It's that annoying reminder again.

If you have already voted for Inca Kola News for the weblog award, I thank you.

I also remind you that you can vote again every 24 hours. If you'd like to help the site keep its top three position in the poll (and I'd be chuffed to finish on the podium) click on this link to vote again. Thanks for your patience and remember you can vote every day from now until Tuesday January 13th at 5pm EST.

We're now three days into the vote and the yearned-for top three finish is looking possible. However it will only happen if you people out there take a few seconds out and continue to vote every day. It may be a silly system, but as it's the biggest open vote award of the blogging year if you care you'll be helping to put this humble corner of cyberspace on the map...and that would be cool.

Chavez is wrong

Chávez is wrong, part one

January 5th, 2008: Citizens Energy has recently been informed by CITGO that due to falling oil prices and the world economic crisis, CITGO has been forced to re-evaluate all their social programs, including the heating oil program, which has provided hundreds of thousands of low-income U.S. households with much-needed fuel these etc etc ........................................................

Andres Oppenheimer says*: "This only goes to prove that the Chávez regime is quickly falling apart. As I predicted, his hatred of the USA and its citizens is showing through at long last and he would rather watch your grandmother freeze than to yada yada......."

Chávez is wrong, part two

BOSTON, Jan. 7, 2009 – CITGO Petroleum Corporation confirmed the continuation of its social programs in alignment with the solidarity principles endorsed by the government of the Bolivarian Republic of Venezuela through its national oil company, Petroleos de Venezuela, S.A., said CITGO Chairman, President and CEO Alejandro Granado during a press etc etc.....................................................

Andres Oppenheimer says*: "The Chávez regime shows no shame to its people, preferring to watch its own country starve to death while overspending to supply cheap oil to the USA in an obvious propaganda attempt to score political points and influence yada yada.........."

*ok, I made these up. bite me

So what does Dominic Channer of Aurelian think of Ecuador's new mining law?

Dominic Channer (for it is he)

This morning, Aurelian's (now a branch of the Kinross empire) President Dominic Channer spoke on Radio Quito. Here are a few direct quotes from the interview (via OttoTrans™):

"We have followed with great interest the advance of the mining law and we have participated at several points in the mining debate to present our opinons."

Channer then pointed out that the debate goes ahead tomorrow and made a point of mentioning that the law has changed from organic to ordinary. Then there was a whole section about the contentious issue of water (one of the battlegrounds for the treehugger NGOs that have been brainwashing locals about the big nasty miners). Channer said;

"On the subject of water, we see this as a fundamental issue in the law and the fact that there will be many controls with a new water law. We see this as extremely important in the mining sector."

Next came talk about the environment in general. Channer again did himself a service by telling it like it is.

"I think it's important everybody understands that mining has an effect on the environment, but the same as any human activity, any industry, agriculture, daily human life affects the environment. The important thing is how we manage these impacts, and that is why the standards used by modern mining and the control applied by the State are so important."

"(The new law)..has many controls and is much better in this aspect than the current law. This is why a new law was created that has all necessary controls in the environmental area, the social area, the labour area. It's very important people understand that the new mining law takes cares of these uncertainties and is the result of over a year's work."

All in all, a good job done in the interview by Channer and kudos to you, sir. By the way, it's news to me that the debate will go ahead tomorrow (I thought it was just the report handing-over ceremony tomorrow)...let's hope that's true. The sooner the better, I say.

UPDATE: Silvia Santacruz of Ecuador Mining News clears up the slight confusion. Thanks, Silvia!

Hey Otto,

The Assembly's Economic Commission will present their observations to
legislators, tomorrow. Then, they will have two days to read it, and then the mining law will be presented for second debate. Here is the link to the Assembly's website.

http://www.asambleanacional.gov.ec/index.php?option=com_content&task=view&id=16811&Itemid=1

Trading Post ("what goes up..." edition)

This may sound all hokey to you, but when I get correspondence such as "...thanks for exhorting me to take some cash off the table, one of my many weaknesses.." (reader GB referring to this post yesterday) it makes it all worthwhile. I just hope GB did what he said he'd do yesterday.

Here's the kopper korner: Right now FCX is down 6%, PCU is down 5.% and yesterday's example stock Capstone (CS.to) is down 8.5%. Let it be repeated; "DON'T BE AFRAID TO TAKE PROFITS IN A BEAR MARKET". Spot copper is down 3% on "demand fears" today.....errr, what did I say about bear markets again?

Colossus (CSI.to) up again, now at $1.30. After the bell yesterday CSI.to announced its 2009 drill program at Serra Pelada was underway. So be it. I still say 'avoid' and the more I read about this thing the leerier I get. You should get reading, too. It's called DD...do it.

Petaquilla Minerals (PTQ.to) at $0.55. To prove every dog has its day, this thing has moved 30% or so with the rest of the junior gold field. What's that one about rising tides? Check the insider filings for 2008 and you'll see just how underwater CEO Fifer really is. Man the bilges, shipmates!

