Saturday, September 29, 2012

The Cookie Monster on BNN Market Call, last Thursday

So Cookie was on Market Call this Thursday, and here's the Cliff's Notes for the whole thing.

Clip 1

- Uh-oh! He's talking about global debasement of currency being positive for gold price. As opposed to, y'know, buying in Asia. Looks like the goldbug virus hit him.
- He concentrates on companies with deposits that will give a major low cost to production and high margin. He thinks there's maybe only a dozen deposits that meet his criteria.
- He again brings up John Kaiser, who noted as of last month that "under 70% of juniors were trading under twenty cents and had a mean of under $700,000 or less [in cash]".
- He also notes something I forgot to write down from his talk at TRIC, that the TSX has changed their rules so that now you can finance under a nickel, which he thinks will really work out well.
- It's difficult to find an economic deposit. So maybe gold does go up to $8000 per Jordan Roy-Byrne? I mean, if there's no gold out there left to mine, right?

Clip 2

- Uh-oh, going to the phone lines already.
- He thinks Volta has to prove a better grade resource starter pit to be economic.
- He notes in West Africa, fuel is expensive and you're short on power and water, so it's harder to make a deposit economic than in Nevada.
- He thinks financiers and explorers are at odds - exploration is a long-term process, while a financier only cares that he can unload his paper at a profit in four months. And the twain shall never meet.
- re INM, he thinks it's a big deposit with plenty of tons, wide open along trend; the question will come down to grade. He notes Coeur already put money into them. And he thinks it's one to watch, he can't say anything bad about them.
- Perseus Mining: Brent's been there to Ghana, good deposit, well-run company. He thinks a company like African Barrick should be looking to acquire them.
- High Desert Gold? It's on his list of twenty. Exploration level and very high risk, a very large epithermal gold system. He says they've got one section of holes, and now have to prove that it goes on to the north or south.

Clip 3

- Great Basin Gold? Has been a bit of a disaster. Brent thinks it's going pretty low. - Geez wow! What a chart, it goes from $2.80 down to pennies. Hey Gary! There's a bottom-feeder pick for you!
- Prophecy Platinum - is it for real? Brent says they have a large Cu-Ni-Pt-Pd-Au system. The infrastructure's not bad but you've got to look at the metallurgy: his question is, what will be the grade of the payable minerals in the concentrate, given there'll be a lot of pyrrhotite. Til the met's proven, he'd stay clear.
- Goldquest? He's taken profits but hasn't sold it all. For all the doubters, if he's in at something nuts like 10 cents then he already has a 13-bagger. In your face, haters!
- Premier Gold, he likes. He thinks the plan is they're going to become such a nuisance to their partners that they get bought out. He'd definitely hang on to them.
- in general, 95% of stocks that go up will come right back down - so he says your job is to know enough about that stock to figure out what the flaw is, so you can get out near the top. Which is typical fundie-speak - personally, I'd just sell when the stock drops through its EMA. The chart is the chart, right?
- Kaminak? Top guys in the business, very honest, hardworking and thrifty with their money. Should have a resource by early next year. He'd focus on whether the high-grade structures can carry capex with a starter pit. He's watching it but doesn't own it.

Clip 4

It's Cookie's past picks!

- Alderon Iron Ore? Down 44%. Yet he still holds it, he thinks it's the best development-stage iron ore project in Canada.
- AMM? Down 15%. He still likes Ixtaca, and once they hit the feeder they have a major deposit. Which of course he's been saying for years.
- Lara? Down 10%. 15 projects being explored with other people's money.

Clip 5

And back to the phones.

- Miranda Gold? He goes back a long time with the president, who didn't hire him in the 80s. Their exploration could take years, and he owns it.
- next some kiss-up asks him to explain his prospect generator model. you've probably heard it all already.
- interesting - the host asks him about the streamers, and is able to name them all off - Sandstorm, Royal Gold, Silver Wheaton... it almost looks like they're becoming a new fad! Is that why they're all up so strongly? Cookie says they're being valued richly, but you don't have the operational problems so it's a very safe way to play it, and he wouldn't discourage anyone from getting into the streamers. Very interesting indeed! Looks like the streaming royalty companies might be this year's fad!

Clip 6

- Gold Canyon Resources? Brent thinks it's "the best disemminated gold deposit in Canada, it hangs together well, it's soft ore, it'll be inexpensive to mine. The issue is, it's under a lake." He also thinks there might be native issues to be dealt with.
- Ooh! A zinger comes up next! Someone phones in to ask about those fuckers Regulus Resources. He thinks they have good guys running it, so obviously he didn't get assraped by that shitty resource release last December. He doesn't think they've expanded their resource enough beyond the one caldera wall to make for an economic deposit, and he hasn't seen anything yet that would make him jump in and buy it.
- Silver Standard? He thinks there's better companies to buy if you want leverage to an increasing silver price.
- He still likes Fortuna. He'd put them in a league with MAG which he owns, or Tahoe which he thinks is pretty expensive for a one-project company in Guatemala.
- Northquest? He just met with them Thursday afternoon. Given the volume of the deposit, and if it really does average 5g/t, he thinks it may work, but he hasn't had time to sit down and do the math.

Clip 7

- Northcliff Resources? He doesn't know them! Boo, hiss!
- Barkerville Gold? Will people quit bugging him about Barkerville?!?! He immediately started chuckling - he realizes he's got "ask me about Barkerville" tattooed on his forehead now. He says it would appear they got themselves into a mass of trouble; he thinks it's a smeared resource, and he doesn't know what their plan is to get out of the CTO. He thinks someone new has to come in and do a new resource calc.
- Northern Freegold? He thinks it's too low grade, marginal at best, and they're doomed to build if they want to continue, so shareholders will get diluted out of it.
- Glass Earth Gold? It's one of the 20 in Brent's list, they're in New Zealand. He thinks they're getting closer to something that Newmont would want to take out because they definitely need ore for their own mine.
- Atac? "Great company run by really smart, adventurous, innovative geologists"... uh-oh, that doesn't sound good. "It's in the Yukon, it's a difficult location." He thinks it'll be worked for "years and years, decades and decades to come". But it's refractory ore, so they'll have to build a big roaster. In the Yukon. So he thinks they'd need at least 5Moz at at least 5g/t in an open pit before it'd work. So it's a great discovery and all, but he's not buying.

