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11/24/12

Predicting the outcome of roulette, by Michael Small and Chi Kong Tse

Here's the paper, here's the abstract:



Predicting the outcome of roulette
Michael Small and Chi Kong Tse

School of Mathematics and Statistics, The University of Western Australia, Perth, Australia 
Department of Electronic and Information Engineering, Hong Kong Polytechnic University, Hong Kong

(Received 30 April 2012; accepted 4 September 2012; published online 26 September 2012)

There have been several popular reports of various groups exploiting the deterministic nature of the game of roulette for profit. Moreover, through its history, the inherent determinism in the game of roulette has attracted the attention of many luminaries of chaos theory. In this paper, we provide a short review of that history and then set out to determine to what extent that determinism can really be exploited for profit. To do this, we provide a very simple model for the motion of a roulette wheel and ball and demonstrate that knowledge of initial position, velocity, and acceleration is sufficient to predict the outcome with adequate certainty to achieve a positive expected return. We describe two physically realizable systems to obtain this knowledge both incognito and in situ. The first system relies only on a mechanical count of rotation of the ball and the wheel to measure the relevant parameters. By applying these techniques to a standard casino-grade European roulette wheel, we demonstrate an expected return of at least 18%, well above the 2.7% expected of a random bet. With a more sophisticated, albeit more intrusive, system (mounting a digital camera above the wheel), we demonstrate a range of systematic and statistically significant biases which can be exploited to provide an improved guess of the outcome. Finally, our analysis demonstrates that even a very slight slant in the roulette table leads to a very pronounced bias which could be further exploited to substantially enhance returns. 

VC 2012 American Institute of Physics


The full download is here. It's how numberheads kick back on a weekend.

11/23/12

A Rick Rule Q&A

Rick Rule is one of the guys that creates fanclub followings around him and...well...if that's how he gets his rocks off who is this humble scribe to judge? Overall I'm agnostic on the dude but will say that 1) can't knock success and 2) he's never disguised his objectives around junior miners; he's in the sector to make himself money, period. There's no hidden agenda with Rule.

That preamble runs into this, a Q&A with Rule  that has this as highlight:
"The most common mistake I see speculators make is regarding the market as a source of information. It is not. It is a mechanism for buying and selling fractional ownership of businesses. Getting your information from the market is the same as getting your information from the expectations of 10,000 people who probably know less about the topic than you do."

Total agreement here, because it's recognized as a personal weakness.

The Friday OT: Björk; All is full of love

Another sumptuous Björk video that'd end up frightening the crap out of you if thought and considered too much



Also a song of great beauty, which is the main reason why it's here.

Oh yes we love TA

It never fails


Especially when it tells you what you want to hear

Dundee still calling Tahoe Resources (THO.to) (TAHO) badly...

...but at least there's the beginning of recognition that the project has serious social problems in the Canadian anal yst community instead of the lahlahlahicanthearyou attitude of the last few months. Read the Dundee take here, which is still rose-tinted specs.

Codelco's quarter: profits slip further

Chile's Codelco came out with its third quarter results yesterday and we track its progress via the "excedentes" benchmark, the term used for what would be company profit if Codelco, the world's biggest copper mining company, weren't a State-run entity. Here's the chart:


The quarter was a good one but only because Codelco booked $3.517Bn from the August agreement with Anglo American that was based around the sale of 29.5% of the Las Condes Bronces* mine (after about a year of disputes and wranglings). If we back out that one time gain here's what the chart looks like:


Codelco talked about the deterioration of results (and it's becoming a pattern) in this way, via its VP Admin and Finances, Iván Arriagada: "The lower excedentes therefore, when we discount the effect of the purchase of Anglo American Sur, is due to a lower price (for copper) that was 14% lower: The average price (int he first three quarters of 2012) was U$3.61/lb compared to U$4.19/lb last year."

*that'll learn me for trying to do these things from memory. Thanks to Setty for the correction

Chart of the day is...

....Peru's IGBVL 'general' index versus the S&P500 index, 2012 year to date:


Next time you hear some Peru talking head telling you about the wonderful growth rate in their country, remind them that their stock market blows.

11/22/12

Peru national newspaper quotes The Onion as source

Peru's national daily Correo is one of those brainless rags for mouthbreathers and run by the most obnoxious man in Peruvian media, Aldo Mariátegui. Today however it outdoes itself by running this serious story that uses The Onion as its source material. Screenshot here, just in case it disappears.


Freakin dumbasses. And here's the link to the original Onion piece, same photo and everything.

