Saturday, August 3, 2013

A comment so funny

I gotta make sure everyone sees this:

Saturday news

Here's a few more newsbits for you:

Bonddad - everything except the headline stank. He thinks the long leading indicators in the July employment report warn of a possible recession in 2014.

I still think you need to remember which parts of employment are being influenced by (hopefully) one-time factors, like the right-wingers trying to destroy America with needless bickering, or ignorant right-wing employers fucking their employees over even more by cutting their hours so they don't have to be given medical care.

Then again, are any of these really one-time factors? Or are the Rethuglicunts going to continue trying to do all they can to destroy America? Because after all, America can't become the "new fallen Roman Empire" if the economy improves, right? And that's what the right-wingers say is happening! Well, why would the right wing work to disprove their own narrative?

Bonddad - on the other hand.... The rest of 2013 looks clear - he just has a worry about 2014. Fine. BTW, I think Bernanke and Yellen have the same worries, and they're (hopefully) in charge of things.

Michael Shaoul - Spain unemployment data. Unambiguously... bottoming, I guess. Though of course the stock market is not the economy.

Mineweb - Barrick says "screw you guys, we're going home". This is what I said a long time ago I wanted to see: major mining companies saying "well if you're going to cave in the gold price, we're going to stop mining gold." There's no way gold goes to $800 if significant production and development cutbacks are happening in the $1200s.

Mineweb - US real interest rate influence on gold price waning. Here is the money shot:
“The established view relates gold prices to movements in the real US interest rate through investment channels. Over a five-year average, global investment constitutes 27% of gold demand. Adding both exchange-traded funds (ETFs) and over-the-counter (OTC) demand takes this share up to 37%, well below the 48% accounted for by jewellery demand. Further, investment demand linked to the US and Europe only accounts for 18% of total demand over the last five years – even if all OTC-related demand is assumed to originate here.”
Is the entire goddamn world FINALLY STARTING TO GET IT? What I've been screaming about for the past year? - four reasons the smart money is selling gold and will never return. Well, Anthony Scaramucci of Generic Cocaine-Snorting Money-Loser Hedge Fund doesn't get it.

Here are his four reasons, and how wrong each of them are:

"Central bankers are exercising caution on inflation and the risk of Weimar-style hyperinflation is just not there." Answer: I'm sorry Tony, but 70% of all gold is bought in Asia. Have you been looking at the EM inflation outlook at all? Or are you too busy stuffing your head up your own ass?

"Deflation has become a risk and as each dollar becomes more valuable, the dollar value of gold drops." Answer: Only to the extent that gold is priced in USD, Tony. Cos 70% of all gold is bought by people primarily exposed to the rupee, renminbi, dong, baht and so on.

"The Fed won't sell its bonds thanks to the institution's very long time horizon and the absence of a bond bubble is negative for gold." Answer: What the fuck?!? What do US bonds have to do with gold? Have you been listening? The US doesn't buy gold. Asia buys gold. Only the most insignificant portion of gold demand (a small sliver of the West's total 18% investment demand) comes from the gold carry trade. Interest rates and GOFO are utterly meaningless to the supply demand picture.

"Economic growth would hurt gold because rising rates make gold, which does not produce yield, even less attractive in comparison to bonds." Answer: Now you're just being a purposefully ignorant cunt, Tony. If stronger economic growth in the US results in increased wealth generation in India and/or China, then gold demand will go up because over there gold is an asset class assigned a fairly fixed portion of the investment portfolio. And do you seriously think that the Indians, Chinese, Vietnamese and Thais who buy gold are seriously considering lowering their gold allocation in favour of USTs? You think they have a choice? Do you know nothing of the demographics behind the buying? This is three billion peasants, not a couple dozen investment banks.

As noted in the comments section of this blog a while ago by some smart guy, most of Wall Street thinks this way. It's completely utterly wrong, but it still informs their investment decisions.

So, fine. Let them all leave the gold market. Then gold will bottom. Then it will start to behave as a pure commodity whose demand is increasing while supply is being drawn down, where the major producers refuse to bring any new supply online ever again cos they've just gone through two years of being fucked over to within an inch of bankruptcy.

I'm trying to be bearish gold here, but it's just not working.

Thank god for Anthony Scaramucci. If it wasn't for money-losing ignorant suckers like him on the other side of the trade, it'd be a lot harder to make money on the market.

Mineweb - gold imports jump 102% in Pakistan. Still but a miniscule fraction of overall Indian demand. They should look for data from Dubai.

