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Which will be worth more at end 2015?

1/3/09

The world's best performing stock market in 2008 was.........

.......Venezuela.

Don't start spreading it around though. Wouldn't want to upset anybody.


2008 was a year to forget in all global stock markets, in fact of the 43 stock markets that your diligent Otto has managed to track, not one of them ended up in the positive column. However the 'best of the bad lot' was Venezuela, which lost just 7.85% over the year. It's also noticeable how well LatAm did compared to other places around the planet (relatively speaking, of course...maybe 'least bad' is still the best phrase) with all the top four coming from this neck of the woods. Venezuela, Chile, Mexico and Colombia were the only bourses that managed to drop less than 30% on the year...I suppose that's some sort of achievement.

Anyway, here's the full world chart (pity eastern Europe, oh gosh China and whatever happened to miracle economy Ireland, eh?)...

Click to enlarge

...and here's the breakdown of the seven most important local markets (e.g. Ecuador's microbourse isn't included). Note how Brazil sucked compared to most.

Click to enlarge

Also note just how well "Investment Grade Peru" did over the 12 months (and excuse me while I guffaw at S&P and Fitch and mumble "toldya so, suckaz" under my breath).

Finally, for those that like their data, here's the full table with percentages and everything.

World Stock Markets Ranking, 2008
Rank Country Annual Change
1 Venezuela -7,85%
2 Chile -22,13%
3 Mexico -24,23%
4 Colombia -29,30%
5 UK (London FTSE) -31,33%
6 New Zealand -32,80%
7 USA (Dow Jones) -33,84%
8 Switzerland -34,77%
9 Canada -35,03%
10 Sweden -38,75%
11 Malaysia -39,33%
12 Spain -39,43%
13 Germany -40,37%
14 USA (NASDAQ) -40,54%
15 South Korea -40,73%
16 Sri Lanka -40,85%
17 Brazil -41,22%
18 France -42,68%
19 Australia -43,01%
20 Thailand -47,56%
21 Hong Kong -48,27%
22 Philippines -48,29%
23 Italy -48,66%
24 Singapore -49,17%
25 Argentina -49,82%
26 Indonesia -50,64%
27 Portugal -51,29%
28 Turkey -51,63%
29 The Netherlands -52,32%
30 India -52,45%
31 Norway -52,59%
32 Czech Republic -52,73%
33 Hungary -53,34%
34 Belgium -53,76%
35 Pakistan -58,34%
36 Peru -59,78%
37 Austria -61,20%
38 China -65,39%
39 Greece -65,50%
40 Vietnam -65,95%
41 Ireland -66,21%
42 Russia -68,39%
43 Bulgaria -79,71%


All data culled from this Spanish language link.

UPDATE Sunday: A redux post available here

Riddle me this one

"Allow me to help you with your bags, sir."

Guess what happens when you:
  • train some guy up for a couple of years
  • then put him (or her, obviously, but frankly it's more likely to be a him) in a uniform
  • give him impressive powers to detain/arrest/search people
  • let him legally break into places and look at whatever he wants
  • give him a big gun with a holster to show it off to the world with
But then pay him U$250 for 240 hours of work per month? (And yes, that says two hundred and fifty dollars a month)

In the latest Ipsos/Apoyo report on corruption in Peru, 68% of people that responded said that police were "corruptable" (i.e. ready to take a bribe). It also puts the police as the second most corrupt body in Peru, just behind the judiciary (and there's just one degree of separation there, too).

This report (you can link through to it here...the link that says "ver nota de prensa") came before Interior Minister Remigio Hernani revealed that 246 police officers had been put under suspicion of gasoline theft due to the investigative operation his bureau started on October 1st. He did dismiss talk that three-quarters the $150m in fuel assigned to the police forces was being sold on the black market, but did say that of the 59 control operations that the Interior Ministry had run, 15 had turned up police officers siphoning off fuel and selling it. So if they manage to turn up 246 bent cops in the first place they decide to check, how many officers will be left on the street if they really start asking around? Chances are the figure will be floating around the 32% mark, no?

The solution is for the national government to start respecting its police force. That means it should be moved into a higher pay bracket. You know what happens when you pay peanuts, yeah?

Financial reporters: Never believed me about how bad they can be?

OK, read somebody who used to be one.

Buy the man a Gillette

Guillermo Parras-Bernal at his quickly-becoming-must-read blog Market Memorandum wrote this today:

"...The real purpose of this blog is to tell people who have little or no idea how markets work how the media reports market events. And how bad or good (in my opinion) they do that."

Oh, I like. I like. I very, very like. As regular readers know, this is one of the themes regularly revisited here. The problems that can come between the real, raw story and the end user (that's you...and me) are manifold, but include things such as lapdog subservience at the altar of business, over-deference to the rich'n'famous, deliberate political bias in the reporter's writings, errors of omission that skew the story away from reality, "favouritism" (and that's putting it as gently as possible) and more....and more.

So who better to tell us about the ways of LatAm business journalism than someone who worked in Latin America as a biz journalist for over 10 years? Put Market Memorandum on your radar, people. Here's the link again. Thus ends the OttoPump.

Weblog Awards finalist

You better believe it, dudes and dudettes.

The 2008 Weblog Awards
Click this logo to go to the voting page

We're not up for the big prize of "World's Best Blog" or anything like that, but IKN is one of the ten finalists in the "Best Latino Caribbean or South American Blog" category.

Now here's the bit where you come in; The award is decided by open public vote. It's an open vote that starts on Monday January 5th and finishes Monday January 12th. I'm quite aware that IKN won't win the whole caboodle and that's fine by me, but I'm going to ask you to vote for Inca Kola News anyway. I've been mulling the whole thing over and my personal feelings are midway between "It'd be great to win etc etc" and "Awww shucks just great to be in the final and it doesn't matter what happens etc etc etc". I'm no rabid, seeking politico about getting voted, but on the other hand I'm not going to deny that I'm very pleased about getting this nomination and would like to do well.