UPDATE: Site pal Setty sums things up well down this neck of the woods, where we're all having large scale yoks over the Correo huevo-en-cara:


UPDATE 2: Correo has now pulled the story, which is why we took the screenshot in the first place. But evidence is still out there that the above isn't made up IKN shit

It's not what MAG Silver (MVG) (MAG.to) says...

...it's what it doesn't say. Yesterday the CEO of MAG Silver (MAG.to) (MVG), Dan MacInnis, was on BNN defending his company against the allegations of its involvement in the murder of Ismael Solorio and his wife Manuela Solis, the act that snowballed into the decision by the local Barzón agrarian collective to expel MAG from its Cinco de Mayo property (a decision MAG says is illegal). The video of MacInnis's appearance is here and its worth watching the first few minutes for the company take on all this, because there are glaring inconsistencies between key facts of the events and what the company wants the Canadian business community to understand.

1) The story used by MacInnis was that Solorio was murdered and then this Barzón group jumps on and starts accusing the local mining company. He says this (direct quote from the interview):
"Two member of the ejido (local land owners), Ismael Solorio and his wife, were killed in Guatemac in southern Chihuahua about a month ago. And from that moment on there was a large group of anarchists, if you like, and anti-mining types and this group called El Barzón, who seem to be trying to link the deaths of these two to MAG."
The dead man and the Barzón group are made to sound separate by MacInnis, whereas in fact Ismael Solorio was leader of El Barzón. There are dozens of reports that confirm this, here's just one. We also note that the MacInnis spin is about how this event happened and then the links to MAG began afterwards, the company-as-scapegoat line of defence. This brings us to point 2.

2) Presenter Andrew Bell brings up the fact that Ismael Solorio had been threatened just a few days before his death by a group of people. MacInnis then says that the Barzons now say that it was the mining company behind the threats and roughing up (and of course denies this), when in fact it was Ismael Solorio himself that reported the event to police and he himself accused people working at Cascabel (MAG's wholly owned subsidiary that's working the Cinco de Mayo property) of the violence and threats. Here's The Mex Files who does a good job of reporting in English on the Spanish language reports of that time:
Solorio had met with Chihuahua officials last week to complain about threats against him, his family and members of El Barzon by employees of the Cascabel mine in Ejido Benito Juarez (San Buenaventura Municipio*).  The mine is owned by the Canadian firm Mag Silver.  Both Solorio and his son, Eric, were physically attacked by mining company employees on 13 October.
So it's not "a group of anarchists" who jumped on this bandwagon, MacInnis, it's a dead man who accused your company of threatening his life and was then found full of bullets a few days later. Got that?

3) MacInnis made a point of saying that the company and Solorio had done cordial business before and had previously done deals on access and drill permission on land owned by himself and his family members. There's no reason to doubt this, but we aren't told when those deals happened. Probably because Solorio was on record as opposing all company activity and protesting against its presence for at least four months before his murder and that of his wife.

Bottom line: On these occasions, when a CEO does a Q&A about a sensitive subject and has obviously been well briefed by his lawyers and rehearsed the company line, it's the bits they don't want to mention that are more interesting than the company spin. MAG Silver (MAG.to) (MVG) is hiding facts from the English speaking business world. We'd like to know why.



Chart of the day is...

...ten days of Tahoe Resources (THO.to) (TAHO):


Oh c'mon guys, where's your sense of humour? Anyway, the good news is that the police are now hunting for the 50 tonnes of explosives that the mob stole from your truck. That'll help things, no?

11/21/12

Lima welcomes HudBay Minerals (HBM) (HBM.to) to its stock exchange

Good to see that HudBay Minerals (HBM) (HBM.to) is expanding its footprint in the world by listing on the Bolsa de Valores de Lima (i.e the Peru stock exchange) as it begins to ramp up its Constancia mine project in that country. Let's hope it brings best practices to the country too rather than the way it's previously run its Latin America operations. The following from this:

“The brutal and arbitrary shooting of Adolfo Ich was caused by the negligent management of Hudbay Minerals both in Canada and in Guatemala,” reads the Statement of Claim filed by Angelica Choc in the Ontario Superior Court of Justice. Ich and Choc had five children. Their son José, who witnessed the killing, says the security guards hacked at Adolfo with a machete before shooting him in the head.

Angelica Choc is confident that her case is solid. “We know very well who those responsible are, they can’t tell us otherwise,” she said. “We lived it, we’re the ones who have suffered, here, in the flesh.”
The same day Ich was brutally murdered, German Chub was shot by mine security, permanently losing the use of his lower body. The man responsible for the killings, Mynor Padilla, has been jailed in Guatemala since September of this year. Despite high levels of conflict in the area, Chub's Statement of Claim alleges, “Hudbay Minerals continued to engage under-trained, inadequately supervised and unlawful security personnel while failing to implement or enforce standards of conduct that would adequately govern and control their conduct.” 


