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Which will be worth more at end 2015?

12/19/09

The Year To Date Small Silvers Sweepstakes (up-up-update)

Here's how those small silvers are doing, with just ten days or so to the finish line:


Leader and now looking quite safe for the prize is Endeavour (EDR.to). Then comes my personal fave Fortuna Silver (FVI.v) in a clear (though catchable) second place. But after that there's a real scrap going on for the bronze medal position with Bear Creek (BCM.v) dropping, Great Panther (GPR.to) treading water and Impact Silver (IPT.v) zooming up in the last few days.

Amongst the also-rans, good to see First Majestic (FR.to) put in a spurt and rise above our nominal benchmark, the Silver ETF (SLV). How do you feel if you held ECU Silver (ECU.to) as "THE sector play" in 2009?

12/18/09

The Friday OT: Primus; Wynona's Big Brown Beaver

Earlier in the week (and totally out of the blue) it suddenly occurred to me just how much I love this song. I'd never seen the video before (hey, these things happen) but on checking it I fell in love all over again.



Completely good. Enjoy.

Trading Post (ignorant edition)


Focus Ventures (FCV.v) up 6.1% at $1.04 on the incredibly predictable Casey reco today. Nice picture of Huascarán, Louis.

Fortuna Silver (FVI.v) up 1.4% at $2.18 as the Casey team recos also recos this one today. To paraphrase the analysis, it says, "We got the Mexican pol risk totally wrong earlier in the year and missed a 150% upmove, but we're too full of shit ever to admit it to our sheep.". Enjoy hubris.

Sandspring (SSP.v) up 1.9% at $1.07. Remember folks, you got until December 28th to bank 'em before the dentists get out of escrow.

Animas (ANI.v) up 7.4% at $0.73 and bouncing a bit after yesterday's bucket of cold water. Sounds about right, it looked oversold on panic yesterday. This is one of many stocks that will get a more in-depth commentary in The IKN Weekly issue 34, out Sunday.

Pediment (PEZ.to) up 2.3% at $1.32 on this news that has very pretty numbers from the La Colorada asset in Mexico. Nearly 1.2m oz Au (but remember, still only M+I+I so don't bet the farm) at a very heap-leachable grade. This one gets more talk on Sunday, too.

International Royalty Corp (IRC.to)(ROY): What are the chances that Franco Nevada makes a counterbid?


Hey, nice news for ROY/IRC.to holders today as Royal Gold (RGLD) has also seen the tremendous value offered by International Royalty Corp. (IRC.to)(ROY) and made a white knight counterbid to the recent Franco Nevada (FNV.to) offer.

So what are the chances that FNV.to comes back and tries to outbid RGLD now? In my view, the chances are very high indeed as the thing is still going for a song at RGLD's buyout level. Don't sell your IRC.to / ROY shares, holders.

DYODD. I long.

UPDATE:
thanks to a kind reader (who prefers total anonymity) I see that Haywood's call on this is "unlikely to see a two horse bidding war", the diametric opposite of this humble correspondent. Vamos a ver...........

The price of gold: A chart

DYODD

Click to enlarge

A quick word on Cardero (CDY) (CDU.to)

As per the news release this morning, the iron ore deal with China's Nanjinzhao Group is going through as planned, with $58m paid and $30m to come on December 31st.

So if we check the last quarterly we note that CDY holds net assets of $44m. To that we can add maybe $14m due to the continued upwards valuation of ITH.to. Then let's add the $88m being banked with the Chinese this month.

So, via the ballpark math we have $146m in assets (a lot of that liquid assets) and 58m shares out. That's around $2.50 per share. This would mean that the current U$1.37 per share pre -market price is a total bargain except for one small detail; the company is run by self-serving crooks and will find a way of ripping off the retail holders somehow. As such, it's still totally avoidable no matter how cheap it looks on paper. DYODD.

Pisco sours served. The end.

Matthew Yglesias and the difference between idiocy and ignorance

I was going to drop this, y'know.

Via The Mex Files (not even the common decency, etc etc) I hear that I've been too harsh on Matthew Yglesias because of his comment about Ecuador having seen a coup this year (and not Honduras).
Rich and Otto – please stop. Neither of you read Yglesias regularly, so isn’t it a little bit lazy/intellectually dishonest on your part to launch such “thorough” critiques of him on the basis a tossed-off line at the end of one post?

Our hero defender of Yglesias is a blog called Yamascuna in this post. We extract:
Alas, this has turned into something of a minor issue within the Lat-Am blogging community, who have decided that Yglesias is some sort of hopeless idiot.

So here's the point:

1) You got a nasty case of straw man there. Also, what's this "please stop" when I make mention of the subject just once? Bleeding heart liberal blogger that can't abide the fact that progressives make errors too. WTF? What world do you live on?

2) You confuse idiocy with ignorance. For sure Yglesias is no idiot (in fact it takes an idiot to infer that on the basis of a couple of lines). What he is, however, is ignorant. As mentioned previously, it's perfectly ok to be ignorant of LatAm affairs...I mean, I'm utterly ignorant on MidEast affairs, or Myanmar, or Mongolia, or a thousand other subjects....but you do not, and get this straight, do NOT have the right to pontificate if you cannot get the most basic of base facts correct. Not even in a "wrap up the year" world geopolitical review of 2009. This is triple-true when you have a high profile as one of these professional experts that make a living via words spoken on social/political affairs.