So because I feel midway about it, that's what we're aiming for; a top five finish. So what you do come January 5th is click on the logo here or in the box above and then register your vote. That's all. I'd just really appreciate it if at some point in the next week you pop over and spend 20 seconds putting a click by the IKN name.

Voting doesn't start til the 5th, by the way (in other words, expect to be bugged again next week). Finally, here's a bit of the blurb about these awards as ripped from its site (I've been investigating, y'see).

About The Weblog Awards

The Weblog Awards are the world's largest blog competition with over 545,000 votes cast in 2007 edition and nearly two million votes cast in all editions since 2003 yada yada continues here




1/2/09

Globalization: Today's fun packed lesson

Wal Mart (you might have heard of them) is currently buying up D&S, the Chilean supermarket chain that is market leader in its home country (via its Líder brand of supermarkets and hypermarkets) . As part of the purchase process, Wal Mart today instructed D & S that it has until January 4th to remove from its shelves all products supplied by Cuba. Castrolandia supplied (up to now, at least) 42 different products to D&S, so Otto advises Lìder customers in Chile that if you want to buy your regular brand of rum, get down the stores before Sunday. Wal Mart is also banning from sale in Chile's biggest retail chain products from Venezuela, as well as Iran and Iraq. Now whatever would all these countries have in common?

So the upshot is that there are now two LatAm countries that cannot sell their products to another LatAm country, and all three have openly socialist governments. This must be because all socialists are made equal but some are more equal than others. Trade embargoes are like the Good Lord; they move in mysterious ways. But the US doesn't meddle in LatAm affairs any more. Oh no no no no no no...........

Trading Post (basic instinct edition)


Suddenly the world loves base metals. Go figure.

The copper sisters doing it in style, with both FCX and PCU up 9% (give or take a click). Not surprising that these guys are leading the way. I love SinkingAlpha...what a great contrary indicator.

Breakwater (BWR.to) is only technically LatAm but worth a mention as it's a great way to leverage to Zn. BWR.to is up a big bunch (56% right now at $0.18). BWR.to did a royalty deal just before xmas that gives it working capital to play with. Check the 52wk high on this and see just how far it's fallen. One for nimble traders, methinks.

Colossus Minerals (CSI.to) up 23% at $1.05. Albatross or not, the suspected relief rally has happened. It was just before the holidays that I wondered if it was worth revisiting. It'd be nice to claim magnificent insight for that change of mind, but I can't because I still think this thing is untouchable for LT investors and your humble correspondent will be posting as to why in the next few days. Watch this space.

Fortuna Silver (FVI.v) up 8% at $0.75 and also getting a boost from the love shown in zinc and lead (and silver too, i spose). This stock is still way below its NAV and i think it'll revalue towards 1.0X NAV once the market realizes it's still a healthy company, no matter the low prices for its wares compared to 2008. Remember FVI.v is a site sponsor here so be sure to DYODD (true for all things mentioned here, of course).

Troy Resources (TRY.to) up 11% at C$1.00. It's going nicely, but it's also going nicely without me so far. Humph....the price of honesty. Nah, not bitter...I'm glad a few readers got on board this one. Plenty more to come imho, folks. I may even bite the bullet and open my position at these prices today, especially considering the strong action in Australia last night.

Last but not least, Capstone Mining (CS.to) up 10% today, the base metals play that was mentioned earlier this week. It's the right size and with the right costs make-up to get good leverage from any BM upmove. Here's the five day chart that might not be as spectacular as BWR.to but it's still very cool; a win is a win.

Chile, interest rates, inflation, Bachelet and the central bank

Bachelet proves she can maintain her composure and smile
even in the most difficult of circumstances

President Bachelet gave a very interesting interview to Chile's Radio Cooperativo on Wednesday. Part of the show was devoted to the question of interest rates, as the analytical world and their spouses all say that Chile's central bank is about to cut the rate by 0.5% (it's currently at 8.25%) in order to stimulate growth (or so the theory goes). Anyhow, here are a few direct quotes from Bachelet in that interview after being subjected to the OttoTrans™:

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"Inflation is in full retreat and I understand that this will be a criteria that the Central Bank is going to evaluate when defining its interest rates policy.....this is what I hope for, although I am respectful of the Central Bank's autonomy, but I believe that the numbers we're seeing augur well for some good decisions."

"The only good news at the moment, from the point of view of economic future is that expectations and estimates of the experts say we are going to end 2009, some say, with inflation at 2.6%. We ended ths year (2008) at 7.5%."

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It's not just Chile, of course. The whole region is now benefitting from the drop in prices (just check the Peru PPI figure in yesterday's chart, for one example). The countries of South America are net commodity exporters thus the drop in world commods prices is a net negative. However there is most definitely a silver lining to the cloud, and that silver lining is the easing of inflationary pressures.

So as growth was the strong point pumped by every regional government in 2005 to 2008 ("Growth!! Growth!! Look at how we're growing and don't worry about the inflation number, it's not that important anyway...now vote for me, suckaz") so the inflation rates regionwide will be the Presidential talking point of 2009 ("We have the important inflation figure under control. don't worry about growth, that will come back quickly enough because I'm wonderful and smart and have controlled inflation...now vote for me, suckaz").


In the words of Kurt Vonnegut, "So it goes.".

Base metals rallying again

On the subject of rallies, the Dakar Rally (ex-Paris/Dakar) starts tomorrow.
This edition is being held in Argentina and Chile.
Above is a cool hi-res photo to click on



"I've been down so long, being down don't bother me."

(trad. Blues standard)


Maybe it's just because they were so low they couldn't go no mo' low, but the base metals complex is starting 2009 in fine style. Charts please, maestro!

