Saturday, October 6, 2012

Stockwatch actually doesn't do a half-bad story on LSL today

Here's Stockwatch on LSL. Looks like they're rushing to get in before Sunday night when we'll all rush to read our IKNs on the topic.

And here's my redline markup:

On second thought, it's probably not nice to copy Stockwatch's entire story.

Though you should still read Sennen's four increasingly snarky news releases about the attempted LSL buyout, to add colour and due diligence.

How many disabling head injuries can you suffer before turning into a respected junior mining stock analyst?

I just looked at that Liberty Silver post again this morning and was stunned after re-reading the writeup from James West.

"The math is very straightforward with Liberty Silver Corp.'s Trinity Project: 50 Moz silver at $30/oz, minus cash costs of $15/oz, equals $750M divided by 80M shares outstanding equals $9.38/share. Chop that in half for the sake of conservativeness, and you still get a price of $4.68/common share outstanding—if they don't drill another hole. . ."?

Is this meant to be serious? We're supposed to calculate a mine's valuation based on ounces in the ground? Can't we do a Net Present Value calc with discount factor, at consensus future silver prices, after funding capex 50% debt/50% equity and diluting the NPV across the capex-diluted share structure?

I mean how fucking hard is it to do this? I can do it in my sleep. They teach it every year at PDAC, it's 1 hour out of a 1-day course. You see how to do it in every PFS. Or why not do a simple cash flow multiple for the target price, if it's too much fucking work to do an NPV? And he doesn't include the warrants and options for this per-share calc: aren't we supposed to visit the company webpage to look up their share structure?

No wonder the "math" was so "straightforward".

People invest their money based on this?

And then there's that "if silver goes to $110 boyoboy this'll be a good stock yessir dadgummit" statement. The ignorant hayseeds on Stockhouse use precisely that argument to justify holding their UC Resources at 4 cents. Go buy 2013 SLV $50 calls if you're so certain.

My god. This is what happens when I stop being drunk. I have to go get drunk again immediately.

UPDATE: now that a certain Rogue Peruvian Blogger has linked to this article in his weekly, I thought I'd give you the links to the other LSL articles of this weekend:

- The stockwatch article;
- Four snarky news releases from Sennen, who LSL tried to buy out;
- James West's LSL writeup was deleted from the Midas Report last night, as well as from the Google Cache; but you can still find it on Before It's News, and a veritable army of evil minions is reposting it everywhere else - and you can too!;
- Here's the delicious irony of James West's recent interview on The Gold Report, a website that needs to be far more picky in the future;
- Oh, and some quotes from The Gold Report, where you'll find other positive assessments of LSL from Jeb Handwerger and David Bond.

Friday, October 5, 2012

My oh my, Liberty Silver.

Liberty Silver is teh awesomez!

Let me give you some news releases:

Yahoo, Sep 26th:

Renowned and respected investment advisor and founder of Midas Letter, a subscriber-driven private investment strategy newsletter, James West, has recently reported his overview of the Trinity Silver Project, a Liberty Silver Corp. (LSL.TO) (OTCBB: LBSV) endeavor.

The Trinity Silver Project is located 25 miles northwest of Lovelock, Nevada (Pershing County) and shares its geographical location with major gold and silver producers including one of the largest silver mines in the United States, the Rochester silver mine owned by Coeur d'Alene Mines Corporation, which produced 125 million ounces of silver from 1986 to 2010 and has an estimated 120 million silver ounces in reserves.

As reported by West at, “In the month of September so far, the company has traded over 20 million shares and doubled in value. Silver itself has traded in a similar trajectory, increasing in value by 35% since mid-summer, and outperforming gold smartly. The most respected and experienced traders in precious metals fully expect the ratio of how many ounces of silver it takes to buy one ounce of gold to head towards 16:1 from its current level of over 50:1. That would imply a silver value of $110 per ounce.

“If Liberty Silver shares continue to trade at such a high beta to the silver futures price, the premium being awarded Liberty Silver could be substantial,” adds West. 
My my! What a great buy! Not at all pumpy! But wait! There's more:

From, Sep 11th:

We have become interested in a previous silver producing mine right here in Nevada just about to break into all time highs.  Libery Silver (LBSV) has recently seen a major increase in accumulation and investment interest.  Liberty Silver (LBSV) is permitting and intends to be producing silver at its Trinity Project which was one of the largest silver mines in US history possibly within the next 18-24 months.  Trinity produced five million ounces of silver between 1987 and 1989 before Rio Tinto closed id down when silver prices went below $5.  Now the ballgame has changed as silver may be on its way to test new highs at $50.

The company is now preparing an updated NI 43-101 Resource Estimate and a Preliminary Economic Assessment (PEA).  Liberty is beginning permitting as it believes it could move very quickly into restarting production as it already has an existing open pit mine that was once in production.  Now silver is breaking above $30 and could move significantly higher over the near term possibly into new all time highs should QE3 be announced later this month.  The higher prices has brought a lot of investment interest into this project and makes this project a potential cash cow with huge leverage to the price of silver.

It sounds even more awesome! And still not pumpy!