Nadagold up at $2.27. It made a very big move yesterday on the back of the news about the extra bonus share giveaway that has put $75m in the company coffers instead of the original $60m. Who cares that the big projects won't ever be built and the company has already proved itself incapable of running a gold mine properly? Answer: Nobody (except boring fuddyduddy fundamental analysts who search long-term stock value like me). Just get the money, boyz.

Cornerstone Capital (CGP.v) UNCH at $0.075. I stared and stared at this when it went low recently, but didn't pull the trigger. I saw it get the Caseypump treatment when at 5c, but did nothing. I mentioned it to a couple of e-mail pals at the time and didn't move on it. It's still there, looking at me and saying, "Hey look at me, Otto! I'm good value for the Ecuador mining law good news just down the path." There are worse pennycrappers out there, that's for sure.

DON'T FORGET TO MAKE OTTO'S DAY AND VOTE EVERY DAY!
HERE'S THE LINK, DUDETTES AND DUDES.

Venezuela's media love Israel more than Hugo. Surprised?

I love you though you hurt me so
Now I'm going to pack my things and go
Tainted Love, Soft Cell, 1981

Israeli news service Ynet got a telephone interview with Israel's (now ex) ambassador to Venezuela, Shlomo Cohen. Here's the link and go visit and read for yourself, but here are the direct quotes from Cohen. Y'know, sometimes...just occasionally.....you get a glimpse of the reality behind the curtain. No further comment from me. Let's be different about all this and treat you as a thinking human being. Read the man and work it out for yourself.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

"This is the first time I'm being dismissed. We're getting the paperwork together and preparing to close down the embassy as quickly as possible. We don't have much time to waste, since the government has ordered us to leave the country within 72 hours. I don't remember anything like it. This is a new low in the relations between the countries."

"Since yesterday I've been receiving many calls from friends of Israel here, expressing their sympathy and support in light of the president's decision."

"During the Second Lebanon War I was summoned for consultations and Chavez threatened to sever the ties with Israel, but didn't follow through with the threat. This time he did. I estimated that something like this could happen. After all, he is an ally of Iran who maintains very close relations with the government in Tehran."

"Although the parliament lauded the decision and supported it, it's clear to everyone that he is the only one making the decisions. He regularly supports radical states and organizations, and his door is closed to us. Even if the media in Venezuela understands why we embarked on the Gaza operation, the regime is simply uninterested. It supports one side and that's that."

"I hope the economic and cultural ties continue despite the crisis, and I'm hopeful that one day the friendship that characterized the ties in the past will return. I no longer believe I will be back here as an ambassador; after all, I was declared a persona non grate. Perhaps I shall return in the future as a tourist."

Mo' Ecuador: Bonds and Visits

Raul suddenly realizes that his guest has not yet arrived

Two shots from Ecuador:

1) Studmuffin lands in Cuba today on an official visit to shake hands with at least one Castro and possibly two. The visit is by personal invitation of Raul, with The Muffin due to be handsome and dashing at scientific and social displays. Mojitos served.

2) According to Reuters this morning (Spanish language link), Ecuador's plans to buy back the defaulted debt include setting aside U$900m for the job. FWIW, this implies a 28.15c on the dollar average pricing, so we're starting to get the target in sight now. Still all deathly quiet amongst the vulture funds. Methink they be biding their time. In fact, meknows it.

Ecuador mining law update

Petsain (right) and assembly head honcho Fernando Cordero on Monday

Things are beginning to move in Ecuador concerning the mining law. There are quite a few bases to cover, so here we go with bullet points:

• The report that will be used as the base for the second assembly debate is handed over to the parliamentarians tomorrow. We can expect the debate next week. Remember, if it gets through the debate next week (and there's little reason why it shouldn't) then it becomes law.

• The law is now very likely to be non-organic. This means that other laws can be applied to the mining sphere and may complicate matters for some. In the case of my preferred vehicle Dynasty (DMM.to) there's nothing to be worried about (there...I've stuck my neck out on this).

• Over the last two days, enviro protestors have been protesting in the southern districts. Things turned a bit nasty yesterday and the protests got violent. In total 12 police were reported injured in clashes and one police medic was taken hostage by the protestors. The hostage was apparently taken to use as a bargaining chip to get arrested colleagues out of jail. The medic dude is in no danger here, it should be stressed.
  

• Protests are continuing this morning but less vociferous. The gov't has shipped an extra 140 police into the area and schools etc are open as normal for the first time this week (70% attendance rates reported).

• Indigenous umbrella group CONAIE (national executive) has not been directly involved in these protests but yesterday expressed their support and called on the law to be delayed and for a national debate. It should be pointed out that CONAIE has used the same tactic in previous moments and the government has always replied that the consultation process before the proposed law was published was extensive and thorough. CONAIE also made their usual anti-transnational (i.e. gringo) noises.

