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9/13/08

Saturday mailbag thingy

I don't mind doing this kind of post, as long as it's only occasionally. It's a bit too self-centred to do this all the time even for my egomaniac world.

So today A. Reader wrote on the subject of this post about that Jim Willie guy and his (lack of) forecasting ability. After a couple of rounds, the conversation had moved on a little and the question came up as to whether we were experiencing a secular or cyclical bear market in junior mining companies. Underneath is what I wrote as my dos centavos' worth on the subject, and I'd like to share it here (just brushed the spelling up a bit and added a word here and there to help comprehension). Hopefully some others will feel like chiming in and opinionating, too. Comments welcome either below the post here or to my mailbox, otto.rock1(AT)gmail(DOT)com

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Cyclical or secular, inflation or deflation, bulls or bears, mayo or ketchup?

Although I have an issue with Don Coxe's immediate commentaries, his long term macro worldview is unbeatable. This junior bear market only a cyclical in timescale terms, as the underlying bull market for the end product, those shiny metals, is still absolutely intact.

Bull market demand and bear market pricings...that's where we are now. Obvious stock bear, obvious metal bull. So as Coxe has rightly pointed out in previous newsletters*, this is the lull period when the US banks sort their shit out and some fail and some survive. But there ain't no end of the world happening while China grows 9% per annum and RIO and BHP can ask for and get 13% more for their iron pellet.

As Ernest Borgnine said in The Longest Day "they teach you to fight, they teach you to kill, but they don't teach you how to wait."** In the longview, it's obvious that the 11.3Bn lb Cu at Los Azules Argentina will not stay in the ground much longer. Cañariaco, Magistral, Marcona Mirador...you pick your fave and add a few of your own to the list...you know the score, man. Supply lag will force these things into production eventually. We....just....wait.

I'm reminded of the classic bear market caller's attitude (once again). Nouriel Roubini was calling the housing bear from early 2005 onwards and non-stop, but it only started to unwind in early 2007 and then the real caca only started to hit the ventilador late '07. Roubini was right, but a visionary bear will ALWAYS call too early. The mindset is "I know it's going to happen, I just can't see why you guys around me can't see it too." The best intellects see the furthest, but the best intellects also lack good old plain-spun common sense and can't see they have to wait for "the herd" to catch up with them.

So...we....just...wait. We don't moan and groan and shake our fists at the world Jim Willie-like. We just wait.

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*Basic Points, The Music of the Metal Market, published Feb 19th 2008, probably the best Don Coxe monthly ever and available on request from Otto.
**Probably a false quote and source, but I'm sticking with it anyway

Wisdom of the LatAm currency masses

When it comes to currency exchange rates, especially concerning the dollar, LatAm locals are a very sharp collective crew.

On Thursday I ran a kind of informal poll by contacting friends and acquaitances up and down the region, and I made it a point not to talk with people in the financial sphere. So in Colombia, Ecuador, Uruguay, Peru, Venezuela, Argentina, Chile and Brazil, a dozen or so people got phone calls or mails (or both) asking them what local feeling was about the exchange rates.

Without exception, the answers came back with variations on "people are selling dollars and buying local currency", which pleased me no end because not only did it agree with my current take on the overbought dollar (see chart here for example, plenty more though) but it confirmed once again the wisdom of the masses down here. I've seen this phenomenon many a time; when the dollar gets past a certain point against local currency, saved greenbacks suddenly appear from under mattresses, behind clocks and between hardback books. Queues form at exchange houses. Foreigners who get paid in USD go around with big smiles on their faces because it's like getting a 10% payrise (myself included on that one).

Here we see a range of three month charts for local currencies against the dollar (all on these quick'n'easy yahoo charts that I like), and look how they all peaked at the same time:

The Argentine Peso

The Brazilian Real

The Colombian Peso


The Chilean Peso

The Peruvian Nuevo Sol

The effect of a weaker currency is good news for exporters. This means that the net exporting countries of the region will be happy with this drop. However, weaker currencies also mean higher imported inflation, and countries such as Peru that have expanded rapidly and have seen their trade balance dip into the negative recently (despite record metals exports) will be a little concerned about this move.

In fact, the Peru Sol (PEN) is a good example of a currency to buy right now and I expect it to be encouraged back up by local monetary policy in the next few weeks, with my personal chalkboard target currently set at S/2.80 (from today's S/2.97).

Another currency likely to improve rapidly is the Chilean Peso (CLP) as copper prices rebound and the country gets back toward a 5% growth rate. Most economists in Chile have forecast an exchange rate of around 500 to the dollar at year's end, and that seems perfectly logical to me. A good vehicle to play this bounce would be ECH, the Chilean ETF available on the NYSE. It's a very misunderstood ETF (from nearly all literature I've seen written on it in English), because contrary to most people's perception it's much more a play on Chile's currency than on its stock market. I fully expect ECH to gain around 20% from here and end the year in the U$48 to U$50 range.

Anyway, I digress. The point of this post was to show that locals are pretty astute at the currency exchange game down here. All last week the foreign tide of dollars went into ebb mode and money was sucked away from the region (mainly Brazil). Locals saw their chance and cashed in on the strong dollar exchange rate. I'd now expect the smart ones among them to buy back those dollars in ten percent's time.

Good weekend reading from respected bruddasites*

Abiding in Bolivia is on steroids! No point in linking just one of El Duderino's posts in the last 48 hours because they're all top notch. Here's the front page link; go read 'em all and keep bang up to date with what's happening in Bolivia.

Sapitos de la Noche does us all a great favour by reminding us that most of the time Venezuela isn't some sort of intense political hotbed. It's just a normal place, with normal people doing normal things. My stars this dude can write well.

