Saturday, March 30, 2013

Yet more bunnies

Yet more bunnies? Say it ain't so!

More bunnies?

More bunnies!

Bunny jumping competition

Bunny jumping competitions are things that exist.

Happy oestrus.

Interesting article

Just about to dash out the door for the day.

But I came across this blog post some guy wrote from 5 years ago:

Indian Gold Reserves. Forgotten History! New Opportunity?

It has some interesting data on Indian gold holdings per economic quintile, which is terribly important if India does ever actually manage to liberalize its society and grow its economy. I've been wanting to find data like that for a long time.

Also some funny history of gold ownership in India over the past two thousand years, including some whining by the Romans.

I've only browsed through it. I'll read it later. You might want to check it out though.

Friday, March 29, 2013

The weird part of YouTube

Was wondering whether to start doing my taxes, or fire up Sims 3 for a month.

Then I came across this:

If you think that's weird, apparently you can kill the Grim Reaper by asking him to move in with you, then starving him:

Thinking a bit about B2Gold

This is what I have written down for P&P/M&I for B2Gold:
Libertad 1.6Moz, Limon 250koz, Masbate 3.2Moz, Jabali 450koz, and Otjikoto 1.3Moz.

Let's assume Otjikoto goes into production no problem. Let's also assume Gramalote is worth nothing, and the above is all there is to B2Gold.

That sums up to 6.8Moz of P&P (or M&I for Jabali), or 6.7Moz when you factor out the parts of Limon and Otjikoto that B2 don't own. It also assumes zero inferred and zero exploration success.

Divide by B2's market cap and you get about $290/oz undiscounted. That's what their gold is selling for. I thought that was unfair, so I brought out my old Excel '97.

I put together a spreadsheet with B2's production assumptions from their Mar 2013 presentation, using the mine life assumptions given (Limon 5 years, Libertad 10, Masbate 15, Otjikoto 12). The numbers pretty much add up to their P&P numbers given above, with a bit of slippage; and yes I fudged Otjikoto's production down after 2019 to make all its gold average to the given long-term average production of 110koz.

Now if you assume $324/oz net profit per ounce of gold, what they basically reported this week, carry that all the way into the future (i.e. their cost per ounce doesn't go anywhere and neither does the price of gold), and you get B2's present market cap ($1.99B, actually) supported by a 0% discount rate. No Gramalote or Cebolatti or any exploration upside.

If you include a 50% chance of their 50% share of Gramalote producing starting in 2017 (i.e. they get only 75koz/y for 8 years, the 50% discount based on the fact it's Colombia and they're not building it yet), their market cap is still supported at a 1% discount rate. The prefeas from Gramalote really shouldn't have much effect on B2's market cap, basically.

So if you forget Gramalote again and assume they can get their profit per ounce to $400 in the future, then their market cap is supported by a 2.5% discount rate.

I personally don't like the idea of a low discount rate for B2Gold. I don't have a problem with Namibia (I assume it's too far from anything for anyone to care enough to cause trouble there), but Noriega (whoops) Ortega might die someday, or the Philippines might go to shit. So you need to discount future flows by something more than that, I'd think - maybe 5%?

Plus, I've got this idea in my head that if you want to value a miner, you should use a discount rate equal to how you think the S&P will perform in the future - since after all, your choice isn't between buying B2 or a government bond, it's between buying B2 or SPY. So your cost of money, if valuing a gold miner, is the cost of not owning the S&P.

So upside from B2Gold must come either from the gold price flying up faster than their cash costs, or them bringing cash costs down relative to gold price, or exploration upside at their producing properties extending mine life, or... the rest of the market giving them a popularity premium because they're quite simply one of the 5 or 10 miners who don't suck.

The aside from this is that maybe miners have gone down simply because if you model their cash flows based on a discount rate equal to the expected profit from SPY, their future flows are worth a lot less than they were when we all thought the US was going to become a post-apocalyptic Mad Max wasteland.

Why naive preschoolers (and Joe Wiesenthal) shouldn't be allowed to run blogs

So keeping up with the current blogger theme of saying "OMG North Korea is killz us allz", Joe Wiesenthal wades in with this story:

BI - North Korea releases new photos that reveal its 'US mainland strike plan' in the background.