Clip 8

Ooh-er, it's his top picks, the only thing you lot ever bother to listen to. He says today he's doing low-risk picks.

- VGQ - They get $100k/mo in royalties now, will be getting $25-30M annually for them in future. Valued by future royalty, it should be valued at $12-$15.
- Lydian - he doesn't understand why this one isn't recognized by the market, despite him going on about Lydian at every public appearance for years. To me, that is dangerous - come on, Brent! Everyone and his brother has already had a chance to buy Lydian shares! Every mining company has had 2 years to buy Lydian at under $3! If the feasibility study values Amulsar discounted at over a billion dollars, with only a $260M capex, why hasn't anyone bought them? Why, Brent, why? This is a great example of the failing of fundamental analysis: great value picks can go nowhere.
- Duluth Metals - one of Quinton's ideas. Cu-Ni-PGM deposit in Minnesota developed by Antofagasta, with what Brent thinks is a possible huge upside. It's a huge geophysical target, which if drilled successfully could be a major new discovery.

Toronto Resource Investment Conference - day two

Only saw three speakers in Day Two, all in the afternoon.

First up was John Kaiser. I really like this guy - he agrees with basically everything I say! Politics- and economics-wise, that is - I dunno much about exploreco investing.

His talk started out by identifying three different modalities for resource speculation:

1) Discovery - betting on the drill play.
2) Commodity price - the example he gives involved the recent reassessments of old deposits that once were uneconomic, but have changed to being economic with the advent of higher metals prices.
3) Security of supply - the whole REEs hubbub of 2-3 years ago.

His argument was that while the last speculation boom (and bust) has been based around 2 and 3, that's pretty much over now and speculation will return to playing point 1, the drill play bets.

Contradicting Mickey, Kaiser says the big insto capital is still on the sidelines. Meanwhile, financings have collapsed: he put up his newest masterwork, noted by Brent & Quinton recently, the chart that shows most companies on the Venture now have essentially zero working capital (when you subtract the cash already earmarked for CEO salaries and their hookers & blow).

He noted that the future expectations in the metals space are bleak - institutional consensus still calls for $1200 gold - and this is mainly due to doubts over China. Meanwhile, cost inflation in capex and opex is up around 10%/year. Thus, juniors are priced at a level he feels is far too low.

He thinks the EU sovereign debt crisis will take about a year to fix, and notes that the US economic misery is entirely the fault of gridlock in Washington - particularly the Rethuglicans.

And here's where he really impressed me: he's in a room full of crank lunatic right-wing extremist birther goldbug types, and yet he clearly and assertively stated that he feels if Obama wins and sweeps house & senate, the US economy will be fixed, while a Rethuglican win will drive the USA into a deep depression.

Mister Kaiser, you have a stunning pair of brass balls and I salute you.

He also noted 42% of world military spending is done by the US - and it can't continue.

Furthermore Mister Kaiser, your brass balls shine like mystical twin suns on an undiscovered planet's horizon, their bright light bringing warmth to my countenance as the dawn breaks through the cold gloomy night.

And the interesting idea put forth is that as US military hegemony is reduced, this will raise global uncertainty which will benefit the price of gold. Which... I don't get. The gold price is driven by consumer demand in Asia, not by fear. Mani Swaminathan in Bengal isn't going to buy more gold just cos the USA's military spending went down.

He used Geologix (what? huh? GIX doesn't suck?) as an example of the pessimistic market pricing of explorecos. His models for a fair GIX price were anywhere from $1 to something stratospheric like $50 - all depending on when the perception shift back to optimism happens in the exploreco space.

Anyway, I came out of the talk really interested in subscribing to Kaiser's service. The guy seems switched on. Unfortunately, I already have 4 subscriptions that I don't get enough use out of. What to do? Somebody wanna buy me a free 1-year subscription to Kaiser, please?

Next up was a smoke break, a bit of wandering around, leering lustfully at the gold and silver coins and bars at booth #630, and even bumping into the ever-beautiful Daniela Cambone setting up the gear to interview some newsletter writer or something who nobody really needs to hear.

Anyway, in a last-minute decision, I decided to forgo whoever it was I was originally going to see, in favour of Mickey Fulp.

Anyway, for the first while he chatted about his own picks. So go get your pencil:

1) Mickey likes Avrupa and Tarsis.
2) He expects very good things from Curis - he says they should be in production by 1Q13.
3) He's a permabull on U.
4) He calls Strathmore a "screaming buy" at 27 cents, nothing changed since Fukushima and they have millions in cash.
5) He says he thinks REEs might come back.
6) He also likes Quest Rare Minerals, Rare Element, and Tasman.
7) He's still nattering on about graphite after all.
8) He says Stupid Flanders Resources is "the best graphite play on the planet". To which I reply:

And then he had a rapid-fire Q&A session.

Mickey feels that until a new mining law is enacted in Colombia and somebody goes in and operates a showcase mine, he'll avoid investing there. He feels the Yukon is difficult, both with infrastructure and weather, and mining up there will be maybe 10 years down the road.

He doesn't follow Candente, but knows The Big Freeze, and feels the territory is too remote and rugged, and they won't be able to show enough copper to justify getting taken out.