• Meanwhile this link takes you to a report of the visit to parliament by Paúl Petsain, president of the Shuar Arutam people from the Cordillera del Condor region (where the DMM, K, CTQ etc etc projects are located). He expressed his support for the mining law, disagreed with the CONAIE-backed protests and is happy that minor changes are being added to the second debate paper (mainly about artisan mining support proceses). Run the Spanish language link above through Google translator; a very interesting and positive article. I remind you that the indigenous voices closest to any mining project are the most important, with the larger national executive's position being less important. This may seem counterintuitive to some, but it's the way it is.

The bottom line here is optimistic; the protests from enviro-group locals are bound to continue during this week and next but they will not affect the passage of the law. The date is all but set for the second debate and once that happens we'll basically have our active law. It looks like DMM.to's prediction of commissioning at the end of March is going to come true.

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

.....copper, 60 day spot price.

Even though it has sagged a bit today in London trading (currently $1.52/lb), copper and its base metallic friends have staged a good recovery since Christmas came and went. Certainly a lot healthier than the last time we looked at the 60d copper chart back on the morning after the US congress voted down the auto bailout plan (wowsers, that seems like half a year ago, doesn't it?). Here's the link to that earlier post which pointed out the double bottom.

Where were you on January 7th 2004 at 07:55 and 32 seconds?

Happy 5th Birthday, wonderful and blessed firstborn child. It is a great honour and a great privilege to be your father.

A polite reminder

Yes, it's about this darned Weblog Award again.

If you have already voted, I thank you. I also remind you that you can vote again every 24 hours. If you'd like to help the site keep its top three position in the poll (and I'd be chuffed to finish on the podium) click on this link to vote again. Thanks for your patience and expect more annoying posts like this for the rest of the week.

News roundup (the bits that Fox News forgets to tell yaz)

BLAME CHAVEZ FOR THIS
HUMANITARIAN DISASTER

Honour amongst thieves. This afternoon at its cabinet meeting, Peru's 17 ministers of state decided to reject the pay rise given to them late last week by Presidential emergency decree. Or in other words, Peruvians kicked up such a fuss about this barefaced crime that the ministers collectively decided that they couldn't get away with it.

Freeze, suckers! Chávez takes approximately four nanoseconds about deciding between cutting cheap fuel aid for US citizens and cutting aid for....errr...Venezuelans. Y'know that if Venezuela carried on spending the way did with crude at $100 it would also be frowned upon as too much public sector burden. Some you lose, some you draw, eh? Anyhow, betcha can't wait for the first "Chávez Froze My Grandmother!" headline out of New Hampshire.

Argentina started its "plan zero" easy credit plan for new cars today. Just in time (geddit?) too, as auto production was announced today as down 47% in December YoY. Phunny phactoid; originally the first person on the list for the new car on cheapo credit was the 21 year old son of the Minister of Environment and Development, Homero Bibiloni. When the press got wind he struck his name off the list. Only in Argentina........

Ecuador has shrinking reserves. At end 2008, international currency reserves stood at U$4.472Bn. El Comercio does the math and notes the important bit; that's down U$1.538Bn in the month of December. Ouch. Not good.

The Israeli Ambassador to Venezuela is expelled

Shlomo Cohen and wife are about to travel by aeroplane

Here's AP on the news (in Spanish), and here's the Ottotrans™ of the moneyline.

"Venezuela has decided to expel the Israeli ambassador, Shlomo Cohen, and part of the personnel of the Israeli Embassy, reaffirming its vocation to peace and its demands for the respect of International Rights."

Meanwhile, Minister for Information and Communication Jesse Chacón said:

"This is not a decision against Jews as is being said, but against Israel. Thus as we criticize the Jewish holocaust we (also) criticize the Palestinian holocaust because holocaust is holocaust and should be named by its name."

Trading Post (rising tide edition)

Have you voted yet? If not use this link right here, it only takes a few seconds. I'm shocked to see this humble corner of cyberspace in second position right now, behind the deservedly popular blog Generation Y (and in front of the high-traffic blog Dolar Paralelo). From the start I set my heart on a top five position, but a top three finish would be simply wonderful. And remember you can vote every 24 hours, so if you've already polled early (thanks) you can still vote often. Ain't democracy grand?

Copper sisters, do your thang! FCX up 8% at $30, PCU up 5% at $19. Marc Faber said he'd buy industrial metals over gold going forward today. Here's the link to Faber and his badly knotted necktie on BloomieTV earlier. Thanks to Lucas at Trend&Value for sending this link over.

Greenfield copper juniors doing well, too. Just one week ago we noted Candente (DNT.to) at $0.17, Chariot (CHD.to) at $0.10 and Los Andes Copper (LA.v) at $0.05. Today those numbers are DNT.to $0.235, CHD.to $0.17 and LA.v at $0.095. Very nice bounces all round. All large deposit juniors in LatAm and all worth a visit and some of your DD time if the copper rebound goes the way Faber thinks it will.