Jurgen Schuldt makes it plain as plain can be that Peru's headline inflation figure is a total crock, and the issue is now a serious problem for the vast majority of his country.

The Mex Files raises conscience on just how bad the recent spate of hurricane activity has been for the Caribbean. Sure Galveston will be your headline word this week, but behind the headlines there's death and damage on the islands with no money for repairs. You can help.

In Colombia, you can be found innocent of a crime and still be held in prison to be tried again for the same crime, even when the court that judges you has no legal power over your case and even the prosecution says that house arrest would be just fine. CAJA tells you all.

Memory in Latin America keeps track of the important but (outside the country) under-reported Fujimori trial. Lillie does her usual great job.

As for Venezuelan politics, borev is the greatest. As always.

And as for us stock market investors, absorbing Don Coxe's 'Basic Points' is perhaps the most profitable reading we can do this weekend. Here's the link again, just in case you missed it yesterday.

*and sistasites lillie

9/12/08

Bolivia: Reactions from Regional Countries

As you read down the following list:

1) Play 'spot the difference'.
2) Note the total regional support of Evo Morales and his government.
3) Note how you have to come to a small corner of cyberspace to hear what's really going on.
4) Note that even Alan García gets one right occasionally.
5) Note the only regional President not to have made an official statement or used official diplomatic channels is Alvaro Uribe of Colombia.

Also, just to lighten the dense text find some photos of those loveable democratic Santa Cruz scamps and their handiwork.

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Michelle Bachelet, President of Chile:

"We call for the immediate cessation of violence in Bolivia....conditions must be generated for peaceful dialogue."


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Chancellor of Argentina (speaking of behalf of the government)

"Faced with the serious violence and terrorist sabotage reported in the sister republic of Bolivia, (the Argentine government) fully reiterates its full and unconditional support for the constitutional government of President Evo Morales Ayma."

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Spokesperson for President Lula da Silva, Brazil

"We will not support or tolerate a rupture of institutional order in Bolivia, above all because this order was recently ratified by a manifestation of its people (i.e. the referendum)".

"(Brazil) will not recognize any government that substitutes or tries to substitute the legitimate constitutional government of Bolivia."


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Tabaré Vasquez, President of Uruguay

"(I express my) total support and solidarity of the authorities of Bolivia elected freely and democratically."

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Rafael Correa, President of Ecuador (currently on state visit to Peru and speaking in the presence of Alan García)

"Obviously, President Morales and his government has the unrestricted support of Ecuador, and as I have said to President García of Perú, the unrestricted support of democracy and the unity of Bolivia."


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Alan García, President of Peru

"(I agree with my Ecuadorean counterpart in) expressing our will in respect to the democratic government, in respect to the government that the Bolivian people support, and our natural rejection of violence and any separatist force that breaks the integrity of nations."

García also spoke of the need for "civilized dialogue to overcome claims and impasses."

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Manuel Zelaya, President of Honduras, refused to accept credentials from the new US ambassador to his country this afternoon.

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Sean McCormack, US State Dep't Spokesperson (translated from Spanish)

"We regret the actions of Presidents Hugo Chávez and Evo Morales in expelling our ambassadors in Venezuela and Bolivia respectively. This reflects the weakness and desperation of both leaders in the face of internal challenges (to their countries)."


Just for the record (and eyewitness report of the Pando massacre)

I've just noticed today's site figures have been very strong for this note I wrote a few weeks back. It went by the title "Those Crazy Crazy Santa Cruz Nights" and detailed the secret meeting of (now ex) US ambassador to Bolivia Philip Goldberg and the Santa Cruz prefect Ruben Costas. It also had a write-up on how a ranked officer of the US army was arrested for drunken and threatening behaviour in a Santa Cruz club that same night and was pulled out of the jail by countrymen who said he had diplomatic immunity.

At the time, el duderino mentioned there was plenty in this story for MSM to get their teeth into, and the events of the last 48 hours seemed to have confirmed that. So if you see a bit of this background popping up somewhere else soon remember where you saw it first, yeah? Hopefully the story of how the US has been in the shadows of the Santa Cruz insurgency will get deserved light poured on it.

Meanwhile, Abiding in Bolivia sadly reports that the eight people dead by extremist ambush yesterday in Pando, Bolivia is now fourteen. The following is an extract quoted from an eyewitness report of yesterday's massacre that is on the wires; I personally guarantee its veracity but all the same, as soon as a link is available I'll add one. It's not very pleasant reading.

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"The road was blocked with trucks from the Prefecture, and there they started to shoot at us. Those that escaped towards the river were chased and were killed at the water's edge. Some of the survivors that arrived at the Riberalta hospital were (immediately) murdered," said one of the survivors.

(The survivors) also reported that several women were kidnapped, including old aged woman and mothers with babies or pregnant, and were forced to strip naked and were then tortured.

There is a lot of concern for the wellbeing of Professor Víctor Choque de El Chivé, member of the Cooperativa Intergral Agroextrativista de Campesinos de Pando, who was tortured inside the hospital but is believed still alive.


UPDATE SUNDAY 14th:
There are now 30 confirmed deaths from the Pando massacre, and the latest eyewitness reports tell how the unarmed group, men, women, children of all ages, machine-gunned at point blank range.

Trading Post (fashionable green edition)

The dollar is STILL the whole ball game here, and it's sunk a full point to stand at 79.03 right now. Everything else is taking its cue from that dynamic.


Copper doing it in some fine style. Up 5% in one trading day....yep, I'd say that's positive enough for me for one day ;-). Glad to say the whole BM complex is following the leader, with an excellent relief rally in Zinc almost stealing the show (that means BWR.to and VEM.to on your radars, folks).