Friday, August 2, 2013

Shocking new video exposes the truth at Rio Alto Mining's La Arena

Incakola News refuses to give you the straight dope on Rio Alto Mining and La Arena, but I have unearthed an utterly unbelievable (yet true) video that explains what exactly is going on.

This interviewer tracks down a man who has the entire inside scoop on Rio Alto:

No wonder their stock is going down!

Why Mila Kunis is smarter than you

I think we should have a new regular feature on this blog, titled Why Mila Kunis Is Smarter Than You.

As you know, back in March Mila Kunis announced she was taking her vast fortune, accumulated over the years with her entertaining and very sexxxay TV and movie appearances, and investing in the stock market.

Various fucking asswipes and self-important dickless queers - mostly neo-Nazis from the ultra-conservative right wing echo chamber - made fun of this, such as:

Daily Beast - when celebrities like Mila Kunis talk stocks, it's time to get out of the market
WSJ - five reasons Mila Kunis shouldn't be buying stocks now
Gold Stocks Today - is this the Mila Kunis stock market top?

And since that time, assuming all she did was buy SPY, Mila Kunis and those who followed her simple yet elegant wisdom would have made 9.5% (plus around 1% in dividends).

What did the neocon ultrafascist Hitler-loving right wing do in all that time? Probably lost money, right? GLD is down 18%, GDX is down 30%.

So who's smarter, then? Mila Kunis? Or the fucking Jesus-worshipping mud-hut fascist pigs at the Wall Street Journal and the Daily Beast who spend all day sucking Andrew Breitbart's zombie dick?

I think you know the answer. Mila Kunis is obviously smarter.

Anyway, on top of all that, Mila Kunis also appeared on the cover of Esquire as "Sexiest Woman Alive", which is another thing you won't see from any of the right-wing wackaloons. Here she is talking about it on Ellen:

Holy shit, it's the Crucifucks on Detroit cable access TV!

Dude WTF! As Sean Kennedy used to say, "Server provides, all hail Server".

Here's the Crucifucks on Detroit cable access TV.

First there's a bit of an interview, and then they play "By the Door" and "Democracy Spawns Bad Taste".

If you're a Crucifucks fan, I guarantee unless you already had this on VHS you were pretty damn sure you were never going to be able to find it again.

So let's all sing along...

Be a good American, fuck off!
Be a good American, go to war! 
Be a god fearing citizen, kill someone or
kill yourself! Cos you're such a fucking bore.

Blog stats, yet again Daniela Cambone edition

I try to give you guys quality content, and what does the internet give me in return for all my hard work?

Seriously Daniela, you should be charging me frickin' royalties.

Several species of newsbits gathered together in a cave and grooving with a Pict

Blah blah, stuff and so on.

Bespoke - there's your market breakout, doomers. But no, keep telling everyone the S&P 500 has topped out. Because it's better to associate with a bunch of paleo-conservative apocalyptic Dispensationalists than it is to make money as the market goes up.

Michael Shaoul - on the July ISM. "About as good a set of data as anyone could have imagined".

Calculated Risk - construction spending declined in June. He gives you the nuanced interpretation to go along with the shallow headline.

Bonddad - GDP shows Washington's fiscal fail. How much better would US GDP have been if not for Republican obstruction? But the Republicans want to do all they can to make sure the nigger in the White House never presides over an unambiguous economic recovery.

Michael Shaoul - Italy new car registrations. Apparently bottoming out.

BI - bye bye Berlusconi, you fucking cunt, don't let the door hit your withered micropenis on the way out. A sentence is finally handed down. And know what? Italians tell me they vote for Berlusconi cos he gets away with whatever he wants... so does this mean his party now collapses in the polls? After all, it sounds like Italians want to vote for a rakish winner, not a dumbass loser.

Times of India - monsoon going strong, set to top 100%. Though apparently some areas are getting too much rain. That can happen. Indians also can whine with the best of them. Hand an Indian a pile of gold coins and he'll whine that he left his burlap bag at home.

Reuters - India's cheap food plan falls short. Of course this is the BJP saying this. But still, it's the BJP saying this and pointing out their own programs in Chhattisgarh accomplish so much more. And note how the upper-class types say "we give the poor rice, cos that's what the poor eat" - a little fucking arrogant, no?

BI - Goldman downgrades Indian stocks. Mr. Chidambaram, the misfortune will continue along this trajectory until you stop giving offense to the goddess Lakshmi! Why do you continue to offend the gods?

