Saturday, May 5, 2012

Tonight's movie night - featuring testosterone

I saw the trailer for Expendables 2 yesterday on Gawker. It actually seemed like a fun movie.

So tonight, the feature film for everyone's viewing enjoyment at home is the first Expendables, the extendamix version or director's cut or whatever. Apparently this movie will make a bald person grow hair, or a woman grow a penis, that's how much of a guy movie it is. Things explode and guys beat up other guys and shoot guns. And drive cars I guess. Really. That's the plot. And probably some farting and beer.

Let's see if I remember who's in it? Stallone, Jet Li, Arnold, Bruce Willis, Stone Cold Steve Austin... and... I dunno, apparently everyone else who ever did an action movie. Except Van Damme apparently, no loss there, I've always thought he was as fun to watch as a quantity surveyor counting instances of the letter 'r' in a large telephone book.

UPDATE: Yeah, so I watched the movie, here's the review.

Sly Stallone has a skull ring. The one other guy had a gun so big it made people blow up. That British dork who's England's answer to Bruce Willis is in the movie. So is Bruce Willis. Things explode. Most of them actually drive motorcycles instead of cars.

And... that's about it. Bleh. Fight scenes, things blow up, car chase with guns, blah blah.

on Hussman etc.

Apology to coasta, but while I've gotten an email notification of your comment, it still hasn't shown up here at blogspot. Comments seem to disappear with frequency here. Often on purpose, but this time utterly by accident.

Anyway... you posted

Wasn't impressed with shortsideoflong's take on the US.

>There are no signs of a recession in the US at the moment so therefore the US equity markets remain in an uptrend.

1. He is clearly blind, as there are TONS of signs and indicators that the US is heading for a recession (if not already in one). As a counter example, read some of John Hussman's stuff. His weekly commentary is a must read.

I don't read Hussman because he's a broken record, and because he is wilfully blind to positive data. Sorry, that's how I feel about him. He's no better than that ECRI fool who has kept saying "oh, the economy is flashing a recession signal" since the last recession ended. For data interpretation I find nobody better than Bonddad.

(Biiwii as well, whenever I can figure out what the fuck he's going on about with his goldilocks and the three wise bears references. Frankly, it makes perfect sense that GT's a Wire fan because everything's "A bell is a cup until it is struck" with him.)

Yeah, the US is stagnant, jobs are being added too slowly, etc. etc., but I find the people who are most concerned about that are the Nazi Rethuglican wing who want to drown the US in yet more debt by eliminating taxes and spending yet more on the military and Vaterland Security. They have a record of doing that, see? The US's problems get solved tomorrow if you eliminate the Bush tax cuts, close Homeland Security and transfer all its duties back to the FBI/CIA/state police/county sheriffs, eliminate idiot farm subsidies, and cut spending on war by 50%.. Frankly, the "fiscal cliff" is going to be a fantastic boon for the US, and a fine first start.

Off on a tangent now, sorry.

As a side note, have you noticed oil crashing recently? And wouldn't a big drop in oil be a boon to the US economy? Maybe Bernanke won't have to do a QE3, if oil can drop back to $90/bbl.

(If someone reads that last sentence and says "uh-oh, no QE3?", then they're part of the problem.)

2. The equity markets and the general economy are quite often uncorrelated to each other. So his little QED there doesn't really make much sense.

No argument there, I guess. Except the market's performance is a large input to the ECRI formula, the market crashes when the economy goes into recession, and so on.

>Credit markets are also behaving in order and do not give us any major warning signs of banking trouble directly ahead.

LMAO. Thanks to Captain Ben and the Operation Twist brigade. Just because they appear to be behaving, doesn't mean the contagion isn't festering right underneath. Just because a floor appears sturdy, doesn't mean you won't fall right through when you stand on it, if the structure underneath has rotted away.

Sure, I'm cool with the ultimate-debt-explosion interest-rate-doom only-a-Volcker-can-save-us story for the long-term evolution of the developed markets. But that's secular. I.e., it could be another couple years before that hits. I need to know what's happening now.

Speaking of which, we have no idea how that debt doom is going to play out unless we can predict what the effect of China, India and Indochina's growth will be on the US's near future. It all really does hinge on China, and that's really why I liked the story I linked to.

