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7/26/14

The Elegant Universe

The best book I've read this year is Brian Greene's 1999 publication 'The Elegant Universe'. Now (and that means literally this morning) I find out there was a three part documentary made by PBS in 2003 that was based on the book and hosted by the author. So here it is:


Once I have my weekend of work out the way I'll be watching this. Therefore I can't make a personal call on the quality of the TV show yet (though on quickly checking 3rd party reviews I strongly suspect it's great) but imho you should run and get yourself a copy of the book if you're into the subject of big-question physics/string theory for dummies/life the universe and everything, but haven't read it yet. Brilliant book.

Parts 2 and 3 run straight on from this part one, or should do at least. If not click here and get all three.

7/25/14

The Friday OT: Prince; Let's Go Crazy

Live performance, February this year.



He's very good at music.

Chart of the day is...

...The US Dollar Index (USD):


Sometimes the most interesting news is when there's no news at all.

7/24/14

Argentina going into default: The question is...

...who cares? Serious question this one, and the following swear word is necessary for emphasis:

Who. Fucking. Cares?

1) Not the rest of the world. They'll just shrug their collective shoulders, let their brain-dead hacks write them a "Don't Cry For Me..." headline, then get back to whatever sports program or TV series they prefer.

2) Not Argentina. This one's quite important by the way, it's basic point behind the writing this post in fact. For one thing Argentina's been through defaults before, its population knows how to handle the jive. For another, it's not as if the economy's doing that badly. For yet another and wildly unlike 2001/2002, the country has access to U.S. Dollars via its own reserves, via deal (e.g. China last week) and via selling things to other places (start with soybeans, work down the list). It's not a perfect economic position (inflation) and there are other structural weaknesses, but it's not the edge-of-collapse postion the BS-merchants and CFK-oppo press try to make it out to be. Argentina's doing ok and it'll do just fine even if an indefinite closure to international debt capital via the world markets is in its near future. Not only that, but this battle has been framed in such an us-vs-them way that the CFK govt has the general support of its population against 'the vultures'. 

3) But the vulture funds care. That's because they're not getting their cash next week, which is precisely why they're currently kicking up all this fuss now because really, those guys understand the dirty little secret that is point 2) above and know their leverage position is tenuous at best and more likely non-existent. We repeat; Argentina does not need to do a deal here and it can decide to ignore Griesa's ruling with little or no damage done, barring the headlines you'll get for a while. And semi-on-topic I'll bet you several dollars to the proverbial donut that Mr. Singer now regrets all that BS he tried to pull by embargoing the ANA Libertad in Ghana last year, because that's exactly the type of thing you don't do to a sovereign nation without getting it returned to you with interest (pardon the pun).

4) The other people who care are the non-holdout bondholders, because they're not getting their interest payments even though Argentina sent the payment out to the relevant clearing banks. Kinda wonder if judge Griesa's going to be defending a case soon, instead of merely judging one. 

The bottom line here is that Argentina doesn't need to pay and it can fall into default, because 1) the consequences for the country are much better than the chain reaction that it might (repeat might, lot of discussion over RUFO right now) set off if it pays and 2) the consequences for the country really aren't that bad even compared to a neutral position. In fact (slightly off-topic) it's a bit like the "award" Gold Reserve (GRZ) might get awarded in a few weeks time in its ICSID case versus Venezuela; who's gonna write your cheque, Doug? 

Back on-subject now and this is at least part of the point I alluded to a couple of days ago in this post, the bit about the difference between the law and justice. Yes for sure the law says that Argentina defaults and it's in the wrong, but only according to the eyes of the law, which in this case is personified by a dusty idiot of a biased judge in New York who should have been put out to grass a decade ago and is showing signs of Alzheimer's. Therefore Argentina can and indeed will ignore this book-driven law and bide its time until the real terms of agreement are struck and that will only happen via true justice, a far more powerful thing than a mere law.

A Flash update...

...has just been sent to subscribers. A nice day to add.

