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12/13/08

From a reader's mail to Bill Cara to a good idea worth support

Cara has better taste in neckwear than Agapov

Reader 'RS' mailed me yesterday to say nice things about the blog (appreciated) and to say that he'd linked one of my posts to the "Bill Cara Community" message board. So I clicked his link and went over to look (apparently I'm slightly cynical...shurely shome mishtake ossifer:-) but while there I saw the following post from Bill Cara. I think this is a great idea. Mis dos centavos after the paste-up:

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AUTHOR BILL CARA, LINKED HERE (timestamp 09:21am): I would like to ask your help. Two years ago, I embarked on a project that I thought was very much needed and very successful until the lawyers at UBS, ML and MS told me (politely mind you) that I must stop uploading to the Internet their published reports. That was only fair because I was receiving pdf's from over 20 broker-dealers, often minutes after being released to their staff, and the google and yahoo webcrawlers snapped them up from me and posted them for the world to read -- most often before the staff or clients of those firms could do the same. That wasn't fair, so after the first complaint -- the global head of legal matters for UBS came in -- I agreed to stop. But I still told these lawyers that their own staffs were foremost in the letters I was receiving asking me to get for them research from their peer broker-dealer firms, and those reports were not being sold by them for cash and were being freely shared by all Wall Street firms.

Now I'm ready to start the process again, but I'm not going to make these reports available on the Internet. I am only going to do it on a personal request basis and only to those who commit not to re-publish them on the web. This community is an investment club, not unlike any other in that we have accounts with all these broker-dealers and we have the right to obtain their research for discussion amongst ourselves. If the lawyers for the aforementioned firms disagree then please submit your response; but I will not be so forthcoming this time. What's good for the goose is good for the gander. They cannot permit other investment clubs to flourish and then stop mine.

So, if you are somebody who has access and can spend the time to retrieve and send the Wall Street/Bay Street research to me, even if it is just about a few companies or industries, please contact me in confidence.

I have set up a partitioned server to host these reports that will prohibit unauthorized access. I will need several sources for each broker-dealer because there is a lot of available research, some of it very good. So, please do what you feel you can. In return for participating in the Cara Community, the reward in the information you will continue to receive will be substantial. I intend to do all I can to level the playing field.

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Otto sez:

1) Bill Cara has a motto of "Capital Markets and Social Equity", which is basically where this humble corner of cyberspace comes from, too. We all have our own agenda, of course, but it's pretty clear that Bill Cara knows oodles about his profession, cares a lot about the smaller retail investor and wants to level the playing field for the lil guy. He seems like a very good dude and a straight shooter, all told.

2) His initiative mentioned above is a manifestation of that. I often reflect on the quality of analysis available to the pro community as it compares to the meagre scraps offered up to the small shareholder. I've even quietly linked to a couple of reports here while knowing it's a bit naughty. Therefore making quality reports only normally seen by the pros available to all and sundry (in a way that the lawyers won't be able to moan too much about) gets big applause from me.

3) Cara's idea sounds good and I'll be supporting it by throwing reports his way (plenty pass this desk). My personal taste as a phaedrus of this world means that I don't really like community chats, message boards, internet clubs and all that. I tried for a while and in the end they didn't suit me so I won't be joining Cara's community personally. However they are popular with many people, that's wholly healthy and good, so for those inclined there seems to be a very good community spirit over at Cara community dot com and a high level of shared knowledge. You might consider joining yourself. Here's the link, go check it out.

And before we go any further, let me point out that I don't know Bill Cara. Never met him, never talked with him. I don't get any sort of commission or payment for recommending his community board to you. Nothing, zilch, zip, nada. This is a headsup for you guys out there, no more and no less. My only connection to his board is that a handful of readers here are also community members and that's how I know it exists.

The bottom line is that it may well be worth your while joining his community chat board. Give it some thought. Personally, I hope Cara's idea of making a quality research library available to all gets off the ground quickly and becomes a great success.

As a reminder, this is the only thing you need to know about Crystallex

Ask the KRY directors and the shameless promoters of the company one simple question: Where did the money go?

Peru's Sendero Luminoso embraces capitalism

Image from a 2007 Peruvian TV report

A very solid piece of reporting from Reuters yesterday. Here's the link to the note that updates on Sendero Luminoso (Shining Path), the Maoist terrorist group that is making a comeback and making serious money via the Peruvian cocaine business. Here's the start, read the rest yourself:

INTERVIEW-Peru: Shining Path expands role in cocaine trade

12 Dec 2008 23:07:53 GMT Source: Reuters

By Diego Ore and Terry Wade LIMA, Dec 12 (Reuters) - The Shining Path rebel group, which led a bloody civil war in the 1980s, has expanded its foothold in Peru's cocaine trade to run lucrative drug labs and coca farms, the country's top counterterrorism official said on Friday. The Maoist insurgency, whose war against the state beginning in 1980 killed 69,000 people, largely collapsed in the early 1990s after its leaders were captured. Holdout members of the group have since provided protection services to drug traffickers. Members have mostly scrapped their ideological struggle but recently stepped up attacks against police and soldiers. Antenor Rosas, director of Peru's counterterrorism police, said the Shining Path was moving increasingly into more profitable parts of the drug trade in the world's No. 2 coca grower, including cultivation and production. In an interview with Reuters, Rosas said yadayada continues here

12/12/08

Rusoro, Gold Reserve, Crystallex, Gold, Venezuela, Brisas, Las Cristinas, Bloomberg and Inca Kola News

Andre Agapov and a serious bow-tie

Yeah, a whole range of fave raves in the title line, and all because of this little report out of (the rapidly improving) Bloomie Venezuela. They even get to name a decent source of information for once. I may have missed on the Ecuador story (and I'll write a longer post on that tomorrow), but this one is coming to pass as seen.