Now first, manual of style: you don't fucking capitalize articles ("the") or prepositions ("in"), even in titles. I don't know what journalism school Wiesenthal went to, but he didn't.

Second, Wiesenthal says "A key thing as points out is that the photos were released in a domestic workers paper, implying that the images are for internal consumption, rather than a real threat."

Um... yes, because North Korea runs such a tight ship that they know these photos can never make it out of the country? Especially digital copies? What a coup! Business Insider are such leet hackers! Tard.

In any case, I doubt these four old fools in the first photo would have the slightest clue how to fight a modern war.

Two newsbits from Grandich

Grandich has a couple interesting articles this weekend.

One, he's all "oh look at the central banks around the world buying gold". You know he has his own spin on the story, one of US dollar collapse due to too much negro power.

But let's look at the chart he refers to:

See something there? Darn near all of the central bank gold buyers are EMs. Most are pretty good exporters. I assume they've all seen large currency reserve accumulation, and have bought some gold to diversify.

Nothing to see there. As long as the EMs keep making a profit, their central banks will keep buying gold.

So stop selling gold you morans.

Then he also has a copy of this chart:

Which he says is a good contrarian play.

But I'm wondering why the US traders are short CAD? Our interest rates can't drop any time soon; we've got a very well-hyped real estate bubble thanks to the Chinese kleptocrats.

So then what? A collapse in Canadian exports? Yes, our auto industry is crapping out, and yes everyone's going on about the China slowdown negatively impacting iron and copper (though it's not; it's that the base metal capacity got built out so fucking much that they overshot the demand sweet spot). But Canada also exports a fuckton of cattle, wheat and lumber, and I don't expect demand for any of those to drop any time soon. So what's the real reason?

CAD is at a sentiment extreme, far moreso than AUD, which is yet another commodity currency. In fact, the only other strong short on the COT is GBP. And the corresponding overbought long is definitely USD, so you know the pairs are USD/GBP and USD/CAD. Short yen and short peso are tiring out, and the market's already backing away from short Euro.

The only possibility is that USD/GBP is a play because they expect the UK to drop into an even worse recession. So do they also expect Canada to fall into recession? Is that it?

Anyway, funny thing with the US chart is when the large specs go net long hard, the USD goes up. I.e. the opposite of the charts above. So really he'd have to expect USD, CAD and GBP to all go up together now. Dunno why, though. Don't get it. Never understood the currency thing.

Anyway, I assume US dollar is still thought of as having something to do with gold, so that's why I brought this up.

A few weekend newsbits

A little more news for you. Mostly China news from Bill Bishop at Sinocism.

der Spargel - European austerity costing lives. It's promising when Germans remind themselves of the murders they commit... then again it didn't stop them last time, did it?

the Guardian - those on low incomes will be hit by an avalanche of cuts. I guess this'll be the end of the Pink Pussycat Party in England. Meanwhile, it'd be nice to see a few hordes of yobbos smoshing things oop in protest, but I really doubt the English can be arsed to do more than whine via leftist newspapers.

Beyond Brics - Ukraine replacing Russian gas with cheaper European imports. A bit of schadenfreude at Russia's expense, but also a factor in why Russia will never be a significant world player; when you're a cunt, people tend to look for ways to not do business with you.

BI - China's crackdown on WMPs. Probably won't accomplish much and I'd rather listen to Bill Bishop than BI. Even still, it's now a thing.

ABC - Garnaut warns on China's debt. When the presenter brings up 60 Minutes' story on "ghost cities" you know he doesn't have a clue what he's talking about. The guest, though, is pretty good. Important fact stated about Chinese debt is that they have the savings, the reserves, and the political will to fix that problem. And, of course, growth reduces the effect of debt on the economy.

Reuters - Fed study says China growth may slow markedly by 2030. Except it doesn't say that. But, again, fear over China growth, it's a thing, market's talking about it now.

