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9/3/11

Consuelo Mack interviews Robert Shiller

Via a headsup from Ritholtz, I've just spent the last 26 minutes watching a Q&A with Robert Shiller who talks an awful lot of sense about the current state of the US economy. It's a 100% recommended interview (nice to see an interviewer who understands her job well too...knows when to shut up and listen...asks simple yet penetrating questions) so go watch it yourself right here.

The Gold ETF (GLD), Silver ETF (SLV), mining ETF (GDX) and juniors ETF (GDXJ) in the last five days

We've done this end-of-week comparative before, but today's is interesting because...


...the miners have tracked gold bullion (ETF proxy) very closely (around +5% each) and the junior miners have tracked silver bullion (ETF proxy) very closely (around +7% each). 

So we can't really saying the miners are beating out the metals (as now predicted by all Canadian brokerage anal ysts....tell 'em what they wanna hear, eh boys?) but at least they're up with the pace.

Nobody reads blogs

Step one: In this post on Tuesday August 30th, IKN points to the production figures for silver in Mexico and tells the bizcomment world to stop all this nonsense about Peru being the world's number one silver producer.

Step two: In this post dated Thursday September 1st, we present even more evidence of Mexico's production superiority in silver over Peru, comparative chart and all.

Step three: On Friday September 2nd, Bloomberg runs its note, "Mexico overtakes Peru as largest producer of silver", though strangely enough the only version available online of the Bloomie note is a Spanish language piece farmed out to a Peru business newspaper.

Just sayin'

It goes without saying that this humble corner of cyberspace was not mentioned, as the journalists at Bloomberg always do their own DD and surely would never copy anyone else's ideas or data without giving due recognition, would they? Oh yeah while I'm thinking about it; you Bloomie guys should look up the phrase "troy ounce" as it might help you with your calculations the next time you try and do this kind of report. And they wonder why news media is dying...

9/2/11

The Friday OT: Joan Armatrading; Drop the pilot

The bizarre part of this video is that it dates from 1983, two years before Woody Allen's Purple Rose of Cairo (you'll see what I mean). The cringeworthiness of this video is the look chosen by Joan's backing group, which is approximately Mullet-Perm Blue Steel. Sadly, it was cool at the time....oh those 80s....



The wonderfulness of this video is Joan, her exceptional voice and a song that's a four or five cuts above yer average pop. Quality abounds and fun vid too.

The only TA guy I trust....

...is calling the HUI as breaking out to the upside today. Read it here on his blog, but what you get if you're a subber is his e-mail alert that sets a short-term and medium-term target as well.

Biiwii rules and if you're not paying him a pittance per month for his fabbo weekly newsletter yet, you're missing out.

disclosure: I receive no sort of financial benefit, commission etc etc ad infinitum from reco'ing Gary Biiwii's NFTRH letter. It's reco'd here because it's a top quality service, that's all, end of story.

Minera Andes (MAI.to) and US Gold (UXG): Toldyaz

On July 14th while commenting on the proposed 1-to-0.4 ego-driven pure paper merger of Minera Andes (MAI.to) and US Gold (UXG), your author commented (amongst other ranterations):

"If I were a long time supporter and holder of MAI.to I'd be hopping mad today."

...and also...

"...0.4 shares of UXG is an insult!"


Today we have a NR update on the process and we have this excerpted:
"Based upon the input of their independent financial advisors, each special committee has directed its legal counsel to continue due diligence and begin negotiation of binding transaction agreements at a ratio of 0.45 of a US Gold common share for each 1.0 Minera Andes common share held.   This is a change from the exchange ratio of 0.40 of a US Gold common share for each 1.0 Minera Andes share originally proposed by Mr. McEwen."

