Metals Market Wrap-Up

1. The action right now is encouraging, but I do not think it is particularly bullish. I'm surprised that Gold has remained above $600 while Oil and Copper have been slammed so hard and I think this bodes well for the future. However, I do not think that we are about to bust through the $640-$650 barrier at this point either. The miners don't really seem all that excited right now and, as I previouosly mentioned, a Head & Shoulders pattern is still in effect on the HUI, XAU and GDX. I think I might be a seller if Gold approaches $640.

2. ROYAL GOLD, INC. (Nasdaq: RGLD - News) today announced that it has entered into a definitive and binding agreement to purchase another net smelter return ("NSR") sliding-scale royalty for $20.5 million on the controvertial Pascua Lama project which is situated partly in Chile and partly in Argentina. RGLD is up over 2% today, but frankly, I'm not sure how good a deal this is. The NSR royalty only gives a fairly tiny %, ranging from 0.16% to 1.08% depending on the average price of gold during the quarter. It will be applicable to all gold production from an area of interest in Chile. The transaction also includes a 0.216% fixed-rate copper royalty, again that seems pretty low. The copper royalty applies to 100% of the copper reserves but does not take effect until after January 1, 2017. 2017! That's half a generation away. The acquisition is subject to customary due diligence and is expected to close in early March 2007. The property has about 18 million ounces of Gold in reserve, with about 80% of that on the Chile side. Interestingly, the sliding scale contemplates prices up to $800 or more--seems like they are considering the possibility that Gold prices could still go considerably higher.

3. New Jersey Mining Company (OTC BB:NJMC.OB - News), which was up big yesterday, announced that it had increased its silver resources to approximately nine million ounces with the recent addition of the Niagara copper-silver deposit located near Murray, Idaho. If this is the news that caused it to surge higher yesterday, you have to wonder whether there aren't any insider trading issues here.