Trading Post (nervous Alu edition)

When Alcoa (AA) reports after the bell, forget the headline number. Forget the breakdown numbers, too. The thing that matters is the conference call as Alcoa management have never been afraid of telling it like it is. I'll be listening in.

Dynasty (DMM.to) up 3.2% at $4.83. She goes up, she goes down, she goes up, she goes down. However with the sparkling fundies behind this stock it's very easy to hold thru the beta ride.

Freeport (FCX) down 1.4% at $41.17. My now open short position was in the negative column all day until very recently. It's at least a nice way of hedging the long metals positions held and at best might still toss a short term winner over this way. DYODD.

Ventana Gold (VEN.to) down 4.7% at $1.41. I mentioned the other day that it looks like it has peaked and recent action has gone a way to confirm this view. Nice looking project and good management, but in the end everything has a price. Certainly one to watch going forward.

Cosan (CZZ) up 13.5% at $4.69. So I made a buck and sold the stock and left a buck 20 on the table. DOH! I'm still not worried as I made my money on the play. However I was very pleased to find out today that at least one reader of this humble corner of cyberspace followed me in at the $2.50 level and (not being a whuss like yours truly) has held all the way up so far. Kudos to you, reader AC.

Peru: I dream of GINI

Thanks to reader MR for the headsup, here's a chart that Peruvian economist Humberto Campodonico used to illustrate his great article that you can either find here in La Republica or here on Campodonico's own blog.

Basically, Campodonico demonstrates with solid numbers that which we all suspect; Peru's growth has not managed to reach the pockets of Peruvians but has been largely beneficial to big business. The metrics used are of salaries and industrial output, both as percentages of GDP. Here's an extract from Campodonico's article as translated by your truly:

"In monetary terms, the salary loss is immense: The (Peruvian) GDP in 2007 was 410.939 billion Nuevos Soles. With 30.1% of that (as in 1991) workers would have received 123.7 billion Nuevos Soles. However with the 21.9% of 2007 they only received 90 billion Nuevos Soles, that is to say 33.7 billion Nuevos Soles less.

But in 2007 businesses received 38.6 billion Nuevos Soles more than they would have in 2001 for the additional 3.4% of GDP (assigned to them)."

By the way, Twobreakfasts is still under the self-delusion of being on the left of centre.

So how's that 2009 Peru growth miracle story going?

Let's compare what The Twobreakfasts&Carranza Show wants you to believe (5% growth, unaffected by world recession, investment grade, serious country etc etc) to..... well...... errrrrr....to reality.

The reasons given by the SUNAT tax office for the fall in tax revenues were (and I quote), "A less dynamic economic activity and an unfavourable international context that continues to affect tax collection levels, principally via the mining sector and the taxes assocaietd with the importation of goods".

So, let's think about what we should really believe here. The region's most unpopular President and his poitically biased spoutings based on nothing but a wing and a prayer, or the facts? Tough one, no?

Fujimori found guilty

'El Chino' not enjoying his day in court today

Like I said, no surprises today.

Here's Reuters

Here's AP

Plenty more links at Google News if you want to read the same thing 100 times.

UPDATE: I'm actually getting some e-mail feedback about the Fujimori sentencing. For the two mails saying "tell more", you really are better checking the newswires. The link to Google News up there will keep auto-updating. For reader PF who asked ".... how long is Fujimori going to get in jail?", the answer is likely 35 years. There are 247 separate rulings and verdicts to get through (it could take all day), but one of the main verdicts was mentioned almost at once by the judges. Fujimori was found guilty of being the brains behind the 'La Colina' massacre. This is a crime against the state and the mandatory sentence for that crime alone is 35 years.

UPDATE 2: Reuters is running this useful little Factbox report that crunches the Fujimori years into an easily digestible timeline. A good place to learn the basics.

UPDATE 3: Rather strange, but no complaints either. The court has just handed Fujimori 25 years in prison (not 35 as the supposedly mandatory sentence indicated). Long enough for sure. On this link you can find the full 20 chapter court ruling. What better way to practice your Spanish?

Venezuela: The day Chavismo feared has arrived

It's the day Venezuelan opposition finally showed signs of political maturity.

Pre-Chávez, Venezuela was ruled by an oligarchic elite (and that's not an overdose of rhetoric) that never needed to explain themselves to their underlings as they never bothered to include the vast majority in the political franchise. Then along came Chávez and that has now changed forever. Since that time, the reaction from the upper and middle classes has basically been one of the petulant schoolboy stomping his feet in rage that someone dared to steal back that which he had stolen.

However, this post over at oppoblogger Quico's Caracas Chronicles site may just mark the moment when Chávez finally has something to fear from the opposition. A much-needed dose of maturity is shown by Quico as he makes it clear to his fellow oppos (much to the disgust of some of them..check the 100+ comments) that Chávez is not a dictator. In fact, he recognizes something that has been clear to non-rabid outside observers for some time; the rest of the world laughs at an oh-woe-is-me opposition that tries to lump a democratically elected, re-elected and re-re-elected President who has brought social justice to his country with the real dictators of our time (Stalin, Pinochet, Amin, Pol Pot etc etc).

So go read Quico's post, "The Dictatorship Canard", for yourself. It's linked right here. You may or may not agree with the whole thrust and political background of Quico, but that's beside the point. The overriding reason why it makes such a refreshing change from the usual drivel written by the anti-Chávez brigade can be summed up in three words: It is intelligent.

Snapshots from regional economies

Chile: February's YoY growth figure was a very nasty -3.9%, worse than even the downtrodden -3.3% the local economists* expected. Not only that, but consumer prices clicked up 0.4% in March. Stagflation, anyone?

Colombia: Exports are down 13.2% YoY for January 2009, with a trade deficit to boot. Ugh.

Argentina: Due to the liars and thieves at the official INDEC stats office it's very difficult to get an accurate inflation figure about Argentina, but certain times of the year help us out. As Easter is upon us, the traditional "Easter Basket" of goods is being measured compared to last year's prices as a 21% increase. That tallies quite well with other anecdotal information on Argentina inflation.