Venezuelan bonds sunk in best capitalist fashion on yesterday's political news. The reaction of local bankers was predictable; "Let's rip off the guy in the street on the parallel bid-ask".

How they can buy a currency at 4.00 and sell at 4.50 and keep a straight face about it is beyond me. Crooks in suits.

All miners, be they base or precious metals, very much á la mode. Let's just pick three right now, but I could fill the screen, really:
  • Big hurrah for the quick way in which CS.to bounced, which makes up for my personal annoyance in buying it 24 hours too early on Monday.
  • My biggest bet on all the recent charade, FCX, up 7.7% at time of writing and doing just fine.
  • Minera Andes continues to show serious strength. Kudos to the guy who reads this and bought MNEAF.ob at 0.76...you know who you are ;-)
Meanwhile, away from the miners have a good look at Brazil sugar play Cosan (CZZ). Quarterly results came out in line with expectations and sugar crop forecasts in Southern Brazil got a boost yesterday from positive climate news. The stock has been really beaten up and looks like it's past the worst. Buyable here, but as always DYODD, dudes.

Tin Foil Hat Spam and Jim Willie

A long-ish post, and it's possible that part two is more interesting to you than part one so that's why I've split it up. Here we go.


Part One
One of the nice things about this blog is the mail I now swap with an impressive cross-section of people (and a good % of mailers are wise enough to disagree with me but keep to the spirit of good, friendly debate). One of the boring things is suddenly being included in an unsolicited mailing list, and one such example happened last night. Some guy with the apparent name 'Randall' decided to include me in his spam sent to various others (quite a few recognizable names on his list) which urged us all to go read an article written by a guy named Jim Willie.

So just for once I decided not to immediately delete. Just for once I sent "Randall" a reply, asking him who he was. He very quickly replied with a smartass comment that included my real name and "and who are you?". So I sent him this:

"Allow me to explain; the person who sends unsolicited mail is the person who should explain himself. The addressee is under no obligations.

Now, let's start again: Who are you, and why are you sending me mails that i didn't ask for? This time, either answer sincerely or simply don't answer.
"

He didn't reply. Fair enough, I gave him the option. But I'd mention two things right now:

1) If Randall spams me again I'll publish his e-mail address on the open web. From there the spambots will pick up on it and I'd guess his mailbox will suddenly become very popular with people who'd just love to sell him a penis enlargement kit.

2) Sure Otto Rock is a pseudonym (says it out loud on my profile), but I've never made my real name an amazingly secret secret, either. In fact from the beginning of this blog I've laid a couple of internet breadcrumb trails to my real identity. And quite rightly, 99.9% of people don't give a damn as to who I am. FWIW, I like the dynamic of the pseudonym here, as it allows me to mentally separate this blog from my 'real life' and job. Every now and again I've received a mail asking me for my real name, and I've always supplied it (to the ones who don't come across as unhinged in mails, anyway). So Randall, your pathetic attempt at shocking me (that could almost be construed as blackmail) is a far greater reflection on you than it is on me.

Part Two
So on to the meat of the program. After being bugged by Randall and his link to this Jim Willie, I thought "well, just for once let's see what it's about anyway" and clicked over to his note, entitled 'Calling US Bonds Home' (I'm not going to link it here., but you can find it on kitco if you want to read it yourself...it comes with three exclamation marks in the title). What I found was a TA-loving goldbug tinfoilhat raver who can put together a train of logical ideas about the decadent society in which we live and how we're all gonna die and stuff but was so bad at forecasting that he probably couldn't predict tomorrow's sunrise.

It seems Mr. Willie likes his charts, so after reading his Technical Analysis-based forecasts for the days and weeks to come, I thought it'd make a lot of sense to have a look at how he's been getting on recently. First, here is how gold has performed in the time period:

Gold price, May 2007 to date (click to enlarge)

Now, here are the charts from five of Jim Willie's previous articles in this time frame chosen at random (honestly, I got bored reading them after five episodes and there are dozens more to choose from) ......

....and be it May, June or July...

....and as you can see.......

.....we can certainly call the guy consistent....

....because he's consistently bullish on gold.....

.....and consistently wrong. In fact, if I'd known about this guy previously I could have made a bundle by using him as one of the world's foremost contrary indicators.

The only question left in my mind is "Who's the dickhead?". Is it our man Jim for being so badly wrong all the time, or is it people like Randall who pay this guy subscription fees and praise him to all and sundry? My best guess answer is "both", but only one of them is getting rich from this total BS analysis.

Don Coxe Basic Points September 2008

Click here to get this month's Basic Points. This is not the subscription version, but the version found in the publicly available BMO weekly. The same words, just different format.

Copper at $3.22

Nailed it.

(click to enlarge)

Also, note the reasons put forward today are the same proposed here in the last few weeks (and on several occasions). Bloomberg's headline sums it up:

Copper Rises in London as Chinese Stockpiles Fall to Record Low - Bloomberg, Sep 12 2008 5:41AM

Also, in that note we have people who obviously read biiwii Gary:

"The dollar has had an amazing run and clearly needed a pullback,'' Randy North, a trader at RBC Capital Markets in London, said by phone.

The USD index is at 79.56 at time of writing; that's down half a point. See this post from yesterday morning for the necessary chart and the thoughts, but the bottom line is that I want that guy Randy's job. You get to be wise after the event and they pay you.

9/11/08

More Bolivia: Santa Cruz's idea of democracy

Smile! Branco, the acceptable face of slavery

Duderino is back! Abiding in Bolivia's guiding light returned from a short break tonight, and among three or four other posts (he must have been bottling them all up), he's found an absolute, total, essential must read report on the way Santa Cruz landowners treat their slave force (they call them workforce, but you'll see I'm right when you read the article). This is the link, so go there right now and get an education.