He's not fond of zinc; it's difficult for new producers because the price of zinc keeps puking whenever a butterfly farts in the Takla Makan.

He fully expects Rye Patch to win over Coeur d'Alene, otherwise (good point) the entire mineral tenure system in the US gets destroyed and the country becomes another joke like Venezuela. However, maybe he should read what Denninger has to say about how the US court system has already destroyed chain of title in real estate. Sorry, but nowadays the foundation of law gets ignored whenever it suits big money. That's how the US is today. It's kleptocracy; look it up.

And he doesn't seem to know Lupaka very well at all - they didn't recently do a financing, they did a buyout of a cash-rich nobody. (though I guess that's six-of-one anyway.) And Otto hasn't sold off his Lupaka yet, he still owns it.

One guy in the front row managed to stump Mickey on three different juniors in a row, which was rather impressive.

Mickey disappeared right after his talk. I figure that since Daniela had been around, and Brent had also disappeared (Cookie had been out in public chatting with people for the entire two days, so his sudden absence was obvious), that perhaps the three of them had gone off to record yet another edition of "At the Bar with Daniela and Two Guys Mooching Booze".

So we'll probably see that come out this weekend. Let's see if Otto can beat me to posting the video.

I actually skipped out on Brodrick, who was going to talk in the same room after Fulp; frankly I don't know the guy too well, and wanted another smoke break and maybe a coffee. But I caught the tail end of his talk, and it seems he likes Silver Wheaton one heck of a lot and thinks the royalty companies are teh awesomez. I guess the chart is the chart, eh?

And finally, it was time for Jojo!

Jojo (right) and someone who thinks my blog is awesome, but then again he owns Lupaka warrants (left)

Jordan said he was very hung over from Thursday night, when apparently there was a big "anal yst dinner" of the overwhelmingly liquid hydrocarbon variety, involving lots of chatting with James West, Tom Calandra, and anyone else you'd ever want to meet. Nevertheless, he soldiered on.

He presented his thesis that the PM equities put in a major bottom this spring, per the Rydex PM assets chart, and per the spec silver positions having hit an 11-year low, and per the senior producers' valuations having dropped to a 6x/7x cash flow. From here on in, he thinks there can be a bull market of another 7-11 years; and not only will producer margins improve, their valuations should move up towards 10-20x cash flow over time as the market realizes that gold's going up again.

And everyone in the room who could follow the TA immediately spooged themselves at the very thought of it.

He's got a near-term target of $2350 for gold, maybe by end of winter (I think that fits best with the whole "sell at PDAC" thing, personally); his mid-term target is $4000 WTF, and then after a correction he thinks there'll be a parabolic move to something like $7000-$8000 OMG WTF LOL BRB STFU.

All this from waving a skull wand at a chart and speaking the magical chants! This TA stuff is teh awesome!

Seriously though, he does come at it from a historical analysis perspective, and it does all seem to be based on real TA, and he tries to ground it with a fundamental basis, and it does really seem to make perfect sense - when you're surrounded by smelly goldbugs at 4PM on a Friday afternoon, anyway.

I did have a big problem with his chart on funding needs of the US government over the next 3 years: the "fiscal cliff" will greatly reduce the deficit, and the foregone conclusion of an Obama/Democrat landslide should (if they're not dolts) also mean a return to Keynesian stimulus spending that will bring the US back into strong growth, which will further reduce deficits. I told him that afterwards, and yeah he agreed, but noted there remains the problem of rolling over a few trillion in existing debt over the next 3 years. OK fine.

I forgot to bring up that charting gold vs S&P is dangerous when your chart goes back to the period pre-Nixon when the gold price was repressed under Bretton-Woods: you're no longer charting gold there, you're charting USD. He should have damn well listened to that Marino Pieterse at PDAC. Pay attention to your elders!

Back to the talk: more concretely, he noted that the average exploreco doesn't rise for more than 1-2 years; as he said, "if your stock pops, sell it and get rid of it! They're not long-term holds under any circumstance." Which is useful to remember.

He suggested we were probably all idiots for buying junior stocks for the past few years when we should have been playing the warrants - just picking up the SSL, FNV and AR warrants would have been the brightest move. Well, if we're in another bull move equivalent to 2009, with gold going to $4000 in a couple years, maybe we should look at warrants again? Personally I've had great fun with my AR and FNV warrants. Lupaka warrants are a bit of a bitch though.

What are his big picks? He publicly mentioned Corvus, saying "it has huge room to move" (which the PEA definitely supports, as far as I'm concerned); and he also seems to like Northern Vertex. He also said Primero could be the next Argonaut.

Anyway, after he was done, we stuck around and chatted for a bit, but then I had to beg off to catch the train home. It really is a crush of humanity, all those people leaving Toronto at 5:30PM on a Friday - as VNV Nation once said, to "escape the sorrow and restraint of mortal cities".

So, there you go. I'll be at PDAC again next March, and then we'll go thru this whole business again of me reviewing a bunch of people who say stuff. In the meantime, we'll await the next issue of "Daniela at the Bar Plying Two Old Guys with Drinks".

Gobs of weekend newsreading

Got home late yesterday and right to bed, tiring day. Second TRIC writeup will come soon. But first a pile of news articles.

WSJ Marketbeat - earnings season is coming, woo scary! If you were looking for a reason for the market to tank this month, there you go. We know for a fact that the past 3 months have sucked due to worldwide crises and slowdowns. Earnings and forward guidance should be quite dire. If you've been screaming at the monitor that the S&P 500 has no reason to be at a new high, maybe you'll be smugly vindicated when Klaus Kleinfeld walks on stage in metal breastplate and delivers the opening aria in the Wagnerian tragedy.

Of course, if earnings turn out to be shit yet the market goes up, then you better damn well get out of the way of that oncoming train: never take a short position against an incomprehensible move.