FT beyond brics - Asian credit growth masks deteriorating fundamentals. Y'know, there's these people out there who are constantly nattering on about the coming "massive repudiation of debt" in the US as a "dishonest system is coming apart at the seams", and how leverage and debt creation are bad and don't signify a healthy economy. My response is: HAVE YOU TAKEN A LOOK AT ASIA? And if you have, did you know that the emerging markets altogether account for about 70% of world gold demand? Thus, WHY HAVEN'T YOU DUMPED ALL YOUR GOLD AND BOUGHT THE S&P 500? Is it just intellectual laziness, or is it simply that you try to avoid any commentary that's in disagreement with the Max Keiser/Breitbart/Russia Today/Jim Kunstler echo chamber?

FT - betting the mine on an economy that's now slowing. What does the China slowdown mean to LatAm?

Mineweb - cash cost reporting comes home to roost. Neener neener says Lawrence Williams.

Friday video - White Punks on Dope

Here's the Tubes, on OGWT, doing "White Punks on Dope".

Thursday, August 1, 2013

Spain pops

Did Spain just break out to the upside? Just now?

Or should you wait til it breaks $32.50 or so on the weekly?

Daily seems to target around $36, and the weekly $45.

Remember that Spain has spent the past 5 years sucking, so I'd have to figure out how to pull up a monthly candle chart to really get some perspective here.

Let's test something

Something I've noticed during stock crashes:

You get those crazy >3SD spikedowns that are caused by a huge crush of selling that overwhelms the instantaneous liquidity on the bid side. You think "huh, there's no way that this is a realistic reaction for this stock".

Predictably, the spikedown gets negated and you get a nice decent bounce. Cos people want to buy at more realistic prices.

But that spikedown price, as irrational as it was, still matters to the chart. It becomes the new support level.

Here's Lydian:

Lydian at 85 cents was a stupid price last week.

But I betcha LYD still drops to $0.85 in the next few days. Barring any news of course.

I guess you can explain it by saying that's what happens when the continued selling uses up all the people who considered the higher prices to be good buy points.

I guess, in the case of LYD, this is a very bad thing.

Quick bit of news

Seems people really don't want gold to pop above the SMA(50). But I don't think it has a choice anymore - unless someone really big can mount a really huge takedown, which doesn't seem to be in the cards anymore.

Anyway, here's some newslobs:

FT beyond brics - Asia PMIs turning red. Not good.

NYT Dealbook - China opts for small steps to help the economy. Bill Bishop's op-ed. One thing he notes is "Bearishness toward China has now gone mainstream, and rare is the day without a report on the economy’s impending crash. [...] Investors should consider the possibility that the pendulum has swung too far too quickly, and that the situation is not quite so dire." Words of sanity in an unsane world.

Bloomberg - China to boost infrastructure spending. Hopefully this happens after they remodel the funding system to ensure the money all goes into construction, instead of just into the pockets of corrupt officials who then use the cash to buy more condos in Toronto. I'm only sayin'. - WGC assures that Bernanke doesn't control the gold price. Words of wisdom: indeed gold really does depend on China, and not on the US in any way whatsoever. You can tell the WGC are reading my blog!

Ottotrans: Dundee Precious Metals edition

Here's the original:

Dundee Precious Metals Announces 2013 Second Quarter Results
31 Jul 2013 21:26 ET
Marketwire Canada

Dundee Precious Metals Inc. ("DPM" or the "Company") (TSX:DPM)(TSX:DPM.WT.A) today reported second quarter 2013 net earnings attributable to common shareholders of $15.9 million ($0.12 per share) compared to $9.6 million ($0.08 per share) for the same period in 2012. Net earnings attributable to common shareholders in the first six months of 2013 were $16.6 million ($0.13 per share) compared to $17.8 million ($0.14 per share) for the same period in 2012.

"Our second quarter performance continued to reflect solid operating results from Chelopech following the completion of our mine expansion in December. Kapan's operating performance improved significantly, with higher grades, increased equipment availability and improved operating performance in the period. Tsumeb also performed well in the second quarter and the annual maintenance shutdown of the Ausmelt, which started on July 1, is now complete," said Rick Howes, President and CEO. "Despite weaker metal prices in 2013, which have negatively impacted our earnings and cash flow, we remain a low cost producer, in good shape financially, with sufficient cash resources to meet all of our operating and non-discretionary capital requirements."

