Saturday, March 23, 2013

Hey lookie that - the $BPGDM came off of zero. Also, a reminder about which country buys gold and when.

Hey, check it out! $BPGDM went up at the end of the week!

Last time $BPGDM went up, it was good for a chickenshit 20% upmove in the miners before everyone puked their guts out again! I wonder how much more pathetic the rebound will be this time around!

Can someone please just start a world war or something so the price of gold can start going up? A massive hyperinflationary debt collapse maybe? Something? Anyone?

Cos it's getting awfully boring waiting for the Indians to bring in their Rabi harvest.

I guess it happens in May, eh? Then Kharif harvest is September. Then October thru December is wedding season. Diwali is November. Funny how it all stands out on this little graph, eh?

Oh, speaking of which: hey goldbugs, check this out:

Your stacking of silver rounds looks pretty fucking pathetic next to this lady. She's got more gold than all the Tea Party Ron Paul doomers combined. And it's all pure gold too.

Our Daniela interviews some technical analyst about something or other

For what it's worth, here's some technical analyst doing his analyzing in a technical manner.

Some points to make:

Maybe the reason this retrace isn't as deep as the one in 2008 is because 2008 was when people were dumping everything in preparation for the apocalypse? Even gold? I don't see a reason today for even a gold traditionalist (i.e. a guy who thinks gold has anything at all to do with USTs and USD) to dump as hard as in 2008.

Oh, and by the way - the 2008 gold collapse to $700 shows how much of a lie the "gold is a counter-cyclical hedge" theory is, right? I mean boy, the global banking system was about to collapse, tanks on the streets in the US, and gold drops 40%

Sorry guys, gold is something Indians and Chinese buy. Just another boring regional commodity, like saffron or something.

The other point to make is that Daniela's really hit one out of the park with this faux-denim-finish fitted blouse with the stylish cuffs. I'd say forget the dresses Daniela, this is more your look.

J. Scott Drever from Silvercrest Mines

Speaking of which, I also came across the Silvercrest presentation from that Coffin & Co. Saturday do:

I think it's pretty close to the presentation I saw Monday that I put the audio up for.

Just in case IKN wants a silver producer in Mexico that doesn't utterly suck™.

Eric Coffin pre-PDAC video

Here's a video of Eric Coffin at the pre-PDAC thing that him and his buddies did on the Saturday of that weekend.

I hadn't seen or heard him before, and he's a pleasant surprise: entertaining and reality-based.

He makes one interesting suggestion: that when gold was lower, people were buying gold companies so that they could buy reserves when the price went up; is this Ron Stewart's "optionality of gold" argument? Cos of course the miners didn't give anyone any leverage to gold, so now everyone realizes that (all together now) gold miners suck™.

Pleasantly sensible, Eric Coffin.

Friday, March 22, 2013

Friday rumination

Bloomberg - S&P rally toward record broadens as EW climbs. By the way... did your goldbug analyst tell you, back in April 2011, that over 50% of S&P 500 companies had already achieved new highs? You know, when the gold miners fell from their peak? Hm?

Short Side of Long - fund managers are alarmingly bullish. He notes they're net-short commodities (which seems a major disconnect if you're long US equities) and very bearish gold. Then again, he ruins a perfectly good contrarian post by blathering that "we're on the cusp of a recession": it seems he's not paying attention to the US employment trend, the housing market numbers, or basically any other data that you can get for free from Calculated Risk, Bonddad, or any other half-decent free blog that gives you useful data for free. Absoluely no indicators are showing any possibility of a recession any time soon.

So I have no option but to ignore everything else in this post. Sorry, if you ignore data, I ignore your blog. Anything else would be unwise.

der Spargel - how India keeps poor people poor. A nice introduction to the culture of poverty in India. Just in case you were buying the OECD line about how much the Indian middle class is going to grow.

WSJ China Realtime - Where Chinese consumers are spending their money. Buying things on the internet is apparently a big thing over there.

