Saturday, December 1, 2012

Other news of maybe significance


FT Beyond Brics - Hong Kong luxury sales. Some explanation for the dive in Hong Kong: maybe Macau is stealing business, or maybe the rich Chinese are just going to Milan now to buy their Prada.

Or, of course, maybe the rich Chinese don't want to ostentatiously advertise their wealth anymore, since it's obvious to all that it must have been gained through state corruption.

Bespoke - performance of S&P domestic versus international. This is a major tell of the market, and something more people should look at more often if they want to have a clue what the broad US and international economies are doing (Gary!). And the chart right now says domestics have begun under-performing versus internationals. Maybe cos the international slowdown has bottomed?

FT Beyond Brics - El Salvador and Mongolia: solid bet, or bubble? Me say bubble. Grossly stupid bubble. As if anyone in their right mind should pay a premium to own Mongol debt over Spanish debt! Also, I think this is yet another indication that the Age of Income is at an end, and we're about to switch back to the Age of Capital Gains. I.e., the bear market is almost over.

WSJ Marketbeat - China opening interbank gold market. Dunno what it means, but I bet goldbugs will spin it positively. Personally, I am quite scared of the idea that the grossly illiquid, highly over-leveraged, non-transparent, incompetent and corrupt Chinese banks now have the ability to dump gold on an open market if they ever get, say, financially stressed. Ticking time bomb there.

FT Beyond Brics - Russian consumers rack up debt. Oh good. This was especially funny:
“In Russia, the macro-economic risks are small,” says Natalia Orlova, chief economist at Alfabank, “But the risks in the banking sector are accumulating. Retail lending is becoming a high-risk segment.”
It's usually the Russian men who are the ignorant fucking fools; but this time it's a woman. No macro risks to Russia? Really? So oil is going to stay expensive then? Nickel? Natural gas? Good luck with that!

Frankly the macro risks to Russia are catastrophic, because it's a resource-based economy. A hiccup in China will give Russia a fucking heart attack.

And here's my opinion about the common thread to the last three articles:

If you want an indication of the start of the next secular US equity bull market, according to people like Jim Rogers anyway, you need to see commodities collapse, bonds done, and the emerging markets fucked.

I really think all it'll take is a major economic screwup in China to do all of this. A China collapse (something Asian Tigers-like) would do the following:

1. Tank commodities, since the demographic/economic growth push on commodity prices is what's giving them a speculative premium;
2. Tank the developing world economies, most of which depend on commodity prices, probably destabilizing them in the process;
3. Tank most EM bonds per 2 above;
4. Drive labour utilization out of the developing world and back to the developed world, since obviously a company doesn't want to make their goods in a nation destabilized by economic collapse.

There are probably some effects that I'm missing, but I think that's the way the end of the equity bear/commodity bull will play out.

And if I'm right, that means the whole damn thing will get telegraphed to us, and we'll know well ahead of time that the big machine is turning. It'll play out over a while - a couple years maybe - but eventually that machine will turn.

I'm not saying that's where we are now. I'm saying that's the ultimate endgame, is all.

Bespoke on China and India, but it brings up an interesting question about China


Bespoke - China struggles while India surges. Strange, eh? In fact it should be grossly embarrassing to the Chinese leadership that western investors would rather put money in an avowed socialist, anti-capitalist, perennially corrupt state than in China.

Although, to be fair, here's some charts:






They all look pretty healthy, eh?

But here's the Shanghai exchange:


WTF, eh?

I haven't looked under the hood, so all I can think of for an explanation is that the China ETFs are composed of stocks that the round-eyed barbarians buy; the $SSEC is composed of all those stocks plus everything else.

So, are round-eyed barbarians super-clever, able to pick out the best stocks in China? Or is it just that domestic capital is fleeing their broader equity market while round-eye capital is pouring in? Is it that people in China are smarter than round-eyed barbarians about their own markets?

Or am I missing something, and I should look under the hood to see if I'm really comparing apples here?


Friday, November 30, 2012

Yet more blog stats fun

So the blog gets a hit from McLeod Williams. They apparently are a group of explorecos.

They apparently came in and read a couple of my posts about the collapse in junior mining share prices.

Gee, wonder why?






All five McLeod-Williams companies are down 80%-90% from their 3-year highs, eh?

Know what guys? You should just phone up all the other explorecos out there and invite them to a special conference. Where you all just get completely shitfaced drunk. Listen to some sad music. Just go in and don't come out. You know how, when you keep drinking and drinking, eventually you just collapse in a heap, and someone drags you off into a shower stall or someplace with a tiled floor? Then when you wake up you drink some more? And then get dragged back to the vomitorium? And so on for several days? Ever do that?

