Saturday, March 3, 2012

I like a good story, me.

I love a good story, me. Either an apocalypse story like 28 Days Later or Shaun of the Dead, or a good conspiracy theory story like Enemy of the State, They Live, or Videodrome. Or hey, a good kinky sex movie like... um.. Videodrome, or Black Swan.

So that's probably why I liked this post from Turd Ferguson. It touches on all the big hooks: JP Morgan (at the behest of the Joos) dumped 100,000 gold contracts into the bid Wednesday, with no regard for execution, trying to smash down the gold price. Meanwhile, some ex-JP traders are valiantly trying to corner the market on silver to crush JP Morgan!

People on the internet are saying that floor traders are telling them that this is happening! So it must be true!

Seriously, though, this would be an awesome movie. Except they might want to talk to Eddie Murphy and Dan Aykroyd first. Though I'd rather watch a movie about silver than about FCOJ.

Is it true? Who knows. I don't. But frankly I wouldn't put anything past the dastardly Lizard People. Seriously. Just because I'm paranoid doesn't mean there isn't anyone out to get me.

See you at PDAC, maybe

OK, so I guess I'll be going to PDAC after all for the newsletter writers' presentation on Sunday.

I'll probably miss Mickey Fulp. See, problem is, I'm definitely going to want to stay for Rick Rule; he ends at 4:40, and since it takes me 2 hours to get to PDAC from home, I'll probably not want to pull a 11-hour day by getting there for Mickey's 9:35 slot. We'll see though. Might do it, especially if the cat wakes me up before 6.

Unfortunately, John Kaiser is horribly popular, and I'd think most of his readers are smart enough to want to stay for the Cookie Monster, so I'm unsure if I'll be able to get in to see Brent. I might stay in standing room at the back for the opportunity. He's got a very professional, friendly demeanor, but it seems to hide a subtly wicked sense of humour. He lulls you to sleep and then strikes, the guy.

Then I'll see Roulston. Then I'll possibly go for lunch. The food at the MTCC is brutally, brutally expensive for what you get, especially since you're stuck 80 feet underground in the fucking Mines of Moria. (And yes, it really does smell like orc poop and decaying dwarf carcasses, though that might just be from the people there - I mean crap, you've got exploreco investors, plus bankers, plus geologists and CEOs.)

And if you want to go most elsewhere you're stuck taking the Skywalk for 15 minutes. I'll try to get in to Hoops Sports Bar on Bremner; then again, might just hit the Subway instead. See, I don't want to walk forever for food. Also, Google Maps takes up a shitload of battery life on my phone, so I can't depend on it to find food. If there's street meat on the way, I might just get that.

Then in the afternoon, Adrian Day, if I can get a fast enough lunch. I might actually stay for Jeff Berwick The Glorious Anarcho-Capitalist Freedom Fighter and Lifetime Ally of Casey, depending on how drunk I am at that point. He might be a fun listen while drunk. Then Marino Pieterse for sure, cos he's Dutch and the Dutch are good with money.

Then I *might* want to hit a booth or two (trying to figure out who to see... Sunward? BHV?), even take a few pics for the blog if allowed (esp. of the evil Hochschild boothbabes). But as it takes 10 minutes to get out from the sub-sub-sub-basement to have a smoke outside, I might not have any time for booths. There's always Monday for the booths.

(I assume the booths won't be busy this year... nobody's going to want to talk to anyone whose share price crashed 70% from last year, and that's the majority of the companies there. Seriously: you think anyone's going to be at the Atac booth?)

Then it's Paul Burton, Jordan Roy-Byrne, and Rick Rule to close out the day.

Now... what to wear?

Seriously. I want to fit in with the junior mining investment crowd this year. I've got the stubble, messy hair, lumpy face and poor skintone, and various colours of cargo pants.

Unfortunately I've got my valknut t-shirt on today, so I can't do the Aryan Nation look tomorrow. My Sigil of Baphomet t-shirt might be a little over-the-top for PDAC, I think. (Speaking of which, did you know the Sigil of Baphomet is trademarked by the Church of Satan? My t-shirt, of course, is pirated. Yay pirates!) That'd freak out Jay Taylor though, if he saw me wearing a Satanist t-shirt. Plus any Americans.