Copper

Zinc

Lead

Nickel

Again, my eye is caught by Zn. While copper dropped from above $3 to under $1.30, zinc has stuck around all this time at $0.50/lb or so. To me, this points to the "well, it can't go any lower than this, can it?" line of thinking. The rebound in BMs over the last couple of days may well be monetary in its nature and less to do with actual demand (though that Chinese stockpiling news does suddenly spring to mind). Whatever it is, it's welcome.

Now to watch and wait and see if it holds. Betcha the Peru stock market makes headlines this afternoon.


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

.......explains in very simple terms why the US Dollar will remain the world's reserve currency for the indefinite future.

The chart was ripped from this page at the center for arms control. Also, let's check out the fun stats these guys use to pep up their article.

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  • The United States spends more than the next 45 highest spending countries in the world combined.
  • The United States accounts for 48 percent of the world's total military spending.
  • The United States spends on its military 5.8 times more than China, 10.2 times more than Russia, and 98.6 times more than Iran.
  • The United States and its strongest allies (the NATO countries, Japan, South Korea and Australia) spend $1.1 trillion on their militaries combined, representing 72 percent of the world's total.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

I know this post is not directly LatAm related but as the US dollar plays such an important role down here you need to know why the dollar prophets of doom are wrong to get a full handle on the Americas, both North and South. For sure the greenback might weaken some, (in fact i'm expecting it to weaken a bit in 2009) but there's no way in the Creator's Great and Mysterious Universe that the world will abandon the USA and its currency while it holds the biggest stick in the playground. The subject of finances is not just about financial things, you know.

Any further questions?

1/1/09

Definitely not suspicious at all...oh no

On December 29th, Panama's Public Ministry (equivalent of State Dep't in the US, I suppose*) announced the country's police force had stopped a band of drugs runners. In the operation one Colombian national died from bullet wounds in the shoot-out with police and two other Colombians were arrested. A total of "at least 250kg of cocaine" was also seized in the raid. All in all it looked like a goodly sized win for the whitehats in the ongoing LatAm cops'n'robbers cocaine game.

Then today, police announced that there were six arrests, not three. All six, including the dead person, are Panamanian nationals, not Colombians. And the haul from the raid was just 132kg of cocaine and 5kg of heroin. To give you a visual idea, this is what 51kg of cocaine looks like (a photo I found from a 2007 seizure in Kentucky, USA).


What are we looking at here? That to me looks like 20kg per grip bag, more or less. So 137kg of drugs is seven bags' worth, and 250kg is 12 or 13 bags' worth. You want to tell me that a professional drugs-fighting squad can mistake "at least 250kg" for an eventual 137kg total in drugs? Or let's put it another way: Do you, kind and gentle reader, have any trouble in telling the difference between the volumes of three sacks of cement and six sacks of cement? These people are kidding us, right?

This is the way the DEA hold themselves accountable in the ongoing "war against drugs", by the way. The DEA has controlled (cough, splutter, ahem) this drugs trafficking route since Noriega's time. Keep blaming the Axis of Evo, boyz.



*UPDATE AND CORRECTION: RG at Mexfiles know better and informs that the equivalent is the US Attorney General's office. Thanks for the correction.

Peru's 2008 inflation figures are in....

The PPI dropped in December. CPI didn't.

...and as reported by Reuters this afternoon, the headline Lima+Metropolitan district Consumer Price Index (CPI) finished at 6.65% for 2008, a country mile away from the Central Bank's 1% to 3% inflation target, a whole street away from FinMin Luismi's BS of just a couple of months ago and all this doesn't even include the basic facts that

a) this figure for Lima+Metro is not at all representative of the country as a whole because Lima has one of the lowest inflation rates in all Peru
b) the stats are crooked against reporting reality anyhow.

2008 was the year when food prices shot up and stayed high, allowing everyone except the end user to cash in. This was the year that finished seeing Peruvians end up paying double that of US citizens for a gallon of fuel. This was the year that chicken moved from S/5 per kilo to S/8 per kilo, and rice from S/1.80 per kilo to S/3.20 per kilo but has a gov't that insisted all was well because gas prices fell by 1.5%, beer got cheaper and you could get yourself an iPhone on a plan. It's a great time to be rich in Twobreakfasts' free market paradise, but it truly sucks for the vast majority.

The only two stats that really matter about Peru:

Percentage of population that lives on U$2 or less per day: 40%
Approval rating of its President: 20%

The rest is noise.

Well, I must have done something right

I've just found out to my great surprise that for some strange reason this blog has been included as one of the ten finalists for "Best Latino, Caribbean, or South American Blog" in the 2008 Weblog awards.... which is nice. Here's the page where the finalists are linked and here's the list of the ten blogs that made it to the finals:

Best Latino, Caribbean, or South American Blog

Dolar Paralelo
inca kola news
Generation Y

Mujeres camino al éxito

mUsiqUe auTomaTiquE

El Cafe Cubano

Cubanazos

Luz de Luma. yes party!

Mambí en Acción
popnografia


You can find the list just under half way down the page (these Weblog people do a lot of categories, it seems). Of the others, I only know the Generation Y blog but I do know it does a great job covering Cuba and is rightly megapopular. Just to be on the same list as Generation Y is quite an honour, frankly.

So anyway, they give out finalists badges soon so expect it to pop up on site this week. A humble thanks to the unknown nice people who must have said nice things to get IKN this far. And to all you readers.

Two miners in financial straits

According to Alexa today, icanhascheezburger is the world's 3,883rd most popular website.
Can somebody explain this to me in a cogent argument that does not
include the phrase "gringos will buy anything"?


When junior miners are involved in head-on collisions with the money guys, don't expect the miners to come off best. Especially in this world climate.

Gold Hawk Resources (CGK.v) dose of bad news is linked here. CGK's problems are compounded by the financial woes at Nuinsco (NWI.to), holders of 13% of stock and the source of previous financing. Negotiations are ongoing but the debt repayment date came and went yesterday, so CGK.v is now in default on $9.7m. Its problem in the short term is the lack of response from the insurance payout for the tailings dam slippage (previously documented on site). Also of note was the apparent tax loss share dump from Gordon Bub just before end December.

