Saturday, July 26, 2014

Friday, July 25, 2014

Special extra friday video: Taylor Swift's "We Are Never Ever Getting Back Together", for Permashave Dave

Here's Pharmasave Dave's favourite singer, with a song inspired by his two years of living hell with the junior miners and how this time he's never ever ever getting back together with them.

Whenever you're tempted to get back into the juniors, Dave, just sing this song.

Hopefully you don't work in an open-concept office or they might think you're a bit weird.

Gold and the miners - charts for the weekend


GDXJ is below its short-term EMA and MACD is down. Thus the uptrend is over.

GLD is below its short-term EMA and MACD is down. Thus the uptrend is over.

RIOM is below its short-term EMA and MACD is down. Thus the uptrend is over. Same for all the other miners I'm interested in.

SLV is below its short-term EMA and MACD is down. Thus the uptrend is over.

Maybe this all just happened because someone needed to monkeyhammer the juniors for OpEx, like I've been saying. But for now, the uptrend is over, and I don't buy downtrends.

Criteria for me giving a crap again is these charts getting back over their EMAs and going upwards.

Call me a momo.


Permashave Dave - the oil patch is nicer to me so I'm never ever getting back into junior miners ever!

Oh my!


As a reminder as to why not to invest in the junior mining scene I still have one of Frank's deals (ROY.H) in an account and it is down a whopping 92% and I have some GMV Minerals that is down a typical 95% for a junior. Both deals got rolled back 10 for 1 killing all chances of seeing any return of the equity. (that is how it is done in the junior mining sector).

Hey Rick that is $13,000 that will never hit the junior mining circuit again, poof! And I am not the only one who lost up to 95% of the value in juniors, there are legions of speculators out there with the same returns, never to step back into the ring.

The real money is flowing into the oil patch just ask Tim DeFreitas who took an $0.08/share shell and raised $130,000,000, yeah that is $130,000,000 million that did not make it into the crappy junior mining scene.

You see the oil patch has a reputation of making money for investors who are more than willing to back new projects, the junior mining scene has squandered the shareholders cash on lifestyle companies, hence why the money will not be flowing back into this scene any time soon.

For the record I will keep the losing position in GMV and Royce as a stark reminder to never invest in the junior mining industry again.

I'd like to post the video, but I can't, so here's an animated gif:

He'll be back.


Crossing Wall Street - the gold model revisited. Sigh.

No, really. Sigh. I'm tired of this shit. I'm tired of stupid White people and their arrogant America-centric, paleolithic pre-Nixon magical thinking about gold.

OK, here goes:

The key to understanding the gold market is understanding that it’s not really about gold at all. Instead, it’s about currencies, and in our case that means the U.S. dollar. Properly understood, gold is really the anti-currency. It serves a valuable purpose in that it keeps all the other currencies honest—or exposes their dishonesty.

Um... so gold has nothing to do with mined supply, scrap, investment demand and EM physical demand? Supply and demand don't matter? It's not a market with buyers and sellers?

So when the price of gold halved from 1980-2000, that had nothing to do with a doubling of mine production from the introduction of leaching while demand remained constant? And the gold price skyrocketing after 2000 has nothing to do with production increasing too slowly (or some years even standing still) while EM demand for gold increased due to massive new wealth creation?


This may sound odd, but every major currency has an interest rate tied to it. It doesn’t matter if it’s the euro, the pound or the yen. In essence, that interest rate is what the currency is all about.

OK. So you're going to talk about interest rates other than the US interest rate, right? Cuz US gold demand is a fraction of Indian or Chinese demand. India and China together consume 9 times the gold that the US does. Why the hell should the US, UK or Japanese rate matter to gold? So you're going to talk about rates in India and China, where gold is actually consumed, right?

No. No, of course not. You're not going to talk about interest rates in India and China, are you? You're not, because like every other Wall Street Whitey, you only have one country in your model. You think only America matters to the price of gold. Because America.

We’re getting closer to our model, but we need to take yet another detour, this time to Sweden to discuss the great Swedish economist Knut Wicksell. Wicksell was an interesting character who wrote on many topics, but he was deeply concerned with the theory of interest rates.