So I guess I'm stuck wearing my all-seeing eye t-shirt. I think that works. I mean, it's a statement on One World Government, it'll be recognized instantly by goldbugs and ZeroHedge users, and it'll make me look batshit crazy.

Unfortunately, it's blue, so that means I can't wear my khaki cargos, I'll have to switch to the black. And the black ones aren't as comfy.

In actuality, I'm not intending to go there to be a weirdo and embarrass myself. But frankly, there's no way in hell that I can dress like a Bay Street banker, and there are a lot of bearded exploreco silverbug weirdos there. So which group should I try to fit in with, then? I mean, it's not like I've got any money in AAPL or SPY or anything that's making money. I may as well look like a fucking loser.

Anyway... might change my mind about the clothes by tomorrow AM. But if you see a guy there in black cargoes with a blue all-seeing eye t-shirt, feel free to go up to him, say "hey, are you the guy from Market Narrative?", and... I dunno, try punching me in the nose or something. If you break my nose, maybe Mickey Fulp can take me to meet Daniela Cambone, who will kiss it better for me. And then marry me and we'll be together forever and ever.

Hey, it's no different than expecting Bellhaven to go back to $1 ever again, right?

Then again, if you punched me in the nose, my uncontrollable rage response might kick in, and since I'll be wearing steel toes, and I come from a city of violent abusive steelworkers, neither of us might like how it all turns out from there. So, maybe just say hi?

Then it's home, in time for a meat pie for supper, and then off to watch The Wrath of Grapes: The Don Cherry Story Part 2. So unfortunately you might not get an update Sunday night.

PS I'll definitely have a black leather Guess jacket, and a black leather Danier shoulderbag. So seriously, if you're one of the 5 readers of this blog (and I know one's in Sweden, the other's in Peru, and the 3rd is in New England and wouldn't waste his time visiting explorecos' booths listening to their fraudulent lies when he can just look at their charts on his computer), say hi and offer to buy me lunch or beer or something. Or lunch of beer. Or a stick of gum. Whatever.

PPS originally I was going to sign up using the real name of The Blogger Who Must Not Be Named, and impersonate him and see how many people I could get beaten up by. Nope, maybe next year.

Friday, March 2, 2012

Some perspective from Bespoke

Since you're possibly a junior mining investor, you are brutally failing to gain proper perspective about the broader market conditions.

No really. Trust me. You're sitting in your bunker full of MREs and guns & ammo and bibles and silver coins, waiting for the Iranians & Israelis to launch their doomsday attack that brings back teh Jeebus to rule over America as the new Christian heaven with Ron Paul as Speaker of the House.

So how do you interpret this chart?:

OMG teh S&P is teh overly bot totally, sez teh anal ysts. It's like, above where it was last May, and there's no reason for that. So we've just gotta gotta gotta see a pullback.

Oh lookie, transports are diverging from the industrials even, and R2K is underperforming. That obviously indicates it's time for a pullback.

So... what do you make of this, then?

Same time period.

Compare it to the previous chart, please.

It's a chart (from Bespoke) of the S&P's 12-month trailing P/E. That's trailing - as in, "no, we're not including the rosy future projections that ZeroHedge always snarks about". This is stock price versus earnings already booked.

P/E is down 1.5 points from last year. Another way of looking at it is that, despite S&P now being at 1370 or so, its P/E ratio is about the same as when we hit the 1280 peak last Halloween.

Last fall, if you remember, was when everyone was certain the Eurozone was going to collapse, there was going to be a cascading bank failure, and that second US recession was just around the corner according to ECRI. The peak was a brief respite before more gloom and doom followed - but by then, Europe had already begun fixing all that crap you were scared of. I guess you were late to the party though, weren't you?

The stock market is still valued at about that level today. The difference is, the earnings have improved since then.

A P/E of 15.5 would mean S&P hits the 1530s without seeing any improvement in earnings. And you'd expect improvement in earnings, considering US unemployment is going down, QE1 and QE2 effects are finally being felt in the system, and Europe has already embarked on a massive QE of their own with the LTRO.

Now you tell me why you want to walk in front of that freight train with your silly short position.

Even just a temporary short against this is bull. You're sticking your finger in the air and saying "hm... I betcha next week we get that pullback". I bet you're also thinking you should play the frickin' casino this weekend.

Frankly I look at this post and wonder why the hell I'm invested in stupid miners.
Well that certainly doesn't look too good.