This still isn't that great, but at least it recognizes that Rob McEwen was trying to pull a fast one on holders of MAI.to. Anyway, I think I can say "toldyaso" on this one, even if MAI.to is still being sold halfway down the river.

disclosure: no position in either

Two Weeks Notice on the Chile protests

Greg Weeks at Two Weeks' Notice is someone that your humble scribe disagrees and agrees with on things LatAm, but when it comes to Chile he's been consistently correct in this humble opinion, especially regarding the recent student protests and strikes and what-have-you currently making all the headlines down there. After all, anyone who highlights Rober Funk's analysis as good (because it is) and then takes Andres Oppenheimer and the Investor's Business Daily to task for their woeful reporting of the Chile upheavals (because they are) can't be all bad.

For those of you wanting to know more about the Chile situation, here's the link to Two Weeks' Notice. Go there and scroll down for the several posts on offer. Make use of the links Weeks offers in his posts, too. By the time you've done that, you'll know more than 99.9% of the experts on Chile.

The most interesting thing about today's gold move is that....

...silver is following it and not going with copper & friends.

This time

For the moment at least.

Though all real bets off until after the jobs number please, dayflippahz.

UPDATE: Rithholtz breaks down the thing here, but here's IKN's considered and sober commentary on the jobs report:

Chart of the day is...

...the population of Argentina.


The definitive results of the Argentina census taken on October 27th 2010 were released yesterday and show the country with 40,117,096 people on board. It also notes that for every 100 women there are 95 men, which means it's probably becoming a nicer place to live. La Nacion report on the numbers here.

9/1/11

Sick

I kinda decided not to post anything else today, give myself a break and all that. I certainly wasn't going to post anything OT or outside the normal sphere of LatAm and mining and stuff. But I was wrong, because this post at Juanita Jean's has to be read to be believed. Here's a snippet from her snippet.

"The Republican Party in Arizona’s Pima County, which is represented by Rep. Gabrielle Giffords (D-AZ), is in the midst of a fundraising raffle, $10 per entry.
"The prize: the same model of gun that delivered a near-fatal blast to the Democratic lawmaker’s skull outside a Tucson grocery store in January.
"Tucson is in Pima County."

I'd really appreciate any comment, mail or otherwise, from any dyed-in-the-wool Republican telling me that yes, this is sickening for them, too. Or are you just going to let fellow members of your party drag you down to such lows willingly? (UPDATE: Thanks for the mails and nice to know there are at least six pro-GOP out there who feel the same) Go read it all.

UPDATE: This needs music.

The 'Small Silvers' 2011 sweepstakes August update

I keep forgetting to do this end-month update thingy, but today I remembered so here it is. We track nine "small silver" companies against the silver ETF (SLV) gold ETF (GLD) (thank you quick reader SS) to see how they get on every year, starting January 1st.. Chart please!


 (click to enlarge)

Top spot is still kept by First Majestic (FR.to), with Endeavour Silver (EDR.to) close behind in 2nd. Notably, both of those have U.S. listings folks....something to consider, no?

Then comes the bullion ticker, the silver ETF (SLV) gold ETF (GLD) that supplies our benchmark. Basically, if your miner can't beat out the metal then it's not supplying the necessary leverage to offset the risk and should be considered underperforming to date. This applies to the next four stocks, Fortuna (FVI.to), IMPACT (IPT.v), Great Panther (GPR.to) and U.S. Silver (USA.v) even though there is a decent mitigation for those, namely they're making a profit year to date.

And so to the dogs. MAG Silver (MAG.to) has been crappy this year and not helped by its new rounds of insider selling (a very bad habit at that company and telling of its true take-out chances). ECU Silver (ECU.to) is a laughable excuse for a silver mining company and needs no extra here, as only true fools play this one. Finally, bottom of the pile is Bear Creek Mining (BCM.v) after its well-documented snafu at Santa Ana, Puno. 

If I remember we'll do this again end September. Toodle pip!

Rule Rule on the state of play

Click through right here for over an hour's worth of Rick Rule's thoughts on the current state of the market, as per his broadcast to Global (and other) clients yesterday, August 31st. Pretty interesting stuff, with highlights including his thoughts on:

1) Market volatility
2) PGMs
3) Tax loss selling in November and December this year.
4) The discovery cycle of PM deposits
5) China

Plenty more too. It's 1 hour 24 minutes long, so the type of thing you listen to in the downtime moments. And if you get bored trying counting the number of times he says "very very very".

