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No questioning that climate change is really happening. No dispute of its relationship to burning fossil fuels. No Sarah Palins loving the smell of emissions. No Michael Crichton tinfoil-hat conspiracy theories about liberals inventing the whole thing.
Discussing climate change is a different affair in Brazil, simply because there are no climate deniers. This is such a refreshing change from the straw-man squawking, the industry-financed pseudo-science, and the faux-libertarian pillorying of anything climate related -- all of which in the United States passes for climate debate.
Great Panther Silver (GPR.to) (GPL) stops the bullshit about its cash costs profile and makes dumbass analysts that swallowed their previous crap whole look stupid
In 4q10, GPR said that its "cash cost" was U$8.41 per ounce of silver sold.Yes, you read that right. When GPR touts its "cash cost" figure, what it doesn't explain is that it only covers less than half of its real costs.
This means its "cash cost" total for the quarter added up to U$3.111m (and if you don't believe me, check the company filings on SEDAR, they're all there).
However, its "Cost of Sales" for the quarter was $6.36m!
2q11 silver production: 386,210 oz
2q11 cash cost: $11.84
Total of above: $4.57m
Reported cost of sales in 2q11 report: $4.61m
2q11 cash cost: $11.84/oz
1h11 cash cost: $10.69/oz
UPDATE: Reacting to this post, your author receives this question as part of a mail from reader CV (a GPR long):
Answer: Guy's gotta have a hobby.
UPDATE 2: Who is goldminingXpert? Do I know you? A quick mail would be appreciated if possible. And if Christopher Barker (aka TMFsinchiruna) is resorting to Ad Hom attacks instead of addressing his own obvious failings he so totally fails. Ego = poverty in this game, dumbass.
No blahblah from me, here's the note, out Wednesday:
PERU/MINING: Tax hike likely to be moderate, but risk of cumbersome burden remains
10 August 2011 12:10 PM EDT
One of President Ollanta Humala's policy priorities will be to raise taxes on mining, but he will probably seek a relatively moderate increase given his desire to keep the sector reasonably attractive for investors. Recent statements by key officials, saying the government will negotiate its proposals with mining companies and that maintaining the sector competitive will be a guiding principle of reform, reinforce this appraisal. Nevertheless, two factors could lead the government to seek a more cumbersome tax increase. The first is Humala's desire to centralize revenue in the hands of the central government, which poses the risk that companies will bear the cost of compensating local and regional governments for any revenue loss. Second and most importantly, a drop in Humala's approval rating suggests he could become politically weaker in the medium term, something that would increase the risk that he will tax more heavily mining production to finance new spending.
The Humala administration is widely expected to increase taxes on the mining sector, but there has been much uncertainty among investors about how far he is willing to go and how the new tax structure for the sector will look like. While Humala views extracting more revenue from mining as an important measure to finance new spending, he will probably seek a relatively moderate increase given his desire to attract more investment to the sector, which is an important driver of economic growth (See PERU/MINING: Humala likely to show some restraint in approach to mining sector from 1 July). A more uncertain international economic environment will probably reinforce views within government that it should take a cautious approach to the sector.Erasto Almeida
Recent statements by key officials reinforce this appraisal. They have reaffirmed the government's plan to introduce a windfall profit tax on mining, a proposal that had already been included in Humala's campaign manifesto. But new "prime-minister" Salomon Lerner, Minister of Mines and Energy Carlos Herrera Descalzi, and Minister of Finance Luis Castilla have all said that the government will negotiate tax measures with companies and seek to keep the sector competitive. Humala himself said in his 28 July inauguration speech that the government will negotiate higher taxes and respect tax stabilization agreements. While Humala originally proposed a 40%-45% windfall profit tax (without providing any details), now officials say that the government will analyze its options and officials are holding meetings with representatives from private companies to hear their views and suggestions. Some miners are making the case that any tax increase should focus instead on the royalty tax, which is levied on sales at a 1% to 3% rate depending on revenues. And rather than simply raising rates, they propose a shift in the tax base from sales to profits, with a sliding scale based on operating margin -- something similar to what neighboring Chile has done.
Despite the recent signal of moderation, however, two factors indicate that some risk that the government will seek a more ambitious tax increase remains. The first is Humala's desire to centralize more revenue in the hands of the central government. Currently, companies pay a 30% corporate tax, but legislation stipulates that half of these proceeds (the so-called "canon minero", which is a compensation for natural resources extraction) has to be transferred to producing local and regional governments, who also receive all revenues from royalties. Humala appears to believe that the central government should keep all revenue from the corporate tax, and companies should bear the cost of paying the "canon" to local and state governments. He looks unlikely to move forward with such a proposal, since it would place a heavy burden on companies.