3) We, down here, are pig sick of you up there telling us how to live our lives, what we should or shouldn't be doing and proferring wise saws and modern instances when, at the same time, you think the capital of Brazil is Montevideo, if water goes down the plughole clockwise or anticlockwise really makes a freakin' difference to life, Hugo Chávez is the President of South America, Colombia is spelled with a 'U', Ecuador comes equipped with a 'Q', how said country suffered a coup in 2009 and not Honduras, there's no colour TV or broadband internet South of the Rio Grande, Macchu Pichu was built by the Aztecs, Colombia has no real political risk problems and them there Mexicans don't know how to make a burrito right, do they?

And so, when we make a stand and point out a glaring dumbass error that is totally deserving of ridicule, we're the ones in the wrong! Fuck you Yamascuna, you Uncle Tom blogger. That clear enough for you?

Chart of the day is.....

....the "Anti Roubini" edition.

So Doctor Doom calls the Brazilian Real overvalued due to euphoria.
“There’s too much euphoria about Brazil,” Roubini said yesterday at an event in New York. “There’s probably too much capital inflow to the country. The strengthening of the currency is too strong on the basis of the long-term fundamentals.”

Two points for him to think about.

1) This is Latin America! We do euphoria! The whole of the financial system is based around best of times/worst of times and there is nothing in the middle. What you think it is round here fercryinoutloud, Switzerland?

2) Overvalued against what? If you're talking about that underperforming scrap of paper known as the US Dollar, the gains have been rapid this year.....
......but if you want to set your stall against something of actual value, and I can think of no better benchmark than gold, the Brazilian Real is UNCH on the year.

12/17/09

mining snippetz


Silver porn! Dia Bras (DIB.v) pleases the crowd with the above photo and the news release that goes with it. You'll also note the latest in MinerFashion. Derek Zoolander taught 'em everything they know.

New Gold (NGD) 4% down? Wasn't this news supposed to shoot it skywards? Shome mishtake shurely, ossifer!

Animas now 27% down at 68c.

Meanwhile, the stock that dare not speak its name (K-Y) has news. This press release today has a phrase that you don't see very often:

"....Cryst_llex has acted reasonably..."

This big ol' world never stops surprising, ah tellz ya.

International PBX Ventures (PBX.v): What idiot paid up for this stock at the bell today?

So Intl PBX (PBX.v) publishes its 43-101 PEA today and the stock rises 25% at the bell.


WTF? Why do people pay for this kind of crap? Bother to actually read the press release (let alone the report itself) and you'll notice subtle little signs that point to just how much of a dog this thing really is. Nearly $800m capex for a 0.11% Cu deposit? U$2.80/lb copper before it goes NPV positive (at 5% discount)? You don't even need to know mine modelling in depth, just a fair inkling of how these things work would be enough to slap the label "utter dog" on this project.

For sure, it may one day become a mine. But first we'll need to see $4/lb copper and second we'll need to see about 80 other projects with far more robust numbers become working mines. And hell needs to freeze over, too.

UPDATE post bell: LOL! It gets worserer and worserer.

Animas (ANI.v): a real world answer

In the post Animas (ANI.v): a technical question of a couple of days ago, this humble corner of cyberspace mused on whether the share price weakness in Animas Resources (ANI.v) had anything to do with its upcoming drill results.

Now we know. The first set of core results were published today and sure enough, they suck. I wonder how Bob Bishop is going to spin this one?

 Summary of drill hole intercept of greater than 0.100 gpt over more than 2
meters

Hole Interval Thickness Average Grade
meters meters grams/tonne
----------------------------------------------------------------------------

Toro-Gregorio

ARTG-001 192.65-195.60 2.95 0.124
325.50-332.45 6.95 0.312
475.95-479.55 3.60 0.636

ARTG-002 0-6.10 6.10 2.390
256.75-263.00 6.25 0.702
430.50-435.30 4.80 0.271


Summary of drill hole intercept of greater than 0.100 gpt over more than 2
meters

Hole Interval Thickness Average Grade
meters meters grams/tonne
----------------------------------------------------------------------------

ARTG-003 32.85-42.45 9.60 5.450

ARTG-004 119.45-122.45 3.00 0.219
145.95-167.35 21.40 0.214
189.50-216.35 26.85 0.221
228.95-231.00 2.15 0.306
240.85-258.80 17.95 0.184
267.80-284.10 16.30 0.494
352.05-354.75 2.70 2.230

ARTG-005 No intervals

ARTG-006 546.70-549.75 2.55 0.149

ARTG-007 203.05-205.60 2.55 0.257
250.00-254.20 4.20 2.077
268.25-269.30 2.55 0.280
430.20-433.20 3.00 0.224
441.00-462.15 21.12 1.224




UPDATE: Oh lordy! 15% down

The whole ballgame in one chart

The US Dollar index chart on thirty minute candles.

If you're not watching the dollar today it means you have no interest in stock markets (which is probably quite a healthy attitude to life, really).

Baa Baa Baa: Moody's grants investment grade to Peru


The Trifecta is complete. Last year S&P and Fitch slapped 'investment grade' on Peru and both of those must have been sweating the call when the stock market sunk under 7,000 during the crisis and the "we're going to grow 6% and we won't be affected by the financial crisis" ridiculousness of its government was shown to be the big fat lie that it clearly was.

