Friday, April 6, 2012

On Brent Cook's genius, IKN's dark night of the soul, and the end of the GDXJ

Brent is probably reciting the famous line by Emperor Palpatine: "everything is proceeding as I have foreseen!"

After all, months ago he was saying there was a whole raft of companies with poor economics that were being valued by the market as if they could be buyout candidates when they weren't; and he said there were a whole pile of deposits being valued by the market for success when they were mostly going to fail.

Well Brent, hat tip to you! GDXJ is proving you right.

Thinking more about the in-depth analysis of GDXJ, I realize two things:

1. The GDXJ isn't coming back. It has no good reason to ever come back.
2. It doesn't mean the "gold miner" case is broken.

The GDXJ isn't coming back because a lot of the companies that make up the GDXJ aren't coming back. In some cases (ITH, SBB, etc) the shine is gone from north-of-60 projects and won't come back til a far-north mine starts showing stellar profits. In other cases (GUY), the project economics have proved failure; in other cases (KGN) people have turned their backs cos of failed moves by majors (Tasiast). AVR won't come back til we're sure Mali hasn't turned into the next Sudan. Richmont, Golden Star and Brigus were also noted in the comments as utter business failures, to which I guess you can add JAG and GPR and... help me out here, Otto, who else in the GDXJ have you always called crap?

And yet, BTO AR RIO and so on still look strong. Cos they already have mines, they have growth in the pipeline and have already proven that they can mine at a profit, and so nobody's going to turn their backs on them. Yes, AR's lost 25% from their high - it was probably in a bubble to begin with, same as SSL (which has fallen out of its uptrend). And BTO's down 10% off their high, with a failed breakout to boot; but considering how much of the GDXJ is BTO, a 10% drop should really be expected as people puke their GDXJ shares.

So I'd say the miner case isn't broken - You could still put your money into BTO with a reasonable expectation of capital appreciation. Same probably for AR. Know what? Probably FVI is a great play right now too - I'd worry about the cash costs, but if they truly have a program in place to reduce costs thru capex they should bounce back.

But at the same time, the overall junior space is broken. GDXJ is broken; why buy an ETF made up of 90% failures and 10% real businesses? (That's been my thesis on Russia ETFs for years, btw - why buy an ETF made up 90% of mafia, child-porn producers and ex-Kagebeshniki?)

So, what to do?

I think of poor Otto Rock. You guys don't know unless you subscribe to him, but he is a real analyst, with an industry-standard methodology and Excel spreadsheets and field visits and all that. He could probably get a job at Canaccord tomorrow - under an assumed name.

He stares at the screen in a daze these days, wondering "could I have been wrong all these years? Is gold doooomed? Should I really switch over to the tech sector?"

But yet, he has caught a lot of the buyouts (ANM, FRG, PEZ sort of, PGM, LCC pending, HAT, MFN more by accident) and the emerging-producer stories (FVI, BTO, RIO). And I don't really see that being broken right now. When BTO and RIO and AR and YRI's prices utterly collapse, then the emerging producer story is broken; when perfectly economical, uncontradicted, jurisdictionally safe projects collapse (and... um.. I'm drawing a blank here), then the buyout story is broken.

GDXJ in general is broken, and for good, because a lot of its constituents are crap: but this guy's been screaming at his screen for years, saying "WTF are these bozos doing buying Great Panther etc.?" Well, now the shitty companies are collapsing. (You said they were worth zero, Otto! Now the market agrees with you!) But BTO and RIO still have a bid. The companies that don't have a reason to collapse aren't collapsing.


So maybe the gold miner investment case isn't dead? It's just that all the companies that suck are getting puked into the pennies. The companies that don't suck are maintaining position.

Maybe we've all gotten greedy this past 2 years, seeing all the easy money being made as shitty companies went up in price, and we have to cut back on our watchlists and only look at the true economically viable stories. Cos the easy money of the rising tide of dumb new goldbug investors is gone. Now Brent Cook can say "ha! Told you! Lydian is the only likely gold buyout candidate".

Friday video: Sympathy for the Devil

Screw the Rolling Stones. Here's Laibach.

Thursday, April 5, 2012

PS silver sucks

Reuters has a nice article on the end of silver.

Read it and weep, bitch.

update on reader contest

With today's post titled ATTENTION: READER CONTEST, someone posted an interesting comment that got me thinking.

Maybe the GDXJ is crapping out simply because all the speculative premium in the juniors is getting bled away? I mean, look at all the miners that died this past year.

