Saturday, July 21, 2012

Telegraph reports that Christine Lagarde finally got around to reading my blog

I tend to avoid reading articles from the Daily Telegraph, as they're nothing but a Euroskeptic rag, and so will tend to give me the ZeroHedge view of the Euro mess.

However, I came across this article, which tells me Christine Lagarde is a regular reader of my blog.

Cos she finally figured it out: the problem with the Eurozone is Germany.

By the way: do you think the Germans are really in favour of a fiscal union? "Fiscal union" means the Europeans together set Germany's budget - it doesn't mean that the Germans go in and set other countries' budgets.

And do you think the Germans are really in favour of political union? "Political union" means the Germans get outvoted - it doesn't mean that the rest of Europe cedes all sovereignty to a Fourth Reich, with Merkel as Fuhrer.

The Germans aren't even in favour of fixing the labour mobility problem in Europe - because that means they'll be forced to let all sorts of Spanish engineers and Italian toolmakers into their country. If it's one thing the Germans hate, it's living next door to a swarthy Mediterranean who stays up past 10PM listening to happy music, and who greets you by your first name.

No, what the Germans want is a Fourth Reich.

I certainly hope that Rajoy realizes, sometime soon, that he's got a gun to the Germans' head in the form of Deutschebank's counterparty risk. Like I keep saying, you solve the Eurozone problem by offering to tank Deutschebank. And if the stroppy Dutch start to bitch, you also tank ING. Fuck 'em.

Friday, July 20, 2012

Friday market comment

I guess today is opex day for GLD and SLV or something?

I dunno, but silver managed to drop quite nicely for 8:30 EST, didn't it?

It's funny when this sort of stuff happens and yet the mining shares don't move. I guess that tells us something.

Anyway, off to buy some new clothes or something at the mall. Got some stink bids in for Bear Creek, happy to become gravid in BCM again. Fuck, it's about the only stock that has rhythms I can trade. And I guess people are puking BCM right now in fear about who the new Peruvian PM will be, or maybe fear about what the priests are going to recommend in their report.

Or maybe they're just herding, dumping because others are dumping. I don't care.

Oh - dumped the rest of my NCU. I don't like bot-driven bullshit order books, and NCU's got it. Also, despite their continued progress setting up the underground operation, I do assume NCU will take a hit when the Yerington bill dies on the table in August. Which it might not do, but I figured a play at BCM was a better place for my capital over the next few weeks than a play at NCU. I can buy back NCU later.

Oh yeah, forgot - many positive flip trades this week. I forget them all... AR, DPM, BTO, RIO... forget who else. It gets me fed up when I see a 5% profit over 24 hours, then the stock just sits there for weeks; so that tends to drive me to sell quickly for a 5% gain. Not a good idea in a bull market, but in this churn we have now I guess it's temporarily a profitable strategy.

Friday videos: let's be sensible

Let me explain it for you.

There's this fellow named Captain Sensible. And - here's the thing - if you address him as "Captain", he will respond with the interrogative particle "wot".

And... well, that's about it.

Now sing along. 

I like how punk music (e.g. the Damned) turned into this in just a few short months.

Wednesday, July 18, 2012

Various articles I thought were neat

JC Parets wrote a post about his favourite trade setup. He seems to think the Euro is ready to move up vs US dollars. I guess sentiment might be on his side with this one? We'll see how he does.

As noted previously, Peter Brandt thinks gold is going to $1260, but since PFG stole all the money from his (supposedly "segregated") account, I think his vision might be clouded.

Speaking of which... in a private exchange, someone noted that the sentiment for gold makes it implausible. In response I noted "meh", and added that a China collapse and Indian monsoon fail could maybe do it.

Silver's COT looks worse. And you need India and China buying gold.

US corporations aren't holding $1.7 trillion in cash. They're holding more like $5.1 trillion. Now if only they could invest that in productivity improvements or something.

Reuters has a modest proposal for the miners: just quit building mines, nobody's rewarding you for it! Then when the world freaks out about a supply collapse, you'll get decent money for your metal and maybe your share price will go up. Now, forgive me if I'm wrong: isn't that how you start a stagflation spiral?

BIG tells me in one of its fabulous daily subscriber-only reports that IBM, Ebay, Qualcomm and Skyworks are all trading strongly up in the aftermarket, after posting some nice earnings surprises.