Well, I've been there, and eventually you get to the point where, instead of killing yourself, you feel revived and happy, and the desire to life comes back. It takes 5 years off your liver each time, but it's a fucking awesome way to reset your attitude and feel positive again, and livers eventually grow back.


Or alternatively you could all just fucking kill yourselves, I mean, if you really want.


More lighthearted blog stats fun


So I get this search...


and several thoughts come to mind:
  1. If you're in Tel Aviv and you have to do a Google search for cute Jewish girls then I really have to suggest you get out more often.
  2. Really? I'm #9 at Google for this?
  3. Mia Kirshner, Natalie Portman, Alyson Hannigan, Ashley Tisdale, Mila Kunis, Google Image Search, l'chaim.

Oh and by the way:

Here's the India ETF:


Here's gold:


Do you see?

Here's the ratio:


Do you see?

(Maybe it'd be better to construct a chart which is 50%/50% Nifty 50 and $SSEC, denominated in US dollars, and then see how well that corresponds to movements in the gold price. But I still fucking think my theory is better than the bullshit theories of the goldbug world.)

Our Daniela! (and that Peter Hug guy too but it's kinda hard to get worked up about him) on the Nov 28 gold smackdown


Peter Hug seems about as empirical and sane as you can get in this industry, and here he gives the explanation, to whatever extent there is one, about the gold smackdown on Wednesday - also known as the "fucking outright bald-faced suppression of gold by International Jewry and the Lizard People".

Those of you who care about the real explanation will listen to Peter Hug, and those of you who are paranoid right-wing wackaloons still get to stare wistfully at the goldbug world's perpetual sweetheart.

Everybody wins.




And PS Peter, quit it with the "debasement of currencies" line. Anyone with their eyes open knows there's no "debasement" going on anywhere, it's all sterilized. The gold price depends on south and east Asian physical demand, and on the continued depletion of new supply.

AUU - oh the humanity!!!


As bad as AQM is, it's not nearly as bad as Aura Silver. I think I dumped this at a massive loss around end 2011. 12 cents? Maybe I was lucky. Again, never a bad idea to sell a stock that's going down.

Here's a long term chart:


That's the chart, here's the video:



I guess if you wanted to, you could be optimistic and say:
  1. Awesome! I'm going to buy an entire exploration company for $1.5M! I like Oaxaca and want an excuse to spend more time there.
  2. Hey, how much downside is there from here, really?
  3. It's -3SD down; if it just rebounded to 3 cents I'd have a double!
Alternately, you could say:
  1. Holy mother of Cthulhu, boy do exploration stocks suck™.
  2. Exploration stocks suck™. 
  3. And they suck™.
  4. Still with the sucking™ here.
  5. etc....

AQM Copper - oh the humanity!!!!



I haven't checked, but I think I dumped this back at 30 cents or something? Or maybe 16 cents? At a big loss? A really big loss?

And since then I guess it's proven that a big loss is always better than a bigger loss....


There's the chart.

Here's the video:



With a market cap of now $6.86M, do you think AQM is a buy? I mean, its deposit is worth substantially more than $6.86M, isn't it?

Isn't it?

Hellooooo?


Blog stats weirdness: can any Eurozone people help?

I just got this dude show up in my stats:

Commission De Surveillance Du Secteur Financier

Who are these guys and why would someone send them a link to my blog? 

Some morning reads


Bonddad - the scary depth of the EU's recession. Some numbers to make you realize how fucking evil the Germans are for imposing austerity instead of supporting stimulus. Oh well... eventually the EU recession has to end, especially given new developments like the Draghi Put and the Greek bond buyback threat; what do you think a resurgent EU economy (even just by +1-2%) will do for the economy of the USA, and for the economy of China? Improve demand and exports? Hm? It's not where we are that matters, it's where we're headed.

NDD - initial jobless claims - comparing Katrina and Sandy. All is normal and to be expected, basically.

Biiwii - the HUI-gold ratio. I guess the takeaway is either (a) we're at a bottom for gold miners, or (b) gold miners will well and truly suuuuuuuck going forward. Depends on if GDX:GLD loses its immediate supercritical end-of-an-era support.

Biiwii - US dollar looks sick. Sick as in it seems about to puke. I guess this would support (a), above. Frankly I don't see the catalyst, but as GT would say "it is what it is". I guess we can just keep an eye on the USD?

Bonddad - the impressive long-term gold chart. Or as IKN says, "if you look very very closely you may be able to spot a trend".

Hullabaloo - the "fiscal cliff" is a lie. Again, like I've been saying:
Deficit hysteria is an integral part of the Republican Party's starve-the-beast economic sabotage. The idea is to spend like crazy on wars, tax cuts for the rich and boondoggles to favored corporate interests, blow the up the deficit, and then declare a crisis, demanding spending cuts that directly hurt people as human sacrifices to the Bond Lords, Confidence Fairies, and other Objectivist gods.

