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The sport photo of the year was captured today

You are the manager of Bayern Munich.
You're in a tight home match, score is 2-2.
Your team score a vital third goal.
Your reaction is this:

Pep Guardiola understands the true meaning of sport.

Tito Vilanova, QEPD

For more on the 30+ year bond between Pep Guardiola and Tito Vilanova, this Sid Lowe tribute in The Guardian is beautifully written and strongly recommended.


The Friday OT: Devo; Whip It


After this slice of wonderful yesterday, it was kind of inevitable. Did you know this vid was banned for its lewd content at the time? Times change, oh yes they do.

Yet another Kitco weekly gold survey fail

Kitco's monkeys with dartboards again get the call wrong. 

Last week 57.1% of the "experts" surveyed said gold would drop (with 33.3% saying it would rise, 9.5% remain unchanged). The result for the week was a 0.55% gain on the price of gold, as measured by our GLD proxy. This means that the running total on our 33 weeks of coverage is that they've been right just 13 times. Also (probably more significantly), of the 23 occasions they've offered a strong signal (i.e more than 50% in one of the three options) they've made the correct call just eight times.

Monkeys. With. Dartboards.

It's about time Kitco gave us the names of these dumbasses, so we can avoid their other market forecasts like the plague too.

Meanwhile, bad news for the gold price in the week to come: 63.2% of these jokers are calling it higher this time next week. Fear the worst.

What's changed in the Gold Headline Generator™?

Back in late January, with gold selling at one thousand, two hundred and sixty United States dollars per troy ounce (plus shipping), IKN put together this post which had this as its centrepiece:

Your humble scribe then showed it in action during one of those happy jolly "Hey guys, let's tank gold $20" moments that the market so loves to throw our way:

And I got to thinking last night about what had changed on the table and maybe these days we need Ukraine there some place, but apart from that it all works fine. Which leads directly to the conclusion that we've gone through three months of noise on gold with the net end result $50 added to its price, despite all the wailings of the prophets of doom on one side and the to-da-mooners on the other. 

Bottom line: A helluva lot of complete bollocks is spoken about gold.

Your topical Ecuador kicks out gringos story of the day

Right on time after yesterday evenings little rant. Here's AP and here's how it starts:
QUITO, Ecuador (AP) — Ecuador has ordered all 20 Defense Department employees in the U.S. Embassy's military group to leave the country by month's end, the Associated Press has learned.
The group was ordered to halt operations in Ecuador in a letter dated April 7, said embassy spokesman Jeffrey Weinshenker.
The AP was first alerted to the expulsions by a senior Ecuadorean official who refused to be identified by name due to the information's sensitive nature.
President Rafael Correa had publicly complained in January that Washington had too many military officers in Ecuador, claiming there were 50, and said they had been "infiltrated in all sectors." At the time, he said he planned to order some to leave.
Weinshenker said the military group continues here

Many growth stories, selective coverage

The way in which good news from supposedly unfriendly countries in the LatAm region is ignored isn't a new phenomenon, but the way in which the news today from Bolivia,  that its 2013 GDP growth number at 6.78% represents a 25 year record, was greeted by virtually zero coverage gave a classic example upon which we might chew. After all, here's a country going great guns and expanding its economy rapidly but the world of serious people and their serious numbers seems wont to ignore the news. 

Why is that so?

That's the question that floated round this humble scribe's head today, so after a while and a bit of data compilation this chart appeared, that shows one supposedly "friendly country" annual GDP growth (Peru) next to two supposedly "unfriendlies" (Bolivia and Ecuador) in the period since 2000.

As always, such datasets are going to be noisy (in fact, GDP figures themselves are approximates at best and liable to many revisions) but I put forward that the graph shows two main things:

A: The three countries' development is roughly equal over time. That's the big picture verdict, but they're obviously not exact fits which brings us the main thing number two:

B: Aside a couple of punctual peak/trough moments, there are three periods that show differences worth mentioning. They're marked on the chart as...
1) The period when Peru outstripped the other two in size of growth. From its timing, it fits with the price rises experienced by its two main exports of copper and gold, as well as the growth of free market policies in the country (under the Toledo and then the García governments).  
2) The drops in GDP that resulted from the 2008 financial/U.S housing bubble/Lehman etc crisis were sharp, but Bolivia fared better than the other two. The best guess here is that exports of all types were badly hit, but as Bolivia's main export and source of currency, natgas, was sold under long-term fixed price contracts it had a better buffer zone. 
3) The last couple of years, which has seen decadence in Ecuador and Peru from higher levels, while Bolivia's growth has accelerated. Both Ecuador's and Peru's growth rates are still laudable however, just less than previous years. Meanwhile, GDP growth really seems to be taking hold in Bolivia and a virtuous circle developing.
Therefore yes, there are differences in the story (and 10 or 12 lines is hardly comprehensive on any country, let alone three, so I'm painting in the broadest strokes here) but the question is, why do we the English language consuming business news audience rarely get to hear about the good things going on in Ecuador or Bolivia, but Peru gets all the poster-child-wonder-growth-new-modern-development-hooray-applause stories?