Therefore, when multimillionaire, mega-landowner, racist shit and arch troublemaker Branco Marinkovic says, as he did today, "Those who are causing the violence are from the government, who have deployed violent people against our right to express ourselves and fight for our rights and for democracy", the way he treats the people mentioned in the F24 report is this idea of 'democracy' he mentions to a lapdog press corps. To give you a taster;

"All her life, Ines has worked without being paid. "I don't know how much I should have been paid. They gave me old clothes - that was how they paid me", she says. Today, in this remote corner of southern Bolivia, an estimated 2,000 families continue to live in semi-feudal servitude and debt bondage. Year after year, many workers find themselves trapped into paying back debts to their employers, which cancel out any meagre wages they earn."

Marinkovic should consider himself lucky he lives in Bolivia; anywhere else and he'd be in jail by now.

Psst! Wanna see the tapescript they're going to use in the Antonini suitcase trial tomorrow?

If you do, then click right here. It's a PDF in Spanish and English, it was recorded on November 30th last year in a restaurant and it's a conversation between Guido Antonini (supergrass) and Moises Maionica (one of the "foreign agents").

Be warned: it's 155 pages long. Have fun!

Bolivia: Eight dead and 34 injured by opposition mob

In the small town of Porvenir in department of Pando, a group of Evo Morales supporters were on their way to a support rally when they were met by an Anti-Evo mob. The local police quickly arrived and were in the process of mediating between the two groups when another band of Anti Evo supporters arrived on the scene with firearms, and opened fire on the pro-Evo group.

The toll is currently 8 dead and 34 injured. Reuters Spanish link here, Bolivian gov't website link here. I've tried to find a Bolivian opposition news media story on this, but it looks like they're going for the blackout tactics.

No further comment needed from Otto.

UPDATE: We now have a Reuters English language report here. They do it better than I can.

Breaking: Venezuela kicks out US Ambassador to Venezuela


One of these people is P. Duddy, the other isn't

Fifteen minutes ago, Hugo Chávez ordered the US ambassador to Venezuela, Patrick Duddy, to leave the country in the next 72 hours. The move in apparently in support on Bolivia's move to kick out the US ambassador to Bolivia (as reported here yesterday).

Chávez said, "The Yankee ambassador in Caracas has 72 hours from this moment to leave Venezuela, in solidarity with Bolivia and the Bolivian people." He also said, "That's enough shit from you, Yankees" (kinda of true to form), and said that he was also recalling the Venezuelan ambassador to the USA.

This is...errr.....big news.

UPDATE:
this is now being reported on Bloomberg wire service

UPDATE 2: here's a Reuters Spanish Language link to the story.

UPDATE 3: It's all over the English-speaking press now, so this will be the last update. But here's the youtube of Chávez tonight telling the crowd about his decision to expel the US ambassador.



Trading Post (up'n'down juniors edition)


Colossus Minerals (CSI.to) continues to enjoy the influence of Patrick "Albatross" Anderson.

Minera Andes (MAI.to) has been strong all day on good volumes.
One smart friend of mine bought the MAI.to chart yesterday. He's made some coin on this.

Fortuna Silver (FVI.v) has had another doghouse day, now sitting at $0.79. I'm not showing the chart cos it hurts too much.

New site sponsor Vena Resources (VEM.to) (more on that later, folks....a story to tell) is obviously benefitting from the star-quality exposure at this humble corner of cyberspace. Currently in the green (not many juniors can say that) with bid 0.38, ask 0.42. Both prices meagacheap.

The blindingly obvious Hugo pair trade is back! If you feel daring*, go long Gold Reserves (GRZ) at $1.22 because it actually has assets worth something, and short Crystallex (KRY) at $0.98 because it's a crock worth precisely nothing. These two stocks aren't usually so close together pricewise...a good arbitrage on offer, I'd say.

Corriente Resources (CTQ.to) (ETQ) has been solid through all this recent mess. Nobody getting scared out at these prices? Whatever the reason, very interesting trading in CTQ these last few days, gotta say. Remember that CTQ is doing a New York roadshow soon. DMM.to got a nice pop from doing the WallSt rounds a few weeks ago (though it has faded since then). FWIW** this stock is on my radar, though I haven't taken the plunge yet.

*I don't...still officially "avoid" on KRY, the worst gold mining stock in the known universe
**not much

Snippety Stuff (arm's length edition)


  • Quote of the day (and quite possibly of the year) comes from the report into the pervasive corruption in the US govt's handling of its oil royalties. The U$10Bn per annum of oil money that slushes through the hands of gov't officials quite literally in bed with big oil companies makes the Antonini suitcase affair look like small change, but let's get straight to the moneyline (as reported here in the NYT):
“sexual relationships with prohibited sources cannot, by definition, be arms-length.”

  • Venezuela has reacted to the US dept of Homeland Security's edict on its "unsafe" airports in the best way it knows; hit the imperialists in the pocket. Reuters reports that Venezuela will restrict flights by US airlines into and out of Caracas.
  • Spot copper held the $3.10 line again today, and now sits at $3.16. You gotta like copper from here, Otto's honour. FCX reversed and rebounded and got healthy on the copper move.....Go Team!
  • The USD once again tried and failed to rally further. Time for a leg down here, more Otto's honour.
  • This week's "No Shit Sherlock" award goes to Tom Shannon, the US Assistant Secretary and general gov't fireman down here who says that kicking Philip Goldberg out of Bolivia will cause "serious damage to relations".