Now, BIG also points out that technology has been the laggard sector (GT's also noticed the weakness in $SOX - at least until today when it went up ~4%!), and the thesis BIG gave was that tech is the most foreign-exposed sector on the NYSE. Foreign countries have been kinda weak recently dontcha know. So the market dumped the tech stocks.

Well, I'll be interested to see if the market realizes it's been too worried about foreign sectors, and quits with all the "omg China doooom omg Euro doooom" crap. Cos that might make gold and silver finally go up.

We'll see.

What good is a prediction without context?

Peter Brandt has come out with a $1260 target for gold.

Ouch, eh? What came over him?

Well, for starters, he has (had?) an account with PFG, the commodity trading house whose CEO tried to off himself recently after having embezzled all his clients' money from their "segregated" accounts. You might have heard about it, the news was all the rage for a few minutes before the next banking scandal (Liebor? HSBC funding terrorism and narcotrafficking? I've lost count) hit the wire.

Since then he's written a lot of Denningeresque rants about how, finally, he actually cared about the massive fraud throughout the financial industry.

So maybe his perspective is a bit skewed.

Not that I want to pile on to a guy who's been cleaned out by an embezzler. I mean, I accept it's awful rough to get your trading capital reduced to the stuff that you can fish out from under the couch, whatever you can steal from the supply room at work, and (if you want to leverage up) a kidney and a few pints of blood. And yes, he has the right to be angry as all hell about it. Personally, while I'm well cognizant of the arbitrary illegality of counselling acts of violence on a blog, so I won't, I still think in a theoretical sense that the world would be a much better place if there was more retributive violence against the scamster Plutocracy that runs this world.

But I really think this is clouding his trading judgment. Not good to do tech analysis when you're angry. Cos tech analysis is like reading Tarot - you cast a bunch of cards down, and then make shit up that seems to fit. He's angry right now, so the particular shit he's making up is targetting $1260 for gold.

And anyway, the fact remains that everyone had the opportunity last year to really reform the financial system. Y'all bloggers could have gone out to the local Occupy demos, and instead of laughing at the hippies with their drum circles, could have moved in and made the demos mean something. You could have included your own grievances against the system in the broader movement.

Instead you left the Occupy demos to get taken over by the crypto-Maoists. And now they've disappeared - because they're no longer relevant to anyone but crypto-Maoists.

Tuesday, July 17, 2012

Classic Ritholtz for you

Some people scream at the monitor because the markets aren't going the way they think they're supposed to. US bond yields are dropping; silver is dropping; gold is dropping; the S&P is going up.

All the above action, contrary to certain people's worldviews, gets labelled as a vast Jewish conspiracy - JP Morgan (run by Jews) is driving down silver and gold, the Fed (run by Jews) is manipulating the 30s/2s to kill gold, the Plunge Protection Team (run by Armenians - no, wait - nope, it's the Jews again) is the only buyer in the market, and so on.

Ritholtz points out that if your politics is getting in the way of turning a profit in the market, then maybe your fucktard politics is wrong and you should quit paying attention to it. And ZeroHedge.

The Dangers of Investing via Politics

Why Politics and Investing Don't Mix

Dr. Copper Himself Reveals His Complete Forecast For The Global Economy

Stolen from Business Insider, here's a nice slideshow from Rio Tino on their outlook for copper demand.

Lots of charty goodness on Adrian Day's favourite topic - industrialization and the per-capita demand curve.

Plus lots of charty goodness on Cookie's favourite topic - decreasing grades, and difficulty of finding new deposits.

In case you were wondering whether to buy 50,000 shares in that certain-to-be-a-mine copper exploreco with the several billion pounds in the ground and stuff.

Go read it, seriously, it's good.

Whose fault is the Eurozone trouble?

Hey, here's a couple articles in der Spargel:

Who was it who weakened the old fiscal compact, that was to limit deficits to 3% of GDP? Germany.

Who is the country full of tax cheats, hiding their wealth in Swiss accounts? Germany.

Just in case you've been falling for the "Teutonic superiority" rhetoric.

OK, look. If I can double long SLV at $26 and then sell at $26.35 for a nice profit (not >2% cos the USD/CAD got in the way), then why the fuck can't the rest of the market do that too?