When the Euro doom was happening, the European pundits were adamant that the American pundits hadn't the slightest fucking clue what they were nattering on about. As it turns out, if you look at the 1-year chart of the SPY, the European pundits have since been proven right. So now, if China is in question, I want to find commentary that is based on actually knowing something about China; and now I've realized even Chovanec hasn't a fucking clue.

But back to your thing with the floor and stuff. I agree with GT that if banking trouble hits, the credit markets will slip out of Bernanke's control. Maybe it's even possible to argue that his control is what's stopping any doom from hitting. In any case, the banks will get recapitalized with taxpayer money, because that's the post-capitalist Statist-fascist totalitarian slavestate we live in.

The question is, do they then print money afterwards? I think we'll have to see that soon - though "soon", again, is secular, and may only come after another 5-10 years of stagnation.

A few weekend articles for you

Here's a few weekend reads:

Jojo's written a piece this week that contains some charts that, if you're a goldbug, should make you spooge yourself at the possibilities for the future. I especially like the comparison between 1971 and 2011, since those two eras are approximately two Jim Rogers Units apart.

Short Side of Long is a contrarian blog that I've just started to appreciate. It's easy to be contrarian and wrong: every argument has a large number (n) of counterfactuals, of which it is certain that at least (n-1) of them are incorrect. This guy seems to be interested in the difficult task of finding the counterfactual that is most likely to be right - instead of just parroting off "everyone else is A so I'm going to B", which is the stupid way of being contrarian.

Anyway, Short Side of Long has a nice article this week which has the following observations: (1) no, the US isn't going into a recession; (2) long positions in $USD are 2SDs above normal, which means the long $USD trade is crowded and you should expect the $USD to drop instead (very interesting, that); (3) the S&P 500 isn't topping, because your new highs and new lows aren't equal - but we are in the late stage of a bull cycle; (4) he thinks the Shanghai is bottoming, in which case we're about to go on a bull run for commodities. Good points made, so go read him.

Speaking of which... while I was locked in a smelly van full of engineers for 12 hours on Wednesday, because they really really really needed me to look at stupid box culverts in another time zone, I came across the definitive article on the China question, and I strongly encourage absolutely everyone to read it - so much so that I have put it in boldface and italic.

The upshot is this: people are looking at China through a Western lens, and thus they will get China wrong. (This seems to include Chovanec, by the way.) China's culture is not Western, their politics is absolutely not Western, their economy is not Western; and we need to understand and accept all that before we can begin to get a read on China.

Specifically, regarding short-term jitters, he notes:

  • The Minsky/Kindleberger bubble model is not generally applicable to China. Outside observers visit China and see empty cities and excesses in capital, infrastructure and real estate investments. They think they see Western style, market bubbles. The Minsky/Kindleberger model with its Financial Instability Hypothesis describes an environment where private investors become overenthused about a particular asset and become overleveraged. The ensuing bubble followed by collapse brings about distress and panic for indebted investors and the financial system which has extended them credit. This model describes what happened in the US and other Western countries very well. But it does not describe what is happening in China where the public rather than the private sector is doing the borrowing. You do not hear stories of private mortgagors overborrowing to buy houses as happened in the US. It is a foregone conclusion in China that the government will eventually pick up the tab for bad loans made to local public sector entities and bail out the banks if necessary. The Chinese economy is state (or more precisely Communist Party) directed, not market directed. Minsky/Kindleberger style bubbles and collapses are characteristics of Western market economies, not state directed ones where overleveraged private investors are not playing a major role in the process. As long as the state has the financial resources to cover these losses a bubble type collapse can be avoided. At this point in time, the Chinese state has those resources.
So quit calling for a China hard landing you morans!

And finally, ETF Trends has yet another article on LatAm ETFs and why LatAm is a fantastic growth area. This I find interesting: it's almost like the world is waking up to LatAm growth possibilities. It's almost like LatAm is the new China or the new BRICs.

I.e., it's almost like the US media is starting to beg everyone to flood LatAm with great wheelbarrows full of capital.

I.e., is LatAm the next big thing? Is LatAm another graphite, say?

Friday, May 4, 2012

Commodities - is this the reason?

Maybe this was the reason that the commodity complex has been looking sketchy recently?

"Speculators" were being threatened with higher margin requirements, in an attempt to kick the parasitic capitalist rent-seekers out of the futures markets in favour of the heroic proletarian hedger class.