On the plus side, its RSI(8) looks heavily oversold.

gold versus gold miners: the masses realize the negative-beta proposition

Barrons' "Focus on Funds" is one I follow religiously in RSS.

In an article today, it notes GLD has seen $1.3 billion in inflows this month. Meanwhile GDX has seen $382 million in outflows.

Which is pretty understandable, considering gold's gone up while GDX has only ever gone down.

a little comment on this afternoon's market....

As I write, gold is down 0.23%.

The $HUI is made up of gold miners.

Yet the $HUI is down 2.21%. Because the $HUI stocks suck.

Silver is down 2.47%, so maybe you can make the case that it's understandable for GDXJ to be down 2.08%, and SIL to be down 2.16%.

Then again, maybe this is all just being caused by retail dumping their shares. Because this is Friday afternoon, before PDAC, with the silverbug blogs spouting off about an imminent second attack on silver, and the silver short lease rate is still at -0.49%.

I.e. a self-fulfilling prophecy.

Which, sure, doesn't mean that it's not going to get worse. After all, if you believe JP Morgan and the Joos are going to crash silver tonight, or on Monday at the China open, then maybe you'll dump all your silver now and OH MY GOD YOU'VE JUST DONE THE LIZARD PEOPLE'S DIRTY WORK FOR THEM, IT MUST BE MIND CONTROL.

But it seems funny that copper is strong today, yet copper plays like SWD and AZC are puking along with everyone else. Meanwhile, RIO is back up to the $4.60s even though they're a junior miner.

This ain't called being clever, it's just called looking for inconsistency.

London Telegraph, utter twits, thus the world is at it's always been (UPDATE: now safe for fuzzy bunnies)

Oh wow. Bears say gold will collapse to $1000!

I tried subscribing to the Telegraph blogs for a few weeks, back when the Greek crisis was happening. I quickly realized their "commentary" was typical smug English twit Euroskepticism and unsubscribed.

Seriously. So now gold's going straight to $1000? I guess it must be, because on Wednesday JPM dumped 100,000oz into the market during Bernanke's testimony without any attempt at passable trade execution. That sort of thing always presages the end of gold demand... or a magical increase in gold production from... somewhere?

Who knows. Maybe JP Morgan knows (because they've plotted it out with the Lizard People & the Joos?) that India will suddenly get nuked off the face of the earth, or something, changing the past decade's supply/demand dynamic? Cos... um... India's still buying all the world's gold. Like, on Wednesday they did.

Really I shouldn't even bother complaining about British press... it's like yelling at FOX News.

I'll just end this by copying out an IKN post, cos I'm too lazy to even put my own effort in:

If you look very very closely, you may be able to spot a trend.

And yes I know it's from April 2011. That's because I don't even want to waste time finding a more recent IKN post on the topic. It's also postmodern sarcasm you pompous London yellow journalist twits. Because if you look very very closely, you might notice that April 2011's chart only went up to $1500.

Friday videos - Wire

Oh look, Wire reformed.

Er... they've always been around?

This is one of those songs that gives the lie to the idea that Sonic Youth invented anything. Buy 154 and see for yourself.

Thursday, March 1, 2012

GLD inflows immense

Trying to post from my ATRIX tonight. Read an article on either Focus On Funds or the other ETF blog that said GLD
saw $500 million in inflows on Wednesday. Remember Wednesday? Do ya?

PDAC "newsletter writers' presentation" on Sunday

Sunday at PDAC, there's a "newsletter writers' presentation". Gawd, it makes them all sound so... dirty.

Anyway, I've signed up for the free part of PDAC this year (just the miners' booths, and the aforementioned), so I might go. I've been looking at the "newsletter writer" lineup and tried to figure out who I want to see. This is what I've got so far:

9:10-9:35 - Ian McAvity. Probably not. In his favour, he has an old-fashioned mail-based newsletter. (Crikey - even Grandich eventually discovered the internet!) Against him, last year he sounded like a dystopian Mad Max future style doomer.

9:35-10:00 - Mickey Fulp. I'd like to go, though everything you want to hear from Mickey is available for free with a subscription to his site. But I'd like to see how many people decide to show up wearing nose bandages. Y'know, in solidarity with Mickey, or at least in solidarity with Daniela Cambone. Personally, I'd like to hand out nose bandages before he speaks.