But now Moody's, always the toughest nut to crack, has joined in, raising its rating to the aptly named "Baa Baa Baa" (well, really it's 'Baa3'....geddit?). The upshot of this will be more money can now enter the country for investment purposes if it wants to. Let's not worry about the new capital gains tax on stock market profits though, eh?

So congrats of sorts to Peru, but the truism of ratings agencies calling tops in stock markets shouldn't be forgotten, either.

Chart of the day is.....

.....the Bolivian edition of 'Where's Waldo?', as presidential EpicFail candidate goes on the run to escape criminal charges.


Here's AP with the story (thank you reader 'JR' for the inspiration):

Ex-Bolivian candidate disappears to escape charges

Associated Press, 12.16.09, 02:39 PM EST

LA PAZ, Bolivia -- The runner-up in Bolivia's presidential race has dropped out of sight to escape what he says are politically motivated charges of election fraud.

Manfred Reyes Villa tells ATB television that he won't leave the country, but will not surrender to authorities because "the conditions for a fair hearing don't exist in this country."

12/16/09

Matthew Yglesias, LatAm dumbass

It's doing the rounds and found its way here from Gancho Blog via The Mex Files.

As Gancho points out, it wouldn't be so bad for a Miss Carolina candidate, but this Yglesias is supposedly an expert on foreign policy and has written books on the subject.

But for all that, this has really been a year without a major international crisis. Russia hasn’t invaded any foreign countries. No terrorist attacks have struck the United States. The handling of the coup in Ecuador was, I think, quite deft but this was hardly a major event in the scheme of things.

Y'know, sometimes I think I'm aiming too high. Maybe I should write a book called "LatAm: What you need to know so you don't sound like a total dumbass". Pulitzer!

Hello, my name is Ecuador. I know nothing about mining.


Thanks to reader 'MM' for the early headsup.

This story is a good example of why, apart from one specific exception, it's impossible to reco mining stocks in Ecuador (we've been through this quite a lot in recent issues of The IKN Weekly). As good as a company like (as just one example) Salazar (SRL.v) might be, what's the point in investing there if the government knows absolutely zero zip squat NADA about the mining industry and what makes it tick?

Here's the beginning of the DJNW report, click through for the rest.

QUITO (Dow Jones)--Promising geological conditions and some recent discoveries are spurring hopes that Ecuador could become an important center for mining.

Investors may not flock to the Andean nation, however, if the government moves ahead with plans to make mining companies sign service contracts, industry officials said.

A high-level government official told Dow Jones Newswires the administration of President Rafael Correa hopes to make private-sector companies sign service contracts instead of allowing ownership of resources, much as it has done in the hydrocarbons sector.

"We (in the government) prefer the service contracts, as we are already using it in the oil sector. Most likely we will be working along those lines (in the mining sector,) although everything depends on the circumstances," Minister of Nonrenewable Natural Resources Germanico Pinto said in an interview this week.

He said the first mine to go into production could be around 2011 or 2012, without naming which company could be the first to go ahead.

The government has said Ecuador has a mineral potential of yada yada continues here

News roundup (slices of news thinner than parma ham served in the finest Italian restaurants)


The LME copper inventory level is not an elephant in the room. It's 470,800 elephants in the rooms.

Colombian business peeps are in "purgatory", according to Reuters. The reason is not the crappy job done by Uribe, it's not the world financial crisis, it's not the recession in Colombia and its ongoing fragile economy. Yeah you guessed it, Hugo Chávez is to blame. Reuters heaps more dumbassery on the world.

Ben Bernanke is Time Magazine Person of the Year (stop laughing at the back! Sit up straight!). Krugman explains the "curse of the Time cover".

One of the longest running sagas in South America may be coming to a close, as Brazil's Senate approves the entry of Venezuela into Mercosur. However, Paraguayan opposition swear that they'll veto the gig.

Ecuador's energy crisis was officially declared over by the Studmuffin gov't yesterday (cos it rained). So let's ignore the power cuts reported this morning, shall we?

According to world's worst defence minister, Peru's Rafael Rey, President Twobreakfasts is "accountable to nobody". Just imagine the uproar if Evo or Hugo flunkies insisted on that line? Dudettes and dudes, you're looking in the wrong place for your LatAm dictatorships.

Fortuna (FVI.v) gets the can of corn pump

mmmmmmm....soup!

Nicholas CampbellSoup, the flunkey in charge of pumping Fortuna Silver (FVI.v) over at the can of corn, has done what he's supposed to do and has pumped Fortuna Silver.

His report is about the news as regards San José permitting and according to CampbellSoup it's positive (file that one under 'no shit sherlock'). I have absolutely no idea where you can click to find a copy of his report.

Identifying a gold stock scam


So yet again the idiots pumpers at Constitution Mining (CMIN.ob) (who seem to be largely based in Switzerland, for some reason or another) have been sending in their considered opinions via mail. They're missing a point here; it doesn't matter whether a scam stock's price goes up or down, it's still a scam! In fact the whole point of running these scumball activities is to make the price go up and attract in the sheep....only the most amateur of scams are based around stocks that sell at $0.001 for long periods.