Ernst & Young: "Productivity still down in mining and metals sector"

Here's the link to the E&Y NR entitled, "Productivity still down in mining and metals sector". Here's how it starts:
Companies must overhaul business models to get productivity back on track 
VANCOUVER, July 24, 2014 /CNW/ - Miners will need to drastically transform their business models if they want to reverse the decade-long decline in productivity, according to a new EY report.
And here's the direct link ot the eight page PDF report from E&Y today on the subject. Appears to be today's necessary reading material on the mining sector and it fits in with the atmosphere created by the drop on spot gold, too.

LatAm on Twitter in English: Five people to follow

I occasionally get asked for a few recommendations on the question...

Who to read about Latin America in the English language?

...and it's not that easy, because for one thing most of the stuff I read that's useful is in Spanish* and for another there's a helluva lot of dross and nonsense written about LatAm affairs that then tries to pass itself off as smart and insightful (e.g. just about anything written about the region by The Economist, it's painful to watch that supposed serious medium try to impose its false agenda and never, ever admit error down the line). Anyway, to the subject and here's a little list of people who fill the following categories:
  • Active on Twitter
  • Write all or majority of the time in English
  • Know their part of the region really well
  • Smart and insightful on regional and/or business current affairs

The five here aren't everybody I know and admire (so followers, please don't be offended and nudge me if you think you should be on the list too...can always do another y'know), but these five are definitely people worth following on Twitter if you're into LatAm and would like to read about the place in English:
@fbajak AP's Frank Bajak knows his Andean region South America backwards, highly respected reporter, breaks big stories, unafraid of speaking truth to power.  
@CentAmPolMike Mike Allison is an academic who specializes in Central American politics. Sees and reports on things I'd otherwise miss.  
@Vinncent Vincent Bevins is a newswire reporter and a total expert on Brazil. Has that mix of basic intelligence, jaded cynicism and streetwise that many of the best journalists share. 
@elizondogabriel Gabriel Elizondo also does Brazil but has deep knowledge of the wider region, too. Works for Al Jazz and does great reporting, plus often breaks news via Twitter in realtime. 
@guacamayan Setty knows his Venezuela, knows his Chile, knows plenty about Colombia and other corners of South America, too.

Hit the links above to go straight to their respective Twitter pages. And follow them.

PS: Here's another, so make it six. @colincdocherty Colin Docherty, an Aussie who lives in and has a superb knowledge of Argentina.

PPS: Yes reader TF, they're all men. I scratched my head about that too and the best reply I have is that the women I follow (there are plenty) are more often tweeters in Spanish language than English. And I thought about it again and maybe just maybe it's something about males being more willing to work abroad in journalism, but I honestly don't have a good answer. 

*occasionally Portuguese

Whereas me, I've been bullish copper these last few weeks

As subscribers know, as they're almost certainly thoroughly sick of hearing about the metal in edition upon edition of monotonous script in The IKN Weekly, all "Copper this, copper that, copper gonna go up, copper better, copper blahblahblah", and a couple of new recos in copper juniors to boot.


Mind you, it's turning out to be the right call, so maybe being boring's good after all. Go figure.

Here's an excellent lesson about gold sector analysis

It's from Gary over at Biiwii and you can read it by clicking this link. Here's an extract which also gives a window into why I think Gary is head and shoulders above the vast majority of technical analysts when it comes to reading a chart:

I have looked into these entities and come away not knowing whether to laugh or cry at the head spinning array of calls, up down and all around. 
Still, some gold bugs lap this shit up, as if the chart jockeys have some secret sauce to success.  Look folks, a chart is just a chart.  Your brain, b/s detector, fundamental knowledge and experience all play into a well founded investment stance.
Whole thing here

7/23/14

Northern Miner and irony

Reader 'M' kindly sends in this shot of a clipping from a late June edition of The Northern Miner:


Well, I laughed.

How Hochschild (HOC.L) is selling its remainder of Gold Resource Corp (GORO) $GORO

It's doing it everso quietly, little by little, let's not draw attention, let's not upset the market:


Mind you, it still has over 5.7m shares left to dump so you kinda get the feeling that at some point or other somebody's going to notice. 