And here's more quotes from the Gold Report:

James West, Midas Letter (9/26/12) "The math is very straightforward with Liberty Silver Corp.'s Trinity Project: 50 Moz silver at $30/oz, minus cash costs of $15/oz, equals $750M divided by 80M shares outstanding equals $9.38/share. Chop that in half for the sake of conservativeness, and you still get a price of $4.68/common share outstanding—if they don't drill another hole. . .investors are apparently arriving at a similar conclusion. A major Wall Street firm is actively accumulating a position after visiting the property earlier this month. . .after a second, more in-depth look at the company and its project, I decided to jump in. . .what sets Liberty Silver apart from every other TSX and Venture-listed firm is the caliber of the management and board of directors."

David Bond, (8/30/12) "Liberty Silver Corp. has moved aggressively into the silver market and largely under the radar into the stock market as well. The company leap-frogged from the U.S. pink sheets to a full-on listing the Toronto Stock Exchange, without passing 'go' the NASDAQ or the TSX Venture Exchange, largely on the resumes of its board of directors and on the merits of the properties."

Jeb Handwerger, Gold Stock Trades (8/26/12) "We believe Liberty Silver Corp. is dramatically undervalued and overlooked, which is about to change as more analysts and investors become aware of this situation. The company has shown strong accumulation over the past three months during the summer doldrums; this may indicate smart money has been buying in anticipation of positive developments. . .we believe with drilling and exploration and the announcement of a PEA, Liberty Silver could be significantly rerated and its 24 Moz Inferred resource may move to the Measured and Indicated."

This must be an awesome play! And it's still not pumpy!

Oh wait....

Cuz this happened:

Liberty Silver Reviews SEC Order of Suspension 05 Oct 2012 19:34 ET
Marketwire Canada

Liberty Silver Corp. (TSX:LSL)(OTCBB:LBSV) ("Liberty Silver" or the "Company") is providing this update regarding trading in the Company's securities.
Liberty Silver was named in an Order of Suspension of Trading (the "Order") dated October 5, 2012 from the US Securities and Exchange Commission (the "SEC"). Pursuant to the Order, trading in the Company's securities is suspended from October 5, 2012 through October 18, 2012. According to the Order, the SEC states that, "It appears to the SEC that there is a lack of current and accurate information concerning the securities of Liberty Silver because of questions concerning publicly available information about Liberty Silver, the control of its stock, its market price, and trading in the stock".
The Company believes it is in compliance with applicable disclosure and regulatory requirements. The Company is currently reviewing and working to resolve this matter. The Company will work closely and cooperatively with the SEC to resolve this matter for the benefit of our shareholders.
And also some of this:

IIROC Trading Halt - LSL (all issues)
05 Oct 2012 10:22 ET
CNW Group

The following issues have been halted by IIROC:

Company: Liberty Silver Corp.

TSX Symbol: LSL (all issues)

Reason: Pending Company Contact

Halt Time (ET): 10:01 AM ET

The Investment Industry Regulatory Organization of Canada (IIROC) can make a decision to impose a temporary suspension of trading in a security of a publicly listed company, usually in anticipation of a material news announcement by the company. Trading halts are issued based on the principle that all investors should have the same timely access to important company information. IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.

SOURCE: Investment Industry Regulatory Organization of Canada (IIROC)

To view this news release in HTML formatting, please use the following URL:

Whereupon, strangely, very strangely considering how great a stock this is, there was this sort of trading before the TSX halt:

Where 082 is Stifel Nicolaus, 028 is BBS, 095 is Wolverton, and you've got a few Anons in there for good measure. Not exactly your typical traders. Americans fleeing to the Canadian exchange to dump shares during the US freeze perhaps? Or something else?

Here's some of what the Globe and Mail has to say:

IIROC believes it acted as quickly as it could. “It’s not common for the SEC to issue a temporary suspension on a Canadian-listed security and in this case IIROC staff were not notified of the action ahead of time,” Mike Prior, vice-president of surveillance at IIROC, wrote in an e-mail. “In issuing our trading halt, we have requested Liberty Silver release a statement.”
For now, Liberty Silver is simply halted on the TSX (typically a short-term action), but the SEC has issued a trading suspension until Oct. 18. The two-week period will give the regulator time to look into what it described as “a lack of current and accurate information about the company concerning, among other things, the control of its stock, its market price, and trading in the stock.”
For much of this year, Liberty’s shares traded at $1 or less. But a flurry of activity in late August gave the stock some momentum. From January to August, the stock’s trading volumes averaged about 42,000 shares per day, but shot higher heading into the Labour Day weekend. Volumes remained high in September and early October, averaging roughly 236,000 shares per day.
From Aug. 31 to Oct. 4, the day before trading was suspended, Liberty’s share price jumped from 75 cents to $1.58. During this period, the company’s market value climbed to $126-million from $61-million, almost doubling in just over a month.

Wow, eh? Heck of a blow-up.

I don't know what it all means, and it's not like there's any detail to the news, and I'm not interested in fucking around on SEDAR for all weekend trying to do forensics on LSL. Because I don't care about chickenshit pinksheet stocks.

But wow, guys. In particular, James West will certainly be even more renowned and respected after this one.

UPDATE: Sean Brodrick has some upscale readers. One in particular from somewhere in Florida....

BTO - a little note

#1, I keep hearing the phrase "there's no such thing as a triple top". Does that apply to BTO, here?

#2, Let's say you bought BTO in August 2011, or in March 2012. You'd be down at most 10% right now. How many of your other stocks have performed so well in that time?

#3, since the $HUI peak in April 2011, BTO is up 30%. How have you done since April 2011?