Reformed Borker (Bork Bork Bork!) - see above. Underlying economic data really sucks, says he.

Beyondbrics - South Korea sucks. Again, scary.

New Deal Democrat - yabut it can't be a recession, market's at a new high. Well, we'll see. Achuthan may wreak his vengeance upon you yet!

Beyondbrics - yeah, avoid Vietnam. Specially for Gary Tanashian, who always thought VNM was a better EM Asia play than THD or EIDO.

Reuters - China crackdown to support rare earths prices. ORLY? We'll see. Frankly I don't care about rare earths prices; I only care whether Molycorp starts going up again. The chart is the chart. This sort of bullshit news, about intents and beliefs, means nothing.

Kid Dynamite - Max pain, a key trading concept. Works just as well for the junior miners too, except an illiquid stock can see a 10% or 20% drop on a puke, not just a 1% move. Also there are usually no shorts to burn with upspikes in the exploreco scene.

Ambrose Evans-Pincermovement - Europe's betrayal of Spain. Now, the Telegraph is a Euroskeptic rag, and Ambrose is the economics writer they hired to cover that side of Euroskepticism, so you can usually ignore what he says....

However, whenever the Euro crisis flares up, which it always does due to the schemings and backstabbing of the Aryan Nazi bloc, things seem to get inflamed even more by nationalist hyperbole. So Ambrose is simply giving you the heads-up on all the other flaming woo that'll freak out the markets in the next few weeks as this all gets fought out.

Personally, I think Rajoy is smart enough to bring out the nuclear option to get his way. He knows that he can take down the German banking system without hurting his own country much worse than the Germans are already hurting it. And quite frankly, Germans always fold like sissies when a good street-fighter backs them up against the wall. Especially when it comes to their bank balance.

via Big Think - is it economical to mine asteroids? All we need now is for that cunt Richard Branson to build a spaceship that drags a 5km-long iron-nickel-base-PMs-uranium-REE asteroid back to earth, and drops it (gently!) in the Outback, thus creating an instant gigantic deposit and cratering the price for all metals forever. That would suck.

Or it would be nice. As Ian Graham noted yesterday, the present global urbanization drive will result in ultimate mineral scarcity; the next economic sea-change after that would be the ability to move to post-scarcity with metallic asteroid mining.

It would be nice for the future of humanity, and it would suck for my portfolio. So you can guess which side I'm on.

Problem is, it costs a lot, energy-wise alone, to transport a 5km-long asteroid from the trojan belts and drop it gently in the Outback. So why not mine and refine all elements in space? Here's why: how the hell are you going to run a smelter in zero-gravity, near-zero temperature, and the vacuum? How will you do gravity separation? Serious, you're not just trying to figure out how to run a grinder at 4 Kelvins with no gravity or pressure (hint: you can't); you have to figure out how to do all the metallurgy and refining. And where you gonna get the power to run all this from: a diesel genset?

I also have a serious concern about to how refractory an ore will be after it's been sitting in near-zero temperature, zero-gravity and a vacuum, being bombarded by cosmic rays for four billion years.

Friday, September 28, 2012

Friday Post - Millionaires

Goin' to Cambridge Toronto to see Jojo and buds!

And because I've made so much money on junior miners, tonight I'm going to party like a millionaire!

Thursday, September 27, 2012

Toronto Resource Investment Conference - day one

Well, since the PDAC posts went viral and earned me a massive audience which I've since driven away with brutal invective, I figured why the heck not do the same for the Cambridge House thingie too?

First thing that has to be said is that the Sheraton is a much better venue than PDAC's MTCC South. #1, you're only two floors underground instead of five. This means cleaner air and fewer Balrogs. #2, the rooms just... feel... bigger, I dunno. Y'know? Also, the decor is more "faux Victorian hotel" and less "MTCC has an Ikea discount card".

Now, I originally wasn't even going to bother going on the Thursday. Then I saw Adrian Day added to the Thursday AM speakers and figured I should go - he was definitely a bright surprise at PDAC.

Well, I got there early, and the first thing I saw on my way down the escalators was this:

Well, that doesn't look promising... I'm going into the lion's den here. Jay Taylor, Jeff Berwick, gun-totin' US patriot wackaloons, and now a place where you can buy gold and silver "bullion" (read: highly marked up coins).

And then I stumbled into the last few minutes of the "eye-opener panel":

There's Mickey Fulp, Lenny "Bud" Melman, the strangely normal-looking Tommy Humphreys (and of course it's usually the normal-looking ones who eventually are found to be hiding a collection of street-people's severed heads in the freezer), some completely hidden other guy, and at the end a partially hidden Sean Brodrick who was about the only guy at TRIC with a flame-red shirt.

I only was there for the last 5-10 minutes, so all I got out of it was:

1) Mickey still likes Curis and Strathmore; he thinks the rally in REEs will continue and likes QRM (instead of, say, Molycorp, who actually have a rare earths mine, and already know how to mine rare earths, god Mickey this ain't rocket science); he might have finally quit going on about graphite; and he says "the smart money - the people that matter - are starting to put their money back into the market via PPs", which really ended well for ev-eryone the last time didn't it.

2) Lenny "Bud" Melman talked about something called "poe-tash". I should look into this "poe-tash".

3) Brodrick would be a fine radio host. In fact, I think we have the next Sean Kennedy - he's already up on the survivalism thing, so we just need to get him into conspiracy theories, transhumanism, anarchy, Neon Genesis Evangelion, goth chicks, and wardroids and he'd be Sean Kennedy all over again. Serious, he'd be a fine weekly podcaster with that voice.

And then it was time for Adrian Day:

And I have to admit, in the first few minutes I was disappointed. Here's a perfectly respectable British economist, one who's studied Mill and Smith and Keynes, one who might someday aspire to his own Nobel Prize like wot Krugman got, and he spends the first few minutes making digs at Ben Bernanke and pretending to be a member of the Ron Paul Brigade. Srsly?