Or maybe they've noticed just this minute?

Peru re-shuffles its cabinet. Again

For those who care (and I don't, not anymore), Prime Minister Rene Cornejo handed in his resignation due to yet another one of those TV investigation reports that dig up a scandal and as a result, the President of Peru yesterday ordered her husband, the head of state, to put a friend of hers in as the new PM and change a few ministers, too. Read about it in several English language reports, try Goggle and put in "Ana Jara" "Prime Minister" and if that doesn't work, add "Banana Republic" and "Ollanta lame duck" to the mix.

I have a growing theory about the number of resignations due to scandals and suchlike in the halls of the Peruvian government. In rough terms, what we have is old guard politicians being re-cycled by somebody with little clue. Those old guard politicos come from the classically corrupt Peruvian political system and to have got this far up the slippery pole, are near certain to have skeletons of various shapes and sizes in their closets. But with the advent of the internet and availability of information to all, it's getting easier and easier for opponents to dig out these nuggets and much more difficult to keep them covered up. So, as soon as these dirtbag politicos get a high level job out come the revelations of past dirty deeds or deals, or if not (as seems to be in Cornejo's case) all the opposition need do is wait until the oldschool guy uses his (with the corrupt it's almost always male) preferred modus operandi in order to solve a problem "in that special way" and they bag another victim.

Anyway, that's just me and my little pet theory. What we do know for a fact is that Ollanta Humala has now burned through six Prime Ministers in the first three years of his five year tenure, which is worse than stupid. Anyone who takes this administration seriously from now on needs their head examining, the people really running the country are the people printing the newspapers.

Charts of the day are...

...these two, showing Chinese metals import (and and by implication export) figures...



...and are taken from this report by Andy Home of Reuters, who is must-read on the subject as always. So go read him now.

By the way, I remember reading a report out of Goldman Sachs in 2006, which talked in part about China's ImpEx mix for industrial metals had the same type of chart as the top one of these two. The impressive thing is noting just how little the ratio for copper has moved, which says one clear thing: China's never going to have enough copper on its home soil and is always going to have to look abroad for the raw material. 

7/22/14

Comparing the USA's SEC to Canada's OSC/BCSC/etc, Pretium Resources $PVG edition

The USA's SEC:

SEC Charges Investor Relations Executive With Insider Trading While Preparing Clients’ Press Releases
07/22/2014 10:45 AM EDT
The Securities and Exchange Commission today charged a partner at a New York-based investor relations firm with insider trading on confidential information he learned about two clients while he helped prepare their press releases.
The SEC alleges that Kevin McGrath sold his shares in Misonix Inc. upon learning that the company continues here

And with that topical reminder of what a real securities commission does on a daily basis, we move to yesterday afternoon's trading and today's news from PVG and Canada's OSC, BCSC etc:

Argentina: Is it or is it not a default?*

Today July 22nd sees a key meeting between Judge Griesa and the "holdouts", or "hard-done by bondholders who deserve justice" or "vulture funds" whatever other name you want to put to Singer, NML and friends. According to the northern English language press, if Griesa doesn't change his pari passu-based position, allow a stay and let the 92-and-bits percent of bondholders that accepted the revised haircut terms a few years ago receive interest payments, come the end of this month when the grace period ends Argentina will be in default. 