NY Times - Xi Jinping imposes austerity on China's elite. Except there will be a lot of princeling pushback. The phrase "eat quietly, take gently and play secretly" is the point here - if Xi can't truly reform the plutocrats, at least he can get their excesses out of the public eye. Otherwise, revolution would be around the corner.

Asia Sentinel - Canada, China's new condo & citizenship market. As I suspected, the flood of Chinese into Canada is mostly thieving plutocrats trying to establish new identities for themselves in foreign countries with a pile of stolen wealth. That explains the hundreds of condo towers being built in downtown Toronto right now.

Friday videos - life with a restart button

Turns out life with a restart button kinda sucks.

Thursday, March 28, 2013

Evening news

New Deal Democrat - the oil choke collar loosens. Seriously, the US breaking its reliance on foreign oil is a game-changer: first, it makes for cheap power for US manufacturing. Second, more importantly: why the hell would the US continue to fund the world's largest military to keep oil flowing, essentially subsidizing the oil price for the world, if they no longer need foreign oil? China is fuuuucked if the US ever cuts back their military involvement in the Middle east. Maybe that's what eventually tanks the emerging world? In any case, remember NDD's term "oil choke-collar", because the rest of the pundit world should figure out pretty damn soon how useful this concept is.

JC Parets - defensives still leading in 2013. Tech and materials still royally suck. I guess, after maybe a pause to refresh starting in April, the smart thing to do would be to buy tech? Is that the script? - Australian mining service industry in dangerous decline. See also an article at the ABC website. Same in the rest of the world, though I guess Australia's problem is they're too focused on high-capex high-throughput garbage base metals like iron?

Mineweb - Minera IRL still hasn't got its projects up and running. A whole writeup in Mineweb and still not one share sold today. 65,000 shares traded the day before, though.

Wired - White House can't afford its shape-shifting alien reptile guards. Of course the White House will deny everything. And, of course, the video got taken down when the Bilderbergers and Zionists who read Wired found out about it; but you can still find copies of the video posted elsewhere on YouTube. Here, for example:

By the way, dear Reptilian/Bilderberger/Freemas­on overlords:

Please get in touch. I'd like to help you enslave the planet, and have always thought I'd make a good overlord myself. I'll be happy to work for gold, which reportedly exists in abundance on your Annunaki homeworld of Nibiru.

Also, if you can make Natalie Portman and Mia Kirshner my hebrew slavechixxx, I can maybe teach you aliens a thing or two about slavery and mind control. Or at least create some very popular porn videos which you can then seed with your secret mind-control signals and Freemason symbolism.

You already own Google and Youtube so I'm sure you'll be able to track me down and get in touch.

Noontime noos

Here's a few things to ponder:

Reformed Borker (Bork Bork Bork!) - all of a sudden Josh is a panty-piddling pussy. He's scared of low cash levels. Why? Dude, is the US retail trader all-in, or is he out? Make up your damn mind. One of your datasets is wrong.

Beyond brics - India's current account gap. Dear Finance Minister Chidambaram: yes, if you "improve financial literacy" you might wean your country off gold. But you also need to enfranchise the hundreds of millions of Indians living in abject poverty, who are repressed by caste, who therefore have no emotional investment in your country's elitist financial system. If you were to enfranchise these people and make them feel part of India, they might stop buying gold and opening bank accounts. Keep them slaves and they'll keep buying nice ol' portable gold.

Beyond Brics - BRICS summitteers fall short of target. Like I said just yesterday, don't expect much from these guys.

Mineweb - post-Cyprus gold price defying logic: why? Sigh... maybe because Europeans don't buy gold?

Beyond Brics - gold's correlation to Chinese pork prices. A nice piece of whimsy which hides a simple fact ignored by the gold analysts of the Euro-American world: gold is not bought by Americans. It is bought by Chinese and Indians. So please, for the love of god and all that is holy, quit looking at US inflation and interest rates for cues about the gold price: you should be looking at Chinese inflation and interest rates.

Grope & Flail - insider buying of gold stocks at 7-year highs. Then again, the article notes it takes 6-36 months for a peak in insider buying to translate to a new bull move. Hope it's not going to take too long.