A few trades done

I dumped my $20K remaining of NCU. Apparently Pala feels NCU should buy shares in Pala's Mercator Minerals. On first glance, I don't see how this helps an NCU buyout, and (due to past experience with Century Mining) I don't trust fucking Russians - especially ones with corporations located in tax havens like the Channel Islands. So, I'll take my $7000 profit and free up some capital.

I bought another $10K worth of SVL this morning - they're doing a capital raise at $2.55, but it was immediately oversubscribed, and the money's going to take off a hedge, so on first glance and with no DD on my part I think this'll add to SVL's value.

On the Primero news this morning, I saw the warrants were late to move - so I grabbed some at $1.55, turned them around 15 minutes later at $1.70. I'll buy back maybe at $1.30-$1.50 or so, if it gets that low. But we'll have to see the longer-term reaction - I'm not making a decision based on 1 hour of trading! P's advanced almost 200% in a couple months, so I'm sure some people will want to puke and take their profits.

I'm stuck in a TBT position (bought yesterday) til my discount brokerage adjusts my share count for last night's 1:4 reverse-split. I don't see why they have to consolidate at $16, but whatever. The idea of TBT looked good, since JNK and UUP were making moves yesterday.

I'd probably buy a double-long silver at the price right now. Like I said - a good US jobs report is bullish for silver, not bearish. Same for gold.  The problem is, market participants still seem by and large to be operating under the old paradigm - that good is bad (Bernanke won't print) and bad is good (cos then Bernanke will print). Clue in, guys! Bernanke's print button is stuck now. The paradigm has changed.

Man oh man, SSL is taking off! I have $5K in A warrants (which are very liquid) and $5K in B warrants (which are grossly illiquid). A seems to be moving at about 60-80% of the rate of B, so that's okay. These are "leverage" shares, where I buy them so that I don't have to commit as much capital as I would if I'd bought SSL shares themselves. The freed-up capital then makes money elsewhere while hopefully SSL also keeps going up. God I love warrants in a bull market!

Dunno what to do now - I have $20K cash at this moment and feel I should be 100% in. I'll have another $10K when my TBT gets closed out next week.

Maybe I should buy $10K in Alcoa? :-)

In the grand scheme of things, I've now made back all the money I lost since December, and then some. Now all I have to do is make back all the money I lost *in* December - about $60K thanks to those cunts at Regulus. Actually, it was my own fault, since I could have gotten out at a profit days later; but what can you do when you see a position get blown out? Pull the trigger and move on. From now on I'll be avoid fucking explorecos in general - I don't like investing based on newsflow.

Anyway, I'm sure I'll make back last December's losses by the end of this year.

That makes me feel good about myself.

Out-thinking the market at 9AM, and some news

I guess someone got the memo that they can't let gold close the week above $1790, or silver above $35, eh?

Because it's not like the stellar nonfarm payrolls report released at 8:30 (headline number: 7.8%) should have any effect on the price of gold and silver, should it?

I mean, if you believe that Bernanke affects real demand for gold and silver, then the nonfarm payrolls means nothing, since he's already said he's going to continue QE3 til unemployment gets down to 6%. And that's still a long way away, with a lot of bumps in the road before we get there (Catalonian elections, Spanish debt rollover, German policy freeze, and so on). So gold and silver shouldn't have gone down.

Whereas if, like me, you instead believe that demand for gold and silver is dependent on the health of developing economies, then a stellar jobs report is bullish for gold and silver; silver because it's an industrial metal, and gold because that's where rich Chinese and poor Indians like to put their savings, which they'll have a lot more of now that the US economy is improving. So gold and silver should go up strongly.

Which do you think is right? Me or the goldbugs? Here's a hint: after the jobs report, $USD went down and copper went up. I'll tell you who's right: the market.

Speaking of which, here's some news:

Want China Times - foreign developers rush in to buy commercial properties in China. That's bullish for China.

Xinhua - Chinese railways see record traffic during this week's holiday. Again, bullish for China.

WSJ Marketbeat - bullish options action on Alcoa ahead of earnings. Alcoa certainly is low right now; the economy might be better than we think, but aluminium is still in a glut. No matter; how the market reacts to whatever news is given is what's most important. If AA goes up, I betcha copper will go up too.

Friday videos - Set the Controls for the Heart of the Sun

A great soundtrack for the impending apocalypse.

Similarly, a great soundtrack for the impending US election.

As that fruitcake homo Chuck Norris says, a vote for Obama will bring a thousand years of darkness.

And yes, I called Chuck Norris a fruitcake homo. The city I come from, and the things I've seen, I guarantee you Norris would be afraid to set foot in that fucking shithole. I went to grade school with kids who could put him in hospital. And would just for the bragging rights. No lie. And that's even before Norris went senile.

Thursday, October 4, 2012

Our Daniela and Peter Hug

Daniela Cambone gets various opinions and stuff from Peter Hug:

Gold's already closed over $1775, and the Euro's over US $1.30, so I guess now it's all to da moon Alice?

I mean, if I'm going to bully poor Sean Brodrick about predictions, I may as well hold Peter Hug to his own predictions too, eh?

funny picture

You can tell it's in England because of the way they spell "gynaecology".

Also because... well... English food is kinda crap....

Colombia is a barbaric backwater

Just look at this:

Colombia is a third-world country. They have to work harder than the Vietnamese for the same amount of beer.