But when curbing deficits actually means increasing taxes on the wealthy, suddenly those who are more interested in preserving their bloated offshore bank accounts than in their ideology find that the scam doesn't look so good after all.
[...]
The only people who don't know it's a scam are the Very Serious People in the beltway, their ideological friends, and those disconnected 20% who depend more on the stock market for their retirement and their wealth than on their actual wages plus medicare and social security.
And especially
It may well be that going over the cliff is temporarily bad for the Dow Jones Industrial Average and might impact a few 401Ks for a while. But the Dow Jones has been doing extremely well as the rest of the country suffers. Maybe it's time the Dow Jones investor class crowd felt a little bit of the pinch, too, rather than people on fixed incomes and those who depend on Medicaid.
Smackdown on your candy ass, bitches!

Which is a good time for an interlude with The Rock:



I pretty much quoted the entire article right there. Why don't I subscribe to the blog then? Because, just like how I don't learn anything important reading Republican lies, I also don't learn anything important by reading people who agree with me ideologically.

So I might put him in my "entertainment" RSS along with Stonekettle Station and Rude Pundit, but he's not part of my market reading at all.

Cos here's yet another guy who agrees with me:

Capital Gains and Games - Fiscal Cliff shows many GOP beliefs to be lies.

Quoting just a few paragraphs, you do go read the whole thing now....
But that doesn’t mean the budget debate hasn’t been substantially changed by what’s already happened. To the contrary, some of the most commonly held budget beliefs and fiscal fish tales have now been shown to be deceptive, disingenuous, misleading and just plain wrong.

The most obvious of all the now clearly disproven common budget wisdom is that the federal deficit is always bad and therefore must always be reduced. The whole discussion about the fiscal cliff — indeed the creation of the phrase itself — is all based on what should now be considered absolutely incontrovertible: There are times — like now — when a federal budget deficit is a good thing and efforts to reduce it make no sense whatsoever.

This comes as an absolute shock to those who keep being told and have a religious-like belief that a deficit is a sign of corruption inside the Washington Beltway and a reason the other political party can’t be trusted with the economy. The fiscal cliff debate has demonstrated that the presidents, representatives, senators, and Federal Reserve Board chairmen who fight for a deficit — or a higher deficit — when the economic situation calls for it are far more valuable than those who demand it always be reduced.
I doubt we'll see any real change to Rethuglicunt policies from this. Because the problem with cognitive dissonance is it's impossible to break.

And finally....

Jalopnik - Zurich will have drive-up sex booths soon. Things to note:
  • Like most Gawker-group articles, it's just stolen from the Daily Mail. And they criticize Business Insider for stealing content?
  • The material just writes itself. Example: "This is the next positive step in trying to get the Swiss to have sex."

Friday video - more Millionaires, bitchez!

Yeah, while I'm still collectin' a paycheck*, may as well give you some of this:



Can you believe i get paid to shake my ass on stage
We're getting drunk everyday you're makin minimum wage
We live the life you wish bitch don't say shit!
No talent just lucky but they still wanna fuck me!

Indeed, ladies, you have certainly nailed that one.



* - post was created a few weeks ago before I knew how early the layoff would come.

Thursday, November 29, 2012

Let's check up on Liberty Silver

How's that great silver company doing?


Not good, eh?

Wonder who's selling....


Let's see... we know 001 is Anon, no surprise there. 065 is Goldman Sachs Canada, 013 is Instinet.

Buyers? CIBC, Stifel Nicolaus, a couple TD and Desjardins... probably all dumbass retail, right?

Such a big move on only 80K shares traded! How the heck is this thing going to stay above $0.00?

What Liberty Silver needs to regain its momentum is another sterling writeup from James West or David Bond... or maybe another promotional video by Jeb Handwerger.



By the way, SEC guys - I can still see you hitting my blog, and I know it's you even though you're now using Level 3 and Comcast instead of the SEC system for your browsing. Either look into a simple Firefox add-on to keep me from being able to see you, or use TOR (which, sure, has been hacked by Mossad, the FSB and the Chinese; but I doubt that matters for most SEC investigations).

Some light reading

I'm impressed. I've been copying all my RSS feeds over to my browser bookmarks, since I don't use my smartphone during the day.

How many links did I move over? Nine. Holy shit, that's not much. I'm happy that I'm following as few news sources as possible.

Anyway, here's some news:

The Gold Report - Adrian Day and Brian Ostroff. Skip the middle section on their ignorant political viewpoints and concentrate on the very useful things they say in the first and last thirds of the interview.