Mineweb - withdrawn bid shows perversity of junior pricing today. A 100% premium to the market price still undervalued the company's assets. So really how can you expect any buyouts of struggling juniors, when any generous offer is still unacceptable?

Wednesday, March 27, 2013

He'd like to register a complaint

Fun video:

Morning news, with commentary

Some stuff to keep you occupied.

Ritholtz - I am going to keep showing you statistics that prove this bull market is not a bubble til you all shut the fuck up and accept it. It includes this chart:

Point being, the US is not sufficiently overweight equities for you to call a top in the S&P, so stop calling a top in the S&P.

Reformed Borker (Bork Bork Bork!) - 361 capital weekly research briefing. I'd add that ORCL looks buy-ish on the weekly chart:

Use the weekly SMA(50) as a tight stop. After all, are people all of a sudden going to stop administering payroll and WIP by computer? Or whatever it is you do with Oracle products? This chart has had quarterly pukes since the mid-1990s. They were all buying opportunities.

Other nice charts in that article - how much tech is underperforming SPY, the arch billings graph, home equity correlation with SPY, and this sexy thing:

I think it's supposed to suggest that you're supposed to be buying equities now.

Bloomberg - BRICS plan to build an alternative to the IMF and World Bank. Yeah... I'm sure that between South Africa, Russia and India they'll manage to find enough graft and incompetence to sink this boat. Still, it's symbolic of a globalization-driven counter-American tendency toward multilateralism, which is good for gold if you accept Kaiser's thesis. I just wouldn't expect much from a bunch of Russians and Indians.

Daniel Drezner - on what Cyprus means for multilateralism. He reads our sitrep as indicating neither Russia nor China really have either the desire, the will, or the competence to replace a country like the US (or its incompetent plutocrat cousin the EU) as a bloc leader on the world stage - because neither has the will to get its hands dirty and step into tough situations like the US does. After all, throwing around your weight in the South China Sea or making micropenis-compensating threats against tiny Caucasian neighbours pales in comparison to what the US can do with soft power alone. Interesting suggestion... China and Russia will remain 3rd-world clown shows til they can lead the way the US can.

Bloomberg - rate hike in China expected, thus the weakness in commodities. The article's all speculation, but at least it explains why commods are weak despite the world economy having bottomed already.

CNBC - statistics on goldbugs. They did a poll about investments, and found out that goldbugs are statistically more likely to be white males, highschool dropouts, teabaggers and stock market doomers, with less than $50,000 in savings to invest, who are still underwater on their mortgages. Now, I can see them being more likely to be teabaggers since the whole Neocon scene in the US shares its mailing lists with direct-marketing stock fraudsters; what I'd like to know is if the reason goldbuggers have no money to invest is because they lost it all buying shit stocks recommended by Ayn Rand worshipping social darwinist neocon clowns like Sprott and the Caseys.

The Vancouver Adventurer - The Kaiser extinction is true capitalism at work. Good point, parallel to what Cookie was saying two years ago, that the goldbug bubble of 2 years ago was a paper bubble, and now we've got to chew through a load of worthless paper - kinda like the US deleveraging process, having to chew through a load of debt. But I've got to ask, as we flush it all away, will it back up the toilet? What if this bubble has so killed Canadian exploration that it all moves away to Australia, Russia, or China? After all, exploration will go where the free capital is.

And just a half hour later....

PM miners and metals looked bad, but seem to want to make a turn-around this morning. I find that interesting because I was about to buy HZD to protect from a cascade waterfall down in silver... which so far hasn't happened.

Funny enough, while the junior miners that I watch were looking weak, Yamana was looking strong. It's up over 2% right now. Check out this chart:

I just find it interesting that YRI failed to drop below its short-term EMA, after bouncing off its SMA(50). The other miners (BTO, RIO and so on) seem to have much weaker charts than Yamana right now.

Can I use this stock as a bellwether for the miners, maybe? Cos if it pops above its SMA(50) now, that'll be quite the positive thing, won't it? I mean, is there any stock-specific reason for YRI to do better than BTO, say?

There goes silver

Well, say goodbye to $28.50 silver....