Minera Andes (MAI.to) dose of bad news is here. MAI.to needs to get love from its finance backers Macquarie....and soon. Presumably (though I may be wrong) MAI.to will be looking to refi/roll over its credit line with Macquarie and also raise funds for its portion of the cash call for the San José silver mine (check the numbers in the PR linked). However I have the distinct impression majority partner and operator Hochschild (HOC.L) is going to come out of this in fine style with the rump end of the deal suffered by MAI.to. This one isn't that cut'n'dried as yet and needs to be followed closely in the weeks that come.

As always, DYODD, dude.

12/31/08

Three wishes

This continent is generous to its population on New Year's Eve, as one of the traditions is to grant three wishes to whoever wants them (must be wished after nightfall on the 31st) . Here are mine for 2009:

1) Good health for my family.
2) More people with Spanish as a second language.
3) An end to racism.

If it were me......

........in a hostile bidding war to take over a company, and the stock of the company I wanted to buy out was fairly tightly held but still at an ostensible discount to the price I was offering, I'd probably run the stock up some, buying small bits wherever posisble, then let the stock dump from a short-term high to rattle holders into either selling to me or submitting to my bid.


Just thinking out loud during the last hour of the trading year. Move along now, nothing to see here.

DYODD, dude.

Ecuador bonds update

Another bad haircut

According to an interview El Universo published today with Diego Borja, Studmuffin's Minister of Public Economy, Ecuador is looking for a 70% haircut on the bonds buyback scheme. In other words, mark 30c to the dollar in your notebook. Here's Reuters reporting the story in Spanish. As for the "if the bonds are supposedly illegal why pay a bean for them?" line of thinking, Borja lays down the official mental gymnastics by saying,

"...the buyback is a pragmatic solution in which the government recognizes that there are holders who are not guilty in this situation and will be affected."

In other words, the debt is illegal but it might not be fair to pay nothing to the poor innocent bystanders that get caught in the crossfire of our crusade for justice an the nasty horrid kapitalist pigdogs (err...that's us gringos) so we'll pay a bit to everyone, even the pigdogs.

Or in other other words, Ecuador is about to be eaten for breakfast by Elliott Assoc and friends. If the whole line of reasoning for default is that the debt is "illegal" but then they offer to pay, that offer immediately dilutes their own defence. Meanwhile they have the money to pay 100% of the bonds face value and a straightforward court action is likely to go the defaultees favour.

These people are toast. They just don't know it yet.

Trading Post (twelve grapes edition*)


Anyone want to explain to me why base metals are rallying hard today? I don't have a clue as to why, but it's welcome enough. Right now we have the dollar, oil, copper&co (esp nickel) and gold all rallying together. If it's just window dressing I'll still take it.

There are plenty of beneficiaries from this base metals move, but one that's caught my eye is Capstone (CS.to), up 8.75% at $0.87. According to company literature, today's copper spot is around the point that CS.to has its cash cost.

Malaga (MLG.to) putting in an end-of-year spurt. It was at 8c early yesterday, now at 15c on low volumes. I'm still watching this one...I think it's better than the average microdot and its cash costs will tumble between now and the 1q09 report.

There be people sniffing round Vena (VEM.to) according to the Ottoscope. Only bits and pieces of volume but it's up from that $0.12 baseline level and I've had more than one conversation about it since xmas. A TA pal sez the chart "looks good"; I don't have a clue as to what that might mean, but he said it alright. DYODD, and it's a site sponsor so keep that in mind.

Jaguar Mining (JAG) has made it to U$5. The last time I said it was good value it stood at $3.1...not so long ago, either. Yeah I know I sold it too early (at a profit, but too early..me patsy too sometimes), but it doesn't change the call. I have this one mentally pencilled in as a takeover target. Kinross or Yanama, perhaps.

Dynasty (DMM.to) UNCH on low volumes. I'm watching to see if da boyz try plunging it again. If it goes under $2.50 I'm adding. I own. I'm very comfortable holding this stock. I love rock'n'roll. Put another dime in the jukebox baby.

My other recent long position is Cosan (CZZ) and it seems to be marking a line in the sand at $3.50. Fine by me. I'm 20% to the right side and under no pressure.

Happy new year everybody. Thanks for coming over to read the blog (that goes for the ever-increasing numbers of RSS and e-mail readers, too). It's been a fun way to spend 2008 and I hope you keep coming back in 2009.

*A tradition that started in Spain (I think) and is popular down this way is to eat 12 grapes, one on each stroke of the 12 bells at midnight tonight

I don't think you want to be long anything Venezuela at the bell today

Just my opinion.

Tomorrow January 1st, Raul Castro is heading up the big act to mark the 50th anniversary of the Cuban Revolution. So be it. Also Chávez will be there to speechify, but the street rumbling is that El Hugo going to use either this speech or a speech right afterwards in Venezuela to mark out gov't policy for the year ahead.

Anyone who can remember back to early January 2007 and the speech he made to Venezuela's parliament just after winning the Prez election will know what kind of effect a Hugo policy-mapping speech can have on your back pocket (were you long CANTV/Vzla bonds/GRZ/etc etc that day? I hope not). So consider this a headsup. As usual I'm sitting with cash on the sidelines waiting for the market to toss me a bone. One might come my way by Monday morning. Woof woof.

The 2009 prediction game, LatAm country edition


It's the time of year, give or take a few days, that the idiots who were so wrong with their previous year's predictions shamefacedly go for the new round of crystal ball gazing for the year that cometh. The complete hash that these self-important, overpaid cretins made of 2008 isn't putting them off either, so there's a whole batch of soothsaying for 2009 going on right now.

