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12/20/08

Ho ho ho

Do what you must do, developed world citizen.

There was this "gifts for him under $25" link on the front page of Yahoo this morning, so I clicked on it to see what you guys will be getting up there. One that caught my eye was a company called "The Art of Shaving" that offers a pre-shave balm at $19.95.

Believe me, as long as brand names such as "The Art of Shaving" exist the USA has no idea about poverty and hasn't experienced what 'recession' means, either. So when you're out shopping between now and the 25th and you walk past that Salvation Army bucket, drop a dollar in, yeah? Don't pat yourself on the back for doing it and don't do it out of shame or pity, either. Just do it. No big deal.

Of all the cartoons...

.......that Jurgen Schuldt has collected on the financial crisis over on this post, I like this one the best.

Go have a look at the 50 (yes, fifty) cartoons Jurgen has collected together in one spot. Most need no knowledge of Spanish, but for those who do speak the language watch out for a great one of Twobreakfasts and his wife watching TV.

An excellent compilation and highly recommended as a weekend kickback. Here's the link again, just in case.

12/19/08

Crisis? What Crisis? (Ecuador edition)

After using the urinal next to Alvaro Uribe, Correa explains all

A shiver went down my spine this afternoon when reading this article posted on 'The Presidency of Ecuador's' website. It's not the country, it's not the President himself; it's the continent. One of the classic signals of real financial problems down this way is when the head honcho of country X says "There's no problem with our banking system." This time country X happens to be Ecuador.

So here below are the direct quotes by President Studmuffin in the report today (in OttoTrans). For the Bloomberg version by Stephan Kueffner, click here

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Nobody here is talking about a bank holiday (i.e. forced closure of banks). This government doesn't do things like that."

(These are rumours from).."those that sunk the country and want to become powerful again. We are not going to let that happen. The citizen's revolution is irreversible, friends."

"The financial system is in excellent health. Of course the financial crisis is harsh, but we know how to move forward with imaginative measures."

"When you hear an economic pseudoanalyst or editorial say that measures have to be taken now, what they are telling us is to send us a "paquetazo" (ottonote: literally "big packet", a concept in LatAm meaning a combined package of price and/or tax hikes). There isn't going to be a paquetazo. We are going to take advantage of this crisis and use it to make the social and econonic system more equal."
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Now there are things to agree with there (e.g. the rumour mongers that want to start some kind of crisis for their own ends...that's for sure). There are things up for debate (e.g. a more equal socioeconomic system sounds like Utopia to me, esp with crude oil at $40/bbl). But I wish he hadn't gone and said "The financial system is in excellent health". Uff........there goes my spine, all shivery again.

Trading Post (copycat edition)


Bad news for Dynasty Metals (DMM.to). Some dickhead called James West, best remembered for calling "buy" on SWG.to just AFTER the Boka gold samples scandal hit last year, has shown up on BNN (I always preferred its previous name, ROBtv...much more suitable considering its content) and made some very unintelligent, neutral noises about the stock after being caught off-guard with a very easy question, finally deciding it was a buy because....well, because he said so and he's a TeeVee personalitee and he must be important. I wish these people would stick to what they're good at. Nothing. Anyway, DMM.to is slightly up on slight volume. I'm cool and holding thru, despite the crud it's attracting all of a sudden. Thanks for the headsup, BF ;-)

Nadagold (NG) down 20% at $1.49. Remember that little cryptic comment about Nadagold (NG) yesterday? (Is it possible to get working cap and screw your shareholders at the same time?) Have a look at this Reuters report for the first round of explanations. There's worse to come for shareholders, but don't worry 'bout the bossmen...they'll keep getting their money no problem.

Minera Andes (MAI.to) now down 17% at $0.475. The stock market is a hard, hard place. This is the company that was the virtual pathfinder for Southern Argentina mining and for the longest time was the only thing out there. Now that it has its mine up and running it gets judged on its high cash costs and lack of positive cash flow. It's quite right, of course, but goes to show that you don't get to win just by being a good guy.

Rusoro (RML.v) up 10% at $0.325. I've had a lot of mail on this stock in the last 48 hours, most of it very intelligent and readable. Thanks for all correspondence of this sort. It seems to be on a full PR offensive, with PRs about its lower cash cost results and Pres Salamis on BNN and this and that and the other. Well, it's still a mighty "avoid" of a stock. If it does eventually get to play in the Brisas/Las Cristinas sandpit with the Vzla gov't it will need enormous chunk of capex to fund its part of the construction. And looking at today's PR and tapping the keys of my Casio, it's not bringing in more than $18m of free cash flow per quarter (and that's being generous; it's probably much less). Or in other words this stock is going to get diluted to merry hell soon, so if you like its gameplan Otto sez buy after the big dilution, not before. DYODD

Bot Cosan (CZZ)

If you heard a big "SPLAT" sound in October, it was probablyCZZ

Hellfire, this feels weird. I've just bought a sizeable chunk of Cosan (CZZ), the big Brazilian sugar/ethanol play. The weirdest part of all is that I'm taking this position for at least three months (a promise to myself) and that's as close as I've been to adding to the LT positions for at least a year, maybe more.
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So mark me down as a buyer at U$2.84 and mark me down as a sugar bull over the next few weeks. Let's see how this one goes. DYODD dude.