ATC, SBB, and ITH will never be mines cos they're in Nunavut and Meadowbank's a failure and Hope Bay has been shuttered and abandoned.

KGN will never be a mine cos Tasiast is a clusterfuck, therefore Esaase will be too.

BAT, GUY, both never had a mine to begin with, so it turns out.

Meanwhile, others are failing to mine at a profit.

Would you speculate on companies that are failing?

Anyway... go over to that post if you want to continue the comments.

That is incorrect! Spain is the answer!

Spain is the answer to the terrible secret of space!

I guess your response to that is "#REF!"

Oh well.

As of this second, Italian 10Y yield is 5.43%. Spain's 10Y yield is 5.73%.

Oh cruel fate, to be thusly boned. Ask not for whom the bone bones - it bones for thee.

Silence! It's all about India!

Read this:

Jewellers' strike: 5 things you must know

Read it all the way to the bottom.

Naw, you're a lazy shit aren't you. Okay, I'll reprint the important bits:

3) The Union Budget doubled import duty on gold to 4 percent of value and imposed a 0.3 percent excise on unbranded jewellery. The move was aimed at reducing imports and shore up India’s current account deficit, which happens when imports are higher than exports. India’s household gold consumption of $ 45 billion is 82.1 per cent of the estimated current account deficit of the country at $ 56 billion

4) The Budget proposals could severely affect the $200 billion a year jewellery industry. Experts say they could cut India's gold imports by a third to 655 tonnes, and push it to second place as the largest importer of the yellow metal, after China. Gold prices have more than doubled since the financial crisis in 2008-09.

5) The Reserve Bank of India has asked gem and jewellery exporters to submit monthly data on gold imports, in addition to banks and other nominated agencies.. Gold is India’s second largest import after crude oil, and large-scale dollar outflows drive down the rupee’s value.

OK? It's all about India. Then China. Not dollars. Not fiat Weimar Zimbabwe. Not Ludwig von Mises and Bohemian Grove and the Lizard People. India and China buy half the world's gold.

Also, read this.


It's no use using an index til you look under the hood.

I went and downloaded the Excel for GDXJ today, did a sort by position value in $, and then went through and looked at the chart for every single US and Canada stock. (Some of the Londons and maybe even a few Aussies might be cross-listed on the TSX, but I'm not interested in hunting down symbols - this is a first approximation study).

Then I highlighted all the stocks whose charts look good - i.e., the stock price goes up. And I highlighted all the stocks whose charts look bad - either a collapse post-PDAC, a swan-dive in the past couple days (FVI's an example, but there's a few other surprises), or even a simple impersonation of the slow downward spiral of Kinross or Agnico.

Out of 64 US/CDN stocks, 8 look good. BTO, CGG, AR, RIO, SSL, MAG, TRX(US), and EOM.


The remaining 22 are pretty much blah. Not collapsing, but not looking particularly good either, some just hanging at support, and none really informative by my own instantaneous subjective interpretation.

So, here's the question:

Why do the 34 suckers suck?

I know some reasons for a few:

GUY - will never be a mine
ATC - will never be a mine
ITH - might never be a mine?
SBB - might never be a mine, and its royalty stream might never be a mine
XG - might never be a mine, but we can't tell cos their PEA was a FS... or something?
SVM - never had a mine to begin with - come on, can you really trust the Chinese?
BCM - Would have been a mine but Ollanta Humala took it away. Though it was Garcia actually, not Humala.
AVR - good golly, it's Mali.

So what are the reasons for the others? - Note: I'm not looking for answers along the line of "management are morons", although of course we're all friends here and I'm sure we'd all like nothing more than to kick a few shrivelled & wobbly CEO 'nads. No, let's be entirely serious today: I'm interested in material explanations, along the lines of "their pre-feas came in uneconomical" or "their quarterlies keep proving they can't even mine $1600 gold at a profit".

Cos I'm trying to figure out why the GDXJ might continue to puke, or why it has been puking, despite my old refrain of "silver's at $31 and gold's at $1620, and India & China want more, so what's your problem".

If GDXJ is collapsing, I thought last night, it might be because all the speculative premium is being drained out of all the explorer prices. ATC, then SBB, then GUY, now BAT, have all become apparent non-mines. So they don't get valued at $50/oz now, they move towards a new target of $0/oz.