Chart of the day is...

...another one on Mexico versus Peru silver production, because the world is full of reporters who aren't just dumbasses, they're lazy too and can't be bothered to find the facts for themselves (and yeah, I am talking about you, mailer of yesterday, and rompes mis huevos una vez mas y te voy a cantar en nombre, dale?)

Seriously, gimme a break here. You want proof?


Proof. Oh, unless you think I'm just making up the figures you can see for yourself at MEM Peru and Camimex Mexico. But I'm not.

Mexico is the world's number one producer of silver, period.

8/31/11

OT: Jet-Skiing Irene

The hurricane wasn't much fun for most people in its path and very serious news for a few. We're not making light of that, just highlighting a silver lining seen in the aftermath.


A great video. Thanks to reader J for the headsup

Fortuna Silver's (FVI.to) record production month at Caylloma

While all the market watchers look to the brand spanking new San José mine in Mexico for their Fortuna Silver (FVI.to) kicks and most get warm and fuzzy about the new NYSE listing, your humble scribe's attention is drawn to the production numbers out of the established mine at Caylloma Peru, because the July numbers have just been published and THEY RAWK.

  • Context: In 2q11 FVI reported production of 474,979 oz Ag. If you split that down into months by a simple 3 division, you get 158,326oz Ag/month.
  • In the July figures just released, the Caylloma mine reports production of 6063kg, which is 194,951oz Ag in old money. That's an all-time record for the mine.
  • As silver's average selling price for the month of July was around U$37.91/oz (according to the London Fix average at least), we're looking at about $1.4m of extra income compared to the average month of 2q11. Just the silver, just one month of three, just the extra on top. Cool beans, no?

"And how do you know the July 2011 production numbers for Caylloma, Otto?", I hear you ask. Easy, I know my way around this website (and my kung fu is strong). DYODD.

The Shame of All Peru: How much gold comes from the environmental wasteland known as Madre De Dios, Peru?

Answer: In July 2011 the Madre De Dios region officially produced 2,089,908 grams, or 67,200 ounces of gold. At the July 2011 London Fix average price of U$1573/oz, that's worth U$105.7m.

 In the first seven months of 2011, 13,332,654 grams, or 428,703 ounces of gold.

July's production represents 14.91% of all the gold produced by Peru. 

And remember, the above figures are only the OFFICIAL Peru Mining Ministry numbers and that unofficial production is normally estimated to be the same again, so take those numbers and double them to get the real picture. Though this below is the real picture of Madre De Dios (from this excellent photoseries):


¡VIVA INVESTMENT GRADE!

Shougang Peru on strike


Those upstart worker people want more money? How dare they! In our day we 'ad to walk 6 miles t'd pit, work 18 hours a day AND pay the owner for permission to come to work, bah gum.


Here's Reuters (translated):
August 31st 09:51am
Production at the mining company Shougang Hierro Perú (Shougang Iron Peru) is currently stopped this Wednesday due to an indefinite strike by its workforce, according to general manager, Raúl Vera.
Shougang Hierro Perú. controlled by the Shougang Group of China, is the only producer of iron ore in the country and has its mine in the southern Ica region.
"The company is not producing in light that the workers have down tools...we are waiting for word from the ministry of labour for a meeting", said Vera in a telephone conversation with Reuters.
Workers have gone on strike to demand better pay and working conditions, a union leader told Reuters.

UPDATE: Next time I won't bother translating, as ten minutes later here's an EngLang Reuters note on the story.

The main Hathor (HAT.to) question


I'm not that bothered about whether there's a competing offer right now, because the main issue about HAT at Roughrider is the value of the asset, not the movers'n'shakers doing their stuff. We all know that the board of Hathor (HAT.to) will oppose the Cameco (CCO.to) (CCJ) cash offer when it publishes its NR (in the next few hours) but what main reason will they put forward? I mean, they have the opportunistic angle, they have the Fukushima angle, but I think the main reason is that the scoping study due out in the next couple of weeks is going to wow the audience and make the asset value of HAT looks miles ahead of the CCJ offer.

