Saturday, March 9, 2013

PS, I don't want Otto's clowns commenting at my site


IKN is apparently now a comment-free zone. Even worse, the fucker's now sent the clowns who've been bugging him over to my site.

Let me clarify something, Otto.

It is trivially true that, sometimes, "[I] actually seem to care about what other people write and even repl[y] to them". But that's only because there's like 4 or 5 people whose comments I bother to approve. Coasta and comet52 because they seem smarter than me and give me good links, you for the entertainment value, and I guess Fredrik Lundquist and Michael Lupaka whenever they show up.

Other than that the default sitrep here is "delete", unless the comment is of significant value. Really, honestly, I delete all comments that aren't useful or originating from the inner cabal.

I delete mountains of comments, usually from neo-Nazi fucktards, without reading them and without ever responding to them. Cos I'd rather the cunts go away.

You know what your problem is, mate? You waste time debating the fuckers. Just hit delete and put their name in a file marked "retards". Don't even acknowledge their existence. Eventually they get tired of submitting comments that never get posted, and they go away.

UPDATE: someone compares what Otto's just done to "Scotty sending tribbles to the Klingons". Um... I just wanted to bring that to everyone's attention.

Kitco fails to get their priorities straight


I know, it's probably that Alex guy who sets priorities, not Daniela.

Still, I don't get it how they have an absolutely brilliant At The Bar recorded, with superstar guests and all, but they still haven't gotten around to putting it up on YouTube.

Get your priorities straight! Cookie and Ridgway first, then these other guys later.

Oh well... for now we'll have to content ourselves with an interview of Sandstorm's Nolan Watson, on how he feels he hit one out of the park with the Entree deal:



As he explains the Sandstorm business plan, "we're making millions and millions of cash, and we're going to deploy those millions and millions into buying more millions and millions of gold, at a discount of millions of millions, to make millions and millions more in cash, rinse wash repeat. Therefore, John Paulson is a moron for selling our stock."

Well said, Nolan! And maybe I'm just a tard, but as I keep saying, I really think this Watson kid is going to go down in history as the Chinggiz Khan of gold. Seriously, he's ten years younger than me and he's already got more gold than you and the state or province that you live in. Just try to figure out a scenario where Sandstorm stops growing and making money - there really isn't one.

However, as you might notice at the end, he's either a noob when it comes to economics, or he's talking down the US to bring down gold for his own nefarious purpose.

Nolan, read my blog and look at the damn data - US is continuing to recover, and they're not printing money, they're choking it off with their budget cuts. There's no excuse for someone like you to not have a clue about economics or the basic data that you can read every day on Calculated Risk or Bonddad Blog.

Dammit Nolan you're not some idiot goldbug blogger, you're a respected CEO. Start acting like one and talking like one. There's no profit in trying to be Sprott anymore. The goldbugs are broke, they bought shit like Canaco and got blown up; quit trying to chat them up, they're not buying your stock, they're saving their last few dollars to fight for custody now that their wives have taken their kids away.

Success requires paying attention to real data and tuning out the clowns. I run this blog for your benefit, so damn well use it, okay?
Anyway, then there's this other interview with Peter Gray, a fellow originally from some country apparently named "Istrillia", and formerly of KPMG:



Another guy talking about capital costs and supply/demand? No "money-printing" "fiat" "gold standard" "hyperinflation" memes?

Reality?!?

PS Daniela, yes your hair looks fine here.

Peak gold, and the USGS 2013 report


So I've been poking around the Wikipedia articles about gold and gold mining, cos I'm interested in expanding on my "it's a commodity not an asset class dammit" theory of the gold market. Basically, I'm interested in finding out the details of what it was for a mining company to mine gold in, say, the 1950s or 1970s, versus the 1990s, versus today.

Let me explain.

Between 1968 and 1971, gold eventually became "free-floating", no longer having its price set by the state. Well, in that case, what was it like pre-1968 to mine gold? Did your company simply refine it and hand it over to the government for a $35/oz payment?
If so, then what happened when gold went free-floating in 1971? The price spiked by 1980, so obviously the pre-1971 price was artificially suppressed. And when a government tries to artificially suppress a commodity's price, you see production dwindle to nothing; this was the whole point behind the IMF/neoliberal policies of forcing countries to abandon price controls, in Latin America for example.

Gold price chart from Wikipedia

So the gold price becomes unpegged by 1971, and the price spikes. Did that encourage a bunch of new gold production? Was gold production throttled before this, by artificially suppressing the price through the gold standard?

(UPDATE - as a commenter pointed out, the nice USGS people have a chart that notes there was no production increase from 1971 to 1980. Then production doubled from 1980 to 2000, where it hit a peak. It might be that the suppressed gold price meant nobody was inspired to innovate new technologies to bring new production onstream til 1980. Or maybe it simply takes ten years from liberalizing the gold market til new deposits can come online.)

If so, that explains the sync-type curve from 1980 to 1995. Every time the new free-market-determined price tried to increase, it looks like new production came online and smacked it back down.

So is that what happened with the gold miners in the 80s and 90s? Did they greatly increase worldwide production of gold after Nixon cut the gold peg?

And then what happened in 2000? Is that when production peaked? (UPDATE - yes, per the pdf in the comments.) There's an article on Wikipedia about "peak gold", where it says several people asserted we had essentially reached peak gold production sometime between 2000 and 2007. When you look at Brent Cook's slides from PDAC, it does seem sort of peaky:

from Cookie's website
Gold price is going up strongly in this chart, but it doesn't seem to be inspiring anyone to find new discoveries. As the guys at Cookie's At The Bar pointed out, nobody really has anything in the way of new discoveries.