BI - Tiffany's Q4 earnings. 8% YOY Asia-Pacific growth. - the newest fad: breaking up the majors. John Paulson is clamouring for Anglogold Ashanti to break up. Mark Bristow from Randgold admits he's too much of a mental midget to be able to manage more than for our five mines. So now the majors will sell off their assets at firesale prices, and break up, because their management are still idiots.

Bloomberg - gold giants shrink to fit. As above.

(I'd like to know what Clive Johnson thinks of the assertion that you shouldn't have more than four or five mines in your company - he seems to be able to handle 3 operating mines, a new mine coming onstream, and a couple development properties, and was all gung-ho at PDAC about buying more mines in the future. Is he more competent than other CEOs? Is he better at managing? Or is he about to make a terrible mistake?)

Friday video: and Nicki Minaj

Okay, it's a good video, but still:


It's nice that you like elektro enough to pretend at it once in a while but I really wish you'd quit being a pussy about it and get a little hard core. You've got the clothes and the Intel consulting gig, now get yourself a real synth bank instead of hiring out the music writing and recording to a sweatshop in Bangalore.

I mean seriously, it sounds like you borrowed my Roland D2 and didn't even want to use the good presets.

Also, please do more videos featuring Britney's awesome butt, which I would happily pound into a warm and foamy goo like the fist of an angry god.

- Yours, I

Thursday, March 21, 2013

News for Thursday

Calculated Risk - surprise demand for housing keeps industry off-guard. Lack of permit staff at municipalities, lack of workers, lack of everything, hopefully creates a more sustainable housing boom.

Price Action Lab - rally will be self-fulfilling due to buy and sell stops. Interesting idea. Bears keep getting slaughtered.

BI - hedge funds annoyed by lack of panty-piddling over Cyprus. This article is important because it suggests the assclowns at the hedge funds have gone long gold over Cyprus; I really don't like being in the same boat as those twits.

FT Alphaville - China PMIs back to bullish. Bill Bishop at Sinocism doesn't seem concerned with the Chinese economy, by the way.

Mining Augmentor - calculating SLW's value based on ounces of silver reserve. Interesting idea, though I'd assume it leaves out all the new silver streams they're going to purchase with the income they'll be getting from existing streams.

Mineweb - global nickel output to rise 8.5% in 2013. I guess the problem is, base metals can build out fast to take advantage of higher prices - thus the cyclicality. Where's all the build-out for gold, by the way?

Miners resolved things to the upside

So it looks better today:

GDX finally broke above the short-term EMA. Might this be the start of an uptrend?

Wednesday, March 20, 2013

Nolan Watson, apologist

Found a video of Nolan Watson on YouTube, apologizing for all the various mining CEOs who are unable to build their operations on time and under budget.

Some news

Ritholtz - another 'voice of reason' post. Let me just quote him at length:

As I noted all the way back in 2009, this is the most hated rally in Wall Street history. Many participants are unable to pry their eyes from the wreckage in the rear view mirror. This impacts their psychology, investment posture, and allocations.

Consider the initial over-reaction to Cyprus. The swiftness in which the bearish commentariat erupted over the weekend was a wonder to behold. It also was far more revealing of the bears own confirmation bias than anything it said about the circumstances in Cyprus itself.

Some have made a big deal of the January inflows into equities — the biggest in years — as a sign of the top. Perhaps a little context might help put this into perspective: The $20 billion dollars added to U.S. stock funds in 2013 pales when compared to the over $600 billion in outflows from equity funds over six years though 2012. It is also less than half of $44 billion that flows to fixed-income managers in 2013 (ICI).

Thus, we have a market which remains disliked, under-owned by investors, not unreasonably priced, with few alternatives to equities. (Does that sound like the recipe for a market crash to you?)

Bonddad - will France be the next EU basket case? Maybe Hollande's calculation was that the crisis would have been over by now and he'd be seeing economic growth, instead of an accelerating drift downward into continent-wide depression.

Daniel Drezner - the surprisingly resilient global financial markets. He makes an interesting suggestion: one reason the market isn't freaking out about Cyprus is that the financial system is strong; the market only freaks out when it smells weakness.