10:00-10:25 - Jeb Handwerger. Nah. The guy's CV on the PDAC site looks pompous.

10:25-10:50 - John Kaiser. He was a popular guy last year, loads of people came to see him. He's a fun listen, but I didn't get much from him.

10:50-11:15 - Brent Cook. The cookie monster himself! Probably will go to see if he's as clever as last year.

11:15-11:40 - Jay Taylor. Nope.

11:40-12:05 - Lawrence Roulston. Apparently is valuable. Might go.

12:05-12:30 - Greg McCoach. Another guy with a CV that makes him sound self-important. Nope.

12:30-12:55 - Frank Holmes. Really a complete cypher, don't know a thing about him.

12:55-1:20 - Dominic Frisby. Seems like another unimportant type, but might watch him since he's also a stand-up comedian, so he might present well.

1:20-1:45 - Adrian Day. LSE grad and go-to talking head in the media. Might want to see him.

1:45-2:10 - Jeff Berwick. Randroid, Casey follower, supposed "anarcho-capitalist freedom-fighter". My brain will not be able to handle teh stoopid.

2:10-2:35 - Marino Pieterse. Dutch guy. Dutch are good with money. Seems to be a strategic/geographic analyst. Sounds like a good listen.

2:35-3:00 - Leonard "Bud" Melman. From Resource World magazine. Might be okay.

3:00-3:25 - Vin Maru. Late-season call-up from the minors. Kid looks 16. Can't see the reason for seeing him.

3:25-3:50 - Paul Burton. Apparently a real analyst who's held down real jobs. I probably will want to listen to him.

3:50-4:15 - Jordan Roy-Byrne. Gets interviewed a lot. I'd pobably like to listen to him.

4:15-4:40 - Rick Rule. The Rick of Ricks. Probably necessary to go see him.

I'm almost certain that between 10:00 and 10:50, if I look around outside, I'll probably find Daniela Cambone interviewing Mickey & Brent again somewhere. Someplace where there's booze being served. That'd be fun to watch. Anyone have any ideas where this will take place?

EST Keith Laskowski interview

Here's a little inverview of Keith Laskowski from 2 weeks ago. Nothing major, I guess, just a "hi here I am".

hey! surprise! more day-to-day micromanagement!

I'm probably going to jinx the hell out of the rest of today. But bear with me. Look at these three charts, and keep this question in your mind: "So did yesterday's action break the miners?"

$HUI failed the EMA(8); but it's bouncing up off support at the EMA(45), which seems to be a significant mid-term trendline. Recall, though, that the major miners suck shit and are garbage.

GDXJ, strangely, looks worse. But it's still bouncing up off EMA(45) support. As a negative, if you happen to like entirely arbitrary lagging indicators, MACD looks a little bad now. GDXJ is both made up of good miners (BTO's a big one, if I remember) but also some garbage.

The silver miners look swell. Haven't even broken their EMA(8).

So in sum, does this look okay to you?

And which would you rather buy right now, now that the three have all printed a slight discount from last week?

I guess one caveat is that the last time there was a breakdown in $HUI, EMA(8) failed... but then EMA(45) got broken a couple days later. So bouncing up off the EMA(45) is only an indication that we're not still plummeting to our dooms.

Then again, $HUI is still made up of components that stink. I mean, who would buy Kinross? Agnico?

Anyway, you could always sit out, in expectation of a further silver collapse. Up to you. After all, Bernanke noting that the US economy is swell should indeed tank the price of silv... wait, what?

I'm sitting out for now... actually made $400 this morning double-longing silver, lucky me. And I bought $20K of AR (not broken) and $10K of FVI (not really broken either and there's a nice inverse H&S targeting $9.20 or so on its chart).

Wednesday, February 29, 2012

what's better? silver or gold?

Oh noes! Teh silver washed out 4 days of gains!

While gold lost a month's worth of gains.

What looks better right now, do you think?

market comment again

Silver miners ETF has not failed. It is right at the EMA(8).

Junior goldminers ETF has sorta failed, but EMA(45) seems to be an intermediate uptrend line.

I guess a lot of people might bail at Comex open tomorrow on margin calls. So maybe it makes sense to stay out of the market for another day and see what happens.