Minera Andes (MAI.to): well, this sucks

Here's the link to the Minera Andes (MAI.to) PR this morning, but this is what it says:
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Minera Andes Inc. ("MAI") announced that following a meeting of the shareholders of Minera Santa Cruz, S.A. ("MSC") on December 17, 2008, the shareholders of MSC can expect to receive a cash call of US$23 million to finance further expansion and development of the San José project. MSC is owned, indirectly, as to 51% by Hochschild Mining plc ("Hochschild") and as to 49% by MAI. MSC is the registered owner of the San José gold project in Argentina. MAI's share of the cash call is approximately US$11.3 million, payable by mid-February, 2009. Failure by MAI to pay this amount when due will result in a dilution of MAI's interest in MSC below 49%. MAI is investigating financing alternatives available to it.

This request for additional funding is being made notwithstanding previous assurances by Hochschild that additional cash calls would not be required as the mill and plant are operating and Phase I of the initial expansion has been completed. Further plant expansion costs were therefore expected to be paid from cash flow.
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So MAI.to has to come up with $11.3m to keep San José running, even though they've been producing for a while and the company (not HOC.L, but MAI.to) assured us all on several occasions that they'd be cash flow positive by now. Humph...can't trust anyone these days, can you? That's what comes of a creeping cash cost number.
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MAI.to has dumped 10% on this news, and for once I agree with the sell-off in this stock. What was once an Otto favourite is now an also-ran, at least for the time being. Finally, I note with chagrin that two readers now have the right to say to me "I told you so, dumbass." I'll be expecting your mails...you know who you are.

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

.....crude oil via the WTI contract, three year chart.

I have no special comment for this one except for "WOW, I never thought it would get so low". And as WTI is somewhat the cream, most other crude contracts are much lower than this one. As an example, I note MidEast crude at $33.52 right now.

I'm glad I've never tried to play this market, as I would have been wiped out seven times over these last few weeks.

Only in Argentina


Disgusting news out of Argentina last night. Twenty of the worst pieces of shit that were responsible for the disappearances and hundreds (even thousands) of people via the infamous ESMA building during the military dictatorship have been ordered free.

Why? Well this is the disgusting bit; The judiciary has ruled that time is up for pre-trial custody. These people have over 800 cases to answer for, but not one of them has been moved forward sufficiently by Argentina's congress to make it to trial as yet. So the judiciary blames congress, and congress blames judiciary and the flotsam and jetsam of this world get out of jail. In the case of the most famous of the lot, Alfredo Astiz, he's been in jail since 2003 but not one case has been brought against him yet. This is worse than ridiculous. To give you an idea of the calibre of the man Astiz in a context that gringos might understand better, British war veterans of the Falklands/Malvinas conflict remember him as the guy who ordered his troops to fly white flags at Goose Green then, when the British soldiers got close enough, ordered the same soldiers to open fire. As for his exploits during the disappearances, as well as being one of the head torturers at ESMA he was the guy who condemned two French nuns to death during his undercover work, the signal for those watching being a kiss on the cheek of the nuns. Crud like Astiz, "El Tigre" Acosta and all the others should rot in jail forever, but because of the laxity and collusion from passive friends-in-high-places he'll now walk free.

UPDATE: I should have checked first. Lillie at Memory in Latin America is all over this story and does a far better job of telling it, too. Here's the link, Go see.

Another one for the Mark Mobius collection

Oh dear, very bad news for emerging markets. The evermore ridiculous and desperate EM permabull Mark Mobius is headlined as saying this today:

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By Francine Lacqua and Michael Patterson Dec. 19 (Bloomberg) -- Emerging-market stocks are “bottoming” and will begin a new bull market next year as interest-rate cuts spur economic growth in developing nations, investor Mark Mobius said. “We’re beginning to see this bottoming situation,” Mobius, who oversees about $26 billion in emerging-market stocks as executive chairman of Templeton Asset Management Ltd., said in a Bloomberg Television interview from Hong Kong. “I sincerely believe that next year we’re going yada yada continues here
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Why bad? Well, if you remember back to this post dated October 9th, we had Mark Mobius saying the following at the following dates this year:

By Daniela Silberstein and John Dawson

Oct. 9 (Bloomberg) -- The global financial crisis won't last long and emerging-market stocks are a ``wonderful opportunity'' for investors after their record rout, said Mark Mobius, executive chairman of Templeton Asset Management Ltd yada yada CONTINUES

On September 15th
Templeton's Mobius Says Merrill Deal Signals Bottom (Update2)

"....The decisions will ``go a long, long way to stabilize the situation,'' Mobius said. ``We're probably now at the bottom and it'll be a build up of confidence from here on in, if these decisions are made.''"

On August 20th
Emerging-Market Retreat Is `Overdone,' Mobius Says (Update2)

"...Mobius said he's buying as many consumer shares in emerging markets as he can."

On July 22nd
Mobius Sees `Good Bargains' in China, India Stocks (Update2)

Mobius added that he favors shares in Brazil and Russia because the two markets can still benefit from the demand for energy and other raw materials.

``Russia and Brazil are pretty much in the same position,'' Mobius said. ``Both of those areas are swimming in excess liquidity, which will drive consumer prices as well.''

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At least people aren't laughing behind his back any more. They're laughing straight at his face. Your time is up, Mobius. Any fool looks good in a bull market.

12/18/08

Two stories on BN Americas tonight about Las Cristinas, Brisas. GRZ, KRY and RML.v

If any of the following surprises you I just hope you've never heard of the place.