So how do you spot a scam? Easy, you do something that the vast majority of idiot sheep never do in their investment lives (and then wonder why they're still poor 30 years later): YOU READ THE REGULATORY FILINGS!

By way of another example (because there are far more scams out there than just CMIN.ob and I've written more than enough to show just how shaky this bullshit company is already) here's another example, that of an alluvial gold mining junior called "Affinity Gold Corp.". It is listed in the USA under the OTC ticker (AFYGE.ob) but hardly trades. However, it's also listed in Frankfurt under the ticker (79F.f) where, by some miracle, it actually averages a few thousand shares traded per day.

Why is it a miracle? Just look at the latest quarterly:

  • Current Assets (i.e. cash): $23,044
  • Fixed assets (i.e. a number picked out the sky as a value on a truly worthless land holding): $12.7m
  • Current Debt (i.e. what it needs to pay to keep running): $147,683

The company has no cash, no production, not even close to making any money and owes more than it has. Even if you are stupid enough to believe its properties are worth the number printed on its books, the whole caboodle is worth $12.7m or so.

Now here's the rub: The company has 51.2 million shares out and they trade at or around €4 (to be precise it's trading at €4.11 right now). In other words, it has a market cap of around €210m.

Asset value $12.7m and market cap twenty-four times bigger = scam. End of story.

DYODD dudettes and dudes. Stop believing everything you read around one of the most scam-ridden sectors of business. Read the REG Fs, for crying out loud! Mark Twain nailed it over a hundred and fifty years ago and nothing much has changed since then, so if you just nod your head and believe everything the gold scammers tell you without checking for facts you deserve to lose your money to these criminals.


Mickey Fulp and a junior miner reco

Mickey Fulp has put together an analysis on a silver company operating out of Mexico called Oremex (ORM.v). I don't personally know the stock very well and don't have an opinion, but if it's good enough for a solid, trustworthy type like Fulp (who is not a pseudo rockhead remember; this guy is a real full-on economic geologist and knows what he's talking about, unlike so many letter writers out there) it's at least worth your time and consideration, I'd venture to say.

So here's the link to his PDF analysis of the company. It's a good job of work and available to you free, gratis and for nothing. Enjoy.

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

....gold daily candle on the futures contract.

Hey, I'm not expert chartista, but that doesn't look too bad to these eyes.

12/15/09

Trading Post (down edition)


Kinda quiet out there today.

Troy Resources (TRY.to) down 5.4% at $2.12 and still getting sat upon by the post rights issue period, it seems. I was mailed today and asked at what point this thing becomes a strong buy. It's too late for that reco, because it's been a strong buy reco round here since 84c. Are you looking for a long term gold play? Look no further.

Ventana Gold (VEN.to) down 4.3% at $8.09 and the same battlescene as yesterday. Anyone else note the large large money lurking below too?

New Gold (NGD) down 0.8% at $3.60 and not following on from yesterday's news about the court injunction. There's still more than meets the eye here and I'm happy to stick with my 'avoid' call.

Animas (ANI.v): a technical question

Question: If you were a fan of technical analysis (I'm not) and if you held Animas Resources (I don't).....

.....would you be worried about the pending results of its drill program?

Inquiring minds and all that. DYODD

News from narco-friendly Venezuela

Remember how Venezuela is directly responsible for the world cocaine trafficking business, even though it doesn't grow any coca, produce any cocaine and is totally guilty of everything whitepowdery just cos happens to be stuck between the world's biggest producer of the stuff and the world's biggest user of the stuff? Recall how Hugo Chávez himself is directly responsible for the cocaine that your twenty month old boy is snorting up his nose?

So how come Venezuela is having a record year for cocaine interception, confiscation and arrests of traffickers? Riddle me that one, oh brainwashed masses. Here's the latest, a tidy haul of the stuff seized en route to gawdknows where and coming from Colombia.
San Cristóbal, 14 Dic. ABN: Members of the Number 1 Regional Command of the Bolivarian National Guard in the state of Tachira, under the order of Brigade General Franklin Jaimes Márquez, successfully seized 14.15kg of presumed cocaine from a secret compartment in the motor of a vehicle, the drug destined for the state of Barinas continues here
The big seizures tend to catch the big news stories, but that's not how it works at ground level. The seizures go on and on, day after day and week after week. 55kg here, another 38kg there, here's 57kg found in sacks of carrots, another 47kg in this report, not to mention a couple of tonnes of mary jane from time to time. All those above links are captures in Venezuela. All in the last three weeks. It all came from Colombia.

And wait! What's this? Colombia's manual eradication program for 2009 was supposed to get rid of 70,000 hectares of coca plants. The result? Just 54,180 hectares. Hugo Chávez is directly responsible for the failure of Colombia to control its illegal crops too, ya knowz.

Ever had the feeling they've been lying to you?

Riverside Resources (RRI.v)

You on board yet? I am so filter that first, but check out the chart, note the volume, remind yourself that drill results are due before the end of the month and make up your own mind.

click to enlarge

You're betting on the truth machine coming up with the goods, but the odds are nicely stacked here, methinks. DYODD, dude.

And while we're on the subject of broader LatAm macro things....

....the comment below was left under yesterday's coveted award post by reader Matthew Hawkins and it's well worth sharing with the wider, front page audience.