This is off the wires, so no link as yet (but it's kosher). Once the story makes it to the open internet I'll add.

UPDATE MONDAY AM: Rusoro bids for GRZ. Still doubt?

Enjoy.

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Venezuela Gold Projects May Be Joined, Rusoro Says (Update1)
2008-12-12 23:42:33.830 GMT

(Adds Gold Reserve comments from 11th paragraph.)

By Steven Bodzin
Dec. 12 (Bloomberg) -- Two Venezuelan mines containing about $25 billion worth of gold most likely will be developed as a single project, according to Andre Agapov, chief executive officer of Rusoro Mining Ltd.

The projects, known as Las Cristinas and Brisas and controlled by Crystallex International Corp. and Gold Reserve Inc., are “one ore body, and it would be naive to think it would be more than one company” involved in development, Agapov said in a telephone interview from London. He suggested a Russian miner would get the job.

The mines have been in limbo since both Toronto-based Crystallex and Gold Reserve of Spokane, Washington, failed toget needed environmental permits in April. On Nov. 14, Agapov said that Rusoro was Venezuela’s “preferred partner” to develop the site. Agapov considers his Vancouver-based company Russian because he and the other founders are Russian.

“Only a Russian mining company can afford” to remedy problems at the site, Agapov said today. “Which company, I don’t know, but it’s the only way it’s going to be resolved,” he said. “I see resolution in the first half of 2009.”

Government Take-Over

Venezuela’s Mining and Basic Industries Minister Rodolfo Sanz said Nov. 5 that the country would take over the mines and administer them.

Rusoro, which has taken part in Russian diplomatic} missions to Venezuela, already operates the country’s Choco10 mine.

At Las Cristinas and Brisas, “it would be naive to believe it will be two ownerships, two permits. That will never work” for Venezuela’s mining and environment ministries, Agapov said today.

Together, the two mines contain more than 31 million ounces of proven and probable reserves, valued at more than $25 billion at today’s price.

Gold futures for February delivery fell $6.10, or 0.7 percent, to $820.50 an ounce in New York. The price reached a record of $1,033.90 on March 17.

Rusoro gained 5 cents, or 16 percent, to 36 Canadian cents in Toronto Stock Exchange trading.

Agapov declined to comment on a report on mining blog Inca Kola News that his company may try to take over Gold Reserve after being rebuffed in September. “They’re perfectly positioned for some transaction,” he said. “I don’t know if it will happen or not. It’s the end of the year. Maybe some brave ones will step in.”

Shares Jump

Gold Reserve President Douglas Belanger said he knew nothing about any attempt to take over his company and said today’s 30 percent surge in the share price was most likely the result of rising gold prices and the stock being worth half the company’s breakup value.

“There are no bids, not that we’re aware of,” he said. “We wouldn’t comment anyway.”

Gold Reserve rose 9 cents to 39 cents. It has plunged 92 percent in the past year.

Belanger said he recently converted non-trading Class B shares into sellable Class A shares because the stock’s value had dropped enough that he could trade out of the Class B stock without tax liability.

“It was just simple accounting, a chance to clean something up that had been around for years,” he said in a phone interview. “If I had converted them at $10, I would have had about $9.70 taxable income. I just took advantage of the low price.”

He also said the company’s debt remains outstanding and hasn’t been bought back. Crystallex spokesman Richard Marshall didn’t immediately return a call seeking comment. The stock declined 1 cent, or 7.1 percent, to 13 cents in New York. It has fallen 94 percent in the past year.

Related Post

Why Gold Reserve (GRZ) may about about to sell out to Rusoro (RML.v)

air traffic

A Friday night off-topic, and one of the most impressive youtubes I've seen. Hat tip to Felix Salmon at Market Movers.

Tales of sleepy Colombia

The gentle side of life in the USA's favourite local free democracy revealed once more.


Cristian David Daza was drinking in his local in Bogotá and smoking his favourite brand of cigarette. The problem with this small scenario is that on December 1st just past Colombia finally caught up with the rest of the world and banned smoking in public places, including, of course, Cristian's watering hole.

When the first waiter asked him to stop smoking, he just carried on. So a second waiter on duty told his colleague not to serve him any more. Cristian reacted by stabbing the waiter in the shoulder and then, when chased down by the bar's owner, stabbed the owner in the chest twice and killed him.

Nice place, no? Or in the words of the Bogota Tourist Promotional Committee's own English language website:

".......guarantee a special treatment to those who stay in Bogotá on weekend."

Bless 'em!



Studmuffin obviously didn't sell enough advertising space for tomorrow's show........


........so by way of spite he's going to make his declaration on the debt payment in precisely 10 minutes' time, at 2pm local time in Quito. Here's Reuters to confirm that I'm not fibbing.

I'll be updating this post later. A roll on the drums, please........................................

UPDATE: Well guess what? I was wrong, and President Studmuffin is taking his country into default. Here's Bloomberg's version:

By Stephan Kueffner Dec. 12 (Bloomberg) -- Ecuador won’t make a $30.6 million bond interest payment due next week, putting the South American country in default for a second time in a decade, President Rafael Correa said.

“The country is in default,” Correa told reporters in his office in Guayaquil. Correa, calling the debt “illegal” and “illegitimate,” said the government will present a restructuring proposal to bondholders in coming days. “We want creditors to recoup part of their money.”

The country’s bonds plunged to under 25 cents on the dollar yadayada continues here

As a little mitigation, I point out that the advice was to take half profits today at the 31c prices offered, but that doesn't disguise the fact that this sucks.

As more mitigation, he's clearly aiming to get a deal done here and he's not saying "we ain't gonna pay never never", but doesn't disguise the fact that this sucks, either.

As the last little droplet of mitigation the call to buy Ecuador paper was made when it stood at 21c and 22c, so it's still a win. But hell, this still sucks.

