Saturday, December 14, 2013

Saturday video: Evanescence, with "Bring Me to Life", a song about how junior mining sucks

I think I'll just keep posting different versions of this video, over and over again, all through tax loss season, just to drive home how much the mining stocks suck right now.

Here's Evanescence on Muchmusic:

Friday, December 13, 2013

Some Friday noonreading

Here's some stuff and junk:

BI - the case for a December taper. Which is a good thing because it means the extreme measures to support the economy can now end.

Financial Post - US economy in 2014 has more upside than many think. Geez Dave, if only you'd been bullish in 2009 instead of staying wrong for four years. Here's a quote:
But things actually are getting better. The Institute for Supply Management figures rarely lie and they are consistent with 3.5% real growth. Federal fiscal policy is set to shift to neutral from radical restraint and the broad state/local government sector is no longer shedding jobs and is, in fact, spending on infrastructure programs again.
So basically, Dave, your ability to understand the markets gets better when you quit shooting off your own idiot mouth and just quote what Bill McBride has been saying, for free, at Calculated Risk for the past fucking year, right? So you're admitting you have no clue and Bill McBride is smarter than you, right?

Reformed Borker (Bork Bork Bork!) - US stocks cheap by 12 of 15 valuation measures. But no, you go ahead and keep listening to clowns like Tom McLellan.

BI - China 2014 growth target fears. The argument now is that everyone's puking China cos they think the government's growth target is going to be revised down to 7% from 7.5%.

And here's a funny pic for you:

A Schadenfreude moment - Eric Sprott

This link was passed on to me by a vaguely famous newsletter writer who doesn't like offending the stars of the industry:

WSJ - gold drop is blow to prominent hedge fund manager Sprott.

(This seems to be paywalled sometimes and not paywalled other times - maybe WSJ lets you read one free article a month? Or maybe my employer has a subscription account with the WSJ? I dunno. If you google the title you can find partial reprints elsewhere.)

But here's a sad quote of sad sadness that's sad:

The flagship fund of prominent Canadian hedge-fund manager Eric Sprott has dropped more than 50% this year in what will likely be the third consecutive year of double-digit percentage losses, according to documents sent to investors.

Redemptions and weak performance have pushed down hedge-fund assets managed by Mr. Sprott to about $350 million from nearly $3 billion in 2008.

Ouch! That's a nearly 90% drop in AUM, much of which must have been driving the crash of the junior scene.

And, despite my normal ornery self, I'm willing to bet that this collapse in AUM has been reflected at all other junior miner funds - and even maybe the ports of junior scene mainstays like Sheldon Inwentash, or even that dude who blogs on the internet. How much of your own AUM is still in junior miners? With me right now it's zero.

And so what's happening to Sprott himself? The sad story of sad sadness gets even sadly sadder:

The poor results come with a personal cost: Mr. Sprott's investment company, Sprott Inc., which he founded in 1981, said last month that it is phasing him out of investment decisions.

By the end of next year, Mr. Sprott—who early in his career was a programmer for Merrill Lynch—will no longer directly make the firm's investment decisions, though he will remain chairman.

Sprott Chief Executive Officer Peter Grosskopf said that Mr. Sprott would also be handling "chief cheerleader duties."

Oh geez. A big-name goldbug is now tossed to the sidelines by his own fund, and relegated to "cheerleader"? Dudes, you're simply trying to piss him off here.

The company declined to make Mr. Sprott, 69 years old, available for comment.

Holy crap. This is like locking someone in the basement. They've locked Sprott in the basement, and will only let him out to dance around in a cheerleader outfit.

Mr. Sprott's losses exceed that and other precious-metals benchmarks, thanks in part to heavy exposure to volatile mining stocks and short exposure to international equities that have climbed this year, investor documents indicate.

Dafuq? The only way he could justify shorting international equities this year was if he thought there was imminent risk of global economic collapse. Which I guess is consonant with goldbug theory, but still - did he ever look at a chart? Did he ever notice that the market was going against him?

Did he ever listen to any news, or was he only paying attention to the Tea Party/Libertarian doomer echo chamber? Was he getting all his economic data from Max Keiser and Zerohedge?

It's one thing to be sure of yourself. It's another thing to remain sure as your port is annihilated. I mean, every clown on the Stockhouse boards has learned by now that if you're down large in a position, the best thing is to sell, take your losses, and stay on the sidelines until you see a reason to get back in. Is Eric Sprott a slower learner than Stockhouse posters?

It's one thing to be wrong. But it's a significantly dumber thing to stay wrong.

Unfortunately, the more arrogant and egotistical you are, the less likely you are to want to take a hit on your obviously wrong calls.

I wonder what Rick Rule thinks of his career change now?