Beyond brics - beware bearish EMs. I guess if western capital decides the S&P is the better buy, then just because of competition you'll see EMs go down. We'll see. First question to ask is always "which 'emerging markets' are you talking about?"

IKN - spoils a perfectly good goldbug wankfest. Great application of the Total Perspective Vortex: zoom out far enough and everything will suck. In this case, he's all nasty about the fact the GLD had its first inflows in 6 weeks.

FT Alphaville - the best laid plans of miners. The base metal miners are simply in deep shit, mostly because they've built out to respond to the big China-led demand increase of a few years back. Now they're expanding production into a weak market and committed to spending years of capex. And thus we learn that mining is cyclical.

Australian Bureau of Resources and Energy Economics - resources and energy quarterly. March 2013 issue is out now, big writeup, it'll get linked in the reading list at right. I've poked through the "gold" section and will have more commentary about that later.

Beyond brics - Argentinians buying gold. Supposedly, anyway.

Mineweb - silver and gold demand down strongly in India. Well, maybe it really is all about India? Who buy massive amounts of silver and gold? Anyway, the farmers should be getting paid for their winter wheat soon. I wonder what they'll buy.

JC Parets - the safest haven in times of crisis. It's what? Gold? Nope! Gold correlates positively with the S&P in times of crisis. The safest haven, believe it or not, is the Yen. Weird, or what?

Beyond brics - going cuckoo for LatAm cocoa. Too bad this is also predicated on selling more stuff to China. Oh well.

I'm leery towards the miners right now

Chart time.

GDX hasn't yet managed to get above its short-term EMA, or its Bollinger mean. Seems to be drawing a bear flag. Pretty pathetic. Also, the volume that was there 2 weeks ago is gone now.

GDXJ did respond more strongly, and binged its top Bollinger; no bear flag here. But again, volume has disappeared.

The silver miners ETF has continued to drift downward.

All told, that is one hell of a weak "rebound".

As for good producers? What are their charts like?

Oceana looks like GDXJ; but its volume has literally dried up.

BTO the same. This thing was trading >5 million a day a while back, now it's likely to end today under 2 million.

Sandstorm bounced back from its stupid selloff, but again no volume.

All these three are now sitting on their short-term EMAs.

If volume doesn't come in to drive them up, there'll eventually be volume to drive them back down.

GDX and SIL suggest the next move is down. Volume suggests next move is soon.

Tuesday, March 19, 2013

Some Tuesday noon news

News for today:

Reformed Borker (Bork Bork Bork!) - sentiment driven rally. His buddy thinks it's all driven by an expansion in Shiller PE, and we'll have a big crash afterwards.

Bonddad - is the economy stronger than we think? A good summation of all the positive economic data coming out of the US.

Value Walk - hedge funds continue their dollar love affair. Dollar long is apparently a crowded trade. And macro hedge funds are aggressively selling commodities, because I guess a strong US economy means... the rest of the world... won't... be.... using... commodities? I guess?

Bloomberg - Denmark also reeling from a real estate collapse. That is, it's not just swarthy Mediterraneans who fell for the banks' easy money and blew a massive real estate bubble.

Beyond brics - India cuts rate 25bp. I wonder if they have something up their sleeve? Cos inflation in India is insane right now, and they weren't supposed to have room to cut.

WSJ China Realtime - the jobs report. Wage increases are accelerating, and the service economy is poaching workers from manufacturing. The slow rotation continues.

JC Parets - thinks the silver chart is interesting. I guess when you look at it, you should see a bear flag, targeting like $20 or something. And maybe that's what JC is noticing? That everyone should be seeing a bear flag?

Mineweb - miners to replace workers with machines. This'll end well! Maybe we can start by replacing CEOs with Magic 8-Balls. If that works out, thn we can replace IR personnel with colostomy bags.

Vancouver Venturerule of law and miners. Well, according to Jim Rogers, the end of the commodity bull cycle typically involves resource nationalism and an end to free trade as a first step.

