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8/1/09

John Stuart Mill and Bill O'Reilly

How did I miss this one? Thank you reader RB for the send-in.

According to Bill O'Reilly (who I hear gets people agreeing with him up North all the time) the higher life expectancy in Canada is to be expected, because there are 10 times as many US citizens as there are Canadians. I mean, where do you start with this?



John Stuart Mill said it best.
"I never meant to say that the Conservatives are generally stupid. I meant to say that stupid people are generally Conservative. I believe that is so obviously and universally admitted a principle that I hardly think any gentleman will deny it."

Something pretty for a Saturday



[South America] - America Meridionalis - Mercator - Hondius,  1630.
Drawn by Mercator-Hondius in 1630. Pretty, no? The original is yours for 900 Euros,
just click the map to go to the seller (and no, I'm not on commission).

Bolivia leads South America

Scrawny, mouthy, opinionated people like your humble correspondent have been saying it for a while, but now the people that really matter are daring to say the unsayable:

Bolivia is the fastest growing country in the region.

Bolivia has a strong economy and low inflation

Bolivia is riding out the financial crisis better than any other regional state.

Yesterday the Bolivian Central Bank (BCB) published its half-year report. You can go look for yourself right here, but what you'll find is an economy that will grow by 4% this year (the first half of 2009 saw 2.1% growth acording to head honcho at the BCB, Gabriel Loza, mainly due to the productive sectors). Loza sez:
"The perspective is that growth in the Bolivian economy will continue, we are talking of rates around 4% and therefore Bolivia will not suffer a recession as in other regional countries."
Bolivia also has an economy with inflation reeled in to just 2.1% (again, thanks largely to wise economic policy) and international currency reserves at all-time highs. Not only that, but Bolivia's exchange rate has, in the words of Loza:
"...has avoided unnecessary exchange volatility. Our exchange rate, which is not fixed but a regimen of administered exchange, has shown a moderated, stable and non-volatile behaviour."
Yet again, this is why you never hear about the Bolivian economy in English language media. It's going far too well, y'see. And all this stability and strength has its roots in one, single policy decision from the government of Evo Morales: Nationalize hydrocarbons. And another smart thing that Evo has done is to leave the financial experts to run the finances and not stick his nose in, as the guy knows what he's good at and what he's not good at.

I'm evermore convinced that Evo scares the hell out of the blue-eyed whiteys more than Hugo could ever manage. He's not changing the rules but doing something far, far more dangerous and subversive: He's beating them at their own game.

Crappy oil call of the week award goes to...

...Otto Rock of IKN. On Thursday morning, with oil nudging at $65/bbl, your humble correspondent wrote......
We can see $66 again, but a quick look at the daily candle tells me that downside risk is far higher than anything offered to the upside.
.....which is why you should never listen to me about charting or crude. This is what it did since then.

Nuff said. Otto way sucks at crude and won't give up his day job.

7/31/09

The Friday OT: Soda Stereo, En La Ciudad De La Furia

The quintessential Buenos Aires.



My favourite Soda track and a real memory-laden, shiver-down-spine song for your humble correspondent. This video is from a Chile TV show in the 90s and apart from the way Cerati is dressed up like Frodo has aged pretty well. South America's biggest ever rock band at the height of their powers. Just a great, great song and for fun I've dug out the lyrics, so mumble along with Gustavo.

Me verás volar por la ciudad de la furia
donde nadie sabe de mi y yo soy parte de todos

Nada cambiará con un aviso de curva
en sus caras veo el temor ya no hay fábulas
En la ciudad de la furia

Me verás caer como un ave de presa
me verás caer sobre terrazas desiertas

Me desnudaré por las calles azules
me refugiaré antes que todos despierten

Me dejarás dormir al amanecer entre tus piernas, entre tus piernas
sabrás ocultarte bien y desaparecer entre la niebla, entre la niebla

Un hombre alado extraña la tierra

Me verás volar por la ciudad de la furia
donde nadie sabe de mi y yo soy parte de todos

La luz del Sol derrite mis alas
sólo encuentro en la oscuridad lo que me une
con la ciudad de la furia

Me verás caer como una flecha salvaje
me verás caer entre vuelos fugaces

Buenos Aires se ve tan susceptible
es el destino de furias lo que en sus caras persiste

Me dejarás dormir al amanecer entre tus piernas, entre tus piernas
sabrás ocultarte bien y desaparecer entre la niebla, entre la niebla

Un hombre alado prefiere la noche

Me veras volver
Me veras volver...