Bonds have dropped from those 31.5c levels yesterday to 25c now, and Elliott Associates are sharpening their knives as we speak. Mark Weisbrot got the call right this week. Good shot, sir.

More on this later. Meanwhile he's the proof that I was dead wrong on this call. Having opinions is a real burden sometimes.

Trading Post (platinum edition)


An ounce of gold is now selling for more than an ounce of platinum. I don't have a clue what that means, but it's pretty cool to see after watching platinum double over gold this year. Meanwhile, over in the fun fantasyland we call 'the junior miners'..........

Gold Reserve (GRZ) up 30% at $0.39 on good volumes. The rumour going round on this side of the Darien Gap is that Rusoro is making another offer for GRZ. I honestly don't know if that's true, false or salad (comme on dit en france), but I do know that 1) it would be the most obvious rumour to spread around if you wanted GRZ higher, 2) it may be true, 3) if I had a dollar for every rumour I heard about stocks down here, esp. gold junior miners, I'd be sipping piña coladas at an expensive resort right now and not writing this blogpost.

Dynasty Metals (DMM.to) up again and at $1.55. The bid is higher than the last trade, too. If you think I'm pounding on the table about this stock, you're right. I am. Live with it. Or better buy yourself a few and then live with it as it soars to $3. DYODD.

Troy Resources (TRY.to) up 7% at $0.73. I had a very pleasant e-mail exchange yesterday with Claude Cormier of Ormetal Inc. It's always good to speak with the smart investors and commentators in the gold sector. Cormier is an investor/analyst who knows about gold, not a tinfoilhat goldbug....and there's a BIG difference. Anyway, Cormier likes TRY.to bigtime and that's a pretty good reco in itself. I'm going to have a close look at it in the next couple of days, so expect a post (there...I've said it now....no turning back)

Candente (DNT.to) down 15% at $0.165. The market didn't like its dose of reality much this morning, it seems. However Otto sez to keep this thing on your radar. If copper moves up in a meaningful way it has a future, and there's no doubt it's dirt cheap right now.

Farallon (FAN.to) up 30% at $0.17. There certainly seems to be bottom fishers biting these beaten down plays over the last few days. FAN.to getting its turn at the head of the queue today. The trick is identifying the next one, not the last one. Any ideas from out there?

Venezuela's budget, currency devaluation and a chance for the prophets of doom to win money and kudos

Feeling lucky, punk? (redux)

This week Venezuela's Congress passed the 2009 budget, coming in a touch under U$78Bn and with an air of austerity (here's Reuters in Spanish). It's typical for Vzla budgets to be thrown in lowball then any extra gravy from better oil sales is used on discretionary projects, so the benchmark oil price of $60/bbl for 2009 (50% higher than today's price) means that unless oil climbs the country will have to nip and tuck at some point.

As usual there are plenty of expert analysts (the same people who would have cost you your life savings if you followed their advice over the last two years) calling for the country to devalue its currency, the Bolivar Fuerte (VEF); the same chorus has been calling this tune every year since...well, since Venezuela's economy started expanding rapidly (and that really disappointed them), but it looks like a devaluation might actually happen this time. If the country goes into recession it makes sense to deval while there is less inflationary pressure. On the other hand, if oil picks up it'll be business as usual and the VEF stays at 2.15 to the dollar. So the bottom line is that there is unlikely to be a deval in the first quarter of 2009 at the very least. Then after that point it depends on the state of the oil market, not on much else (certainly not politics).

The last round of BS about an imminent devaluation of the VEF was back on October 23rd. At that time I offered to bet $100 that there would be no deval in what was left of 2008. Unfortunately, the shills talk the talk but can't walk the walk and I failed to get anyone to wager with me.

But here comes the second chance, sportsfans! I again offer to bet U$100 that on 31st March 2009 the VEF has not been devalued and is still at the official peg of 2.15. The bet is offered at even money (your c-note covers my c-note) and we settle on April 1st 2009 via PayPal (or whatever you prefer).....we can even arrange for the money to cover a meal at Fallen Angel (or at least the round of cocktails). Any takers?

Candente (DNT.to) offers the world of copper a dose of reality

A very interesting press release from Candente Resources (DNT.to) today, the junior exploration-stage copper play run by Joey Freeze (i.e. class mgmt act) and owners of the Cañariaco greenfield in Peru.

The PR (linked right here) reports on the 3rd party economic assessment recently done for the project. There's the usual amount of blah blah (if you're a wonk like me, you should read the full PEA report by Samuel Eng. available on this link) but it all boils down to this chart....

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Cu Discounted NPV's (Post-Tax)
Price$/lb (x1,000,000) Pre-tax IRR Post-tax IRR
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0% 8% 10% % %
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1.75 $ 771 ($158) ($250) 7.4 5.6
2.00 $1397 $127 ($8) 12.4 9.9
2.25 $2024 $388 $210 16.9 13.5
2.50 $2651 $645 $424 21.2 16.7
-----------------------------------------------------------------------
......and the capex price tag of U$1.17Bn. So zoom in on the 8% discounted NPV line (the traditional benchmark for projects such as this). We see that until we get to U$2.25/lb copper the IRR (internal rate of return, just a fancy way of saying "the money we'll make") isn't so great. Or put it another way; if you wanted to invest one point one seven billion dollars, you'd be looking for a decent profit, no?

The bottom line is that DNT.to, a pretty good set up as junior coppers go, has just presented a cold fact to the market; there will be no copper projects coming online until the metal gets back above $2 minimum. Not Cañariaco, not anywhere. That's because the DNT.to project is a very good benchmark in world-style numbers (relatively cheap, relatively big, relatively well-run, relatively well-designed etc). We have a very good reference point going forward. Until copper moves back above $2, the market will not get any new supply.