FT Alphaville - yes, let's blame the gold collapse on a fat finger, that works. If I were a neo-Nazi I'd point to this as yet more proof of a conspiracy by the Rothschilds and the Jew-controlled liberal media. A better explanation comes from Mineweb, but the best is simply my previous post of the comments from Zerohedge. Mineweb in particular has this to say:
...if the US economy IS the first to show signs of recovery next year then the dollar-friendly environment could well take the shine off gold for a further year. This is not a bearish forecast but may call into question whether the 17% year-on-year compounded rises we have seen for a decade can be sustained or perhaps replaced by more modest gains.
Which of course ignores that fact that the gold price is determined by Asian demand you fucking morons.

Jojo - gold stocks approaching a crossroads. The caveat being we may have to wait several months. Why not buy some CXB in the meantime?


FT Alphaville - so who's actually going to sell their Greek bonds? The problem with a debt buyback is illustrated here: it makes sense for Greece to simply take out a new loan, use that money to buy back their own debt at a discount, retire the debt (which you can do when your debt isn't being used for leverage at an insto), and thus immediately reduce their debt-to-GDP. However, the moment a country can do this (and my point a few days ago was that Greece can, specifically because of its Eurozone membership), its debt goes back up in price. Thus future yields are lower. You win by just threatening.

So what does that mean?

It means bond vigilanteism against Greece is now a losing proposition.

It's exactly the same as Draghi threatening to buy up Spanish and Italian debt to restore the transmission mechanism.

The bond market is forced to be very reasonable in future. The bond market was the thing that was moving the ECU towards dissolution; once you get them in line, the ECUis instantly strengthened.

Basically, the old system was bistable, and the debt run-up was an effect of falling down to the lower stability level. The Draghi put and the Greek buyback threat moves the stability ranges a lot closer together, and so there's less possible volatility.

It even looks like a newly-discovered process that can compensate (not 100%, but maybe 50%) for the stupid ECU problem caused by peripheral countries being forced to given up sovereignty over their own currency and monetary policy by adopting a common currency.You'll still have imperfect monetary policy transmission, but it's a lot less imperfect, even tolerably imperfect now. And you do still want the imperfection so that countries are motivated to improve their debt-to-GDP trends.

It is a fucking game changer and that's why the immediate Eurozone problems are solved. (There are still long-term problems that need to be solved, such as German colonialism, but that's another story.)


Zach Weiner has been letting me down


Zach Weiner at SMBC has been letting me down recently. He's straying away from the penis jokes and weirdness, and towards actual intellectual commentary.

I think it's marriage that did it.

With that in mind, here's a cartoon that works in the threads of economics and gold, so I'm sure you'll like it:


GDX weekly tells a less optimistic story

Here's GDX daily:


I look at this and say "gee, I dunno... could be that we're bottoming right now". I mean, maybe the MACD is turning up, maybe we just have to test the Bollinger mean and EMA(16) a few more times before we break through, gosh that Wednesday white candle looks hopeful....

But then I bring up the weekly:


And fine, maybe we're bottoming around 48, but the weekly chart really looks like all we're doing is pausing in a downtrend to some lower target. We've already fallen through the weekly EMAs.

In this case, the resistance we're seeing in the daily EMAs and Bollinger mean now looks to me like not a bottoming process, but just a pause before further downside. Now all of a sudden I see volume decreasing over the past couple weeks on the daily chart, and I end up thinking "bear flag".

I don't know which point of view will get proven correct, but I just wanted to say that switching to the weekly gave me a much less optimistic point of view.


Hey junior gold miner suckers - you're not the only ones suffering

Here's platinum:


Here's the platinum miners ETF:


In case you don't see it, here's a chart of the ratio, indicating the relative "performance" (snicker) of platinum miners to the metal:


Gentlemen, we have a new trademarked phrase: platinum miners also suck™.

Hey, speaking of which....

This ratio chart reminds me very much of the absolute performance of a double- or triple-leveraged ETF. If you stay in it for any length of time you get wiped out, even if the underlying stays steady, or even advances.

Now, as far as I know, there was a big stink a couple years ago where some important body like the SEC mandated that financial institutions (and I guess discount brokerages) have a fiduciary responsibility to notify all customers that leveraged ETFs are not long-term investments, and that you'll lose all your money if you hold them long-term even when the underlying trends up.

Don't you think, with this sort of performance from PM company ETFs, that the SEC should force instos to tell their clients not to own PM companies, for the exact same reason?

I mean yes, I'm being a bitch here, but even still, the chart is the chart, right?

Morning market comment


#1, I guess I shoulda bought them silver rounds and gold bars yesterday, eh?

#2, here's some charts:


Looks like UUP is giving more evidence today for a roll-over. I guess that's good for equities and PMs.