Trading Post (will be weekended edition)


The following stocks will get mention in this weekend's edition of The IKN Weekly (but only some of the comments will be stock positive):

Inca Pacific (IPR.v) up 36% at $0.40 and big volume.

Castle Gold (CSG.v) up 1.5% at $0.66 and the subject of this week's NOBS report.

Amarillo Gold (AGC.v) down 5.6% at $0.85

Troy Resources (TRY.to) up 9.8% at $1.35 and it's actually traded more than twice in a day. Miracles never cease. Still, my biggest single position is now 60% up since purchase in January...I'll take it.

Dia Bras (DIB.v) up 30.3% at $0.215 and subscribers will know why this stock is on the list today. Ty2GaryBiiwii, btw.

Chariot Resources (CHD.to) down 2% at $0.25

Los Andes Copper (LA.v) UNCH at $0.095.

All these microdots and a lot, lot more besides. Just $25 a month to try the service and easy to unsub if you decide it's not for you once that month is through. It'll be good to welcome you on board.

Venezuela, Capitalist Heaven

Venezuela (despite everything I'm sure you've heard) is a great place to be a finance wideboy. Banks make eye-popping profits and returns on equity, finance houses who play the yield curve clean up year after year, commissions on trades are licences to print money.

For example, let's check that parallel 'permuta' exchange market, sewn up tight as a duck's sphincter by the local moneymen so that those who want janquidolares pay through the nose. Here's how Venezuelan Bolivar Fuerte, and a range of other South American currencies, are trading at retail exchange house/street level today.

Country Bid Ask
Venezuela 6,67 6,93
Peru 2,99 3,01
Argentina 3,815 3,845
Colombia 1990 2000
Brazil 1,85 1,87


So now let's compare the percentage differences of the 'bid' (what they'll pay you if you take dollars to the window and withdraw local currency) and the 'ask' (what you need to pay them to get a US dollar):

Yep, Venezuelan forex is great work if you can get it. Cartel? Price gouging? Bankers ripping the people off? Shome mishtake shurely ossifer!

This is what comes of not being in APRA

Only one of these is now in doggy heaven

About 2,500 posts ago in May 2008 IKN reported on Miro Ruiz, an opposition member of congress in Peru who decided it was ok the shoot dogs with an unlicenced Browning point two two. The dog in question, a family pet Schnautzer named Matias, was caught in Ruiz's back yard worrying his chickens or ducks or something and the next thing heard was bang bang bang.

Ruiz denied everything at the time, then later fessed up and admitted shooting the hound. However, he got into schtuk because he had no licence for the weapon even though he'd bought it a year previously (he claimed not to know that a gun needed to be under permit...dat one wuz funneh). But now he's really in the schtuk because yesterday the Peruvian Supreme Court has lifted his parliamentary immunity on the case, ruling that there's nothing that could be construed as political about the illegal ownership of a really heavy duty firearm. Ruiz is now just one step away from a criminal prosecution that is good for at least one year's jailtime (and up to 15 if things go really badly in front of the beak).

Would he be facing slamtime if he were an APRA congressman? Gimme a break, those Twobreakfasts guys get away with all the crime all the time. No, Ruiz is a Humala party member and as such in problems. Moral of the story; don't kill pet dogs.

The South American Swine Flu Sweepstakes Update July 31

Here's the updated chart:

click to enlarge

Chile hasn't updated since last Friday, so that 79 number will jump for sure...that goes for Paraguay, too. Argentina is now world number two for AH1N1 fatalities (after the USA with 302 deaths and ten times the population count). Brazilian cases are mainly in the South of the country where its not that warm this time of year. Your winter will come, northeners.

According to this report, two out of three swine flu deaths have been registered in Latin America. Want me to start singing Meat Loaf songs?