When a junior miner cares more about style than substance, watch out

Because the word "Ecuador" is currently out of fashion in the mining world, junior mining company Ecuagold (EGR.v) has just announced that it has changed its name to "Andeangold". The PR says;

"In addition, the shareholders approved a change of the name of the Company to "AndeanGold Ltd.", pending final regulatory approval...."

Let's be straight about this. If EGR actually cared about exploring and creating a mine more than exploiting and creating in the Toronto Stock Exchange (Venture section), it wouldn't give a damn what its name was. And while we're on the subject of BS press releases, the company recently said that it has enough money "...to finance the Company's exploration diversification strategy and to maintain its day-to-day corporate and administrative functions for the next 12 months" but with its approx $1m at bank, Lord forbid what will happen to the number of shares outstanding when the company actually does something radical like a bit of diamond drilling.

Five cents a share may look like a bottomfish bargain to you. You'd be wrong. I'd also bet money that as soon as Fruta del Norte is an operating mine and Ecuador is viewed as politically no riskier than anywhere else in Latin America (what goes around comes around, dude), EGR will vote to change its name to EcuadorGoldAssets'R'Us or something similar.

Bottom line: Avoid this stock and others who play the namechange game like the plague. Don't expect EGR to appear on this blog as an advertiser: Ever.


The Dollar: the USD index chart

click to enlarge

Forget oil. Forget precious metals and base metals. Forget every single conspiracy theory from the tin foil hatters.

The US dollar is the whole ballgame right now, and this chart says that the dollar is about to take a well-deserved break. The moves in everything else will march to the drum of the dollar, and let's go on record here: I fully expect the dollar to reverse and weaken off this (approx 80) high and allow copper, silver, gold and the rest to rally.

South America World Cup futbol Qualifiers: results

Allow me to repeat, one more time and for the record; I suck at betting.


My all or nothing bet was to double Chile to beat Colombia and then the mighty Brazil at home to beat the region's minnows, Bolivia. Sure enough Chile obliged in some style (4-0 winners) but greed got the better of me and I just had to add Brazil at 1/9 odds to put a bit of extra pzazz to the winnings. As I wrote Monday;

"The odds (for Brazil) are tiny, of course, but this is as close to an absolute certainty as is possible in futbol."

Stupid, stupid, stupid. Bolivia, playing with just 10 men for most of the second half, put on a magnificent defensive game and the result stayed at 0-0. Otto is now penniless for the October 11th next round, so I might just do myself a helicopter Ben and award myself another $100 of play money. Or i might not. For sure I'm better at stocks than futbol. But a deserved round of applause for the Bolivian team...great result, guys. Kudos.

Argentina: Chubut looking good for miners

Mario Das Neves needs to buy a razor

A tiny little story caught my eye on Tuesday, and it obviously caught the eye of a reporter in Argentina's newspaper of record, La Nacion too. In the South Argentina province of Chubut, one of governor Mario Da Neves' closest supporters, Norberto Yahuar, resigned this week after reporting friction between himself and other factions of the regional government. Apparently Yahuar's big problem is with Governor Das Neves' son, who is trying to muscle in and take over the day-to-day running of the Province while his father expands and marks territory for his presumed 2011 presidential push (at least according to the cattiest critics).

It's a typical story of Argentine nepotism for sure, and personally I don't give two hoots who runs the shop as long as its run relatively well, but the thing I picked up from this is that local business concerns are likely happy enough with the nascent father-son double act. (or else Yahuar would still have a job....you gotta know provincial Argentina to know these things, dudes). Das Neves Senior represents the non-Kirchner part of the ruling Peronist (PJ) party grouping that looks for social and economic progress more inside the present system, and during his second term of office (and to the specific delight of foreign capital) Das Neves has turned Chubut from an anti-mining reactionary area to a pro-mining region.

Main beneficiary so far has been Aquiline Resources (AQI.to), owner of the large silver/lead "Navidad" project in midwestern Chubut. After getting the big dude to visit their project recently, AQI was rewarded by Mario Das Neves waxing lyrical to a crowd gathered in the Canadian Embassy in Argentina about the exemplary social and environmental responsibility of the AQI set-up. This may not be a surprise for those of us who know the difference between 21st century clean mining standards and the type of thing miners still try to get away with when people are not looking (ask FCX at Grasberg), but the fact that miners (if obliged to do so) can extract the goods leaving very little enviro footprint and actually look out for the people who live around the area is still new news for politicos like Das Neves. What it does mean is that Chubut is quickly becoming a miner-friendly corner of Argentina, and if Das Neves Jr is shaping up as the new power-that-be, companies like AQI will be pleased enough.

So keep your beady eye on AQI and any other miner with Chubut exposure. As a country, Argentina is a very regional political risk exposure, and having the local governor on your side is probably more important than having the national government running with you. Right now, I'd rather be a junior in Chubut than in Mendoza for sure, no matter what Exeter Resources (XRA) might tell you!

Local knowledge. Get some.

UPDATE: So much for my local knowledge. Thanks to the reader who just pointed out to me that AQI's project is "Navidad" and not "Natividad". That's what happens when you write copy late at night while watching the futbol. Thanks for the correction.

9/10/08

The suitcase trial starts to get interesting

So far I've deliberately not mentioned anything about the trial going on in Miami because up to now it's been pure yada yada "we're gonna prove this" on one side and "my client is totally innocent" on the other. But today we heard the first recording made of conversations between the suitcase carrier turned supergrass, Guido Antonini Wilson, and the accused, Franklin Durán.