I like this news a lot.

As for Candente, the robust economics of just a few months ago have faded away. No market genius needed to work that out; all you need is a price chart handy.

There's hope for this stock here at 20c; if copper moves above $2 it's a double and if it goes above $3 then expect DNT.to to be a five-bagger or simply bought out by a major. Today's press release a nice, clear map for both DNT.to and the sector in which it works. Use it to your advantage.

Charts of the day are...........

...24 hour and 60 day spot copper.

Wow, the US Congress has just laid us a beautiful trade (for those of us in cash, anyway). Because if copper rallied then failed due to the Detroit bailout plan and last night's backfiring.....

......and The Hawaiian has made is clear as a bell that he's going to save them creaking carmakers (and check the dude's statements.....this isn't some wild OttoGuess here) then copper will rally in the same style all over again.

It's not often we get to see a glimpse of the future. If you don't take advantage of this one come the right time I suggest you stick to time deposits going forward. The only question left is "when to buy"; let's see how this episode of the soap opera pans out. First part is to let the headless chickens and shills do their job.


12/11/08

Cemex, Harold Wilson, investments and gurus


"A week is a long time in politics" said British PM Harold Wilson in the 1970s. That may be true, but four days is enough in the wakked out world of the stock market version 2008

Earlier this week we noticed how copper surges, then collapses, then soars, then slumps on alternate days, with reasons drawn out of a tombola drum by financial hacks and fed to the beast. But tonight we take Mexican cement giant Cemex (CX) as our example, and let's give Bloomberg headline the chance of screaming at us:

Dec. 11 (Bloomberg) -- Cemex SAB, the largest cement maker in the Americas, fell the most in 11 years in Mexico City after the company failed to refinance some debt and analysts predicted “very weak” results this quarter as the economy slowed.

Cemex slid the most in the Bolsa Index, losing 19 percent to 11.42 pesos. It was the yada yada continues here

Which compares to this headline about the same company from the same media source just four days ago (Monday 8th)

Dec. 8 (Bloomberg) -- Cemex SAB rose the most in at least 14 years on speculation North America’s biggest cement maker will benefit from an infrastructure stimulus plan in the U.S., its largest market.

Cemex, which got almost a quarter of its revenue from the U.S. last year, surged 27 percent to 12.65 pesos in Mexico City trading for its biggest gain since yada yada continues here

Confused? You won't be, after this week's episode of HeadlessChickens.

Nobody knows what's going on right now; not in copper, not in cement, not in oil, not in gold. There are plenty of prophets on offers to the highest (or even lowest) bidder and those with the loudest voices are the ones that will likely seduce the most sheep. They might also get their calls right, as the worst charlatans out there will just call the same thing over and over again until it's their turn to get the stopped clock award. Screw the timing boyz, just get the monthly subcriptions off your beloved flock.

Want to know how to become a better investor? There are a thousand valid pieces of advice to offer in any one of a hundred different categories under the grand umbrella of "investing", but here's just four ideas for tonight:

1) Do your own due diligence. DYODD, dude. This is the most basic step of all and it's a MUST. If you invest your cash in ticker XYZ without finding out about the company, expect no sympathy when your account comes with flushing toilet sound effects.

2) If you don't know, ASK! A couple of days ago I got a mail from a reader asking me about Dynasty Metals. He said that there seems to be two tickers for the stock and his E-Trade account only showed DMMIF.pk and not DMM.to. These questions may be basic for some of us, but we were all rank novices at some point. It's a pleasure to help with the basic points.

3) Turn off CNBC. Honestly. Do it now and don't turn it back on. Yeah great, infotainment and and Fast Money and Booyah! and all that jazz. It's just noise. If you base your investment life around what you see on TV you're condemned to a life of stockchasing and disappointing results. Spending 8 hours looking at finance issues on the internet is a far better time investment than doing the zombie and seeing that advert for American Express for the 934th time.

4) Do not believe anyone. Not me, not her, not him. If you're bearish on a stock, find a bull and listen to why s/he thinks your wrong (and vice versa). Listen to experienced traders and market commentators if you want. Develop respect for some of them if you must, but never trust any of them blindly. Nobody knows all the answers, and if you start deifying these swamis and soothsayers (to use Gary's phrase) you might find religion at the end of your journey, but there won't be much cash hanging around to help celebrate enlightenment.

Trading Post (supply edition)


Gold is up. It's in short supply (so they tell me).

Oil is up. OPEC is cutting supply (so they tell me).

Nickel is up. Supply is dwindling as Sudbury mothballs itself piece by piece (so they tell me).

Zinc is down. Discuss.

As for a few stocks........

FCX up 6% and PCU up 1.5%. I'm the guy that nailed the call on FCX but didn't put a bean on it. Is that smart or stupid? YOU BE THE JUDGE!

Fortuna Silver (FVI.v) up 9% at $0.70. YAY!!! There is justice! Hot damn this stock is cheap, and it's high time the market saw it so. 25% up in just a couple of days and plenty of volume to like, too. Yes, FVI.v is a site sponsor, but it only got on here because i like it. Don't put the cart before the horse, dudettes and dudes. DYODD, as always.

Great Panther (GPR.to) down 16% at $0.25 today. This stock shows the flipside to Fortuna's strong balance sheet and why having a big slug of cash and low cash costs is vitally important these days. After the bell yesterday GPR.to announced at big dilutive placement to raise $2.7m, via 13.5m shares at 20c a pop (and a half warrant attached that puts the full dilute over 100m).

This $2.7m is for payroll...no more and no less. That sucks. This is a company that tried and failed to raise capital on its recent London trip and are now forced to dilute because they have no cash left. As the old saying goes:

"Shareholders; if they can't take a joke, **** 'em."*

If silver stays where it is they'll be doing the same thing in two quarters' time. Avoid like plague and add GPR.to to the list in the previous post.