Anyway, they're sure to make themselves at home in Peru.

Make teh stoopid stop and polite notice

These are the people entrusted with the financial future of mankind:
According to the SEC’s order against Barthelemy and his firm, when examiners asked for a list of client assets, Barthelemy misrepresented his firm’s AUM as $26.28 million instead of the actual $2.628 million.  He downloaded client account balances from the firm’s online custodial platform onto a spreadsheet, and then manually moved the decimal points for each client one place to the right before providing it to the SEC staff. 
Words fail me.

As for the polite notice, your humble scribe would like to inform those people kind enough to have come over to this humble corner of cyberspace today that he will be taking the day off and hanging with his wife. And she's better looking than you, so there. Have a nice day.

PS: And visit My Own Market Narrative, because it's getting better and better as a blog. Seriously, the world needs more smart cynics like Iwnattos watching the juniors and the market.

Chart of the day is...

....China gold production per year:



It comes from this note entitled "How demand from China could send the gold price soaring". I disagree with the thrust of the note (because gold isn't a commodity) but the charts are good, the above just one of them.

11/20/12

Tahoe Resources (THO.to) (TAHO) has no dynamite

Here's a translation of this report out of Guatemala about the ongoing serious problems Tahoe Resources (THO.to) has at its Escobal project (via its wholly owned local subsidiary San Rafael, mentioned in the report). It goes without saying that THO.to would much rather this news stay out of the English language media...which is of course why it's appearing on the blog today. My thanks to A. Reader for the heads-up.

20/11/12
Mob Burns Six Vehicles on Road
A furious mob of neighbours in Mataquescuintla Jalapa, set on employees of the mining company working in San Rafael, burned five pick-up trucks and a cargo truck.
By Oswaldo Cardona and Hugo Oliva
The protesters set fire to a truck that was supposedly carrying dynamite. Also, they set fire to an 18 room hotel where employees at the mine were staying.
The towns people demanded that President Otto Pérez Molina respects the decision of the people in its recent local referendum (that voted against the mining company's presence).
Several people who preferred not to be identified said that this was only one of many protest actions that they would take if they see vehicle or employees of the mine passing through the town.
They blamed the government for what could happen, as they are not going to let the mining company work in the area any longer.
The vehicles were burned on the road to Jalapa.
The first confrontation happened at km104 and continued for one more kilometre before the Barrios area.
Hugo Loy, the municipality's mayor, said that the problems happened at 5:30pm and the protesters asked for the presence of the local legal authority, and then threw stones at him when he arrived.
"I do not support this type of vandalism, but there is a division in population that the people at the mine have produced," explained Loy.
continues here

Mo' MAG Silver (MVG) (MAG.to)

And thusly and therefore, MAG Silver (MVG) (MAG.to) comes out today with an NR that says the decision to evict the company from its Cinco de Mayo project in Chihuahua is illegal, the vote was conducted using several irregularities (see the NR for the list) and reiterates that it had nothing to do with the death of the anti-mining activists in late October. All predictable defence stuff but the interesting bit of the NR is at the bottom.
MAG is holding an investor conference call with MAG''s President and CEO, Dan MacInnis, and MAG Director, Peter Megaw, on Tuesday, November 20, 2012 at 12:30 pm Eastern time (9:30 am Pacific time) to address this matter. To participate, please dial BC local: (778) 371-9827; TO local: (647) 427-7450 or toll-free (888) 231-8191 and request access to the "MAG Silver Conference Call". A replay of the conference call will also be available by calling 416-849-0833 or 1-855-859-2056, conference ID: #73507580.

A confCall gives anal ysts the chance to ask real questions, so I'd suggest these two:

1) Is it true that the regional government of Chihuahua suspended the company's exploration licence at Cinco de Mayo in late October? If so, why weren't we told? If not, why was it reported that way by Mexican press?

2) Is it true that a National Congressional committee was set up in early November to investigate the occurances that have resulted in the eviction decision? Again this is something widely reported in Mexican media but unmentioned so far by the company and seems to directly contradict MAG's claim that "Until recently, it appeared that efforts to use this tragic incident as a basis to interfere with MAG''s activities were losing momentum".