Government to install gold refinery at Las Cristinas - Venezuela
Thursday, December 18, 2008 18:10 (GMT-0400)

Venezuela's basic industries and mining ministry (Mibam) plans to install a gold refinery near the Las Cristinas gold project, a ministry official told BNamericas.

"The idea is to industrialize gold production because the Venezuelan state is taking over those areas along with [the industrialization] that Rusoro will carry out," the official said.

The initiative came about because the Venezuelan government estimates that the area holds reserves of close to 41,700oz of the yellow metal, according to the official.

The refinery calls for the creation of Minera Venrus, a JV with Rusoro Mining (TSX-V: RML), that will be in charge of exploration, mining and marketing the gold, and will also be responsible for building facilities and the metal processing plants, the official said.

Las Cristinas has 464Mt grading 1.13g/t gold or 16.9Moz contained in proven and probable reserves, in addition to 629Mt grading 1.03g/t gold or 20.8Moz contained in the measured and indicated categories.

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Rusoro keen on developing Brisas, Las Cristinas together - Venezuela
Thursday, December 18, 2008 15:48 (GMT-04

On Wednesday (Dec 17) an official with Venezuela's mines and basic industries ministry (Mibam) told BNamericas the ministry has finally decided to rescind the mining concessions of Gold Reserve on Brisas and Crystallex International's (TSX: KRY) rights for Las Cristinas in order to develop the two projects with Rusoro.

"I can't confirm that," Rusoro president George Salamis said in a Wednesday telephone interview following the report. "All I can say is that the government is very happy with what we have done on other projects." As Russian company Rusoro Mining (TSX-V: RML) enters litigation against Gold Reserve (TSX: GRZ) over a recently launched takeover bid by the former, the company said it is eager to one day develop Gold Reserve's Brisas project in Venezuela and the adjacent Las Cristinas property together, and ultimately become the premiere miner in the country.

He added, however, that developing Las Cristinas and Brisas together "would make sense from an operational perspective. It's the same ore body."

Salamis specified, however, that for the time being Rusoro is concentrating on taking over Gold Reserve and only then would turn its attention to developing Brisas.

Rusoro launched an unsolicited all-stock takeover bid for Gold Reserve on December 15 after having sent a non-binding letter of intent to acquire the miner in August, which was rejected.

"We tried to do things in a friendly manner but enough is enough," Salamis said. "We have to resolve the situation in kilometer 88 [the so-called mining district where Brisas and Las Cristinas are located]."

"We will be the premiere mining company [in Venezuela] and that's why we started the company in the first place," he added.

Las Cristinas has 464Mt grading 1.13g/t gold or 16.9Moz contained in proven and probable reserves, in addition to 629Mt grading 1.03g/t gold or 20.8Moz contained in the measured and indicated categories.

The Brisas project holds proven and probable reserves of 10.2Moz of gold and 1.39Blb (630,039t) copper.

To read the full interview with Salamis, see this week's Perspectives, to be sent to subscribers on Friday


I wondered where he was


Guillermo Parras-Bernal* was a Bloomberg journalist I used to speak with (or spar with depending on the subject) quite regularly in my real job, but then kinda suddenly he kinda disappeared on me....kinda. Well the good news (for me at least) is that he's suddenly resurfaced as a blogger.

This is good news for you too, methinks. GPB is a smart watcher of LatAm affairs and his English language blog is well worth your time. As from today it's on the links list over there on the right. Any of you that don't just come for the snarky gossip and really do want to know more about what's going on down here would be wise to add his blog to your list.

Here's the link to his blog, named Market Memorandum. Use it. In fact, why are you still here at my cheesy blog? Go on.............go.........................now.

*crazy name, crazy guy

Trading Post (make it quick edition)


1. GORO.ob and DMM.to both up a bunch. Want me to crow some more? Nah, didn't think so.

2. NG down a bunch Is it possible to get working cap and screw your shareholders at the same time? YES!

3. Copper sisters FCX & PCU down a bunch. Copper is sub $1.30, so waddya expect?

4. There are more things to cover probably but Otto isn't feeling very well. It must have been the quadruple absinthe with the cider chaser..........or maybe it was a maraschino cherries floating in the cider. I really must change my breakfast menu.

Dynasty Metals (DMM.to): Do I have your attention yet?

I've been pounding on the table since December 1st about Dynasty Metals (DMM.to). It was $1.22 at the time. To be as fair as possible I called it a raging buy for you guys before I bought it myself.

Then I managed to sell a few of the NOBS report on the stock, too. (That's still available, by the way. Here's the link). So here's the ten day chart, with today's action...errr....pretty clear.

Right now we're trading at $2.37. Not bad for two weeks' work, no? Read the report available above and you'll find out why this is only the start of the upmove. I want to sell more of the NOBS report on DMM.to because I want you to be in on a very good investment.

A free white paper for these recessionary days

As we're closing in on Christmas here's a free present from IKN to you, dear reader. Check out the blurb underneath and get your copy of this totally free, gratis, for nothing white paper entitled "Talent Management in a Down Economy".

Free. A price that works for me. Here's the link to get your copy.

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Request Your Free White Paper:

"Talent Management in a Down Economy"

Learn how to fuel higher levels of business performance by developing, redeploying and retaining top talent.

This white paper explores the relationship between talent management strategies, processes and practices, and the advantages that can be gained by organizations coping with an economic downturn. Learn why talent management is the key issue for businesses worldwide and remains a central strategy in any economic season.