Now Wicksell was an economist, and consequently he wasn’t always the clearest writer. He often seemed to get his interest rates confused. One economist referred to this as the “Wicksellian muddle.” But what’s important is that Wicksell believed there was a constant tug-of-war between two interest rates. One is the interest you see in the real world, the money rate. The other is an invisible phantom rate called the natural rate. While unseen, this natural rate does make its presence known in various ways. Wicksell believed that when the money rate drops below the natural rate, the economy grows and prices rise. When the opposite happens, the economy contracts and prices fall.

I believe that if we take the Wicksellian natural rate and view it through the prism of a still-functioning Gibson’s Paradox, we can understand how gold’s value works.


Here’s how it works. Whenever the dollar’s real short-term interest rate is below the Wicksellian natural rate, gold rallies. Whenever the real short-term rate is above the natural rate, then gold falls. Just as the Knut Man describes. When gold holds perfectly still, you know you’re at the natural rate. It’s my contention that this was what the Gibson Paradox was all about, since the price of gold is tied to the general price level.


The definition of the Wicksellian interest rate, according to Krugman anyway, is "the rate that would lead to full employment in a Keynesian model; keeping rates below that level leads to inflation, keeping them above it leads to deflation." It's essentially a make-believe number that nobody can actually calculate at any time.

You might as well be trying to explain the price of gold with reference to the luminiferous aether or phlogiston.

You're also obfuscating, apparently, the fact that a Wicksellian rate would be entirely different in every country in the world. Have you tried addressing this?

Whenever the dollar’s real short-term interest rate is below the Wicksellian natural rate, gold rallies. Whenever the real short-term rate is above the natural rate, then gold falls. Just as the Knut Man describes. When gold holds perfectly still, you know you’re at the natural rate.

Compare what you just wrote to what Krugman wrote, above. Your Wicksellian natural rate is a variable that you can cut out of both sides of the equation. You're saying when there is inflation gold goes up.

It's just that now you're using a make-believe theoretical number that nobody has any way of calculating in order to hand-wave away the noisiness of the relationship.

So all you're establishing is that commodity prices go up relative to a currency that's seeing high inflation.

Do you ever bother to stop and think about these things before you commit them to the internet?

I would also imagine that at some point, gold could break a replacement price where it became so expensive that another commodity would replace its function in industry, and the price would suffer.

OMFG Eddy, are you saying gold is being used in industry? My god, are you trying to build a model for the gold price without first getting yourself the slightest goddamn clue about gold supply and demand?

That's it. I can't spend any more time on this article. Eddy Elfenbein might be a really smart guy who's really good at other things, but I think he's failing the gold analysis because he's completely White-ass pig-ignorant about gold.

Some Friday news

Some news right now, some sarcasm later:

Calculated Risk - weekly initial unemployment claims decrease to lowest since 2007. I'm thinking that the included chart suggests that interest rates should be rising by now.

Reformed Borker (Bork Bork Bork!) - is the Fed now underestimating the labour market? For the love of god, Josh, you just can't stop whining about the economy, can you? Speaking of which, get back to printing more Boockvar. I liked him.

Bespoke - every time the market goes up, the bulls vanish. Is lack of bullishness the sign of a bubble?

Mineweb - gold investments fade for rich Indians. Unfortunately Shivom Seth fails to include the proportion of gold buying by the rich in India. That makes this article pretty useless.

Reuters - gold premiums in India drop on weak demand, excess supply. That's not good. Is it something to do with the monsoon, do you think? Or would you rather blame it on wharrgarbl US interest rates wharrgarbl US inflation?

A cartoon to Mickeyman from XKCD

Becxause World Complex is where the really weird shit happens:

Although the oral exam for the doctorate was just 'can you do that weird laugh?'

An original artwork from XKCD

Friday videos: Th' Faith Healers

Here's Th' Faith Healers, who were apparently part of the Camden Lurch scene, with "Pop Song":

Fun piece of trivia #1: the martial arts move re-enacted by Roxanne Stephen at 1:44 is called "monkey steals the peach".

Fun piece of trivia #2: The band was called Th' Faith Healers, with no "e". They claim their "e" was stolen by Thee Hypnotics. Selfish buggers wanted two.