So, I'll hold on to my cash. If nothing else, I'll be able to buy some stocks back (FVI, SLW, FR, DPM, and so on - geez I've lost track) for less than I've recently sold them for. And that's always a good way to get a bit of an edge on the market over the buy and hold crew.

And meanwhile, if I see a general collapse tomorrow, I can throw $100K into some crazy leveraged vehicle like I did today with HZD, and make a fast huge profit.

yeah, so, hold on a sec. UPDATED

Wait. I just got my up-to-the-minute news from one of my subscriptions. Silver dropped 7%, and gold dropped 5%, because Ben Bernanke says the US economy is stronger than expected?!?!?!?!

You have got to be shitting me.

So I've ended my HUI double-short and Vix double-long. There was no fear in the broad market anyway - just a collapse in PMs. Even copper still looks good.

And I've gone right back and bought loads of FR and SLW (and RIO, averaging down, cos the chart isn't broken yet). I figure FR and SLW should compensate for my having sold FVI and USA - I don't like buying back the same stock the day I sold it, cos then the average price calculation in my discount brokerage's system gets screwed up.

We'll see if this was a bad idea. I bought SLW and FR at SLV=$34.19, if you're keeping score. I figure if SLV can crawl back up to less than -3% on the day, we won't see a Comex close waterfall decline.

Several miner charts are broken, by my own EMA(8) criterion: BTO is one. But others aren't: RIO, AR, so on.

We'll see if this is going to be a serious decline, or a minor correction.

But I fail to see how the US economy doing well is going to pooch Indian demand for gold, or industrial demand for silver.

If I get proven wrong, so be it. But today's short silver position during the collapse has given me a windfall that I wasn't expecting this month. So why not use some of that cushion as a chance to take risk in getting back into these stocks at de-risked prices?

UPDATE: got back out of FR and SLW. US dollar is still going up.

quick comment

I'm busy at work.

But I'm also busy shorting the known frickin' universe.

Dumped FVI on a shaky open, profit! Tried longing silver, got stopped out; tried shorting silver, got stopped out; went back short, when the market started looking like it was calling me right.

Took $4K profit there. Thankful I dumped SBB yesterday.

Now am double short the goldminers (HGD) and double long VIX (HVU). 50% cash, but moving it in and out of short positions quickly.

So get lost I'm busy.

And as for Otto: took you a few weeks to see a silver collapse, but finally you're proven right! Just like Turd Ferguson was proven right about his negative lease rates theory. Touche for the two of you!

Tuesday, February 28, 2012

New fave blog of all time

Apparently this guy got Farked, which is probably where Ritholtz came across him (cos you'd expect Ritholtz to sit around on Fark all day). Now he's the newest sensation of blogging.

I fucking love this guy and want to be him when I grow up.

So go to Stonekettle Station right now if you're like me and always 2 days late to the newest big thing. Read absolutely all his posts.

And so....

Sabina's broken if it drops below $3.50, he says. So I cut my losses and ran. It's worth more than $3.50 by the numbers, so obviously the market is saying my numbers are wrong. I refuse to stay wrong.

SLW got sold for a quick profit cos I still don't like the looks of $VIX and JNK:LQD, so I'd rather have more cash than more silver. I can't see another 5% upmove in silver for at least a few days, unless we're starting another little silver bubble. But I still have the FVI, just in case, which took longer than the other silvers to move but then finally moved. On decent volume too.

I also picked up some RIO again, since it was drifting low but on a poor-volume day.

So, tons of cash on hand, I still managed to turn a profit this month (just not a good one), and I think I'm going to sit back and try to figure out what the market's saying right now.

E.g., to me it's saying that the guys who produce gold and silver are worth more than the guys who have property with gold or silver on it.

I might just wait for a $VIX pop and try to play HVU.

progress report?

Well, putting $40K in SLW seems like it was a good idea today. So I have since put a further $30K in FVI.

But funny nuff, FVI isn't moving, despite superior volume (we'll probably see a 3-month high for FSM volume on the NYSE today) and, also importantly, the rising price of silver. Looks like someone wants to unload their entire holding at $7.15 or so. Buggers. The price looks pinned.

And, of course, I could have bought FR and BCM instead... they've moved quite a bit more than SLW.

