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8/14/18

This is a very good article

Keith Weiner on all sorts of things, including the Dollar, trade (deficits), global growth, the trade war and tariffs and yes, gold too. An excellent, easy to read framework for what is going on in the macro today and I cannot recommend it too highly. In fact, I'd rate it as required reading for anyone regular visitor to this blog, no matter how experienced you are in capital markets.

Go here and read it yourself. Thanks for putting it in front of me, Gary.

Argentina and the calm after (and before) the storm (from IKN480, dated August 5th)

It seems like weeks in the past, but in fact it was only eight days ago that the following piece, "Argentina and the calm after (and before) the storm" was published by your humble scribe in IKN480, dated August 5th. And here we are, lo and behold, just eight days on the Peso (ARS) is plumbing new lows, down 8.6% from the time of the note. 

I didn't expect Argentina to start falling apart again quite this quickly, but the falling apart thing was and still is a given and this evening I'm reading of all sorts of bizarre out of the country too, the pro-Macri local media (i.e. nearly all the main channels) trying desperately to lipstick the pig of a situation. The latest piece of wonderment is how the government plans to phase out the LEBAC (short term Peso bonds, currently paying an official 45% annual interest rate and close to 60% on the secondary market) by the end of the year with just a wave of the magic wand and "the deployment of reserves" (i.e. throwing good Dollars after bad local paper). It's 1998 all over again, quite remarkable to see this country willingly commit financial suicide on such a regular basis and not learn a jot from its own history.

Anyway, have a read at what subscribers saw two issues ago.

Argentina and the calm after (and before) the storm
I ran a running commentary on the Argentina Peso (ARS) as it did its collapsing show earlier this year, so for the sake of balance it’s only right to note that since it peaked at just under 29 to the US Dollars a few weeks ago, the government and its emergency policies (that include turning the dollar spigot on and raising Peso interest rates sky high) have stemmed the bleeding. The Peso has traded for the last month in a reasonably tight band of just over 27 to just under 28, with 28.24 marked this weekend.

The calm will not last. For one thing, the government is mopping up the Peso liquidity by offering 49% annual interest on its short-term paper and if anyone reading this thinks that is sustainable they are wasting their money by subscribing to a financial publication. At some point the interest rate must drop (and not just by a point or three, there’s no virtuous circle that begins this high) and to do that, the real economy needs to improve. Unfortunately the reality is the exact opposite and a quick trawl through headlines on the very useful AgendAR website (12) shows supermarket sales down 2% year-over-year (YoY), retail sales down 4% YoY, industrial production down 8.1%, and the Central Bank forecasting a GDP of negative 0.3% for 2018. To put that last one into context, the December the Organisation for Economic Co-operation and Development (OECD) was forecasting +3.2% for the country and in May downgraded its forecast to 2.0%. As recently as June, Argentina’s FinMin Dujovne said that growth would be +1.2% this year. News of large scale job losses is becoming common, with the auto industry now being hit (despite that cheap Peso making production competitive for foreign markets).

Meanwhile, on the other side of the equation the Central Bank now forecasts 31.8% annual inflation for the country. We’ve just seen electricity prices rise again by 30% (August 1st, the hikes are non-stop) and fuel prices are about to rise between 4% and 8%, depending on the type of hydrocarbon. That list continues as well, so when you combine both sides of the coin you come to one simple conclusion; Stagflation.

Argentina is in a deep financial mess and just because it’s not made any headlines recently, it doesn’t mean that the crisis is over. This weekend the Argentina airwaves are filled with apparent smoking gun evidence of notebooks from the Kirchner era of Argentina that document that government’s corruption and while they may or may not be true (I think they’re the real deal, the CFK people are screaming that they’re fake), the noise will blow over. Be clear that even if CFK and her buddies end up in jail (unlikely CFK, possible to probable others) once the dust has settled Argentina will still have all its economic pain in front of it. In 2016, Macri told them the turning point would be in 2017. In late 2017 he and his government promised things would be better in 2018 (and backed by all the world’s friendly financial bodies who all predicted GDP growth…all wrong). It’s now Q3 of 2018 and Argentina is in recession, with no clear path out. Time is running out for Macri and don’t think for a second that CFK is his only political enemy. Avoid this country until further notice.