Y'know, cos like speculation is bad.

I guess, if this were to pass, it'd be a net positive for gold miners, since the input costs (oil, steel, miners' cost of living) would be less affected by a speculative premium.

Quote: "It's going to drain liquidity out of the market. It's a shame because the people this market was made for, this is going to make it difficult for them," said Kinoff.

 So if you're watching things like the commodity complex to find a hint of an upcoming liquidity suck, your indicator might not be see-through anymore. I mean, you might be seeing the liquidity exiting the commod market, and only because of a bringing down of the speculative premium.

Peter Brandt says omgweallgonnadie

Peter Brandt says the PMs are at the "do or die" point on the charts.

I read this as him predicting gold's about to drop by $250.

Quote: "A move below the April low at $1613 (especially if it’s on Friday) would not be good news for the bulls."

Quote: "Gold is right at the edge of the cliff hanging on by its finger nails."

Brent Cook on Korrelin

Yesterday on Korelin, Al interviewed Brent Cook on Otto Rock's opinions about Peru, Chile and Argentina. :-)

Seriously, it sounds like Brent is a regular subscriber to IKN. Note the reference to "protest season"....

I guess the upshot of all this Minas Conga business is that we have to wait for that to settle before BCM can "get Santa Ana back"?

Article on artisanal gold mining in Nicaragua with a brief mention of Calibre Mining

IKN recently posted a link to Latin America New Dispatch, where they don't have a lot of content re: Nicaragua, but they do have a rather old photoessay on artisanal mining there, if you're into that sort of thing.

CXB, BTO's little brother, is peripherally mentioned. Basically as teh ebil owners of Hemco Mining, whose cyanide barrels gaily festoon the local towns. I especially like the caption about using "barrels of lethal cyanide to build a fence around their home" - yes, these Nicaraguans are so rich that they can afford to use full barrels of cyanide! Not empty ones! And that is definitely the mining companies' fault!

As well as the g├╝iriseros using mercury for extracting gold: yes, that's also - yup you got it! - the fault of the mining companies.

An untenable theory re: BTO

OK, the last time BTO collapsed (um... a week or two ago) was because Ortega gave a speech in favour of Kirchner's nationalization of YPF.

Is this week's swandive because BTO's got a mine in Namibia that they want to bring into prodduction, and the Namibian government is forcing DPM to fast-track improvements to the Tsumeb smelter?

It doesn't look plausible because the timing is off. DPM dove days ago, yet BTO only dove yesterday.

Maybe it's just one of those FVI type swandives: the explosives accident, the local political bullshit, and the rising smelter costs all combined to force a radical devaluation of their stock. Here with BTO you've got Ortega, and now those jerks in Namibia are saying they don't want to be poisoned by all that arsenical waste being shipped there from Bulgaria. Then the GDXJ dives upon silver's drop to its next lower range, and that's the trigger that gets BTO sold off.

No idea.

Speaking of Namibia, here's Namibian popstars Set-son and the Mighty Dreads:

Friday Videos - let that be a lesson to you

King Crimson, playing "Starless" on French TV, unfortunately without the sax solo by Ian McDonald.

Thursday, May 3, 2012

The beatings will continue until the morale improves

PM sentiment sucks.

Market carnage, and Bear Creek tries to get our hopes up yet again

Generally the GDXJ is getting slaughtered today. BTO, one of the big components, was at one point down 10% - I can't figure if it's because GDXJ is getting sold, so it was selling BTO, so the BTO bids got pulled, or rather if maybe there's new jitters about Nicaragua since one of the old Sandanistas died.

Or, of course, their earnings (set for release post-close Friday) leaked out and are horrible for some reason, so the crowd with the inside info are getting out early. Or even if that's simply what was going through other people's heads as they saw BTO selling off, so they decided to get out too.

Here's a nice little article about Bear Creek Mining, and it's Bloomberg so you know it's true:

Bear Creek Expects Peru Project Rights Resolution by Year-End

Bear Creek Mining (BCM) expects to resolve a dispute with Peru by the end of this year, possibly by sharing profits with the local community, after the government withdrew a concession to develop the Santa Ana silver deposit.
Bear Creek may agree to give local communities 2 percent to 3 percent of net profit from the deposit as part of a deal to restore its rights to build and operate the mine, Chief Executive Officer Andrew Swarthout said in an interview in Toronto today.