Which one had the positive COT report again? I don't remember.

Tuesday, March 26, 2013

A couple Gold Report interviews

Here's Eric Coffin at the Gold Report from a couple weeks ago.

And here's Jojo with a Gold Report interview from this week.

Jojo is still going on about inflation; but it looks like I'm slowly convincing him that gold is an EM growth story, not an inflation story. He just sent me a link to a story about India this week!

By the way, here's a koan for the readers to ponder: why would silver correlate positively with gold at all if silver was an industrial metal and gold was a tail risk hedge?

Some newsbits to keep you occupied

Still sort of busy. Here's some things that caught my eye.

Ritholtz - too many expecting a correction. As he notes, "when too many investors are looking for a correction, it reflects that selling has already occurred. That implies less supply, less downside pressure, and the potential for pros to be forced back in."

Bespoke - world ex-us mostly oversold. It would be nice if the EMs in particular could start moving up. Has everyone forgotten that these people's economies ride on the US' coattails?

Ritholtz - Kotok reports from Dubai. He has a very positive view of the events that have unfolded in Europe. As if he thinks the European plutocratic elite might not continue to screw things up.

Felix Salmon - Cyprus: it's not over yet. Otto's buddy with the dork glasses and the action figure collection views the Cyprus action from a geopolitical EU-versus-USSR lens. - Intierra on the gold production cliff. Quote: “With global drilling activity waning, IntierraRMG forecasts that the next few years will continue the trend with fewer new gold discoveries.” So again, where's all of India's gold going to come from?

Beyond brics - Kyrgyzstan fucks with Kumtor. The suggestion being they want to nick it and hand it over to China. So again, where's all of India's gold going to come from? - major miners continue not buying new projects. With a link to a PWC report.

Mineweb - overview of Mines & Money Hong Kong. Wonder if I can find some video on youtube of the event?

Monday, March 25, 2013

So when you were buying things based on the emerging markets growth story....

So when you were buying things based on the emerging markets growth story, influenced by a desire for the return of the big commodity inflation of 2010, were you buying:

a commodity ETF?

Or how about

a broad global agribusiness ETF?

I know you wouldn't have bought some shitty American corporation, because they're shitty because the USA is shitty and the US economy is all going to shit because of that damn negro president. Right? The USA is going to shit and their economy is falling back into a recession and...

...turns out Monsanto's been doing fantastic.

Unless your theory is that Bernanke's asked Goldman Sachs to buy up all the MON shares.

Oh, and here's some crappy stocks.

BTO looks like it wants to fail.

Sandstorm's still not really going down much, but it's not particularly enthused with up either.

RIO wants to fail, that's all that can be said.

Yamana didn't want to get about its SMA(50) cos that would look bullish. I guess the one thing that's positive is, at least here's one miner that's gone above an RSI of 50.

Seriously, these and the other profitable, well-managed, cash-flowing producers ain't even attracting flies.

Posting might be light for a while

Stomach disorder acting up, also moving this week and busy at work. Posting will be light. I assume you'll really really miss me.

Various comments with charts included follow.

Did someone seriously puke GDXJ by 10% at the open, or is this just a artefact? In any case we're back to hugging the EMA with an RSI that still doesn't like anything north of 60 and a MACD that seems to want to roll over.

JNK is rolling over. That's interesting. Wonder if it starts going back up?

Emerging markets are still going down after failing to break to a new high. Dunno if this is a knock-on worry about Euro area growth problems, or a worry about EM inflation.

I've been kinda thinking that what could kill the EMs and drive growth back to the US is inflation resulting from hitting the limit of what growth their economies can really structurally put out. India's about at that point right now, where their central bank is seeing inflation too high to justify any more rate cuts.

US dollar seems to not want to go up anymore. If it was the gold miners you'd expect that cluster to fail downward.

So what can the US dollar fail against? Maybe the Japanese yen? But I guess yen going up is a safety trade, and now that the EZ is fixed (Italy 10-year yield is 4.61% and Spain's is 4.96% so obviously bond markets don't give a shit about Cyprus) yen should go back down?

Don't really know, been busy with other stuff.