Net earnings attributable to common shareholders for the second quarter and first six months of 2013 included realized and unrealized gains and losses on DPM's equity settled warrants, copper derivative contracts related to future copper production, and unrealized losses on Sabina special warrants, which in aggregate amounted to net unrealized after-tax gains of $12.3 million (2012 - $0.2 million) and $6.4 million (2012 - unrealized after-tax losses of $23.0 million), respectively. Excluding these items, DPM reported an adjusted net earnings in the second quarter of 2013 of $3.6 million ($0.03 per share) compared to $9.4 million ($0.08 per share) in the corresponding period in 2012. In the first six months of 2013, adjusted net earnings were $10.2 million ($0.08 per share) compared to $40.7 million ($0.33 per share) in the corresponding period in 2012. The year over year declines were driven primarily by lower metal prices, including final settlements and mark-to-market losses on a portion of unhedged provisionally priced sales, and higher depreciation, treatment charges and operating costs, partially offset by higher volumes of payable metals sold, reduced exploration costs and a stronger U.S. dollar.

Adjusted EBITDA(1) in the second quarter and first six months of 2013 was $20.8 million and $47.3 million, respectively, compared to $19.5 million and $60.3 million in the corresponding periods in 2012, driven by the same factors affecting net earnings attributable to common shareholders, with the notable exceptions of depreciation, realized and unrealized gains and losses on DPM's equity settled warrants, copper derivative contracts related to future production, and Sabina special warrants, each of which are excluded from adjusted EBITDA.

Concentrate production in the second quarter and first six months of 2013 totalled 35,925 tonnes and 73,327 tonnes, respectively, compared to 30,479 tonnes and 67,457 tonnes in the corresponding periods in 2012 due primarily to higher production at Chelopech following the completion of its expansion project in the fourth quarter of 2012 and higher production at Kapan, as a result of improved grades and operating performance, partially offset by lower copper grades at Chelopech.

Concentrate smelted at Tsumeb in the second quarter and first six months of 2013 of 46,393 tonnes and 80,886 tonnes was 80% and 19%, respectively, higher than the corresponding periods in 2012 due primarily to the annual maintenance shutdown of the Ausmelt furnace occurring in July of this year compared to May/June in 2012. Concentrate smelted in the first six months of 2013 was negatively impacted by the commissioning of environmental and operational efficiency improvements related to Project 2012, which partially offset the favourable impact related to the timing of the annual maintenance shutdown.

Concentrate sales in the second quarter and first six months of 2013 of 35,211 tonnes and 71,614 tonnes were up 5% and 6%, respectively, over the corresponding periods in 2012 due primarily to higher production at Chelopech and Kapan. Relative to the second quarter of 2012, second quarter 2013 payable gold sold increased by 14% to 38,125 ounces, payable copper sold increased by 2% to 10.5 million pounds, payable silver sold increased by 45% to 139,568 ounces and payable zinc sold increased by 16% to 4.8 million pounds. For the first six months of 2013, payable gold sold increased by 14% to 76,398 ounces, payable copper sold increased by 6% to 21.8 million pounds, payable silver sold increased by 17% to 246,287 ounces and payable zinc sold decreased by 2% to 7.8 million pounds, compared to the first six months of 2012.

Consolidated cash cost of sales per ounce of gold sold, net of by-product credits, in the second quarter and first six months of 2013 was $340 and $303, respectively, compared to $173 and $30 for the corresponding periods in 2012. These increases were due primarily to lower realized copper and silver prices and higher treatment charges, partially offset by higher volumes of payable metals.

Cash provided from operating activities during the second quarter and first six months of 2013 was $11.5 million and $43.5 million, respectively, compared to cash used in operating activities of $12.0 million and cash provided from operating activities of $13.2 million in the corresponding periods in 2012. Cash provided from operating activities, before changes in non-cash working capital(1), during the second quarter and first six months of 2013 was $8.9 million and $33.2 million up $1.9 million and down $21.9 million, respectively, from the corresponding prior year period due primarily to lower metal prices, partially offset by higher volumes of payable metals sold and reduced exploration activities.

Cash outlays for capital expenditures in the second quarter and first six months of 2013 totalled $40.6 million and $101.8 million, respectively, compared to $33.2 million and $59.0 million in the corresponding periods in 2012 due primarily to the construction of a new acid plant at Tsumeb.

As at June 30, 2013, DPM maintained a solid financial position with minimal debt, representing 9% of total capitalization, a consolidated cash position, including short-term investments, of $99.3 million, an investment portfolio valued at $25.1 million, and a $150 million undrawn long-term revolving credit facility.