Or maybe, with the economic deposits (as Brent Cook will never stop saying, Lydian is definitely going to be a mine and get bought out), it's fear of a liquidity crunch meaning people jump ship before the next capital raise?

And as for the real miner stocks (hard to find real miners in the "junior gold miners ETF"), maybe it's capital cost escalation?

So, let me know what you think in the comments. They won't all get posted immediately - I'm hoping to be kinda busy this afternoon - but by tomorrow they'll be up and we all can begin to puzzle out what the problem is with the miners... uh, and explorers, as above.

Unless it's all down to the coming doooooom, of course....

Jojo in the Gold Report

Jordan Roy-Byrne got interviewed in the Gold Report yesterday.

He's my new favourite analyst (except, of course, for the recent private exhortation to buy $25 GDXJ calls, it's a bottom! he says, leverage up! he says, all clear! he says). He doesn't just TA, he also works in some market history and economics and sentiment. Plus he doesn't hemm and haww and give you ten different possible interpretations: he says things with conviction.

Plus his performance has beaten the market for a couple years - though maybe much of that was cos he picked Argonaut? Then again, he did pick Argonaut.

Anyway... disclosure (since he's publicly mentioning them), I'm pretty much all cashed up, but still have as a few of my only holds a couple small positions in Meadow Bay and Huldra. I'm not even remotely interested in buying more right now, given the stench of doom pervading the miners market. I have to read more about them though. Starter positions are so that you can have a good reason to watch the price action.

Note, as the blog disclaimer above, I am a certified sociopathic lunatic who suffers hallucinations and thinks he's a golden retriever named Emily. So you should not under any circumstances take anything I say as investment advice, or a suggestion to buy or sell securities. If you do, you're a fucking moron.

In any case, if we run into a liquidity crisis due to the Spain & Italy thing, you might see gold $1000 silver $12 and GDXJ $5, and even good companies could go to pennies if they're not in production with positive cash flow at that very moment. Who knows? Or maybe the companies both totally suck. As I said, I haven't read up on them yet.

stats fun, and my own go/no-go criteria

These are the searches for the past 24 hours that hit my blog:

Search Keywords
my own market narrative 3
delisting stock merger chart 2
mickey fulp macusani yellowcake 2
mickey fulp uranium 2
batero gold analyst buy sell hold 1
gdx capitulation 1
gdxj chart 1
gold miners capitulation 1 1
india jewelers strike and silver

Some funny stuff there (as if I had an opinion on Batero!!). Also, looks like people are looking for proof of capitulation in the miners.

FWIW, here's a couple charts:

GDXJ and GDX both gave failed signals for the EMA(8), so I've upped my tolerance. EMA(17) is now something that I want to see broken to the upside before I wade back into this nightmare. As an analyst has said upon the crapout of the $HUI, we now should hold any upmove to a higher standard of evidence before we believe it.

Plus I want KOL and SLX to stop scaring the fuck out of me. KOL and SLX are like copper - you shouldn't be able to fake industrial demand.

Plus I want Italian and Spanish yields to calm down: they're both moving up by 10 or more points a day right now, and that is bad. The silliness of last fall's "Greece doom" was unwarranted, and worries about Portugal and Ireland are unwarranted; but an Italy & Spain doom would really cack the markets, I'd say, since those two you can't fix with bailouts: you need defaults and bank collapses. Or, maybe insane money printing the likes of which the EZ hasn't yet dreamed.

Plus, okay, some mild support in gold and silver prices themselves. Maybe an end to the Indian jewellers' strike. Then again, China's opened their markets again and yet we're not seeing a vigourous bid in gold and silver from there right now.

Plus maybe some strength in the best miners in the world - Argonaut, B2, and Rio Alto. I've personally lost interest in the growth potential for RIO right now, but still think BTO and AR should still have price strength and steady accumulation - and as long as they don't, that says something.

Wednesday, April 4, 2012

steel and coal - DOOOOOM

This "playing the doom game using chart analysis" is fun - if your portfolio is a big empty hole with a few crumpled dollar bills rolling around in it.

Steel ETF SLX: lopsided head and shoulders, targeting $30 or so. Weekly MACD about to cross negative.

Coal ETF KOL: head and shoulders is already traced out (for those who doubted the copper ETF), targeting $17.50 or so. Weekly MACD about to cross negative.

So, um... is this the apocalypse then? The end of all industry? Looming dooooom in the world economy? Is this the end?