Short Side of Long - breadth divergence in the miners. Problem is, most miners suck. So how to read this?

Krugman - the Dunning-Kruger effect. He also lauds Bonddad for his devastating critique of doomers, and points out Hinderaker was an uber-bull in 2005. I wonder how many other neocon right-wing wackaloons were also uber-bullish in 2005? That'd be interesting to see.

Monday, March 18, 2013

At the Bar with Daniela and Brent. And Ron and Graham and Simon and Doug.

Since you're all to lazy to follow a link and would rather just watch it on a Youtube frame, here's the At the Bar from PDAC again.

Some observations:

See Kitco, this is what happens when you interview a bunch of people who actually work for a living. More of these guys please.

I still don't follow Ron Stewart's gold optionality argument - I still don't see how Kinross would be at $20 today, say, if GLD didn't exist. Tasiast is Tasiast, Pascua Lama is Pascua Lama, miners sucking™ is miners sucking™, and if it wasn't for GLD the market would have probably just bought SPY instead - certainly by 2010, anyway. Or heck, bonds if they were scared.

Is he instead suggesting that "removing the optionality" is why the exploreco scene in particular is dead?

Kudos btw to Kitco, for apparently hauling 2 cameras and at least an 8-channel deck and 8 mics to this. Obviously they'd want to work PDAC light (I've carried gear, I know what a pain it can be) so for them to have all this equipment on them is either good luck or planning.

And in the war against overpopulation of glasses of Jameson whiskey, it seems Simon was the hero of the campaign, slaying two single-handed.

Three newsbits of an evening

Well, the European proletarian uprising against the kleptocratic bankster class didn't happen (darnit), so we're stuck with last Friday's upward path being this week's to travel still.

Here's three newsbits that I found endearing:

Bespoke - Italy and Spain shrug off Cyprus. Always watch the bond yields for hints as to whether Eurodoom is approaching. In this case? No. No doom.

Calculated Risk - LA port traffic increases. I really wish I could just quit posting all the bullish data points, but some clowns still need to be shown how bullish the future looks.

BI - Morgan Stanley's commodity outlook. Yeah, it's all pretty much bullshit - they can't predict the weather, and their zinc and copper targets sound hilariously bullish to me - but at least they're calling for $1773/$1845 gold and $34/$35 silver over the next two years. You know, after everyone just finished selling all their gold and silver positions.

Bonddad unknowingly bitch-slaps the goldbugs

Bonddad's got a fabulous post up.

John Hinderaker: The Economic Stupid is Strong With This One

He's recently changed the rules so that now outsiders can't comment on his blog, so I've been unable to ask for permission to reprint his post in its entirety. So I'll just do it anyway. Because it's so damn good that I absolutely want to make sure you read it.

The only I'll make will be putting a few sentences in underline, because a lot of this post simply isn't stressed hard enough. And I'll put in some comments via footnotes.

I want to post it here because the right-wing are the goldbugs, and the goldbugs are the right wing. There's no difference between the two, except maybe goldbugs buying a lot more MREs and guns and being more lumpy-headed and socially retarded.

John Hinderaker: The Economic Stupid is Strong With This One

I read four political blogs regularly: Daily Kos, Talking Points Memo, Hot Air and Powerline.  They each have good and bad points, but I find that each helps to explain the respective position of each party/point of view in some manner.

All four try to report on economics, and all four do a terrible job of it, largely because each have no choice but to see through their respective political lenses without much underlying economic theory or knowledge to back it up.  Or, if they rely on economic knowledge, it's usually knowledge that has been fantastically wrong for the majority of the time.

Case in point: yesterday's post of an imminent economic collapse as written by John Hinderaker at Powerline.  It's rare that you find a column so full of inaccurate statements (with the exception of his own global warming denial posts1).  So, let's begin:

First -- where are these reports of a crash?  I read Bloomberg and the Financial Times everyday and Marketwatch a bit less regularly.  I also read most major economic statistical reports in the AM and most major economic bloggers.  I haven't seen any doomsday report issued.  Evidently, however, these reports are widespread in some circles.  