Then there's this chart:

Also stolen from Cookie's site, ooh look he quotes Pierre Lassonde too

The costs bit I don't care about; that's what happens when you mine gold in predominantly third-world countries that then see living standards improve, during a time when energy prices are going up. You're going to pay more for labour and energy over time, and you'll also pay more per ounce to get your gold out because the rock hasn't changed but your grade has.

The interesting bit, to me, is that your mined grade and the grade of your reserves is dwindling, and has done so quite solidly for 10 years.

That's peak gold, isn't it? I mean, that's the peak right there, no?

So did the cutting of the peg in 1968-1975 eliminate a price control, which brought about a free market in gold, which caused a spike in 1980, which was responded to with massive production increases, which probably overshot the new demand and brought the price back down to $285/oz at the Brown Bottom?

And why haven't the major miners ramped up production to take advantage of the 500% increase in the gold price since then? Is there no more gold to mine?

Anyway.

Those were just some things I was thinking about.

What I really wanted to do with this post was give you a link to the 2013 USGS Mineral Commodity Summaries 2013 Doohickey. Cookie and Kaiser refer to the data in the report all the time, and it's a nice big 200 page read. I'll put up a link to it on the reading list at right.

Also, the articles on Wikipedia aren't that great, but they're still a damn lot more educational than any crap you'll find on doomer goldbug blogs. So start with these articles, and do some edjumacatin':

Gold
Gold mining
Gold reserve
Peak gold
The Brown Bottom

And by the way, did you know that the total gold owned by Indian households is 50% of the entirety of the world's state gold reserves? Neat, eh? You think they'll keep buying?

Friday, March 8, 2013

Repeat of a couple Cookie Monster articles


Just cos I myself need reminding, here's Cookie's interview in Gold Report in January, and here's Cookie's free article Profiting from Explorecos Who Suck™.




Some more news


Bespoke - 10-day A/D line overbought. OK, that's fine, but read the next three articles:

Calculated Risk - Feb employment report is good.

FT Alphaville - Feb employment report is good. Please follow all the links in that article; they all point to data. Add those to the 12 PE on the Dow and what does that tell you?

Reformed Borker (Bork Bork Bork!) - once again the asteroid misses earth. Josh, you're a better read when you're sarcastic.

beyond brics - China investors should bet on urbanization. Only cos I want to keep beating you over the head with it.

beyond brics - EM trade boosts China's exports. That's something neat... China doesn't only depend on the US and Europe?

Mineweb - Investors sold $5.6B of paper gold in February. OK, have you got that? Now read these next two articles:

India Times - bumper winter wheat harvest in India. Hey... so if the farmers make a lot of money, do you think they'll spend it on US equities? Or do you think they'll spend it on gold?

Bloomberg - India might boost wheat exports in advance of harvest. Ninety million tons of wheat buys a lot of gold, you think?

beyond brics - Thailand pioneers tablets in schools nationwide. Like I'm saying, this is an awesome country. Maybe the US can be their friend.

BI - Art Cashin says North Korea "might get interesting". I guess Cashin is saying Best Korea is preparing for war? Like, for this weekend? Yes, that's nice Art. I hope you just made a lucky call. And bet your money on it. Zerohedger cunt.

Speaking of which,

Cassandra Does Tokyo - Take the zerohedger test. And y'know? In honour of the new all-time high on the S&P, we should declare next week "ZeroHedge Week". Every blogger pretends to be ZeroHedge for a whole week. Whaddya say?

Friday videos - Belanova and Lena Katina

Here's Mexican synthpop group Belanova, with Lena Katina from Tatu!!!


Thursday, March 7, 2013

Some evening news


Bespoke - AAII bullish sentiment still low. I wonder if that's what's driving the rotation into cyclicals? I wonder how long they'll decide to remain wrong.

Pragmatic Capitalism - 3 signs to watch for the next bear market. And they aren't visible right now.

Bespoke - initial claims drop more than expected. Again, thus there is no bear market for the US.

Guardian - European citizens are rejecting austerity. Well, no, they're not, not just yet. They will soon enough though, and then Germany can go fuck itself.

Bonddad - growth in South America. I'd probably want to stay away from Peru if copper slides, but Mexico sounds like a nice market to put some money into.

Mineweb - gold sales double in China during spring festival. There's where your money went, Paulson.

Bloomberg - Paulson's lost another 18% this month. Dumbass! Didn't you ever hear of position sizing? Y'know, so that when you get hit with redemptions, your forced sales don't drive down the value of your portfolio by 18% in one month? What a clown.

Beyond brics - Thailand seeks FTA with Europe. A great country with good industrialization, and now Indochina has become too small for them.

Mineweb - Indian gold buyers embrace the web. Hey, you think Mineweb's correspondents are reading my blog? Quote:

"During the Diwali season, we saw more than around 1,500 transactions on our website over a couple of days. This year, we are looking at hitting 3,000 transactions every week,'' said Mahesh Gupta, president of HariLal Jewellers, who owns a bullion souk in Mumbai.

He added that government or regulatory policies on gold would not help to curb gold sales or gold demand, and that most of it happens to have moved onto the net.

Going online seems to be a sure shot winner for branded jewellers in India. While at the moment, only 10% of branded jewellery sales happen online, the success and growth prospects of online jewellery retail stores has got premium jewellery brands reaching out to the world wide web.