8/13/18

TMAC Resources (TMR.to) 2q18 financials

They were posted tonight on SEDAR, here are a couple of charts:



Lots more where they came from, too. This is not good, people. Not good at all.

Congratulations, Argentina! A new record!

A round of applause for the Macri government, which has managed to push the Argentina Peso (ARS) over the 30-to-1 barrier against the US Dollar (USD) for the first time ever:


Yes, Mauri, we know you have inflation under control. Of course, relax. Now, cue up those front page headlines about how Chileans are happy to come and buy in Buenos Aires and how that's going to benefit the economy. You know it makes sense.

You guys can keep your Turkish Lira, I'll take the 62.3% deval in the Argy Peso in 2018 YTD and the total fruitcake country behind it every single time.

The Barrick (ABX) Lagunas Norte gold mine in Peru is under blockade by locals

As of this morning, the nearby town of Chuyugual is blocking the roads around the Lagunas Norte gold mine in La Libertad, Peru. They say the protest is due to the constant abuses they have suffered at the hands of the company, with water pollution issues at the top of their list. Apparently, representatives from Barrick (ABX) went to speak with the this morning but were given short shrift.

It's worth noting that as Lagunas Norte is a big operation, this type of protest is unlikely to have any immediate effect on production. However, it would seem the locals have been trying to at least negotiate with ABX for a long period of time and are now at their wits end, so if the blockade moves from hours and into days it could have a meaningful effect on the company.

The IKN Weekly, out now


No, this is not a subtle comment on the current 
state of the gold market. It's just a cool picture.


IKN481 has just been sent to subscribers. Words, pictures and numbers, there are always numbers.

8/12/18

You too should read Notes From The Rabbit Hole, edition 512

As usual for a Sunday morning Gary Tanashian's subscription weekly, Notes from The Rabbit Hole (NFTRH) plopped into my inbox and, despite being a bit pushed for time today, I decided to open and skim it before getting on with my own stuff and then giving it a good read later. After about five minutes I stopped skimming and started reading. That was about 45 minutes ago and now I'm even further behind schedule, but damn it was worth it.

Even by Gary's high standards, NFTRH 512 is a tour de force. Anyone wanting to know about the US Dollar, gold and how to set their portfolio for the rest of the year should read it. Better still, subscribe to him (right here, it's cheap) and read it. Top class work, Gary. Applause and thank you for getting my head right.

8/11/18

Dear RayJames

I will now start to post everything you publish to your clients, here on the blog, for free.

If you want to read my subscription weekly, subscribe to it you tightwads.

The Friday OT: Johnny Cash; Folsom Prison Blues

This the live version he did at San Quentin jail (including one of the most famous gig intros of all-time, "Hello I'm Johnny Cash"). For reader GS.



Youtube here.

8/10/18

Barrick (ABX): Thornton says they're not buying Detour Gold (DGC.to)

Barrick (ABX) Chair John Thornton gave a wide-ranging interview to Bloomie today with plenty of corners covered (sounds like he wants to get rid of those "he's a banker he doesn't know mining" comments that have started to swirl), but the paydirt comment is the one about Detour Gold (DGC.to) and whether or not they're interested in buying:


"The company will be as disciplined in making acquisitions as it was divesting assets, Thornton said, and that means it will not be buying Detour Gold Corp. Barrick was recently said to be the undisclosed gold miner cited by Paulson & Co. as interested in potentially buying Detour. It doesn’t meet the three criteria to be a tier 1 mine, Thornton said, “so guess what the answer is as to whether we are going to buy it. The answer is no.”"

So now you know.

In this weekend's edition of The IKN Weekly

A site visit report on a very interesting gold exploration company.

8/9/18

Today's view

Was very nice.



Details on Sunday, subscribers.