Just about everyone expects the economy to crash, in some fashion, in the next few years. The fundamentals are very bad: year after year of virtually no growth; ever-declining labor force participation; grotesquely wasteful government spending; exploding federal debt; cronyism that saps vitality from our economy; and a largely dysfunctional education system. The questions are: 1) when will the crash happen? and 2) what form will it take? 

Let's start with real GDP growth.  As the chart above demonstrates, GDP has been growing consistently for the last four years and is now higher than pre-crisis levels.  While he is correct that growth has been slow, that does not mean stagnant or non-existent.

And then there is the labor force participation argument. He is correct that this number has been dropping for the last four years.  However, it's also obvious that he hasn't read any research on the issue.  This is a topic we've been covering for awhile now.  Remember that with the baby boomers now entering retirement, we're seeing about 10,000 people leaving the labor force every day.  As a result, the general consensus is that about half of the drop is due to retirements (see this paper from the San Francisco Fed).

And then there is the exploding federal debt issue.  First -- where was this guy in 2004 when we decided to invade a country and not raise taxes to pay for it?2   Was there even a peep of concern about that long-run issue?  Probably not, even though that was a primary cause of the debt we're currently facing.  Remember that for Korea we raised taxes -- which was then considered to be a move of good governance.  As for the runaway deficit issue, it's actually projected to do much better than he thinks3, as the most recent CBO analysis notes: 

Regarding the wasteful the wasteful government spending argument I would note that with the exception of defense spending, I sincerely doubt the federal government does much good in Mr. Hinderaker's mind.  However, let's look at total government expenditures:

Notice how the total number has been stable for the last few years?

Next, Mr. Hinderaker discusses the last two asset bubbles.  He does OK with the tech bubble, but then we get this gem of crap:

In 2008, the situation was quite different. Hardly anyone foresaw what happened. Very few understood how feel-good government policies that forced banks to make bad mortgage loans, the Typhoid Mary role played by Fannie Mae and Freddy Mac, and the little-understood consequences of securitization would come together to create financial disaster. I was probably a typical investor–when the crisis hit, my retirement portfolio was weighted toward bank stocks because they weren’t considered to be very risky.

Yes, it's the old "CRA led to the collapse canard" back from the dead.4  There are numerous reasons for the mortgage collapse, but the CRA isn't one of them -- not even remotely.  As the Federal Reserve noted back in 2008:

In conclusion, I believe the CRA is an important model for designing incentives that motivate private-sector involvement to help meet community needs. The CRA has, in fact, been helpful in alleviating the financial isolation of many areas of concentrated poverty, but as our report illustrates, there is much more that could be done in these communities. Contrary to the assertions of critics, the evidence does not support the view that the CRA contributed in any substantial way to the crisis in the subprime mortgage market. Today's discussion is an important first step in the process of identifying other initiatives and areas of cooperation between government and the private sector that will effectively address the continuing challenge of poverty in the United States.

I would also suggest doing a search on Barry Ritholtz's The Big Picture Blog to get an idea for how completely and thoroughly debunked this idea is.

As for no one warning anybody about the real estate crash, it's obvious he didn't read any major economic blogger at the time who were collectively warning about the bubble crashing.  

So -- what will happen with the big crash?

So what form will the next crash take? The great fear, of course, is inflation. Ben Bernanke has gone on a money-printing5 spree without precedent in our history, to the point where we are like the cartoon character who walks off a cliff and keeps going for a while before he realizes there is nothing holding him up.

The old "money printing and an inflation" argument.  First, we've been seeing this argument from Chicago School economists for the last four years.  It hasn't happened as shown in this chart of the year over year percentage change in US CPI:

See?  No inflation.  And the reason is simple (for anyone who actually looks at the data): monetary velocity is low:

What if you printed a lot of money, and no one spent it?  The entire CPI explosion goes out the window. We would need to see a massive and quick spike in velocity the likes of which we have never seen in order for the "inflation is around the corner" argument to have any validity.  And that assumes that the Fed is asleep at the wheel when it comes to mopping up excess liquidity.  Does Hinderaker seriously think the Fed hasn't given an ounce of thought for how to end the program?6

And what of the exact nature of the crash?