Though India’s gold demand is largely driven by a combination of both retail and urban consumers, urban consumers are eager to raise their gold holding in direct proportion to a rise in income, be it a salaried employee or a businessman.

In the case of the rural customer too, a continuous upward revision in minimum support price of agri commodities has left more investible surplus in the hands of the farmers. Other than food and shelter, farmers would rather put down their investable surplus in gold.

Beyond brics - India's wheat surplus/shortage. The problem has always been infrastructure, corruption, and outright fucking incompetence. Thus piles of rotting wheat while people starve. But at least it means the farmers are rich, so they'll buy more gold, right?

Mining.com - JP Morgan thinks commodities supercycle will last another 15 years. Really, eh?

Mineweb - Randgold CEO Bristow sees upside for gold. Here's a quote:

The gold market is showing signs of inelasticity, supply is tight and production costs are high, Chief Executive Officer Mark Bristow said today in Toronto, where he was attending the annual Prospectors & Developers Association of Canada convention. Gold miners, which have underperformed the metal for the last six years, are under pressure to improve returns and that will probably lead to less gold production globally, he said.

“I still believe there’s more upside than downside in the gold price, particularly if the industry is going to be driven to make those hard decisions,” Bristow said in an interview. “I don’t think there’s much room to go below $1,500 this year and I still believe there’s every potential for it to go $200 above that.

Mining.com - golden replica of Lionel Messi's left foot on sale for $5.25M. Just in case Otto was in the market for a nice present or something.


Our Daniela interviews Adrian Day at PDAC


I saw the two of them dashing in and out of the press room on Sunday, so I expected an interview to come eventually.

It's a pretty good interview from Day. At around 3 minutes you can tell they've been reading my blog and taking my sage observations seriously.



By the way Daniela, where's the John Kaiser interview?

The rest of the news - China


There, now I'm caught up to last night midnight.

These 5 articles are all on China, and they're the 5 important things I read in the past few nights on Bill Bishop's blog which you should subscribe to in case I miss something. Because China is still important.

Reuters - yuan's headwind against becoming a global currency. No businesses in their right minds would want to operate in yuan if the US dollar is available.

WSJ - on hukou reform. If China wants to avoid the negative hit from the demographic rollover, they have to strongly improve per-capita productivity, and hukou reform is the way to do it. This is a very good explanatory introduction.

Reuters - on hukou reform. As above.

Bloomberg - China's richer-than-Romney lawmakers. I suspect this is one possible source of future strife - a rebellion by the plutocrats against the central authority. Then again, when rich people start revolutions you never hear about it, do you? All that happens is one day you see an "under new ownership" sign.

China Daily - China well on way to becoming world's richest oil importer. And if you believe US military spending was always meant to ensure US supplies of oil, then... well... why should it continue if all it's doing is subsidizing Chinese oil supplies? Why not let China fight the wars from now on?

BNN - Kaiser and Mickey


This is a bit weird - you don't normally see Mickey and Kaiser in one room.

BNN wraps up PDAC with Mickey Fulp and John Kaiser.

part 1 part 2 part 3

Kaiser presents even new chilling stats for you.

Mickey says these slumps are 3-5 year cycles, so the carnage could go on for up to 3 more years.

Kaiser expects there might soon be a bunch of buyouts; he's interested in how the market is going to react. "Are the asking prices going to go up?"

Kaiser has the exact same economics outlook as me. In fact we chatted at length about gold now being pro-cyclical. I still don't know what'll happen with his particular stock picks, but as far as understanding the macro-economic picture goes, he's the one and only guy in the industry.

Mickey is short-term bearish copper, but long-term bullish. Hey Mickey, don't you think that copper production is doing a good job of expanding to meet demand? There was the hiccup with the inflation-expectation hysteria of 2010, but the copper production then demanded is now already coming online.

After all the copper price is dependent not on how much demand there is, but rather how difficult it is to develop supply.

Interesting idea based on a Brent Cook observation


I might tease Brent Cook, but he was the one guy two years ago who first called the top in juniors and the beginning of a crippling, brutal bear market. It was either a BNN interview, or a Kitco interview, or maybe both; he said he saw a massive pile of paper (i.e. PP shares) about to hit the market, and nobody left to buy them.

Now first, I'm impressed. He's a geologist and an investor, but he didn't make the top call based on geology or on engineering or on management; he basically looked at the supply-demand characteristic of the market in exploreco paper, and said "supply is about to swamp demand, and I don't see where any new demand can be found". That's actually more insightful than any thing that any other analyst has said in the past 2 years.

But secondly, I was just thinking about that now, and I put it together with other things he's said, and I've now realized something.

A point made at his At the Bar interview by a few of the folks there (maybe Doug Kirwin and Graham Brown? Have to wait for the video but that seems sensible) is that there is now insufficient exploration and development to fill the gold production pipeline.

But here's the thing. If you want to fund sufficient exploration and development to fill the pipe, and thus keep the price of gold down, you'll need to find a market for the shares. And if more and more gold is needed in the future, a larger and larger market for selling shares is needed. Given the Bre-X style disaster we're living through right now, I don't see that new share demand coming any time soon.

Looking at this now having just typed it out, I guess my idea isn't original; it's just giving a reason for the long-cycle cyclicality of junior gold stocks.

Still, it's yet another reason for the gold price to go up that's based on simple incontrovertible axioms of economics, and I like those sorts of things.

A few more newsbits


Gotta plow through my inbox and get this all cleared up....