Geographic Eligibility: USA, Canada

Publisher: Taleo

Click here to apply

FruityRumPunch update


You thought I was joking in this post about Presidential downtime in Brazil this week? Here's Chile's Michelle Bachelet taking a late afternoon dip yesterday, accompanied by her director of programming and good friend María Angélica Alvarez.

Of course in Chile this has set off the chattering classes and some kind of debate about "Presidential image", which kinda underscores just how anally retentive the Chileans can be at times. The girl's having a swim...big deal. And she may not sport a top model's silhouette but she's been doing her job right recently. This time last year her approval rating was in the mid 40s but the latest poll gave her 56.8%.

So you go girl....but please don't suggest to Twobreakfasts that a media-witnessed dip in the sea might be good for his image, too. Ugh.

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

.... the Positivo (POSI3.sa) five day chart, including this morning's action in Brazil.


A salutory warning about investing in Latin America right here. Rule one is "rumours make other people rich, not you" and the biggest crooks wear suits and ties and work for banks and brokers.

Site sponsor news

Note the recent volume.....

Vena Resources (VEM.to), beaten back to where it bounced the last time, has published on its coal start-up business in Peru. Read the PR yourself and pay special attention to the fact that the company doen't have a price fixed for its goods yet, but all the same this is an easy and technically simple way of adding alsmost immediate cashflow to the company.

You need to DYODD on the company (as always) because I have two vested interests:

1) Vena sponsors ths blog

2) I like the company and how it's going about its development program under tough market circumstances.

But there's no doubt it's cheap, and there are far, far worse pennyflip possibles out there. Have a look at the PR, and if you want to investigate further here's a link to the VEM.to website

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Vena Acquires Coal Producing Property and Updates Corporate Structure
Wednesday December 17, 4:22 pm ET

TORONTO, ONTARIO--(Marketwire - Dec. 17, 2008) - Vena Resources Inc. ("Vena" or the "Company")(TSX:VEM - News; LIMA:VEM - News; FRANKFURT:V1R - News) is pleased to announce the acquisition of its first producing coal project with plans to increase tonnage deliveries to a large Peruvian cement manufacturer. The property is currently being mined at a very small scale; however the Company has received an order for a minimum of 2,000 MT of coal per month, with the option of increasing it up to 6,000 MT per month in the near term. The Company plans to confirm non-43-101 compliant resources and to continue to sell coal to local cement and steel manufactures. Vena is also pleased to announce the appointment of Ing. Luis Moran as General Manager of Peruvian operations. Mr. Moran is a chemical engineer with an exemplary track record in the Peruvian mining industry. He has been on the board of directors of Centromin Peru as well as Minero Peru SA and held the position of general manager for San Ignacio de Morococha Mining Company, Castrovirreyna Mining Company as well as general manager and president of Hierro Peru (ex - Marcona Mining Company). Mr. Moran also held the position of Vice President of the Special Privatization Committee for several large Peruvian mining companies (Tintaya, Centromin, Minero Peru and Hierro Peru).

The Company also would like to extend its gratitude to James Fairbairn who recently resigned from the board of directors as well as to Rod Ogilvie who recently resigned as Vice President, Engineering.

The Oyon Coal Property - The formation containing the coal seams corresponds to the Oyon formation of the lower Cretaceous age. The main structure controlling the location of the identified coal seams corresponds to an asymmetric syncline with a north-south bearing; the coal seams outcropping along its west and east flanks. A number of coal seams have been identified within the mining concession with thicknesses that vary between less than one metre and exceptionally reaching four metres, all of them hosted in dark gray slates and gray sandstones of the Oyon formation.

The Alexia and Micaela seams are the most outstanding due to their geological characteristics and their relative continuity outcropping for over 670 metres, their average thicknesses being 4.0 metres and 2.0 metres, respectively. The Alexia seam has been partially exploited but the old workings are currently collapsed due to the inadequate mining method previously used.

The results obtained from chemical analyses of channel samples taken show that ash content ranges from 6.0% to 31.5%, volatile matter content is moderate to low, ranging between 8.8% and 16.0% and fixed carbon ranges between 58.3% and 82.5%, whilst sulfur contents are all below 1%.

Historical Resource Potential - Non 43-101 Compliant

A preliminary field evaluation and review of historical production and exploration records, including mine development plans and an EIA application submitted to the Peruvian government by the previous operator performed by Vena's consulting coal geologist, Dr. Rolando Carrascal PhD, has so far identified estimated historical coal resources in the range of 620,000 TM to 700,000 TM and a prospective additional tonnage ranging between 130,000 MT and 150,000 MT. The Company plans to conduct an exploration program based on Dr. Carrascal's guidance leading to a NI 43-101 complaint report in 2009.

Dr. Carrascal, PhD Geo is acting as Vena's qualified person for all coal related projects. He has not completed sufficient work to classify the historical estimate as current mineral resources, and it should be noted that Vena is not treating the historical estimate as current mineral resources and that the historical estimate should not be relied upon. The Company would like to caution readers that the potential quantity and coal quality is conceptual in nature as there has not been sufficient exploration to define a mineral resource and it is uncertain if further exploration will result in discovery of a mineral resource.

12/17/08

False Positivos, Brazilian style

It's not just Colombia that will lead people to the slaughter with 'false positives'. Check out how Bovespa quoted computer maker Positivo (POSI3.SA) has been thrown around by da boyz.