I'll save the Doors video til next week - this week is Easter so I gots something specially for that.

copper - DOOOOOOOM

Head and shoulders targetting about $26 or something.

Just throwing that out there.

Oh wait - not the apocalypse?

Wait... now we've got to buy all those shitty gold positions back?!?

Metal Bulls See Buying Opportunity in Gold ETFs

So, who's right? Casey? Or everyone else in the world?

Something to think about

Here's GDX to the price of gold:

Here's GDXJ to the price of gold:

Once the analysts become the sentiment indicators: what then?

Doom, or not?

From Barron's Focus on Funds:

“The reality is the market has been in a state of negative sentiment for weeks but has failed to sustain any rebound,” writes gold analyst Jordan Roy-Byrne overnight. “This means the market needs a final plunge/capitulation to wash out the last of the weak hands. It is a bad sign when a market that should rally can’t rally.”

Roy-Byrne says he’s closing out a highly leveraged bullish position — the Direxion Daily Gold Miners Bull 3x Shares (NUGT) — using the opening price, and putting on the opposite view using the Direxion Daily Gold Miners Bull Bear 3x Shares (DUST).

Oh, and GT as well:

I think your scenario has a good chance of coming to be. If the HUI xxxxxxxx goes, your scenario gets loaded [HUI 315]. As you know I have been nagged by a lack of a final capitulation (BPGDM and other indicators) and have been trying to figure out if the frogs are fully boiled or not.

As for gold, if it blows the pattern and does not continue to make a right side shoulder and then if it loses the Dec. low, it will be broken.

Well, Turd Ferguson is now screaming at his monitor.

At least Turd Ferguson is still bullish.


" is extremely unlikely that gold will drop to and through 1600. Maybe, in a wild bit of downward momentum, gold could trade there for a day or two. But, in the absence of real, significant change to the fundamentals, gold will not and cannot go down a whole lot farther."

One of his commenters notes:

"beginning at 2pm EST, over 127,000 contracts, or 637.535 MILLION OUNCES OF PAPER SILVER were dumped on the market in only 1 hour, resulting in a massive silver decline of.... $0.65."

Tuesday, April 3, 2012

Enough of this "gold and QE" and "gold and inflation" bullshit.

I've had enough of the "anti-inflation" and "fiat Weimar Zimbabwe" crowd, okay?

If gold is a "constant dollar" and there's "hidden inflation that the Fed is covering up" and there's "stealth devaluation of the dollar", then the last thing you want to do is own gold miners. Okay? Don't own gold miners. Flee at top speed from gold miners. Because if there's all this pretend hidden inflation, but gold is the "constant dollar", then no gold miner will ever improve their margins. Ever. Because their cost inputs are in "devalued fiat currency". The coming hyperinflation disaster you keep harping on about will cause all the gold mines to shut down. Cos they won't have any oil or labour or electricity anymore.

In fact, you don't want to hold bullion either. In times of hidden inflation, and hyperinflation, you want to own productive farmland. Okay? Cattle. Orchards. That sort of stuff. That's the constant dollar, because people don't stop eating, even when the rest of your economy collapses.

And don't get me started on silver. If this purported "hidden inflation" is destructive of real economic productivity, like you're saying, then you should avoid silver like the plague because it's an industrial metal.

Gold is being bought because 3 billion poor people in Asia are becoming marginally less poor, and they've always loved gold in Asia because they never fucking had any. Whenever they could get their hands on it, it meant that they'd traded something valuable for it.

India never had any gold. 2000 years ago, they used to set off in little boats to Indonesia, to buy spices, to carry back to Sri Lanka, where they'd also load up on cinnamon, and maybe saffron and stuff from the north, and then take all that to ancient Egypt, and Nubia and Punt and Tanzania, where they'd trade the spices and cinnamon for gold. Because Egypt was the only country that had gold back then.

Later on, traders would go all the way to China for fuck's sake, overland because Arabia had become full of shipfaring pirates, over pretty nasty mountains, through lands full of mildly unfriendly people and no water, and they'd load up on silk to trade all the way to Egypt for gold. That was the only way China ever got gold. Because Egypt was the only country that had gold back then.

Later on during the rise of Islam, Mali became the center of gold production. In fact, the Malinese king, on a pilgrimage to Mecca, stopped off at Alexandria and gave away so much gold that he caused a great worldwide currency devaluation which resulted in the economic depression of the Middle Ages. Because all the world's gold-based currencies were manufactured out of the small supply of gold that was coming out of Mali, plus the pre-existing Egyptian gold.