Reformed Borker (Bork Bork Bork!) - stock flows then and now. How can this be a top if flows have been getting more and more negative since the bottom? As Josh notes,

equity fund flows do dispel the "euphoria" myth, whereby it assumed that because the Dow is breaking new highs, the nation is deep in the throes of some kind of speculative mania. The truth is, the country is in no mood to celebrate and there is almost no "euphoria" to speak of. People are much more excited about the fact that their home value has stopped dropping, the stock portfolio is almost an afterthought.

Look at his chart, doomers, and weep. Or, of course, reinterpret the data to suit your doomer agenda.

Mineweb - tug of war between gold fund selling and physical buying. Ha! A disconnect between the paper and physical supply/demand - who was warning you of this? Now, this is a bullionvault article so it's going to be slanted bullish, but nevertheless it's got some interesting data to chew on - China $20 premium to spot, for example.

Biiwii - $HUI big-picture view. He seems to be saying there's support at 336 and 265. I.e., it could still go lower. Thus my lack of interest in heeding bottom-calls right now.

Mineweb - uranium juniors attractive again. Mickey Fulp is also positively glowing about the long-term outlook for uranium. And after all, the U sector shouldn't be particularly correlated with gold and silver, should it? So maybe it's a good sort of diversification.

Tucson Sentinel - Sequester this! Fantastic op-ed making the rounds, you should read it. Here's just one quote:

Ever since Ronald Reagan ran for the presidency, politicians have gotten ahead by claiming "government is the problem." And voters accept this as they accept their Social Security checks, Medicare benefits, safe food and drugs, freeways and roads to drive on, in vehicles powered by gasoline kept artificially cheap by federal subsidies, armies and fleets, live in a Sun Belt made habitable by federal initiatives from the TVA to the SRP, survive airplane flights thanks to government air traffic control...and they think government is the problem. A people this stupid and corrupt deserves the real-life experiment of seeing whether they really are rugged individualists who don't need no gub'ment. Bring it on. I especially look forward to letting the net-taker red states actually live the Ayn Rand fantasy they rave about.

Whatever happened to Blue Sky Uranium?


Here's the interview with Sean Hurd from Blue Sky Your Anium:



Here's the chart.


That's down 99%. The 10:1 rollback just makes the chart even more juicy.

I won't mention who top-ticked this stock, but long-term IKN subscribers can follow this link, look at the date, poke through their old issues, and gasp. No, it wasn't Otto.

Ultra-low grade uranium, Argentina, Venture exploreco stocks... what could possibly go wrong?

Comment on GDXJ and the bottom call thing


Yes, that was a nice volume spike yesterday. So what? Sentiment can always get worse, volume can always get greater, and I've drank enough in the past to know that this may be no more than a pause to refresh before the dry-retching resumes.

If it's a bottom, I'll want to see a confirmation with GDXJ over $17. Basically, a higher high.

And yes, I haven't forgotten that GDXJ is full of stocks that suck. So I'll also watch the charts of good companies to look for the same thing, and take a signal from them as well.

If the juniors are ever going to move back up, then I don't care about whether or not I make that first 5% profit. I care that I've finally seen the last of that idiot Paulson puking crap like Tower Hill into nonexistent bids.

Basically I'm going to try to be Dominic Frisby here.

News part one

I've actually found a mountain of news articles the past few days, but have fallen behind posting them cos I've been watching the BNN interviews and working for a living. Today will be a catch-up day.


Bonddad - why the sequester is so ill-timed. Basically, the US economy wants to start rolling but the Republicans want to sabotage it and cause another recession to make the Kenyan Muslim look bad. Then again, State spending is set to increase now that their revenues are going back up; so maybe it won't be so bad. And as Ritholtz said yesterday, there's already been a lot of cuts these past few years so stop whining.

Reformed Borker (Bork Bork Bork!) - should have been in the S&P 4 years ago. Instead of, y'know, mining stocks. Another shot at the apocalyptic wackaloons.

Bonddad - latest ISM points to continued expansion. Again.

JC Parets - but look at the sector rotation! Yeah, JC, that's true. So should we be waiting for a 5% pullback to get into the market, or should we note that despite the sector rotation into defensives the market is still going up? Is the move into defensives just a tell that all the market actors think we've topped? Because we don't top when they say we've topped. You know that. We top when everyone is long and risk-on.

Calculated Risk - young adults retreat from piling up debt. Yes, tuition debt is skyrocketing, but overall youth debt has been going down. If you can just get these kids some good-paying jobs then the tuition debt bubble should get fixed on its own.

Beyond brics - Poland's interest rate cut a shocker. Beginning signs of desperation in Europe again. That's good.

Mineweb - Azerbaijan increases gold reserves. Again, with the gold that Paulson's been puking into the market. And you thought central bankers were stupid?

Vancouver Venture - harbingers of a market bottom. He seems like a really clever market-savvy guy, so I won't criticize what he says; but I have my doubts. After all, sentiment and short interest and everything else can always get worse, as we've seen with all the bottom-calling of the past 2 years. Really, the bottom comes when everyone (especially Paulson) is as out as they can get.

Mineweb - not enough Chinese at PDAC. Well, maybe they have enough mining going on in China? Ever think about that? Or maybe the Chinese know they don't have enough expertise to invest wisely in explorecos? After all, if that idiot Paulson can lose his shirt, so can the SOEs.

Wednesday, March 6, 2013

Cookie Monster on Market Call


Cookie Monster was on Market Call, and here's links to the 7 segments.

part 1 part 2 part 3 part 4 part 5 part 6 part 7

Brent doesn't see what's going to save us right now. Cue Bender:



And for background, here again is a link to his free article Mining Meets the New Normal.