Gold pornography update. We'll just do this in graphic form and keep the words to a minimum.
Nuff said.

Cosan (CZZ) up 10% at $3.61. This is my money-where-mouth-is play on soft commods, supply squeezes, lack of fertilizers in the first part of the growing season issues. Also, is that the word "ethanol" I hear back on the lips of people? Is that somethig to do with crude breaking through $50 to the upside today? DYODD dude, but I like this position more every day. You go girl.

Dynasty (DMM.to) at $2.70. I'm still waiting to see if Mr. Market is kind enough to offer me $2.50, in which case I'll be adding. Good news on the Ecuador mining situation expected shortly. Watch this space, as I'll be posting on it later today.

Oh yeah, nearly forgot. This morning I found out the reason behind Fortuna Silver's (FVI.v) big recent move. Apparently Casey's newsletters called it as "Best Buy" at $0.69 on December 31st. Whether that is good or bad is debatable, of course. Personally it gives me that shivery feeling in the pit of the stomach, but on the other hand a win is a win. Fortuna up at $0.92 today and continuing the good run. Fortuna is a site sponsor (for the time being at least) so DYODD.

Capstone Mining recovering well. Any fool looks good in a bull (with the emphasis on 'fool')

Right now, Capstone Mining up 15.5% at $1.34. Here's what I wrote on December 31st:

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.

And here's what I wrote on January 1st:

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.

Since then, the chart has done this. That's a nice gain for sure..... $0.75 to $1.34 in five trading days works for me anytime.
So what's the point here, apart from pointing out that I nailed a good trade in the "Trading Post" series and then preening and crowing like the arrogant git that I am in front of my audience? Here are a few bullet points:

• Any fool looks good in a bull market. Those with short memories will at this time be sharpening their pencils to write their own versions of "hey look at me" for online consumption.

• BUT THIS IS NOT A BULL MARKET! To follow the example above, it's great to point at the 20% rebound in copper but that doesn't suddenly make copper exposure a sure-fire winner. So very cool to point to a stock that gains 50% but let's not worry about where the stock was this time last year. We're currently enjoying a relief rally in a bear market. It's very welcome all the same, but that's all it is and anyone telling you otherwise is just plain wrong. Copper at $1.50/lb isn't going to get a single financier thinking about throwing a billion at an unbuilt mine, I promise you.
  

• In my opinion, the rebound so far has been for monetary reasons and not based on true supply/demand factors. For sure supply is being restricted (see the post earlier this morning about Volcan for a topical example) but there's not much sign of demand pick-up as yet. We need to see a change in direction of macrofundamentals before we're allowed to change our minds again.
  

• You should expect pullbacks to happen in the current atmosphere because that's what happens during a bear market. Period. So the logical conclusion to that is to say loudly and clearly, "DO NOT BE AFRAID TO TAKE PROFITS." If you make good coin in a bear market trade, take it. Cash it in. Bank it. Keep a chunky position on the sidelines for the next opportunity. Be nimble. I could come out with a dozen other clichés, but you should have the message by now.

• Selling well is, of course, even more difficult than buying well. On a personal level, very occasionally I get a call just right (e.g. this recent one on GORO.ob), but more often than not calling "take profits" at the very top of the price curve is either luck based or impossible. As a recent example, I said that taking profits on GRZ would be wise with the stock at $0.95, and since then it has motored on to stand at $1.21 right now. So be it, but the main thing here is that you take YOUR profit. Not his, or hers, or watch the thing keep on moving and shout "D'OH!" all week, cos that's silly. Baruch was one of the most successful stock market players of all time and he said, "I made a fortune by selling too early." Think about that one.

The bottom line here is that it's not some kind of ego-based "you-vs-them" game here. This is not a drill (as Gary Biiwii likes to say). Be clear that the tactics used by successful investors in bear markets are wholly different to those needed during a bull. Bear markets are rarer than bulls and this one is a nasty example, too. That means there are a lot of things you're used to doing that should be ignored right now. In my case, when I see a great, undervalued mining company such as Capstone my temptation is to stay inside my value investor's shell and say "yeah, it's up 50% but the numbers say that if copper keeps moving like it's moving I'm holding a potential 5 bagger" or variations thereof. So I buy and hold, then buy again and hold some more and then buy another value stock and hold that and suddenly my cash reserve has gone and I'm trading on margin. Trading on margin in a bear market is NUTSO.

Moral of the story is be conservative, take a chunky profit and thank the market gods when you do. Don't look back in anger and PRESERVE YOUR CAPITAL. The time to buy and hold will come eventually, as day follows night.

DYODD, dude.

Argentina's macho men

C'mon, join in the chorus folks;
"Macho macho man...i wanna be a macho man.."

Mar Del Plata is the place Buenos Aires goes to in January. The country's biggest seaside resort gets an enormous influx of Porteños every January and February that want to forget about big city life for a couple of weeks and kick back and do some serious R&R, Argentine style.