Basically the Chinese and Indians are buying gold for the same reason they're buying cars, or art, or beef. Cos it's a luxury good, it's been a luxury good for 2000 years, and now that more of these guys have some money, more of them are wanting gold.

The price of gold probably still is influenced to some extent by the real (interest minus inflation) yield rate of US T-bills. But it's also influenced by the fact that three billion Asians are buying fuckloads of it.

But they're not this month. Big deal. Cos China's closed for a holiday and India is on strike. Yet gold is still at (checking Kitco) $1646.90. Hardly a demand disaster.

Oh, hey... remember the FOMC saying "inflation is tame"? That means that cost inputs for miners should also be tame now, so you should buy miners. Not sell them. Cos they have better opportunity to make money, the minute India and China start buying their gold again at the previous pace. Which is probably next week or something.

aftermarket party, and Sunward's Titiribi is destroyed forever

With the Indian jewellers still on strike and the Chinese markets closed all week for holidays, it'll be interesting to see if gold still manages to find support overnight.

The silver miners still look quite healthy though, at least in comparison. But I guess gold is perceived as an "inflation play" (instead of an emerging markets growth commodity play) and silver is supposed to be an economic growth play.

And - correct me if I'm wrong - Titiribi is about 100 miles north from that little Nevado del Ruiz volcano that's about to erupt killing thousands. Or not. So, hopefully the selling of SWD going on right now has nothing to do with the volcano.

carry on market comment

Either HFT algos are programmed to sell when the FOMC or Bernanke says something hopeful, or the human participants of the market are similarly silly.

"OMG Bernanke says the US economy's doing just fine, sell! Sell! SELL!!!"

further market comment: retail doesn't get it edition

Silver's in an upward channel today, and gold is even. Yet GDXJ is down over 2%.

It might be that the surge in miners yesterday was just the result of funds adding miners back to their portfolios after the end-Q1 dump. But tellingly, after yesterday's surge, retail's dumping the miners back down today, cancelling out yresterday's surge. We have a bearish outside day on the $HUI and the GDXJ.

So maybe we're still bottoming? Analysts remain rabidly convinced that the bottom is in and the miners should be going up from here. But they're not. Probably because retail still wants to sell?

Whoops - it's 1:24 ET and I just saw silver pop to a new (post-bottom) high. That means a higher high. Those things are good, y'know. So maybe now the juniors can come back?

morning comment

Seems like retail depserately needed to sell off this morning to avoid the rally in the miners. Now it's all bounced back.

I didn't exactly bottom-tick a buy of HGU.TO this morning, but I was awfully darn close. I figure, since the analysts are all screaming that the bottom is in, and I'm not cocky enough to buy at-the-money calls, I'll just go for a double-long goldminers ETF and see how that works out.

Monday, April 2, 2012

We now return you to your regular programming.

Everyone called a bottom this weekend. Every single analyst. Everybody. Now silver up gold up GDXJ up miners up SIL up say goodnight Gracie goodnight Gracie.

I would especially like to thank the guy who talked me out of buying $20K of short-date GDXJ calls at the money on the open.

Er, wait, not thank... what's the word I'm looking for? Abjure? Accurse? I dunno. I'll come up with something soon.

GDXJ and SIL have both broken upward through their EMA(8)s with conviction. So, barring a drop down and retest today, or a collapse and resumption of downward trend, everything is now looking hunky-dory and I suppose you can all go back to buying back the stocks that you've been puking out from every orifice for the past two weeks.

Oh and PS China's PMI is fine after all kthxbye.

UPDATE: Just to reiterate from Friday:

And for an explanation, watch this:

And if you're one of those crybaby sissy junior mining investors who's all boo-hoo, junior miners suck, explorecos suck, just remember this:

The seasons don't fear the reaper; nor do the wind or the sun or the rain. Can you be like they are?

Sunday, April 1, 2012

Reuters: gold miners still don't get that they fucking well SUUUUUUCK. That's "SUUUUUUCK", by the way, with a capital "SUUUUUUCK".

I always wanted to be an editor. In fact I have been. So here's my markup of the story. Follow the headline if you want the original without all the dollops of sarcasm.

PS - feel free to forward this post to Sean-Boy, Chuck Genius, and Nick Holeintheground.