Cue the Newsmonster:

Daniela Daniela Daniela! interviews Don Coxe


IKN's into Don Coxe a lot, but I've never really liked him that much - I found his political position noxious and his understanding of economics infantile.

No, inflation hasn't come back Don, and high deficits are exactly the way to get out of a deleveraging depression; and if you don't understand why then you should have been reading the Financial Times for the past 5 years instead of that idiotic propaganda rag WSJ you've been cribbing your notes from. It's very simple and people like Krugman can explain to you perfectly what's going on. Your call on inflation was wrong and you should shut up about it from now on.

And Don doesn't get the Draghi put either. It had to be done to keep the Eurozone from being torn apart by speculators and to break the feedback loops that are ignorantly part of their system; but he also had to lend support to Italy and Spain to try and forestall the democratic will of the people who are getting fucked over to bail out the banker class and keep Deutsche Bank & Germany from collapsing.

If you don't understand those things, Don, then no insight you provide is going to do any better than chance at predicting future market movements, and you'll probably be caught flat-footed at precisely the big turning points.

Anyway, here's Our Daniela interviewing Don Coxe down in Florida a couple days ago, but you only have to listen til about 6:15 where he admits his gold forecast was wrong because he has no clue about economics, and then goes on to make more idiotic comments about economics.

At that point, you may as well shut the interview off and go to a nursing home to chat with any grumpy old senior citizen; at least you might learn something of value from them, like when's a good time to plant your peas or how to make good sauerkraut.




Some news


FT Alphaville - Record high on the Dow. Importantly, the last time Dow was up here it was trading at a 17.1 PE, but now it's at a 12.7 PE. So it's a better deal now than it was back then. So quit your dooming.

Bespoke - new all time high, in your face doomers.

A lot of people look back on that period and seem to remember that once the DJIA made the new high, it quickly peaked and then the financial crisis hit.  In reality, though, from the time the DJIA first made an all-time high (ended of shaded area), the rally continued for another year.  It wasn't until the fall of 2007 that the DJIA actually peaked.
In your face!

der Spargel - Europe's lost generation finding its voice, not kidnapping and assassinating politicans yet. A good article on the Grillini. And frankly I am positively inspired by the sudden backbone found in Europe.

NY Times - China's push to cool down housing. But I'm not concerned if Bill Bishop's not. And he's not. And as he notes, if some dolt you've been reading has ascribed any significance to that idiotic 60 Minutes story on "ghost cities", you should take them off your RSS and ignore them forever onward because they have no clue what they're talking about. Basically, housing isn't the problem in China.

FT Beyond Brics - No need to fear China's "housing crackdown". Again, quit worrying.

Bloomberg - Korea, Russia and Kazakhstan buy Paulson's gold. Seriously, you utter goddamned clowns who run hedge funds - have you noticed that the minute you go home at night, the gold price starts going back up?

Mineweb - one simple question to ask gold miners. Do you have your high-level managers on site managing construction of your new mine? That was apparently the big suggestion from Silvercrest's Eric Feir. Here, let me quote half the article for you:

Fier, who deserves some kudos for helping to deliver the Santa Elena mine build in Mexico for Silvercrest on time and on budget (his words, but also true) had a Socratic moment, in which he gave a fresh perspective that should console a weary investor. Here, an experienced-mine builder admitted to his own poor investments in mine-building companies.

"How does mine construction get off schedule and over budget?" Fier asked. "So we've seen this time and time again. And I think executive management is directly responsible for that. I've looked at a lot of these companies. And I'm a shareholder in some of them. And I've lost money. So of course I'm going to look into this [and then] finding out that executive management hasn't been on the project for a year, or two years, and they're trying to build something!

"There's a complete disconnect [in this case] between what the corporate office is thinking and what the field is thinking. You actually lose a lot of your critical decision making. And time is money. When you are trying to build a project, every day you can't make a decision can cost hundreds of thousands or even millions of dollars to the company. So you need to have direct involvement by executive management."

Fier was on site for the Santa Elena build fulltime, and now goes down on a monthly basis, he said. Likewise, Anagnostaras-Adams, who mans EMED's ongoing bid to bring the Rio Tinto copper mine in Spain back into production  - a thorny process that has required intense patience - said success to date at Rio Tinto could not have been made without management onsite during development. He lives in the town adjacent to Rio Tinto in Andalusia. Being onsite allows expedient, money saving, problem solving.

Fier put it this way. "People would come in [to my office] and sit down and say, 'Eric we gotta make this decision. It's critical to the project and we need to change something.' It was done right then. It didn't go through 10 tiers of people to get to corporate office before you could make a decision."

So would someone like to ask Lenic how often he's been visiting Shafter?

Mining.com - copper doom awaits! Warehouse stocks surging, massive new production coming onstream, and China doesn't need it cos Oyu Tolgoi's next door. And that's the problem - demand can only drive up the price when supply growth isn't fast enough.

By the way, from what I heard at the At The Bar chat, gold supply growth is highly constrained - the senior miners have sworn off growth, and the exploration end has utterly failed to find any new deposits to stick in the front of the pipeline. The only way you'll see gold supply grow to meet demand will be a market shock that shakes all the gold out of China, or a flood of selling by central banks.

Or, of course, that moron Paulsen being forced to liquidate his holdings because he failed to properly size his position for the paper gold market.

Big elephant, small pool, lotta water gets displaced. Elephant has been getting out of the pool recently. When the hedge fund clowns are gone, maybe we can get back to a less stupid gold market.