Maybe he was just playing the songs the crowd was calling for. I mean, it's a good way for Day to endear himself to the crowd right away. But I'm sorry, when I go to an Aphex Twin gig I don't want to hear "Free Bird" just cos some loons are yelling "play some Skynyrd!"

Anyway, it seems like he really did just throw in the Bernanke attack to lure in the crowd, because he then spent the next 25 minutes talking about the serious stuff: the demographic-driven resource boom. The pic up above shows (blurrily) the slide that Day's shingle hangs on. Again, the shortest copper cycle was 17 years, longest was 44, and we're only 11 into this one. You think this boom will be the outlier? Let statistics do the work for you. He thinks the China boom will be as significant as the UK industrialization or the German/US concurrent industrializations - and both of those led to long resource booms.

Funny nuff, he also notes that over the past 20 years, Chinese consumer spending as % of GDP has gone down, while savings as % of GDP has gone up. Now, I also know that China has a repressive anti-saving environment; add that to the mix, and you've probably got China driving a boom in gold.

Day also notes China in 2011 only had 90 cars per 1000 pop.; even Brazil was already at 280 per. A recent survey had something like 26% of 18-54s in China saying they wanted to buy a car in the next six months. Point being, numbers like that will drive Chinese resource consumption.

And again, China only uses 4kg/person of copper per year; we use 8kg/person, and we're post-industrial. (Post-industrialized economies use less resources than at the peak of industrialization, both cos (me here) resource-light "services" are a larger chunk of the economy, and cos mature economies already have had decades of sunk hard asset investment: copper transmission wires don't rot away.) Point being, China has a lot more copper consumption still to do.

BTW, re all this "China China" stuff - I chatted with him afterwards, and he does seem to value China more than, say, LatAm. Frankly, I think China's kaput once their demographic cliff hits in 2017, and the real future drivers will (this is the way it always works) be the countries where the young grossly outnumber the old - Malaysia, Indonesia, Thailand, and then LatAm ex Brazil (cos Brazil's already fucked - the Russians are moving in and that never ends well). He maybe thinks China gets back to producing a replacement rate of babies; that fails the demographic driver model, I'd reply, since you're still going to have a downward slope to your % participating in labour force til those babies grow up.

Still, I think you can substitute any billion-sized bloc of population for "China" in his "China will X" statements, and they'll still work, possibly even better. So, Indochina, for example, or LatAm.

Anyway... he asserts that because of the massive lead times needed for copper discoveries to begin producing, we pretty much know today how much copper we'll be producing in, say, 20 years. And long story short, it's not enough. He feels there's no historical example of a country getting as far down the path of industrialization as China and then stopping (cough Soviet Bloc cough). He's not concerned about Chinese inventories.

Meanwhile average new discovery grades continue to dwindle.Another point for us.

Oh, and he doesn't think Taca Taca ever gets bought. That last bit was for Otto. But Ross Beaty's still more handsome and rich than both of you combined.

So, after AD was done, it was off to the swag counter:

Ooh lookie! Books and pamphlets!

I snagged the "Mining Leaders: Colombia" and "Mining Leaders: Peru" books, so I could pretend I'm doing due diligence or sumfink on my LatAm stocks. (UPDATE: Ooh, one has a big interview with my hero Clive!) Plus a copy of the May 2012 E&MJ, with their "special report on Ontario mining and financiers". And this week's Northern Miner. All free! Free, I tell you!

Then I swung by the Argonaut booth, and had a fun informative conversation that pretty much avoided anything to do with the political situation around San Antonio because you're not going to come across any IR person at any conference from any company who will ever give you the straight dope about anything like that. Never. Don't bother asking. I'll leave it to Otto and Jojo Jordan Roy-Byrne to fight amongst themselves about future development roadblocks at San Antonio and their existence or not.

Then it was off to see who this Ian Graham fellow was:

Another Adrian Day, except with a strange West Country-meets-Australia accent. Or maybe West Country-meets-Tyneside, as I seem to have a habit of mistaking Geordies for "bloody Australians". But it was certainly a west-country "r" in his accent. Or not.

While Day played to the crowd, Graham seems to have not yet cottoned on about what this goldbug lot is like - he pointed out governments are more democratic today than they have been in the past, "despite what you hear on these panels", a gentle little dig at Vinnie Maru and Jay Taylor (who were in the "insane goldbug" panel at 9:30 that I didn't stay around for because I wanted to save that braincell for old age).

I was joking later with Jojo Jordan Roy-Byrne that "I came to a loonie goldbug conference, and a discussion on demographics-driven commodity consumption trends broke out". To the extent this applies to Adrian Day, it does tenfold more with Ian Graham. My god I was back at university! With a professor who doesn't suck, even! Graham was more informative than the rest of the day combined.

Again, the thesis is, demographics drives resource consumption. The world will urbanize another 3 billion people by 2050. Thus, to da moon Alice - in fact, he concluded by saying (pretty much can't argue with him) "this will be the greatest resource demand growth cycle the world will ever see". And pretty much the last, we might add, unless there's another 6 billion neolithic tribesmen hiding out in an undiscovered continent somewhere.

Frankly, when I hear something like that, first thing thru my head is "phew! What a relief! I thought Jim Rogers' commodity bull would end in 2017 or so and I'd have to learn how to trade real stocks."

Of course, then the dystopian futurist in me replies "what happens then? Is that the last gasp of the human race?"

And finally, the Satanist in me responds to that annoying little dystopian with "WTF do I care? I'm dead by 2040. Fuck you, fuck that legacy for our progeny shit, I'm gonna get me a rich ass and then spend 20 years banging Ukrainian gymnastics starlets. If my kids can't build starships and mine asteroids by 2040 they deserve what they get."