Chart of the day is.....

.....the number of riots in China.


With a H/T to Felix Salmon, the above chart notes as zero the number of riots that China has recently suffered according to this report. Here's the paydirt:
The official invented a “theory of local truth.” He said: [certain phenomenon] may be true if you take a local perspective, but if you take the perspective of the whole, it is not true. For example, riots occur locally, it is true. But if you take the perspective of the whole country, [the society] is stable and peaceful; therefore to say our country has riots is not true.
That dude is clearly a genius and will go far. Douglas Adams afficionados will also be aware that the population of the Universe is zero. Here's the relevant quote from the master:
Population: None. Although you might see people from time to time, they are most likely products of your imagination. Simple mathematics tells us that the population of the Universe must be zero. Why? Well given that the volume of the universe is infinite there must be an infinite number of worlds. But not all of them are populated; therefore only a finite number are. Any finite number divided by infinity is zero, therefore the average population of the Universe is zero, and so the total population must be zero.

7/30/09

On the road


Places to go and people to do. This blog will pick up where it left off later tonight or perhaps tomorrow morning. Have a fun day.

My how times change

Portrait of the fascist as a young man

The younger bundle of fun pictured above is a Chilean named Rodrigo García Pinochet, grandson of the older dude in the photo who you might recognize. Yeah that's right, the one who took over his country, put a bullet through the head of its elected president and then proceeded to rid the country of those troublesome lefties in the most efficient manner he knew. I mean, no point paying for prison cells when there are unmarked mass graves as an alternative, eh? In the name of democracy, of course.

Anyway, I digress. Mini-Pin8, this Rodrigo dude, is all upset and bothered because he's all grown up now and wants to carry on the family tradition of .....errrr...democracy?.....but his far-right wing political party won't let him stand as a candidate for Chile's parliament in the upcoming elections. Rodrigo said yesterday:
"I have no doubt that if my grandfather were alive (the party) would be giving me all its support."
Well yeah, Roddy. I think that's the whole point. They don't feel like the next possible murder victim these days so they can say what they really think, not just piss their pants and cave in to pieces of shit like you and your family. Even the far-righties are eschewing Pinochet these days....damn, there is hope for the future.

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

...........oil, hourly candles.

The last time we caught up with oil (a.k.a. the inflation/deflation leading indicator), it has just tumbled from 68.5 to 66.5. Then it just kept a-tumblin' some more, down to $63, but overnight and this morning we've had a bit of a rally.

However that RSI (and the MACD, for that matter) tell mine eyes and the limited brain behind them that the recovery is too little and too quick. We can see $66 again, but a quick look at the daily candle.....
...tells me that downside risk is far higher than anything offered to the upside. Then if you like go check the weekly chart cos that's even scarier. I really should get into this charting; you can interpret anything you want and there's always a great excuse on hand when your call goes wrong...or in other words, gotta DYODD, dude.

7/29/09

Chart Quiz: The answer

On Monday in this post we stripped a chart of its clues and asked what stock it was and whether you'd buy it just on the chart. Well here's the right answer (and yeah, a day late...I'm a slacker, ok?):

The chart is of Castle Gold (CSG.v) and I'm very impressed with two people who got the right company. I was even more impressed with reader SM who said he'd never buy a stock on just a chart...damn str8 dude, that's my kinda investment philosophy.

As for my opinion on Castle Gold Corp and whether you should buy that chart, that will be available for subscribers on Sunday as The IKN Weekly is dedicating its NOBS fundamental report section on the stock in this week's edition. We'll get nitty gritty on the numbers, run through those books, examine the future, get a good handle on the stock. Then we'll stick a finger in the air, come up with a price target and decide whether it's a buy, a hold or a fold. Should be a lotta fun.

Ecuador: Good news is no news

When it comes to South American financial news, the only things that English language newswires are allowed to report about Colombia and Peru (Amerika's friends) are good. When it comes to Bolivia, Ecuador and Venezuela (those nasty commiepeople) the reverse is true.

Take, for example, the story of Ecuador's international currency reserves. Here's the chart year to date and we can see how reserves dropped in the first part of the year, reaching their low point at the end of May.