Tuesday, March 5, 2013

BNN interviews - Ned Goodman from Dundee, Wade Hodges from NGE

A lot of interviews on BNN the past few days. I'll get around to them and post the ones I actually find worthwhile.

Here's a link to Ned Goodman from Dundee. He was going to be on a panel today with John Kaiser and That Clown Sprott on strategies to revive the juniors.

part 1 part 2

He believes there's still a commodity supercycle, and believes the emerging market is still the future.

He says "if you're a CEO of a company and you've lost $14 billion dollars in the last seven years and you're wondering why you got fired... excuse me?"

He's got a few funny ideas about economics, but otherwise he's a fun listen.

And then they interviewed Wade Hodges from NGE.

link

He's either the exploration world's biggest snake-oil salesman, or the one guy whose stock you should put all your life savings into. Can't figure out which, but he's snagged John Kaiser for his biggest promoter, so we'll just have to wait and see if he ultimately is hoisted by NGE's petard.

News or not?


Ritholtz - investors should ignore politics. Good point - the market really does go up and down on questions of real money.

BI - fear of Nuremburg Trials for corrupt Italian politicians. My god, the more I hear from this Grillo, the more I love him. Get this:

“How can we be accused of destroying something that’s already destroyed?” he asked. “They’ve devoured the country, and now they can’t govern.” He called Berlusconi of the right-leaning PDL a “psycho dwarf” and Pier Luigi Bersani, the top honcho of the left-leaning Democratic Party, “a dead man walking.”

Italy’s political system would collapse, he told the German online magazine Focus. “I give the old parties six months, and then it’s over.” In the subsequent elections, the 5-Star movement could get enough votes to govern—and to clean house.

He also demanded the renegotiation of Italy’s debt. “We’re being crushed, not by the euro, but by our debt.” A government is like a corporation that goes bankrupt. Investors are simply “out of luck.” They took a risk and lost, he said, having earned a degree in accounting. And if the conditions aren’t changed, he added, Italy would leave the euro and return to the Lira.

Then he was talking with the tabloid Bild, the largest circulation paper in Germany—he’d become an equal opportunity mainstream-media darling. The Bild pushed him about Merkel’s demand that Italy continue on Prime Minister Mario Monti’s path of reforms and austerity. He brushed it off. What Monti had done wasn’t real austerity, he said. “Instead of taking something from the already privileged, particularly politicians, he helped himself to the savings of families who now, without this money, no longer know how they can go on.”

How the hell can you not love this guy?

FT Alphaville - China's 2013 targets.

Beyond brics - Indian cities, opportunity or chaos? I didn't know Indian urbanization was so low. I guess they still have a way to go.

Mineweb - failure at Oyu Tolgoi would be a 'catastrophe'. Well, that's good! Now you get it! So quit trying to fuck with the company!

Mining.com - mergers lowest in like forever or something. With a link to a coming PWC report, which I guess now we have to wait for or something because it's not like they can time their fucking NR for the actual release of the report, right?

Mineweb - capital a serious constraint for mining growth. An international survey of mining and exploration executives by Grant Thornton has found more than half of those surveyed admit that they suck.

Monday, March 4, 2013

And finally some news


BI - Apple and gold charts eerily similar. BI's argument is that Apple and gold are both asset classes, and people are diversifying out. I say no. Apple and gold are both weak because hedge funds bought both heavily last year, and now are dumping both heavily. Does nobody remember how much the hedgies were into Apple last year? How it was a zero-retail, all-fund ownership stock?

Calculated Risk - housing's two bottoms. Be bullish USA. Otherwise explain how the data is wrong while your much-vaunted opinion is right.

Bespoke - readers still bearish. You know, I think this is getting to be a joke.

Reformed Borker (Bork Bork Bork!) - asset allocators rediscover stocks in year five of the bull move. And Cookie calls me sarcastic.

Ritholtz - Spending cuts are nothing new for the US economy. The sequester is overblown, just like the last few American crises were. The real damage was the upping of the payroll tax; but who gets all the press? The workers? Or the fatcats at Raytheon and GE who see their defense research programs cut by the sequester?

Market Monetarist - worry about Frankfurt, not Rome. Like I keep saying, the domination by the rentier class is coming to an end. The war against democracy is just the last gasp of the bourgeois fascists.

BI - Morgan Stanley says the bull market for gold isn't over. Well, if nobody's mining it anymore, it stands to reason, no?

Biiwii - you thought last week was the final puke? Sandstorm down 9% - seriously, what the fuck? These guys have a license to print money. Are you nuts?

BI - oh look, we've also discovered the gold vs TIPS chart. That's nice. What does the TIPS have to do with gold? Supply, or demand? Nothing. Thanks for playing.

FT - miners face struggle for survival. And yet they all look so happy at PDAC!

Mining.com - exploration set to plummet. SNL's World Exploration Trends 2013.

Beyond Brics - Peru - the South Koreans are coming!


Went to PDAC for Day 2


Yeah, I said I wasn't going to go back, but what the heck.

I went to see the BTO, SVL and DPM presentations. I've recorded audio and will put it up maybe tomorrow. Clive Johnson was fashionably late and suffering from laryngitis, which I guess makes him the Lady Gaga of mining. Eric Fier gave one of those presentations that makes you wonder why IKN doesn't have him up on a pedestal with Alex Black. And DPM is still a pile of crap, but they manage to make all the crap work together and make money off it.