Translation: wow, we're really hopeful that all of a sudden we can be friends with the local people. They seem nice. Maybe if we offer to share some money with them? Wouldn't that be nice? Sharing is nice. Let's just be nice.

“There’s a strong willingness to resolve this problem,” he told analysts and investors at a presentation earlier today. “We’ve had some very constructive discussions.”

Translation: Wow! Peru's mining ministry is nice! They made us feel hopeful with how nice they were. I'm sure we'll get our mine back, because... darn! they're just so nice in the government and that means something, y'know?

Peru’s government withdrew Vancouver-based Bear Creek’s concession to develop the Santa Ana project as it sought to end a month of protests seeking a ban on mining and energy investment in the southern Andean region of Puno.
Newmont Mining, the largest U.S. gold producer, suspended construction of its $4.8 billion Minas Conga project in Peru in November after weeks of clashes between police and opponents of the mine. Newmont said last week it’s evaluating the recommendations of a government report that said the project needs “substantive improvements.”
Swarthout said the uncertainty over Minas Conga probably needs to be resolved before Bear Creek sees progress on an agreement for recovering the Santa Ana rights.

Translation: Peru's government told us they just have to go sort out that Minas Conga thing and then we can talk more about getting our mine back. Gee, we hope those nice Newmont people have nice things happen to them. Then maybe nice things will happen to us too! For the time being we're happy to wait by the phone. Shouldn't be long.

Bear Creek declined 3 percent to C$3.25 at the close in Toronto. The shares have fallen 60 percent in the past 12 months while silver prices have dropped 36 percent.

Corani Project

The mine may cost $70.8 million and produce 5 million ounces annually in its first six years, according to a January 2011 feasibility study. Bear Creek, which says the withdrawal was unconstitutional,...

Translation: we're sure that constitutions and international law mean something! Because that would be nice, and the world is nice. Nice things happen to nice people, and we do try awfully hard to be nice. targeting annual silver production of 15 million to 20 million ounces by 2015, Swarthout said.
The company’s larger Corani project in Peru may cost $574 million and produce 13.4 million ounces of silver annually in its first five years, according to a Nov. 9 feasibility study. The company will submit a permitting application this year, Swarthout said.

Tuesday, May 1, 2012

New term, this one open-source and available for all - "smelly finger"

Yesterday, if you recall, at 8:31 AM, gold got killed instantaneously by a $1.2 billion dump into thin bids.

Here's a couple news stories for you on the topic.

Some of the "reputable" MSM sources suggested it was a "fat finger". But those of us who follow the true news sources like ZH and TFMR know that the whole thing simply fucking smelled. It was a rank, bald-faced puke of one point two billion dollars into nonexistent bids all at once while China was on holiday. It was so severe that gold stopped trading for 10 seconds.

Nobody who has access to a billion-dollar sell button outside of heavy market hours is going to input the launch codes like that. Unless they want to. The whole thing stinks.

In my effort to pay you back for my appropriation of the term "gold miners suck", I hereby invent a new term for you to use: "smelly finger".

Short Side of Long makes a compelling case to go 100% in right now

Short Side of Long blog makes a very compelling case for PMs right now, especially by the nifty little public-opinion-of-silver chart.

Read it and say 'giggity giggity - awww-riiiight'.

quiz time!

Here's a quiz for you:

Which of these four charts sucks™ right now?

Monday, April 30, 2012

Does history repeat itself, or just rhyme, or is it rather a fucktard

See if you can determine what this chart says:

(1) In the middle, you see the big 2007 bear market in gold. Seems to have lasted about 18 months.

(2) $HUI went nowhere over that time. Then again, back in 2007, $HUI went up to its consolidation range; in 2011-2012 it went down. This is because gold miners now suck™.

(3) Lookie dat, S&P went up 300 points, 25%, during the consolidation in gold and the miners. Of course, afterwards very bad things happened... but you're a fucktard if you think the bad things are coming tomorrow. Yes, you, ZeroHedge. A fucktard. A tard of the fuck. You.

(4) We seem to be at around ... where? Where are we today, assuming that history's repeating except for the gold miners suck™ bit? Looks to me like we're around January 2007 right now, by the gold chart. But assuming we're seeing the same seasonality in the S&P, we're more like June 2006. Good time to buy S&P. Funny that the gold and the S&P don't line up that well compared to today, so maybe this analogy thing isn't holding up.