But if he decides to go down that path, even if to reduce only partially the current transfers to subnational governments, the burden would probably fall on companies shoulders. Subnational governments have a limited capacity to execute investments and most of them are "siting" on cash transferred from the central government, so one may argue that it would make more sense for the central government to just retain a larger share of the corporate tax and invest directly in producing areas. But Humala probably wouldn't run the risk of picking up a political fight with local and regional governments. While subnational governments in Peru are relatively weak and have limited influence on legislators, if Humala proposes measures that cause them revenue losses, they could, for example, mobilize locals to stage protests, and that could hurt Humala politically. Humala will likely look at the overall burden of new tax measures on the sector when drafting his proposals. But his desire to centralize revenue increases the risk that he will opt for a heavier tax burden then he would otherwise. It also increases the risk of a more cumbersome tax structure in comparison with a scenario in which the government just introduces a new windfall profit tax. This is because the new structure would rely more on taxes levied on "regular" profits (the new "canon", which would be presumably be calculated based on the corporate tax) or sales (royalties) to compensate subnational governments. Humala's desire to centralize revenue also means the government is unlikely to limit tax changes to royalties as proposed by private sector representatives.
Second and most importantly, a drop in Humala's approval rating suggests he could become politically weaker in the medium term, which would give him an incentive to look at new sources of revenue. Humala's approval ratings have already dropped sharply from 70% in June to 41% in July. Support for him will probably bounce back a bit in August due to the positive news cycle related to his inauguration and the announcement of popular measures such as an expansion of social programs and a hardline on the fight against crime and corruption. However, he may start his administration will lower support than his predecessors and his approval ratings will probably suffer during his first year in office. Not only is the economy slowing, but the trajectory of past president's approval ratings show a pattern of rapid decline during their first year in office, suggesting there are structural factors behind low presidential approval ratings in Peru (See PERU: Drop in Humala's approval ratings increases medium term risks from 25 July).If facing declining approval, Humala could be tempted to pursue more aggressive policies to recover support. This could include a more substantial tax hike on mining to finance new spending. Risk for miners who have tax stabilization agreements would also increase. While Humala will most likely respect contracts, he wants to re-negotiate terms and could take a tougher stance with companies if he feels he needs to boost popular support.
This also means that the timing of tax changes will matter. Both the government and the sector have an interest in addressing the issue as soon as possible. Minister of Mines and Energy Deslcalzi said the government hopes to introduce tax changes before the end of this year. But it will probably take at least a few months before the government has a final proposal. Officials are still conducting internal studies to have a clearer sense of the current effective tax burden and the options available for change. Once the government has a proposal, it will conduct additional talks with companies. And then it will need congressional approval, which would probably take at least another few months. With Humala's approval ratings likely to drop, the longer it takes to finalize a proposal, the higher the likelihood that the government's appetite for new revenue will increase.
As for the odds of congressional approval, the government will most likely have enough support for a proposal viewed as relatively moderate. Humala will need votes from centrist legislators given that his party won only 36% of seats in congress. But there is growing consensus among policymakers in Peru that there is room for higher taxes on mining, and members of former President Alejandro Toledo's party, who hold another 16% of seats, will support a moderate tax hike. In case Humala opts for a more cumbersome tax increase, congress would probably be a factor of moderation. If facing strong opposition there, the government would probably make some concessions to make the reform more palatable to investors. Though unlikely, a more negative scenario could also develop. If Humala's approval ratings drop sharply, he could be tempted to use an aggressive tax hike on mining as a way to boost popular support. His weaker political standing would in theory make congressional approval more uncertain, but he could prioritize and politicize the issue, seeking to generate popular pressure on legislators to approve his proposal while also trying to coopt legislators from other parties.
Analyst, Latin America
Reader 'SK' sends in this note and photo:
OttoFrom my travels in Oxford, England. Perhaps not quite as sceptical as Mr Owl (& indeed not an owl), but a fair imitation?
...The Dow vs Gold (via GLD), five year chart:
1) They get to appear on TV, I got me a pissant lil bloog.2) They're wrong, I'm right.
3) Then there's this. Please conform
Sorry charties, but they really do:
Your author looked for a 4c EPS. We got a 7c EPS (NR linked here)
Does this justify the recent price run-up? DYODD on that one dude, cos I'm long BTO already.
I get knocked down,
But I get up again,
You're never going to keep me down.
C'mon, join in the chorus dudes...you know you want to...
From this post over at Big Picture, we get this (your humble scribe adds bold type and underlines):
My comment on Bloomberg Tuesday that Bank of America should seek a pre-packaaged, GM-like bankruptcy reorg generated a stern phone call from a Mr. Someone. Understand, I have been saying this exact same thing for over 3 years (only adding the GM part since their reorg). After being told the call was recorded — one could hear the sphincter tighten on the other end of the line — I responded in the only way I knew how: My exact phrase to this person was a less than eloquent expression involving self-love that is not possible amongst those who are not double jointed.