But you can't always pick the biggest winners, can you? Nobody's always that lucky. I should be satisfied with satisfactory results. And at least I have my money in a silver royalty company with little exposure to runaway cost input inflation, and a good conservative silver miner that some guy in Peru thinks is a well-run and well-managed company. The conservative nature of those two holdings makes me feel safe. And I would not feel as safe putting my money in BCM.

And at least I haven't been scared into inaction by the possibility that silver's going down someday. Though gawd, today's move in silver looks awfully bubblicious, no?

The PDAC warning

March 4-7, 2012, it's the PDAC conference in Toronto!

You know what that means?



I probably won't be going... but if you go, say hi to Juan Vegarra. He honestly does like chatting with the average folks, is a regular reader of a certain rogue Peruvian blog, and is a very nice guy to talk with.

A Wile E. Coyote moment

Feel free to assume that I've inserted a sound effect here of Wile E. Coyote making that whistling sound as he falls off the cliff and plummets to the cavernous riverbed far below.

If you're going to PDAC this year, I'm sure the Guyana Goldfields guys will be the ones wearing the paper bags on their heads.

Today's transaction - grasping at straws

As predicted, silver's up over 3%, yet GDXJ and $HUI continue to disappoint.

I was heavily cashed up at end of yesterday (dumped CAN at a profit, DPM at a wash, and a small amount of USA to resize my position as it seems they aren't breaking over $2.60, - the market seems to be happy to let the company be the only buyer of its own shares).

So today I bought $40K of SLW. It seems to always be slow in catching up to the price of silver, but yet it does follow silver. FR's another one like that.

It is still very tempting to buy back FVI since they've broken above $7. Apparently they mine silver too.

But that's it. Until GDXJ stops looking like it's about to roll over, I'm not too interested in getting back into the market.

more blog stat fun

Here's the google searches that led to my blog over the past 24 hours:

my own market narrative - 3
"tye burt sucks" - 1
azc - 1
booth girls for pdac 2012 - 1
canaccord evil empire - 1
extorre bcsc - 1
pdac mcavity - 1
share market narrative story - 1
sprott, bear creek mining - 1
us silver amex listing - 1

The "canaccord evil empire" search must have been one of Otto Rock's regular readers.

And whoever searched for "booth girls for pdac 2012" is a true hero who definitely has the right priorities in life. Just watch out for the Hochschild girls - they work for Satan.

premarket - two options

Now, gold and silver have shot up strongly this morning. This comes despite the silver short lease rate dropping to -0.45, which is a danger sign according to various silverbugs.

As a contrarian, you might say "well if everyone's expecting silver to go down, it's going to have to go up".

But that doesn't matter to me. Why? Silver is not gold is not copper is not the miners is not the broad market, is why.

So thus, the chart above. $HUI is rolling over right now. It is what it is. If the strong upmove in silver brings a strong upmove in the miners, (as I've seen, the gold miners tend to move with silver, not gold; I guess it's a speculation thing;) then it's good to stay in the miners; maybe silver and gold will skyrocket now, and we'll see $HUI break its slow midterm upward channel and hit its magical upside targets?

But maybe silver and gold will skyrocket, but $HUI and GDXJ and SIL will do nothing. Gentlemen, that is indeed a possibility. It doesn't matter what logic says. That's why I keep suggesting that I should be buying the metals themselves, and not the miners.

After all, if Kinross and Agnico and Hecla can't mine the stuff at a profit, and Extorre and Guyana Goldfields and Atac and Hope Bay and Tasiast will never become mines, then what? Are BTO and RIO and FVI really going to be able to supply each year-over-year demand increase in gold and silver? I haven't looked at the numbers yet, but I suspect that it would take at least 10-30 of these new companies coming on line every year just to meet the incremental new demand we see from Asia. Could be 100. Could be 5. But it's still some number significantly greater than zero.

So where are they? Who's the analyst who's picking each year's successful new junior producers? Cos I ain't hearing about them. I'm hearing about all the also-rans.

So maybe you wanna ride silver and gold, and forget about the miners altogether?

I'm only suggesting a possibility.

Today's action on the $HUI and GDXJ will suggest which is the proper way of going about things, I suspect.

Monday, February 27, 2012


Less of an "ouch", more of an "ooh bugger".

BTW: A technical analyst would say that these charts look bad. I think.

Extorre, and how you can't even trust an engineering firm to get anything right

Geez, the BCSC has forced Extorre to come out today with a "mea culpa" re their Cerro Moro PEA.