The Company's outlook for its 2013 operating results and capital expenditures remains unchanged from the guidance provided in the Company's MD&A issued on May 8, 2013, with the exception of zinc and silver contained in concentrate produced which were increased to reflect production results achieved in the first six months of 2013. It is currently expected that concentrate smelted at Tsumeb in 2013 will be at the lower end of the range provided in the Company's MD&A issued on May 8, 2013, which was between 185,000 and 200,000 tonnes.


Assuming current exchange rates, 2013 unit cash cost per tonne of ore processed is expected to range between $42 and $46 at Chelopech and between $71 and $80 at Kapan. The cash cost per tonne of concentrate smelted at Tsumeb is expected to range between $345 and $370.

For 2013, the Company's growth capital initiatives continue to be focused on the construction of an acid plant at Tsumeb, stage 1 of the Pyrite Project at Chelopech, securing the remaining permits and completing detailed engineering related to the Krumovgrad Gold Project, and exploration and/or development work to enhance underground operations and advance a potential expansion at Kapan. In aggregate, these expenditures are expected to range between $210 million and $240 million, which is consistent with the previous guidance provided. Sustaining capital expenditures(1) are expected to range between $35 million and $45 million. Further details can be found in the Company's MD&A under the section "2013 Outlook".

DPM has sufficient cash resources to fund all of its non-discretionary capital projects through to completion. The Company's other growth projects, such as the electric holding furnace at Tsumeb and the second phase of the pyrite project at Chelopech, are discretionary in nature and are expected to be staged over time commencing in some cases in 2014. The selection and staging of each project will be based on its expected return, market conditions and having sufficient cash resources to fully fund the project. With the delays being experienced in obtaining the remaining Krumovgrad permits, at this stage we do not anticipate ramping up capital spending on this project any sooner than the second half of 2014.

The 2013 outlook provided above may not occur evenly throughout the year. The estimated metals contained in concentrate produced and volumes of concentrate smelted may vary from quarter to quarter depending on the areas being mined, the timing of concentrate deliveries and planned outages. The production outlook for Tsumeb assumes that the existing temporary curtailment is lifted during the third quarter of 2013. Also, the rate of capital expenditures may vary from quarter to quarter based on the schedule for and execution of each capital project and, where applicable, the receipt of necessary permits and approvals.

(1) Adjusted net earnings, adjusted basic earnings per share, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash from operating activities, before changes in non-cash working capital, and growth and sustaining capital expenditures are not defined measures under International Financial Reporting Standards ("IFRS"). Presenting these measures from period to period helps management and investors evaluate earnings and cash flow trends more readily in comparison with results from prior periods. Refer to the "Non-GAAP Financial Measures" section of the management's discussion and analysis for the six months ended June 30, 2013 (the "MD&A") for further discussion of these items, including reconciliations to net earnings attributable to common shareholders and earnings before income taxes.


DPM's condensed interim unaudited consolidated financial statements, and MD&A for the three and six months ended June 30, 2013, are posted on the Company's website at and have been filed on SEDAR at


We don't suck! Quit selling! Why are you selling? Quit selling! We don't suck!

Wednesday, July 31, 2013

Xkcd's "what if?" and chemistry vids

I'm catching up on Xkcd's "what if"s, and right now I'm reading the one on extreme boating.

Among other things, he's got some links to fun chemistry videos.

Here's someone demonstrating how dense liquid mercury is.

Here's bromine violently reacting with aluminium to create aluminium bromide.

Here's gallium infiltrating aluminium, turning it into something weak like paper.

Here's a video I probably linked to before, of mercury destroying aluminium.

Which is all weird cos I tend to think of aluminium as very nonreactive.

Anyway, stuff blowing up for you.

Some more links

Looks now like I bet on the wrong pony with that gold thing. Then again, maybe GLD can get as low as $125, fill that gap, and then bounce back up? The drop looks funny, because up until after 10AM silver wasn't reacting.

Anyway, here's more links:

Bonddad - real median wages highest in 2 years. But this won't stop the doomers from continuing to call for an imminent US collapse.

Michael Shaoul - Japan housing starts improving. I have no idea how important housing is to the Japanese economy though. Doesn't matter, the real reactions to real data are being swamped out by stampeding hedge-fund cokeheads.