In sum, it's the singular greatest resource boom that will ever be seen, and Anna Bessonova look me up sometime, sweetie.

Sorry, where were we? Oh, Ian Graham.

He pointed out, interestingly, that most mineral exploration is PMs, not base. Despite base being the bigger money. Then again, do you get more bang for your exploring buck by exploring for base metals?

He's also bullish on mined energy. Natgas, coal, so on. In fact, his graphs on future coal use imply that the Toronto area will be a sweltering tropical jungle in 30 years. That clathrate gun it gonna go boom, cheese. If, that is, you believe in global warming... er, I mean, science.

And on his graphs... man, what graphs! Take a look.


No, seriously, I know what this graph means, and it means I be gettin' the hot Ukrainian chixxx soon.

Those big circles represent the size of each consumer nation, and where they are on the x-axis represents per-capita GDP, which correlates vaguely directly (post-industrialism aside for now) with resource consumption.

So as those circles move to the right, their consumption increases per the size of the circle.

And China alone has a circle with bigger area than all the white folks' countries already up beyond $30k/person.


But then again I'm the kid who got 90s in math while doing zero homework. So I can see this. YMMV.

So, basically, PDAC (and these Cambridge guys too) need to hire more Ian Grahams and Adrian Days to give talks, and fewer podcasting/blogging wackaloons. Cos this is where the meat is, these two guys.

Of course, China could always collapse in another Asian Tigers crisis, and the US could progress to the next stage of post-industrialism where per-unit-commodity productivity drastically increases yet again and the automation of the West ushers in a new era of Western economic expansion. Or maybe Richard Branson starts landing metallic asteroids in the Australian outback (or wherever there's nothing of value and no human habitation - Ungava, Nunavut, Calgary) and mining all these space minerals for peanuts.

Still, it gives me hope.

Anyway, after Ian Graham, I came across Jojo Jordan Roy-Byrne stumbling confusedly through the lobby. Seems he doesn't wake up before 11. I let him settle in at his lonely booth on the exhibitor's concourse while I sat thru Brent Cook's fireside chat.

After a 2-minute intro where he tried in vain to teach the audience the basic things you should always look at in an exploreco (burn rate, managerial experience, a working model of the mineralization, unhealthy obsession with their criminal pasts at the IKN blog), he was off to a rapid-fire Q&A. People randomly shouted out stocks, and he responded with his opinion. A few random examples?

DMM - "screwed."
SVL - just met with them yesterday.
SWD - no good. Basically, his opinion was... um, I dunno. Can't explain it. In one ear out the other. I'm not an economic geologist, but I know when one's speaking, and he was. And he doesn't think SWD works and he seemed to think he had a good reason for it.
ITH - doesn't think it works either. As he said, "Kinross is right next door. So why'd Kinross go to Mauritania to buy their next property?"

He did not say anything about Calibre Mining being a guaranteed 20-bagger. But I think that's only cos he never got asked.

And then, it was off to lunch at Fisherman's Wharf.

$30's a bit much, but it was good. Should maybe have just bought the big seafood platter instead. Not enough wiggly things here, too many vegetably things.

And the big surprise? 

Innis & Gunn beer. Very nice. Scottish apparently? But it tasted very much like a Belgian beer. Not so much an ale as a lambic. $9, small bottle, but then again I've happily paid $20 for the Orvals of this world. Very very nice beer. And yes it is sort of pink, but that's maybe the hops. I don't know these things, I work in engineering and the golden rule is if you're smart, you hire technicians to make the beer - you just drink it.

So tomorrow, or maybe Saturday cos I'll be there til late and I've been writing this for 3 hours already, you'll get part two of the Cambridge House review.

Now go viral, me pretties!

Some news:

Spain came out with a budget. Apparently that's what boosted the markets? Meh, I give it a day.

FT Alphaville - explaining how the Germans have fucked over their supposed "partners" with the recent declaration by the Aryan Nations Teutonic Bloc Axis Powers aw hell there's no nice appellation.

BI - Spain's budget assumes a 0.5% contraction next year. Like I said? Moving along....

Bonddad - Uh-oh, NDD has changes his tune. No longer poking fun at Achuthan, he now worries that the US durable goods orders presage a collapse. Just wait til earnings season.

And back to FT Alphaville - they're now resorting to channeling the ghost of Tanashian. The theory? Bernanke's "QEternity" is meant to make the world think that hyperinflation is right round the corner! Muhahaha! Genius!

The theory (far as I can tell) is that in a deflationary depression, like where the US is now (minus the negative growth, for now) the fat lethargic money hides out in a cubbyhole full of low-risk low-return debt instruments. Bernanke wants to scare it out of its hiding place, out into the open where it can go into capital spending. How do you do that? By threatening to make that money worth less next year.

Thus the part where Kaminska says "in other words, let Zerohedge, Max Keiser, Ron Paul, Jim Rogers, and Paul Ryan fan inflation fears. They might actually be doing the world a propaganda favour."

And the cherry on top? This is the last QE. Cos there can be no more QE when this QE is promised to never end. And why is that a good thing? "If the market knows it can’t ask for more QE, it will have no choice but to ask for fiscal spending next time round". I.e., Bernanke's done; if this QE peters out in its effect, it's now entirely the politicians' fault.

And god knows you're never going to get the fucking politicians to ever do anything without the full force of Wall Street holding a fucking gun to their heads.

Wednesday, September 26, 2012

Schwa World Operations Manual available til Mayan Apocalypse 2012

Entirely coincidentally, while responding to a Mister Frisby post with how many movies and TV shows have already portrayed worldwide mind control, I stumbled across a webpage that has the entirety of the Schwa World Operations Manual on it.

It is only available for download til Mayan Apocalypse 2012.