A "Romney bump"! Hilarious!

I find it utterly Hillaire Belloc that someone at BI suggested that today's strong market is the result of a "Romney bump".

That's why people are also selling USD and Treasuries, and buying emerging markets and junk bonds, right? Cos Romney had one day where he didn't make himself look like an utter fucktard?

Are the charts deciding to do something?

Some juniors are up strongly today.

And as for the intermarket?

FXI is banging its head on the $35 ceiling. Looks like it wants to go up.

IEF looks like it might go either way, so you can't really read anything into it. But....

JNK is definitely making a move to the upside, which means risk on; and

UUP is definitely making a move to the downside.

UUP and JNK colour my opinion of IEF and FXI. Also, positive news about Chinese vacationing, Chinese consumer sentiment, and Chinese auto purchase desires make me feel that the anchor's getting lifted.

So I threw another $15K into shitty junior miner stocks. Who knows, maybe they'll go up too. Unsure if I want to commit my last $30K (I tend to go to $0-10K cash when I'm bullish).


Dash of Insight - QE3 misperceptions and how to profit. Again, a lot of clueless, politically-charged bullshit is flying around on the subject of QE3. Get blinded by politics and you'll lose money.

FT Beyond Brics - India's cut to diesel fuel subsidy, the good and bad. It was probably a very waste-encouraging program, and it was killing their balance of payments, so it's probably good to cut the subsidy. Also, Indian markets rise on promise of reforms. So I guess we can say the bottom was in for India and it's looking positive again?

FT Beyond Brics - China's golden week. China's on holiday, so maybe that's part of the blase picure for gold. (For those of you who think China has anytihng to do with gold demand, of course.) But funny enough, internal tourism has soared during this year's holiday. Combine that with recent surveys showing high Chinese consumer optimism, and maybe the bottom's in for China too?

FT Alphaville - German slowdown. Not the economic kind, though they are going into recession - rather a policy slowdown. Sep 2013 is the next German elections, and as we get closer and closer you can expect Merkel to want to do even less for Europe than she already has been doing. After all, she has to keep the hardass nationalists and racists on her side if she wants to retain power, right? So, something to keep in mind as a possible downside catalyst for 2013.

Reformed Borker (Bork Bork Bork!) - Respect the technicals. It doesn't matter how much value there supposedly is in your stellar little value pick if it just keeps going down. You shouldn't just look for value - you should look for the right time to buy that value. And that means looking at the chart once in a while. Quit being a snob about TA - you're just blowing your portfolio up needlessly.

Streamers - charts look great

You've been living under a rock if you didn't notice SLW, RGLD, SSL and FNV's outperformance of everything else recently.

I was thinking, y'know... if I were the Saudi royal family, I'd be well served to buy out a major gold streaming company. I mean, if I've got a few billion dollars, why not buy 30 years of gold streams at a discounted cost, and just pipe all that gold to my own private vaults forever?

Similarly, if I was the central bank of the People's Republic of China, and I wanted to establish the yuan as a valid worldwide reserve currency, I'd be well served to buy out a major gold streaming company. I mean, for a few billion dollars I could buy 30 years of future gold production, and add that to my forex reserves to improve the standing of my currency.

I'm only sayin'....

An old idea from a few months ago

Long before I started going on about the monsoon, I posted a chart of INP vs GLD.

Let's revisit it:

No comment is necessary. Either you see it or you don't.

Wednesday, October 3, 2012

Ottotrans of SUE

Spent 2 hours looking for my cellphone, turns out it was in the fucking laundry room on the shelf.

So I'm late for my evening internetting, so here's a thingie on SUE in case you're pissed off that Otto's gone to bed already.

Here's the original:

TORONTO , Oct. 3, 2012 /CNW/ - Sulliden Gold Corporation Ltd. ("Sulliden", or the "Company") (TSX & BVL: SUE) announces that based on discussions with its shareholders, it will not be proceeding with the milestone bonus plan outlined in the Management Information Circular dated September 5, 2012 .
The Board of Directors felt that a milestone-based incentive plan would align management focus and shareholder value with a view to the best interest of the Company. However, in light of shareholder input, the board has decided to terminate the plan.
Here's the Ottotrans:

TORONTO , Oct. 3, 2012 /CNW/ - Sulliden Gold Corporation Ltd. ("Sulliden", or the "Company") (TSX & BVL: SUE) announces that based on its share price collapse to .93 on 6.6M shares and an after-hours ass-whipping on BNN, it will not be proceeding with the milestone bonus plan outlined in the Management Information Circular dated September 5, 2012 .
The Board of Directors felt that a milestone-based incentive plan would align management focus and shareholder value with a view to the best interest of the Company. However, in light of its share price collapse to .93 on 6.6M shares and an after-hours ass-whipping on BNN, the board has decided to postpone the plan til IKN's attention is somewhere else.

PS red is the only colour for markup

Hey... what about that Indian monsoon?

We totally forgot about the monsoon, eh? I guess when the price of gold goes up we don't care why.

Oh well, turns out the rains were 92% of average, thanks to a late push.

Here's Pakistan Daily Times on the topic.

Here's a Reuters article from a couple weeks ago.

So everything worked out okay after all, and Indians are just a bunch of worry-warts.