Things are now getting juicy, but one thing to keep in mind is that by this time, Antonini was working for the Feds and secretly taping the conversations. He was also trying to get as much information as possible for the US Feds, and a defence of entrapment is likely to be used by Durán.

As well as Antonini and Durán, in the recording a guy called Guillermo Ledesma, an Argentine lawyer, is also heard speaking. Critically they talk about a certain Claudio Uberti, who was one of Nestor Kirchner's inner circle of functionaries and the man who travelled with Antonini on the plane.

Here we go with the tapescript as heard by the court; My only comment so far is that this whole charade is likely to embarrass the Kirchner end of South America more than the Chávez end.

Translation Otto.

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Franklin Durán : (in reference to a Venezuela-Argentina agreement to close the case) "There are elections on the 28th October, and there's risk if Cristina doesn't win, we have to assume that risk".
(Speaking to Antonini); If Cristina doesn't win the election, thet will give it to you hard, with a bat. If the opposition win you'll be the scapegoat."

Guido Antonini : "If I talk everybody will go to prison."

Franklin Durán: "The real truth is that they are argentines and they will defend their own territory, and the only one that will go to prison is you."

Guillermo Ledesma : "You have to hand yourself in. That way you'll give a signal to the Argentine government that you won't sell out."

Guido Antonini : "Who will guarantee this?"
(meaning that he won't go to jail)

Guillermo Ledesma : "Kirchner and Chávez".

Guido Antonini : "Today, the only weapon I have is the truth. They tell me that this is a political disaster."
(Referring to Claudio Uberti) "He asked me to carry the briefcase. Well, i did him the favour of carrying the briefcase. That was all, as easy as that."
"I need the goverment
(of Venezuela) to give me a guarantee, to give me something for the benefit of my family."

Franklin Durán : "What guarantee do you want? You finished with half the money, $400,000."

Guido Antonini : "No, I want more".

Franklin Durán : "How much do you need them to transfer you? Tell me to which account?".

Guido Antonini : "Who's going to give you it?"

Franklin Durán : "It doesn't matter to you".

Guido Antonini : "I'm going to ask you for a million dollars. And I'm not going to prison?".

Franklin Durán: "You're not going to prison, I'm guaranteeing you that."

Guido Antonini : Why did Rafael Ramírez (Venezuela Energy minister) wash his hands of all this?

Franklin Durán : "Rafael Ramírez is not washing his hands of this, he can't wash his hands of this any more. President Chávez already knows the Rafael Ramírez's assistant was the person who carried the briefcase on to the plane."

The Russians are Coming! (part два)

be vewy vewy qwiet...am huntin' wabbit

Part one (linked here and from today) was the two 'Blackjack' bombers that Russia have loaned to Venezuela for a few days target practice on Las Cristinas (errrr....I think).

Part two (to translate) of this saga are Russians who aren't here yet, but will be soon. El Universo today reports that the big cheese of the bigboy Russian oil company Lukoil, Vagit Alekperov, will be heading up the trade delegation that arrives in Caracas next Monday, 15th Sept. Along with Alekperov will be gov't flunkies and Gazprom flunkies and the Veep PM of the whole country, so expect serious amounts of red carpet on show.
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As the two countries signed various oil deals when Chávez was in Moscow recently, there's no doubt that the delegation will be checking out the promised land, aka the Orinoco oil belt. As Lukoil says, the area is "the hope for petroleum extraction in the next 10 to 15 years." Still think Venezuela will never boost oil production? If you do, you must work for RIK and be on drugs and stuff.
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So, we get two bigass Russky bombers arriving in Venezuela the day the US ambassador to Bolivia gets kicked out of the region and the day Chávez announces the big Russian trade visit.

See any symbolism yet?

Philip Goldberg, persona non grata


Evo Morales has done the right thing today by kicking out the US ambassador to Bolivia, Philip Goldberg. In his speech today, Evo kicked out the US diplo by saying, "We do not want separatists or divisionists who conspire against unity, we do not want people who attack democracy (here)". He also told his people to go tell Goldberg immediately that he is on the next plane out.
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The root of all this (aside from the case of Fulbright scholars being recruited as spies by the US embassy in La Paz) is Goldberg's recent secret meeting with Santa Cruz officialdom. Goldberg's visit and 90 minute closed door conversation with Santa Cruz prefect and racist shit Ruben Costas (documented in this post) would never have come to light if local TV hadn't caught Goldberg on candid camera. Only after the images showed up on TV did Goldberg even admit to meeting Costas.
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Since that visit, violence has increased in the Santa Cruz area. Not content with simply attacking police or raiding government buildings in "symbolic" protest, the racist thugs now taking over Santa Cruz have in the last 48 hours stormed gas pumping installations and reportedly turned off supplies to Argentina and bombed the pipeline running to Brazil.
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You think it coincidence that violence escated after Goldberg's visit to Costas? Well, could be, but do you suppose it's also coincidence that Goldberg was the diplo in Kosovo when that small state imploded too? And last week's flying and low profile visit of Branco Marinkovic (rich landholder and the other racist pig in charge of Santa Cruz) to Miami is coincidence too?

The USA's days of mischief-making in Bolivia are certainly not done with, but from now on they'll have to use more clandestine communications lines than ambassador Goldberg. Today's decision by Evo is not something to celebrate, but it was necessary.

Blackjack! Venezuela gets a visit from some pretty birdies

Sleek and sexy (and that's just the pilot, Komrade)

The Russians are coming!
(oh...they're already here)

Why have two Russian TU-160 "blackjack" bombers just landed in Venezuela? Here are the choices in today's multiple choice special...YOU BE THE JUDGE!

1) Military manoeuvers in Venezuela.

2) About to bomb the crap outta Las Cristinas if Fung doesn't stop messing around.