I've often berated those who will criticize Venezuela, Ecuador, Bolivia because of their dependency on primary exports to as the motors of their economies. The classic beef is that of Venezuela, where we're told (quite correctly) that the black stuff accounts for 90% of the country's exports. The same kind of addiction to oil is shown by Ecuador, whereas Bolivia is guilty of betting the farm on natgas and metals.

But the same people who criticize the AxisOfEvo™ countries fall over themselves to praise a country like Peru and conveniently forget that 60% of its exports are metals (mainly copper and gold, by dollar value). And the same with on-the-way-to-being-a-first-world Chile, where the same amount of exports isn't just metal, it's one freakin' metal! (yeah you guessed it, Cu). To the list we can add Colombia (coal, other hydrocarbons), Brazil (everything, esp agro), Argentina (its soya addiction is more impressive by the year) Paraguay (also soybean) etc etc.

There's a double standard in operation here. The thing is, I'm not against basing an economy on primary exports. I barb at those who criticize the AxisOfEvos but not the AmerikaFriends, but the model that most (not all) of LatAm is using for growth isn't a bad one at all. Not to put too fine a point on it, it was made in Chile in the 1990's and the others, esp. Peru and Bolivia, are now copying it successfully (with their own local adjustments, of course). The idea is to pump out the exports, tuck the money away in a reserve fund and then if commods prices drop you have a safety net, via a fund that is available for countercyclical measures that will keep the motors running through the hard times.

It still has its critics of course (as Matthew Hawkins points out) and that issue can be debated. I'm not one of those critics, but the point is that when it comes to the primary export model you can either be for it as regards South America or against it. However, criticizing one government for its model because you don't like what its president says on the world stage and then praising a friendly government for the same policy is intellectually corrupt. This is where the dumbasses enter stage right.

A final point here. I think the IMF is due some decent praise for its recent stance on Bolivia. Yeah for sure it's easy to take a potshot or two at the suited dudes because they were wrong about their diagnosis and cure for the country, but at least they have the intellectual clarity and balls to say that things are going well for Bolivia and the state of macro affairs is good. They might not put it into direct words, but the last year's worth of IMF commentaries on Bolivia have summed up to a "we were wrong and we admit it". That's because these guys go in , look at the numbers and don't try to slap an extra layer of political bias on the deal. Others try to use the same numbers in a manipulative way to kosh people over the head with prejudice. So a "YAY" for the IMF on its recent Bolivia comments. Fair dinkum, dudes.

So now to Matthew Hawkins' comment, as left behind this post yesterday. One of the smartest and clear-thinking comments that have been left here and excellent food for thought. It distilled a lot of ideas that randomly rattle around in my head and I hope it is of service to you too, esteemed IKN reader.


There is no capacity to significantly industrialize in Latin America. I would say dust off the old dependency theorists, but the rise of China's manufacturing capacity has made any industrializing-to-development attempt in Latin America very outdated. I don't think anyone will necessarily find holistically useful and contemporary solutions in any of the dependentistas. Which is not to say their analysis of the economic realities do not remain valid and important.

Which is not to say that Brazil's automotive and aerospace manufacturing is not significant, nor that other countries in the region cannot start their own manufacturing. But these sectors are not large enough to support the growth of an economy nor can they compete internationally to bring in foreign capital. They can be developed to lower the costs of certain imports and encourage economic independence (or regional interdependence).

Bolivia, Venezuela, and most Latin American countries dependent upon extractive industries are going to run into a problem 'economically'. The failure of Centellas to acknowledge the most basic tenants of South American dependency theory in his 'economic analysis' of Bolivia, demonstrates either an ideological or academic blind-spot. The 'failure' of ISI programs, as the proposed solution by many dependistas, in Latin America (highly debatable if we look at the growth numbers of the ISI period to the neoliberal period but I digress) has been used to discredit the analysis of the political-economic situation of Latin American countries. That in itself was politically motivated, as no one would have followed a neo-liberalization with its deregulation of the global markets, dropping of protections, whole-sale sell off of public assets to global investors, etc. had the dependency theorists held the political-imagination of nationalist leaders.

The fact that dependency theorists' observations remain fundamental sound and true today, and that Latin American countries have not escaped the whims of the global price of primary commodity-exports should again raise alarm bells against anyone who attempts to make this the particular problem of an individual (leftist, read:Allende) government.

Chart of the day is....

....the state of bank deposits in Bolivia.

Just to show you another facet of the economic maturity in Bolivia. So the amount of money in bank deposits has doubled in less than three years, but that's not all, folks. Back there in December 2006, a mere 26% of the deposits were made in the national currency (Bolivian Peso) and the vast majority of the rest in US Dollars.

Today, 46% of deposits are in Bolivian Pesos. But for some idiots, cutting the dependency of foreign currency and the growing confidence in local coin "isn't all it's cracked up to be", either.

12/14/09

"What did you do with them?"


In Argentina, the trial of 15 military personnel accused of crimes in the Dirty War dictatorship is now underway. As expected, Lillie over at the excellent 'Memory in Latin America' is following the case closely and will keep us informed as the case progresses. Make sure she's on your RSS.