Thursday, July 24, 2014

Sarah McLachlan and Frank Giustra

I saw someone from Vancouver poking around on my Sarah McLachlan & Geoff Courtnall post.

Curious, I went back and re-read the post, and saw a comment that I'd never followed up on before.

Sarah McLachlan hanging out with Frank Giustra.

Oh god, she's hanging out with junior mining people in general, not just Geoff. It's worse than we thought.

Um, Sarah? You do know that junior gold is a shitty place to invest money, right? Here, let me show you a chart:

That's only an 80% loss; most of these other juniors will lose you 95% of your money. Stay away from these people, Sarah! Don't invest in juniors, or it'll be the down-east trailer park life for the rest of your days.


UPDATE: this old post has been getting a lot of hits these past couple weeks, so it must be a problem for a lot of people, and so here's an update for 2015.

The catnip plant that had all the aphids on it last year didn't grow back this year, so I guess the aphids eventually kill the plant. Then again, I've lost a couple other of last year's catnip plants just due to root rot. No big deal, it's a weed and spreads like crazy.

The black ants who were farming these aphids have moved on to another catnip plant, but I've found I can get rid of them by spraying them with a pyrethrin-based Raid. However I don't want to do that, because catnip also attracts a lot of rare species of bee that you never see elsewhere, and I don't want to kill them with the pyrethrin.

Some people say you can deal with the problem simply by spraying off the aphids with soapy water. Well, it seems the black ants go and pick up all the aphids, clean them off, and plop them right back on the plant.

One other thing you might want to do, to take the fight to the enemy, is look around for large anthills: this species of ant seems to build big colonies, at least a foot across. There's even an ant colony in the neighbour's backyard that's a foot high and two feet across! I've been repeatedly destroying these anthills, wiping them out by turning a strong hose on them for half an hour to wash away everything, and yet they still come back. It's a war of attrition, but it satisfies the mass murderer in me, so I'll keep at it.

Oh and diatomaceous earth seems to do nothing to this species of ant. They're hardy buggers.

So here's the rest of the old post:

So I'm growing some catnip around the house for neighbourhood cats.

Also, it's been fun because catnip flowers attract lots of strange insects you won't find anywhere else - they love the nectar, so they come from miles around. I've seen lots of interesting species of bees, plus a few nice butterflies and some other strange bugs too. It helps improve biodiversity and gets cats mellow, so why not?

Anyway, one of the women at the pet food store said that catnip drives away ants, because it's a mint and ants hate mint.

Well, I can call bullshit on that. For a couple weeks I've had medium black ants* crawling through the catnip, supping at the little flowers. So they don't mind catnip at all. OK, fine, I says; the kitties can eat you and get some extra protein.

Now, however, it's gone one step worse.

I've had black ants farming aphids on the plants in the back for years. Basically, aphids seem about as stupid an insect as you can find, outside of scales; so ants just pick them up, carry them over to a plant they like, then plop them down like livestock on a pasture. The aphids drink from the plant's stem, and then the ants come by and lick the aphids' asses to get at their sweet sugary poop.

No really, look it up.

But now those black ants from the back have moved over to the side of the house where one catnip plant is, and now they're farming aphids on my darn catnip.

Screw you guys, pay rent or GTFO, I says. Bloody socialists.

Yeah I know, you don't believe me, so here's a photo for proof:

click to make even bigger

My digital camera can't focus in tight, so this was about the best shot I could take. The plant is catnip, obviously. You can see the ants, of course. The little gray blobs on the stem (where the most ants are) are the aphids, trust me on that.

Here's another pic, you can see the aphids a bit better:

chlick to transform to yet greater proportions

So just now I've powdered the aphids with diatomaceous earth. It apparently takes a long while for diatomaceous earth to kill aphids, but at least the ants will sod off and die pdq.

Anyway, if you don't believe the intelligent ants farming herds of aphids thing, despite this photographic evidence, then you can watch this short edumacational video:

And "harvest the gleaming secretions" is a euphemism for "licking their poop".

Come to think of it, it would also be an awesome title for a Godspeed You! Black Emperor album.