Why does the very act of Bernanke talking cave the price of silver? Especially when we've seen the same fucking show play over and over again?

BTW I sold partially to plow the money back into miners, now nicely discounted by the act of Bernanke talking. But also I only put in $10K to begin with, so essentially I won a couple cartons of smokes for 30 minutes' work.

Anyway. Enough of this bullshit tanking the PMs just cos Bernanke is speaking to a bunch of inbred fucking Rethuglicans. Bernanke isn't stopping Indian peasants from buying gold, nor is he saying anything of interest to the solar cell or battery industry. So quit thinking anything he says should have a bearing on PMs.

Geezus fuck, this steams me.

Monday, July 16, 2012

News roundup

Oh shit, Bernanke is going to talk on Tuesday. Plan: 9:30 AM, triple-short gold. Later that day: close the short, rake in 10% profit, go triple-long gold for the snapback.

Oh shit, China's about to collapse. Look at that chart.

Yabut, homebuilders are going up!

The Reformed Borker (Bork bork bork!) gives you this week's headlines in advance with a slight dose of sarcasm.

British historian Ian Mortimer discusses the often brutal reality of everyday life during the Middle Ages. Sounds like a good book, think I'll order a copy.

Realizing you're a fucktard is the first step toward changing things, Eurozone bureaucracy edition

It seems the ECB has finally begun to realize that it's kinda counter-productive, and not rewarded by the bond market, and rather anti-democratic and plutocratic, and also sort of corrupt, and also a blatant theft of taxpayer money, to force recaps through sovereign debt issuance.

They're now looking at making the shareholders and bondholders take the hit in future recaps.

Maybe a million blood-raging angry Irish, pissed off at the long-term debt created to bail out their own criminal banks, have helped convince them what a clusterfuck the old way was.

Rule of life #147: don't anger the Irish. If you're angering Irishmen, you're doing something wrong. Because it's definitionally wrong to do something that can result in your fucking face getting kicked in.

Sunday, July 15, 2012

Cartoon for you

Wile E. Coyote. Watch it.

Feelgood monsoon story for you

Five reasons why a drought in India won't matter

Droughts are those creeping sorts of natural disasters that grab us unawares. Or are they? The south-west (June-September) monsoon, that gives almost 75% of India's annual rainfall, is erratic in one out of four years.

With wide variations in agro-climatic zones, drought is guaranteed somewhere in the country each year, affecting about 50 million people.

Changing weather patterns have accelerated drought attacks. There were six between 1900 and 1950 and 12 in the following 50 years. We have already faced three droughts between 2000 and 2009.

So, if this monsoon produces droughts in some areas - we are nowhere close to that possibility right now - do we have to worry? Not really. There are five reasons for this.


After the 2002-03 drought, the government developed a standard operating procedure on how to tackle water shortage for humans, cattle and crops. Once a drought is officially declared, several things happen at once. The Central government starts rescheduling farm loans, moving water and fodder by rail, hiking food allocation to poor families, creating more jobs. A ministerial task force is set up to take rapid decisions.

Drought-declared states are monitored individually by the Centre. The Essential Commodities Act is used to prevent hoarding, and states get cash for relief programmes. The upshot of these moves is that even though the majority of India's poor families live in rain-fed areas, destitution from loss of farm income is considerably less.


Even a 20% drop in rice production this year will not impact supply after the record harvest last season. The government is holding enough rice and wheat to supply ration shops for three years. This puts a ceiling on consumer foodgrain prices. A sugar shortage is unlikely because sugarcane is grown on irrigated land. Besides, India has plenty left over from last season that can be diverted from exports to the domestic market.

Punters may be betting on a shortage in edible oils and pulses. But the summer's production loss can be compensated by a good winter crop of oil-rich mustard seed and chickpea, India's largest pulse crop. As almost half the edible oils and a fifth of the pulses consumed annually are imported, price and availability are anyway decided by international markets.

Importing a tad extra won't send the market into frenzy. Even coarse grain, mostly fed to livestock and chickens, may eventually not be scarce as more land is being planted with these hardy crops. But consumers will feel the pinch of more expensive green vegetables as fewer farmers in rain-fed areas would be willing to invest in these high-value crops. Milk and meat will also become dearer as fodder prices rise.