Afterwards, I got invited to a recording of an "At the Bar". I was at first ambivalent about going, since Jojo had already warned me that Daniela Cambone was going to beat me up; and then it turned out the Bar they were going to be At was reserved by Raymond James, obviously for some sort of nefarious purpose. Coming from an engineering background I have a short fuse when it comes to scheduling mishaps, so I buggered off to C'est What for a badly-needed piddle and Fresca.

But I found out the venue change soon after, so I went to the other bar after all and got to watch the At the Bar.

Here's a pic of setup:



Long story short, here were the salient points:

  • It'll be a really good At the Bar, since it seems they rounded up a whole pile of mining folks. The two names I remember are IKN's buddy Rod Stewart, ex-Dundee and now touring his new single; and Simon Ridgway. (UPDATE: Also Doug Kirwin from Ivanhoe and Graham Brown from Anglo American.) It'll probably be a very long segment, because it was more of a free-flowing conversation between the various parties, on various topics concerning the doom of the mining industry. 
  • They don't actually drink booze during these segments - it's actually apple juice. Amazingly, most of these guys are teetotalers. So quit writing the angry letters to Kitco. 
  • I, however, drink booze. 
  • Yeah, I really did tell Daniela I'd like to see more industry professionals in her interviews (like David Harquail and Darcy Marud last week) and fewer apocalyptic front-running clowns. The media too has a responsibility for the sorry state of the junior world.
  • A juicy piece of gossip was that Mickey Fulp's nose-punching last year by Graham Harris happened because Harris thought he was Otto Rock. Which is stupid, Graham, because everyone who's anyone knows that "Otto Rock" is actually Tommy Humphreys. Seriously, ask around!

Meanwhile, today the rest of the mining world got puked out onto the floor. But my BAL and JO positions have started moving nicely.

Let's all pile on Steve Letwin


Really Otto, it's unfair to post something like this about poor Steve Letwin of I!Am!Gold!.

After all, he's just come out and said

the Company has initiated a program to reduce annualized spending by $100 million.   This will be achieved through cost-cutting initiatives aimed at reducing mine operating costs, exploration expenditures and mine site and corporate general and administrative costs.

That $100M might not have meant much a few years ago, but now that IMG's market cap is down to $2.4 billion (which is only 20% more than Lord Clive's B2Gold, ahem) it's definitely more than a drop in the bucket!

Hell, all he has to do is mosey on over to Deloitte's nice booth at the trade show and they can give him a nice 44-page report about how they can stop his company from sucking. That alone should find him $100M in savings.

And besides, how can you pick a fight with a guy who says

"We have a long track record of generating attractive returns on capital employed," said President and CEO, Steve Letwin . "The need for a robust return on capital is not a new concept at IAMGOLD, and we continue to approve only projects that will generate a return surpassing our risk adjusted cost of capital"?

The proof is in the pudding, Otto my man. I mean, just look at how they've done:


Um... wait, what I meant to post was:


...um....



At least it should get maybe a $2 pop when they finally get around to firing his ass.

Let's see how my grownup doing-it-for-myself picks are doing

Tired of these newsletter writers I sub to: the one guy just follows pennycrap explorecos, the other is a buy-and-holder but I want to avoid the downdraft, and the third guy is saying "yeah, don't buy anything right now, let's just wait". Yarr! Gimme some stocks that are going up!!!

So I've been trying to do the grownup do-it-myself thing. Here's what I got so far.

I bought JO at $31.35 on the bottoming pattern. Man, it's nice owning a US denominated ETF when the USD is going up! I make money as my position goes nowhere:


My stop was a lower low to Feb, but maybe I'll tighten it to $31. I wanted to see it break through the EMA(16) and it has done as of now. There were record shorts in coffee, and record high stockpiles: and the last time that was the case, JO went from $37 to $80. So a contrarian buy might pay off.

Yes, it's the wacky world of commodity trading!

I'm already short the emerging markets via HJD.TO:


It was already a hedge against China and India weakness (thus hedge of the goldminers). I wanted to see it fail to retake the EMA(16), and it did. Now I'll ride it down. The EMA(16) is my stop loss.

And today I bought BAL:


I bought it on the breakout of the topping pattern there at $55 or so. Already it's up to $56.05, that chart's 6 minutes old. :-)

You'll see cotton's a real widowmaker if you look at the charts. It chooses a direction and busts through brick walls to get there. In 2011 it went from $37 to $110 in 6 months, with only the weekly EMA(16) as support. You wanna find me a goldminer that can give me a triple in 6 months?

Let's see how these do while I wait for the juniors to stop sucking.

It's just another PDAC Monday

PMs have done nothing yet GDXJ's down 2%.


And yet no, USD is tame, IEF is very tame, JNK is doing what it's supposed to, and JJC's no different from Friday.

It's that good ol' PDAC curse!

So here's a pretty song to take the edge off.


Sunday, March 3, 2013

Speaking of which, here's Daniela Daniela Daniela!


I was bloody standing right beside David Harquail in the smoking area, recognized his face, recognized the name, couldn't place it. Thankfully, cos I'd have screamed little a little girl if he'd told me he was from Franco Nevada, which outperforms the price of gold because Franco Nevada don't suck.




Here's Lenic Rodriguez, telling Daniela all about how he dilutes his shareholders into nonexistence while not putting Shafter into production pull your thumb out and build the fucking mine already.




And here's Darcy The Rude from Yo' Mama Gold, with an interesting question: why don't they boot all the shit companies off the $HUI and just keep Yamana? Well, maybe Randgold and New Gold too. And BTO of course. But mostly Yamana.