Now follow the bouncing ball, ladies and gentlemen:

1) Positivo Soars on Report Dell, Lenovo May Buy Company (Update3)
Dec. 8 (Bloomberg) -- Positivo Informatica SA, Brazil’s biggest computer maker, soared the most since its initial public offering in 2006 in Sao Paulo trading on speculation Lenovo Group Ltd. and Dell Inc. may be interested in acquiring the company. Positivo rose 30 percent to 6.16 reais, the biggest gain since yada yada continues here

2) Lenovo’s Amelio Expects Industry Consolidation ‘Soon’ (Update1)
Dec. 9 (Bloomberg) -- Lenovo Group Ltd., China’s biggest personal-computer maker, expects PC companies to consolidate “soon” because of the global slump in stock prices, Chief Executive Officer William Amelio said.

“With equity values down significantly, there will be consolidations in this industry,” Amelio said in Shanghai today. There is “no news to share on” a possible plan by Lenovo to buy Brazil’s Positivo Informatica yada yada continues here

3)Positivo May Buy out Minority Shareholders, Itau Says (Update2)
Dec. 10 (Bloomberg) -- Positivo Informatica SA, the Brazilian computer company that more than doubled this week on takeover speculation, may buy out minority shareholders to proceed with a sale, Itau Corretora said. Positivo gained 16 percent to 10.44 yada yada continues here

4) Brazil’s Positivo Rallies for Fourth Day on Buyout Speculation
Dec. 11 (Bloomberg) -- Positivo Informatica SA, the Brazilian computer maker that doubled this week on takeover speculation, gained for a fourth day after Lenovo Group Ltd. said it’s in “preliminary” talks about potential investments.

Positivo climbed 6.3 percent to 11.10 reais at 9:45 a.m. New York time in Sao Paulo trading, extending its four-day advance to 6.35 reais.

Lenovo, China’s biggest personal-computer maker, hasn’t started any negotiations on possible acquisitions or agreed to any transaction terms with third parties, the company said in yada yada continues here.

5)Lenovo Says It’s in ‘Preliminary’ Acquisition Talks (Update3)
Dec. 11 (Bloomberg) -- Lenovo Group Ltd., China’s biggest personal-computer maker, said it’s in “preliminary” talks about potential investments, after the company’s shares rose 27 percent yesterday on speculation it will acquire Positivo Informatica SA. Lenovo hasn’t started any negotiations on possible acquisitions or agreed any transaction terms with third parties yada yada continues here

6) Positivo Plunges Most Ever on Report Lenovo Won’t Bid (Update2)
Dec. 17 (Bloomberg) -- Positivo Informatica SA, Brazil’s biggest computer maker, fell the most since shares began trading in 2006 on a report that Lenovo Group Ltd. dropped its pursuit of the company. Positivo slumped 23 percent to yada yada continues here

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Check those links and you'll find 'em all pumping the hell out of nothing; Unibanco, Citi, Itau, Goldman, you name the bank or broker with presence in Sao Paolo, they were all shouting their mouths off. All except for one. Agora's analyst Alan Cardoso quietly pointed out that there was no substance nor logic to the rumour on December 12th, but his voice was drowned out....until today. Kudos to Agora, but round trip sales commissions to the others. Believe me, it sucks being honest in this game.

Charles de Gaulle was right about Brazil. I'll leave you with this classic market cartoon that you've probably seen before, but it's a good one anyway.



Trading Post (cool yer jets edition)


Canadian markets are still glitched and closed tighter than a mallard's sphincter. Word is that the computer technicians are contracted from company called Madoff Inc...would that have anything to do with it?

Nadagold (NG) up tons again. Holy Moley, check the five day chart out.
That's a mighty, mighty rebound for such a crappy company. Today NG released a statement saying "we dunno what's making the stock do this" (12:54pm timestamp right here), probably trying to put the brakes on before it gets too high. After all, most of Greg Johnson's 580,000 shares sold before the "we're in trouble" announcement were around this current price and WW's Paolo Lostritto has to get his price target changed, too. Eh boyz? On a totally unrelated matter, I wonder when the next round of incentive options at NG will be awarded?

The copper sisters doing nicely, with both PCU and FCX up 5%+. Again this rebound pointing to the underlying value in these stocks and not a reaction to spot copper, still languishing under $1.40/lb. We follow 'em closely and know the score by now, right?

Gold Reserve has dumped 18% on the news of its weird and wonderful lawsuit, now at $0.50 on average volumes. Can somebody explain how you sneak onto a walled concession with a diamond drill rig and secret-squirrel yourself a few core samples? Man this is mondo bizarro. Maybe the kookiness of having KRY as neighbour for all this time must be rubbing off onto Belanger. He strikes me as the boy who takes his football home just cos the others won't let him be Diego Maradona.

Jaguar Mining (JAG) up another another 13% at $3.76. I refer the visiting reader to yesterday's comments on this popper.

Cosan (CZZ) up 3.5% and back at $3.00. I'm very close to buying and holding this company now. The ZIRPy Fed will help its debt profile and product prices at the same time. This is the stock at the very top of my list right now. Just have to overcome my personal inner whuss-barrier and I'll be long.