3) Invasion of Colombia about to happen.

4) Got lost on their way to Georgia.

5) Chávez went for the buy-one-get-one-free special offer that Putin dangled in front of him.

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2 Russian strategic bombers land in Venezuela

MOSCOW - Two Russian strategic bombers landed in Venezuela on Wednesday as part of military maneuvers, the government said, announcing an unprecendented deployment to the territory of a new ally at a time of increasingly tense relations with the U.S.

Russia's Defense Ministry said the two Tu-160 bombers flew to Venezuela on a training mission. It said in a statement carried by the Russian news wires that the planes will conduct training flights over neutral waters over the next few days before heading back to Russia.

Also Wednesday, NATO said it ended a routine exercise by four naval ships in the Black Sea. Russia had denounced the exercise as part of a Western military buildup sparked by the Georgia conflict.

The alliance said the four ships — U.S. frigate USS Taylor and three similar vessels from Spain, Germany and Poland — were moving back to the Mediterranean Sea after the 18-day mission.

In Moscow, Defense Ministry spokesman Alexander Drobyshevsky refused to say how long the Venezuela deployment will last or say whether the planes carried any weapons.

The military said NATO fighters escorted the two Russian bombers on their way to Venezuela.

The apparently retaliatory move follows the U.S. deployment of warships to deliver aid to the former Soviet nation of Georgia, barely a month after Russian armor and aircraft crushed the Georgian military in a five-day war.

Earlier this week, Russia said it will send a naval squadron and long-range patrol planes to Venezuela in November for a joint military exercise in the Caribbean.

The deployment of planes will be certain to anger Washington. Relations between the U.S. and Russia have been badly strained by the short war last month between Russia and U.S.-allied Georgia.

Trading Post (hangin' tough edition)


Spot copper is hanging tough
at 3.10 to 3.13, and I'm along for the ride.

(click to enlarge)

Until it makes its definitive move (be it up or down), consider me a rabbit trapped in its headlights. Gold sinking may pull it down to the point that I bail on my underwater positions. We shall see. I moved over from GLD to SLV as planned this morning (check the gold:silver ratio post to find out why).

Cosan (CZZ) has been murdered these last few days, even by Brazil stock standards. The combo of the downturn, its expansion program timed to imperfection and the bad sugar crop news from the South of Brazil has made mincemeat of this stock. It's down hard again today.

(click to enlarge)

CZZ is one I follow quite closely, and have been known to move in and out of on a short term basis. Certainly cheap now, but no trying to catch falling knives right now, please...just put it on your radar.

Fortuna Silver (FVI.v) now at $0.76. Uff, how i suffer in this stock (for this stock?). I repeat; this company has 50 cents of cash per share. I repeat; it is so cheap it's laughable. I repeat; FVI advertises here and I'm long and DYODD.

If FVI.v is the baby, Colossus Minerals (CSI.to) is the bathwater. This is what the stock has done since Patrick "adding value" Anderson joined the BoD (as mentioned here and here at the time).

(click to enlarge)

I'm reminded of Radiohead: "Karma police arrest this man, he talks in maths he buzzes like a fridge, he's like a de-tuned radio."

UPDATE: Forgot to mention it again. The USD index is now at 80, and main man Gary at biiwii has consistently called the index as going to 80/81 as if drawn by a magnet. A direct cause-effect, gold now $759/oz. Tin foil hat heaven!

Thinking about it, copper's continued resistence at 3.10 really is quite impressive under the circumstances. Now $3.13, and still bouncing round that 3.10 to 3.13 range. I'm ever more convicned that Dr. Copper and the way he breaks will define the whole ball game from here....we wait....we watch.

Barrick, Pascua Lama, Argentina, Chile


Argentina and Chile are finally moving forward on the Barrick (ABX) Pascua Lama gold mine project. As Bloomie reports in English, Chilena newspaper "La Tercera" writes that the relevant authorities from both countries will meet later this month to try to hammer out fiscal matters on the mine that straddles the two countries way up high in the Andes.

Even by LatAm standards, this project has been severely delayed. Just google the name and you can find plenty of "it'll be operational by 2002" and then "one year later" and then "by 2005" and then "by 2008" comments from Barrick talking heads. The environmental angle is strong, too, with well organized protests on both sides of the border due to the way the mine will have to "relocate a glacier" to get at the orebody. For sure the EIA conditions will be very stringent, but that shoudn't be a project-killing problem in the 21st century and I'd wager right now that the project gets green lighted before the end of the year (but I would't wager too much money). As for beneficiaries, ABX will certainly like to move the mine forward, but maybe the better play would be International Royalties (IRC.to) (ROY) that has bought a tasty chunk of Pascua Lama royalties on a sliding scale (see the company website linked here for details) DYODD, dude.

9/9/08

Gold:Silver ratio

Way back in May I wrote on the gold:silver ratio in this linked post. As part of the post I wrote:

"...the way I like my TA charts. I don't want to peer at my friend's gold/silver ratio for a few minutes and kinda weigh up the probabilities of him making a good call; I need to look at 'em for about a nanosecond with worrying too much about this indicator compared to the relative merits of that signal; I want 'em sitting up and begging.."

I think that this latest chart qualifies in the "sit up and beg" stakes, don't you?

(click to enlarge)

My only mistake today was to go long GLD. I should have gone for SLV. That will be remedied tomorrow, fear not.

Recently spotted in Quito, Ecuador

Reuters today reported that Corriente (CTQ) is being "eyed up by global mining giants". The report mentions big world player Xstrata as well as Chilean state miner Codelco, and then also mentions Chinese player Tongling. There was nothing really new about the fact that CTQ itself is talking with all and various companies, but the solid news contained was that the Ecuadorean gov't (and not CTQ) has been approached and has talked to these three entities.