Peru: The Central Bank will cut interest rates this week, the only question being "by how much?". If the cut is 0.25% it means the Velarde and his Central Bank friends see inflation risk. A 0.5% cut is the most likely outcome. Anything above that wil mean "Oh crap, we need to boost things and yesterday" and will also knock the Nuevo Sol (PEN) down against the greenback. The trade surplus Peru registered will allow Velarde more room to be aggressive if he wants to be. Personally I predict a 0.5% cut and a slight lowering of the reserve requirements at Peruvian banks. That combo might make Credicorp (BAP) an interesting short-term trade, but DYODD.


*dumbasses in suits

More evidence of a top in copper

1) At the CRU conference in Chile, Reuters had to search hard to find a bullish shiller or two. The report ends up with Ivanhoe's Friedland (a man with a "history of promotion", let's say diplomatically) and some non-entity from Petaquilla which is simply the worst mining company in Latin America (and that, dudettes and dudes, really takes some doing). If these are the only people Reuters could come up with for saying "buy copper" it doesn't bode well for spot Cu.

2) John Kaiser (who gets general approval Chez Otto...I don't subscribe but he's not a bad newsletter writer and importantly has a top reputation for honesty and integrity) just said the following (mailed over by reader DL 30 minutes ago...I don't know exactly when Kaiser published it).

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There is some suspicion that hedge funds have re-entered the "hard assets" arena, and quite a few market observers have issued sell recommendations for the copper sector on the premise that copper prices will soon develop a downtrend. Nickel prices have remained near the bottom of their recent range, and while zinc and lead have both crept higher, the gain is nowhere near as dramatic as in the case of copper.

xxxxxxxxxxx

I do think that's fair comment even as I try my hardest to avoid the "blame the hedgies" approach.

3) SinkingAlpha starts publishing nobodies and their "buy copper" calls. This one really is a great contrary indicator, stopped clocks notwithstanding.

DYODD, and accuse me of searching for reasons to justify my own position as a short-term copper bear if you like. I am LT bullish on the stuff, by the way, but do believe it needs to retest lows in the next couple of months before it really moves up properly.

Whatever makes you think........

......that Wendell Zerb and Canaccord are all nice and snuggly with Exeter Resources (XRA) (XRC.v)?

Click to enlarge

Nothing to see here...move along now, please.......

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

....a survey taken by Peru's Universidad Catolica (PUCP) about the verdict expected today in the Fujimori trial.

For me, the main thing to take away from this survey is that 24% of Peruvians truly are insane. The Fujimori sentencing circus starts at 9am Lima time. And winner of the "overkill of the week" award is Mercedes Cabanillas, the Peruvian Interior Minister. She's put 10,000 extra police on the streets of Lima to avoid problems when maybe 50 would have been about right. Don't expect surprises.

You should be reading 'Colombia Reports'

Colombia Reports is an English language online daily that popped up on my screen about a year ago. I've been drawn back to it more and more often, and nowadays it's part of my normal day-to-day reading.

For the wide coverage of Colombian affairs they cover, their team of what looks like 17 people (including editor, reporters, photographers, office and sales) is remarkably small. The best compliment I can offer them is to say I sometimes forget I'm not reading in Spanish over at the site, it's that good. These guys actually do real, genuine reporting, too. It's not just a whole page of newswire re-hashes that you can read in other places. It's the real deal, unafraid of reporting Colombia the way it is in English.

So now you know; there's a top quality news service out there on Colombia in the English language available to you for free (they survive on advertising and donations). Go see for yourself on this link and from today you'll find the link to Colombia Reports on the IKN right-hand linksbar.

Trading Post (bargain edition)

Fronteer (FRG) (FRG.to) down 5.3% at U$2.14. I put a stink bid in at $2.10 this morning and it filled. So what if Au and Ag go down further? This is cheap, cheap, cheap and I love the risk/reward equation here and now. SO HEAR THIS: I'm now selling a NOBS report on Fronteer for U$10 at the usual PayPal payment address, otto.rock1 (AT) gmail (dot) com. You send money and I send report back to you immediately. Fair deal?

Dia Bras (DIB.v) up a penny at $0.07. If you like your high risk and high reward pennycrappers, take a good look at DIB.v. Methin ks the rounds of financing are now over, judging at least by this PR today that smacks of "we're all in, let's start feeding 'em the good news". I repeat, the recent fund that has bought a third of DIB.v shares is run by smart cookies who really know their mining.

Minera Andes (MAI.to) down a penny at $0.65. MAI.to is keeping its head whil all around lose theirs. Very interesting and encouraging PPS action today. McEwen is in the big apple all week giving it the promo talkup. We like McEwen.

Cosan (CZZ) up 10% at $3.85. Some guy wrote this morning to point out I'd sold too early. I refer him to Baruch who said "I made my fortune by selling to early". I made my money and I'm happy if you're still long and making yours.

Dynasty (DMM.to) down 5.3% at $4.62. Ouch. The silver lining is that I was expecting it.

Exeter (XRA) (XRC.v) down 5.1% at U$2.59. Oh dear. How sad.

Freeport (FCX) down 3.4% at $41.32. FCX is very shortable from here. So shortable, in fact, that I've just put an order in to short it for a few. Short-term trade. Great great company, but putting my money where my bearish copper mouth is for a change. DYODD.

More on Capella Resources (KPS.v) and the scum behind the scam

This is an update to this morning's post which can be found below or on this link.

My oh my, what a company! Check out this link at one of my fave mineblogs, I Think Mining. Capella has a real reputation in the trade, as does the puppeteer behind the show, Brian Gracey.

Also unmissable is David Baines report on the ultra-shady Gracey, linked right here. Here's how the Baines report starts:

Brian Gracey's business doesn't look like a cash cow, but it is.

His office is located on the fourth floor of the tired Credit Foncier building at 850 West Hastings. The sign at the entrance says "apella Resources," a wounded vestige of Capella Resources, one of many TSX Venture Exchange-listed companies that he has controlled or managed during his two decades on Howe Street.

His office is, well, shabby. Some old steel filing cabinets, a couple of desks, no receptionist, just somebody who answers the door if you knock loudly enough. But appearances can be deceiving. Gracey has made a good living on Howe Street, good enough to afford to live in a $2.2-million home in the British Properties.

CONTINUES HERE

Also worth a quick look is this post from a blog back in 2006 that shows Capella Resources has been pumped and dumped previously....not a surprise, though.

The more you look, the more incredible it seems that the Canadian OSC regulators have never lifted a finger to protect innocent retail shareholders from these criminals. Now you know why I keep on calling the Canadian market one of the most corrupt in the world.