Unfortunately, the typical Argentine macho man's idea of relaxation includes acting like a complete asshole. This report caught my eye yesterday in Argentina's Clarin national daily that tells how police in Mardel carried out a breath test campaign on drivers over the weekend. The result was that so many drivers failed the alcohol test (0.5mg/l) that the police compound quickly overflowed with the 60 confiscated cars and they had to park them on the roads around the lot. These breath tests are part of a brand new campaign tied to a new points system of road infractions, and it's a system that has had the average boludo on the street moaning and whinging about civil liberties.

Argentina is not a serious country, but that's not because of its government; it has the jokers that it has in office because they're all the idiot population deserves. Take a look at this chart that shows just how many people die on the roads in Argentina every year.

In 2008, they managed to kill 8,205 people, 40% of whom popped their clogs in the Buenos Aires province. That's over 22 people per day. Or to give you a different perspective here's a comparative chart for the year 2006.

Worldwide, transit accidents is number nine in the list of people killing activities. In Argentina it's number three. It's just a damned pity that it doesn't just kill the moronic macho "I'm a better driver with a drink inside me" criminals who think they're normal. If it did it'd kill two birds with one stone (pardon the pun).

Two final thoughts:

• Gov't studies in Urban Argentina show that women drivers use their seat belts 49% more often than men. Women also break red lights 52% less often than men. The guilty are men, not women.

• Personally speaking, I've seen plenty of LatAm in my time and know that in most parts the driving is reckless (compared to up North, at least). However IMHO Argentinians are the worst of the lot. They all want to be Fangio. Just google the words "picada auto Argentina" and see what I mean. No doubt there will be 8,000 fewer of them next year.
  

Volcan closes open pit operations

This is a great hi-res shot of the town of Cerro de Pasco. Click to enlarge (it gets big).
I think we can say "dominated by mining", no?

Big news for zinc supply. Volcan (VOLCABC1, Lima) is one of the the world's top five zinc producers. It operates in Peru, itself the third biggest zinc producing country in the world.

Peru's El Comercio today reports that Volcan has shut down its open pit mining operations at its Cerro de Pasco mines (note that underground mining continues at its mines) and has also cancelled 32 of its 64 service contracts with third party companies (many workers are contracted this way, for example). According to the report, 302 workers have been laid off, a number that may be greater due to the service contract cancellations.

Volcan, owned by the Letts family, is one of the longest-standing mining companies in Peru. It's also a rather secretive company about its workings. Although (true to form) the company has made no official announcement, El Comercio did well to get a quote out of an un-named company spokesperson who said that many workers had decided to volunarily resign from the company "as they reached an economically favourable agreement with the company, but these are not sackings."

Whatever. What this means is that the low world prices for zinc and lead (Volcan's main production along with silver) have claimed another victim. In 2007, full year production at Volcan was 335,926MT...that's a lot of Zn, people. The metal that came from the open pit won't be reaching the market any more.

It remains to be seen whether this news gets a greater audience in the mining sphere. Volcan is a big player, but as it only trades on the Lima bourse it tends to get ignored by the retail chat-o-sphere.

Chart of the day is......

........2008 inflation rates for 10 regional countries.


Some are now fixed in stone (e.g. Peru) and some still have to be confirmed (e.g. Brazil..note the asterisks) but whatever happens, this chart isn't far away. Venezuela is the stand-out country here, but that's only cos Argentina cooked its books to within an inch of a hearty broth in 2008. If Klishtinalandia had been honest it would sit up there next to (or at the very least close to) Venezuela for sure.

Meanwhile Peru quickly stopped boasting about having the lowest regional inflation rate as soon as it didn't, Uruguay showed its achilles heel and Chile's rate supremely sucked.

Final reflection; every single one of these countries missed their inflation target, and most by a long way. It just goes to show that it matters not what flavour of government you have down here, as they are all slaves to greater economic factors. The actual amount of influence any of them have is minimal.

Voting is now open for the Weblog awards

I heard from several people earlier that they went to the voting site but the poll hadn't started. I've just been mailed and told that the polls are now open. So now you can click this link to go and vote (or the banner at the top of the site, if you prefer).

Thank you again in advance for taking a few seconds out to vote.

KRY: the gold sector's equivalent of pornography

You just can't help but look.

The advice remains the same on this stock:

Do not go long KRY

Do not go short KRY

Simply AVOID KRY

It's not a serious company. Leave it to the arch-insiders and the greenhorns. If you think this is a way to play South America, miners, gold or a combo thereof, this blog is not the right place for you.

"...35 bottles of beer on the wall, 35 bottles of beer...put one back up and pump it some more, there's 36 bottles of beer on the waaaaaaaaaaaaaaaaaaaaaaaaaaall..."


Related Posts
As a reminder, this is the only thing you need to know about Crystallex
Crystallex (KRY): I'm not kidding you...just "avoid"

At last, intelligent comment on Brazil at IKN

GUEST BLOG! GUEST BLOG! GUEST BLOG! GUEST BLOG! GUEST BLOG! GUEST BLOG!