Humbled gold miners sweeten pie to entice investors

(Reuters) - A [further] collapse in gold producers' lofty valuations [already shitty prices, despite the price of gold continuing its strong advance,] has sparked soul searching about an exodus of restive shareholders, forcing them to tighten operations and boost dividends to lure investors. [a few vague babblings about paltry 1% dividends that, judging by these companies' poor performance, would never make up for the continued downward spiral of their share prices.]

Executives of top gold firms acknowledged during the Reuters Mining and Metals Summit this week that they bear blame for losing some investors who have switched to putting cash in gold bullion itself instead of companies that dig it up. [their companies, who keep insisting that they do dig up gold, but still show massive losses on their balance sheets, so something's just not adding up here.]

"Over the last year or two, investors who love gold... have been quite disappointed in the general gold sector's performance in terms of execution, be it capital blowouts, or a range of operating issues," Chief Executive Greg Hawkins of African Barrick Gold (ABGL.L) told the summit in London. - ["except for B2, Argonaut, Rio Alto, and all the other juniors whose share prices have steadily gone up over the past year because the companies aren't run by fucking idiot morons."]

Up to about five years ago, gold mining companies were accustomed to enjoying valuations that were more than twice those of other mining companies. [And they're still behaving like they deserve those valuations.]

The forward price earnings (PE) ratio of gold miners was 30-35 in 2005-2006, compared to less than 15 for world equities, but the situation has flipped.

Valuations for gold firms have slid so much they now trade at a discount to the market, with a PE of 10 versus nearly 12, according to Thomson Reuters Datastream.

At the same time gold companies struggled [failed] to control costs in far-flung locations, investors were presented with an easy way to invest in gold bullion through exchange traded funds (ETFs), which have attracted $130 billion of investment.

"I think the ETFs may have structurally changed demand for gold company stocks," said Tom Massey, who heads Citigroup's (C.N) metals and mining and chemicals investment banking teams for Europe, Middle East and Africa.

"Also, some of the management teams haven't covered themselves in glory in some of the recent gold M&A, [really screwed the fucking pooch with idiotic acquisitions. I mean, seriously! Tasiast? Hope Bay? Why not just shovel a pile of money down a flaming pit to the center of the earth, then cover it with 10 cubic miles of 100Mpa reinforced concrete?]" he told the summit. "Most of our collective gold clients have told us in private that they wonder if the gold premium is coming back. [know a leprous rotting corpse when they smell it, so they're going to stay with GLD.]"

The high valuations had likely been supported by a group of investors who are most ardent about gold [run-of-the-mill idiots], but if [even] they are shunning the companies, gold firms must broaden their appeal [to the mentally retarded, seniors with Alzheimer's disease, and people who failed grade 3 math], executives say.


"We can't just continue to battle each other for the same dollars from the same gold funds," Chuck Jeannes, Chief Executive of Goldcorp (G.TO), told the summit in Toronto.

"We need to attract those generalist investors, but to do that we need to run our businesses very responsibly, we have to deliver on the financial promises we make and we have to avoid the big issues that scare those investors away."

["Unfortunately," he added, "replacing our executives with their Guatemalan poolboys would mean our gravy train stops. So, it's not going to happen."]

Other executives also acknowledged they now have to compete with a wide range of other companies for investment and see boosting [pretending to slightly boost] dividends as a key strategy.

Last month, steep [tiny] dividend increases helped spur [temporary] share rebounds in Canada's Kinross Gold (K.TO) and Agnico-Eagle (AEM.TO)[, before the prices turned around and headed back down to multi-year lows this week;] and in September global No. 2 Newmont Mining Corp (NEM.N) said it would link [miniscule] dividend payments to the price of gold.

"We'd love to see some of the bigger companies in the space forgo some growth capital on high risk projects and say we are actually going to increase our dividend and we are going to put in a program to buy back shares," Agnico-Eagle Chief Executive Sean Boyd said.

"I think that would be the start of sending the right messages and really make the sector a forceful competitor to the ETFs. [Since we've proven that we're utterly incapable of growing our mining companies, I'm sure investors will happily flock back to us when they see we've foregone replacement of reserves, in favour of slowly paying out a fraction of our earnings in the form of a dividend - almost as if we were a 10-year bond with a face value of zero.

"Why would investors have a problem with that? If they can buy growth companies like PT or TEF with five times the dividend, or a Canadian bank with double the dividend, or Dow dogs with triple the dividend, I'm sure they'll see the merit in instead chasing a 1% dividend, paid from mineral reserves that we no longer want to expand, at a poorly-run miner in a cyclical industry.]"