Related Post

Capella Resoures (KPS.v): A fraudulent scam for the ages

I swear to you it's true

Regular reader 'MM' just sent this in.


What's the point in having a blog if you can't share images like this anyway?

Capella Resources (KPS.v): A fraudulent scam for the ages

My jaded cynicism of Canadian junior miners, their scams and dubious managerial decisions designed to screw retail shareholders is well documented on this humble corner of cyberspace. However, every now and again a story comes along that leaves my jaw 100% dropped in amazement. Thus begins this post on Capella Resources (KPS.v) a company that has screwed its shareholders so far into the ground they're currently visiting the Mohorovicic discontinuity.

This story is so impressive it's difficult to know exactly where to start, so let's start here with the 12 month price chart

Yep, that's one helluva price jump recently, isn't it? The reason behind that jump is in this press release. The company hit a very nice drill return at its 'Lajitas' project in Chile (just a couple of clicks from XRC.v's Caspiche project, matter of fact). Here's the moneyline from the PR:

CAPELLA RESOURCES LTD. (TSX-V: KPS - News) (“Capella” or the “Company”) is pleased to announce drill results (drill hole LJ-08011) from the Company’s 100% own Lajitas gold project in northern Chile. The core drilling intersected a zone of continuous gold mineralization of 261 meters grading 0.91 grams per tonne (g/t) gold between 90 meters and 351 meters down the hole. Contained within the intersection is 104.7 meters grading 1.59 g/t gold

The PR comes with other bits of good news, but to cut a long story short KPS.v hit paydirt on this drillcore and the price shot up. Nothing wrong with that, of course. This is the whole reason behind the high risk high reward world of junior mining investment. Except that just before this sexy press release hit the wires, KPS.v took all the reward away from its shareholders and gave it to its own management team, gift-wrapped with a bow. You need to follow the time line here to get the full picture, so here are a few bullet points:

• On June 19th, KPS.v announced it had stopped drilling due to bad weather at Lajitas. Anyone who knows the region in question at that time of year will understand why. The drilling was stopped when the final hole reached 91m depth. It beats me why they were even attempting to drill there at that time of year, to be honest. 'Hostile environment' is putting it mildly.
  

• On October 30th drilling started on the 2008/2009 campaign. Note that the first drillcore that was taken from the 4,000m program is the one that had its results announced on April 2nd 2009 and made the stock fly. Don't you find it strange that it took KPS.v five months to drill 261m, log it, split it, send it down the hill to the SGS labs in Chile (SGS is a labtest company with an impeccable reputation, it must be said) and then finally get the news out in April 2009? Well it's even stranger when you find out what went on at the company between October 2008 and April 2009.
  

• On October 31st, the fun began. KPS.v decided to do a 10-to-1 reverse share split. Here's the moneyline from the PR:

The Company currently has 66,832,174 issued and outstanding common shares. If the Consolidation is conducted on a ten (10) for one (1) basis, the Company would have approximately 6,683,217 shares outstanding following the Consolidation.

Or in other words, if you were (just as one example) one of the shareholders who had participated in the $10m placement back in 2007 organized by Dundee, every 10 shares you owned at the time (that you bought at $1.10) were to be converted into just one share.

• On December 5th 2008, the deal went through.

• On December 24th, Capella began trading again at just three cents. Amazingly, it's the very same day that the CFO locked in that price by awarding herself stock options priced at 3c. Merry Christmas to you, Barbara Wolanski.

• On March 4th, the big switcherooney. Firstly, KPS.v quickly and quietly raised $1m in capital by offering a share at 6c and a warrant at 15c. This means that suddenly the share count that was slammed down from 68m to 6.8m was now back up to a fully diluted 40m or so (and those 15c warrants are now waaaaay in the money). Then KPS.v management decided to swap debt owed by the company to insiders for shares at 6c. (For future reference, the escrow period ends June '09). The deal, for example, handed two million shares over to the CEO, Richard Bachman. Plenty others got their slice, including the "43-101 independent qualified person".

• On March 24th, the transaction closed. Adding the debt-for-shares to the share count, we're now at 46m or so shares out. It's extremely suspicious that the company didn't want to have 68m shares outstanding to any old shareholder back in 2008, but suddenly it was cool about having 46m shares out when those shares had been sweethearted to friends and insiders.

• So we return to April's drill result announcement when that very same "qualified person" signed off on the five month delayed drill results that shot the share price from pennies to over a buck! More coincidence is that the paydirt drill return started at 91m below ground, exactly the same place where drilling was stopped in June 2008. Well, better said "supposedly" stopped, because if you believe in this many coincidences that bridge of mine is still for sale.

• And then two days later on April 3rd (last week) the company announces it's raising $5m with a $0.73 placement! Not only that, but KPS.v announces that it's going to give away nearly 2m stock options as "incentives" for management.

Ladies and gentlemen, these people belong in prison. This is fraud, quite plainly and simply. People like CEO Bachman should be arrested, locked away until tried, then stripped of assets, liberty and social standing by an honest day in court. On December 24th 2008, the company had a market cap of $204,000. At Friday's close, that market cap had shot up to around $38m, an increase of nearly 200X in a touch over three months and it's all suddenly in the majority hands of management and friends of management. So where is the OSC on this one? Who will stand up for the people screwed by KPS.v in 2008? Where is Dundee and why haven't they said a thing about this? Who were the "lucky ones" that so quickly bought in to the $1m share offering in March that added a cool 33m to the S/O total?. Canadian mining reporters at FP/NP, Globe&Mail etc, why aren't you on this case yet?

Related Post
More on Capella REsources (KPS.v) and the scum behind the scam

No point getting a call right....

......if it doesn't make money.

So my "gold U$880" has come to pass. However being 1) obstinate about Troy Resources (TRY.to) and not taking profits recently and 2) buying Minera Andes last week at the seeming bargain of 63c and 3) looking for a higher exit price for Dynasty (DMM.to) are all going to see my port take a dive this morning. So be it and no worries here. The good news is that all those three will be higher in the weeks and months to come because gold will be back over $900/oz soon enough. Just don't ask me when cos I still suck at the short-term stuff.

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

...very, very scary indeed. Mortgage resets in the USA.

Necessary and deserved hat tip to John Hussman's blog.