Friday videos - Evanescence with "Bring Me to Life", a song for the junior mining scene (with lyrics)

I never really got into this band, but Amy Lee sure can belt, and they were about the only band to successfully play gothic operatic metal in the US, and I did really like this song.

What's more, it turns out that it's not a gothic metal love song after all. In fact, Evanescence wrote this song for the destruction of the junior mining scene! I mean, seriously, did you see the lyrics?

Here's the chorus:

Wake me up inside
Wake me up inside
Call my name and save me from the dark
Bid my blood to run
Before I come undone
Save me from the nothing I’ve become

and from the bridge:

Without a thought, without a voice, without a soul
Don't let me die here
There must be something more
Bring me to life

and if that didn't sell you on my thesis then just check out the coda (which you can hear on their Belgium-only live DVD):

the Venture exchange
is a lifestyle exchange
professional geologists are all jokers
and National Instrument 43-101 is their joke
we thought as long as there were Republicans
our scams could go on forever
but now all capital has fled
and now we lie, abject and forlorn, in a pool of our own shit

Thursday, December 12, 2013

So anyway, Ke$ha is a member of the Satanic Illuminati and drinks blood from a human heart

I just came across this, and it's very edumacational.

All about the Satanic Illuminati and Ke$ha.

Dunno if there's any hard currency advocacy in it, I haven't gotten that far yet.

Wednesday, December 11, 2013

Some enchanted evening news

Here's more stuff:

Reformed Borker (Bork Bork Bork!) - bullish sentiment is now officially embarrassing. So I guess a few days of incomprehensible market pukage is in order to reset the sentiment, eh? Probably everyone wanted to buy into the market to be positioned for the Santa Claus Rally that usually begins about now... so they just created a Santa Claus Rally that'll end about now.

Calculated Risk - looking for stronger economic growth in 2014. Bill McBride tends to repeat himself, which is good if you're also reading other blogs that pollute your mind with inessentials and lies. In this case, he reminds that the sequester drag is over, state & local austerity drag is over, and therefore some significant headwinds to US growth are gone.

BI - replacing aging capital stock is bullish. Here, read this:
"The last time the corporate sector allowed its capital stock to get this old and obsolete was back in 1958," wrote Rosenberg today. "The very next year, the annual growth rate in volume capital spending swung from -6% to +13.5%"

"Given the rate of depreciation, we typically need 4% real capex growth just to prevent obsolescence from taking hold; in the past five years, we have averaged less than 1% annual growth," he added. "With productivity growth now vanishing, with clear negative implications for profit margins if not reversed, the incentive to start plowing some of the cash hoard back into the real economy is running very high and is actually becoming increasingly evident in the recent business survey data. Revived capex growth is likely going to emerge as a key bullish cyclical theme for 2014."
Makes sense, no? I wonder who wrote thOMG IT'S THAT PERMADOOMER ROSENBERG!!!

Yes, that's right! The "massive repudiation of debt as a dishonest system comes apart at the seams" crowd's favourite doomer, David Rosenberg, whose opinions once carried some weight when they were consonant with the Ron Paul crowd, is now suggesting a multi-year period of fundamental, capex-driven US growth!

Bespoke - internet group breaks out. As they say, "a nice breakout above its sideways range to close at new highs".

Reformed Borker (Bork Bork Bork!) - strength begets more strength. Here's his quote of Jeffrey Kleintop:
Some may fear an outsized gain in the stock market during 2013, is surely to be punished with losses in the coming year. However, historically after a one-year total return in the 25 – 30% range, the S&P 500 has followed it up by more solid years of gains. In fact, the average return in a year following a 25 – 30% gain was 12%, and stocks posted a double-digit gain in four of the five occurrences (the exception was 1961’s gain of 26.9%, which was followed by a loss of 8.7% in 1962) [Figure 4]. In fact, most of the years were actually followed by several years of strong gains, as was the case in 1943, 2003, and 2009.
Or you can keep believing we're in an unsustainable bubble.

Reuters - Letta wins confidence vote, vows reforms. We'll see: with no Berlusconi, maybe Italian politics can become slightly more honourable for a few years. As an aside, do you remember all those clowns who were predicting a Eurozone breakup? You might want to look them up and ask them if they're still retarded.

Reuters - Congress Party vows to tackle inflation after drubbing. Yeah good luck with that you incompetent asshats.

IKN - Cookie's turn on the troubles with 43-101. It really looks like Cookie's suggesting you shouldn't bother with explorecos unless you are already so experienced in the business that you can tell the well-written reports from the bad ones. - Chilean miners turn to solar to ease energy crunch. Power was the limiting factor for Chilean mining growth, so this is interesting to see. I'd wonder about the cost-benefit, since last I checked solar generation is grossly costly; but I'm sure the miner in question already did the math.