That's all the attention that we have to pay India for this year. Til next year, kids, always remember:

Americans don't buy gold. Indians buy gold. And Chinese. Any gold analyst who spins you a tale based on yet-to-be-seen USD depreciation or non-existent US money-printing, instead of on India and China, is either a liar or a fool, and should be ignored.

News reading

der Spiegel - Joseph Stiglitz is a raving communist who wants to take all your wealth and force you to have gay marriages. No, actually he's rather intelligent and perceptive. He's only crazy in the USA. Oh and Germany, where they're also turning into fucktards.

New Deal Democrat - Can you really have a recession if housing, cars, layoffs and stocks won't play? NDD at Bonddad, along with Boockvar and Sarkar at Ritholtz, are my go-to places for the up-to-date macro and world situation.

FT Alphaville - Chinese property is back. Y'know, the global economic situation is really starting to not resemble sucking.

FT Alphaville - more on the Rubik's Cube of Finance and why QEternity doesn't cause inflation.

BI - September car sales are strong. Oh and also, I've read elsewhere that GM is going great-guns in China, and Einhorn is long GM. Which you wouldn't do in a recession. And Einhorn is smarter than you, even.

All-Star Charts - interview with TA Ralph Acampora part 2. You should also read part 1, then part 3 when that comes out. But long story short, he thinks 666 was the bottom. Pay special attention to this exchange:
JC – That’s great stuff. So we talk a lot about cyclical markets and secular markets and how long they typically last. The consensus out there seems to be that secular bear markets typically last longer than the 12 years that we’ve been in. So you don’t think that’s right? You think that we’re already in the next secular bull?
Ralph – We had 12 years, what do you want another five?
JC- Well, I’m asking.
Ralph – Give me a break. I think it’s over. The bottom was made in 2009. That was it.
JC – The generational bottom huh?
Ralph – You got it.

Market update

Still a boring market.

Yup, can't really say anything else here.

Boring. Wondering where it's going. Some PM stocks still look like they're rolling over, with channel/EMA support broken - check out FVI, KGN, EDR, SVL slightly.

Some are in a pennant, more or less holding channel/EMA support but not hitting any new highs - DPM, SLW, BTO.

And yet a few are hitting new highs - FNV, SSL, AR, PLG.

Volume generally seems to be dwindling.

It's as if everyone's trying to figure out whether they want to buy the goldbug hyperinflation story, or trust Bernanke and them Satanic Manhattan Jews with their book-learnin' and their gay marriage.

Nobody knows what to do so they're watching and waiting.

It looks like we're going to need Klaus Kleinfeld to sing the opening aria to get a decent market crash next week and get the prices moving again.

Tuesday, October 2, 2012

R Daniela interviews Thomas Barnett

Still no Brent 'n' Mickey Variety Show.

But here's an interview with Thomas Barnett:

And he seems to understand the whole age-dependency thing.

Different ideas at least, as he's not "one of us"; so watch him.

Africa ETF

While all you guys were looking somewhere else....

Gaf's showing an inverse head and shoulders (or a cup if you're Gary Tanashian) targeting 86 or something.

Nice upward channel and we're at a good in point right now.

Unfortunately the volume is pretty darn low.

Korelin interviewunt Pontius Corvum ed Edwardus Lupakoi

1. Here's Korelin interviewing Jeff Pointius from KOR.

Basically they're drilling some holes and stuff. Pontius doesn't give good interview.

2. Here's Korelin interviewing Eric Edwards from LPK.

Edwards seems to admit now that the only reason they bought AAG was cos they were shut out of capital markets with everyone else, and unless they bought AAG they'd be out of cash by December. Like I said. Now they're "cashed up for 2 and a half years".

Also, he calls Invicta "compelling", so he probably did talk to Victor Jaramillo about it. Like I said. (Or he's making it up of course.)

And it sounds like LPK's going to sell the Southern Legacy shares. Or at least he's going to "maximize value" of them, and I don't see any other way to "maximize value" in that property if what Otto says is right.

Anyway, they've started drilling A2 thru A4 last month. He says it's a "key news driver within the next month to six weeks." He says "we have every expectation, on a geologic and scientific basis, to believe that [...] we've got another similar-sized deposit on the Crucero property" in the A2-A4 zones.

So don't turn your back on them, Otto! Don't sell them!

You neither, mister Lupaka Warrants!

It's goin' to da moon Alice! To da moon I say!

Adrian Day merits an interview by Daniela instead of the other guy

Hey, Adrian! You're on the A-list with Brent and Mickey!

And oh no, he's also swallowed the "inflation blah blah" pill. Adrian, QEternity isn't stimulus: it's quantitative easing. Stimulus is what the Republicans have been blocking for the past four years.

Also, the stimulus isn't "open-ended"; it's unemployment-targeted.

And it's funny that you point out China's slowing down, and the Eurozone is in recession, yet the US is only in a low-growth stagnation scenario; I wonder if there's a word beginning with the letter "q" that explains why the US hasn't also fallen into recession? Hm? Any q-words come to mind?

And the peripheral-EU depression isn't going to drive stimulus in the Eurozone. The stimulus is going to come when the Germans realize they're also sliding into depression; that is when the taps will be turned on.

However, good job in pointing out that austerity generates economic depression.

Also, you are wearing a singularly brilliant tie.

And everyone, we can now add Adrian Day to the analysts who like the royalty companies. Holy geez, my FNV warrants are going to be worth a fortune.

Daniela brings up a stellar point around 5:55. She should interview herself more often.