Look, I'm sorry to do this to you on a (N. hemisphere) spring morning. I'm not trying to get you all bearish about life all the time, but this chart was just too eye-popping to ignore. And in the end, you gotta know the truth about this bear market rally. The truth is that it's a rally in a bear market. And it's still a bear market.

Meanwhile, from one seismic zone to another, Otto's thoughts are with Abruzzo, Italy this morning.

Meanwhile, in that other haven for narcos.......

.....a big drugs raid in the Venezuela border region with Colombia today does away with five cocaine labs that supposedly combined can churn out seven or eight metric tonnes of the stuff per month, confiscates 1.5MT of pure cocaine, all the manufacturing gumph, arrests, etc etc

This puts Venezuela on 17 drugs labs decommissioned in 2009 and 5MT of cocaine not going up the noses of the blue-eyd whiteys (™Lula). But it's all Hugo's fault, you know. Thanks to UL for the headsup on this report.

UPDATE: A very good mail from regular reader 'ebear' tonight. Here it is:

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Otto,

I think someone needs to correct Lula on this blue eyes thing. Sure, cocaine is a recreational drug for some white upper class boys - Wall St springs to mind - but the greater harm is done in the black communities where freebase cocaine (crack) is cheap, widely available and highly addictive. A cynic (or realist?) might view this as another in a long line of deliberate policies to keep the black community in America from attaining any real economic power or control over their lives. It certainly looks that way when you consider the ineffectiveness of the so-called War On Drugs™. As you yourself have often pointed out, this war is waged much more effectively in those nations that don't have a DEA presence. Why is that, I wonder?

Lula and others who keep repeating this white boy myth really ought to be better informed. Blowing the problem off as something created by North American demand misses the point entirely. Cocaine, in its most evil manifestation "crack" is causing untold harm and misery to people whose only difference from the poor and oppressed of Latin America is that they happen to live in El Norte. The color of their eyes has nothing to do with it. The color of their skin most definitely does.

ebear

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Your Plan Colombia tax dollars at work, part 439

Another example of the U$7Bn wasted on Plan Colombia this decade. Even though coca production rose 27% in Colombia last year, the Colombian and Mexican cartels just can't get enough raw material these days to sell to their ever expanding target markets that still deny they're any part of the problem (i.e. USA and Europe). So now the ColoMex cartels are trying to move into Bolivia, thus spreading their filth even further and buying up all they can from the locals.

But the thing is, once they leave the relative safety of DEA controlled Colombia (geddit?) they risk getting arrested by people who are actually doing an effective job of cracking down on the cocaine trade, namely Bolivia's FELCN. So add the 195kg of very pure Charlie, eight Colombians, one Argentine and a Bolivian to the recent roster of success at FELCN. In fact, since this report last week about Bolivia having confiscated 7.19 metric tonnes (MT) of cocaine and an impressive 1,267MT of marijuana in the period Jan09 to March09, the FELCN has taken another half tonne of cocaine off the market and taken yet another light aircraft away from the narco scum. And all this doesn't even include the 100kg per day cocaine megafactory that the FELCN dismantled in late March.

However, according to the English media it's Evo's fault. And they'd never lie to you or feed you a false agenda, so why even bother with the facts?

copper thoughts

I've been musing on these two longview copper charts over the weekend. The first one is the 10 year copper price chart (in U$ per MT), the second one is the 10 year LME warehouse stocks chart:

It's boring being a copper bear (in the short term) and watching the price move from $1.75/lb to $1.95/lb in quicktime. So when markets go against my forecasts, I'm always interested in finding out where my mistakes were made.

My basic in-a-nutshell bear call when the price stood at $1.75/lb or so was "copper won't go up because the price move so far has been monetary in nature and not driven by demand." I can still happily stick with that call, even though China imported a large amount of copper in February. This is because China is clearly stockpiling the metal and it's not satisfying final end-user demand.

However, it's clearly not the whole story. My best guess is that large funds have moved back into copper and are buying on speculation. That strikes me as my own bad excuse for calling the move badly, though....it's so darned easy to "blame the hedgies/PTB/WallSt crooks" etc for any market move that goes against you, isn't it?

Whatever it is, although I'm not comfortable with my mistake I have to stick by my call for the time being as fundamental analysis (my baseline) cannot see any reason for higher copper prices going forward. But be clear, that's more my personal analytical weakness showing than any particular table-banging. Any comments either left below or via mail from people with a view on copper very appreciated.

DYODD

UPDATE: Heather Walsh is one of the better reporters at Bloomie. She filed a report from the CRU conference today that goes under the title "Freeport Says Rally Unlikely To Spark Investment Jump". The contents from no lesser name than FCX CEO Adkerson back up my own position.

UPDATE 2: Tyler Durden at Zero Hedge throws another dos centavos into the debate. I agree here, too. What is it about Sundays and musings on copper, anyway?

China financials (Brad Setser must-read again)

Non-LatAm post.

Want an example of why reading SinkingAlpha is a waste of time? If so read this lump of drivel about the latest noises from China about introducing a new, non-dollar world reserve currency. By some miracle the conclusion is to buy gold, silver and oil. A total waste of time. SinkingAlpha's model as a blog aggregator really makes little sense when the few good contributors can also be read at their own sites and the many mediocres have no other outlet. Honestly, why bother?

Now compare the tosh to the latest excellent analysis from Brad Setser about the same issue. In fact, scratch this thought. Instead of reading each article once, read Setser's article twice as you'll learn a lot more in the same space of time.

Ecuador gets credit from China

Studmuffin brushing up on his mind control techniques
before the election later this month

Studmuffin sums up the latest deal with China in one simple phrase:

"China has a surplus of financial resources, but a deficit in natural resources, particularly hydrocarbons."

That's about the size of it. Meanwhile, Ecuador has plenty of oil and not much money right now so the solution is simple; China hands over U$1Bn to Muffinlandia, and Ecuador ships over the oil little by little in the next few years. As for all the talk of turmoil in Ecuador's financial sector, here's FinMin Borja via Bloomie:

"All the prophets of disaster who said dollarization won’t last and that there’s no finance for Ecuador have been proven wrong,” Borja said. “There’s enormous international interest in providing finance."

And when he says "international", you'd be way wrong to immediately picture Lula's blue-eyed whiteys. By the way, Correa is polling 53% of vote intention for the presidential election, with his nearest rival at 12% or so. Therefore to quickly answer a reader's mail from Friday, Correa wins. Period. Zerobrainer.