Bizarrely, the newswires were full of stories about those reserves when the drop was on. Here are just a few examples (of many, believe me) culled from the wires between March and May:
March 16: "...Ecuador’s foreign reserves fell to their lowest since June 2007..."

March 19: "... The country’s foreign reserves declined 5 percent to $3.31 billion in the week ended March 13, the lowest since June 2007..."

March 26: "...leftist President Raffael Correa could be forced to drop the dollar, throwing the country's monetary system into chaos ..."

April 27: "....Correa dismissed concerns about the economy, even though Ecuador's foreign exchange reserves dropped by half over the last six months...."

May 11: "... A 30 percent tumble in the central bank’s foreign reserves since the December default is draining the money supply..."
But then weirdly, bizarrely, strangely, when May left the scene and those international currency reserves began to rebound (due almost entirely to the better prices for crude oil), the newswires decided that the subject wasn't interesting any longer. By way of proof, check out this link to Bloomberg that notes how the keywords 'Ecuador', 'currency' 'reserves' returned a whole swathe of reports in 2009....but not a word since May. Not a single word.

Funny that, innit?

And you wonder why I call bullshit on the mediocre media that covers LatAm? The only truth you get is the version the newswire controllers want you to get. True for every single country down here. Truly pathetic coverage of Latin America, brought to you by Cheese-O-Mint™, for all your cheese/mint needs. Ask for it by name at your favourite store.

Trading Post (nothing but flowers edition)


I've been listening to 'Naked' by Talking Heads this morning. Great album, wholly underrated.

Sacre-Coeur Minerals (SCM.v) down 7.1% at $0.65, but despite the low volume drop today this stock has been the subject of a back'n'forth between your humble correspondent and a smart investor reader. The consensus is that recent share price action has been pretty bullish and augurs well for the fate of the soon-to-be-closed financing round. Worth a good, hard look at 65c.

Fortuna Silver (FVI.v) down 4.2% at $0.91 and piffling volume. This story is pretty much a microcosm of the whole sector today; dropping on low volumes as the players watch gold and try to decide whether this drop is the whole thing or just the appetizer. For me there's more drop to come, especially in copper, but WTFDIK anyway? The best way forward is to buy decent, fundamentally strong companies like FVI...then you just don't have to guess so much.

Exeter Resources (XRC.v) (XRA) down 2.7% at C$2.84 and the company impressed precisely nobody today with its middling drill results PR from the Argentine Cerro Moro project. This is kind of a pity, because unlike that BS promo job in the Chilean Andes pumped by the Zeds, Cerro Moro does actually have a chance of becoming a mine one of these days.

Troy Resources (TRY.to) down 3.9% at $1.25 on....yes you guessed it...low volumes. This despite some strong news out of the company last night about the Casposo project. Here's the link to find out the details about the 32% resource increase on the site. Very good looking company and the Aussie stock performed well on good volume after the news hit in the dead of our night. But don't expect the knuckleheads in the Canadian brokerages to tell you....probably jealous, that's all.

Nadagold (NG) Update

rick!

It's been a while since we looked at the doings and goings on of Nadagold (NG), the all mighty dog-of-all-dog mining company (and by that I mean pockets, not gold). Let's start off with the price chart and....

....oh dear, that's not right, is it? But thanks to reader 'M' (thank you) we got ourselves something to chew on and can find out a bit of reasoning as to why the company is going down like Jenna Haze*. Up in Nome Alaska, Ricky van Alphabet has been trying to do some PR to stop the bad public opinion building against him and the company. He also finally got round to paying the money NG owed to local authorities, as 'M' notes:
They did finally pay the City the $1.9mm it owned them. Nova wanted to swap land for the bill but the Nome City fathers shot that down and made them pay cash.
Alphabet was also out there hitting the radio stations and combatting another front of bad vibes locally, because Nadagold has been slapped with a US gov't violation order on the cleanup of its Rock Creek project near the city. Y'see, the pisspoor engineering done by NG meant that the whle area behind the tailings wall flooded out and the company was told to pump (or be fined) before the freakin' wall collapses and real damage is done. Sure enough NG dragged its heels on the job so the enviro people slapped them with yet another violation. So now as part of the clean-up operation NG wants to pump its waste into the Nome sewage system, to which reader 'M' commented:
The word on the street is the community is not too keen on the idea of the mine pumping their excess water to Nome and into the sewage lagoon (see Nugget story). Not so much as it will affect the lagoon, but more as "why should we bailout these guys for bad engineering especially since RVN stated in the press that the drunk Nome workforce was one of the reasons the mine closed (another Nome Nugget story from earlier this year)".
Drunken workforce, eh? Let's see what our friend the owl thinks of that concept
You sure got a smooth way with words, Rickyboy.