Of the multiple moans and groans i get from regular mailers, top of the list is always "Why so little on Brazil, Otto?" It's true; for a LatAm blog, this humble corner of cyberspace is woefully short on Brazilstuff. The main reason is that I don't know so much about the place (and it's my blog, so tough), but happily, joyously, wonderfully and finally HELP IS AT HAND. From today, we'll be joined from time to time by guestblogger Lime Slime, a dude who has forgotten more than most of us know about Lulalandia. Lime Slime wishes to remain under the deep cover of pseudonymity (is dat a word?), so all I'm going to say is that he and I have drunk beer together in the past.

So on with the show, and Lime Slime's first dispatch on Brazil. Enjoy.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Really, our planes ARE better!

by Lime Slime

In Brazil, there's a large story, complete with fancy diagrams for wannabee pilots and arms junkies, saying that Brazil's Air Force is favoring, drumroll please, EMBRAER to be its new preferred supplier of high-tech planes.

The story is pure PR crap. Its argument hinges on the fact that bids by European and US aircraft makers won't make the cut because of technology transfer rules, which basically means that Brazil wants to know how the systems it flies work from the inside out, while some foreign governments want to prevent Brazil from becoming even more sophisticated and powerful. This is nonsense. These tech transfer rules can be worked out, and while Embraer is a great company, with innovative products, it doesn't know crap about building fighter jets.

What's really going on is that Brazil, and especially the Lula administration, is pursuing yet another industrial policy and giving handouts or big breaks to domestic players. They've done this time and again in shipbuilding, telecoms, mining, the beverages sector and now this. It's really a revival of policies from the 1970s, when the military was still in power and pursuing a state-centered development model. Sometimes the policies end up working, but often they end up costing taxpayers and consumers a lot more. Try buying a car in Brazil. They are 1.5 to 2 times more expensive than in most other countries, mainly because domestic manufacturers are protected. Same goes for electronics. Ever heard of the Ipod index? Check it out. Brazil's a great place to live, but a shitty place to be a consumer, and an awful place to be a fighter pilot.

Bolivia: Santa Cruz racist violence caught on camera

This video is not for family viewing. Do not click and watch if you find any of the following too upsetting;

1) young white males beating up old indigenous women in broad daylight

2) foul language in written English (as seen in the subtitles translation)

3) undiluted hatred shown by white people towards indigenous people, solely based on skin colour

4) the spectacle of gangs of whites beating up individual indigenous men because they dared to be in "their town".

5) etc

This one goes out to all the medialuna apologists. Watch and learn about the people you support.

Trading Post (pneumatic juniors edition)

Vena Resources (VEM.to) at $0.21. On December 31st I mentioned that there were people sniffing round this stock (it closed at $0.15). Here we are just two trading days later staring at a 40% gain on much healthier traded volumes. Toldyaz!!!!!

Fortuna Silver up 10% at $0.87, and it was higher than that at the bell, too. Now I might have mentioned this stock as offering tremendous value in a couple of recent posts, no? :-). Also, I know I'm not the sharpest knife in the drawer when it comes to charting, but this graphic......

....sure looks like a breakout to me. Please bear in mind that both FVI and VEM are site sponsors, so gotta DYODD dude.

Troy Resources (TRY.to) down a bunch at $0.94. I'll be straight with you; I'd like to see it lower. With spot gold still asthenic today I might be able to bag a few under C$0.90 if people get sufficiently spooked. My report is still available for sale, ya knowz. Just U$10 (pumpypumpy show-no-shame). Here's the place to click for details. Gotta love this stock for 2009.

Cosan (CZZ) down 4% at $3.40. Still holding, and $3.50 or so is looking tough to break through. Time is on my side (yes it is). I own..that clear?

Candente (DNT.to) up 40% at $0.28. Don't say I didn't warn you that $0.20 was cheap. Cos I did.

Metanor (MTO.v) down 13% at $0.41. Ever since I did a NOBS report on this for a client it's been on my radar. Your value-sniffing Otto still thinks that this thing offers great value in the gold mining sector. It isn't based in LatAm so I don't mention it very much, but that's a side-issue. I recommend you have a closer look. Plenty of upside available. DYODD, dude.

José Insulza withdraws his candidacy for President of Chile

Insulza (for it is he)

Here's a bit of a shock. After making all the "I'm announcing soon" noises, today José Miguel Insulza has withdrawn from the 2009 Chilean Prezrace before it even started. Here's Bloomie in English, and here's what Insulza said today (via OttoTrans™)

"After a deep and difficult reflection...my presence in the country today has the objective of asking the parties of the Concertation that my name is not considered in the 2009 Presidential definition.....In thanking all those that have given me their support in the last few months, I would also like to declare my decision to remain as Secretary General of the OEA (ottonote; Organization of American States) until the end of my mandate (in 2010)."