That above is a bit of a mouthful, but long story short all your hear in the English press on the subject, "Argentina Facing Default" etc. As a result, we again heard from Argentina's cabinet minister Jorge Capitanich this morning who insisted (and I've lost count how many times he's used this official government line in the last weeks) that whatever happens Argentina will not be in default of its debt, because Argentina has paid its dues. Which brings us to the question: Will Argentina be in default come August 1st if nothing changes? Points to make:
  • Argentina says it has paid. Which is true, it has indeed deposited the cash it owes for interest payments to the non-holdouters at the relevant banks. Therefore, says Argentina, if you pay you can't be in default. That's a position that has plenty of common sense and logic on its side (for further reading and backing, try the Webster's dictionary definition of the word "default").
  • However, Judge Griesa and assembled says that unless Argentina pays everybody, including the holdouts, then it's breaking its contract and nobody gets paid any more. That's the essence of his pari passu judgment of a couple of years ago and the problem set up by the Supreme Court ratification of his call in June this year, the one that's brought it all to a head.
  • In other words says Griesa/NML etc, Argentina has paid the people it wants to pay, it hasn't paid everyone. Whereas Argentina says it's paid everyone it has an agreement with but also wants to reach a negotiated agreement with the holdouts, so until that time let's put a freeze on the current judgment (the 'stay' it's looking for) until such time etc etc.
  • So in the eyes of Argentina it's not going to be in default because a pesky judge stopping the money from flowing is the real culprit, while in the eyes of Griesa/NML etc Argentina will be in default because if you're going to pay you have to pay everybody else you're breaking the deal. In their eyes, Argentina's selective payment to 92% is the same as deciding to pay 0% or 50% or 25% or 80% or whatever else portion, they're not in a position to choose who does and doesn't get paid. 
  • Therefore, the use of the word "default" in this matter is now in the eyes of the beholder. It's moved from an objective matter of law to a subjective matter of justice. Argentina's position will be, in essence, "It's not default because the law's an ass". NML/Griesa etc position is "It is default because the law says it's default" and importantly, the fact that Griesa has frozen payments to the vast majority of non-holdout bondholders who agreed to Argentina's haircut terms years ago is beside the point. 


So yes, Argentina is facing default in the eyes of the law because when it comes down to it, like it or not, Griesa IS the law, he's an octagenarian Judge Dredd and to add to the weight of his Dreddness, since June 2014 he's had the US Supreme Court on his side. For sure Argentina can claim the USA has no right to pass judgment on a foreign sovereign state and on that it may have a point, the country might even claim Griesa is in the pocket of the vulture funds, but the fact remains that when it signed up to the bonds deal it did so saying that the US courts would rule on any disagreement and hey, here we are. We've seen the term "technical default" bandied around as well, which tries to add nuance and differentiate between the binary situation. Sadly (and on this I fully agree with Capitanich and the Arg govt) it's a meaningless term because the bottom line is that Argentina is facing default, plain and simple undiluted default. It may be unjust and in fact I firmly believe it to be unjust, but since when did the law care about a priori justice? Laws do not create justice, laws change due to justice. So, nice and clear here:

Yes, if nothing changes Argentina's going into default.

P.S. For my Argentine friends now tuning in: Quien hace la ley hace la trampa.

*With apologies for using a question mark in the title line, it was difficult to avoid this time even though it comes across as one of those annoying 21st century clickbait hooks

Fortuna Silver (FVI.to) (FSM) $FSM insider trading

Hey, you remember back on the morning of July 10th when IKN noted Fortuna Silver's (FVI.to) (FSM) 2q14 production as pretty good, but also that the decent numbers looked fully baked into the share price at the moment? Well, looks like the company insiders agree:


The share price was $6.47 the morning of the numbers. It's $6.11 now. Just sayin'. Screenshot of the insider selling chart from here.




Chart of the day is...

...two years of the Gold/Copper ratio:


It's quiet out there. Perhaps...a little...too quiet.

7/21/14

Sulphuric acid

If you didn't know, even at the best of times it's not easy to get your hands on really solid fundamental research on the sulphuric acid market (or sulfuric acid, if you insist). That's why I've dedicated a decent slug of my day to reading this really great report out of Chile's Cochilco on the country's supply/demand situation for the acid of choice in the world of copper. It's a great article, full of detail and you may be interested to learn that Chile expects to turn to net surplus  for H2SO4 come the year 2020.

Mining wonks will like this link.


Pretium (PVG) $PVG (PVG.to) set to raise...

...about three months' worth of working capital. NR here.

Good job nobody got tipped off about it, right Quarterbrain?