Look at that follow-through in the miners, oh my!

Yeah, the miners really looked good yesterday, eh? Well, they're being sold right back down today.

Yup, the juniors too.

Any pop up is just an excuse to sell before the holidays.

Some noon reading for today

Here's some stuff to read:

Michael Shaoul - investing will be trickier in 2014. A Bloomberg interview.

Reformed Borker (Bork Bork Bork!) - 361 Capital weekly research briefing. Consumer sentiment, GM, equity flows, and so on.

Crossing Wall Street - 2-10 spread hits 2-year high. That is apparently a sign of an improving US economy.

Ritholtz - why is everyone sitting on huge piles of cash? Maybe because the market's not at a top yet? He says:
I have not found persuasive the argument that cash on the sidelines was bullish -- except when it reaches extremes in individual investor asset allocations (The American Association of Individual Investors does a nice job tracking this). However, these substantial amounts of held cash, according to multiple surveys, make me further doubt the claims of an equity bubble. The psychology of a frenzy does not appear to be present -- yet.

After many years of equity outflows, accompanied by enormous inflows into fixed income, we have only this year begun to see inflows back to stocks. And, this condition could potentially continue for many years.
But you go ahead and continue to get your financial reporting from Max Keiser and Elliot Wave, neither of whom have a job trading stocks in the markets.

FT beyond brics - India trade balance better but gold concerns persist. An illustration of how nobody really knows:
Ashok Minawala of the All India Gems and Jewellery Trade Federation estimates that almost half of India’s current consumption of gold is being satisfied by smuggled metal.

Others say that – though smuggling is undeniably a problem – the volume of gold coming in through unofficial channels is far too small to deem the official trade data inaccurate.

“It’s kind of like an ocean versus a bucket of water,” says Samiran Chakraborty, regional head of research at Standard Chartered.

It’s difficult to tell given smuggling is, after all, unofficial. But the government’s statistics certainly aren’t stacking up with World Gold Council data. In the month of September, for instance, the government reported imports of 50 tonnes where the council’s sources put that figure at 85 tonnes, according to PR Somasundarum, managing director for the lobby group in India.

His sources suggest the grey market has doubled in size this calendar year and he expects demand to pick up in 2014. The restrictions are only working at the moment thanks to advance buying in April and May when gold prices were at a low.
It's interesting to note that the "smuggling isn't accomplishing much" crowd are the guys at the financial houses, who you'd assume have reason to suck up to Rajan rather than make him look bad. The jewellers, however, are aligned with Modi, so they're more likely to tell the truth about the smuggling.

Mineweb - brace yourself for another round of selling in gold. An Indian perspective on gold demand. Here's a quote:
Secondly, people are finding Indian gold way too expensive to buy, and that will lead to a further drop in demand going forward. If I have to buy an ounce of gold, why should I pay 20% more than the international price? It is going to prompt me to wait, not to buy at this level. So the wise people are not buying gold, but the demand from rural India is very price inelastic, so no matter what prices are, they are buying, because they don’t have exposure to other financial instruments. So, demand from tier one and tier two cities will drop but rural demand, they don’t care what is happening in the international scene or what the government is doing, they just keep buying gold, the monsoon was good so they will keep buying gold.

FT beyond brics - foreign banks in India losing sleep over regulation. Note that the phrase "anxiety over the country’s fickle regulatory environment" is polite-speak for "trepidation about when the government is next going to fuck things up even worse".

Business Insider - bitcoin's libertarian paradise would be hell on earth. Basically, it would mean roving death-squads controlled by a criminal drug-dealing elite - kinda like what you see in every country with (ahem) "minimal government".

Tuesday, December 10, 2013

Some news

Here are links to things:

Ritholtz - A/D line says no top yet. Here, here's some technical analysis for you:

So if you're a "TA" are you're calling for an imminent top in the S&P, I guess it's because you're letting right-wing propaganda from ZeroHedge and Max Keiser take precedence over the cold hard facts.

Jim O'Neill - world growth is accelerating. Harken to the words of Mr. Manchester:
Current pessimism about the world economy is overdone. The world’s three biggest economies -- the U.S., China and Japan -- are all in decent shape. Barring a major new deterioration in Europe and unforeseen calamities in the rest of the developing world, a moderate acceleration of global growth looks likely. 
Or, of course, you could listen to some guy with a blog somewhere, who spent the last five years telling you not to invest in the S&P 500 because gold Ron Paul fiat Weimar fractional reserve banking Helicopter Ben.

Reuters - BJP wins state polls. They won't accomplish much in the south and east, but it still looks good for next May's election. Which should be good for gold. Anyone else give you a better reason for why gold went up a bit today?