Word also has it that NG is doing some resource drilling. Time for a little smoke'n'mirrors press release? Only time will tell, but do the right thing and leave this dog to the idiots in New York City that actually believe NG will one day produce gold. Biggest scam out there, avoid like the plague. Find out all the details of the above at The Nome Nugget here and at the right page for most of the words here.

*Before you say anything, I Googled and found out the name of the latest star in the sector. Didn't know previously.

Honduras: Money Talks

Now a common sight on the currency bills of Honduras, the Lempira.

click to enlarge

Nuff said.

That weak Bolivian economy again

(H/T to reader JR)

On this link you'll find the second quarter results of GCC, the Mexican cement company that has the biggest market share in Bolivia. It also does business in the USA and Mexico. So let's check the scoreboard to find out how GCC has been doing.

NET SALES (millions of dollars)
2Q 09 2Q 08 2Q 09 vs
2Q 08
6M 09 6M 08 6M 09 vs
6M 08
Consolidated 175.6 217.8 -19.4% 306.9 369.6 -17.0%
United States
102.9
123.0
-16.3%

165.3
199.2
-17.0%
Mexico
46.2
75.0
-38.4%

89.5
133.5
-33.0%
Bolivia 26.5 19.8 33.8% 52.1 36.9 41.2%


Yes, that does say what you think it says. In dollar terms in the second quarter, sales are down 16.3% in dollar terms in the United States of America. Sales are down 38.4% in Mexico. But sales are up 33.8% in Bolivia. And if we use the Mexican peso (the currency that GCC reports) sales were up 76%, due to the fact that the Bolivian currency is strong...and that's due to the fact that the whole freakin' economy is whupping the rest of South America's tush bigtime. Here are the reasons for the sales figures as given by GCC:

FINANCIAL RESULTS

Net Sales in the second quarter of 2009 rose 3.6% with respect to the year ago period, totaling $2,358.6 million pesos. This was the result of a 6.4% increase in the United States and 76.0% in Bolivia.

In the United States, sales in pesos rose 6.4% compared to the second quarter of 2008 as a result of a more favorable pricing environment in concrete and the depreciation of the peso against the dollar. There was a decline in the residential and public infrastructure sectors, and a slight improvement in the commercial sector.

In Mexico, sales totaled $616.0 million pesos in the second quarter of 2009, a lower figure than in the same quarter of last year. Public infrastructure showed some strengthening, while activity in the residential and commercial sectors declined. The pricing environment in cement and concrete was more favorable.

GCC’s proportional sales in Bolivia rose 76.0% during the second quarter of 2009 compared to the year ago period. This strong growth was due to greater demand in the DIY and commercial-industrial sectors, as well as the depreciation of the peso against the Bolivian peso.

So the next time somebody starts on about that bad economy in Bolivia, tell 'em to STFU, yeah?

Chart of the day is....

....those LME copper stocks again.

We've been watching closely and now the world is taking notice, too. We now have the last eight days with copper stocks rises (and 9 of the last 10), which is now less a blip and more a trend.

As is often the case, my argument is right but my timing sucks. DYODD.

7/28/09

Alvaro Noboa and his banana

Ain't he pretty? No wonder he has to pay......