(5) Back to #3, funny how when bad things started happening in the S&P, $HUI initially went up. File that away for future reference.

Anyway, that's some food for thought for tonight.

Let me be your contrary indicator

Already put $7K or so into Telefonica SA. Might grab another 200 this week. I like the LatAm growth story - it seems leveraged to the broader emerging markets growth story, cos as the broader markets broadly grow, Peru should make a killing selling them fucktons of copper and silver and lead and zinc.

Plus, the folks doing the mining apparently are exerting wage pressure on the industry? Or will soon? So they're going to buy smartphone bandwidth, no? All I know is it's a 10% dividend stock (due to its unfortunate circumstance of being a Spanish company), and I'm going to be excited to see the price collapse 10% when they go ex-div this/next week. I've never seen that sort of action before.

I've been thinking about buying some AmBev too - ABV trades in the US, and they make beer. Beer is always good, World Cup is coming, and their dividend ain't that great but at least they should have growth.

Was going to buy EPU but it only yields 2%. So I'll have to actually do some thinking there. CAT's on the list, but want to see how the Dow's summer progresses. I won't buy ECH - it seems the best time to buy that would be when a massive earthquake strikes Chile, not before. And that seems often enough an occurrence in Chile that I shouldn't try to front-run it.

The point of all this is, I'm diversifying away from miners. At probably what should be the exact wrong time to do so, right? But I really do still feel that gold miners suck™, and if I'm going to get burned on cost pressures then I want to diversify into holding some of (1) the metals themselves, and (2) the companies that will be making all the money off the miners and the mining companies.

I'm not staying away from miners - I'm still in the process of repositioning my holdings, but can't see getting my miningco holdings below 50%. Too much I want to own. Too much with upside right this second. But I need to cull the miners below 100%, so that I only hold the best performers at any moment.

So, is there anything else exposed to Peru/Mexico/Chile that's not a miner, that should probably see massive growth if this whole China-drives-metals-drives-LatAm-growth thesis were true?

Beating Otto Rock to the punch

Cos I know an unbeliever like Otto at IKN would post a cartoon like this the moment he found it.


Who is most likely a statist btw.

Peter Brandt says gold is about to move in one direction or the other!

Peter Brandt has a TA article today noting that gold is about to go way way up! Or down! We just don't know! But it's going to be soon! You can bet on it! Or don't!

Sorry, but anyone can make an either-or prediction - I used to do Tarot card readings, I know. The trick is telling me for sure what's going to happen.

I personally don't think you can see $1400 gold in this environment: major miners' all-in cash costs are $1200/oz, so you have a severe supply-side force for higher prices; and India & China are buying 50% of the world's gold and aren't looking like they're about to collapse, so it looks like there's enough demand force to keep the price significantly away from the production cost.

But at the same time I don't see any particular reason to be expecting $1900 gold either.

Anyway, if you like charts, go read Peter Brandt, at least because he says there damn well is such a thing as a continuation inverted H&S for upmoves you young whippersnappers.

Sunday, April 29, 2012

Open letter to all analysts: "gold miners suck™" now a trademark of My Own Market Narrative, get your own fucking catchphrase

OK, this is for Robert Sinn, Jojo Byrne, Gary Tanashian, Mickey Fulp, and all the other anal ysts out there who have been muscling in on my turf all weekend:

I was the one who began using the phrase gold miners suck™. Not you. Me. Me me me. I me mine.

The phrase "gold miners suck"™ is a trademark of My Own Market Narrative. You are not allowed to use the phrase gold miners suck™, without giving full credit. And money. Seriously. I was there first, I was the one calling "gold miners suck™", you guys were supposed to be there before me, you're the ones getting paid the big bucks, you could have saved everyone a lot of money by pointing out the suckage™ of gold miners, but I scooped you, so fair is fair and either make up your own catchphrase or pay the hell up.

Alternately I am satisfied with equal value payment in hookers and E.

Note you've especially screwed things up by turning "gold miners suck™" into an internet meme.

Rabitt of Seville vs Barber of Seville

Frankly, I think this:

Is better than this:


Plus also one heck of a lot shorter.

Call me a mouth-breathing pleb.