The Gold Report - interview with Dudley Baker on warrants. Frankly there's very little available to play in the warrants space for when the GDXJ tide turns: he mentions Sandstorm, New Gold, and a new issue from Alamos. But it's something to think about when you finally decide it's safe to get back into the water. - Kitco versus Revenue Quebec. Oh dear....

Monday, December 9, 2013

Cookie doubts the glorious victory of the proletariat: gold mining in China

Funny thing....

Kitco - China could pace gold production in 2014. Check out these quotes from the Cookie Monster:

“In China, I’m still waiting for someone to show me where the big production’s coming from,” said Brent Cook, geologist and founder of Exploration Insights. “I would love to see a list of the top ten mines in China and what they’re producing. I’m not aware of any big mines, aside from a few big porphyry copper mines, any mines that are producing a lot of gold.”
“All the major mining companies went over there looking, I went over there as well, and no one to my knowledge made an acquisition, except for Eldorado and one company out of Australia, and no one found a big new ‘Carlin Trend’ or anything like that,” Cook said.
“None are impressive, yet they are the biggest gold producer,” Cook said. “Something’s funny here.”

I'd think China would have stunningly prospective geology for gold, what with that big suture from Tibet to Yunnan, and maybe the mountains in Sinkiang. But I guess if anyone should know about prospectivity it's Cookie and his friends, and he's suspicious, so that's interesting to me.

So I went to the USGS to look at 2012 China mine production. It was 370t, and assumed Chinese mineral reserves were 1900t.

That's a depletion rate of about 20%; notably, this is twice the depletion rate of Canada, the US or Peru. Russia, Uzbekistan, Ghana and PNG are down around 5%.

So either the USGS has really, really, really shitty data on Chinese gold reserves (which would be surprising since they're professionals), or China is depleting their gold reserves like crazy. Or, maybe, China is also discovering and delineating ~400t of new gold reserves per year?

I'd wonder what Cookie has to say about how easy it is to define 400t/y of gold reserves. Is it doubtful that you can mine 400t/y, or is it only doubtful that you can replace 400t/y?

So anyway, maybe China just depletes so fast because they have no interest in optimizing production rates to maximize NAV and IRR? Cos after all, the State has a completely different reason to mine gold.

If nothing else, it's an illustration that you should never rely on free-market models for mining; some countries don't use the free market.

Not much to read today

Not much worth reading for the rest of this year, I guess. Or maybe I'm just bored with the news?

The Reformed Borker (Bork Bork Bork!) - Josh Brown is constructive on gold miners for 2014. He notes an article in Forbes about how the hardest-sold stocks in December are the best performers the following year, and then says:
Can you truly buy fear at this time of year and hold through 2014? If so, your top sector candidates are the gold miners, down an astounding 53% on the year.
By the way, here's a quote from the Forbes article:
After recent tax law changes, qualified dividends and long term capital gains can be taxed as high as 25% if you include limits on deductions and the new surtax. In 2013, there are more reasons than ever to rebalance your portfolio at year end, take losses where they are, and get in the best position possible for this higher tax climate. This is causing a fear induced rush to the exits in some sectors as investors sell their losers to offset gains in their winners.
Okay, in reality Josh isn't really constructive the gold miners; but if you follow the thinking in this article then it seems logical, no?

FT Alphaville - on how much hedge funds suck. Here is the core of the problem:
The flood of money into hedge fund strategies has competed away what unexploited returns were available to hedge funds. As there is no inherent return to cleverness, the outperformance of hedge funds will tend towards zero.
As if, I guess, there was only a certain amount of money to be won in the market, and as more players enter the returns per player go down.

Join me in a thought experiment

Riddle me this.

Pretend we're back in the beginning of November, and you're some guy running a junior mining fund. Your predecessor has already spent much of the year selling all the stocks in the fund, mainly cos of redemptions, also because of death threats.

Now he's fired, or maybe dead, or maybe just disappeared, and you've been shunted into his former position as manager of that fund, probably because your boss hates you.

Your task: sell all the rest of the stocks in this fund before end 2013. Obviously, try to get the best price possible.

Are you really going to stagger everything out so that you're still selling after December 13th?

I'd think you'd be trying to get all your dumping done before then. After all, it's best to beat the tax loss selling rush, and do you really think there's going to be liquidity left in the market next week?

So I'm curious as to how much junior miner selling we see after this week is done. Maybe they go lower if we see another leg down in gold, but otherwise this week should be it, no?

Of course, if the selling continues on through Xmas and into the beginning of January, that means there's still a lot more selling in the tank before we can call a bottom, right?

I just found it an interesting idea and wanted to share it. We'll see what really happens.