All of that is rather comforting. Still, I doubt whether I, or anyone else, has foreseen the nature and dimensions of the next crash. We are all passengers on a railroad train, facing backward. We see the past and try to make sense of it. That is a worthy endeavor, but invariably, the future comes out of nowhere and takes us by surprise. Only when it has receded into the past do we claim to understand it and, perhaps, to have seen it coming.

Translation: I really have no idea, but it's really going to be bad.  Very bad.  Because Obama.  Or CRA.  Or taxes.  Or debt.  Or deficit..... you get the idea.  Simply put, this is nothing more than an individual who is scared for political reasons letting those fears guide his economic "analysis."

I usually don't jump into political frays, largely because they are so utterly devoid of the possibility of developing any meaningful dialog.  But the above "analysis" (and I use that term because none other really presents itself) is so full of wrong statements (about the only thing he got right was his name) that it needs to be hacked apart.  I read the financial press regularly and there are no calls for imminent doom or collapse -- unless you consider World Net Daily or Breitbart reputable sources for any information.  The world is not projected to fall apart tomorrow.  The people calling for a massive spike in inflation have been doing so for the last four years and they're no closer now to being right than they were when they first opened their mouths.  Instead, the general consensus is that we're in a slow growth, post-financial crash recovery which is slow due to the massive amount of de-leveraging that is going on. 

I should also add that I'm praying that anyone who relies on the above analysis deserves to be on the other side of any trade I execute over the next few years.  At least then I'll know that I'm taking money from a complete sucker.

Notes (this is me and not Bonddad)

1. Isn't it strange that people calling for imminent doom are also global warming deniers, anti-gay, and hostile to a president whose ethnic background is not completely white? And why do these people resist so strongly when you point this out to them? There's no need to answer - this has nothing to do with economics, it's entirely partisan political bullshit, and meant to trick idiots into voting Republican, not to inform you about the economy.

2. Again. Why crucify Obama for the gigantic deficit, when so much of recent US debt was generated to pay for the wars in Iraq and Afghanistan, the bugaboo of Homeland Security, and massively wasteful Pentagon programs? Again, no need to answer - it's partisan bullshit again.

3. No shit, 2013 US deficit is 2.5% of GDP. 2014 is projected at 1% of GDP. That's why the bond market's not crucifying the US, nor will it ever - their deficit is disappearing and the debt is eminently payable.

4. Again. you can tell someone's a right wing loon spouting inane partisan fantasies when they blame the housing collapse on negroes being allowed to buy homes.

5. For me, "money-printing" is as much a bullshit right-wing talking point as "fiat" or "Zimbabwe". When someone says "money-printing" I close the article and delete them from my RSS.

6. Actually yeah, Hinderaker probably does think the Fed hasn't given an ounce of thought for how to end the program. Because to be right-wing means (definitionally, I mean it's part of US society, I mean great works of sociology have been written on the subject) to be anti-intellectual, and to be anti-intellectual means to believe that becoming chairman of the Federal Reserve is just as easy as becoming a blogger.

Some news that has nothing to do with small Mediterranean islands

On a completely different tack:

Bespoke - highest bearish sentiment since last July. Time to add?

Bloomberg - stocks at lowest valuation since 1980. But it's still doooom, right?

Bonddad - read my point & figure and weep. Quote:

For the first few months of this year, I have found the actual state of the equity markets to be incredibly hard to determine.  The biggest analytical headache has been the Fed's QE program -- a program which I support from an economic perspective.  The problems caused by this program relate to its effects on the theoretical "natural flow" of money that occurs throughout the business cycle. First, when the equity market starts to rally, the bond market (which should rise during the recession and should hold those gains for the first part of the recovery) should sell off after traders realize the the economy is growing.  At this stage of the recovery the equity market should provide a better rate of return than the bond market.  This bond market sell-off does not happen under the QE program as there is always a bid under the treasury market.  Additionally, low yields in the treasury market means investors will look to other areas of the market for fixed-income like returns: hence defensive market segments like utilities (the XLU is currently yielding 3.86) and consumer staples (which is currently yielding  2.8%) have also been rallying when they should be selling off to a certain extent.