As IKN's contribution to this zero-sum game, your humble correspondent has decided to avoid completely the stockpicking game ( I mean, I'm the fool who thought copper wouldn't drop under $3) but have a bash at predictions for the countries I follow most closely down here. No Mexico or Brazil as you'll get better commentary from RG at MexFiles and GPB at Market Memorandum on the "big two". Here you just get the little underdog guys....suits me better. So here we go!

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Argentina
Argentina version 2009 will be dominated by the October legislative (not presidential) elections, with half the lower house ("chamber of deputies") seats and a third of senate seats up for grabs. Otto expects the normal noise from outside opposition forces (Eliza Carrio the shrillest voice, Macri an interesting sideshow), but the real action will be inside the Peronist (PJ) party. The Peronist party is a very tough animal to sum up in just a couple of sentences (a friend based his doctoral thesis on the thing and used to spend hours running through his dissertation with me as a sounding board....believe me, it's complicated), but for our purposes 2009 promises a full-scale showdown between the Kirchner wing of the PJ and the "traditional" PJ line under the watchful eye of eminence gris Eduardo Duhalde.

This may not be the Prez election year, but what happens in October will set the scene for the next three years minimum (and likely longer). On the economy front, Argentina won't default its bonds but will see itself in recession. However expect the gov't INDEC stats office to cook the books and tell the world that the country is still growing....they might pitch for 5% or so. It's BS, but hey...who cares, right?

Bolivia
Evo will get his constitutional amendment on January 25th. He'll win the late year election, too. The medialuna racist opposition will continue to bitch and gripe, especially about the way they lose large swathes of land to their quasi-slaves who suddenly become unslaves. The pragmatic and effective Bolivian cocaine fighting campaign will continue without the "help" of the DEA and ATPDEA will be restored by Obama. Evo will continue to talk the socialist talk and be slagged by the English language media. In other words, it's going to be a very quiet year in Bolivia compared to 2008 and so much the better. As for the economy, expect the same prudent attitude as we've seen in the last three years and expect public works to take up the slack caused by the global recession.

Chile
Election year! Bachelet is enjoying an Indian summer of popularity that can only help my pick for the next Prez, José Insulza. This guy is my idea of a great centre-left politico; hard as nails and smart with numbers. I hope he gets the job and I think he will.

On the economy front, Otto sees Chile going through a meagre 2009 but its social fund will help things tick over. Whatever happens, expect the same countercycle economic policies from Chile in 2009, 2010, 2011 and beyond. It ain't broke, so why fix it?

Colombia
Colombia's going to have a hard time economically speaking. Its international currency reserves are low (in per capita terms) bonds are exposed to the winds of the world and Uribe needs to pray at the altar of coal, crude, natgas and coffee futures for a bit of respite.

The FARC looks more and more like toast (thank the stars) but is very unlikely to go gently. Expect more trouble, more rumblings, more extrajudicial killings by extreme lefties and extreme righties. Finally, "America's Friend" will get no love from Obama on the FTA front. Whether that's good or bad is another story.

Ecuador
Ecuador is in big economic trouble. When the bonds charade hits the NY courts and goes against Studmuffin there may well be hell to pay. As for timing, expect the opposition (both Ecuadorian and overseas) to crank the serious pressure just before the April elections. The country is in flux and it's tough to call anything more than a few weeks out.

On the mining front, the law will go through soon (at long last) which will let us rabid kapitalist pigdogs make coin on DMM.to. Otto's got other ideas about stocks to play on this....those thoughts for another day.

Paraguay

Possibly the world's best president-in-the-making, Lugo will continue to be wonderful. However the world will continue ignoring Paraguay and the population will continue giving 100% of its collective attention to its soccer team and they won't care much about politics or the economy, either. The main international headlines are likely to revolve around the Itaipu dam's electricity output and how much Paraguay wants Brazil to pay for its portion.

Peru
Peru is in for a very hard time. On the one hand you have economic reality staring at you in the face, with trade and BoP deficits a close certainty. On the other you have one of the most irresponsible, unpopular and corrupt governments on the continent that refuses to face reality and promises the world to its population. Expect greater social unrest and hardline reprisal actions from this shamefaced mob. Otto also predicts that PM Yehude Simon will see the error of his ways and resign his post before he loses all political capital. PPK will step up and soothe the neolibs as part of his President election campaign foreplay. Sendero will continue to be a pain in the ass of humanity and the cocaine trade isn't going away, either. The rich will try to get richer and the poor will undoubtedly get poorer.

My only hope is that S&P or Fitch face reality, stop playing politics, take the country's investment grade away and wipe that disgusting, patronizing grin off the face of the continent's most uncaring and arrogant president (and there's plenty of competition for that honour).

Uruguay
The Presidential election is in October and as things stand current Prez Tabaré Vasquez can't run. But if the constitutional amendment he's after gets through (probably via referendum if it happens at all) he'll get his re-election. If not, his 'Broad Front' party may find itself split apart and on the losing side. Delicate times right now. Tabaré has done an excellent job during his term
and runs close to historically high approval ratings for a Charrua President in his last year of mandate. Otto's prediction is that he gets his re-election. Economy-wise, Uruguay will feel the world downturn but will get through better than most.

Venezuela
The deval prophets of doom have called the same call every year since 2004. This time I think it's going to happen, but not until at least mid-year. Otto predicts that Hugo&Co will devalue the Bolivar Fuerte currency (the Strong Bolivar...expect a swathe of jokes about that name when it happens) to maybe the 3.0 level versus the dollar. The timing is right for 2009, as a deval into a deflated world economy lessens the inflationary impact that the country will feel.

On the political front, it's a tough call but Otto sez that Hugo will get his constitutional amendment in Feb/March and will be allowed to run in the next elections. Apart from these two calls, the whole caboodle depends on the price of crude. That hasn't changed in Venezuela for at least 35 years and it won't change in the next 35, no matter what flavour of politics is in charge.

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

........the Dow (DJIA) versus GLD (the gold ETF used as proxy to gold), 2008 chart.