He also left the way almost totally clear for Eduardo Frei Ruiz-Tagle to become the Left's candidate for the 2009 vote (well...'The Left' in Chile isn't exactly "Hasta La Victoria Siempre, Comrades", but you know what I mean) . Insulza even went as far as to throw his weight behind Frei (winning him bonus points with the present administation who "viewed with good eyes" Insulza's decision).

Thus Insulza has the honour of being the first person or country to shoot down one of my 2009 predictions in flames. In this post just last week I wrote...

".......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."

...which just goes to show you, no? As ever, DYODD dude.

USA denies Chávez assassination plot

If you're a media dude in the LatAm of today and you want to create your own personal false polemic that grabs a corner of the limelight, here's a rough guide. Follow the bouncing ball, people:

1) Start some wild rumour that attacks the Venezuela of Hugo Chávez, or just pick up on the latest BS being chattered around the ruling class bars and restaurants in Caracas/Maracaibo.

2) Collar some government lackey as they leave office at the end of the day, or at a cocktail reception or in the local McDonalds or wherever.

3) Ask him/her if there is any truth in the rumour that yada yada...

4) Diligently note the response

5) Bingo! You got yourself a headline.

And also note that, far from being jealous, other media dudes will be happy to feed off your BS and run stories such as "According to a report in the Daily Blabber, Venezuela rejected all yada yada blah blah.....". So imagine for a second if that kind of trash journalism was allowed to happen in "the serious countries". You'd quickly get headlines such as "USA Denies Chávez Assassination Plot" or "The UK Denies Insurgency Campaign in Bolivia" or "Sarkozy Insider Denies Presidential Cocaine Habit" or whatever.

This note was brought to you by the following sponsors:

"International Herald Tribune", "Venezuela Denies Iran-Syria Missile Report"

"El Universal", "Venezuela Denies Prescence of FARC Bosses In Country"

"Reuters", "Venezuela Denies Mulls Changes To Forex Rate System"

"Associated Press", "Venezuela Denies Report That Chávez Invited Russia To Open Military Base In Venezuela"

There are another 10,000 or so of these; just Google "Venezuela denies" and see what happens for yourself.

Chart of the day is......

....gold, the live spot chart.

It was looking pretty inevitable, so let's just get this drop out the way. USD at 83 has bounced right back and is the root cause of the drop in gold. It's like a waltz.....

Anyhow, here comes the buying opportunity in Troy, I hope...just a tad more patience needed. Here's the overnight chart for the Aussie listing of TRY.

As the current forex is CAD1 = AUS1.16, this puts my entry target for TRY.to at C$0.95 or so. The guy who mailed me last week to say he was a happy buyer at a buck but couldn't get filled should have less problem today.

Voting starts today for the Weblog awards

As mentioned late last week, Inca Kola News has been chosen as one of the 10 finalists for "Best Latino, Caribbean or South American Blog" in the prestigious 2008 Weblog Awards....which is cool.

So now it's all up to you! Your gratefully-humbled-but-proud Otto will be the happiest dude in the barrio if he finishes in the top five, so if you'd be so kind click on this banner below and go to the voting site (starting Monday 9am New York time, so I'm told)

Then click a vote for Inca Kola News, if you'd be so kind again. Thanks in advance.

By the way, you are free to vote again after 24 hours have elapsed, so those of you with enough passion for this humble corner of cyberspace can vote again at 11:01am on Tuesday if you vote at 11:00am today (and then 11:02am Wednesday, etc etc)

Voting is open from today until January 12th (i.e. one week), so as they say down Chicago way;

vote early and often

News roundup

Mar Del Plata, Argentina. Jan 23rd 2008.

Ecuador: Even though Correa decided to default on the 2015 Global bonds, he's now saying that they're different from the "illegitimate" 2012 and 2030 bonds (the 2030s are still technically undefaulted though) . Studmuffin now says that the 2015s were "developed in a very different way" and need further examination. Smell fishy smells? Yeah, me too.

Venezuela: International currency reserves shot up in the last few days of 2008 and finished at U$42.2Bn, a country record high. Here's Bloomie on the story. This should take pressure off the parallel currency rate, currently standing at a bid/ask of 5.5/5.7 to the dollar. I'll do an update post on the VEF currency in the next few days with the usual charts and everything (if it doesn't appear, somebody send a mail to remind me please?).

Peru: By their deeds shall ye know them. President Lugo of Paraguay foregoes his salary, saying it must be spent on the poor. President Morales of Bolivia caps his ministers' salaries as a gesture of austerity to his poverty-stricken nationals. Meanwhile in Peru President Twobreakfasts first watches as the members of Congress raise their salaries from S/15,600 to S/23,200 per month (approx U$5K to U$7.5k) and then says that his ministers don't get enough and should earn the same. Thus the "Emergency Decree" published yesterday that raises Ministerial salaries to the same S/23,200 level. How this deserves to be called an emergency is only logical in the corrupt shithole of Peruvian cronyism politics. This government is vomitworthy and Yehude Simon should be thoroughly ashamed of himself for being such an apologist.