UPDATE: "Why does a $10.7m net profit suck?" I am asked (by mail). Because it's a market cap of $643m that's why, and I'm one of those old fuddy-duddies that thinks PE ratios have something to offer the world. If you think it's a good performance, don't feel the need to argue the toss with me. Just wait until the market opens in 57 minutes' time and buy the stock.
- Calmer? Nope
- Large issue stocks nibbled at: Well yes we got that right I suppose (remember we don't give a fig about banks or GOOG or XOM or SBUX, our focus in The IKN Weekly is strictly hard rock mining) but it was hardly "nibbling" and more like full scale gluttony with ABX, GG, NEM etc etc all up on above average volumes
- Juniors ignored? Fail, with lots of the ones we follow putting in great looking gains.
Q: Do you like kipling?
A: I don't know, I've never kippled.
"It's food for thought that they [publishers, media etc] have absolute freedom of speech to publish that there is no freedom of speech."
"Encouraging sustainability requires reinforcing the idea that wasteful consumption costs money and rejecting the idea that changing our behavior will require us to give up the things we love to do. It is not about putting nature or polar bears or spotted owls above human beings, it’s about rethinking consumption decisions so we can focus more on people"
- GORO returned a net profit of $3.06m (its first ever net profit)
- That's a quarterly EPS of 6c
- Compare that to its market cap, currently standing at $1.378Bn
- Yup, that's a PE of around 100X
- And not only that, you're not paying way over the odds for a gold miner, you're paying for a freakin' silver miner. Here's a quick chart that shows the breakdown of sales revenue per metal:
|metal||Oz sold||avg price||$|
And if you want the paydirt in chart form, here it is.
UPDATE: For those of you just tuning in, this update post may be for you.
UPDATE 2: Oh this is interesting. Hey guys over at the Yahoo board, did you know that GORO management are regular readers of your posts? Hey, wouldn't it be interesting if you found out that one of the posters there was in fact part of the managerial team at GORO, too?
Date Time WebPage messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_G/threadview?m=tm&bn=111372&tid=8431&mid=8431&tof=1&rt=2&frt=2&off=1 11 Aug 14:28:54 incakolanews.blogspot.com/2011/08/silver-with-bit-of-gold-resource-corp.html incakolanews.blogspot.com/2011/08/silver-with-bit-of-gold-resource-corp.html 11 Aug 14:31:48 incakolanews.blogspot.com/2011/08/silver-with-bit-of-gold-resource-corp.html 11 Aug 14:31:58 mailto:firstname.lastname@example.org www.blogger.com/profile/03069822714021884725 11 Aug 14:33:55 incakolanews.blogspot.com/ 11 Aug 14:35:11 mailto:email@example.com incakolanews.blogspot.com/2011/08/silver-with-bit-of-gold-resource-corp.html 11 Aug 14:36:57 incakolanews.blogspot.com/2011/08/silver-with-bit-of-gold-resource-corp.html
...the same as before, with the performance of the major regional markets yesterday:
Quite a difference to yesterday's, repeated below:
- Well, we got the not-end-of-world rally in the broad markets early
- We got the relief rally kicking up a gear once the Fed had spoken
- We didn't get much said explicitly about QE3, but plenty of implication from the free money ride banks can look forward to until 2013 (at least)
- We got gold higher
- We got copper higher (only by a bit, but it did cross from sub-$4/lb to over $4/lb)
- We failed on a higher silver price.
Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected. Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Temporary factors, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan, appear to account for only some of the recent weakness in economic activity. Inflation picked up earlier in the year, mainly reflecting higher prices for some commodities and imported goods, as well as the supply chain disruptions. More recently, inflation has moderated as prices of energy and some commodities have declined from their earlier peaks. Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, downside risks to the economic outlook have increased. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.
To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.
The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ these tools as appropriate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.
Voting against the action were: Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who would have preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an extended period
UPDATE: The Economist blog has a decent and even-handed piece on today's news here.
... a rundown of how the major market indices in The Americas got on yesterday, Monday 8th August:
Argentines will be pleased: They're always proud of a number one achievement.
I've been following the development of these five lines all day.
"Tomorrow Monday: Sell-off on the S&P US debt downgrade, risk-off, juniors get hit, non-liquid stocks do odd things, political noise on Italy. Gold used as safe haven, so GLD and GDX continue to go their separate ways."
The following is an excerpt from a mail sent in by reader MW. It speaks for itself, I think.