Peru's slowing electricity demand growth is a good proxy for GDP forecasting

As often mentioned at this humble corner of cyberspace, watching a country's electricity demand is a good way of gauging the real state of growth. You can't hoard the stuff and you need it to for growth in our wild and wacky 21st century, so if your country really is doing well, you should see it here. And Peru has been doing well the last six years, nobody's going to deny that after looking at this first chart of end-user demand for electricity in the country per month. But on peering closely at the right of the chart, is that a topping formation that I see before me? 


Yup, could be. This year-over-year percentage change chart shows a clear and trending deceleration in demand growth. Now let's not confuse growth deceleration with falling demand because via the latest October figures out of Peru the country's electricity demand is still up 4.7% YoY, this is still a country with growing demand. What this chart tells us is that the pace of that growth is slowing and has been on a fairly regular basis for the last two years


The numbers and forecasts for Peru GDP growth in 2012 are set at something at-or-around 6% (e.g. Scotia last week confirmed its 6.2% growth forecast for the whole of 2012). That looks about right on casting an eye over the whole of 2012 here. However, extrapolate that trend into 2013 with your mind's eye and things aren't looking so great for next year, are they?

Chart of the day is...

... a longview of the U.S. Dollar (USD):


Gotta love TA.

11/19/12

A business suggestion for the board of directors of Liberty Silver (LSL.to)

Here's a business proposal for Messrs Geoffrey Browne, William Tafuri, John Barrington, Paul Haggis, Thomas Hodgson, George Kent, John Pulos and Timothy Unwin, collectively the board of directors at Liberty Silver (LSL.to) (LBSV)

  • We know that your company is now woefully short of cash, with just $785k at bank on September 30th and  no way to pay for the things you want to do, such as essential drilling at Trinity or covering the bill that SRK is going to present to you for its third party work.
  • We know that your overtures with Canadian brokerages about them running a equity finance for you have been met with polite "no thankyous" and there's little chance of them playing ball now.
  • We know that you got nowhere with your attempted hijacking of Sennen's treasury.
  • And we now know thanks to this G&M report that the S-1 you filed with the SEC last week doesn't mean you're about to immediately sell those warrants in order to raise capital, with CEO Geoffrey Browne's precise words being "nobody is looking to sell."
  • But we also know that you the board have collectively been promo'd as some kind of all-star cast, with massive reputations and experience and all that jazz. That means you guys must have made a pretty penny along the way, right?


So here's the suggestion: Why don't you guys run an internal, private placement and put cash into the treasury of your own company? Let's take today's 65c share price level, assume you guys are good for $6.5m between you, then fund by placing 10m shares and in that way you get the type of working capital the company needs to do its thing. And my word, it would really be a ringing endorsement of all that talk you give us about the company's bright future, wouldn't it? I think it's a great idea, you get to kill two birds with one stone, show the market that you're not afraid to put your money where your mouths are and give the company structure all the cash it needs to move forward, instead of languishing in its current doldrums. So how about it guys? 

IKN recommends: Investment Revaluation Catalyst

I recently came across the blog called Investment Revaluation Catalyst and have been deeply impressed by the amount of DD into junior mining companies (and one company in particular, as you'll soon find out) that goes on there. This is an unmissable link for anyone into the sector. Go here, find out yourself.

MAG Silver (MAG.to) (MVG) news (from IKN185)

This is one part of yesterday's IKN185 and it's about the bad blood MAG Silver (MAG.to) (MVG) faces at its Cinco de Mayo project.


MAG Silver (MVG) (MAG.to) given 48 hours to get out of Cinco de Mayo
A bit of a stop press report, arriving at this desk late Sunday afternoon. According to reports, The ‘El Barzón’ group that had its leader and his wife assassinated recently and claim that MAG silver (MAG.to) (MVG) was behind the killing, yesterday afternoon resolved to kick MAG out of its Cinco de Mayo project. Here’s Mexico’s newspaper of record, Reforma (13):
Landholders from Benito Juárez in the municipality of Buenaventura, decided during an official assembly to expel the Canadian mining company Cascabel (wholly owned subsidiary of MAG Silver) and establish a 100 year prohibition on exploration by any mining company that wishes to establish operations in the zone.
“This agreement, reached with 240 of the 400 total landowners present, is homage to the sacrifice of the life of our compatriot Ismael Solorio and of his wife Martha Solis, assassinated in the environmental fight of this zone”, commented Luz Estelka Castro, the groups lawyer.

The 240 landholder members means that quorum was made and of the 240 present the vote was reportedly unanimous. Here are more details from this report (14) from Mexico’s daily Progreso.