But a story from the trial today broke my heart. Here's the report at Critica and here's the first part of the report translated. Imagine having this question burning up inside you for 30 years and then finally getting the chance to look the perps in the eye and ask it.

María Esther Tello, mother of two sons that were disappeared during the dictatorship, asked face to face those accused of the deeds on Monday that they tell her "what did you do with them?"

"Just as my children had rights that were not given to them, I also have the constitutional right and I demand to know the whereabouts of my children, because you know what you did with them", said the mother.

With a trembling voice, the mother in her 80s made her heart-rending plea concerning her sons Daniel, 29, and Rafael, 25, at the start of the testimonial stage of the trial against 15 repressors who operated in the clandestine detention centre "Club Atlético-Banco-Olimpo", where the two young men were seen by witnesses.

CONTINUES HERE

Ni olvido, ni perdon.

Carstens Fail


To be fair to Agustin Carstens (up until late last week Mexico's FinMin and now slated to take over at the Central Bank) he's one of the very, very few finance peeps in LatAm governments who knows what the hell he's talking about and is good at his job.

But still: FAIL

Dec. 8 (Bloomberg) -- Mexican Finance Minister Agustin Carstens said he expects Standard & Poor’s to decide against lowering the country’s credit rating after the government raised taxes and cut spending to contain its yada yada continues here

Dec. 14 (Bloomberg) -- Mexico’s credit rating was cut one level by Standard & Poor’s after tumbling oil output and the worst recession since the 1930s swelled the budget deficit. S&P lowered Mexico’s foreign-currency debt rating to BBB, the second-lowest investment grade, from BBB+, with a stable outlook. The cut follows yada yada continues here


x

Miguel Centellas, winner of this week's coveted award

The fatal flaw of the arrogant, know-all academic is to presume they know everything about anything. Miguel Centellas, a political scientist attached to some US university and specializing in Bolivia, falls into that category.

I was over at Greg Weeks' decent site last weekend when I saw a link he'd put up on his "what am i reading" list entitled Bolivia's Election: A quick postmortem. The subject interested me, but to my dismay when I clicked through it turns out it was written by Miguel Centellas at his blog, pronto. "Whatevs" I thought, and read it through. By way of context, this Centellas dude is a dust-dry humourless rightie. His field is Bolivia, so it's a natch to note he can never find a good thing to say about Evo's impressive achievements that don't come equipped with a grudging "yes, but..." and so you have to filter his clearly biased views when reading the political bits.

But then at the end of the article it all got much, much funnier. Centellas decided he's an expert of economics and stated that Bolivia's economic performance "isn't all it's cracked up to be". What followed was total, utter, uninformed balderdash and bullshit. With his academic airs and graces he grasps at straws and tries to find a few decontextualized statistics to match his prejudice. The end result may impress his fellow political scientists, but anyone with a scrap of economics background would laugh him off stage. Here below is the passage as written by Centellas (inset bold italics) along with my own comments (interspersed).



8. It's the economy, stupid

Finally, Bolivia's economy has some troubling signs as the global recession continues to take its toll. Yes, the economy has grown (as many Evo supporters are often quick to point out).

As if it were a sin to mention a fact in public.

But that growth isn't all it's cracked up to be.

First, because that growth has been primarily based on raw material exports, continuing a tradition that goes back centuries (and one highly susceptible to boom/bust cycles).

Just like those nasty commies in Venezuela with their devil's excrement, hey Mikey? And those hardcore pinkoes in....errr...Chile. And then there's Peru. And Brazil. And Argentina. And Ecuador. So what's the point here, that Bolivia's growth due to raw materials exports is bad, but the rest of South America's growth, that is wholly dependent on those same exports of raw materials can be conveniently ignored? Is that it? Sure Bolivia exports tin and gas and stuff, but why this should be a negative in a whole region that does the same? Mikey, you'd be better off explaining to the world that South America is done for because of this, not just Bolivia.

Second, because that growth isn't that much better than in the early 1990s. From 1993 to 1998, economic growth was consistently between 4-5% per year (see chart).
Rather petulant no? Because a previous government got good growth figures out of Bolivia, the current good growth figures don't count.

It was only in 1999 that the economy entered recession. But throughout that period, GDP growth was outstripped by inflation (see data). Last year, inflation hit 14%, far outstripping the 6.1% GDP growth rate. The 2009 growth rate is currently pegged at only 2.8%.

A neat trick! If you get inflation under control, you're still judged by those past inflation figures! Talk about damned if you do and damned if you don't! But his omissions speak louder than his cherrypicked stats, as Bolivian 2009 growth is pegged at 3.5% (by CEPAL, latest figures which I think will be easily beaten FWIW, because just the first three quarters of 2009 have seen a 3.2% growth rate, quite simply the best in the whole of Latin America) and inflation is currently under 1%. But you can't mention that, because those up to date facts don't fit into the world of prejudice he's trying to create. Jeesh what an asshole this guy is!

If the economy begins to falter, that will put strains on Evo's government, which has already used bank reserves to doll out payments to children, mothers, and pensioners.
And if it doesn't falter, it won't. But hey, again why bother with this pap and nonsense, you could add any old name in here. After all, if the economy begins to falter, that will put strains on Evo's/Alan's/Michelle's/Obama's/Harper's/Brown's/Sarkozy's/EtcAdInfinitum's economy, won't it?
These are all valuable, worthwhile programs.
No shit Sherlock
But they're expensive.
With this one simple sentence, Centellas lays bare his ignorance of economics. We'll come back to this one in a minute.