Colossus Minerals (CSI.to) up 24% at $0.57 and on fair(ish) volumes, too. You go girl! Only another $2 and the Albatross's options are in da money!

* copyright RB

It's mailbag and it's quiztime!

Aaah, nice to see this picture back

Loyal and loved IKN readers, today we're holding a special quiz. So fingers on the buzzers and get ready with your answers. But first (and totally unrelated), here's a little story about my mailbag this morning.

Today I got a mail from this guy who wanted to know my real identity. As mentioned before (in this post, in fact), I don't have any problem with that as long as the mailer doesn't come across as unhinged, so I told him. He then comes back to me asking questions about my nationality, the domicile of the company where I work and, most interestingly, whether I have legal counsel.

"Cool guy", thought I, "just the kinda dude who could make my day." So I wrote back a nice mail telling him that I'd be happy to supply further information as long as he tells me who he is and why he's interested. The dude decided not to tell me anything about himself but continued asking me about my personal details. "Hey", thought I, "that's a touch bogus. He's not playing fair." So I politely declined to tell him anything else until he comes up with his own goods. Y'know, quid pro quo and all that.

AND NOW FOR A TOTALLY DIFFERENT SUBJECT: HERE'S TODAY'S QUIZ.

Question (purely theoretical, and nothing at all to do with today's mailbag):

What company or person would be the most likely to have hired a secretive and evasive ambulance-chasing shark-like shyster to stop me relating some of the cruel realities of the stock market?
  • Novagold (NG) (home of Greg Johnson)
  • Crystallex (KRY) (a longtime fave)
  • Petaquilla Minerals (PTQ.to) (le plat du jour)
  • Colossus Minerals (CSI.to) (home of The Albatross)
  • Dorato Resources (DRI.v) (or perhaps "The Cardero Group")
  • Richard Fifer (of PTQ)
  • Eric Zaunscherb (of Aurelian coverage (in)fame when at Haywood, now at Can'o'Corn and only allowed to talk about miners operating in Canada until he learns a bit more Spanish)
  • Bloomberg Brazil or Venezuela
  • Simon Rosemary
  • Greg Johnson (the NG guy who sold half a million shares in daily lots in the month before the bad news hit)
  • Walter Molano (not used to people pointing out the problems with his misleading articles)
  • Hendrick Van Alphen (head honcho of Cardero)
  • Patrick Albatross Anderson (Aurelian shareholders knew what Colossus shareholders now know)
I'm sure there are others....there's a lot to remember! Obviously politicos aren't listed or otherwise this post would take far too long to write.

So, answers on a postcard please to...

otto.rock1 (AT) gmail (DOT) com

....and give yourself a chance of winning the big star prize, a night out with Jim Willie.

Toodle Pip!

Ecuador bonds: the build up to Saturday

The professional arm-wrestling circuit reaches Paraguay

Here we go with the rumour-mill that presages Saturday's big final announcement from Studmuffin on whether Ecuador is going to pay the nasty coupon on their nasty illegal debt.

This morning El Comercio reported that Ecuador has bought back $680m of its own bonds, its source being....errr.....someone. The idea is that the bonds are dirt cheap right now and they can retire their own debt for relative peanuts. This was one of the original conspiracy theories about the whole thing, if you can remember back that far. Here's Bloomie on the story:

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Ecuador Bought Back $680 Million of Bonds, El Comercio Reports

By Stephan Kueffner

Dec. 11 (Bloomberg) -- Ecuador has bought back $680 million of its debt through a state-owned bank, Quito-based newspaper El Comercio reported, without identifying the source of the information.

State-owned Banco del Pacifico managed the debt repurchases after the government skipped a $30.6 million interest payment on Nov. 15, invoking a 30-day grace period, the newspaper reported.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Remember scandalfans, Saturday December 13th is the big Muffin annoucement day during his weekly live radio/TV show. Be there or be square.

Gold be flyin'

Spot gold (click to enlarge)

$833/oz and climbing (update 20 mins later...stalling!!). This is good. I sold my JAG yesterday,but don't expect me to be unhappy about today's move, because the LT portfolio is getting a serious dose of love and affection today. Noteable is the lack of love in base metals today, with silver stuck in the middle of the clowns (to the left) and jokers (to the right).

As for the fun part that gets most of the airing on the blog, namely the trading portfolio, it's DMM.to and cash (and cash far outweighs the DMM.to). Is today a buying day? Well, not at the bell, as a rush to get in through the door is a likely scenario. Let's see if there's a bargain sitting up and begging later on.

As mentioned yesterday (in passing at least) crude oil should be watched closely. It's likely to set the tone for the next few sessions, in fact.

All in all, this is setting itself up as a very interesting day.

Chart of the day is............

...Bolivia's literacy rates, 2001 to present.

In nine days' time, on December 20th, Bolivia will be declared "country free of illiteracy" by its president, Dr. Evo Morales. Since 2005 over 817,000 adults, mainly indigenous country dwellers who never previously had the chance, have learned to read and write.

UNESCO's official definition of a literate country is one that has a 96% of its adult population that can read and write. In 2001, UNESCO measured Bolivia at a little over 85%. In 2005 that number was still under 90%. Then the education rate suddenly jumped from 1% annual gains to 2% annual gains in this key measure for education. Now take a wild guess at which year Morales became Prez.........yeah, you got it, 2005.

The 817,000 people educated by this gov't will now be able to learn and voice their opinion in a democratic way. Bolivia should be proud of its advancement in this sphere. Hell, it was about time, no? Makes you wonder what the advantage was for some previous governors not to educate their citizenry.

Evo Morales: Still your idea of a dictator?

