK."

"We're not there yet but margins are pinched. Beware of gold falling relative to devalued currencies, pardner."

I put some analysis with this argument in my input to the weekly Kitco Gold Survey (see below). Tough times for gold; a strong U.S. dollar and the promise of rising interest rates by the Federal Reserve are proving significant headwinds. It is also now being pulled down by falling metal prices (something it has resisted for some months) and outside markets such as oil. The latter are influenced by the mess in China which is looking increasingly grim.

It's a bad morning for benchmark miner and copper giant Freeport McMoRan (FCX) now trading at levels not that far above its December 2008 low of $8.51 per share. Presently at $12.64, a retest of the 2008 low is not out of play if you remember last Friday closed at $15.88 and the high for 2015 was $23.66 - ouch! FCX reported these second quarter (Q2) numbers earlier this week:

Q2 average realized prices are $2.71/lb. for copper, $1,174/oz. for gold and $67.61/bbl for oil.

Present prices are all below these levels. For every 10 cents down in copper price, FCX is down $400M in revenue. They are presently free cash flow negative (i.e. burning cash) and that may very well continue the rest of the year. They have already cut their dividend 84% to a nickel a quarter per share to save cash. Not pretty for a benchmark miner.

Mining in a world of hurt...

For the most part, mining stocks are plunging with metal prices. Here are this report's tracking stocks (click on chart for a larger image):

Mining stocks, Yahoo Finance

Big gold miners Newmont (NEM) and Barrick Gold (ABX) are trading at $17.57 and $6.91 per share. Last week Barrick was trading at 24-year lows and we're now nearly $2 below that dismal landmark. Midway Gold has been delisted since filing for Chapter 11 protection but still trades over the counter (OTC) as MDWCQ, presently at 1 cent per share (last week 1.5 cents). Timberline Resources (TLR) is unchanged for week at $0.49 per share. Benchmark Moly Miner Thompson Creek (TC ) is now below "continuing listing standards" but still hanging on at $0.5501 per share. General Moly (GMO) is also hanging tough at at $0.5291. As of yesterday, moly oxide price was a lowly $5.83 per pound.

Finally, benchmark miner and copper giant Freeport-McMoRan (FCX) is down 8.13% at $12.53.

Kitco News Gold Survey

My input to the Kitco News Weekly Gold Survey:

My vote is down. Target for next week is $1,050 per ounce.

Gold conundrum: If my pockets were full of gold, I'd be wealthy in the commodity world but growing much poorer in a U.S. dollar economy.

Even though gold dropped to $1,072.3 this morning, its substantial gold premium relative to falling oil and copper is nearly unchanged from last Friday* (5.9 bbl vs. 6.2 bbl 7/17 for WTI; 47.1 lb vs. 48.4 lb 7/17 for Cu). The yellow metal has joined its commodity brethren again but with very stable gold ratios (due to high positive correlation). Gold will no doubt follow commodities lower for the time being but continue to maintain its value premium over WTI & copper

The gold conundrum persists but...

More worrying is gold's relation to the euro and yen. For example, as shown in the chart below (click for larger view), this morning's gold in euros is €986.64 after a break with stable €1,050 territory that commenced Monday (July 20). The margins are contracting much quicker for the euro and yen than for oil or copper relative to gold's 2013 value lows. If gold can't keep its head above 2013 lows in reserve currencies that are being intentionally devalued by their central banks, it could quickly fall into triple digit territory.

Presently, gold is only 12% above its 2013 euro low; 9.2% above the yen low. In late-April the margins were a much healthier 20% and 15.6% respectively. Something to watch!

* as compared to average gold ratios since the Lehman Brothers' bankruptcy

Summer 2015 Mining Quarterly

The Summer 2015 Edition of the Mining Quarterly is now accessible online. Marianne Kobak McKown has done another outstanding job of compiling Nevada's premier mining publication! It has terrific articles on Newmont's 50th Anniversary, profiles of long time Newmont employees and associates together along with updates on Barrick's Arturo and Nevada Copper's Pumpkin Hollow.

This issue also features my column about gold's fortunes:

"Gold: Are the lows in the rear view mirror?" Online edition pages 49 to 51

The answer to that question - not yet, pardner!

TGIF. Have a great weekend!

Cheers - Colonel

Photos by Mariana Titus