Colombia Combo

1) Read the story of Flor Diaz at the excellent CAJA blog. She was recently released after three years and four days in jail for "rebellion", the term used when you have the guts to stand up for human rights and try to help people being trampled upon by government forces in provincial Colombia.

2) Plan Colombia and Beyond has a four minute video of Alvaro Uribe speaking in Spanish with English subtitles about peace activists and journalists that dare to oppose the government line. This type of interview is common in Colombia but rarely reaches the wider, Enlgish-speaking world. The ease in which Uribe connects anyone against his governmental line with the word "terrorist" is chilling, especially considering his government's appalling record on human rights. Equally interesting is how, in 2006, he claims to be on the brink of bringing down the far right wing paramilitary organizations. Anyone visiting the northeastern coca growing regions today will know differently.

3) More Plan Colombia and Beyond. Here's the moneyline from this article:

".....Colombian leader chose to speak about local issues like Families in Action [an economic subsidy program] and successes against the FARC. After a few minutes, some of the meeting’s organizers observed with alarm that Timothy Geithner, the U.S. treasury secretary, chose to disconnect himself from the simultaneous translation feed."

Fading influence, anyone?

4) After noting earlier this week that the Bolivia actions in targetting the transporters of drugs is working well, here's a note from Colombia Journal that shows how Uribe is still barking up the wrong tree in his attempt to stamp out Colombia's biggest export business.

Where can you buy Inca Kola?

Today's the day I clear this one up once and for all.

Inca Kola, for those that don't know, is the Peruvian soda that outsells Coca-Cola in its home country (factoid; Inca Kola in Peru and Thums Up in India are the only soft drinks in the world that outsell Coca-Cola in their home market, or so I'm told). It's bright yellow in colour and the flavour is often described as bubblegum (though I detect notes of banana in there). It's best drunk ice cold so that you don't realize just how much sugar is hitting your bloodstream. My personal fave funfact about IncaKola is that the cheap copies of the stuff made in Peru by other soda companies are usually known as "yellow flavour", which is the most adorable name possible.

I've been asked on several occasions how to buy Inca Kola in North America and another mail arrived last night. The answer is on this link. For U$7.95, some company called MexGrocer will send you a 6pack of the stuff. And no, I'm not on commission for this one. Just a public service announcement to further the cause of diabetes in our modern world. Have a nice Saturday.

Wrapping up the World Cup qualifiers

I didn't want to overdose the blog with soccer posts during the working week, so this is the belated post to wrap up what happened with the South American World Cup qualifiers on Tuesday and Wednesday.

Firstly the bets. True to form (and proving that Saturday's 2 from 2 really was the fluke I said it was) we flunked on both wagers. Chile held Uruguay to a 0-0 draw (I bet Chile) and Venezuela whupped Colombia 2-0 (I bet the draw) so the IKN virtual cash hoard is now down to $141 for the next round. And again, a reminder that thse bets are only theoretical and you'd be stone mad to follow me with real money on these (proved in style on Wednesday).

The real shocker was Argentina being hammered 6-1 by Bolivia (see all the goals here). Paraguay's point away from home at Ecuador puts them all but guaranteed for the finals. Brazil surprised nobody by beating Peru 3-0. Peru has managed to lose seven of its 12 matches now. Truly abysmal.

So the next two rounds are due June 6th to June 10th. Hasta la vista, baby.

US unemployment chart

The data is from this interesting post by Mish.


1. Downward revision on the way

2. You honestly think that last week saw the end of the recession? Wanna buy a bridge?

Trading Post (nosebleed edition)

Cosan (CZZ) up 22% at $3.45. Whoosh! From being very (and I mean very) close to being stopped out earlier in the week, I've just sold all my CZZ at a $1/share profit. Gotta love this Hope™ thing, yeah? It's strange how much dumb luck works in this game as if I'd set the stop loss just a couple of cents higher I'd have missed all the fun. Still, this trade has made my week. My month, in fact.

UPDATE on Cosan: Gotta laugh. I've just found out what was behind the move in CZZ. Yet again it just goes to show that you can identify all the value you like, but things only happen when the sheep catch up. Or in other words, Citigroup called CZZ a buy today. Here's the moneyline:

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The market "has yet to realize" the positive impact that higher sugar prices and a weaker local currency will have on the sugar producer's cash generation, said Citigroup analyst Tereza Mello in a note to clients Friday.

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Minera Andes (MAI.to) UNCH at $0.65. I opened a space for this yesterday at 63c and might buy some more now there's a decent cash position in the trading port. Short-term trade envisaged here. DYODD.

Exeter Resources (XRA) (XRC.v) down 8% at U$2.78. Oh dear. How sad.

Fronteer (FRG) (FRG.to) down 3.4% at U$2.29. Another offering tremendous value. You have to think that the stock is sleeping on the news today, as this Sandman JV project with NEM is now clearly a possible mine in the making.

UPDATE: The nice people over at the stock exchange offered me U$2.25 on FRG. So I took it. DYODD.

Applause for a Bush in Texas

No, not that Bush family.

Stuart Bush is an analyst for RBC and based in Texas. He gets serious applause from IKN for having the cojones to call "sell" on a stock and being correct and staying correct over an extended period, all this in the face of plain vanilla bullying from the company.

Both this humble correspondent and the higher powers know what independent analysts go through when they have the temerity to say "that company sucks" in print. Even this corner of cyberspace has had to suffer foul-mouthed hatemail and wild, unsubstantiated accusations from company management (up to and including CEOs) and their blind sycophants (from retail shareholders to famous pundits and newsletter writers) who delude themselves about certain companies that have been mentioned here (regular readers can guess the rest). It must be even worse for an analyst such as Stuart Bush with a company salary and buyside clients who want to hear good things about potential investments, not bad things.

So hats off to Stuart. Here's the first part of report in the Globe&Mail today and the link to keep reading. And thank you TM for passing the link on.

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The analyst, the CEO, the schoolyard squabble

PAUL WALDIE

From Friday's Globe and Mail

April 3, 2009 at 3:48 AM EDT

Stock analysts are often accused of being too cozy with the companies they cover. Then there's the case of Stuart Bush, an analyst at Royal Bank of Canada's investment arm in Texas, and Zsolt Rumy, chief executive officer of Zoltek Cos. Inc., a St. Louis-based maker of carbon fibre used in wind turbines.