Schwa was a cartoon in the mid-90s. But not really, it was a graphic design project. But not really. It was some sort of... subversive thing. Here's an example of the sort of thing Schwa would put out:

Here's more:

 And this sort of thing too:

And here's a classic:

And so on.

Basically, as far as I can remember: in the Schwa universe, there were stickpeople. They were secretly mind-controlled by aliens, which drove ovoid spaceships. At the top was Schwa Corp. The world was They Live meets Kafka.

Me and an ex* used to put out a zine specifically for the purpose of fucking with people's heads (every issue had Hitler on the cover) and on the back page of every issue we printed a schwa cartoon. It just fit so perfectly.

Anyway. Bill Barker, the creator of Schwa, seems to be a slack loser who keeps putting up half-hearted websites that attempt to continue Schwa, then get shut down a few months later. They guy even has a grand total of two twitter posts. What the fuck. World needs you, quit being a slacker and get back to molesting people's braincells.

Here's a webpage from 2008.

Anyway, you can download the entire Schwa World Operations Manual, page by page, for the next couple months or something. Go do it. Don't look at the pages, just download them one at a time. Then once you have them all, look at them one at a time. I'm serious. I don't want to explain it. It's an IQ test. You're either a stickperson or you're an alien.

* - An ex now on bail for four counts of fraud apparently? Ha ha, there's nothing lamer than a jew who can't manage money. I guess that means you'll never get an arts grant again, or another job at an art studio or whatever again, so now you're stuck doing a worthless art Ph.D.; well, at least you'll still be able to write about self-indulgent inconsequential artists for tiny magazines. Hope that pays well. I know you'll come across this post someday. Here, I'll even add a meta tag to the post to lure you in. Cos I'm still more leet than you.

Midday look at some charts

Here's four charts that are all hanging on by their fingernails:

It seems like it's totally cool to see a short-term reversal that makes it down to the bollinger mean and/or the EMA(16). No problem, usually you want to be buying right now.

My problem with that is:

1) The Eurodoom chatter has only just gotten started like a day or two ago! You think we'll see a policy fix tonight?
2) Earnings start next week or so, we know they'll look bad, and yet the S&P recently printed a new high.
3) Rule of threes. Yeah, I know it sounds silly, but I really haven't ever seen a good setup repeat itself three times in a row. Third time is usually when things go in a different direction.
4) In the case of the junior miners and silver, they've already had a fantastic season, and I damn well know I'd have to be greedy to jump back in right now.
5) I don't want to be incommunicado on Thu/Fri while a market crash is happening.
6) That governing EMA(16) has turned down on a couple of these charts. So I'd just be trying to squeeze a few points out of very short-term trades. In a policy-driven environment, that seems too risky.
7) Quite generally, this is where you'd expect stuff to get broken.

So I'll sit on cash til next week.

This chart is why I'm not expecting a little correction

Here's one of Gary T's old faves, the JNK:LQD ratio:

Holy fuckin' eh, eh? A lower low, right after a higher high, channel bust, SMA(50) lost, large red candles, about to break the lower boll and go 3-sigma down. Add those up and it's a very unattractive picture.

Ouch. All of a sudden people be dumpin' they junk, yo. That's the fear talking, right there. You don't dump yo junk when you're worried about 3Q earnings, and you don't dump yo junk when you're worried about a slowdown in industrial production; you dump yo junk when you're worried about global liquidity.

So maybe there's something the lamestream media ain't tellin' you?
Now all of a sudden I gots me a hankerin' to start following $USD. Cos maybe now it decides to do something it's not supposed to.

Feels like I'm doing it right....

So I've done a bit more selling, just to reduce risk. (I'm at the Sheraton Thu and Fri so I won't be able to do any trading - except for real emergencies of course, I mean I do have my phone.)

Thankfully, there are some positions I don't need to sell: KOR looks very strong (it had its extreme bullshit selling weeks ago), NCU isn't so bad (not when you're in at $2.40!), BCM isn't so bad (again, $2.40!), and CXB is actually digging itself out of its hole too.

Yet I've got $65K or so in cash now. And the ability to cash up even more, at a profit even, if things get worse.

So now I cast my greedy eye on the good stocks that I like, which I don't own right now, which are collapsing.

And I make up really insanely low targets at which point I'll consider buying:

BTO: $3.50 or $3.20?
DPM: $8 or $7.50? (it's a very volatile stock and can get pushed down hard by GDXJ selling)
RIO: $4.30?
FVI: $4.50?
P: $4.40?
SVL: $2.50? $2.20?
PLG: no clue, a complete gap fill seems silly, but can we get $1.40?
CXB: load up the truck at $0.14 cos it's going to da moon Alice!
U: no clue, it's broken its Fukushima support level (!!!) so god knows how low it goes.

I don't need to own all these stocks. But the opportunity will come, at some point, to buy at least one of them at one of these crazy prices - or even lower. Before buying, I'll try and make up even lower targets and see if they can get there. I'll switch to the weekly chart and look for crazy low targets there.

And that's how I want to play this. I want to pick a list of the stocks I want to own, then buy the best deals when they become available. They're all just symbols to me.

In place of the news

No need to post the news today. You already know:

1) Major protests in Spain and Greece against further austerity;
2) Catalonia is going to hold an early election which will be a referendum on separation;
3) Germany, Netherlands and Finland have decided to renege on their bailout agreements, because they feel the Spanish banks who were destroyed by German hot money should be bailed out by the Mediterranean taxpayers with no help from the core, while Deutschebank and ING are the only ones in the future who should be covered by (wait for it) Mediterranean (there you go) taxpayers with no help from the core.

Also, everyone's scared about US 3Q earnings.

So I'd go with the lower of everyone's targets for $HUI et al. Personally I'll be happy if the S&P holds 1350 and its upward channel.