This is what I mean about "preservation of capital". This is why I don't mind when people giggle when I tell them there's gold in that thar long term portfolio. This is what I've been talking about on this blog since it started in March.

Gold doesn't make you rich; it stops you from becoming poor. That's all one can truly wish for in a bear market. Up 5% in a year like this year? Yep, I'll take that happily. Dreams of untold wealth from investing in gold as spun by the goldbug mob? Those people give gold investors a bad name.

UPDATE: As if done to order, here's a smart person talking sense about gold. Cam Hui's post about how a return to the gold standard is a bad idea is packed with common sense and solid argument. Easily digested, too. Well worth reading.

12/30/08

Dynasty and the games redux



I'm not going to list all the trades at the end of day the same way as in the previous post, but if you look for yourself you'll see how can'o'corn (the famous 33) beat down the DMM.to price at the bell this afternoon. When it comes to this kind of crap, there's no better price artist than the jokers at 33 (they're always crawling over this blog for ideas too..... probably cos they just can't bring themselves to hire someone who can speak Spanish).


As a regular reader (who prefer to remain anonymous I'm sure, as he's probably long half the DMM float in his private a/c) wrote to me after the bell;


"I'm getting nervous. I'm selling everything tomorrow at the open! Ha, ha, ha..."


Did you take him literally? If so, that bridge of mine is still for sale. Here's that everso everso retail friendly action in chart form.

Colombian unemployment is up

Acccording to its DANE stats office today, Colombian urban unemployment hit 10.4% in November, up from 8.9% in the same month of 2007. The underlying national unemployment figure is 10.8%, up from the 9.4% of November 2007.

All this on the back of the 3.1% GDP growth in 3q08, which was half the expected number and is clearly slowing towards recession. It'll be interesting to watch the people's reaction to Uribe going forward, as alongside his well publicized fight against the FARC, his economic management has been the other pillar to his enduring success. 'It's the economy, stupid' is just as valid on this side of the Darien Gap.

I know why the caged bird sings

Dec. 30 (Bloomberg) -- Rusoro Mining Ltd., a Russian-funded company buying gold deposits in Venezuela, expects tostart production of the precious metal at its Increible-6 minein the second quarter after securing government approval. The company will revise its production forecast for nextyear after Venezuela´s government approved technical andenvironmental studies for the mine, Chief Executive OfficerAndre Agapov said today in a phone interview.
Venezuela´s Official Gazette announced the mine´s approval on Dec. 23. “It’s fantastic news,” Agapov said of the decision. “Itchanges our projections for 2009,” he said, without providing further information on the Vancouver-based company´s forecasts.
Rusoro is the government’s preferred partner to also setup a joint venture to exploit Las Cristinas, which hasVenezuela’s biggest known gold deposit, Agapov said Nov. 14.The company already operates the Choco10 mine in Venezuela andhas a “lot of common ground´´ with the government, he said.
The company is attempting to take over Gold Reserve Inc.,which has rights to exploit the Brisas gold mine in the LatinAmerican nation. The company wants to create a joint venturewith Venezuela to develop the mine, Agapov said.
Rusoro rose 6 cents, or 9.7 percent, to 68 Canadian centstoday in Toronto. It has fallen 58 percent this year.
“We’re trying to be very proactive,” Agapov said of the offer for Gold Reserve. “It looked like we were the only interested party, and we took advantage of it. If 2009 is a similar story, we’ll be even more proactive.”

Dynasty Metals (DMM.to) and the games people play


Here's the action in DMM.to right now. Interesting stuff that shows how "the houses" (aka the Canadian brokerages) will try to scam weak hands out of their positions.

11:19:20 T 3.05 -0.30 1,000 19 Desjardins 19 Desjardins K
11:18:56 T 3.00 -0.35 200 2 RBC 7 TD Sec K
11:18:56 T 3.00 -0.35 100 19 Desjardins 7 TD Sec K
11:09:15 T 3.01 -0.34 100 1 Anonymous 1 Anonymous K
11:08:59 T 3.01 -0.34 300 1 Anonymous 1 Anonymous K
11:08:59 T 3.01 -0.34 100 19 Desjardins 1 Anonymous K
11:07:21 T 3.10 -0.25 50 79 CIBC 19 Desjardins E
11:05:16 T 3.10 -0.25 200 79 CIBC 1 Anonymous K
11:05:16 T 3.10 -0.25 100 79 CIBC 19 Desjardins K
11:00:51 T 3.10 -0.25 100 7 TD Sec 1 Anonymous K
11:00:51 T 3.10 -0.25 100 7 TD Sec 19 Desjardins K
11:00:34 T 2.85 -0.50 1,000 19 Desjardins 85 Scotia K
10:54:25 T 2.78 -0.57 200 1 Anonymous 1 Anonymous K
10:54:25 T 2.98 -0.37 1,500 1 Anonymous 1 Anonymous K
10:54:25 T 3.00 -0.35 1,000 1 Anonymous 1 Anonymous K
10:54:25 T 3.25 -0.10 200 2 RBC 19 Desjardins K
10:54:25 T 3.25 -0.10 2,000 9 BMO Nesbitt 19 Desjardins K
10:54:25 T 3.25 -0.10 300 9 BMO Nesbitt 19 Desjardins K
10:54:22 T 3.26 -0.09 1,000 7 TD Sec 19 Desjardins K
10:51:20 T 3.30 -0.05 1,000 19 Desjardins 15 UBS K
10:51:20 T 3.30 -0.05 500 7 TD Sec 15 UBS K
10:42:06 T 3.37 +0.02 1,000 88 E-TRADE 79 CIBC K

Right now we have the bid at $3.00 and the ask at $3.09. What does all this mean? Well, first check out the three trades that plunged DMM.to down from $3.25 to $2.78 (i've highlighted them in red). A total of 2,700 shares was enough to wipe the stock down 47c. You'll also note that the previous four trades when Desjardins sold into the bid came with exactly the same time stamp as the three "anonymous" trades that dumped the stock. If you think this is pure coincidence I have a nice bridge you might be interested in purchasing. Since then the stock got bought in, but it's still 10% cheaper than yesterday's prices and there are people getting nervous and wanting to bail at $3.05 thanks to this move.