Scandaltime at IKN, as we catch up with Álvaro Noboa of Ecuador. The one-time presidential candidate beaten out for the job by our very own Studmuffin, head of Grupo Noboa, tax-evader and owner of the Bonita Banana brand that has made him very rich indeed (and his workers mainly miserable) has been accused of forcing a model to have sex with him, a certain US citizen named Nancy Malleo.
Hi Nancy

Here follows the first part of the news story, but click thru for the rest that has the bits about forcing her to give him oral sex in his office, how his condom broke and how he forced her to take a morning-after pill, all in the company of armed guards that made sure Nancy was under his powers. Here we go with the dirt:

"NEW YORK (CN) - A model claims an Ecuadorean billionaire banana exporter and politician lured her to Ecuador with an ad on Craigslist, intimidated her into having sex with him and forced her to take the "morning after pill."
The New York-based model claims she responded to a Craigslist job posting seeking a "fit model" in her 30s for a photo shoot in South America for La Verdad, a political and lifestyle publication owned by Alvaro Noboa, Ecuador's richest man and a perennial presidential candidate there.
Cragislist is not named as a defendant in the complaint in New York County Court. The woman, a mother of three, sued Noboa, Grupo Noboa, and La Verdad Magazine. Noboa's corporate holdings include Bonita bananas, according to the complaint.
The woman says one of Noboa's employees hired for a four-day photo shoot in Guayaquil after asking her to send a picture of herself in a bathing suit. Shortly after arriving in Ecuador, she says, she received a dinner invitation from Noboa, who arrived at her hotel with "a large number of men armed with machine guns and other weapons." She says Noboa took her to a private residence surrounded by armed men and immediately told her to go to the bedroom.
"Noboa ordered (her) to lie down on the bed and he began to engage in sex with her while wearing a condom," the lawsuit claims.
She says Naboa bit her several times, giving her painful bruises...."
Continues here

Damn, this is the calibre of President that Ecuador missed out on, is it? So anyway, Nancy is suing him for $25m. Here's hoping she gets the win.

Trading Post (it's all good edition)


Who cares about consumer confidence? Who cares about unemployment? Who cares about earnings? Just buy stocks and fuggedabadit.

IMA Exploration (IMR.v) down 9.1% at $0.30. This now looks great value on the proposed merger with KBX.v and IBX.v. If the deal goes through pro-rata to working capital IMR is now trading at around 70% net cash, which gives lots of leeway for the finer details of the fusion. Limited downside and potential 20% quick gain? Yep, I'll go for that. DYODD.

Rusoro (RML.v) up 3.8% at $0.415 and Roy Carson is an asshole. If Agapov thinks the kind of bullshit published yesterday is the way to run a company I'm outta here once and for all.

Fronteer (FRG) down 4% at U$3.56 and gotta say I saw it coming. FRG has banged its head trying to get thru $4 once too often. We really like the stock (ever since being aimed this way by Gary Biiwii) and have all the time in the world for it but have shaved a little more off holdings this week. Just a little. DYODD.

ECU Silver (ECU.to) down 5.4% at $0.53. Yeah I know the whole silver complex is down today....I'm just mentioning ECU.to to be petty, ok?

Birdwatching Alert! Lens-wearing Albatross spotted over Argentine Andes area: Investors should be aware of the wealth removal powers of this bird

They're putting the band back together, folks, so if you got ripped off by The Albatross and company last time, why not just plough right back in and let yourself get sold out for peanuts a second time? Yes indeedy, the Aurelian guys have got back together (with the exception of Barron and Leary....why that should be oh er nobody could guess) and are about to pump their new high altitude next to Pascua Lama all over a mining news information service near you. It's called Malbex, by the way, and they've already raised nearly $10m in seed capital (aka the people who will make money on this). Here's the PR that pre-announces the media onslaught expected in September. Caveat emptor multiplied 1000 times and tattoed on your forehead.
VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 27, 2009) -
NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA
Arapaho Capital Corp. (TSX VENTURE:AHO) ("Arapaho") and Malbex Resources Inc. ("Malbex") report that they continue to progress towards completion of their previously-announced business combination (the "Proposed Transaction").
The Proposed Transaction will be effected by way of a three-cornered amalgamation whereby Malbex will amalgamate with a wholly-owned subsidiary of Arapaho and shareholders of Malbex will receive common shares of Arapaho on the basis of one common share of Arapaho for 1.5 common shares of Malbex.