Fundies will out in the end. DYODD dudes, cos I'm long this at $3.90 and a few at $3.97, position opened in the days since the CCJ offer came in (fwiw the buy was called in IKN121, last Sunday).

Then there's the FIS.v question of course....



Peru: The penny is beginning to drop...

...amongst the smarter end of the anal yst community that Peru is going to keep on keeping on being miner-friendly (and biz friendly and FDI friendly for that matter) during the course of the new Ollanta Humala government. The savvier anal ysts out there, such as Mike Bandrowski of Clarus this morning who wrote these two paragraphs below, will in this way get the drop on their peers and leave the dumbasses like Louis Lobito James of Casey Research (who last week called Ollanta "rabid"), in the veritable dust. Here's Bandrowski of Clarus:
"Peru’s foreign debt rating was increased to BBB from BBB- by Standard & Poor’s on signs President Ollanta Humala will continue policies that made Peru one of the fastest growing economies. Note that the increase puts Peru above both Brazil and Colombia.

"Since taking office last month, Humala has pledged to honour previous contracts, spur private investment and implement a fair and equitable mining tax regime. According to Mines and Energy Minister Carlos Herrera, the Peruvian government is hoping to wrap up negotiations with mining companies and define a new tax this week. Many industry leaders are expecting the new tax regime to mirror that of Chile."

DYODD, dudettes and dudes.

Goldman Sachs sez; buy Freeport (FCX) and Alcoa (AA)

Here's the front page of the GS note out this morning.

Rebasing estimates to reflect lower growth; Buy FCX and AA

Market pricing in very weak demand; prefer metals over steel In line with recent weak economic data and macro concerns, with leading indicators like ISM and ABI pointing to renewed weakness, we are cutting our estimates and target multiples, resulting in an average -24% in our PTs across our coverage. We remain more positive on emerging markets, which have a higher influence on metal demand versus developed economies. We thus prefer metals and mining stocks over steel stocks in the near term. Within carbon steel, we prefer service center stocks over steel mill stocks.

Metals & Mining: Correction creates opportunity; Buy FCX and AA We believe the recent pullback in metals & mining stocks has created a particularly attractive entry point for select names. We remain very bullish on copper fundamentals and recommend investors continue to buy FCX. Although we are not as bullish on aluminum as copper, we prefer AA as we see the delinking of alumina-aluminum prices and AA’s aerospace exposure as strong earnings drivers over coming years. We are upgrading CENX to Neutral was Sell as the stock now appears fairly valued. We are also lowering our aluminum price forecast and estimates for AA, CENX and NOR. We are also lowering our PT multiples across our covered stocks to reflect the higher risk premium the market is applying, thus lowering PTs on average 21%.

Steel: Correction appears overdone but fundamentals remain weak. Despite the underperformance of steel stocks during this recent downturn, we are reluctant to get more constructive and expect supply-demand fundamentals to remain challenged in the near future. Although a seasonal uptick in demand in the autumn period, expected lower imports in coming months, and a negative arbitrage between US and global prices may provide some support in the near term, we question the sustainability of price increases going into the latter part of the year. We prefer service center stocks over mill stocks and are upgrading RS to Buy, was Neutral. We are downgrading WOR to Sell from Neutral as the stock appears overvalued, and we see 14% downside vs steel sector upside of 6%. We are also downgrading STLD to Neutral from Buy as we prefer RS. Among the mill stocks, we prefer NUE (Neutral), and on the upstream we prefer SCHN (Neutral). Among specialty metal stocks, ATI (Buy) is our preferred name as we remain very bullish on the aerospace cycle. We are also lowering our PTs by 26% for our covered stocks as we lower our estimates (on revised demand, pricing and costs assumptions) and PT multiples (to reflect higher risk premium)


Chart of the day is...

...copper dailies.

The red circle on that chart highlights last Friday's action and it was something we featured in IKN121, out last Sunday, with this script accompanying. We've been watching the state of copper pretty carefully recently, y'see. 