But I'm not so sure about IEF. It's presently a lower high, so maybe it does go down from here. But already, and without looking at my RSS feeds, this is looking like a short-term market move, probably driven by yet more noise about how Obama's going to sell the working class down the river by permanently extending the Bush tax cuts for the ultra-rich.

Here's some proof towards that:


JNK is flying back up now, and is printing a higher high. So dumping of high-dividend-yield ETFs has stopped and reversed.


The utilities were also beaten down on the fear of the Bush Tax Cuts expiration - they're also high-yield. But now they're back at 0SD; this isn't of course saying much, since 0SD could just be the terminus of a further bear flag.

So, I dunno.

The silver & gold puke yesterday AM, I guess driven by expirations, has now been more than reversed in silver. Gold hasn't yet come back. That suggests that people are happy with the economic situation (silver), but not so happy about east & south Asian wealth prospects (gold).

FWIW when it comes to stacking physical I'd rather buy gold than silver.

Wednesday, November 28, 2012

Zerohedge (burp!) on the gold smackdown


You don't want to read the actual article because you love your braincells.

So here's the summary:



And selected commentary:
  • Actually.

    Yesterday was options/future settlement and a bazillion in the money options got converted in to futures contract longs.

    So them bad ass motherfuckers betting on the rise in the price of gold now gots variation margins to deal with, we wants some of that cash, boys.
    Slam 'em down.

    Typical in the money options to futures being punished by the shorts...

and
  • I'm waiting for the tech analysts to come in here and say it's good for Gold because the paper price touched some mysterious level they just made up
and
  • Of course since yesterday was Options Expiry, and since it is traditional to smack those whose options were converted into futures contracts in the face, this is not unexpected. In fact I was expecting it and just made some nice money.
and
  • It was comex option expiration yesterday and gold mini expiration today. This is normal activity as traders close positions. The turbulence will end by tomorrow and likely turn up as new positions are established.
and
  • Did silver really trade 8,240 contracts between 13:20GMT and 13:21GMT today ?
and
  • 21k contracts in 5 minutes.. really? couldn't work out of that order?

One more news article - Mike Shedlock has utterly no clue

BI - Shedlock on the "skills gap". He starts out right, but finishes the article as a clueless right-wing fucktard.

It's true that there's a "skills gap", but only because companies are too fucking cheap to pay skilled workers a living wage, and too fucking cheap to train them properly. You got that part right. It's like Bill Gates' whining of a few years back - he wanted the US government to open up the green card process so he could ship 100,000 software engineers from India to Seattle, specifically because he didn't want to pay a proper wage for the software engineers already in the US.

(As it turns out, Indians are notorious for not being able to code worth shit or even comment their code; you get what you pay for.)

If you want an extra 100,000 graduates a year in your industry, so everyone can hire highly-skilled workers, then you pay the workers you have a good wage. Basic fucking free market right there. Students will crowd into the market to get their share of a good wage. .

The solution is not to "make it cheaper to live in the US" by cutting taxation (and thus all government revenue) to the bone, so that you can still pay your technological specialist $14/hr. That is utterly fucking retarded; what's going to make people want to choose technology over being a shift supervisor at McDonald's then? Or do you want to cut the shift supervisor's wage down to $5/hr?

Explain this: if a shift supervisor, whose job it is to co-ordinate a high-speed food production unit, is worth $14/hr to the market, then does that mean a highly-skilled specialist technologist is no better? His skills are of no more value to business? Because that's exactly what you're telling him, you fucking idiot.

The solution is to let the free market play out. Guess what a free market is supposed to do when
 "while many of these jobs were lost to competition with low-wage countries, even more vanished because of computer-driven machinery that can do the work of 10, or in some cases, 100 workers. Those jobs are not coming back, but many believe that the industry’s future (and, to some extent, the future of the American economy) lies in training a new generation for highly skilled manufacturing jobs — the ones that require people who know how to run the computer that runs the machine."

If I, a trained technologist, can replace 100 workers, then the company can easily give me 10x a replaced worker's wage and still come out 9x ahead in the deal. I'll settle for 3x.

If I, as a trained technologist, am expected to use my high-end "in-demand" training and skills to replace 100 workers for $14/hr, I'm going to say "fuck that" and go work as a shift supervisor at McDonalds.

Or go to the company down the street offering me a wage that properly values my specialist, in-demand skills.

Sorry, Shedlock, but the "clowns" are not the "monetarists and Keynesians", or as they're also known people who fucking understand the fucking free market. The "clowns" are fucktards like you and the fucktards in small manufacturing, who think they can keep wages down in these high-tech fields and expect to get even one fucking application for their shitty jobs. No wonder business is suffering - you want to make diamonds using cowshit.