It is currently anticipated that the closing of the Proposed Transaction will take place on or before August 31, 2009.

The sealions of Chimbote


Yesterday in Chimbote, Peru, eight sealions were found floating dead on the shore. After being dragged out the water by heavy machinery (those suckers are 300kg each, folks) the report run at first was that they'd been killed by fishermen, as it's quite normal (I shit thee not) for fishing crews to harpoon sealions when they attack their nets and go after the fish contained.

However, later and better reporting noted there were no signs of physical attack on the animals and the mayor of Chimbote stated that the eight had died from pollution. This should not be a surprise to anyone that's visited Chimbte recently, as the city is a veritable shithole of contamination. The main guilty party is the fishing industry itself, as Chimbote hosts large fish factories that turn the catch into very profitable fish meal (Peru is the largest producer of fish meal (aka fish flour) in the world, exporting 1.56 million tonnes of the stuff in 2008, for what it's worth). The fish meal factories in Chimbote pump chimneystacks full of crud into the air..

From this blog post on Chimbote, Spanish
language and very informative

... and deposit liquid waste back into the sea via rusting pipelines that hardly make it out further than the tideline. Your author has been witness to these and to the heavy smell of fish as he walked along the portside and beaches (somewhere between baked and rotten anchovy) that washes up on the shore when the sea is in any state bar calm. For a visual example of the fun'n'games at Chimbote, check out this short youtube...



....and if you want more, check the sidebar of the youtube page for plenty more polluted Chimbote stories. Of course the government has known about this screw-you attitude to the environment and quality of life in Chimbote for years on end, so in May 2009 they finally placed limits on the amount of waste that the fish factories could pump into the sea (yes, that really does mean there was no limit previously). And of course, the factories in question have so far simply ignored the new rules, hence eight dead sealions on the shores of Peru yesterday. But there's still no limit on that air pollution. I mean, the last thing Peru wants to do is scare off big business and ruin that investor-friendly image it wants to create, right?

Viva investment grade. Viva, viva, viva.

A thought on insider trading


After checking out a case of excesses in insider selling over the weekend There's been feedback about both the case and the whole subject of insider trading. I'm going to pick up on the second one here, as I've said what I wanted to say about the first in mail replies.

The first thing (which I actually mentioned in passing in The IKN Weekly last week, so it's still fresh in the memory) is that it's easy to read too much into insider trading. For sure it's an indication of what's going on, but most of the time the trades reported aren't that significant. The ones to take note of are few and far between, really. Things like McCluskey's blatant sales are noteworthy, but as an example, here are two filings culled from today that are...well, they're kinda interesting but I wouldn't bet on either.

The first is from Franconia Minerals (FRA.to) which has a dubious asset or two up on the US/Canada border in that gabbro area in Minnesota.
Jul 27/09 Jul 24/09 Redleaf, Andrew Control or Direction Common Shares 10 - Disposition in the public market -3,057 $0.250
Jul 27/09 Jul 15/09 Redleaf, Andrew Control or Direction Common Shares 10 - Disposition in the public market -27,773 $0.250
Jul 27/09 Jul 24/09 Redleaf, Andrew Control or Direction Common Shares 10 - Disposition in the public market -6,943 $0.250
Jul 27/09 Jul 15/09 Redleaf, Andrew Control or Direction Common Shares 10 - Disposition in the public market -12,227 $0.250
Jul 16/09 Nov 07/08 Redleaf, Andrew Control or Direction Common Shares 97 - Other -601
Jul 16/09 Jul 07/09 Redleaf, Andrew Control or Direction Common Shares 10 - Disposition in the public market -5,902 $0.270
Jul 16/09 Jul 07/09 Redleaf, Andrew Control or Direction Common Shares 10 - Disposition in the public market -2,598 $0.270
Jul 08/09 Jun 30/09 Redleaf, Andrew Control or Direction Common Shares 10 - Disposition in the public market -153 $0.280
Jul 08/09 Jun 29/09 Redleaf, Andrew Control or Direction Common Shares 10 - Disposition in the public market -31,943 $0.270
Jul 08/09 Jun 26/09 Redleaf, Andrew Control or Direction Common Shares 10 - Disposition in the public market -153 $0.280