Oh dear, Sean. Oh dear.

Sean Brodrick was interviewed at the Sheraton last week. Again, he's not interviewed by Daniela.

Oh dear Sean, oh dear. You predicted something. You shouldn't have done that. You predicted $2000 gold by the end of the year. And sometime next year, probably $2400. (That's at 2:52-2:56 in this video.)

May I mock you publicly and mercilessly if it turns out to be not true?

Because the price of gold has nothing to do with QE3; it has more to do with Chinese and Indian consumer demand. And if you "don't think we've seen the end of the bad news in China", then that sounds bearish for gold.

So, we'll see....

Multiplexed newsiness and shut up about the inflationary apocalypse

BI says it all - Ben Bernanke Gave A Dazzling Speech About Monetary Policy—Everybody Needs To Grasp The Key Points. Read it. Basically, it has now gone viral (i.e. filtered down to the mouth-breathing plebs at Business Insider) that there will be no runaway inflation, Bernanke is not printing money, and the only people left who believe in this shit are the fucktard goldbugs.

FT Alphaville - QEternity explained using Rubik's Cubes. Read it.

Ritholtz - here is the entirety of the Bernanke speech. Read it. Again, it's so out in the open that Ritholtz has reprinted it. So shut up about the coming inflationary apocalypse.

I'm serious - I am now deleting any subscription, RSS feed, or news source that continues to natter on about the coming inflationary apocalypse.

Speaking of which - someone notes that it looks like the gold miners are rolling over. I agree. Maybe the rollover that we're seeing now in the miners, and the PMs, is the smart money handing off to the stupid? Granted, some individual stocks will still do well. But the "rising tide lifts all boats" is now a fantasy - and so, for example, Keegan might be going back to $0 EV.

Focus on Funds - gold speculators biggest bets since February. Uh-oh...

Now as for the rest of the world....

FT Beyond Brics - Mali gold miners hurt by travel ban. Except not really, as the story explains. Whatever. At least it seems to say that Randgold is a good buy, if you're into that sort of thing.

BI - Chinese consumers are optimistic. Wait... what? Positive future expectations for the market, everyone! Especially commodities. And not because of "money-printing".

FT Beyond Brics - Chile apparently expects no trouble on the copper front. Except maybe no electricity for new mines. Speaking of which, maybe you also want to read the news release for the Economic Survey of Latin America and the Caribbean.

And as for Europe,

Reuters - Spain ready for bailout, Germany not. I guess the Nazi fucks in Germany won't find a Spanish bailout fun anymore, since Spain has already met the conditions for a bailout in advance. So, Germany can inflict no more pain.

WSJ Marketbeat - Moody's has to wait for Spain. Ha! Fuckers. Can't fucking downgrade them now, can you?

Mariano Rajoy's a fucking genius.

Keegan sucks

Wow, Keegan sucks. $188M cash, $70 million EV.

See, it's kinda funny to see these sorts of companies continuing to suck™ even at this point.

Might be a good buy... when it stops going down.

Re Adrian Day and Ian Graham

Day and Graham's thesis last week was that we're in a long-term secular bull for commodities, driven by a long urbanization/industrialization trend among the developing economies, whose driver I guess ultimately you could trace back to globalization.

(With globalization, industry seeks the cheapest labour cost input, and capital seeks its highest return. Then things change, so capital and industry move, until eventually everyone's kinda better off sorta.)

The endpoint comes when all nations are pretty much industrialized and urbanized. The endpoint would also assume that we're reduced to extracting minerals from seawater, because there simply isn't enough economical gold or copper or iron - no matter what price you run the economics at.

This trend was presented by Day & Graham as a sort of fait accompli - nothing's going to stop it, or at least nothing we can foresee.

I just now remembered, though, reading something a couple years ago that would be the spanner for this works. I think it was Jim Rogers' "Hot Commodities".

He pointed out that commodity booms only last until governments intervene. Whatever dislocations the commodity booms cause (e.g. social unrest, caused by skyrocketing food prices), the typical government response is to deglobalize, institute protectionism, and funnel a pile of money into subsidy of resource production.

So you end up with, e.g., grossly uncompetitive coal mines receiving subsidies, thus cratering your nation's cost of coal. Grossly uncompetitive farmers receiving farming subsidies.

Ultimately, the state intervention in commodity markets craters the commodity prices, thus bringing about a new secular era of cheap cost inputs - and that's when the equities take off.

Looking at this right now, I'm pretty sure it does come from Jim Rogers' "Hot Commodities". Buy his book (or download it illegally off P2P) and read it, because he's a better explainer than me.

Anyway... I'm only presenting this to you because I hate being shown a fait accompli. I want to look for the fatal flaw in everything, and then keep my eye out for that.

And, quite frankly, despite his many foibles, I do hold Jim Rogers in high regard - at least when it comes to understanding the commodity/equity cycle. Til he himself says we're in a 30-40-year commodity supercycle, I'm not going to believe it fully.

bpspx - feel lucky, punk?

Kinda looks like bullishness is rolling over.

Plus, it's October.

Plus, it's between them Yom Kippur and the other holiday.

Plus, $BPSPX just dinged off the upper bollinger.

Then again, this chart is a little too longtimeframey for me.


So what if QEternity doesn't blow an inflationary bubble? Are you prepared for that?