I love it when the big boys start wanting in! Sure they'll use tricks and scamettes to shake shares out from the weaker hands, the kind of investor who says "well...it's moved from $1.30 to $3, I still got myself a win" and hands over their shares in true patsy style. But I love it when this stuff starts happening because a) I can top at lower prices if I feel the need and b) it means they want the stock in their portfolios. That can only be good for the wiser and steadier hands among us.

So let da boyz play their little games. This time is Desjardins trying to fake the field, but next time it might be another house. They haven't managed to shake much fruit out (just 3,350 shares traded since the dump move) so expect them to put DMM.to on the rollercoaster a few more times....get people nervy and that. Me? I'm holding. Very very holding.

Trading Post (early edition)


Fortuna Silver (FVI.v) showing strength today, up 9% at $0.71. The cream will rise eventually.

Troy Resources (TRY.to) up a couple of notches at $0.90. Don't pay too much if you want in (and I'm not just saying that because I'm not bot in myself yet). The best method is to watch the overnight price in Australia (TRY.ax) and then do the necessary forex calaculation. The last time I looked, one loonie was worth A$1.2, so the person who paid $1.00 got scalped by the crooks-in-suits at the TSX. Be long this thing but don't chase the price, either. DYODD.

Gold Reserve (GRZ) up 4% at $0.77. GRZ has followed RML.v up as the RusskyGold has shot forward on some strange share buying action (Me, cynical? Nah....). Anyway, the 3-for-1 deal RML.v offering puts a current theoretical price tag on GRZ of U$1.65. Then factor in the presumed dilution in RML.v after the deal goes through (if it goes thru) and it seems there is still potential upside in GRZ from here. I'm still saying "avoid" on the whole deal, but I'm happy at least for one person I know in NYC who's made good from the GRZ relief rally. Fortune favours the brave, sir.

Apex Silver (SIL) down 37% at $0.81. Message to one person (that's advice for everyone); don't even look at it. Avoid avoid avoid. Thinking this is an investment is the same as thinking slot machines are an asset class.

Candente (DNT.to) at $0.17, Chariot (CHD.to) at $0.10, Los Andes Copper (LA.v) at $0.05. The more I think abut the Corriente (CTQ.to) exclusive takeover takedown takeaway deal and then reflect on how cheap other large regional copper juniors are right now (e.g. the three above), the more I think that CTQ.to is not the place to be right now. Either that or the three stocks above are raging buys right now. Either way, it's hardly a seller's market in copper juniors, no matter how closely held CTQ.to stock is or how patient its management may be. The bottom line is that imho $3.80 for CTQ.to is just too high for these market conditions. DYODD

Peru loves financial crises, official


News from the "four legs good, two legs better" whacky world of Peruvian economics. FinMin Luis Miguel Valdivieso (that's him above.......err.........probably) now says that a world economic crisis is good for Peru. In his words (via OttoTrans):

"This crisis has helped us to achieve a more ordered growth."


You cannot make this shit up, really. Who is this joker trying to fool? Seriously, he either trying to impress the great unwashed masses who don't give a damn about his high falutin' economics things or he's trying to convince the chattering class who won't buy this crap in a million years.

What's the point in spouting crap like this? If you consider the alternative, is it possible that the gov't would say "Oh, we don't like all this growth. Wouldn't it be great to have a world crisis to help us out here?" if there were no crisis and Peru kept on whacking out GDP growth figures of 8% and 9% per annum (that help its population 0%, but who's countin' huh?).

Luismi goes on to explain that of the U$35Bn in investments planned for between now and 2011, the gov't expects U$30Bn to go ahead as scheduled. ROFL!!!! I laugh because I checked, and what I found is that U$15Bn of those proposed investments are base metals projects....y'know, copper and iron ore and their friends. I can sit here and confidently predict that previously fast-tracked projects will be deferred and be subjected to "further studies" until the cows come home. There is no way under the good Lord's heaven that Las Bambas (and all the satellite projects around it), Galeno, the Antamina expansion, the iron ore pies-in-sky proposed by Van Alphen and his band of serial pumpers and any and all of the other projects move ahead. The only one that will happen is Toromocho because the unfortunate Chinese involved fully committed just before the bottom fell out of copper. So let's call abut $3Bn of that 15 as in the realms of reality. The rest is in politicoeconomic cloud cuckoo land.


If you ever needed proof that an IMF lackey like Valdivieso is a outright liar that leads whole countries down the garden path on the behest of his controllers, today's the day.

12/29/08

Troy Resources: be long now


I've been told I have to insist. Some reader who's into marketing for a living says that it's all very well putting the wares up for sale once, but I need to "get in your faces" as he puts it. Me, I'm not sure it's good to start boring you guys too much with the same post, but let's see if it gets a couple more sales. I'm up to nine sold and I have a mental target of selling 15 copies of this report to make it worthwhile.

But I also really want you in this stock (booyah!!) as I truly believe it's a top investment right now and still wildly cheap. And once I make you some real decent money with a real decent, well thought out reco or two you might start believing me a bit more. Anyway, here goes with the reprint; you now have to read it through and then buy your copy...only ten bucks, after all.


xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Since opening the NOBS bespoke analysis service I've written around 20 reports for private clients that have contacted me through this blog. Each time I've only put fingers to keyboard when someone has ordered an analysis about a specific company. As a plan to make this blog pay its way the NOBS idea has been quietly successful without setting the world on fire.