There are highly-trained technology specialists out there. They are available for hiring. Georgia Tech alone turns out tons of the best, so I'm told. Some of them at any time (the worst of them, because the best are always retained by their companies) are looking for jobs. If they see your shit job for $14/hr, and a job at Honeywell or Raytheon for $40/hr that they're also qualified for, do you expect them to go against their own best interest and take the shit job with the fucking skinflint boss?

Seriously, for fuck's sake, Shedlock, did you fucking idiot American right-wingers learn absolutely nothing about the collapse of the American steel industry way back in the last century? Know why your shitty steel companies all went out of business? Because despite being fucking skinflints, they were still not profitable. Because in the 70s you were still operating shitty fucking factories with late-19th century technology; so when Romania and Thailand built their own shitty cheap factories to turn out shit rebar and garbage steel, you had to compete with them for the shit end of the steel market.

Meanwhile the evil socialist Europeans had modernised factories, with technology completely unfamiliar to your American steel workers, like DC control systems and multi-axis servo and HMI and networked WIP control and PLCs and so on, plus workers skilled in metallurgy and automation and QC. So the Europeans could manufacture the high-end specialty steels that your shitty 19th-century factories would never be able to make, nor would they be able to make in Romania and Thailand. 

So your shitty steel mills all went out of business. Because of their own stupidity. Which, by the way, is also how the free market is supposed to work.


A successful business goes where the high margin is. But the high margin is in the area of least competition, and high technology and skills reduce your possible competition.

A skilled workforce makes people rich. Including the business owners. The difference between a fucktard and a successful businessman is that the fucktard doesn't understand this. The skilled workforce will never come to you if you don't offer to give them their fair share of the profit.

Don't be a fucking idiot. You get what you pay for.

Does anyone really read this guy?

Morning news


BI - the Greek debt deal might have actually accomplished something. To me, just the threat of buying back debt at a steep discount is enough to drive down yields, make existing holders slightly more whole, and threaten to dislocate the bond market if the vigilanteism continues. Which, again, is another example of the EU's common currency zone actually having the power to moderate national debt markets. To me, it's significant that the ECU is figuring out that it does actually have power over the debt market of its constituent nations.

Salon - the cake fiscal cliff is a lie. Again, it's really all about stealing more money from the poor to give more money to the rich. How this resolves is going to determine whether Obama really is a friend of the people, or just another puppet of the bankster kleptocracy.

Bespoke - check out their Shanghai exchange chart. God, China sucks. Then again, when you have a corrupt kleptocracy, what do you expect? A well-functioning capitalism?

Beyond Brics - and yet people want to buy that Chinese shit? Here's your answer, pal - they're trading at "11x estimated earnings". That is hilarious since there's no way to independently verify their earnings. And now that people like Muddy Waters are leaving the China short game because the government is actively working to fudge business' numbers and lock up investigators, that cannot in any way make any serious investor more positive about putting money in China.

And the kicker is the last sentence: 
"But there could yet be another argument for foreign investors to hold back from jumping back into Chinese equities. Why go abroad when there are plenty of beaten up stocks closer to home in the US for them to go bottom fishing in instead?"
That sounds like a very reasonable course of action. I'd even buy Greek stocks before Chinese shit.

Biiwii - (yesterday's) state of play for the PMs. And today we get a big puke. Since he closed his DUST position, I assume this means he was no longer bearish PMs? One day too early, Gary!

Bespoke - check out their consumer confidence chart. Things are getting slowly better in the US.

Tuesday, November 27, 2012

Another case of the Slaughter of the Innocents that is junior mining: Geologix


So here's an interview with the CEO of Geologix.

Warning, it's on Grandich.com.

In it he says they have 1.8Moz Au and 813Mlbs Cu M&I, with exploration upside. They also have $5M cash as of end Q3.

They have a PFS that's late, but he says it's because they're looking at a different processing method to up the profitability.

They also have a chart that suggests the market's throwing up so hard it'll be lucky if it has any bones left by the time it stops:


That's a 3-year low, a year of support broken, and next stop is the 2009 low of 11.5 cents.

They're now down to a $26M market cap, which means wow awesome! you get .012oz Au and 5.46lbs Cu for every 17 cent share that you buy.

Alternately, the gold is trading at $14.48/oz.

But if it goes to 10 cents, it's even cheaper. And if it goes to 0.5 cents, it's even cheaper. And if it's relegated to 0.01 cent on the Pinks, it's even cheaper.

At some point it becomes utterly impossible for them to fund any more development of their property without diluting themselves into the 9th dimension. It might be there now. Then you're left with a 1.8Moz deposit that's sitting on the shelf trading for 0. It might be a marginal deposit, I don't know, haven't looked, but serious people with real smarts have supposedly liked this company in the past.