Put more succinctly, my natural market cues for a stronger recovery have been masked by the Fed's program, leading me to mis-diagnose the current state of the market which is clearly rallying.  I should also add that there is now evidence that the economy is in fact stronger than I first thought, a point which I'll make later today.

News, the world looks better after a good night's rest edition

It just goes to show how silly the first-pass emotional response to things can be. I've deleted most of hte links I sent myself re: Cyprus, because a lot of more rational commentary has com out this morning. So here it is:

Ritholtz - watch the cyprus bombast, now. Quote:

An important skill to develop is the ability to read critically and think analytically. After years of practice — I taught the GMAT & LSAT while in grad school — it becomes second nature.[...]

Regardless, before you get yourself worked up into a frenzy over this story, try to take a deep breath and put it into context.

I am not at all suggesting that this is not potentially a significant development; I am saying  that the usual suspects have blown up describing it the way they often do — turning a backyard pit BBQ into a nuclear conflagration.

Global Macro Monitor - WTF were they thinking? Salient point:

Second,  we seriously doubt Cyprus’ $20 billion economy is going to derail the fundamentals that have been driving the U.S. stock market.   Will it end fracking and cheap energy?  Derail the housing market?  Cause the Fed to remove quantitative easing prematurely and raise interest rates?   Get frickin’ real, comrades.

Reformed Borker (Bork Bork Bork!) - fuckin' Europe again?!? Salient points:

7. If this becomes the catalyst for that 5-10% correction we've all been so certain was coming, is that so bad? Isn't that what we all wanted, after all?

8. Imagine the market digests this and then rips into new all-time highs? I predict peals of laughter and a handful of policy bear suicides should that be the outcome.

FT Alphaville - the stupid idea and the system. Coterill notes the real problem isn't any systemic risk, but rather a long-term damage to trust in banks. Which should, I hold, be positive for gold (and London open saw gold pop back over $1600). But US futures are only down 1%, European markets are only down 1%, and the Japan drop of 3% is probably just hedge funds (them again) moving on to the latest play (late of course).

Sunday, March 17, 2013

Pow! Zoom! Straight to da moon^H^H^H^HDOOOOOM

So the big question after Friday close turned out to be: will the kleptocrat confiscation of wealth in Cyprus be a trigger for gold?

Here's your Kitco chart:

It's Sunday night Globex, so maybe it's not worth reading too much into it.

Business Insider is hyping the story for Monday open:

ANALYST: The Cyprus Deal Could Be The 'Trigger' We Were Waiting For In Europe
S&P 500 Futures Gap Down After Cyprus — Euro Getting Crushed
Currency Markets Open After Cyprus, And Some Of The Most Popular Trades Out There Are Getting Slammed
CYPRIOT PRESIDENT ADDRESSES NATION: We Were Given Two Options Like Blackmail
The Cyprus Bailout Is Unfair, Short-Sighted, And Self-Defeating
JPMORGAN: Europe May Have Just 'Bazookaed Itself In The Foot'

Consider a new frenzy whipped up!

So we'll have to see if it's positive or negative for miners.

The miners who the hedge funds just sold off.

That's the funny bit for me.

The At the Bar is up, sort of.

Well, I guess I'll re-post it when it shows up on YouTube cos I prefer embedding their player instead of following a link.

But here's the big PDAC At the Bar, with Our Daniela, Simon Ridgway, Ron Stewart, Doug Kirwin and Graham Brown. Oh and Brent Cook.


UPDATE: Ron Stewart brings up GLD taking money out of the gold miner scene... but did GLD cause the billions of dollars in cost escalations, write-downs and scope reductions at the majors? Would Kinross be trading at $20 today if it wasn't for the existence of GLD? I don't get it.