The two have been battling each other for months. Mr. Rumy says Mr. Bush "has an axe to grind" and that one of his reports about Zoltek last summer was so negative that Mr. Rumy received death threats from shareholders. He has stopped talking to Mr. Bush and banned the analyst from company conference calls.

Mr. Bush, who has a "sell" recommendation on Zoltek, stands by his analysis and says Mr. Zoltek is just angry that the analyst's industry sources are so good.

Relations between the two sank to a new low yesterday when Mr. Rumy issued a press release attacking Mr. Bush's latest report, dated March 27 and titled "Pricing and Order Pipeline Deteriorates Further: Reiterate Sell."

In it, Mr. Bush lowered his estimate for Zoltek's profit, revenue and share price and questioned Mr. Rumy's "overenthusiastic outlook."

He also said the company's head of sales had resigned over a disagreement with Mr. Rumy and he said several customers might cut purchases.

CONTINUES HERE

The Friday Freebie: Free synopsis of "The Wisdom of Crowds" by James Surowiecki

Here's another free condensed book reviews from the nice people at getAbstract. This time the abstract on offer is 'The Wisdom of Crowds', the recent bestseller by James Surowiecki. Find out more below and request your free copy of this synopsis by linking through right here.

PS: check out the full range of titles on offer from getAbstract on this link. With 12 titles to choose from there's something for all tastes. Enjoy

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The Wisdom of Crowds - Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations

Know in 10 minutes what it takes others hours, and keep up with the latest trends in your industry.

In this summary you will learn:

• Why large groups of people seem to be better than experts when it comes to forecasts, valuation and other tasks
• How scientists prove that crowds are wise
• Why it matters

Why you should read The Wisdom of Crowds
This well-written bestseller explores the apparent anomaly that crowds of nonexperts seem to be collectively smarter than individual experts or even small groups of experts. This basic insight is at the heart of contemporary financial investment theory, with its emphasis on the difficulty of outguessing the market. Beginning with British scientist Francis Galton’s remarkable discovery in 1906 that a crowd of nonexperts proved surprisingly competent at guessing the weight of an ox, financial columnist and author James Surowiecki skillfully recounts experiments, discoveries and anecdotes that demonstrate productive group thinking. The concept does not come as news to anyone reasonably well read in modern financial literature, but getAbstract recommends this comprehensive, fresh presentation.

About the Author
James Surowiecki is a staff writer at The New Yorker, which publishes his popular business column, "The Financial Page".

Request your copy here

Publisher: getAbstract

Positive PR Headsup: Fronteer (FRG)

The press release published this morning by Fronteer (FRG) (FRG.to) is very impressive stuff. Here's the link, go read.

FRG currently trading at U$2.27.

UPDATE: The Canadian traded stock (FRG.to) got a very nice rebound on the news. From sinking to C$2.77 on the general gold market malaise this morning it has popped back to C$2.86.

disclosure: I don't own.

More on the DEA

After this morning's post that shows how Bolivia has been fighting the narcos far more effectively since it chucked out the US DEA, a reader in Venezuela sent me the link to this story published yesterday in Venezuela. The similarities are very clear: 1) a national government fed up with the USA's attitude to Latin America 2) the fairly recent expulsion of the DEA from its territory and 3) how its combat against the drugs scourge has reportedly changed since the DEA left town.

Proven stories of corrupt DEA agents have been around for some time, of course. But what's being called into question here are not a few rogue elements but the whole philosophy behind the DEA. Here's the translation of the whole article.

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The Government Detects that Drug Cartels Operate Inside the DEA

April 2, 2009

The Vice-President of Venezuela, Ramón Carrizáles, states that facts demonstrate that the efficiency of the DEA is a lie.

The Vice-President of Venezuela, Ramón Carrizáles Rengifo, stated this Thursday that drug cartels have been detected operating inside the DEA.

While talking about the delivery of 120 transport units destined for the fight against drug trafficking and illegal use of narcotics, Carrizález stated that during the period of cooperation between Venezuela and the DEA, 2001 to 2004, 153 tonnes of drugs were confiscated, but in the period 2005 to 2008 after the cooperation was terminated, 250 tonnes were confiscated.

"We have nearly doubled the quantity of drugs that were captured when we co-operated with the DEA", he said. "This is proof that the efficiency of the DEA is a lie. Countries show better results when their own security forces fight against drugs." He added, "When the DEA was in Venezuela it didn't do anything except favour drug trafficking".

He reiterated that the Government of Venezuela always says that it is impossible to control and succeed against narcotraffickers if consumption is not controlled and if the biggest consumers of drugs do not accept that the problem is inside their own borders.

"With this act of delivery of (the 120) vehicles to prevent the social integration of drugs, Venezuela is taking an important step in the fight against the production, trafficking and consumption of drugs, the Vice President said.

He detailed that so far this year, Venezuelan forces have confiscated 8,936kg of drugs, including cocaine, marijuana, crack, basuko and heroin "because our fight against drug trafficking is a frontal assault".

Oh Noes! Canada isn't the centre of the world!

• Maybe it's because people don't like the loonie

• Maybe it's because people are fed up to the back teeth with Da Boyz

• Maybe it's because people are sick to death of wanting in to a small miner and are offered 24 on the bid and 29 on the ask by corrupt pigs in suits and ties.

• Maybe it's because of the regulatory body, the OSC, that has managed to bring just two people to rights this decade (not joking, that's the number of convictions since 2000) and obviously doesn't give a damn about the impunity under their very noses.

But whatever it is, people are voting with their feet. The junior mining companies wise enough to spread their traded stock around other markets are now feeling the benefit of this move. Case in point is one of IKN's favoured microdots, Vena Resources (VEM.to), that traded just 1,000 shares in Toronto yesterday, but 63,000 in Frankfurt this morning and over 126,000 shares on the Lima, Peru BVL exchange yesterday (with closing bell bid at 21 and the ask at 22...that's how you run an investor-friendly exchange). Another one is Candente Resources (DNT.to), doing nearly half a million shares in volume in Lima yesterday. Plenty more examples to choose from, too.

Wouldn't it be funny if one day they rang the bell on the TSE and nobody came to play?