I started in the gold world in 2006- immediately fell in love with it. All I knew then was Rick Rule, Bob Bishop and Casey - hung on to everything they said and wrote. I collect sayings that seem important when I hear them---the following were transcribed by me from an interview Rule did in 2007 or so- all these impacted me greatly at the time because I was such a newbie:
Rick Rule interview1. Resource markets extremely cyclical:When things appear to be very good, it is because they are about to get very bad; When things seem very bad, they are preparing to get good. (Thus- you will be a contrarian or a victim----stay away from crowd)2. With small companies, price of gold has little impact- they have no gold.These companies make paper (thus, things that affect paper (financial world) affect them.3. Pay Attention to MICRO (the company), not MACRO.4. An unvarnished belief in your own thesis is extraordinarily dangerous to your financial future.(so I always temper my own enthusiasm for everything)In that regard, Doug (Casey) has hired a bunch of young analysts currently unscarred by failure- he believes they are better prepared to deal with a bull market, because they believe less in the thesis of cyclicality than I do.5. If I choose companies correctly, the increase in commodity prices should be the icing on the cake rather than the foundation of my investment thesis.6. I am interested in being in the best 5% or 10% of the companies in a sector- which will punish me less if I am wrong, and, theoretically at least, reward me more if right.7. In high risk/high reward businesses, managing risk is much more important than chasing reward. If you manage the risk, the reward will takes care of itself.(most speculators chase reward without any thought of risk)8. Just having risk as your primary focus, regardless of the technique you use to manage it, puts you ahead of 90% of the competetion. The fact that you consider risk rather than greedily chasing rewards is important.9 How I manage risk:a I am a contrarian: when gold is hot, I am a seller of gold. When natural gas is dead, I am a buyer. ‘Buy straw hats in winter’b. People matter: 50-60% of the wealth is generated by 5% of the people in that activity
Item 4 is why I thought of forwarding this to you. At first I was kind of shocked by the information you put out on the Casey BS being pumped out. However, it resonated true with what I had seen start to come out of that outfit gradually over the years. Hats off to you for calling these guys out---I have written about my disappointment to the 'old guard' there. Afraid they have turned into 'Stansberry Lite' however.
Can you spot the difference?
June 2010 (article wrap-up)
Some gold bugs are throwing about very aggressive price targets of $2,000 or $3,000 an ounce, from levels of just over $1,200 an ounce now. ... ...If the yellow metal does reach those levels, it would form a bubble of epic proportions. From an asset allocation standpoint, owning gold at current levels makes sense only if an investor's view of the world is outright bearish. If not, gold is likely to underperform other asset classes from hereon, in line with its long-term performance history. (The author is head of emerging markets at Morgan Stanley Investment Management)
“We continue to strongly recommend exposure to gold, not only as a consequence (of) the events of the past week, but also through next year, which reflects our conviction that heightened demand for safe-haven commodities will be sustained by lingering investor concern over sovereign debt and growth risks in the U.S. and Europe, all occurring amid historically low real interest rates,” Morgan Stanley says.
However, I'm not the only one in America asking where do these S and P punks get off downgrading US bonds when three years ago they wore out their Triple-A rubber stamps on the cartloads of stinking offal that Angelo Mozillo and other mortgage rustlers were pawning off as bond-fodder on every Frankenstein "investment opportunity" pumped out of the Wall Street CDO mills. Government officials were righteously seething over S and P's chutzpah, but I suppose when they tried to ring-up Eric Holder over at the DOJ they got connected to some call center in Uttar Pradesh where a friendly fellow named "Dale" picked up. China's government-run newspaper virtually spanked the US: "Learn (thwack) to live (thwack) within (thwack) your (thwack) means!"
I'm not convinced that the US bond rating will even matter that much because nobody knows what anything is worth anymore - especially when governments teeter and the folks in the public square (or the parking lot in America's case), start yelling for blood. Merkel, Sarkozy, Berlusconi, Zapatero, will soon be swept away by that selfsame rolling torrent of dreck-strewn woe - in their case a bouillabaisse - while poor Obama looks like one of those hapless, floating creatures in the second-to-last scene of O Brother, Where Art Thou. Even the gold bugs are scared the price will collapse in a debt deflation, or that the federal government will slap a giant extra-special punitive capital gains tax on precious metal sales, or will try to confiscate it from the public altogether like Franklin Roosevelt did - though, given the vast arsenals of private firearms across this land, and the martial spirit lingering in many pissed-off factions of the Tea Party ilk, nothing would invite a revolution, or civil war, or civic upheaval as surely as trying to snatch folks' gold. As a capital preservation refuge, I'm sympathetic to gold, of course, though not so much to buggery.
...the Horizons Alphapro Gartman ETF (HAG.to) versus the Gold ETF (GLD) and the S&P500 index, 12 month timescale:
Oh, and here's the S&P futures chart. It's 6:05pm Sunday local time here and the index futures have just opened. We're now off over 10% in the last two sessions.
"....anything to read into the way gold bullion has been catching up with the price of platinum [?]..."
I've had this tune in my head all weekend, thanks to the the WSJ.
Reminds me of Northern hemisphere summertimes, too. So it's only fair to share.