Two takeaways from this:

1) Is this what Cookie means by saying 70% of the juniors are going to just go away?
2) Then what happens when gold hits $3000/oz and these plays aren't marginal anymore? I mean, is this stock falling to zero because someone is out there finding much less marginal gold deposits that can be brought to production? Where is the gold elsewhere that means nobody needs GIX's gold?


Let's check in with Molycorp

Here's Molycorp:


And here's me kicking myself because I was really tempted to grab a pile at $6. I mean, it couldn't get any worse, could it?

Coulda made 50%.

Hows' about that, mister "buy Pretium and make 10% in a day"?

And silver and gold?

It's sad that the miners are puking while gold and silver look like this:



I'm wondering when's a good time to buy me some more bullion.

Not that I'm intent on a "deadly deal" - I'm buying at a markup, and I'm just buying a small amount in case the aliens attack.

But I guess you won't see a selloff in gold and silver because they don't pay dividends, so therefore won't see their tax preference reduced in January, eh?

It's like goldy and bronzy except with Slovenian subtitles.


GDXJ and $HUI one day later - the sucking is confirmed


I said yesterday that it looked like the miners would drop after contacting the EMA(16).

And today?



Looks like $HUI could either go to 435, or to a retrace like 448, or maybe even lower. GDXJ shows the failure of the MACD.


More Wiesenthal on calculated Risk


BI - How the doomers got it wrong. Again, Wiesenthal boils it down to paying attention to the simple, demographically-driven data, and ignoring the political bullshit. Please do read the article, it's important and good.


All the news you need to know, right after you needed to know it

Reuters - EZ agreement on Greek debt. Like Michael Hainsworth at BNN said, there already was an agreement last week and they simply had to get the paperwork in order.

Speaking of which, I had an interesting thought this morning about Greek repurchase of distressed debt and how it illustrates an interesting side-effect of the Euro currency structure - the death of neoliberal bond markets. I should post it sometime before Krugman activates the chip that steals my thoughts.

BI - Citi's outlook on commodities. It is actually the most uninformative article you could possibly write on the topic. It is truly worthless, and Citi has absolutely no insight into anything. But since the story is making the rounds, I may as well link to it.

Dealbook - The confusing outlook for China's growth. Written by the guy from the Sinocism blog. He's working it out, he just doesn't know yet, but thinks it is going to have to do with political reform in China, but not too much or else it'll destroy the communist party. I'll let him develop his thesis slowly given available evidence, the way you should if you're an empiricist.

Gawker - A horde of fans break into Lady Gaga's house for Thanksgiving, and she was naked. Two takeaways: 1, a Gaga photo where, far from being naked, she's actually dressed like Ambassador Kosh; and 2, she's in Peru and that Rogue Peruvian Blogger never even told us! I can no longer confidently invest in Peruvian juniors if my "source" can't keep me up to date on such important happenings as this.

Rude Pundit - Grover Norquist has nothing to fear. He's not just the one blogger in the universe more rude than me (now that Violent Acres is gone); he also puts forward an interestingly insightful analysis into the truth behind the Republican "offer" to negotiate.


Monday, November 26, 2012

Let's have some fun naming and shaming


Back at 2011 PDAC, Macquarie put out a stunning 184-page booklet on their "eight precious metals explorers". IKN put up a copy at this blog post, but it's since gone inactive; I have a copy on my HD, and could put it up for you somewhere if I ever decided to give a shit.

It would be nice for you to get a copy, since it would provide an abject lesson in how "12-month targets" are about as reliable as anything you might get from a trainee witch-doctor of the Kavieng tribe:

He's actually got a good stock-picking record - he hasn't lost money on the junior gold crash.

Here are Macquarie's March 2011 picks and their 12-month targets:

Auryx - reccied outperform at $0.80, target $1.75
Colossus - reccied outperform at $8.34, target $14
Eastmain - reccied outperform at $1.72, target $2.50
Extorre - reccied outperform at $5.09, target $9.50
Tower Hill - reccied outperform at $9.06, target $12
Rainy River - rated underperform at $12.75, target $9.25
Tahoe - reccied outperform at $15.86, target $25
Virginia Mines - reccied outperform at $8.37, target $11.50
ATAC - reccied outperform at $7.29, target $11

Let's see how Macquarie's picks did, shall we?

Auryx got bought out by B2Gold at the end of the year, for .23 of a BTO share, which seems to be somewhere around 71 cents.

Colossus went to $5.50 in the subsequent 12 months and has continued to suck:



 Eastmain lost 30% in the subsequent 12 months and has continued to suck:



Extorre got bought out by yo mama for $4.26 cash. Then again, by Mar 2012 it was still over $7, so let's be charitable and call that one a win.

Tower Hill was $4.50 after 12 months, and is now at $2.13. Let's again be charitable and call that one a 50% fucking loss.