FT beyond brics - EMs and DMs converging. Personally, I think any EM should be priced at a significant discount to a DM, since EMs are generally run by ignorant clowns who perform idiotic manoeuvres that purposefully sabotage the economy. Then again... the DM comparables include the USA, UK, and the Eurozone, three countries where politicians have spent the past few years sabotaging their economies. So maybe from a political risk-pricing perspective, there is little difference between the two?

Granita & Brioche - Euro area trade: don't worry about China. Dunno who this site is, but they seem to reprint research articles from companies like Goldman Sachs.

FT Alphaville - the great pornwall of Britain. Yup! The UK is going to filter porn. To protect their poor innocent plebs from porn. Cos porn is bad. I guess it's even worse than state surveillance, the slaughter of warfare, and British chat shows.

Three newsbits from last night

Oh and by the way - yes, there are often spelling mistakes on this blog. I hate spelling mistakes more than you. But almost always, they happen cos I'm posting from work and the keyboard that I use there is an utter piece of garbage.That's why they're almost exclusively caused by missing letters - I literally have to hammer the keyboard to get every letter to take.

If I catch the mistake soon enough, I update the post, under the assumption that you're not getting the post RSSed to you within seconds of me posting. But if I'm busy at work, or if I check the post and still miss things, you'll get spelling mistakes.

I'm sorry, there's little I can do about it. Can't really steal someone else's keyboard.

So here's three newsbits.

Reformed Borker (Bork Bork Bork!) - 361 Capital weekly research briefing. Lots of opinion on the US and European economies. I like reading this Blaine Rollins guy.

FT Alphaville - in Europe, the case for optimism. Cos the data has stopped being an unmitigated disaster. Though none of the Periphery charts are showing any sort of breakout yet. But at least everyone's talking about it.

Reformed Borker (Bork Bork Bork!) - green shoots in Europe. I don't think it'll play out the way I'd hope, because the market needs to get floated by Americans, and Americans have an intense hatred of anything European (other than the Aryan countries) because Americans hate that ebil sociamalism. You can see this in pundits' continued call for a France crisis, despite French 10Y yields being at (checking...) 2.27%. They simply hate sociamalism, and Europe is sociamalism.

But at least everyone's talking about it, and if you're the type of guy who likes to buy bottom-fish, why would you not buy Greece and Spain right now? There are few other real bottom fish out there right now, right?

Tuesday, July 30, 2013

Fun FT article on inflation, and how it doesn't exist, and Schiff is a drooling assclown

FT Alphaville - inflationistas and the global supply shock.

Good article. It starts off again pointing out how badly Peter Schiff has made a fucking fool out of himself, but then goes on to explain exactly why there hasn't been any inflation.

But then it goes on to posit a few interesting possibilities:

Firstly, that (as I've already said) this might be the good deflation, where commodities collapse and prices can drop, thus creating a virtuous economic growth cycle; and

Secondly, that this deflation might be the result of a secular labour productivity spike.

In a way, I find the second possibility very interesting.

Worth thinking about, so read the article.

And yes, Peter Schiff has proven to be a clown. I'm just happy that his arrogantly blind stupidity was extreme enough this time round that it actually generated disbelieving comment in the Financial Times.

And on the topic of the gold chart....

I look at this chart and I am driven to say "you know what? Shit or get off the pot already".

Gold is refusing to pop over the SMA(50). And it's also refusing to collapse.

If the government of India and P. Chidambaram are out to destroy gold buying, and this is the slack period of the year for Indian gold demand anyway, then gold should collapse. But it ain't.

If China is slowing down and that's a threat to gold demand, then gold should collapse. But it ain't.

MACD looks about to roll over. That should collapse gold. But it ain't.

Gold is supposed to be collapsing right now, but instead it's hugging the SMA(50) like a bug-eyed baby lemur clinging to its mother's fur.

Place your bets, boys; I'm pretty damn solid in the belief that the next move we see in coming days is a higher high.

Cos this chart looks like total bullshit right now.

An appendix to an addendum of a World Complex post

I had half a mind last night to write a long rambling commentary on a post from World Complex about "crowd-sourcing" prices in a stock market. But having slept on it, and facing a busy afternoon at work, I'm not really that interesting in talking about it, especially if it cuts into my smoke breaks and coffee breaks.

But he does say one thing at the end of his post, almost as a throwaway aside, that I think is worth looking at in detail:

I tend to reject the efficient-market hypothesis. I think the market is almost always wrong, mostly because the majority of market players are missing some information. Sometimes the idiots are too high; sometimes they are too low.

Yes, the market is almost always wrong.

Yes, the majority of market players are missing some information.