Tuesday, September 25, 2012

Just a couple news articles for you

So, casting around for some catalyst to make the market go down fo a bit, I came across this:

Fiscal Times - Brace yourself, 3Q earnings could fizzle

Earnings are a backward-looking indicator, so we know they'll be bad cos things generally have been bad this past Q. In addition, forward earnings projections are always grossly affected by recency effect, so forward expectations will also be crap.

So maybe that'll make things go bad?

Also, re: Europe, here's another of those things that people wanted to see happen:

der Spargel - Europe plans to leverage EZ bailout fund to 2 trillion Euros

Which was what people like Kiron Sarkar said had to happen. After all, any half-measure can easily be eaten up just by a few bond vigilantes - so it's an advantage to get too big to eat.

As for the rest of the market?

Fuck me, I bought $5K PPHM yesterday at $1.28. The nature of the corruption of the double-blind trial wasn't supposed to mean much. But then this morning, I saw the stock wasn't going anywhere, so I sold at a wash. I coulda held on, then sold at noon for $1.69, and made maybe $2K on a $5K position.

Oh well. The pharma space is frightening even to a goldbug like me. It's hard to get too worked up about selling at a wash.

Other than that, I've taken the hint re the miners and metals rolling over, so sold down some of my dead money positions to get some cash. Still can't convince myself to stop owning some other stocks, though.

Monday, September 24, 2012

Two articles on the Spain thing

I don't think the dump has to do with worries about Spain. I think people decided to worry about Spain, and then looked around for a way to demonstrate their opinion, and figured that maybe selling junior miners and silver was the sort of thing that would allow them to demonstrate their fearfulness in a socially accepted manner. Thus making them part of the in-crowd. Again, basic sociology.

But with that in mind, here's two articles, one about the whole Catalonia thing and the other about the demanding that Spain request a bailout thing.

And about the Spanish debt and bailout thing....

I just love the number that Draghi did on the bond market. You can't sell down Spain's debt, cos if you do they get a bailout and bonds bought down to a low yield level. It's a perfect standoff.

Is this all the big move downward is about?

Trying to figure out why the big dump this morning in juniors and PMs.

Then out of curiosity I turned to the weeklies, and....

You can see on the weeklies that both GDXJ and GLD:SLV were 3-sigma up, and are now moving back to within their bollingers.

So maybe today's move isn't such a big deal? Maybe I should wade in and buy up a bunch of FVI and BTO?

Then again, there's a gap fill needed, around $24 on the GDXJ. We ain't there yet. So maybe I should wait til tomorrow? You think we'll see some good retching at the start of the day tomorrow?

The other concern is we've seen two irresponsible pukes in silver in two days: once on Friday at 10:45 AM, and once last night in China at 9 PM.

And maybe the rest of the market has decided that irresponsible pukes indicate an unstable/untenable silver price, and so they're getting out of the correlates like GDXJ.

Anyway... that's what I see. I think maybe I'll take a bit of a vacation from trading for now... thankfully the stocks I own haven't dropped much, and the stocks I want have dropped a lot.

(Yes, as you can tell, I already sold MCP at a wash for something like $13 last week.)

News thing

I was bored last night, waiting for the IKN newsletter, so I opened up ZeroHedge and BI and so on looking for news on why silver puked 50 cents in Chinese trading - with no success of course.

Anyway, I found it interesting that there's a lot of Eurodoooom back in the news again. To wit:

- Greece's deficit is twice what it should be;
- Cyprus is asking for a bailout;
- Spain isn't asking for a bailout;
- There's concern about the size of the Spanish bank bailout;
- Oh, and Catalonia's threatening to declare independence;
- Greece's neo-Nazis are surging in the polls;
- there's concern the Troika will hold off on their Greece report to help Obama win the US election;
- France and Germany are scuffling over the bank oversight system;
- plus of course blah blah Hungary blah blah other dysfunctional idiots.

So, again, the doooomy narratives are back in place. Will we see the market respond the way it did this spring? Well, as of today's European close, Spanish and Italian yields haven't budged. So while the Euro doooom narrative is back in play, what we're seeing today isn't because of that.

The German economy is sliding further into recession, but that's a good thing; it makes the penny-pinching skinflint Germans want stimulus, which will be good for Europe. And Germany won't let Greece out of the Eurozone, now that Germans own all the Greek real estate.

And yet JNK:LQD is collapsing, people in China are puking silver into thin bids at precisely 9PM EST, and the US 10-year bonds are up. So something's fishy. Funny how this crap pops up the moment that the wholly arbitrary targets identified by oogity-boogity TA are hit.

Serves us right for getting involved in a circularly-determined positive-feedback fiat price-determining system powered by monkey-brained primates.

So here's some news:

Sober Lookthe Eurozone crisis has eliminated the periphery trade deficit. Interesting - he says it's because the periphery have stopped buying German goods. I wonder whether the Germans can take this as a teaching moment?

FT Alphaville - IFOnly the Germans could avoid a recession. Again, teaching moment, don't hold out much hope though.

Ritholtz - are US mutual funds calling it a year? Interesting, again - I guess when you've been burned as bad as US investors have, you take your 10% win and take off? I don't see this - aren't mutual funds supposed to remain fully invested the market? That was one of the big problems I always had with them.

WSJ Marketbeat - 60-odd days without a 1% down day. And the odds for continued profit this year are quite good. Again, I don't care about the fundamentals - I only care that my stocks are going up, dumbasses.

BC Lund - I can smell a bad trader a mile away. A nice little write-up on the most basic mistakes that noobs make in the market. I've made these mistakes too - and I find the only way to fight off these bad behaviours is to subject everything I do to the simple test: am I making money on this right now?

Cos if you're not making money at this, you gotta ask what the reason is for you to be investing at all.