12/10/08

More Petaquilla Minerals (PTQ.to)

Richard Fifer (white stubble, invisible hair) posing with Mel Gibson...or is it
Noriega? Or Don Winner? Uff, I get confused....

Y'know, after fanfaring to the world that your gold mine was about to open and your gold mine was going to produce 100,000 ounces of gold in 2009 and your gold mine was wonderful and cheap and everything (and even getting local Reuters lapdog to regurgitate your BS for the wider world), you would have thought that it might drum up a bit of interest among the investment community.

Not at Petaquilla Minerals (PTQ.to). It may have something to do with the fact that the management are liars and the statement aboout PTQ.to having the necessary environmental permits is 100% false, misleading and fraudulent. It might have something to do with CEO Richard Fifer's dubious past as a local politican now under embezzlement charges. It might have something to do with the total and utter rejection among locals of his mining project that is screwing up the quality of life in the area. Hell, it might be due to this humble blog getting the word out about these shady characters and their, "Pssst! Wanna buy a gold mine in Central America?" marketing techniques. But for one reason or another, the dreams that PTQ.to might have had of buyers queuing up to get a slice of their action has not materialized.

So what to do? Well, you can always prop up your own stock price by buying every single bid on any given day. For example, note that of the eight trades completed in PTQ.to on Monday 8th December, eight (i.e. all) of them had a certain Richard Fifer as the buyer (and note the cute little 500 share tape-painter at the end of the day....you go girl).

Dec 09/08 Dec 08/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 500 $0.500
Dec 09/08 Dec 08/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 9,500 $0.490
Dec 09/08 Dec 08/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 1,500 $0.490
Dec 09/08 Dec 08/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 11,000 $0.470
Dec 09/08 Dec 08/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 500 $0.470
Dec 09/08 Dec 08/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 5,000 $0.450
Dec 09/08 Dec 08/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 5,500 $0.450
Dec 09/08 Dec 08/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 20,000 $0.450

At least Fifer has the morals of a ship's captain and has decided to go down with this sinker. Must be looking out (from the concessions picked up in 1986 and never developed in the last 21 years) to the Panama Canal that does it.

Related Post
Petaquilla Minerals: "Oops, we forgot to tell you that we're a bunch of lying shits."
Petaquilla Minerals (PTQ.to) update: Liar, Liar, Pants on Fire

Trading Post (Gold medal edition)


The dollar is down, gold is up, the rest is noise. Cue the goldbug chorus of fiat death coming to a tinfoilhat website near you soon. Meanwhile, for the well-adjusted amongst us..........

What do you do when the market offers you a near 20% gain in one of your two equities holdings during a vicious bear market? Me, I say "KA-CHING!!! THANK YOU!!! PLEASE CALL AGAIN!!". Or in other words Otto has taken profits on Jaguar Mining (JAG), currently up 10% at $2.58.

If you have the word "gold" in your corporate name you're probably having a good day. Pick your own fave, but here are a couple of stories:

Gold Resource Corp (GORO.ob) up 10% and getting love thanks to this morning's press release.

Kinross (KGC) (K.to) up very nicely at $16.50...it looks like the PPS busted through some sort of ceiling this morning and blue sky all around now....or not.....I dunno. DYODD, dude.

Petrobras up 15% at $22 and continuing the wild ride. OPEC decision is the chatter du jour. All I know is that the following oil themes are in the crapper at sub-$50 oil:
  • Canadian oil sands
  • Saudi national budget
  • Brazilian subsalt oil projects
  • Russian national budget
  • Venezuelan national budget
  • Kuwaiti national budget
  • Colombian, Peruvian, Argentine independent well spudding projects
  • etc
Think about it.

Mercado Libre (MELI) zooming again. Now at $16.50. It's cheap, it's growing, it has no debt. Kinda weird to consider that if the USA was growing by 2% per annum people would bid up this stock to $50 because of Brazil's reatil sector strength. Especially weird considering Brazil's retail sector is still strong and it hardly matters what's going down in Macy's, BedBath&Beyond or JC Penney's (if they all still exist...pls advise).

FCX up 10% at $21.80 now. My stink bid yesterday didn't fill so I'm just an interested observer on this move. Still following the advice in SinkingAlpha folks? Those people who write on resource stocks over there are bad for your financial health (unless of course you use them as you should, namely the greatest contrary indicator known to man).

Moody's on US mortgages: a free report

This has been a popular download at the site, so let's highlight it one more time so it can benefita few other readers. Click on this link to get your totally free, gratis and for nothing report published by Moody's and under the title "Into the Woods: Mortgage Credit Quality, Its Prospects and Implications", pretty vital stuff to know about in this current macro environment.

Here's the blurb underneath to give you more details. Let's hope you take advantage of this free offer and get educated about the state of the key US housing sector and what it might mean to investors.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Request Your Free Special Report:

"Moody's Economy.com - Into the Woods: Mortgage Credit Quality, Its Prospects and Implications"

How serious is the erosion in mortgage credit quality?

This Moody's Economy.com special study utilizes unique data from Equifax and Moody's Investor Services to assess future levels of credit degradation and where the greatest challenges will be realized. The study evaluates the threat mortgage credit problems pose to the housing market and broader economy, and the scenarios under which these problems could result in an economic recession.

This special report is written by Moody's Economy.com, Inc., Sponsored by Equifax.

Geographic Eligibility: USA

Publisher: Equifax

For your free copy of this report, click here

Two newsbites from Colombia

Roberto Escobar; totally trustworthy

Is there a more bizarre country in the world than Colombia? Even after over a decade in my beloved LatAm, Colombia is the country that still occasionally makes me sit back, whistle a soft whistle and say "man, that's weird", and most of the stories have death as a common theme, too. I wonder why that is? Anyway, here are two great stories:

Story 1: Seventy years after a guy called Ponzi got famous in the USA for ripping off people, Colombians decided to reinvent the wheel. However the repercussions are slightly different for employees of the spectacularly failing DMG pyramid scheme, as 17 of its suppliers are reported as having committed suicide by DMG reps. Otto thinks "have been suicided" is much more likely.