Neat! Santa Barbara interview

Hey neat! Here's an interview from last year with Christoph Lassl from Santa Barbara Resources.

They are the best-performing stock on the TSX Venture this year too. Up 300% so far!

Sprott Gold & Precious Minerals Fund

Someone on Stockhouse pointed out something about the Sprott Precious Crap Fund, so I went to check out their webpage:

(click to behugeitize)
Boyoboy. Where to begin.

GDXJ from 2 Mar 2012 to 28 Feb 2013 was -46% and GDX was -34%. SLV was -20%. So these guys either barely underperformed the GDXJ, or only barely kept up with it, depending on how much of their port was made up of physical silver.

Keeping up to GDXJ is... well, not admirable, but borderline acceptable.

As long as you're not charging a 2.5% fee.

Oh plus "10% of excess over the S&P/TSX global gold total return index". Which... um... was only down 34%, so if that's Sprott's benchmark, they underperformed it by 8%.

Boy, the suck just goes on with these guys.

As far as their top ten holdings go, I have no clue how any of them did or if any of them are good companies (aside from Silver Wheaton, which is pretty much a no-brainer).

But here's the performance of the few silver miners I know of over the same 12-month period:

P +89%
SVL -18%
AUN -22%
BCM -28%
FVI -42%

Each of them outperformed Sprott.

In fact SIL, the Silver Miners ETF, was only down 27%. So if you're a silverbug, really totally committed, and happy to live through a 30% drawdown, you could have simply bought SIL.

So... why would you buy this fund? Why would you not sell it immediately?

In fact, even if you were the most rabid Sprott follower and believed in him totally, as if he were some sort of cult leader, don't you think that a year of seeing your savings cut almost in half while the S&P 500 went up 11% would be enough to drive you away from investing with the silverbug/goldbug doomer clowns forever?

At some point, doesn't reality intrude?

Thank you, Eric Sprott and Charles Oliver, for your contribution in absolutely destroying the junior miner scene forever.

A few Sunday newsparticles

Ritholtz - Voters should pay attention to politics; investors should ignore it. Read it. Then please quit investing based on some stupid political bullshit.

Guardian - Monti gives his farewell warning. "Italy's outgoing prime minister has warned European leaders that the rigid austerity policies of the past three years have generated mass disaffection with the EU and a populist political backlash." Gee, you think?

Here's a test: if the ruling plutocracy finally accepts that Golden Dawn wasn't a one-off and now changes its tack to encourage growth and combat the alienation of youth, it means they really care about democracy and the European dream.

If instead they continue being cunts, it means they really don't care about the EU, its economy, or its now-shaky democratic foundation, and only want to steal as much money as they can from the continent's proletariat and hide it in their Singaporean private bank accounts before the union collapses.

You know which side I'm betting on. And yes, the kleptocratic thieves include Germany, the country who insisted that Greece honour their purchase agreement to buy German tanks and submarines despite being "bankrupt". - Kitco survey sees gold moving up next week. Let's see how expert the experts are, eh? While I can imagine the whole Cyprus thing having a half-hour effect on the US market, I'm more expecting it to be positive for EU physical gold demand.

After all, the EU has just come out and stated that from now on they will encourage confiscating pensioners' savings accounts to bail out banks. When no bank account is safe anymore, I suspect that's positive for gold.

Too bad for the hedge funds who just sold, eh? Tell you what - post a few dozen hedge fund managers' phone numbers in the comments section and I'll phone them up, rub it in their fucking faces, then post the audio recordings here for you all to hear. Cos (as Jojo and Michael Lupaka will attest) yeah I really am just like this in person.

Nunatsiaq News - Private company buys Hopeless Bay from Newmont. I guess the divestment of crap assets begins, eh? Wanna buy a 9Moz gold mine for $50 million?

Now here's the thing - why buy GUY or LPK when you can buy a mothballed major mine? This doesn't look too good for development properties.