Rainy River actually dropped to $6.50 by PDAC 2012. So it lost 50%, but that is still an underperform all right! Blew past their short target.

THO actually managed to get up to $22 by PDAC 2012. That's a 39% win! Never actually hit your $25 target though, and now it's back to $18.



Virginia Mines actually hit $9.75 in a year. A stunning 16% win. It's done better since, to be fair. Still hasn't hit your target though, guys.


And ATAC? At PDAC 2012 it was at $3. It's famously $1.86 now.

So let's tally this up; we'll leave out the underperform for Rainy River, since that's a short, and if Michael Gray and Samuel Jang at Macquarie had really been doing their job, they would have told everyone to just short the entire junior mining space.

Here's an excel screenshot of the results cos yes I really have fuck all else to do today:



Over 12 months they had five losses, three wins. Not one target got hit. Only 3 of 8 reccies ended within 50% of the target price.

Takeaways from this? 
  • To be fair, junior gold miners have been busy with the sucking since... well... the day after PDAC 2011.
  • I'm sure other professional analysts have even more shameful skeletons in their closets; pity the poor clowns who reccied JAG. Then again, Macquarie has ATAC.
  • Each of these reccies got a big multi-page writeup where the analysts probably managed to provide an eloquent and convincing justification for their price targets. And yet? Well, just look at ATAC and Tower Hill; if they were worth so much, why aren't they worth anything today? Either your analysis sucked to begin with, guys, or you failed to see the upcoming storm that so mercilessly chopped these guys down.
  • According to Macquarie, BTO sure got a deadly deal buying Auryx for pin money. Smart guys. Makes me yet more confident of the imminent success of their Primavera JV with Calibre Mining.*
  • Analysts really must just pick numbers out of fucking thin air.
Again, not to pick on Michael Gray and Samuel Jang at Macquarie, because (as above) I'm sure every Canadian banking analyst has equally fucking hideous picks in their now well-forgotten past. You don't have to be an independent analyst writing a newsletter for 200 people to fuck shit up.

But wow. No wonder the miners can't stop dropping, eh? If you can't trust the bozos at the instos to make good picks for you, then who can you trust?



* -You know me, I gotta pump Calibre Mining once a day, at least. Ticker CXB on the Venture, going to $1 by Xmas, buy now! Etc.


Again with the Schadenfreude


This is fun! I could spend all day tracking down juniors who were taken seriously at one time but have since lost a fortune in stockholders' money.

For example:


I remember being at the mining valuation class at 2011 PDAC and some actual bank analyst did an example valuation calc using Clifton Star. Heh! I still have the workbook but can't be arsed to find what the guy's target was; but I can pretty well darn guarantee you it was higher than 92 cents. Like, maybe 10 times higher than 92 cents.

I guess that analyst still has a job somewhere.




Klondex is also flirting with a multi-year low. Though it's only lost two-thirds of its peak value. I guess those shareholders must be feeling pretty fucking smug right now!




Mega Your Anium was a regular trade reccie of GT's, back in the day. I look at this chart and yes, I can see the Fukushima collapse. But I can also see how it lost 80% of its value since then. Thus one of my big past problems with GT: he often suggested trades in stocks that (as it turns out today) had no intrinsic value.

Of course, I guess as long as you only trade them and have a stop-loss, you can trade utterly anything in the world and get away with it.




Strathmore Minerals... hey, wasn't that one of Mickey Fulp's past loves? In fact, yes it was, and it was only back in September that he called Strathmore a "screaming buy at 27 cents". I guess now that makes it a "hootin' and hollerin' buy at 20 cents"?

Should we wait til it becomes a "pickin' and a-grinnin'" buy?



(Betcha $100 Mickey used to watch Hee-Haw. Betcha $50 he even has the 20 DVD best-of collection.)

Some more horror stories from the junior mining world

Let's look at even more Faces of Death:


ATC supposedly had a great deposit in the north-of-60. People took it seriously. If Sep 2010 was their discovery pop, they have now retraced it in its entirety. Next stop $1, do you think?



GPD apparently has a real deposit and everything. Hasn't stopped it from losing 75% in a little over a year, though. Again, north of 60 seems like a kiss of death here.



JAG reminds me of the Josh Brown joke: "what do you call a stock that's gone 90%? It's a stock that lost 80% and then got cut in half." And then JAG got cut in half again.



Vena? What can be said about Vena? I'm sorry, Juan, but like I said over a year ago, the only possible explanation is that God hates you because you worked at Microsoft.




Macusani Yellowcake - another one that's lost over 90% from its peak.

These are all stocks that were taken seriously once. But ATC is flirting with a 2-year low, while the other 4 are hitting lows that are so low you probably have to go back to 2008 to find a lower low.