Story 2: Roberto Escobar, Pablo Escobar's brother and a man who reputedly killed up to 4,000 in the heyday of his brother's cocaine empire, says that he has found the cure for AIDS. Now if this doesn't strike you as bizarro mondo you're probably from the Planet Zog. Here's what Roberto Escobar said:

"You can already tell the world that for a while already none of the patients using the medicine has died and after being cured they won't be contaminating anyone."

Roberto is currently keeping tight-lipped about the special recipe he's cooked up for this AIDS cure, but he did say that he's trying to make contact with a guy called Obama somewhere up North to raise funds for an AIDS clinic in Medellín. No, I'm not making this up. Here's the link.


Oh how I love, worship and adore Latin America. I wouldn't live anywhere else.

More luck than judgment


When you listen carefully to what LatAm politicos say, sometimes you notice how they inadvertently tell the truth. Today's example is Luis Valdivieso, FinMin of Peru and overpromted IMF-trained mediocrity. This is the same dude that took over the job earlier in the year promising inflation as under control, would be 5.5% at the end of the year (bigtime miss, Luismi) and that Peru would grow 9% in 2009 (errrr...revised down recently, dumbass?).

But the lapse into truth came at yesterday's presser when Valdivieso said (courtesy of OttoTrans™);

"...We are very lucky because the price of imported food is dropping..."

Y'see, these people can plan is prognosticate and pontificate until the cows come home, because the actual effect they have on their economies is between slight and none at all. Peru didn't suddenly grow in the last five years because of a newly found sanity in fiscal management; it grew because the world market decided it would pay more for copper, gold, silver and all their friends. Period.

And the locals kept on telling their citizens how they'd control inflation, but it's taken the onset of a global recession (no less) to curb the price rises felt by Peruvians (most of whom haven't seen a penny of the much vaunted GDP growth hit their own pockets). And note the spin; the world grows, and that's good for Peru. The world stops growing.... yessiree, that's good for Peru, too! Jam tomorrow, anyone?

It's all total BS...pure smoke'n'mirrors from all of them, not just Peru. Once they get past the basics of "build up reserves, tax the hell out of the little guy and leave the rich guys alone" they are then in the lap of the global gods when it comes to the long term health of their nations. It matters not the hue of governmental politics, either. If commods prices stay low, the following South American countries are in the caca:

All of them.

Chart of the day is............

......the gold to copper ratio:

No big reason to this one; just thought it was an interesting chart and helps get metals into context. As a sidebar thought, it is another reason to like FCX more than the broader market does.. This is the "gold backbone" I mentioned in the FCX/PCU/copper post over the weekend.

Gold Resource Corp (GORO.ob) news...interesting


Gold Resource Corp (GORO.ob), a small and tightly held junior gold in Mexico, has just had a $5m cash injection thanks to silver mining bigboy Hochschild (HOC.L) of Peru.

Interesting for a couple of reasons. Firstly Hochschild (HOC.L) has been beaten up really badly recently and it's clearly keen to get more gold production on its portfolio. Secondly because this industrious Otto recently wrote a NOBS report on GORO.ob and liked the company, too. As a quick plug, you can get your own copy of the GORO.ob report for a very reasonable $10 (yep, that says ten dollars) and find out more for yourself about the company and maybe why Hochschild thinks the same way. The PayPal is....

otto.rock1 (AT) gmail (DOT) com

....or just use it to write me a mail and ask things. Anyhow, here's the PR from GORO this morning:

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Gold Resource Corporation and Hochschild Mining plc Form Strategic Alliance; $5 Million Private Placement

Wednesday December 10, 6:00 am ET

DENVER, CO--(MARKET WIRE)--Dec 10, 2008 -- Gold Resource Corporation (GRC) (OTC BB:GORO.OB - News) (Frankfurt:GIH.F - News) is pleased to announce that it has formed a strategic alliance with Hochschild Mining plc (Hochschild) through a $5 million private placement of 1.67 million shares of GRC's restricted common stock at $3.00 per share (no warrants). Hochschild is a world leading precious metals producer listed on the London Stock Exchange. Based in Lima, Peru, Hochschild is a mid-tier gold producer and the world's 4th largest primary silver producer with mining projects in five countries in the Americas including Mexico.

Funding will be used for the continued construction and exploration of GRC's El Aguila Project in Oaxaca, Mexico. GRC is focused on
yada yada continues here

12/9/08

Happy Anniversary, Mister Ex-President

Congratulations, Alberto Fujimori. Your court case is one year old tomorrow.


Today's quiz: Arrange the following words into the variant of a popular phrase or saying:

organize in couldn't brewery a piss Peru up a

Rating LatAm for mining, country by country


So there we were, an e-mail pal and I shooting the breeze yesterday, when he asked me what kind of score out of ten I'd give this-or-that country down here for a combo of miner-friendliness, business-friendliness and importantly acceptance of foreign direct capital (FDI). After I replied he said "hey, that lil' list would make a cool post, dude", so here we are.

The countries are in alphabetical order and I've missed out most of the TPLACS*. The list is by no means definitive and just a personal take on things.

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Argentina: between 0 and 8, depending on the province. It's a real mixed bag because regional governors have far more influence than the national gov't. As a couple of examples , Mendoza scores a fat zero (note where XRC.v has a large play and why they never talk about local politics). On the plus side Jujuy would score a very solid eight....the kind of region that NGO treehuggers fear to tread. Rule one: never upset a miner in Jujuy by threatening to close his mine down....they got dynamite and pickaxe handles and stuff

Bolivia: 3, but was a 5 and will probably go back to 5 or so in the next year or so. The country is full of families that have mined the seams for generations. The main problem is that the backbone metal of zinc is low and putting people out of work. FDI is welcome, but not at any price. Playing good corporate citizen with your local village and your national government is part of the game.