New Peru law weakens environmental safeguards

An important report from AP/Wapo. Here's how it kicks off

Dozens of international groups, the United Nations, and even Peru’s own citizen ombudsman are objecting to a new law that weakens environmental protections in the Andean nation even as it prepares to host international climate talks this year. 
The law, aimed at increasing investment, strips Peru’s six-year-old environment ministry of jurisdiction over air, soil and water quality standards, as well as its ability to set limits for harmful substances. It also eliminates the ministry’s power to establish nature reserves exempt from mining and oil-drilling. 
The nation pocked by more than 300 major mines already offers the industry incentives unmatched in the Americas, even by mining-friendly Chile and Mexico. 
Enacted July 11 by President Ollanta Humala after limited debate in Congress, the new law also further streamlines environmental reviews for new projects, and, for the next three years, lowers by half the maximum fines for all but the most serious of environmental violations. 
At the same time, it re-establishes tax breaks for big mining multinationals, which already enjoy such (continues here)

San Gold (SGR.to) and Kerr Mines (KER.to)

Not really my usual stomping ground way up North, but the news today demands a little recognition on the blog and a general comment of WHAT THE FUCK????

Lemme get this one straight: In June the ex-CEO of Kerr Mines joins Sans Gold as its new CEO. Then a month and a bit later, Sans Gold decides it's in the best interest of it and its shareholders to join forces with a company that has 1.3 billion (with a B) shares out, no cash, and has been melding itself together with other no-hoper Moose Pasture owners like Bear Lake and American Bonanza (that last name a particularly ironic choice). Ah, whatever happened to the heady days when Rice Lake was the new Red Lake...

That phrase occasionally used on these pages about how you gringos will buy anything comes to mind today. Applicable in spades.

UPDATE: Brian Quast of BMO today sent out one of the most succinct and wonderful notes to clients I've seen for a while regarding the deal. Here's what he said (yup, it's the whole thing):

  • Kerr Mines had a cash balance of ~$4M vs. ~$5M in debt as of Dec. 31, 2013 and currently has a market capitalization of ~$40M. BMO Research will consider valuation impacts when the definitive agreement is executed and the exchange ratio is set.

Brevity is the soul of wit. Nicely done, Quast.


The IKN Weekly, out now


IKN271 has just been sent to subscribers and to Cyril Connolly.

7/20/14

Tahoe Resources (TAHO) $TAHO (THO.to)

A fantastic piece of investigative journalism by Guatemala's Plaza Publica website on the current situation in San Rafael Las Flores, location of Tahoe Resources' Escobal mine. Right here.

It is your patriotic duty to be stupid and kill people

Juanita Jean draws our eyes to a most wonderful report:

"… the further our respondents thought that Ukraine was from its actual location, the more they wanted the U.S. to intervene militarily. Even controlling for a series of demographic characteristics and participants’ general foreign policy attitudes, we found that the less accurate our participants were, the more they wanted the U.S. to use force."
Or in her words, "...my favorite poll ever simply because it proves that the dumber you are, the more likely you want to go to war." Nailed it. Go see the whole thing and the great, nay amazing map that goes with it.

I will never read Michael "Mish" Shedlock again

He's been going tinfoil for quite a while, but today's post in which he tries to pass off a one month old Youtube as a video of the shooting down of MH17, along with conjecture that the plane (which is obviously not MH17) was under control as it dived, is nauseating. 

Be clear: The wreckage was scattering over 15km, the plane broke up either instantly or near-instantly, the people on board would not have suffered which is just about the only small mercy available for their loved ones. Shedlock wants them to believe otherwise, for the sake of some hits on his blog. What a piece of shit.

No, I'm not linking to his site. Find it yourself if you must, but the Youtube he features in his post entitled "Video of MH17 being Hit by Missile" (which I repeat is NOT MH17) is here.

UPDATE: Iwnattos agrees and adds more to the mix as well. Thank you, Iwnattos.


Johnny Winter

Thanks due to Twitterpal @chuca 

Take a look at Winter's face.
Notice who's on bass and who's on lead.


Johnny Winter, RIP.