In the proclamation of the meeting of November 17th 2012, registered in the National Agrarian Register that finished at 2pm, the followed was approved: Restrict permits of any mining company for a period of 100 years for exploration or mineral production, and if in the future a new application is made to explore or produce it must be accompanies by studies, permits and corresponding authorizations and approved unanimously by the assembly.
“The company El Cascabel, MAG Silver o Majors and/or its subsidiaries are not authorized to explore or produce...A period of 48 hours is established, from the end of this meeting, for the company to withdraw all its machinery, equipment and materials and well as its personnel from from the Benito Juárez area”.
“This courageous and firm decision of the community is the base to confront any attempt by the mining company to pressure legally, paralegally or illegally in order to extract the mineral wealth from the Benito Juárez area, municipality of Buenaventura. At the same time it is also a call of hope for communities all over Mexico and Latin America that face the voracity of transnational extractive companies, hungry for basic materials and natural resources.”

I think it’s fair to say that MAG has a problem.



UPDATE: Now let's see: We note the assassinations of Ismael Solorio and Martha Solis in this post on October 23rd. We follow developments in The IKN Weekly issue 182 (Oct 28th, Chihuahua State freezes MAG's operating permit) and in IKN184 (Nov 11th, the National government sets up a Congressional committee to investigate the whole issue) and then in IKN185 yesterday we offer the above. Then this morning a few minutes after the opening bell we put up this post. Then at 2pm MAG finally halts and announces its highly spun version of the news. What happens?



Darnit, there must be a lesson here somewhere. Now what could it possibly be?

Education in Brazil

A very good report that deserves your eyeballs from reporter Vincent Bevins at The L.A. Times today. The subject is the level (or lack) of education in Brazil and even for your humble scribe, long-versed in the inequality of South America's educational systems, it's a bit of a shocker. Here's an extract:

Ana Jamil has a fairly common dream for a 6-year-old. "I want to be a veterinarian," she says.
That, of course, would require attending college. When asked how likely that is, [school principal] Andrade's face darkens.
"Look," she says, "I won't say it's impossible. We have had two cases of students going on to university before … and things here are improving."

The feedback control cycle as regulator of past and future mineral supply

Reader MR sends in this, a PDF academic paper entitled 'The feedback control cycle as regulator of past and  future mineral supply', published September 2012 and authored by Friedrich Wellmer and Manfred Dalheimer. Yes, it's a piece of academia but please, this time at least, don't let that put you off because the paper is accessible, readable and a very interesting informative read for anyone wanting to know more about the ebbs and flows of industries such as mining. To see if this 17 page report is up your alley, here's the abstract for you consideration:

Abstract Mineral supply is controlled by a feedback mechanism. When there is a shortage of a commodity in a market economy, prices will rise, triggering this mechanism. The expectation of high financial returns will encourage inventiveness and creativity in the quest for new solutions. On the supply side, for primary resources, the appropriate response is to cut losses in themining process, to lower the cut-off grade, to improve recoveries in the beneficiation and smelting processes, to expand existing production facilities, and to discover and bring into production new deposits. For secondary resources, the key to increasing the supply lies in improving recycling rates by better technology, reprocessing lower-grade scrap which becomes economic because of increased prices, and reducing downgrading to optimize the usefulness of secondary materials. On the demand side, implementation of new and more efficient processes, development of substitution technologies, material savings, and the invention of entirely new technologies that fulfill the same function without the need of using the scarce and suddenlymore expensive material are effective reactions to a price rise. The effectiveness of this self-regulating mechanism can be shown by examples of historical price peaks of metals, such as Mo, Co, and Ta, and the current rare earth elements peak. Concerning supply from secondary resources, a model is developed in order to determine how far the supply from this resource domain can be achieved and how the recycling rate is influenced by growth rate and lifetime. The feedback control cycle of mineral supply is influenced on the demand side by ever shorter life cycles, by products getting more complex with ever more elements involved in their production, and by an increase in element dispersion. All these factors have an immediate effect on the feasibility of sourcing raw materials from the technosphere. The supply side of primary materials is influenced by increasing lead times for new production and by relatively low flexibility in responding to changing demand.


This is a recommended read and you'll know more about what makes mining, sector of choice at this humble corner of cyberspace, tick. My thanks to MR for the headsup.

Chart of the day is...

...a catch-up with the Gold/Silver ratio (GSR):


Oh look, a period of relative tranquility all of a sudden. Or in the immortal words of Elmer, "Shhhh, be vewwy vewwy qwiet. Am huntin' wabbitz".


11/18/12

The IKN Weekly, out now

One of the finest motorcycle engines ever designed, the Suzy 185 block. 
You could drop it off a cliff and it wouldn't stop giving.

IKN185 has just been sent to subscribers. Covering ground and updating on plenty names this week.