And now they're viewed as entitlements, which means any incumbent government will be punished if it's unable to continue to deliver (or even expand) them.

Always a mistake to help the poor, isn't it? Darwinism, I say! Let them starve for the greater good! Survival of the fittest, goddamit!

Moreover, the longer the recession continues in the US & Europe—and the Dubai financial mess is a troubling sign of things to come—the less money will be available for both critically needed donor aid & foreign investment.
Banal.
For all his symbolic rhetoric, Evo is still actively courting foreign investors.
On his terms, and what's more the deals are getting done. Do some freakin' homework and find out the most recent hard rock/hydrocarbons deals, Centellas. And when you do, note that the foreign mining companies and oil&gas giants are perfectly happy with the terms of the deals.
If the economy makes them increasingly risk-averse, we may see a recession hit Bolivia. Of course, rising economies (Brazil, Russia, India, China) may pick up the slack. But that's always a gamble. It would be better to have a larger number of options, not fewer.

WTF does that mean??? I've read it three times and still can't work it out! The only line of reasoning I can see here is that the national decisions of the Bolivian economic team are bad because other sovereign states might decide that they don't want to invest in Bolivia any longer due to circumstances beyond everyone's control! What IS this, the 'Waiting For Godot' economic policy?

The bottom line, however, is that Bolivia is not really charting a new “socialist” course, per se.
No, the bottom line is that you are a dumbass.

It's following the 1952 MNR playbook, pursuing a political strategy of multi-class alliance & an economic strategy of “state capitalism.” It's banking on a state-driven economic sector to grow, keeping the middle class happy while also securing better standards of living for the poor.

Yada yada

It was the failure of the state capitalism model to deliver that led to an experiment w/ neoliberalism. Another failure of state capitalism could leave Bolivia primed, yet again, for another neoliberal episode.
And then again, it might not, eh? But let's just go back to that "but it's expensive" line used by this pseudo-economist earlier. The point he tries to make is that you can't use state revenues (taxes etc) or International Currency Reserves (ICR) to fund social programs because they put a strain on things. Well, point one is that Bolivia's ICR is currently at all time record levels, as this chart ripped from the Bolivian Central Bank site shows:

Before Evo came along, nationalized the natgas industry and diverted the enormous profits being made away from the multinational oil companies and into state coffers, Bolivia had little or nothing in the way of reserves. Nowadays, it has U$8.7Bn tucked away, which is an enormous amount for a country so small and represents 9.6% of country GDP, according to CEPAL. The point here is that Bolivia could keep adding and adding to those reserves if it wanted to, but there comes a point when the opportunity cost of holding reserves (they just sit there and don't make you any economic/monetary difference) becomes too great. So the government has (or at least seems to have) made the decision to spend the ongoing, regular and predictable bonanza that the state is enjoying on the population, via school meals programs (that have seen attendances shoot up) maternity benefits, the first ever formal senior citizens retirement pension etc etc.

The second thing to mention here is whether these program really are "expensive". By this, we mean whether they "cost" Bolivia anything. In a previous post I marvelled at a chart created from Central Bank figures. Here it is again....


...but why is it so important? Well, what it shows is that at first, when Evo took over, the Central Bank quickly added to those reserves via the hydrocarbon revenues. We can see that as the ratio of local currency in circulation (M2) to reserves dropped. But since around the beginning of 2008 (when not coincidentally, the bulk of those "expensive" programs kicked off) the amount of money that is in the central bank reserves has been steady against the amount of local currency circulating inside Bolivia.

What does this mean? It means that Evo's government is not spending money that it doesn't have. These social programs that trouble our pseudoeconomist so much have not taken away dollars from the reserves. But not only that (and this is key), the government, via a very sound and prudent fiscal and monetary policy, has made sure it hasn't created money out of thin air. For every new Peso Boliviano that has been created, there's the equivalent amount of dollars added to those central bank reserves first.

In other words, these programs are not "expensive" at all. For one thing, they are avoiding the opportunity cost of overweighting central bank reserves (yes Miguel, this may come as a shock to you but if you'd bothered to learn about macroeconomics before shooting your mouth off you'd know that it actually costs money, a decent wedge of money at that, to hold currency reserves in your central bank). For another, they are only spending the extra new money that's coming in (thus educating the population, providing better healthcare, spending money for the elderly etc that will add to GDP) in a monetarially neutral manner. Or put simply, the cost to the state is a net zero and the result is a net benefit to growth (bottom-up growth at that, not the Reaganesque trickledown bullshit).

This is good housekeeping. This is just one example of why, when people like Centellas spout off about Bolivia's economy not being "all it's cracked up to be" they fly in the face of serious economics bodies that have recently lauded the country's economy. Y'know, people like the Interamerican Development Bank, The World Bank and the IMF.

Miguel, you win, hands down, this week's coveted award. Enjoy, dumbass.

Trading Post (dangerous church model edition)

I've always thought those die-cast models of Italian churches and cathedrals pack a good punch. Now it's confirmed.


Fortuna Silver (FVI.v) down 1% at $2.03 despite the news this morning that couldn't have been better for the company. Buy the bull and sell the fundies....nothing ever changes round here.