Last week we noted our concern about the “fight for four”, as copper was having all sorts of trouble in making up its mind whether the sink below $4/lb or move higher. By way of a reminder, here’s a small snippet of last week’s text:
“...the best bellweather commodity metal out there, copper, will need a close eye on it for the next couple of weeks. I’ve previously said out loud that I’m not worried about the state of play in copper as long as the metal stays $4 or over, so the last few days of struggle to hold that line is telling. There’s no rush to judgment here, but radar on copper? Yes.”
Cut to today and as we can see on the above futures chart, up to last Friday copper had traded both above and below $4/lb on every single day for 14 trading days after its significant drop in the early days of August. However Friday August 26th marked a change in direction, which also happens to be the right direction for those long Cu such as your author.
Just as last week, we’re not calling outright victory at this point and we’re not rushing to judgment. What we are doing is saying that copper looks healthier now and may turn out to be one less thing to worry come this time next week. Vamos a ver....

DYODD.

8/30/11

Hey I nearly forgot! How are things going over at The Cardero Group of companies this year, Henk?

Oh....not so well.


Never mind, there's always a new crop, isn't there?

Chile: Economic headwinds

I'll leave the student protest stuff to other places, here let's just note that Chile has just published its July 2011 industrial production number today and at +0.7% YoY growth, it way sucks. Here's a chart that shows all the numbers from Jan 2009 to now (note how the big earthquake only really affected one month and then the YoY rebound)


Today's was a mile under the 4% or so people were expecting. Pres Piñera isn't just under the kosh from his protesting locals, as it seems "it's the economy, stupid" also applies to his admin from here. Reuters report in Spanish here, INE website data here.

Quiztime

Here's the big question: Where in the world is this?


Here's a clue: A lot of people think this is still an exploration stage company and they're dead wrong.

Answers on a postcard please to
Otto Rock
Third cubicle along (wide stance)
 Minneapolis - St. Paul Intl Airport
USA

Or if you prefer, the usual mail address. First out of the bag gets to see their initials and their answer stuck on an update just below these words. Fame awaits thee!

UPDATE, one hour later: You can stop now folks, because we got a winner within three minutes (i kid you not) of this post going up. Congrats to the quickdraw reader known to the world as Nowhuffo because that was lightning fast, dude. Nowhuffo correctly identified that photo as Rio Alto (RIO.v) at its La Arena property in Peru.

A Flash update...

...was sent out to subscribers this fine Tuesday morning, a few minutes before the opening bell. Belt'n'braces post complete, have nice day.

Chart of the day is...

...monthly copper production figures for Mexico, 2009 onwards:


Hey, take a wild guess as to when Cananea stopped striking and came back on line?

8/29/11

Mickey Fulp on REE juniors

If you haven't read Mickey Fulp's latest piece on REE juniors yet it means you're not a subscriber to his 100% free service and you should be by now, so here's the link to go join up.

I digress. His note on REE juniors this weekend is excellent stuff, showing the good and the bad of the sector. Read it yourself by going to this link, because it's now out there for one and all. DYODD, dude.

Sino-Forest (TRE.to)

Go read Alex Dalmady's series on the saga, which wraps up with this one today. Here's an extract:

"Carson Block is looking like a champ. For his part, John Paulson took his lumps like a man. It was big loss for his fund, but he showed he could recognize when he was wrong.
I do feel for the analysts who came out to support the company. Lesson learned, hopefully. Don't trust everything they tell you, sometimes the numbers are simply a lie. Company officials are NOT your friends."

The only part I disagree with is the bit about feeling sorry for the lazy group-thinkers, because if you can't see that they're part of the problem and not part of the solution there's a flaw in your argument, Alex. But yeah, credit to Paulson for taking one on the chin in an adult fashion. And that last part about company officials is 100% correct.

What was that definition of insanity that Einstein came up with again...?


1) In early 2011 the dumbass Canadian anal yst community drives their shareholders straight off a cliff by getting them into Coro Mining (COP.to) and promising them the environmental permit final approval is just one rubberstamp away, when in fact the dangers were crystal clear for anyone who actually understands how Argentine politics works.