PDAC non-review

So I went to PDAC this Sunday, and first, here's some photos.




Primero Mining sure as hell knows how to advertise. No wonder their stock price is so good, eh? It's brand recognition, guys! No wonder nobody wants to buy the other shit stocks - all they can think about is Primero Mining.




Here's all the happy junior mining folk, going on as if nothing has happened to their sorry excuse for an industry. A lot of chatting between men in suits, and a lot of ignoring retail. You'd almost think there was a flurry of M&A going on, or at least a flurry of buying each other's corporate jets.




Even the guys at the I!Am!Gold! booth are waiting impatiently for Steve Letwin to get fired.




And here's Kaiser being mobbed by fanbois. Interesting to note that most of the retail at PDAC this year had highly misshapen heads; I guess only the most attractive follow Kaiser.

The guy to the right of Kaiser btw, with the darker skin and black hair, should probably be invited to speak at PDAC. He had some great insight into how the instos diddle stocks. When you look at your piddly retail L2, you see 18 bids for say 200 lots, but the last bid in line is for 183 and the rest are all one-lotters. If you hit those one-lot bids with your sell, the rest of the lots instantly move down their bid price. And so on. I see this happen all the time. Guy should give a talk.

It was funny too, watching Kaiser try to respond to some dolt blathering about Obama without shooting lasers out of his eyes.

And now, for the reviews:

Yeah, I really can't be arsed.

I really just went to see Kaiser and Cook, then stuck around for Aldis and Berton.

The first two were a good listen, but the last two were a bit of a waste of my time. So I didn't even bother to stay for Roulston and Day; frankly, I don't think either of them would have been informative for me.

Aldis does point out that CIBC notes gold stocks went down an average of 20% in each of the last 6 election years, and in following years they went back up by 20%. And the replacement cost for an ounce of gold is $1500, so there's your fundamental bottom price (barring a wave of panic selling of scrap of course). And he did point out there's no mining expertise to build the mines that are supposed to get built in the next few years - whether you go by capex or just number of projects, there are simply not enough mining engineers to build them based on what was built in the last few years. But otherwise, Aldis is one of those anti-Obama dicks.

Cookie points out the discoveries are literally disappearing, and all-in costs are $1500/oz with grade mined dropped by half in the last 10 years. And he thinks the Venture will be carnage for a while, but now is the time to buy.

Kaiser just went on a rampage against the right-wing wackaloons with their survivalist "buy gold and silver!" claptrap. He also gave a big talk on Rob McEwen being awesome. He also, interestingly, said he wouldn't be surprised if China was manipulating gold down, to kill the entire Venture so they could swoop in and hoover up the entire exploration world before they announce how much their gold reserves have gone up - interesting point, but maybe he's got the conspiracy virus now too?

I've recorded the audio for the four that I went to see, but really can only be bothered to put up Kaiser and Cook.


Here's Kaiser:




Here's Cookie:



I know, the sound isn't great. If I ever get inspired to reinstall Wavelab and my audio plugins I could probably clean it up almost to broadcast level: simple stuff, EQ out the hiss, compress up the voice with a high-end bias, and so on, it'd come back to me.

But for now, this is what you got. Hopefully Soundcloud works for this sort of stuff. You'll be able to download Cookie and Kaiser's powerpoints in the next couple days. Speaking of which, you can look at all of Kaiser's past powerpoints without a subscription just by following this link.

Anyway, two last notes: Cookie is on BNN Wednesday at 6PM, and Daniela had a way hot green dress on but her hair just didn't show up for work today. I'm sure we'll see scads of PDAC Kitco interviews pop up on YouTube later this week.

Oh - also, I chatted with a guy from ActLabs in Ancaster. According to him, they're back to a 10-day turn around, and can give you a 1-2 day rush if you want it. There's no backlog in the assay industry at all anymore.

Cos, y'know, nobody's drilling holes anymore.

OK, here's an awesome treat for you


For those of you who were smart enough to not go to PDAC like I've done, here's a freakin' awesome reward for you.

Global Thermonuclear War.

Serious. Check it out.

My only regret is that it only lets you play tic tac toe.

3 morning reads


Krugman - self-destructive Europe. Yup, that little thing called Democracy eventually gets in the way of the elite stealing from the workers' pockets to feed the insatiable appetites of the rentier class.

FT - Italy exposes wide crisis of democracy. As above. Except it's not a wider crisis of democracy; the wider crisis of democracy, as far as the people are concerned, is that the only people available to vote for are the criminals who caused the crisis or the Ayn Rand drones who offer fake solutions to the crisis. And as far as the kleptocratic elites are concerned, the wide crisis is that people still have democracy.

Reformed Borker (Bork Bork Bork!) - is the Fed driving the stock market or is it the fundamentals? Again, clear thinking: the Fed isn't buying stocks, the Fed is pursuing an accommodative policy that causes easier growth, which is driving the market. Oh and by the way:

Greenhaus, the chief strategist at BTIG, demonstrates how S&P earnings since the market lows of March 2009 have gone up by 129% ($43 in EPS then vs today's $98 or so). This 129% improvement in the index's earnings perfectly matches the S&P's price gain of 128%.

The stock market's performance is being driven by improved earnings? Really?

Silver Circle: the movie!!!!!1!

There's a new animated movie coming out!

It's called Silver Circle!

It's about some great libertarians who fight the socialist fascist communist Nazi government by buying silver coins!

Check out the trailer!



You guys just look fucking retarded, mkay?