Evo's Bolivia is Combatting Narcos better than the DEA ever did

So much for the DEA. Here are the solid statistics that show how Bolivia has increased drugs interception and confiscation since the DEA were thrown out of the country.

Yes, that says 'increased', gringos. Read on.

Click to enlarge

This top chart shows the amount of cocaine confiscated in Bolivia every year since 2000. The 7.19 metric tonnes so far this year is right on schedule to match the 2008 totals. Remember that the DEA were thrown out in 2008. Since that time drugs interceptions have clearly rocketed.

On to the perhaps even-more impressive bottom chart. Although cocaine is the headline drug of Bolivia, the country is also a big marijuana-growing area especially in the eastern provinces of Santa Cruz and Beni. This second chart shows the really impressive job the Bolivia FELCN anti-narco police force has been doing against the marijuana traffickers since the US DEA left town. In the first three months of 2009 Bolivia has already confiscated more marijuana than in the whole of 2008, in itself the all-time record year. Again, it surely makes you wonder what the DEA was doing all this time, doesn't it?

Oh, and by the way, since January 2008 the FELCN has grounded nine light aircraft used by the drug scum out of commission and locked away 4,363 people, too. All details from the relevant website right here.

It's strange that left to its own devices, Bolivia (as it said it would) has become far more effective in the fight against drug trafficking. Remember that the USA took away the ATPDEA preferential trade deals in late 2008 because it said it wasn't doing enough in the so-called "war against drugs", but even without trade deals and DEA leadership, Bolivia is doing a far better job than at any point under the US anti-narco lead. As the Vice Minister in charge of operations, Felipe Cáceres, said yesterday:

"Despite the fact that the opposition and media want to discredit the work of the FELCN, the national government is hitting this illicit activity hard. "The neoliberal governments that protect nacrotraffickers and repress coca producers ran between 3,000 and 4,000 operations every year, something that doesn't happen with this government that, under its policy of zero cocaine and zero illegal drugs, is leading a massive struggle against the people and family clans involved in narcotrafficking, and with positive results."

Seriously, it's about time people started asking the DEA exactly what it was doing all this time in Bolivia and whether, as both long-standing rumours and the recent statistics indicate, the DEA really was part of the trafficking problem and not its solution.

And what are they doing in Colombia?

Chart of the day is....

...Argentina retail sales for March 2009 by item.


Recession anyone?

Exclusive: Zo-Lik the Financial Robot to Save World

At the G-20 conference today, Lula won the hearts'n'minds of the blue-eyed whiteys by unveiling his grand plan: Instead of putting the FateOfTheWorld™ in the hands of the very same robberbaron bankers that got us into this clusterf, top Brazilian scientists have designed and built the first ever fully automated financial robot to instil Hope™ throughout the world. Named Zo-Lik by Lula, one will be sent to the Central Banks of each G-20 member in the next 20 days.

• "The robot will perfectly implement all financial mandates and is 100% corruption and bonus-free" remarked President Lula. "As for the design, we decided to go for a mix of Kraftwerk's "I am the operator of my pocket calculator" and Arnie's Terminator, as the Semtex installed in each Zo-Lik will be triggered by the proximity to embezzled accounting files."

If all goes to plan, major banks will be equipped with one per boardroom by the end of 2009.

Trading Post (punk rock classic edition)

s

London calling, yeah, I was there, too
An you know what they said? well, some of it was true!
London calling at the top of the dial
After all this, wont you give me a smile?
The Clash, London Calling, 1979

Highly recommended is this article on Gold from Jon Nadler yesterday. Apart from the slightly jokey Aprilfool type title, the contents are spot on about gold, inflation and all those big things that you guys up there love to worry about.

Southern Copper (PCU) up 7.5% at U$19.38 and was up higher earlier. I never touch my longterm portfolio holdings, it's a matter of previously stated conviction. However I was sorely sorely tempted to sell a few PCU this morning (it's my largest equity position in the LT port) on the back of the HopeFest and the news that Grupo Mexico has upped their stake in PCU to 80% (here's Reuters). However, I resisted the temptation.

Cosan (CZZ) up 10% at $2.64. I'm still holding and now in the profitzone. Always said it'd be a wild ride. I was right.

Exeter Resources (XRC.v) (XRA) down 7% at C$3.73. By Casey's will it shalt be done.

Minera Andes (MAI.to) down 3% at $0.63 and got whacked yesterday after the YE results were posted. Silly sales really, but the reaction wasn't unexpected. I mean, whoever bothers to look further than the headline numbers these days? Fundamentals? Nah, complete waste of time...

Well hear this, people; MAI.to is now a raging short term buy. Pick some up today at 63 and 64c, and sell 'em next week to the New Yorkers who are gathering at the Yale Yacht Club to hear Rob McEwen speak at their luncheon next week. The target is an easily gettable C$0.74, offering us a 17% potential gain. For the record, I just bot a few at 63c.....Ohhhhh Winthorp!

DYODD

The G-20 final communique

You can read it yourself by clicking right here, "it" being the official PDF from the G20 London summit. But in a nutshell the idea seems to be to empower the world bankers via the IMF, the body of suits that screwed Latin America into the ground in the 1980's and 1990's, to get us out of the mess caused by the world's bankers.

I mean, what could possibly go wrong?

Solidarity

Clarin now estimates that 70,000 people have filed past and paid respects to Raúl Alfonsín as he lays in state. The line was non-stop all through the night and also this morning under heavy rain. His cask is about to be taken from Congress to his final resting place, and so this will be IKN's final post on South America's biggest story of the week, nay year.

Meanwhile, the following countries have marked the death of Alfonsín by declaring days of official nation mourning; Colombia, Brazil, Paraguay, Uruguay, Chile, Peru. Notably, the countries that suffered the most under far-right military dictatorships are those to step up and officially doff their caps to Alfonsín. It's times like these that you realize how much South Americans understand and appreciate their own history. Be clear that all the above listed countries will be remembered by Argentinians for their gestures of goodwill.

Equally, it's times like these that you realize just how little people outside the region know or care about South America, as the passing of a great democrat has caused hardly a ripple in the psyche of the wider world. So be it. That will surely be remembered, too.

Peru: Downward GDP revisions coming thick and fast

Don't say you haven't been warned.

Now be honest with me, have a good close look at that chart above and ask yourself whether you can see a pattern beginning to appear :-). Follow the bouncing ball, people;

• November 2008: President Twobreakfasts tell the annual Peru bizpeople's conference that 2009 growth will be 6.5% and that the country's growth is "armour-plated" against the world financial crisis.