* - I don't know the species, but I call them "medium black ants" because they're larger than small black ants, and smaller than the large black ants.

Hilarious blasphemy

I was netstalking an old crush when I came across this tmblr site:

Tmblr - Bargain Bin Blasphemy

Wherein I found hilariously altered album covers, such as:

And this last one doesn't really work that well:

India monsoon news part two: the monsoonening

Here's some more news, in case you care about several hundred tons of physical gold demand:

Daily News & Analysis - July rainfall helped agriculture to revive. The idea is that dooooom has been slightly averted, for now.

Eco-business - newly-found wind oscillation may keep El Nino at bay. For the amateur climatologists out there. Let's hope this means dooooom doesn't come.

Economic Times - late monsoon makes for hard choices. Quote:
Rafiquddin Mondol, a 45-year-old farmer from Polba-Dadpur block of Hooghly district, is a worried man. He may have to defer his 18-yearold daughter's marriage this November if it does pour in the next one week. "My paddy nursery is ready. But I cannot transplant the saplings as it has not rained and the fields are almost dry," he says.

Irrigating the land himself involves a cruel trade off. "It will double my cost of production, to Rs 40,000," he explains.

"I will not be able to marry off my daughter." Even if it rains now, Mondal says, his production -- and his income -- will be less than normal this year.
Indian weddings have something to do with gold, don't they?

Your monsoon update, for those who know that India buys the world's gold

India buys the world's gold, and Indian farmers buy most of India's gold. So what's the monsoon been doing recently?

Reuters - monsoon revival keeps rain above average. Quote:
A month and half-long weak phase in the monsoon pushed rainfall a quarter below the average so far for the season that started in June. But a revival after mid-July pushed the rain level to above average last week.

Rainfall was 24 percent above average in the week ended July 23, the first week of surplus for this year's monsoon season.

Poor rain levels since the start of the June-September season raised concerns that India would face its first drought in five years, with coverage for most of the main summer crops slipping below the halfway mark.
So that's an improvement. Though I don't know enough about Indian farming to be able to guess whether the crop is already doomed for this year no matter what rain is still to come.

Economic Times - late monsoon forces rural India to cut expenses. Quote:
In terms of discretionary spending, sectors that feel a ripple effect of a poor crop are two wheelers, white goods, cooking oil, gold and silver. Angshu Mallick, COO of Adani Wilmar, says rural buyers downtrade in hard times, from branded products to unbranded ones. "They will even switch over from soybean or mustard oil to palm oil as it is a cheaper alternative," he adds.

Gold and silver, a preferred asset class in rural India, will be among the worst hit.

India's annual gold demand is about 950 tonnes. "Rural India consumes 60%," says Haresh Soni, chairman, All India Gem & Jewellery Trade Federation. "If the crop production is not up to the mark, Diwali offtake in bullion will take a beating."
Translation for dumbass Whitey: that's bad for gold. It's bad to the tune of up to 570 tons. But you go on and keep buying gold because inflation deflation Ukraine Israel dollar potato. I'm sure that'll work out well for you.

And no, Goldman Sachs didn't base their $1050 gold target on Indian rainfall modelling.

Reminder, it's OpEx

Surprise, surprise! Gold and silver are getting monkey-hammered today in the leadup to OpEx.

I was just saying to someone that I'm ignoring all the bottom-calling from the junior gold anal ysts, because they obviously have mistaken summer gold seasonality for the beginning of a new trend. This either takes ignorance or a conscious desire to mislead.

To the contrary, however, I'm also ignoring today's PM monkey-hammering because it's the leadup to OpEx, and the last time I ignored the hammer I managed to buy the juniors at the bottom and ride a very good month of winning.

Meanwhile, S&P is 8.7 points away from 2000. How bullish do you think the US equity market will get when 2000 breaks? Are you still listening to those clowns who called an imminent top in the S&P every week for the past 3 years?

GLD and GDXJ charts


GDXJ has lost the short-term EMA. Now it either falls to the -2SD line, or it falls to the SMA(50), or worse. Or not.

GLD is still above the SMA(50), but I wouldn't like to be there if it loses the SMA.