If you're one of those Austrian wackaloons who thinks we're about to spiral into hyperinflation and won't hear a counterargument, you'll find it wise to immediately leave my blog and never return. You won't get a thing I'm saying and it'll just make you all angry and bothered.

Now, as for the rest of you....

We're in a deflationary debt-deleveraging environment. Bernanke's going to QE hard and fast now. That won't cause inflation because we're in a deflationary debt-deleveraging environment. Bernanke knows this cos he went to school or something. And I'm not one of those arrogant hayseeds who asserts that book-learnin' is for fools.

So what does that do to gold and silver?

Maybe they were just bid up because the first knee-jerk response is to expect inflation. I'm saying the first response was wrong. And some commentators in the market are already cluing in.

And what happens to bonds?

Maybe what will really happen is, to the extent that there is any new money entering the system, it gets dropped into safety assets. Because that's what you'd expect in a deflationary environment, isn't it?

Wouldn't it be funny if gold and silver were weak from here, while US bonds were strong?

Just keep that in the back of your mind while you're out among the lemmings nattering on about inflation.

Because maybe things are going in a different direction, and wouldn't it be nice to be on the right side of this trade?

I have no clue if this thesis above is right or wrong. I have to puzzle it out more. But I'm looking at today's action, and man oh man does it not look like silver and gold are going to da moon Alice.

UPDATE: Or, of course, maybe I'm wrong. I'm only saying, just keep a weather eye on bonds and the $CRB and stuff.

Monday, October 1, 2012

another funny

So sue me for being so far behind the times that I didn't hear about this already.

I'm still trying to catch up on all the Laina Walker videos from the past 2 months.

Save this one for later

I have to save this jpeg for later - it's going to come in useful....

John Kaiser on The Gold Report

Here's an interview on Gold Report with John Kaiser. If you remember, I said blah de blah de blah about him in the TRIC Day 2 review.

Anyway, sadly enough, he also likes Cabbage Patch Rye Patch Gold. To which I yesterday presciently responded, "so does everyone else, so what upside is there?"

Also, when I said blah de blah John Kaiser, I said I decided I'd also check out his site and see if there's some way to subscribe or something. And, well, among other things I've found a section that has old writeups of his from last year and before.

Now, any newsletter writer will tell you that "history makes fools of us all". Or rather, they say "what the fuck was I smoking back then!" So I find it very instructive (as of 5 minutes ago, anyway) to read the old writeups of the various stock-pickers: after all, they're always making them wacky predictions, aren't they? Well, wouldn't you like to see how many of those wacky predictions actually panned out?

Or as Jojo said to me about 6 months ago, "how many newsletter writers are still letting you see their year-to-date performance?" Which yeah, he does, cos even 2 months ago he was still showing a profit.

Anyway... I guess everyone who has any interest can go check out John Kaiser's site and his writeups from the past few years.

Market comment, and various bits of things purported to be interesting

As for the market today - funny hilarious pop in silver at 08:30, all given away at the end of the day. So we're still waiting for any further move upward. Which probably won't come, cos if you look at the USD and the bonds it seems the market in those areas has finally clued in that there won't be massive commodity inflation.

I mean fuck dude, the chart is the chart!

So if you want the junior miners, I think now's the time to start being picky again. Maybe that's what I've been seeing? I've been confused because I've been seeing three different movements:

1) Stars, like SSL and YRI, are still moving up strongly;
2) Other stocks like DPM are hemming and hawing, in a flag or pennant, still unsure which direction to move;
3) Some real dogs like KGN are flying right back down.

But maybe that differentiation is now happening because the market's realized that not all boats should rise, because not all stocks are worth buying, because we're not going to see a skyrocketing PM complex due to inflation?

In which case, you should be picky, cos the market already is.

In which case, buy the picky stocks, cos the money might concentrate in those for the next leg up.

Don't argue with the chart. Read the chart. It's telling you what's going on.

And now, the news:

BI - China sliding into a pensions black hole. One thing Adrian Day didn't really consider important. Which is funny, cos most people seem to suggest that the high growth always is achieved in countries with an exploding population slanted heavily towards the young. Which China ain't got. Oh well... if Adrian Day was perfect, he wouldn't be speaking at goldbug conferences.

Nihon Cassandra - QE3 won't cause inflation. My opinion exactly - you don't get inflation in a debt-deleveraging environment - rather, the money-printing serves to reduce deflationary pressures.

Ritholtz - Sell-side indicator still shows extreme bearishness. Either that, or maybe something else is going on? Y'think?

Reformed Borker (Bork Bork Bork!) - institutional portfolio rebalancing might be going on right now. Try to figure out what that would look like.

All-Star Charts - R2K is testing major resistance. Which way will it go?

der Spargel - Europe intent on saving Greece despite everything. Like I said. Greece doesn't leave the EZ. Not now that the penny-pinching Germans have invested all their money in Greek real estate.

And some trading psychology articles, since you really need your fucking head sorted out:

WaPo - Ritholtz's rules of investing. Things that people don't do well.

And here's more trading rules from Ritholtz.

And boo, someone's interviewing Brent Cook, and it's not Daniela Cambone:

Sunday, September 30, 2012

What's with all this "crack-up boom" business? - an illustration of filtering via association

Been hearing a lot about "crack up boom" recently.

So, as with every Sunday afternoon, I had to do a google search.