2) Coro Mining (COP.to) is refused its permit last week and the stock tanks over 50% from an already low level (and way below the silly $1.80 and $2 targets bandied about by said anal ysts).

3) Same anal ysts now say that the permit denial is not as bad as it seems and that the project is merely being "delayed" a couple of years.

4) Same sheep clients actually believe this line and buy COP.to this morning.


The blind leading the blind.

AuRico (AUQ) (ex-Gammon Gold) loving its shareholders once again

AuRico (AUQ) (ex-Gammon Gold) is down oodles this morning because it will basically pay anything to get its production profile up and away from the underperforming assets it has in Mexico. Here's the NR:

TORONTO, Aug. 29, 2011 /PRNewswire/ - AuRico Gold Inc. ("AuRico") (TSX:AUQ.to - News) (NYSE:AUQ - News) and Northgate Minerals Corporation ("Northgate") (TSX:NGX.to - News) (NYSE-Amex:NXG) are pleased to announce that they have entered into a definitive acquisition agreement (the "Agreement") to create a new leading intermediate gold producer. The new company will have 5 operating gold mines, a sixth mine targeting production in 2012 and 3 gold development projects in Mexico, Canada, and Australia, three of the top global mining jurisdictions. The combined company is completely unhedged and offers full exposure to record gold and silver prices and an exceptional growth profile from approximately 475,0001 gold equivalent ("Aue") ounces2 this year to 730,000+3 Aue ounces in 2013 (growth of approximately 54%). All figures in Canadian dollars, unless otherwise indicated.
Under the terms of the Agreement, AuRico will acquire all of the issued and outstanding common shares of Northgate on the basis of 0.365 AuRico common shares per Northgate common share. Based on both companies' 20-day volume weighted average prices on the Toronto Stock Exchange (TSX) ending on August 26, 2011, the exchange ratio under the offer represents a 45% premium to Northgate's shareholders.
"The combination of AuRico and Northgate will immediately position the combined company as a pre-eminent intermediate gold producer with peer leading growth", said Rene Marion, President and CEO of AuRico. "The assets, projects and people in our two companies are highly yada yada continues here

Right now AUQ is off 12% on this news, but hardly surprising for those who watch this dog from the sidelines, as AuRico, ex-Gammon, has a long history of more-talk-than-walk and snatching defeat from the jaws of victory at any given moment. And by the way Rene, AuRico is a really stupid corporate name.

UPDATE: Apparently technicals are the "first things" you need to know about a gold stock. Ahhh, silly old me for actually following a company and knowing its track record, eh....

UPDATE 2: What Brian Christie of Desjardin's thinks (extract):
We expect the market will view this transaction negatively. It is likely that the market believes that AuRico is overpaying for the Young-Davidson asset, given that based on our experience, we believe it will ascribe little value to Northgate’s Australian mines and Kemess project. However, we note that AuRico has a strong track record of turning around and/or optimizing various mining assets, as it has done with Ocampo and is currently doing with El Chanate.
 
We will be reviewing our model for AuRico to reflect the proposed transaction.

Le market c'est moi? Nope, just happened to state the obvious earlier, that's all.

Fortuna Silver (FVI.to) to list on the NYSE

Which is interesting, I think. Here's the NR, go read.

Chart of the day is...

...one that shows how Guatemala'a murder rate has been dropping in the last three years:


It's still high, nobody's denying that, but we like the direction. Chart inspired by this fascinating post by Mike over at Central American Politics today.

8/28/11

The IKN Weekly, out now


IKN121 has just been sent to subscribers. Just thought I'd let you know.

Message to metals reporters at newswires, newspapers etc regarding the silver market

Dear reporter people,

Can we please stop this nonsense about how Peru is the world's number one producer of silver, because it isn't. If you can be bothered to check the figures you'll note that in 2009 Peru was indeed the biggest producer of silver in the world but in 2010 Mexico overtook Peru (it was close, but Mex made more Ag no doubts) and is back to the number one spot again. As for 2011, the gap is getting even bigger and this is why:

Thank you for your attention.