Trend and Value Report get queasy

Totally recommended post over at Trend&Value today, with Lucas noting that his experiment with Padovan numbers seems to be working (better than his forex calls)

He's also coined a very cool phrase, "Queasy Money". Personally I think he should copyright that sucka before some other blog tries to claim originality. Here's the link; a required visit for us financial wonks.

Dollar, Dogma and Dinero Dorado

Some enjoyable e-mail banter between your humble scribe and Biiwii Gary (one of those few people that are good at reading charts as mentioned this morning). He tried reminding me that I'm a dollar bull and I said "aha! not no more!" and he said "you can't change opinions!! That's cheating!!!" and I said "don't care" and stuff to that effect etc etc.
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But there is a serious point worth sharing here; with respect to the strong dollar I previously said give me reasons to prove me wrong and I'll happily admit it. The Fed just gave us all the most enormous reason to hate the dollar yesterday, so i go with JM Keynes when he said;

"When the fact change I change my mind. What do you do, Sir?"
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The virtual ZIRP unveiled by Bennyboy yesterday gives MONETARY reasons to like all assets. Things like traded commondities have the other part of the equation to factor in, i.e. end demand. You can see the difference in the way that e.g. copper (a true commod) and e.g. gold (a true asset) have reacted in the last couple of days.
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A fun part of the mix is silver. As pointed out in a recent post, Silver decoupled from tracking gold and started following the broad markets like a faithful dog. Or in other words it moved from its Dr Jekyll asset personality to its Mr Hyde industrial commodity personality. Silver could be the acid test to gauge whether this asset rally has real legs. But remember; there really is nothing new under the sun.

Trespass to take drill samples? Whaaaat??? The GRZ/RML.v saga goes from bizarre to totally whacko

Just when you thought it couldn't get any weirder, it did. Here's Globe&Mail's Andy Hoffman on the contents of the Gold Reserve suit filed against Rusoro (RML.v). Note the highlighted part for the Kafka input.
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$550m? LOL! Scorch my earth, baby. Gotta love this Belanger guy! My thanks to reader 'BF' for the headsup.
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Andy Hoffman
00:00 EST Wednesday, December 17, 2008

Rusoro Mining Ltd.'s ambitions to become a major gold producer in mineral-rich but politically challenging Venezuela hit a potential roadblock yesterday when takeover target Gold Reserve Inc. launched a $550-million lawsuit against Rusoro and its adviser Endeavour Financial International Corp.
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The statement of claim, filed in Ontario Superior Court, alleges that Rusoro trespassed on Gold Reserve's property in Venezuela to take drill samples and accuses Endeavour of having a conflict of interest because it acted as an adviser to both companies and had access to Gold Reserve's proprietary and confidential information. None of the allegations have been proved in court. Gold Reserve wants the court to grant an injunction preventing Rusoro from proceeding with its three-shares-for-one hostile takeover offer valued at $47-million. GRZ (TSX) rose 1 cent to 74 cents; RML (TSXV) rose 2.5 cents to 28 cents.

Just in case you were wondering........

...the Canada markets have a glitch (c'mon boyz, shout PTB at the top of yer voices). But who cares? Gold is rockin' and all is well. Here's bloomie
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Toronto Stock Exchange Trading Is Halted on Glitch (Update1)
By John Kipphoff

Dec. 17 (Bloomberg) -- TMX Group Inc. halted trading on the Toronto Stock Exchange and TSX Venture Exchange following a computer glitch that prevented quotes from being disseminated.
There is no estimate for when trading will resume, Sylvin Gauthier, a TMX spokesman in Montreal, said in a phone interview.

The nation’s stock benchmark, the Standard & Poor’s/TSX Composite Index, has tumbled 37 percent in 2008. That would be the steepest annual decline since 1931. An average of $5.79 billion in shares changed hands each day this year, according to data compiled by Bloomberg.

Dynasty Metals (DMM.to) has news out

It's the only position in the non-core portfolio, so I'm all over this one. This PR basically formalizes DMM's recent presentation at the San Francisco mining conference, but it's good to see them go to the trouble of nailing their colours to the wall via an official press release. I'm long this one. You long this one? You should be long this one. Find out more here about why this stock is a great buy right now.

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Dynasty Plans to Commission Gold Plant By the End of March 2009

Wednesday December 17, 8:30 am ET

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 17, 2008) - Dynasty Metals & Mining Inc. (TSX:DMM - News; "Dynasty" or the "Company") has nearly completed plant construction at its Zaruma Gold Project in Ecuador.

Company President, Rob Washer, commented: "President Correa and other senior Mining Ministry representatives continue to express publicly and privately their support for "large scale environmentally responsible" mining in Ecuador. After months of direct consultation with government and industry officials regarding the Mining Mandate and draft amendments to the Mining Act, we concluded we should complete construction so that we may commission the gold plant at Zaruma as soon as practicable. We are presently planning for the end of March 2009.Initially, we plan to process 300,000 tonnes of ore to produce approximately 100,000 ounces of gold annually. The installed capacity of yada yada continues here

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

......three charts that compare Southern Copper (PCU), Freeport McMoRan (FCX) and the Philadelphia Gold and Silver Sector Index(XAU). First here's the ten day chart, and the recovery in all three is clearly marked.

Then we have this one that shows the 12 month evolution. This one suggests that FCX is the place to be as it's the most beaten up of the three.

You'd have thought that FCX, with its copper-plus-gold product mix, would have survived the last few months better than the heavily copper (and moly, with some minor credits) PCU, but that ain't necessarily so, Joe.