The government's Agro-Meteorological Advisory Service daily collects weather, soil, crop, pest and disease information in 550 districts. These advisories reach farmers through various media and a daily SMS service so that they can immediately take remedial action and reduce risk.

The recently-launched National Initiative on Climate Resilient Agriculture is creating district-wide protocols on which crops to grow during prolonged dry spells. The technology exists to grow all the things we want with less water.

Resource conservation technologies such as the System of Rice Intensification, drip irrigation, short-duration crop varieties and drought-tolerant hybrids of summer crops allow farmers to save time, labour, energy, water and nutrients and, thereby, reduce cost of cultivation. If the government can ensure ample supply of seeds and fertilisers in those few days when the rains start and everyone rushes to plant, no farms will lie fallow.


The sharp spike in farm wages in the past two years means more job opportunities are available in villages as roads and communication improve. Income from livestock (sale of milk, meat and poultry) now contributes a third of a small farmer's family income.

As long as fodder is available, village people are able to survive a farming crisis. Moreover, rising commodity prices will partly compensate for the smaller harvest. Even those who plant hay will gain from greater demand for fodder.


Even if the normally drought-prone Maharashtra, Andhra Pradesh and Karnataka take a hit, the eastern states of Bihar, West Bengal and Odisha are now far better equipped to pick up the slack. Companies are ready with special promotions and marketing plans to keep their rural customers engaged.

There may be sluggishness in rural sales of big-ticket items like two-wheelers, tractors and TVs, along with agri-inputs. But personal items of daily use continue to sell. Moreover, there is always hope of improved income prospects, translating into higher rural demand, from the second window of opportunity that winter brings.

These are very comforting developments because, bluntly put, droughts can't be prevented. Rains will become even more erratic in future.

From the US to Australia, Argentina to Canada, drought hits everywhere. The difference lies in management skills more than resources. India's management skills, while not at the level of some of these countries, have improved considerably.

We can handle droughts now.

More psychoeconomics for you

Before even opening NFTRH 196, I got pissed off by the cover letter and had to come here to vent.

Look, here's the thing about QE3. It's not going to happen.

The US economy is doing as well as it can, considering Europe has slipped into depression and everyone's all scared about how much of a slowdown we'll be seeing in China.

Oh, and also considering most local and state governments are still eliminating jobs. (Wouldn't you think that is a drag on the US economy?)

Yet gasoline prices have dropped, the consumer is resilient, natural gas is providing cheap power, and now homebuilding is picking up. You don't need any sort of easing in the US economic environment as it stands today. What you do need is a watchful eye on the economy so that if it ever picks up above 2%, which might require a beginning of an end to the Euro crisis and a diminution in China worries, some tightening and discipline can be brought into the system.

QE anticipation is no longer realistic. It's become an unhealthy and useless fixation. It's like Snooki. The media keeps chattering about her despite the fact everyone's realized it was a complete fucking waste of time.

I know that you do see the odd article here and there, where some supposed investment house like Goldman Sachs predicts "QE in July", or "QE in September." But more often, what you're seeing is constant blather about QE in blogs and the media, by all-too-human people who just want to keep this meme going. They're fixated on it, and it's too difficult to learn something new.

We've had QE for years, so the bloggers and media rationalize their fixation by asserting it's the new normal.

Well, QE is not the new normal.

The right-wingers and goldbugs and Rondroids need to keep blathering about QE so that they can justify continuing to complain about "money printing" and "debasement of the currency" and "drowning our children in debt" and all that bullshit. (Want to fix things? End the Bush tax cuts, you cunts! That'll help eliminate the deficit!)

We've had complaints about QE for years, so they think they'll be able to complain about the same crap forever.

Sorry, you can't. Eventually you'll have to find something else to bitch about.

You're not going to get QE in the US because it's unnecessary. And because QE won't solve Europe and won't boost China.

When the China blather dies down and the "incidental statistics" like unclaimed loads of coal fade away, and when the Euro Austerians finally fade away and new growth strategies and bank bail-ins drive down the peripheral yields, the US will take off like a bat out of hell. You don't need yet more QE on top of what's been done.

(Yes, China will probably crash horribly and collapse world markets, but I think that'll take a few years yet.)