This time it's different. I've identified an exciting gold mining company, Troy Resources (TRY.to) (TRY.ax), that in my opinion has all the ingredients of a winning investment right here and right now. So in a break from the norm I've written a brand new report on the company for sale to the general public (that means you, dear reader) which details the reasons why I believe this stock to be such a good investment. The report will show you the following:
  • The structure of the company.
  • Its flagship property
  • The financial outlook we can expect from Troy Resources
  • Its management profile
  • We also put a 12-month price target on the stock that may sound like a big number to you, but I believe this stock to be such a bargain that I'm in fact aiming low and using conservative figures for my calculations.
Also, as always the NOBS report explains the risks involved with the stock and looks into any negativity surrounding the company. However, be clear that the job of this report is to make you very interested in buying TRY.to/TRY.ax. This is a very exciting stock and in my opinion just as mouthwatering as the recent successful recommendation of Dynasty Metals (DMM.to) that quickly turned into a triple. I'd really like to see you guys long on TRY for your sake and not mine, and when it comes to miners in LatAm I do know what I'm talking about. Honest.

This report written on TRY.to is on sale as of today, with the price set at a just U$10 payable by PayPal. All you need to do is send ten United States Dollars to my PayPal account, which is....

otto.rock1 (AT) gmail (DOT) com

.....and once I have your e-mail address I'll send you the report (and if you need help in working out how to use PayPal, just drop me a line at the same address above and I can help. It's already happened a couple of times. The system does take credit cards, BTW).

Now for the necessary disclosure that shows I'm being as fair as possible about this report. Although already sorely tempted to buy this stock I've decided to wait at least 72 hours after I send out any purchased reports before buying TRY myself. In other words, you guys get to be long before I do and that's guaranteed. Secondly, I have received no other form of payment or sponsorship to write this report. In other words, this is just me and you. Lastly, I have received no proposal of any sort from Troy Resources (or anywhere else for that matter) to write this report. In other words, this is my independent reco and nobody's got the inside track on me.

Now for a final bit of shameless promotion. This unsolicited testimonial below is part of a mail I received last week about the report written on Gold Resource Corp. (GORO.ob), another recomendation that has moved from U$2.90 to its recent U$3.47 price (that's 19.6% in two weeks...not shabby). Report buyer 'BF' said the following:

I read your GORO report - fabulous. I must say if I were writing reports, that would a model for me to aspire to...concise and focussing right in on the pros and cons...it really helped me to have had some info about the company before reading, so that I had some greater appreciation for your commentary. Definitely, ten American dollars well spent...

So thanks for that, BF. Hopefully by now you're interested enough in this offer to send what amounts to not much more than the commission you pay on a trade to find out just how good an investment I believe Troy Resources to be right now. For U$10 you'll be getting the same kind of timely information you could have picked up about DMM.to when it stood at $1.22 to $1.30. This Troy Resources report is an investment you won't want to miss because it will make you money many times over the original investment. That's me talking, the dude who knows his numbers, his region and his miners. Order your copy today.

It may be a bit early...........

A visibly spaced-out Antero tells the story of Itsy-Bitsy Spider with just one hand, as the other is
busy holding a marijuana joint disguised as a Cuban fatboy


.....to hand out the weekly 'No Shit Sherlock' award, but as this quote is basically unbeatable we'll just get it over with today.

Ántero Flores-Aráoz is one of those cigar-smoking Peruvian career politicos from the "good families" who is currently in place as Peru's Defence Minister. He was called upon to comment on yesterday's skirmish between Sendero Luminoso narcoterrorists and Peruvian soliders in the VRAE coca growing region of central Peru. The incident left one Peruvian soldier dead on the ground and others injured as Sendero managed to spray an airborne helicopter. All signs also point to some of the Sendero insurgents also being injured. Anyway, on with the quote. Flores-Aráoz said,

"There is always a risk of deaths or injuries during combats."

Thank you for that, dumbass. Real insightful bunch of ministers over there in Peru, no?

Trading Post (frothy edition)


So, let's get this straight. A country bombs the crap out of a piece of land next to it that might or might not be another country, gold goes up and goldstocks rally hard into a bear market. Now is it just me, or do you guys think there might be a short-term top to disappoint the goldbugs and get them muttering strange things about illuminati coming soon?


Gold Resource Corp (GORO.ob) up 8% at U$3.75. If I owned this thing I'd be sorely tempted to sell a few here. I know that when a gold stock gets fashionable it can run hard and fast, but the way I see its fundamentals I'd call it as 'getting ahead of itself' right now. In my worldview if an OB stock offers you a tasty profit, you take it.

Cosan (CZZ) now up 16% at $3.48 and has dropped back somewhat from the early morning peak registed in an earlier post. Hey, I'll take a 16% gain with a big smile on my face any day, no worries. The plan is to hold this position for three months minimum, so right now I'm happy to be on the right side of the trade, no more. Plenty of time to watch the story unfold yet.

Troy Resources (TRY.to) up 23% at $0.90. Thanks to the six people (so far) that have ordered the report. FWIW, if today's Canada trading equalled last night's Australia price, TRY.to should be at around $0.80. On the other hand, it's been so erratic recently and the bid/ask spread is wide apart, so anything could happen (and probably will). The reports will be with you very shortly, people, but I'm looking to sell at least 10 copies to make it worth my while. Any more takers?

Exeter Resources (XRC.v) up 23% at $2.23. Is it time I reviewed my bearish outlook about XRC? I know that the Chile project is hateful and trying to make itself to be something that it isn't (namely commercially viable). I know that the Mendoza project is a rabid dog with fleas thanks to the local politics. But the recent drill results from the southern Argentina Cerro Moro project were nothing short of excellent and must be the reason for the recent pick up in share price. I took long, hard stares at the drill returns and there was no way round the fact that the truth machine is flashing green lights here. What's more it seems there is plenty of blue sky room to come from the vein system. Just a pity that the company chairman is such a dick and insists on running the hype machine. XRC.v is now on my "must swallow pride and look again properly" list.