Finally the long five year view. This one shows that owning gold stocks from late 2003 to late 2008 has been (dare I say this out loud?) a zero sum game.

It also shows just how high PCU flew after it had been discovered by the market.

So what's the bottom line here? Well draw your own conclusions, but I think there are several things to take away from this chart study. Here are just four of them:
  • PCU compared to the others on the long term chart shows the value in picking good stocks at the right time. It also shows how even the best can fall back if the underlying market sucks.
  • The one year chart shows how gold stocks have held up better than base metals stocks. This stands to reason and is part of the 'preservation of capital' drum I've beaten ever since this blog started in March.
  • The 10 day chart shows that the breath of life is being blown into all miners, not just the goldies.
  • But maybe the most important thing to note is how you can favour XAU, then PCU, then FCX just by changing the timescale of your chart. A great example of the biggest trap in charting. This is the thing that puts me off blowhards that say charts are the way the truth and the light. Charts are like statistics; if desired, you can pick and choose the one you want to make your preconceived point. The charts don't lie, but the people who write words around them certainly do. This is why I call TA (mostly) mumbojumbo and this is why a good chart-reader is as skilled as a good fundamental analyst (and also just as rare).

12/16/08

Lessons in human rights, Colombian style

Proposed design of the new school gates

Style one: Aida Quilcue is the head of the Colombian indigenous movement that recently organized the national protest march known as the 'minga'. For her own protection she travels in a 4x4 SUV with polarized glass windows. Today she wasn't traveling in her car, but her husband Edwin Legarda was. Here's what happened according to AP:

BOGOTA, Colombia (AP) — Soldiers at a rural roadblock on Tuesday shot and killed the husband of an indigenous leader who has organized anti-government marches.

Edwin Legarda, 34, was driving a Toyota SUV at about 4 a.m. near an indigenous reserve in western Colombia when the soldiers opened fire. One of four other people in the vehicle was lightly wounded, said Vicente Otero, a spokesman for the Cauca Regional Indigenous Council.

Legarda died at the San Jose Hospital in nearby yadayada continues here

And hey! Guess what? Justice is bound to be meted out on the Colombian national soldiers who thought they'd liquidated one of their government's strongest opposition leaders becasue the army has opened "an internal enquiry" over the matter.


Style Two: This could only happen in Colombia and is so bizarre it's difficult to capture the essence of the weirdness involved. The country is actually opening a "School for Human Rights" that will be run by....wait.....roll on the drums.....The Colombian National Armed Forces. Yep, the same guys who use that cool "false positives" concept of murdering innocent civilians to get their FARC bodycount up high enough for extra weekend leave are opening a school to teach the rest of Latin America about Human Rights! It's like getting Josef Stalin to stand up for the rights of Soviet intellectuals, or inviting the Mansons to babysit for a few hours.

Colombia is trying to justify this unfunny joke by saying it has just completed the "deepest purge in its military history" and my how deep they went! They managed to lose a full twenty-seven soldiers from their ranks due to iffy human rights records. So we are supposed to assume that the 89,973 military types left in Colombia's armed forces have never committed any one of the thousands of recorded cases of extrajudicial killings ...it was those naughty 27 who needed their bottoms spanking.

Now that Colombia's army is whistle-clean it can teach the rest of the region all about how to be caring on the battlefield. Or in its own words, it will be "the leading body in military doctrine for the hemisphere".

I fear the worst.

Trading Post (otto wrong again edition)


Before the bell this morning I dabbled with a bit of chart mumbojumbo and ventured to say that "most likely scenario is the Dollar upping and gold downing". WRONGO! Gold has risen five quiet bucks to $842/oz and USD is down half a tick at 81.50. I'm once again reminded to stick to my little LatAm corner and not to mess in the big boys' playground. So keeping my eyes firmly fixed on this side of the Rio Grande...........

Corriente Resource (CTQ.to) up a very smart 13% at $3.99, all on the back of this good-looking press release today. Apparently CTQ.to is sitting down and talking real turkey with one possible buyer (of Chinese nationality). The two sides have agreed on an exclusive timeframe until March 2009, so maybe rushing to buy right now isn't the smartest move. But a win is a win, today's PR is wholly positive and CTQ.to is controller of a serious serious amount of in situ copper. Not surprising the stock popped on today's news

Gold Reserve (GRZ) isn't messing about with the Russky lowball offers; instead of just saying "don't agree" to its shareholders, Belanger&Co has slapped a lawsuit on the tush of RML.v and the IR firm both companies share (here's the Reuters version). This story has plenty of legs, it seems. The market can't really work out if this is good or bad, as GRZ was up in the morning on the news but has now sold back and is UNCH at $0.58. Gotta love KM88!!

Jaguar Mining (JAG) up 10.7% at $3.10...and I sold at $2.63....DOH! I still think this is a great way to get leverage on gold. The company has lagged its own projections and development timescale, but it does have serious ounces in situ. And it does produce gold. And it's not folding and dying on us any time soon. DYODD, dude...definitely worth a good look at the underlying numbers at these prices, even though i sold too soon personally.

Cosan (CZZ) up 4% at $2.88. I have some good analysis in English done by one of the bigger Brazilian banks about yesterday's quarterly results and conference call. If you'd like a free copy of these PDFs, drop me a line at the usual mail address.