• January 2009: The Peruvian Central Bank revises their growth forecast downwards to 6%.

• Later in January 2009: Yehude Simon the first official voice to say that GDP growth will be 5% in 2009. The rest soon follow.

• March 2009: Peru's Central Bank says that growth will be "a little under 5%" this year.

• April 2009: CEPAL calls Peru GDP growth at 3.5% for 2009.

Remember Otto's prediction is 2.25% for 2009 and that smarter people than I are calling for 0% growth. Nuff said. DYODD and don't believe the BS they feed you.

Related Posts
Peru: The first of many downward revisions (Jan 10th 2009)
Chart of the day (January 15th, 2009)

Morning Mailbag: Apoquindo, Chariot and Doug Casey

"Well, call me crazy, but it is my philosophy that in
order to be successful one must project
an image of success at all times."
Buddy King, American Beauty (1999)

I haven't done one of these posts in a while, so as three worthy candidates have come my way in the last few hours here we go.

Apoquindo (AQM.v): After this post on Tuesday IKN received the following comment from the management at AQM.v yesterday via the comments section, so by way of 'right to reply' here it is in an open post so that more people see it. For the record I agree totally about Villarzú's integrity and his good standing in the copper industry. All I'm saying is that his price predictions on spot copper suck, the puff-piece interview with that copper-ignorant and backpocket-biased Andrew Mickey dude is way too suspect to be taken seriously and the IR company in the middle of the whole thing needs to take a long, hard look at how it's doing its job if it wants to build a worthy following instead of just court the fickle, popular vote. I mean, check the share price action:
So here's the reply from AQM.v. Fair dos to Ms. Ashton, she defends the company corner well.

I want to defend Juan Villarzu as a person with great integrity. You may disagree with his views, but they are genuinely held. I am a director of Apoquindo Minerals, Stephanie Ashton, and the title King of Copper was not made by Mr. Villarzu, he would not call himself that. Basically, to further explain his view, Mr. Villarzu believes that the current crisis is fundamentally a crisis in confidence, and that regaining confidence could change the economic situation very rapidly. He also says that the current crisis differs from other crisis in history, since never before has there been such a massive, concerted and rapid response by governments and central banks worldwide, and this will cause the recovery to be quicker. He believes in copper growth in China, and that alone will mean enough demand for copper, along with production cutbacks, that will result in a higher copper price. Yes Kin Communications is the IR company for Apoquindo, and I do not see what is the problem with the IR company doing its job. Most people disagree with Juan Villarzu´s opinion, as evidenced by the Cru conference presentations currently occurring in Santiago, but he is not alone in view, and it is genuinely held. He is a believer in the metal, as we all are here at Apoquindo.

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Chariot Resources (CHD.to): CHD.to has been a pain in the side of Tom Meyer, analyst at Raymond James, as he rode his pick down through 2008. However Meyer deserves credit for sticking to his guns (though lowering his prices target by an order of magnitude) because 1) Meyer is very good at working the numbers and seeing underlying value and 2) copper has been coming back some and there is light at the end of this tunnel. So with that context, here's Meyer's latest update on the company, out this morning.

Chariot Resources Ltd. CHD-TSX
8th Delay in the Feasibility Study - The End Must Be Near
Tom Meyer, CFA, P.Eng

RATING STRONG BUY 1
Target Price (6-12 mths) (C$) 0.50
Closing Price (C$) 0.24
Total Return to Target 108%

Event
Chariot announced, before market open on Mar-31-09, yet another delay in the release of the feasibility study on its 70%-owned Mina Justa Cu project in Peru. The study is now planned to be released on or before Apr-23-09 (prev. 1Q09).

Action
We reiterate our STRONG BUY rating and are increasing our target to C$0.50 (prev. C$0.40). In anticipation of the "almost done" feasibility study and our view of possible M&A activity as the miner's balance sheets improve with the rebound in commodity prices, we have increased our target P/NAV multiple to 0.30x (prev. 0.20x). This increase more than offsets our model adjustments to account for the added delay and capex and opex uncertainty (we biased our numbers slightly higher). All told, we have reduced our NAV estimate to C$1.65 (prev. C$1.81).

Analysis
- Capex/Opex uncertainty. Similar to the explanation given for the previous delay, management indicated that it is currently in the process of estimating the most up-to-date capital and operating costs. We estimate an initial capital cost of US$490 mln and a life of mine average operating cost of US$0.77/lb [opex includes sulphide flotation mill (additional capex of US$135 mln) starting in year 3 of project life].

- Mine planning parameters. According to management, the feasibility study envisions processing 12 million tonnes per year with an average grade of 0.58% Cu through the vat leach plant to produce up to ~60,000 tonnes per year of cathode and processing 5 million tonnes per year with an average grade of 1.25% Cu through a concentrator to produce up to 56,000 tonnes per year of copper in concentrate. We estimate first production in 2H12.

- Liquidity. According to the press release, Chariot has ~C$19 million in cash and is responsible for funding 70% of the project's US$8 million budget in 2009.

Valuation
CHD shares trade at a P/NAV of 0.15x versus its peer group weighted average at 0.62x. Our target price is based on a 0.30x P/NAV multiple and is in-line with risk and liquidity-adjusted historic multiples for advanced projects

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Doug Casey: Following yesterday's TradingPost, here's a mail from a regular reader, initial "R". Good to see that the smarter among you consider him, at best, a stage along the way.

I've developed a real dislike for that guy (Casey). I hate to admit I was a subscriber for a while. His entire operation is one big marketing drive. You sign up for one service, they tout another. And another. And another. Too many layers, and way too much appeal to elitism. Way too little in the way of performance too. He buries you in more picks than you could ever afford, then selectively touts the winners while tap dancing the burning match routine when his losers blow up.

And what's with the Salta crap? Like I'm gonna sip wine and play polo all day with Mr. Risty while the rest of the world burns? **** that. I hope he gets overrun by Marxist guerillas.

The final straw was when he hired some so-called ex-CIA spooks to snoop for poop. As if. Show us your badges hosers. Don't got any? Thought so. Oh, and the hijacking of ERIS, as if he had clue one what Anton Wilson was about. That really irritates me. He and Tony Robbins should get together.