FWIW, I think it very unlikely that Codelco will step out of Chile and take an active role in a new mine in a different country as they have plenty of projects on their local plate already. On the other hand, Codelco is a welcome visitor in Ecuador and a long-standing partner to the Chinese metals industry; an advisory role is more probable. To hear Xstrata is sniffing around is interesting and logical, but the one you have to pay attention to is Tongling. For one thing, it doesn't really matter which Chinese company is the ostensible front, as all the recent Chinese purchases of LatAm mining projects have been funded by the state.

But hearing the word Tongling also ties in with the fact that Corriente head honcho Ken Shannon and other CTQ bigwigs were very recently spotted dining (well, lunching to be precise) in a high class Quito restaurant with a large party of Chinese guests. A good time was being had by all, and Shannon picked up the bill. I'm sure it can be filed under "essential investor relations expenses."

What with the recently leaked draft mining law hitting the streets and looking reasonably business friendly it might be time to take a position in CTQ stock, but the greater uncertainty of the copper market will probably need to wash through before anything concrete happens., I'd guess. But all the same, CTQ.to is now one for the list of possible buys.

Buen provecho Ken,
and good luck with the investor roadshow in New York at the end of the month ;-)

Lehman Brothers, Moris Beracha and Venezuelan Bonds

Albert's back with another riddle!

There's something going on that involves Lehman Brothers, Moris Beracha and a whole heap of Venezuelan bonds. There's something about the combo of these three elements that's making a few people break into cold sweats today.
  • We know that Lehman Brothers (LEH) was the original emissor of structured debt paper currently being held in the Venezuelan "FONDEN" development fund holding tank.
  • We know that Beracha advised Lehman on the deal.
  • We know that a lot of the debt was paid off by the Central Bank under an initiative devised by Beracha and ex Finance minister Isea, but that policy was stopped in its tracks before the Treasury guys got round to paying off the Lehman debt.
  • We know that the structured debt is worth around U$300m and is currently at a discount to face value (we don't know what kind of discount, though).
  • We know that out of the blue last week Lehman issued a "buy PdVSA debt" call (though it should be stressed that PdVSA debt is not the same paper as the Lehman emitted structured debt in FONDEN).
  • We know that LEH stock is under severe pressure at the moment.
  • We know that Warren Buffett is famous for saying "Only when the tide goes out do you discover who's been swimming naked." Now whatever made me think of that one?????
So what's going on here? Can anyone put these pieces together and make a pretty picture?

Related Posts
Moris Beracha and the Venezuelan parallel exchange rate
Venezuela's currency slide: Mo' Moris
Lehman Bros and Venezuela Bonds and Otto

I think we're at number eleven

Trading Post (timing is important edition)

One of two things going on:


1) I missed the capitulation selling climax by 24 hours
2) I'm in trouble


I'm banking on the first one.
  • Copper held the line and now sits at $3.12/$3.13. Very good looking chart in the making if this holds.
  • Gold also bounced, and came off $780 to sit at $789 right now (and in profit on today's GLD buy). That's also encouraging.
  • Meanwhile in the "I'm getting creamed for buying one day too early" stakes, FCX at $68 and bits and CS.to at $2.44 are my big regrets from yesterday. Spot copper decides whether I bail, not share market action. Holding through.
  • That's because yesterday's capitulation selling was a mere dress rehearsal. Today it's ten thousand clients phoning five thousand brokers and screaming "get me out of miners, fer gawsseks!!!".
  • And a quick note to readers; there is also plenty going on in politics (and even interesting economic numbers appearing), but as my attention is totally on capital markets right now it's reflected in the blog subjects. LatAm political snark will return soon, fear not.
UPDATE: I forgot to mention the number one most important factor. The USD index has reversed, now down on the day to 79.1. Keep this number in the absolute centre of your screen.

South America World Cup futbol Qualifiers: results and next round


First, the result from the weekend's matches, and then the bets for the midweek round eight.

Yet again I prove to the world that I suck at betting. My bets were:

$45.58 on Chile to win (3/1)
$15 on Uruguay to win (11/4)

As for the results, Uruguay won 1-0 and made me money, but Brazil whupped Chile's trasero 3-0 and so I only get paid on my minor bet. This leaves me just $56.25 from my original $100 bankroll (a couple of rounds ago) to play with. Safe to say the bookmakers are not exactly tremblin' with fear about this series of posts.

But hope springs eternal, and here are the round 8 matches that are played tomorrow. Underneath my selections. Prices come from skybet dot com (for those not used to the UK oddsmaking system see the bottom of the previous post here)

Paraguay 4/11.... draw 3/1.... Venezuela 8/1
Brazil 1/9 ....draw 11/2.... Bolivia 20/1
Peru 9/2.... draw 5/2.... Argentina 4/7
Uruguay 8/15.... draw 12/5 ....Ecuador 11/2
Chile 5/6 ....draw 9/4 ....Colombia 3/1

The one compelling bet here is Chile at 5/6. Sure they lost at home over the weekend, but Brazil as a team finally decided to wake up, and when that happens they can make the best team in the world look ordinary. Chile is a good team, be sure about that. Also, Colombia haven't impressed much. I'm going to make this into a win double and add Brazil to win at 1/9. The odds are tiny, of course, but this is as close to an absolute certainty as is possible in futbol. Therefore the bet is:

$56.25 win double on Chile 5/6 and Brazil 1/9

For what it's worth, if the bet comes in my hypothetical bankroll will stand at $114.58.

Game on!