And that forms the basis of technical analysis: for example, if a stock is going up on high volume and you see no reason why it should, it's probably because other people know something you don't. And if a stock is continually going down, for what seems like no reason, it's probably because other people know something you don't, and you should damn well bail (instead of, say, holding Minera IRL from $1 all the way down to 22 cents, or whatever your own particular sins have been).

Think about it: if you assume that a stock price is a dynamic equilibrium determined by relative levels of buying and selling pressure, the only rational reason for a stock price to remain steady would be because there is no change from moment to moment in reasons to buy or sell the stock.

But a stock price is not dependent on information! It's dependent on outlook. So even though e.g. Aple has printed $X trillion in earnings this past Q, and its outlook has not changed form the following Q since yesterday's close, you can still see a change in stock price from yesterday's close if the sum of market participants' outlook functions has changed for that stock.

The inputs to the dynamic equilibrium of a stock price will change from moment to moment, and those inputs are not random, and those inputs do not appear at every locus simultaneously: one guy could get cold feet about the China outlook weeks before the rest, for example.

I guess it's a valid first-order approximation, though, to take the sum of all inputs as a set of all individual positions, including the nutty ones. Really, it should probably get you close enough to the solution of the equilibrium.

Anyway, the other thing I realized was important to note, re this post, is that the price of an equity can also be dependent on what's the fad of the day in cokehead hedge-fund land. So, for example, AAPL flew to whatever ($700?) because over time every hedge fund suddenly decided to own it. The Nikkei flew up because every hedge fund wanted to own it, yen fell cos everyone wanted to short it.

The point of these moves, though, is that there is no fundamental basis for the move to happen as fast as it does; therefore, those moves always end in tears. Yeah, Nikkei should go up from here, but not in the few months after Abe is elected before he's even done anything! There's also no informational drive behind the move, other than the fact that a bunch of people are buying shit for no fundamenal reason. That information has nothing to do with the value of the company, and everything to do with the popularity of participating in that position.

By the way... I just realized the 10% rule might apply to markets.

The 10% rule says that once over 10% of a population holds a particular opinion, it rapidly spreads to become a mainstream opinion. So, for example, once 11% of Americans publicly assert that Balrog HUSSEIN Fartbongo is a Kenyan muslim communist sleeper-agent for the Anti-Christ, it quickly becomes part of the popular lore.

I wonder if that 10% rule applies to hedge fund positions?

Meaning, you should track what % of hedge funds hold particular positions. Once you see the popularity of a position pop over 10%, it should be guaranteed that money participation strongly and quickly increases, to 50% or better.

The value of this, if true, is that now you've got a foolproof way to ride fantastic momo waves driven by hedge fund lemmings. Buy on the cross over 10%; sell as it approaches 40% or so to lock in profits.

Someone really should test this to see if it works. Seriously. It looks too good to be true.

Note: if it works, you better fucking give me a cut of your profits. This means YOU, my silent plagiarists at SocGen, M Partners, BMO, Carrelton and so on! At least hire me as "market theorist" or something.

Anyway, ramble off, back to work.

News, and a commentary on who's not worth listening to.

Some morning news.

BI - Peter Schiff exposed himself as a dumbass on Kudlow. Kudlow's also a dumbass - but at least he's one who belatedly admits when he's gotten a call disastrously wrong. Schiff, however, is turning into an ECRI-level clown, whose cognitive dissonance has now gotten to the point where he's utterly broken from reality into some weird psychosis.

Reuters - Japan industrial output falls 3% month over month. But if you read the article, it seems like this is a grossly noisy dataset.

Reuters - Japan jobless rate falls to lowest in four and a half years. Bodes well.

BI - Fertilizer stocks are a pile of cowshit today. How's that ag trade doing right now?

FT Alphaville - Why a China collapse might not happen the way you think. Again, a couple commentaries on the subtleties that you lose out on when reading the pundits.

Michael Shaoul - More on the RBI. Interestingly, the collapse in India small caps has mirrored that in gold. I wonder if there's a very close correlation that you can see in the charts? Because it seems to me there should be some sort of correlation between India small caps and gold price.

Ritholtz - Pundit suckitude - it's a feature, not a bug. This is why you always see such utter fantasy-land bullshit come out of the mouths of people like Schiff, Achuthan, Bass, and even the sometimes-great Jim Rogers. This is an important point, the understanding of which separates someone like Barry Ritholtz from the poor deluded sheep in the echo chamber.