Also hitting valuations are worries among some investors that gold prices may have seen their peak. [gold miners are failing to even keep their cost increases below the steady advance in the price of gold.]

Gold has enjoyed 11 consecutive full years of gains since touching a low of $253.75 per ounce in 2001, hitting a record of $1,920 last September.

Since then, however, it has struggled to regain momentum and some major analysts have forecast falls to $1,000. [some analyst who we don't even bother to name, and who may not even exist, has even forecast a fall below the price of production, which obviously is going to have to happen coincident with the collapse of China and the death of all women in India.]

Executives are braced for a tough quest [jawboning a lot nowadays about their pretense] to regain investors' confidence in their companies' performance and in the resilience of the gold price[, when in reality they don't give a shit as long as the options keep flowing].

"I don't necessarily see or envisage [or care] that the market's going to all of a sudden re-rate the sector and give us back a 1.8 or 2 times premium. I think we're going to have to perform to earn where we should trade," Hawkins at African Barrick Gold said. ["And that's too hard, and I don't know how to do it anyway, so why fucking sweat it? I'll be turning 60 soon, and then I'm fucking off to Aruba. Let someone else mop up the puke."]

Chief Executive Nick Holland at South Africa's Gold Fields (GFIJ.J) agreed that there was no quick fix [interest in fixing the deathspiral of the majors].

"If people start to believe that the current gold price is for real and it's not going to go back to $1,100 or $1,000, then maybe that will give more belief to the equities, but that may take some more time [doesn't necessarily mean our equities]."

Breaking news: Otto Rock from IKN rushed to hospital.

This is a breaking story, we'll keep you informed as news develops (link here).

UPDATE: It's now 12 midday so fun is now officially over on this, the first day of the month of April. We can inform readers that according to back stats over 90 of you decided to click through on that link above, and (unsurprisingly) 56 of those came from the .ar country code.

And in all seriousness, Shaun Ryder being appointed a special adviser to the UKPM isn't that weird an idea. I mean, aren't they in a coalition with the Liberal Democrats to begin with?

Meanwhile, what Jojo says....

Here's Jordan Roy-Byrne being a dispassionate technical analyst, when all around is der Götterdämmerung (or, if you're inclined, der Götzendämmerung):

Stealth Bottom Coming In Gold Mining Stocks

And he doesn't even put a question mark at the end. I like that.

I was joking today with GT that maybe if I'd have just shut up and done what the technical analysts told me to do over the past few months, I'd be better off right now.

Then again, I (iz teh smrt) posted back on Feb 29 that y'all should have just gotten out of the PMs entirely... cos of the PDAC curse. Which became a self-fulfilling prophecy, only exacerbated by the puke in gold on PDAC Monday. Then the Indian gold duty increase, then the Indian jewellers' strike.

Oops! I just destroyed the universe.

Boy, that sucks. Not only has my DOOOOOOM post gone viral, but now newsletter writers (er... GT anyway) are taking it seriously as a possible indicator of... I dunno, something or other. His words:

"I found your post unbelievably compelling. It almost hurt to read that stuff. Something is going on and I want to be on it."


Look. Here's the problem.

A bunch of Korelin readers have gone full-puke on the miners. They all want to buy Apple. Or SPY. Or Yum! Brands, I dunno, what's in the US press nowadays? Their attitude towards the various goldbug pumpers has gone fully septic. Not just tetanus-septic, but Father Ted-style "I've never seen an entire head go septic"-type septic.

They've seen their stocks go down, by one guy's estimate, "70-90%".

What the fuck do they own? Batero? Golden Hope? Seriously, what else has gone down that much? Aura Silver? Did they buy GUY at $9 and BCM at $12? Then hold through a whole year of suck? Even during my odd forays through Stockhouse and Agoracom, I've always met retail loons who will dump a stock after it's down 50%. Or 30%. Personally my pain threshold/"indicator of something not right" level is 5-10%.

So the guys whining about being down 90% are just utterly stoopid. They're the butt end of retail. The guys who bought GNH from me at $0.90 and held it all the way to 12 cents. Al Korelin himself doesn't own anything that's down over 30%. So why are his listeners blaming (among others) him for their poor performance?