Now, I think at lunch on Thursday, Jordan, ML ("Mister Lupaka"...? interesting!) and I blundered into the topic of how to decide what is news worth following. I think that if I even did manage to explain my own position, I did it poorly.

So here's an illustration of my methods right here:

Here's a short writeup on "crack-up boom".

Oh good, it's an idea from Ludwig von Mises. That explains a lot to me instantly. Warning sign #1.

Here's a longer writeup on "crack-up boom" from the Daily Reckoning.

It mentions "Zimbabwe", so there's warning sign #2.

It's on the Daily Reckoning. Warning sign #3.

Oh, it was written in June 2007. When the crack up boom had already begun. Supposedly. Thus warning sign #4: people have already been crowing about it forever.

And here's video of Marc Faber talking about the "crack up boom". From Feb 2011.

It's Marc Faber, darling of Zerohedge. Warning sign #5.

The video is linked from Zerohedge. Warning sign #6.

Here's Thorstein Pollett writing about "crack-up boom". From Jan 2010.

It's on Warning sign #7.

The author was "awarded the 2012 O.P. Alford III Prize in Libertarian Scholarship". Oh god, not only does such a thing exist, but he is proud of winning this thing. Warning sign #8.

Add it up and what does it say?

Coeur and RPM: wanna bet? (Cos funny enough you can.)

Jordan says it seems like everybody loves Rye Patch Gold right now. Everybody thinks they're guaranteed to win their fight with Coeur d'Alene. Someone at TRIC said RPM was a guaranteed triple. Both Sean Brodrick and Mickey Fulp were excited about RPM.


Just looking at the news releases as carried by Reuters, and not being a lawyer, I think the judge has a good reason to dismiss RPM's claims and revert everything to Coeur. Pedis possessio is not being used in good faith here: RPM can't seriously assert the land is theirs while they explore for resources, because we already know there are resources there. Coeur was already operating a mine. In fact, pedis possessio might actually be on Coeur's side.

But I'm not a lawyer. But that doesn't matter. The chart is the chart.

The clever little claim-stealing maneuver popped RPM as high as 80 cents.

Since then it's been all downhill. Right now it's at 57 cents. In fact I betcha that its recent pop upward from 40 cents happened only as a result of speakers voicing their excitement over RPM at whatever goldbug shows have been going on this month.

So why is RPM only trading at 57 cents? If it's guaranteed that RPM wins, RPM should be at $1.60 by now, shouldn't it? Or whatever target is the talk of the day. What's the target for RPM? A triple from here?

If you think RPM is a guaranteed triple, or double, or even just worth 80 cents, then you are implying that everyone else in the market is blind and you are not only a genius but also the only competent property lawyer in the USA. You are saying that protection of claims applies to predatory exploitation and not to an operating business. You are saying everyone else in the market is wilfully blind to a guaranteed slam dunk.

Trust me: if it were a guaranteed double, it would have doubled. If it were a guaranteed triple, it would have tripled. This isn't secret negotiation crap, this is all out in the open, documents filed in court and everything. Lawyers have looked at this. Law students have looked at this.

But I don't have to say "wanna bet?"

Cos in fact you can bet. Go buy your RPM. Buy it. It's cheap, isn't it? It's a guaranteed win, isn't it? Buy it up to 60 cents. Buy it up to 80 cents. Buy buy buy. Get a second mortgage, any loan under 5.5% is a steal. Put the wife's money in. Borrow money from your elderly family members. Hock the car. Sell a kidney. Go on. Place your bet.

News items

A few news items to keep in the back of your mind:

New Deal Democrat - September weekly indicators surprisingly strong. And BTW, for a weekly fix on macro, you can do no better than New Deal Democrat's weekly data summaries. Between him and the weekend Bespoke service, you get everything you need to know.

Andy Xie - The emerging headache of QE3. I post a link to it despite the fact I try to ignore Xie and think his commentary isn't worth reading. So why post a link to it? Because of sentences like this:

The Fed’s latest quantitative easing may cause problems for countries grappling with inflation and should prompt China to press ahead with economic reforms

QE3 will last for over two years, and the total amount of MBS purchases will exceed $1 trillion, more than QE1′s US$ 1 trillion.

The most direct path from QE to inflation is through commodities. This inflation angle hits emerging economies and low-income people hard.

OK, you get all of that? Now, whether or not it's right, I suspect the market could start to act like they believe what Xie is saying. This is one path forward. Let's see if it happens.

Plus, there are a couple things he says that I think might be true and want to keep my eyes open for:

Inflation, bad loans and a deflating property bubble are afflicting emerging economies. 

Indeed, the relative underperformance of emerging market stocks may escalate capital outflow in emerging economies, triggering financial crises like in 1998.
So, all is not worthless in the article. Still, watch out what you let into your head! You've gotta keep your concentration.

Speaking of which, here's two trading psych articles for you:

Derald Muniz - what volume can tell you. Volume and price are the two most important TA indicators. If you're ignoring them you're not doing TA.

Ivan Hoff - four trading errors and how to avoid them. I seem to have conquered 4, and may have recently nailed 1: my "method" is "buy stocks that are going up, stay away from stocks that aren't going up, and always ask 'if this stock is so good, why the fuck ain't it going up?'". I still get killed by 2, and 3 still is a problem for me (e.g. selling a good stock after a 10% gain and throwing that money into a garbage position). Basically, I still have to learn to be more picky.