Although most of this is probably just due to OpEx on Friday, so I remain unconvinced.

Then again, if the monsoon is going to fail this year, say goodbye the gold buying season and strong seasonality. Cos that's what happened the last time the monsoon failed.

Then again then again, every June-Sep gold pop has included a good hard retrace right in the middle.

Thursday morning news

Here's some stuff:

Reformed Borker (Bork Bork Bork!) - 361 Capital weekly research briefing. I personally like the dropping correlations, because that is bullish for the market.

Gavyn Davies - another false alarm on inflation. He disagrees with Michael Shaoul.

Fiscal Times - it's easier to find skilled workers when you offer them a higher wage. By the way, the average income for a Chinese factory worker is $500 per month: how do you expect to find a skilled technologist in the USA when you're only paying 6 times that? Boy, it's going to suck for the Capitalist class when the globalization chickens come home to roost.

Reuters - as credit dries up, troubled Chinese steelmakers lose lifeline. Tangshan makes as much steel as the entire USA: I think that counts as overcapacity, don't you? - China's falling out of love with gold. Right in time for Friday OpEx? Did the market not notice this already?

BI - pro-Russia militant admits they shot down the airliner. Stick that in your pipe and smoke it, Shedlock you dumbass.

Tuesday, July 22, 2014


Here's Sir Richard Branson videoblogging about life on Necker Island, which he owns and rents out as a resort to the rich and beautiful.

Sir Richard, I like Virgin Records and all, and good work on the airline, and shipping condoms into Ireland was a nice touch, and reintroducing the scarlet ibis to the West Indies is a great idea, and thanks for giving a record contract to that insane bloody wackaloon Mike Oldfield.

Nevertheless, despite how much I appreciate you for all you've done for the world, when I watch this video I just... I dunno, I just want to punch you in the cock. With a meat tenderizer. Repeatedly.

Especially when I see you frolicking in the pool with Bishop Desmond Tutu.

Here he talks more about his island, and how he recently bought another one just a little bit down the way:

And here's an interview where he talks about all the money he's lost on his investments:

The Guardian - Richard Branson pledges to turn Caribbean green.

More Liz Ann Sonders for all you Liz Ann Sonders fans

Bloomberg Surveillance - interview with Liz Ann Sonders (mp3).

Where she probably says something along the lines of "Barry and Josh should quit being pantywaist sissies, stop their goddamn whining and just buy the damn SPY."

A look at some gold miner charts gives us utterly no clue what comes next

Prepare to be confused. Here are four charts:

I like today's action in Asanko. It makes it look like it's about to take off again, and I'd happily buy at US$2.60. Problem is, where the hell do you put your stop?

Yo Mama Gold's chart looks like it's basing real nice, hasn't broken down, still above RSI=50, still a lot of possible upside on the chart compared to other miners.

But here's where it gets weird:

B2 is rolling over.

OK sure, B2 is diluting its shareholders. But it's buying upside in doing so. It certainly would be nice if they stopped buying other mines and actually spent time doing all that production growth that they keep promising, but they are building a high-production low-cost gold miner, and that's the type of company you'd think Wall Street Whitey would buy if they wanted to go long gold.

The problem here is B2's chart looks weak, and a loss of the SMA(50) will make Baby Jesus cry. Why does B2's chart look bad if Asanko's looks good? Is the performance divergence the result of people becoming pissed off with B2's growth strategy? Would people now prefer to own a buyout target than a buyer-outer?

Rio doesn't look as strong as Asanko. Yes, the past few days' action can be a basing before a next leg up; but it could also be a long topping pattern.

Maybe the confusion across charts is just something I should expect, considering the Lizard People have been slamming gold in the runup to this week's OpEx. Silver has held up well by comparison, and is still a tell on the underlying PM market. So maybe I can afford to wait til Friday or Monday before taking any long positions.

Then again, gold doesn't exhibit positive seasonality in years with a monsoon failure. Which we're seeing this year.

Then again then again, maybe whitey takes over from India on the gold demand side, with his expectations of US inflation and/or European deflation and/or god knows what the hell these idiots in Wall Street believe.

What to do? I'll wait for now.