Now, yes, a lot of stocks are down. But maybe most of those stocks sucked to begin with? As Brent Cook noted, there's a whole pile of garbage out there on the Toronto exchange: their whole purpose is to print paper, pay salaries, and pay an 8% vig to Canaccord. A lot is pumped to retail. So of course it sucks. Once a few people pile out, the rest start selling, and the idiots who still think the stock is the next big thing are left holding the bag. The entire exploreco world is a pile of suck, and (btw) even Cookie's LYD and AMM aren't particularly thrilling anyone with their charts.

And the majors are sucking, and even some of the juniors are sucking.

But what worries me is someone starting to take the whining of the butt end of retail seriously, just because I did.

Yes, I've already posted that I think the India demand loss worry is overblown. And Andrew Day is no idiot, and he thinks China's economic situation right now is no big deal.

But maybe something else is wrong? Maybe the drop in USTs is a portend of dooooom? Maybe Europe really is on the brink of a catastrophic collapse? Maybe the Yen is going to kick up a whole hive of bees that shoot bees out of their mouths?

I've been trying to read through the various senior miner MD&As this weekend, trying to see if the "DOOOOOM" emotion is reflected in their recent writeups. I'm going to be very interested in the next missive from Alcoa. I'm worried that maybe, just maybe, the butt end of retail is right, because now Rob McEwen is also saying that miners suck.

I dunno... all I can say is, thank god that no analyst of any importance reads my blog - like James West, Peter Grandich, or the Casey crew. You know, the guys with a readership and a following. :-) Because I'm worried that, if it became any more popular, my DOOOOOOM post might cause a bunch of people to say "aw heck, this is a bottom right here", pile back into the market, and give us a 2-day boost - until the miner indices start crashing again, because maybe there's something real going on here.

I mean - aimed at the chartie analyst here - we should just shut up and watch the chart, no? The Korelin forums are just noise that should be tuned out, no?

I really really hope I haven't screwed up the universe by pointing y'all to the Korelin forums. It was just meant as a bit of good old-fashioned Schadenfreude, it wasn't meant to inform anyone that a bottom was in or the blood was flowing in the streets.

Now... with that in mind, I have quite the hard-on right now to buy some $23 SIL and $25 GDXJ calls. Big time. 100 each. Cos I'm so, so sure it's a bottom.

I'm not usually right, so maybe that should be your contrary indicator.

small chance that maybe ZeroHedge posted something useful

Now, the source is ZeroHedge, so if you go by everything they say, you should actually sell all your junior mining stocks, go long guns and ammo, and hide out in a hole in the ground til the coming racewar ends and Jebus raptures you to heaven. With Jamie Dimon.

But with that caveat in mind, here's an interesting article:

Guest Post: Will India Stop Buying Gold?

The answer, if you want to avoid all the cooties of visiting ZeroHedge, is no, they won't. Cos they haven't for 3500 years.

Oops! Just checked the byline, and it's from Casey.

Well, if you want a different source, here's someone from Kitco:

CPM Re-Shuffles Statistics On India Gold Fabrication Demand And Investment

And here's an article that plays the usual game: spooky scary title, but the details say something different:

"Persistent Investment Needed" to Support Gold as Indian Duty Hike "Kills Imports"

I see... the Indian government drives the price of gold up 2%, so people will stop buying? Come on. No Indian girls are going to get married this year, you mean? Because of a 2% increase? An increase in the end-user price of gold the likes of which has never been seen before! 2%! Shee-it!

In truth, the article says something different:

Bhargav Vaidya of the Bombay Bullion Association [says] “The strike will not be indefinite, and customers will not go high and dry during [the key] wedding season.”

Though there's a few notes that Russia's selling down gold reserves (not that this swamps out developing-world demand) and people are heavily short Zijin Mining (wouldn't blame them - you can never go wrong shorting Chinese corporations).

Oh, and -

“Indian [gold] demand has been dead for three months,” said a senior Swiss logistics executive to BullionVault on Thursday....



So this whole "India demand drop" thing already happened. As in, it's already been priced in. As in, that's why the price of gold was weak in Jan-March. As in, those are the months that have already happened. As in, we've been there already.

Cos here's a Bloomberg article from 21 hours ago:

Jewellers may end 14-day strike on Monday

So... it's not the end of the world? The government's backing down? Not that it matters, of course, cos there were also stories going around that the jewellers were all going to start smuggling their gold in from Thailand. To... y'know... avoid a 2% price increase.

Well... I guess this whole story was one big yawn.

Now the goldbugs can go back to ignoring India and demand, and back to screaming about gold being "real money" and a way to fight hyperinflation.