More Ecuador: a nice op-ed in on the new mining law and some of the consequences published Ecuador's El Comercio daily and written by our very own Silvia Santacruz of Ecuador Mining News. It's only available in spanish at the moment, but hopefully Silvia will translate it and add it to her website soon.

Argentina: AirMiles a-plenty, as Klishtina is due to travel 75,000 km in the next two months on official (and semi-official) foreign visits. Not much happens in Argentina (politically speaking, at least) until March as everyone's at the beach til then. La Salada for the Ds and Es, Mardel for the Cs, Pinamar or Brazil for the Bs and Punta del Este in Uruguay for the glitterati. ¡Que pais generoso!

PS: I've kept my mouth shut about Israel and Gaza and it will stay that way. My only comment on events: I'm glad Dubya decided not to stage his grand finale round this neck of the woods.

2008's best stock market redux

I've had plenty of mailchatter about yesterday's post on the performance of the world's stock markets in 2008 (if you can't scroll down two posts, here's the link). Some points to cover:

1) Don't you guys have anything better to do than read my blog on a Saturday evening? You need to get out more.

2) It never fails to surprise me what kind of post gets a shoulder-shrug reaction and what kind of post lights people's fires. The one about world stock markets yesterday, for example, I consider as a fun bit of weekend fluff but audience reaction has been really strong.

3) Yes, I know that Venezuela's market isn't really that exposed to international money these days. The combo of difficulties to get official exchange rates in order to invest in the market there combined with the withdrawal of CANTV from the wonderful world of capitalism means that bonds are the way to trade Venezuela internationally, not stocks. However the equities market there keeps on trundling along and it's still recognized as one of the larger world markets. Bottom line is "Venezuela's stock market whupped your hometown market" so live with it. Really, the only reason you're getting uppity about this is that you don't like the country's president. Think about that.

4) Venezuela is a side-issue, though. For me the most interesting point here is the relatively good (least bad?) regional showing for Latam markets (apart from Peru....I'm guffawing again). I know it's been rough around here so I'm now feeling extra pity for people in other places. That Irish result was a real eye-opener here. Along with Iceland, Ireland has discovered that falling in love with full-blood capitalism might be fun for a while, but love is blind.

5) Of all the mails received, one this morning from regular reader 'RB' is worth reprinting. 'RB' wrote:

found on a thread that I visit
Sharemarkets Best --- Ghana +59%, Tunisia +10%
Worst -- Russia, Ukraine, Cyprus - all down 70% or more
Next worst -- Australia -43%, Japan -42%, Germany -40%,USA DJ -34%, UK -31%

Apparently we need to add Bangladesh to that list, too (up 6% approx). Now I dunno how accurate that is (and there's no link provided, either). I will say I got my data from the Argentina Stock Market people and its year-end review/study which (over the years) has been a reliable source of info. I'll also wager that my hairdresser moves more money in a year than the Ghana bourse. I'll also say that I'm not going to get into a long, drawn-out finickey discussion about a % point here and a % point there (for one thing, I know from previous experience that results change if you take 31 Dec 2007 or 1st Jan 2008 as your start point). The point here is to note general world trends in the recognized world stock markets. The bottom line to all this is that Latam really didn't do that badly.


UPDATE: I've been sent this Bloomberg screenshot. This is as far as I go on the subject.

We don't need no more stinkin' facts.

Weekend Freestuff

Free, gratis and for nothing, here we are again with the perfect solution to "Awwww...ahm bored an' ah got nothing ta read".

Click this link to directly download a free copy of Ambrose Bierce's famous 'Devil's Dictionary'. Yes, this wonderful and entertaining piece of literature that you've always liked but never owned can now be yours forever thanks to this PDF file. Included are such classics as:

INFANCY, n. The period of our lives when, according to Wordsworth, "Heaven lies
about us." The world begins lying about us pretty soon afterward.
LOVE, n. A temporary insanity curable by marriage............

150 pages of fun. Get yours today.

Click this link to apply for your free subscription to Futures Magazine (and I hope you do, because you get the free sub and I get a buck fifty commish for this). Here's the blurb from the publishers that is designed to tempt you even further.

You'll increase your profit potential once you've gained the timely market insight that Futures Magazine magazine provides. Each issue is full of indispensable information including in-depth interviews with top traders about trading strategies and tactics, technical analysis, and money management best practices. Futures Magazine provides you with the essentials you need to make smart trading decisions.

Finally, click this link for your free direct download copy of Joseph Conrad's novel, 'Nostromo'. This book may have been written moons ago, but there really is no better way to understand the ways of Latin America and the mentalities of those that live here than to read this hugely intelligent and satisfying book (apart from live here, of course). This is a book I'm really pleased to be able to offer you and it's a totally free download, too. No ifs, buts or catches (just like the Devil's Dictionary).

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