Some Tuesday news

I am incommunicado all tomorrow, so there's your fair warning.

But as long as it's still today, here's some genuine factual information for you to consider, instead of the ignorant speculation and uneducated blather that you get from the rest of the blogosphere:

Liz Ann Sonders - market update. Everything is still fine, but it's good to have her around to 'splain it to us.

BI - June CPI. No surprise.

Bespoke - gasoline prices going down. In the summer, even! Looks like US consumers are going to get a boost.

Reformed Borker (Bork Bork Bork!) - the SPY:IWM divergence. As you'll remember, I identified this in the past week. Josh takes the divergence as a sign of a market top, while I take it as a sign that IWM is due to outperform to get back up to the longterm trend. The market top whining just gives me even more confidence that I'm right. And look at today's action, Josh! You might just have bottom-ticked the IWM! I guess that's why Barack Obama reads my blog and not yours.

FT beyond brics - the free ride for EMs is over. Yabut, they don't simply have to improve productivity; they have to do it in the market context of increasing interest rates and reduced investment capital.

Reuters - depleting reservoirs need rains to prevent crop loss. Things are starting to look bad in India, the country that buys all the gold.

Mineweb - metal ETFs lure investors at fastest pace since '09. I guess the market has decided that we're not at the end of a commodity cycle after all?

Monday, July 21, 2014

Some noonday news

Here's some noontime reading for those watching the noncommittal market:

Bloomberg - bubble paranoia setting in. Because the market's not supposed to go up with a black man in charge, or something.

Reuters - late monsoon starts farmer's journey to hell. With the caveat that gold doesn't really care that much what happens in Uttar Pradesh. Kudos though to Nameet Panwar, who has enough brains to switch to a higher-yielding crop.

Sunday, July 20, 2014

I agree that Mike Shedlock is a fucktard and will go one further

IKN - Mike Shedlock is a fucktard. Where he says:
He's been going tinfoil for quite a while, but today's post in which he tries to pass off a one month old Youtube as a video of the shooting down of MH17, along with conjecture that the plane (which is obviously not MH17) was under control as it dived, is nauseating.
Yes, and in particular I'd like to go one further than Otto, who merely notes the date, and point out the video is of the fucking Antonov that the Russians shot down back in June.

You can tell by the fucking video title, "Под Славянском сбили АН-30".

So I actually went over and read his crazy-ass article, and I can explain why Mish wrote this crap.

He did it so he could get a repost on Zerohedge. It fits perfectly.

But what I find funnier is this article that Mish links to:

Newsmax - Ron Paul says "don't blame Putin for MH-17"

I find it hilarious because the great White hope of the Republican Party, Ron Paul, has now essentially come out as yet another Republican stooge for Vladimir Putin:
The former Republican presidential candidate says that the United States shares responsibility for the conflict between Russia and Ukraine.

"It's pretty evident that the whole problem in Ukraine started approximately a year ago when the Europeans, along with the United States, overthrew an elected government and overthrew [former Ukrainian President Viktor] Yanukovych — insisting that there'd be civil strife over there," he explained.

The United States instituted sanctions against Russia Tuesday aimed at Russia's financial institutions and defense sector, which Paul considers "acts of war."
I guess that's what happens when you're a goldbug. You start watching Russia Today, and before you know it you've been won over to the side of the Russians.Next thing we know Paul will reject libertarianism in favour of locking gays up in jail and forcing mandatory membership in church.

And what proves Ron Paul is completely out to lunch?
"Under these circumstances, it's very difficult to get the real information so everybody's angling to propagandize and make their position known," he said.

"It'd be unwise to say, well, the Russians did it, or the Ukrainian government did it, or the rebels did it."
Really, grampa? I guess you didn't hear that the Russian-backed rebels bragged that they did it:

This is what happens when you let propaganda on the airwaves, idiots into the blogosphere, and clueless fantasyland goldbugs into politics.

Two sunday newsbits

Two weekend reads for you:

New Deal Demoncrat - weekly economic indicators. Everything still looks good in the US. - fewer disscoveries, slower development weigh on gold industry. With the caveat, of course, that this doesn't include a damn thing happening in China.