The news release seems to suggest that everything in the report is horribly non-NI-43-101 compliant. Like, using inferred resources for a PEA. Or inferring that their resources are actually reserves. Apparently those sorts of things aren't cool.

Brent Cook has said a few times that he just has to shake his head at the crap that engineering firms are turning out nowadays, with inferior PEAs and PFSes and 43-101 resource estimates. I'm not Brent Cook by a long shot, but I know enough about engineering to suspect that a large dollop of blame in this Extorre mess should be laid squarely at the feet of GR Engineering Services, who apparently wrote the non-43-101 non-PEA non-PFS document. They wrote the document, engineering code of conduct requires that they take the blame for the mess.

Well, at least XG's share price is "de-risking" (read: plummeting) right now. Wanna buy some? There's thick support at $7 approaching, with $6 afterwards. And the lowest XG's ever gotten was $5.60 during the "OMG Argentina's banning all foreign currency transactions" scare.

I mean... the gold is still there, right? Right?

More blog stat fun

Every few days there's a hit on my blog from a google search related to Tye Burt. I guess I was a little hard on the guy - but after all, his time on the job has resulted in an unimpressive share price performance.

Then again, today I got a refer from Google for the following search:

"tye burt must go"

Wow. I mean, wow. Such utter, seething... dissatisfaction, I guess. Maybe even ennui.

(Final paragraph deleted cos I already know I'm on file with the RCMP. Though trust me, I was very witty.)

B2Gold.... and chart analysis

Quick message, won't post the chart. But BTO has a cup and handle targetting $5.20, and is moving up from the handle now.

Is there any situation where BTO would be worth $5.20 within a month?

In other news...

Tried shorting silver at the open. Got out quick when $VIX and UUP indicated that the fear at the open wasn't going to continue. Crap, this is one powerful market, and I really don't want to get in the way of it!!! It'll all end in tears, I bet....

Sunday, February 26, 2012

Meadowbank mine

There's an incredibly useful post over at the Sabina board about Meadowbank, and I want to reprint it here in its entirety:

...Meadowbank cost was originally anticipated to be just $460/oz for the first several years and about $520/oz life of mine. What happened to make it $1000+? I was curious myself and went through a brief chronology and explanation from their news releases.

First, they encountered crushing issues and determined they needed a secondary crusher in place to resolve it but they had to make do with temporary crushing units for about one year (H2-2010 to H1-2011) until a permanent secondary crusher could be installed.

Second, in Mar 2011 there was a big fire that destroyed the camp kitchen facilities and they had a vastly reduced workforce for about two months resulting in lower productivity.

Third, throughout this time period since 2010 they suffered poor equipment availability due to challenges with winterizing the equipment and higher than expected logistical costs.

Fourth, then a more serious issue in Q2-2011 occurred with unusually heavy ore dilution due to the blasting sequence resulting in excessive movement of ore and waste and consequently much lower head grades for the mill. The problem was exaggerated further by the mining sequence also scheduled for lower grade ore at this time too.

Fifth, by Q3-2011 the crusher issue was resolved and operating at design specs. However, in an effort to reduce costs they spent more money to catch up on maintenance and properly winterize their fleet to prevent similar issues that were encountered in last year's winter and obviously this spending increased costs short term.

Sixth, in Q4-2011 despite record throughput all initiatives to control/reduce cost have miserably failed, encountering across the board increases in transportation, logistics, labour, and maintenance. Prior 2011 quarters had cash cost in the mid-600's per ounce range but Q4 spiralled out of control past $1000.

Seventh, during Q4-2011 they finally admit the geometry of the ore body was more complex than anticipated and possibly the mining technique they selected was not optimal for that actual reality. A new mining plan gets devised resulting in a shortened mine life by 3 years with lower production and a huge writedown of nearly $1BILLION reducing the Meadowbank value to just $762MILLION. What really hurts is their combined capex exceeded $700M to develop it and if they realized what they were getting themselves into then in all likelihood this mine would never have gotten developed at all.

The sequence of events is surreal, almost like some kind of pathetic soap opera, really. I think Sabina will be able to learn a bit from Agnico's painful experience and make out like either Cumberland or Comaplex and end up selling it to a senior after thoroughly developing and derisking their project.

So there you go. Sometimes you do find useful stuff on the bulletin boards.