Ventana Gold (VEN.to) down 10.4% at $7.97 and spiked as low as $7.30 earlier, all on fairly solid volumes. Looks like somebody has finally worked out the real problems behind this mess.

Riverside Resources (RRI.v) up 7.3% at $0.74. In IKN33 published yesterday we talked in a bit of detail about the fundamentals behind this stock and what kind of prices we can expect under different circumstances from its Sugarloaf Peak drill program, results of which should be out before the end of the year. Volumes are up today, so that's good.

Antares (ANM.v) down 7.4% at $1.25. Another stock we've talked about recently in the subscriber publication.

ECU Silver (ECU.to) down 1.3% at $0.74. Ready for tax loss selling season, GATAsheep? Betcha Adrian and Wistar are ready to sell into their next pumpjob.

IKN Proudly Presents: The Ventana Gold (VEN.to) Technical Analysis Sing-A-Long

C'mon, you can all join in the chorus:


UPDATE: Holy crap! Lots of people singing today.

Who Wants To Be a Millionaire?, Colossus Minerals (CSI.to) version


Congratulations to Ari Sussman, latest winner of the mining CEO millionaire payoff competition. If any of you sucke....OOPS SORRY! diligent investors who bought into that $57.5m financing back in October were worried about how the proceeds were being used, then fear not! Around 2% of the moolah has been safely pocketed by the company CEO.

Colossus Minerals Inc. (CSI)

As of December 13th, 2009
Filing Date Transaction Date Insider Name Ownership Type Securities Nature of transaction # or value acquired or disposed of Unit Price

Dec 11/09 Dec 03/09 Sussman, Ari b Direct Ownership Common Shares 10 - Disposition in the public market -100 $5.990
Dec 11/09 Dec 02/09 Sussman, Ari b Direct Ownership Common Shares 10 - Disposition in the public market -73,200 $6.030
Dec 11/09 Dec 02/09 Sussman, Ari b Direct Ownership Common Shares 10 - Disposition in the public market -25,500 $6.050
Dec 11/09 Dec 02/09 Sussman, Ari b Direct Ownership Common Shares 10 - Disposition in the public market -13,700 $6.020
Dec 11/09 Dec 02/09 Sussman, Ari b Direct Ownership Common Shares 10 - Disposition in the public market -29,100 $6.090
Dec 11/09 Dec 02/09 Sussman, Ari b Direct Ownership Common Shares 10 - Disposition in the public market -4,000 $6.100
Dec 11/09 Dec 02/09 Sussman, Ari b Direct Ownership Common Shares 10 - Disposition in the public market -1,900 $6.110
Dec 11/09 Dec 02/09 Sussman, Ari b Direct Ownership Common Shares 10 - Disposition in the public market -21,300 $6.150
Dec 11/09 Dec 02/09 Sussman, Ari b Direct Ownership Common Shares 10 - Disposition in the public market -700 $6.170


That little lot adds up to 169,500 shares for gross proceeds of one million and twenty-seven thousand, two hundred and eighty-six dollars. Yes indeedy, Ari's auto-Christmas present this year is ONE.....MILLION.....DOLLARS

HOORAY FOR CAPITALISM!

Fortuna Silver (FVI.v): Win!

This is as good as it gets when the subject is LatAm mining bureaucracy.

VANCOUVER, Dec. 14 /CNW/ - Fortuna Silver Mines Inc. (TSX.V: FVI / Lima Exchange: FVI) is pleased to announce that the "Secretaria de Medio Ambiente y Recursos Naturales" (Mexican Environmental Agency) has approved the Company's application for a change of land use from agricultural to industrial for the San Jose silver-gold project, located in the southern State of Oaxaca, Mexico.

This is the final permit required to commence construction activities and complements the Environmental Impact Study, which was approved in late October 2009. The initiation of construction activities is now within Fortuna's sole discretion and is planned for the first quarter of 2010.

A pre-feasibility study covering all pre-construction engineering projects for the mine, processing plant and supporting infrastructure is scheduled to be completed by January 2010.


Fortuna's San José mine is now a lock. I say YAY.

Blackfire translated: Canada's corrupt miners explained in real English

The Mex Files has taken up the cause of the scumbag miner that was up until recently operating in the Chiapas region of Mexico (until it decided that political assassinations were a smart hearts'n'minds operation, that is) and provides a useful translation of what they said compared to what it actually means. Here's the link.

Chart of the day is...

......the results from Chile's election yesterday.

With 98% counted Sebastian Piñera hasn't made the 50% needed to win in the first round, but the difference built up against government candidate Frei looks good enough to see him through in the ballotage on January 7th. Put simply, it's long odds-on Piñera to pick up the extra 6% of votes needed and be the next President of Chile.

Third placed Marco Enríquez-Ominami did ok with 20% and 4th Jorge Arrate picked up enough votes to give him a certain amount of local voice in the next few years.

12/13/09

Chile Election commentary

Fed up with the pap and crap served up by the media newswires? Yeah me too, so if you want to read about the unfolding election in Chile, want it in snappy, bite-sized pieces and want the person writing the words to actually know what he's talking about, check out Robert L Funk's blog today as he seems to be doing one of those liveblogging event thingies.

Here's the link.