Wednesday, March 19, 2014


Here's a chart to start you off:

With gold back to $1345 this morning, I guess one possibility is that March started with sellers holding it at $1340-$1360; last week someone tried to squeeze them with a breakout, an opportunity handed to them with the Ukraine story; and now the sellers have put on the muscle to bring gold back down to the $1340-$1360 range for OpEx?

Who knows? Maybe all these moves really are legitimate and not based on some clowns trying to play gold futures. What do you think, Mister Memekitten? All just legitimate moves?

Anyway, some great news stories today: what drives the price of gold? Will Business Insider survive as a company? The possible imminent collapse of the gold producers! And more!

And it's all after the break! You'll have to click through!

Calculated Risk - a comment on housing starts. He still expects them to pick up this year. I dunno, maybe he's just clued in that the dominant trend of the US economy is up?

USA Today - will Business Insider go the way of the dodo? A pretty insightful article on the nonscalability of digital media beyond a certain point:
But the actual meaning and value of large digital audiences remain unclear. Only a small percentage of Business Insider's traffic actually seeks it out and regards it as a worthy destination and a source with particular brand authority. Most other readers land on a Business Insider article because of search-engine results, or because of an engaging — tabloid-style — headline in a Facebook feed and other social-media promotions, which generate 30% of Business Insider's traffic.

In 2013, BI made more than $19 million, most of it selling this traffic to advertisers. It said it was profitable in the fourth quarter (usually a good quarter) and that it won't be profitable in 2014.

It has to produce lots of content — quantity tending to trump quality — to realize these traffic goals. But Business Insider is seeking to be not just a content mill (a site that uses bulk amounts of low-level content to attract mass traffic) but also a significant new brand, which adds costs. It has hired, if not quite a seasoned staff, young journalists with at least a bit of experience: about 70 of them now, costing upwards of $15 million a year. Overhead and other traffic-acquisition costs push expenditures well past $19 million. In other words, it costs more to get traffic than what you can sell it for.
I had thought Joey had stopped his ALL CAPS HYPERBOLE: here's what you need to know headlines because I was mocking him! But maybe he's realized that turning a profit means getting rid of the bullshit headlines and rehabilitating his brand?

Seriously though, if the business media market is in saturation, even the second-best won't make money. Even Bob Lefsetz (who I now hate because he mocks Lana Del Rey) will tell you the digital world only ever has one winner.

Kid Dynamite - what drives the price of gold? Here he spreads the Rothschild lie that the gold price is determined by net managed money position! Oh, really? Look at this "chart" that he presents as evidence:

Do you see any correlation there at all? Pfft!

In all seriousness, yeah I know the Producer/Merchant is simply taking the other side of the net market. But I'd still suggest that net managed money isn't the driver of the gold price so much as it is a positive feedback input. Maybe it's the most significant of the inputs?

But it's more fun to blame it on JP Morgan and the Joos. - Video: Sandstorm CEO comments on lessons learned. I haven't watched it yet, but I'm going to. I want to see Nolan Watson own up to how much he screwed the pooch on Colossus.

PS Dave - Monday is D-Day. He has an interesting idea - that the fate of the recent gold miners rally will be decided on Monday, when Goldcorp decides either to up their Osisko offer or just walk away:
If Goldcorp walks does that signal the end of the mini value rally we have seen since December? Does it say that the good/opportunistic deals are done in the $1350 gold environment?

If Goldcorp walks do they kneecap the market speculators in all the other potential takeovers?

Does it signal that this market is now too expensive?

From my experience once one is engaged in the bidding process the emotions take over, if Goldcorp ups the bid then they are emotionally attracted to the deal. If the Board of Goldcorp walks then they have let business sense trump their emotions.
Given how Dave frames it, I'm betting that Goldcorp walks away. Buying Osisko is counter to the major miners' trend of divestiture and wallowing; upping the offer is, from the market's standpoint, doubling down on crazy. In fact, maybe Goldcorp already made their decision at a board meeting last Friday afternoon, thus the faceplant across the entire producing miner space. I could see them saying "too rich - we can buy all of Lydian for the price of upping the Osisko offer".

If so, it'll be interesting to see how the producing junior miners move over the next few days.

If they tank, we should all blame PS Dave.

1 comment:

  1. No way does GG walk away from OSK. No way in the world.