It's because the public act of "making an economic prediction" is not performed with the intent of making an economic prediction; the intent of the performance is to "flatter the prejudices of their base audience".

This is precisely why a goldbug, for example, can't go on the air and say "gee, gold at $1900 is a bit ahead of itself; I think we might see a major price correction". And it's precisely why a junior miner analyst can't go on telly and say "gee, there's going to be so much paper on the market by the end of 2011; I don't think there are enough people left to buy all this new, overpriced paper, and I betcha we see the juniors market collapse over the next few years."

I mean, Jeff Christian can call $1900 gold a top, but if he does he'll be labelled a traitor to the goldbugs - because he has failed to flatter their prejudices. And Brent Cook can call 2011 a major top in juniors, but if he does he'll be pointed at and mocked by all the imminent bagholders - because he has failed to flatter their prejudices.

And thus, if you see a political purpose or point of view in any pundit's pronouncements, the rational default response is to immediately ignore it as the blathering of some blind and deluded clown whose purpose is not to inform you, but instead simply to blather to his echo chamber.

And thus, the only people you can really trust in pundit-land are the people who've already demonstrated they have no fucking interest in making friends or influencing people. Like me. I'm not here to be your buddy, IKN's buddy, Cookie's buddy, Berwick's buddy, some bagholder dentist on Agoracom's buddy, or the buddy of the Ayn Rand movement in the US.

(I'll happily try to refrain from being an utter dickhead to people I actually respect, as hard as it is for me to stop myself from being a dickhead; but I've not been put on this earth to kiss up to anyone and agree with anything they have to say.)

Even people like me will get shit wrong on occasion; but at least when I do you'll know it's because I honestly misread the situation, mostly due to ignorance or incompetence, and not because I was wilfully blind to reality in an attempt to maintain cognitive dissonance so that I can stay part of some exclusive in-group.

Monday, July 29, 2013

Bloody hell, a Smiths documentary

It's only a half hour long and rather pedestrian, but even still.

Three more newsbits to clear out the queue

Three more things, then I'm off to do other things. I think it mostly involves researching trade and draft data for the post-1994 Hartford Whalers. Don't ask why.

Reformed Borker (Bork Bork Bork!) - here, let me save you some time. Apparently the pundits have reached such a monotony of consensus on the second half outlook that Josh feels it necessary to call attention to the gross oversimplification of it all.

Reformed Borker (Bork Bork Bork!) - the earnings comeback. Hey, remember all those guys who say earnings suck? Then what about this chart?

Charts don't lie, dude!

In all seriousness, this chart even matches up well with how P/E multiples have gotten compressed in this bear market.Though it'd look more sensible on a log scale.

Mineweb - more curbs to come on India gold imports. Seriously, they want to destroy gold. Doesn't Finance Minister Chidambaram understand that by doing this he's invoking the wrath of the goddess Lakshmi? India is going to see one hell of a lot of bad fortune if this keeps up!

Some news

Very busy at work doing all kinds of stuff.

Here's some news:

BI - this week is so stacked with mega economic events we may just feel the axis of the earth tilt. Very good, Joe, even for you.

Bespoke - buckle up for a busy week. Same point but without the pole-shift.

Bonddad - turning points. His thoughts about how the next recession starts. Notably, what he's looking for is exactly what Bernanke is watching out for. Because obviously Bernanke knows that economic progress must continue to be made, otherwise the US falls back into a depression, and their last chance at digging their way out will have been for naught.

Michael Shaoul - China business cycle. He says "our assumption remains that a sharp slowdown in both actual and reported activity will take place by the end of this year."

FT - Michael Pettis says China can handle a slowdown. Uncharacteristically undoomy outlook from Pettis, with an overview of his own feelings about China.

Bloomberg - China announces regional debt audit. It's kinda scary that they don't even know how much debt is out there. I wonder if we might get a nasty surprise?

Michael Shaoul - India money markets and RBI policy. He is really shaking his head on India here.

Denninger - Glass-Steagall - where are the tea-partiers? As he asks, "Where is Ron Paul? Bachmann? You keep hearing about how the 'Tea Party' is about fiscal responsibility and capitalism. Well, if so, where's their support of this?" One again, that wackaloon Denninger hits the nail on the head. In reality, all blather coming out the mouths of the Republicans is no more than ignorant, unconscious aping of the day's talking points from the neo-Nazi echo chamber. None of these theocratic assclowns have anything to contribute to America. It's now devolved into a two-party state where one party is the joke party: the Honey Boo-Boo of politics.