Gold Resource (GORO.ob) up 1.4% and still fiddling around just under $3. My offer of the NOBS report on this company is still open (just a couple of takers so far). If you'd like to get the inside track on GORO.ob and also find out what the company is capable of revenues-wise, the report is just $10 away. The address is otto.rock1 (at) gmail (dot) com.

Petaquilla Minerals delays its first pour: surprising for Reuters readers, not for IKN readers


When we last caught up with Panama's answer to Madoff, Petaquilla Minerals (PTQ.to) was claiming to all and sundry that they had all their environmental permits in place and that they'd be making first pour in December. They even got the local Reuters patsy reporter to publish that PTQ would "start production before the end of the year". Hmmmm; it seems that since then the PTQ.to IR dep't has forgotten to update its valued and loved shareholders on the latest developments at the company, so allow me to fill in the details:
  • In a bizarre twist, PTQ.to is now appealing AGAINST the environment permit that it was so loudly trumpeting just a couple of weeks ago. The Panama News reports how PTQ is appealing against 14 of the 40 extra requirements that this blog mentioned in previous posts. Remember this was the same piece of paper that PTQ.to trumpeted to the North as its ticket to production and riches. Funny how they've been keeping knowledge of its own protests against the ANAM permit away from the investment community, innit?
  • It's not December any more, folks. According to PTQ's Engineering Veep on December 12th, the first ounce is now going to be poured "in three months' time". Shareholders of PTQ shouldn't be too shocked with this "unforeseen delay", though; we're talking about the company that assured everybody it would be producing in the first quarter of 2008.
All this doesn't take away from the basic facts, not least of which is that PTQ at Molejon doesn't have a tailings dump and a tailings dump is not something that you can just whip together in a couple of weeks, or even a couple of months. But the good news is that if you're still holding PTQ.to in your portfolio you still have time to dump the stock, as CEO Richard Fifer continues desperately to prop up his stock with multiple buys. Here are the latest trades as per Canadian Insider:

Dec 15/08 Dec 12/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 27,500 $0.440
Dec 15/08 Dec 12/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 17,000 $0.440
Dec 15/08 Dec 12/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 2,000 $0.435
Dec 15/08 Dec 11/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 4,500 $0.450
Dec 15/08 Dec 11/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 24,000 $0.450
Dec 15/08 Dec 11/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 5,000 $0.440
Dec 15/08 Dec 11/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 2,500 $0.435
Dec 15/08 Dec 10/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 500 $0.500
Dec 15/08 Dec 10/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 20,500 $0.500
Dec 15/08 Dec 10/08 Fifer, Richard Glenn Fifer Carles Direct Ownership Common Shares 10 - Acquisition in the public market 9,500 $0.500

At this rate Fifer will be able to OPA the company before it ever produces gold, as by that time he'll be holding all the shares himself!

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
More Petaquilla Minerals (PTQ.to)

sell economics, buy MELI

The year 2008 will surely go down as the one in which Economists were proved to be the dumbasses that many of us suspected they were for many years. The more you ask their collective opinions these days, the more ridiculous they seem. Below is an example from Brazil. Surely 26 out of 27 economists can't be wrong........

So read this and think about how cheap MELI is these days. They don't sell many cars, either.

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By Jeb Blount and Katia Cortes Dec. 16 (Bloomberg) -- Brazil’s retail sales rose more than expected by economists in October, indicating that consumer demand in Latin America’s biggest economy is holding up against the global credit crunch.

Sales surged 10.1 percent in October from a year ago, led up by a 44 percent climb in computer sales, the national statistics agency said. The increase exceeded the forecasts of 26 of 27 economists in a Bloomberg survey and was higher than the 9.3 percent sales growth yada yada continues here

The Latin America Summit


Today at a Brazil beach resort, leaders of lotsa LatAm countries gather for a two day summit to talk about...well things, really. This is the summit to which the USA "didn't ask to be invited", and that in itself is the main talking point (lotsa chat about Monroe turning in his grave etc amongst analysts). But what should we expect from this summit?

1) Chávez will mention the lack of gringos on site every ten minutes

2) Correa and Lula will be special pally pals for the cameras

3) Raul Castro will get a lot of said cameras pointed his way. This is the first time he's been out of Cuba as President (if you include the stop-off in Venezuela the last two days as the same trip...which it is)

4) Nothing of gravitas will happen. Nothing. So don't worry about the whole shebang at all and let the regional prezzes do what they went there to do...get some downtime and drink a few FruityRumPunches.

Which reminds me; apparently this has been a very requested summit to cover amongst local reporters. Hey, we all need out R&R, no? I wonder who'll be covering this important and significant summit for the New York Times?

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

...the US dollar to Gold ratio.


The remarks scribbled on the chart should be enough, but just to make it clear methinks we just hit a short-term bottom for the ratio and I expect it to rise. The most likely scenario is the Dollar upping and gold downing. But also keep in mind that it's just a chart and these things are too revered by too many people...they only work til they don't.

Don't tell the Jim Sinclair sheep brigade that somebody dares to suggest a gold downturn, though. And the first person to use the phrase "gold backwardization" in a mail gets turned into a frog. These people want to believe that....

a) yes, there's deflation in currencies
b) gold is a currency
c) but deflation doesn't affect gold

.....which is what normal people call 'having your cake and eating it'. A smart friend of mine read a goldbug analysis of gold backwardization yesterday and called it "like a tealeaf reader obsessing over one tealeaf" which I thought was pretty accurate....and funny.