OK, so there's selling here by the guy in question and that can't be a positive, right? But is it a stock-moving episode? Well, probably not. It's worth taking into account possible reasons for the sale (he wants to buy a new car, there's a chance to buy a decent real estate property next door to where he lives, he has taxes to pay...could be anything). Secondly, FRA.to is a bit of a dog and doesn't do much volume (the 3m avg is less than $15,000 a day), so it would take more than one trade to sell what he wanted to sell...and each trade has to be filed separately. So his sales are all spread out and give an overly negative impression. Hey, I'm not saying that there isn't a reason to be suspicious here. FRA.to might be about to spring some bad news on the market, or it might not. I don't know (and really I don't care much, either). All I'm saying is that there are plenty of logical reasons as to why this selling pattern above may be perfectly innocent.

The second example shows inside buying. Here's Cornerstone Capital's most recent inside trade filings.
Jul 27/09 Jul 27/09 Loveys, David Indirect Ownership Common Shares 10 - Acquisition in the public market 8,500 $0.080
Jul 27/09 Jul 24/09 Loveys, David Indirect Ownership Common Shares 10 - Acquisition in the public market 8,000 $0.080
Jul 23/09 Jul 23/09 Loveys, David Indirect Ownership Common Shares 10 - Acquisition in the public market 25,000 $0.090
Jul 23/09 Jul 20/09 McKay, Hubert Glyn Indirect Ownership Common Shares 10 - Acquisition in the public market 1,000 $0.080
Jul 23/09 Jul 20/09 McKay, Hubert Glyn Indirect Ownership Common Shares 10 - Acquisition in the public market 10,000 $0.080
Jul 23/09 Jul 17/09 McKay, Hubert Glyn Indirect Ownership Common Shares 10 - Acquisition in the public market 5,000 $0.080
Jul 22/09 Jul 22/09 McKenzie, Colin Burgess Direct Ownership Common Shares 10 - Acquisition in the public market 8,000 $0.090
Jul 22/09 Jul 22/09 McKenzie, Colin Burgess Direct Ownership Common Shares 10 - Acquisition in the public market 12,000 $0.085
Jul 13/09 Jul 10/09 McKay, Hubert Glyn Indirect Ownership Common Shares 10 - Acquisition in the public market 44,000 $0.080
Jul 13/09 Feb 20/03 McKay, Hubert Glyn Indirect Ownership Common Shares 00 - Opening Balance-Initial SEDI Report


So the guy is buying, and that's usually a good thing, right? When the people closest to the company action are willing to put their own money on the line in the from of shares, especially by buying on the open market and not exercising cheap options, that points to confidence within the company about its future, right? Well yes, that again is a possible and logical conclusion to all this. Can't be a bad thing that they're taking a bigger stake in their own game. But we should still mitigate this kind of action, too.

  • The stakes are small. At 8c and 9c a pop, all the trades you see lined up there come to less than $10,000.
  • Again, CGP.v does small average volumes, and filling orders takes more than it would for a highly liquid stock
  • Inside buyers tend to have patience, with few of them bothering to play the market and flip stock. What we might have here is a company that sees 8c as a cheap number when looking three to five years into the future. As such, there's hardly any need for us lil retail dudettes and dudes to rush in after them. Plenty of time to assess this minor positive in the light of fuller DD on the company.
  • etc

So under normal circumstances, I wouldn't have bothered publishing or talking about the two sets of inside trades seen above, as one should take care and not read too much into most of these things. Yes, they're an indication, but no they're not the be-all-and-end-all of future pointers for a company. The only ones I care about are the ones I mention and that's after reading the daily digest page every day and filering dozens and dozens of filings...then, maybe one or two are worthy of note (like on Sunday). In the end, a much better indication of what's going on at a company is contained in the financial reports. So read them and do some real DD, dude.

Chart of the day is.....

....crude oil, 60 minute candles.

See any weakness this morning?