Brazil: a 4 or 5 to get through the inital paperwork..once you're up and running it's a 7 or 8. It's a bureaucratic and corruption nightmare to get a business going in Brazil, but once you have the paper ducks in line things get easier. In the case of mining local traditional local families do not mix well with the providers of FDI; (What passes for) the Brazilian upper class landed gentry has a superiority complex that makes Donald Trump look humble.

Chile: 10. In the words of Tina Turner, simply the best. Chileans look after their miners and welcome FDI with open arms, giving tax breaks and preferential treatment to foreign miners. Unusually for LatAm corruption is not a big problem (hey, after what I've seen coming out of Illinois today, the USA has a lot to learn too). It doesn't have the best reputation for regional business for nothing.

Colombia: 6 or 7...surprisingly good these days. Regions such as Antioquia are actively promoting themselves to FDI nowadays, and there's a quiet groundswell of junior exploration projects happening under the radar of the wider mining community. Again, regional issues are important, such as getting extorted or assassinated by far right or far left terrorists. I mean, a bullet in your head could ruin your weekend.

Ecuador: Right now it's a poor 3, but once that mining law hits the books Studmuffinland will be a 5 or more. This is going to be great! Again micro-regional issues are important to take in account. There are plenty of pockets in Ecuador that are raring to get mining, and Zaruma is one of them. Buy DMM.to!

Guyana: 4. Corruption is high, action and forward movement is low. The country doesn't have a big reputation as a welcome home for FDI (outside of the banks, anyway) and it shows.
There's nothing really wrong here that a decent pathfinder project couldn't improve.

Mexico: 9..almost as good as Chile...some regions have social issues but apart from that we're in another low taxation and high mining acceptance country. Plenty of rocks to look at, too.

Paraguay: 4...nobody has a clue about mining. Not a clue. There are a couple of juniors pootling around the country and uncovering some friendly rocks, but it's a real crapshoot how both local and national leaders will ever react to some guy saying "Look, we really want to invest $500m in your country and build a mine right here (points at map with finger)."

Peru: 7...not as good as people imagine. The bureaucracy is a pain. There are plenty of miner-friendly regions, but micro-regions can be anything from wall to wall mining communities that welcome FDI with open arms to extremely hostile locals that would burn your Jeep (with you inside) rather than see you dig a hole in the ground. Local knowledge is essential in LatAm, but Peru mining is an extra special case.

Uruguay: 5 ..ok i suppose for the little amount of mining that's done there. It gets in the way of the cows and sheep, y'see.

Venezuela: Zero; give me a choice between two Christmas gifts; a mine in Venezuela with a $10m NAV or $10,000 in cash. I'd take the cash after about one nanosecond of careful consideration. You could even barter me down to $5,000 if you tried. The Venezuela of Hugo Chávez has plenty of positives, but its attitude to FDI isn't one of them. Its attitude to miners is another. They know a lot about oil, but Miley Cyrus knows more about mining than MIBAM.

*tin pot lil american countries

Trading Post (cursing local utility companies edition)


Aaaaaaaargh!!! Could have got DMM.to at $1.30 all day if I'd been connected here!! Not only that, a good trader friend bought at the intraday bottom and mailed me to thumb his nose, too!!! ARRRRRGGGGGH. Now C$1.35 and the question is whether to chase the price or no...or put another way, "Which wrong decision shall I make this time?"

FCX down 1% and off a buck since this morning. At least I had fun doing the grocery shopping downtown while you guys were staring at the ticker. Now that the office has electricity supply and there's 30 minutes left of the trading day I've just put in a stink bid for a few FCX.

The Dow dumped. What a surprise. You should be selling these spikes...well, at least until CNBC tells you that buy'n'hold is dead, then we might get a real rally (or is it too late? :-)

JAG was doing well, now it isn't. At $2.27 I'm in the green, just about covering commish and a cup of coffee....and a slice of apple pie.

Normal service....

......has been screwed up by a power cut chez Otto. So this is a quick post from a crackberry (and I didn't think it'd work) to say "come check by later, folks".

Meanwhile, a w00t for FCX as it ignores the idiots at SinkingAlpha, ignores the drop in copper spot and revalues its way back over $20. PCU coming along for the ride, too. This is good.

Another w00t for DMM.to upping to $1.48 though volume is low. This is just the start of something beautiful people. Don't say I didn't warn you.

12/8/08

No more bottles of beer on the wall


NEW YORK, NY--(MARKET WIRE)--Dec 8, 2008 -- On December 8, 2008, the law firm of Sarraf Gentile LLP commenced a securities fraud class action lawsuit on behalf of those investors who acquired the securities of Crystallex International Corporation ("Crystallex" or the "Company") (AMEX:KRY - News) during the period July 28, 2005 to April 30, 2008, inclusive (the "Class Period"). The lawsuit is pending in the United States District Court for the Southern District of New York and names as defendants Crystallex and certain of its former officers.

According to the complaint, the defendants made several statements during the Class Period about the Company's Las Cristinas Gold Project located in Sifontes, Venezuela, and that the issuance of the required Venezuelan government permit in connection with that project was imminent. The complaint alleges, however, that during the Class Period defendants did not have a reasonable expectation that the Company would receive the required permit and that on April 30, 2008, the permit was, in fact, denied. On news that the permit was denied, the complaint alleges, the Company's stock fell roughly from a closing price of $1.68 on April 29, 2008, to a closing price of $0.91on April 30, 2008, on heavy volume.

continues here