And yes, the best answer starts with the fact that Peru is deemed "friendly" by the North, it's willing to trade and do deals with Western foreign direct investment (FDI), it promotes "market friendly" policies, it welcomes the arrival of overseas capital. Meanwhile, both Ecuador and Bolivia are known for their governments who on occasion (or even quite often) rail against the 'capitalist empire' give us the "go home imperialists" rhetoric, nationalize utilities or cut deals with Chinese capitals for large works or projects (and apologies for the overuse of speech marks there, kind of necessary this time).

But this isn't politics, this is GDP! It's about the opportunity to hear about a growth story and enjoy or share the news of success of a new thrusting economy, is it? After all what we're looking at is GDP growth, a measure of the country's well-being. It doesn't matter if FDI is there and making big money, if GDP goes up it means the country is doing better by and for itself and its people, that's what's being measured here. Which brings me back to my original question and the way in which biz and economics media studiously ignores the good macro news that comes from the deemed unfriendlies: Why is that so? For me, when it all gets boiled right down the only real answer is that the English speaking media is catering to its audience and that audience doesn't give a flying fig about Bolivia or Ecuador or whether those countries' inhabitants are doing well or badly, because they can't make a profit off their backs. Whereas Peru is a hot topic because it's Open For Business and a land of opportunity, not only for Peruvians but for new cash coming in and making its own wedge. Plaudits in the business press for Peru aren't there to congratulate the country, they're published to open the greed glands of its consumers. While the flipside is that Bolivia and Ecuador don't get the happyfeely coverage because there's nothing in it for the foreign audience as long as those commie bedwetters refuse to give us gringos the chance to make coin and bring it back home.

In short, the news is being generated for the self-interest of self-centred human beings. And that's capitalism for you.


The Whip It flowchart is the best thing ever

From the world of Twitter and @billykaos, IKN is duty bound to show this piece of wonderful:

Here's the original tweet

Bolivia GDP growth kicks butt

Bolivia today announced its GDP growth for 2013 was 6.78%, the best rate since 1989:

Socialists, eh?

You can guarantee that the usual haters up North will conveniently forget just how well Evo Morales is running his country. Again. 

The need to avoid mission creep

From day one, IKN Nerve Centre™ has been crystal clear on its main market advantage: political risk for mining companies in LatAm. For sure, over the weeks and months and years it's only natural for an inquiring mind to consider the multitude of other moving parts when it comes to mining company valuations and form opinions thereof, but on too many of those subjects this humble corner of cyberspace is just another voice, without a clear baseline advantage. Sometimes IKN is right on the way gold moves, sometimes wrong. Sometimes a bullshit management team has seduced this humble and fallible scribe into its world with grand plans, wise saws and modern instances, sometimes* not. No, all those tend to be reasonably level playing fields but the real advantage we run over The Great White North is LatAm political and community risk factors. That's been shown time and again because we may only have a single clue, but you guys up there don't even have that.

All the meta-twaddle and nonsense you read above was prompted by reading GMP's call on Argonaut Gold ( this morning. They like the thing, want you to buy it and even resort to the puerile "it's a smart money buying opportunity right now" argument to get your ego stirring and you on the phone to the trading and compliance desks. Thing is, GMP and IKN could argue the toss about its valuation call on the numbers (1.15X of NAV8% is rich as hell for this thing, guys) but when it comes to its pol risk call on what's happening in Mexico, they're just being plug dumb stupid. The subject is again San Antonio in Baja California Sur State, and the line GMP uses is...

"We continue to take a conservative approach, estimating production beginning in Q4/15."

Woah! Stop! That is not a "conservative approach". The true conservative approach is estimating production that will never begin and removing the $1.30/share NAV estimate for that "asset" (word used loosely, because in fact it's the exact opposite, a liability) from the calculation. Expecting San Antonio to ramp up in 2015 and calling that a "conservative" estimate shows a complete and utter lack of understanding about the political risk factors around the project, even if you decide to disagree with IKN's own "never gonna happen" call. It's the hallmark of a nodding dog analyst who cannot speak Spanish, hasn't bothered to read up on the local situation, has no clue about the type, strength or depth of the opposition to the project and has limited their DD to a phone call to the IR department to find out the company's own viewpoint and repeated it verbatim to brokerage clients.

It's at this point that the cry of "STOP TEH STOOOPID!" often makes its appearance in an IKN post, but not today. That's because I don't want the advantage to disappear, so Canadian brokerage dumbasses, please continue to be as dumbass as ever about Latam mining politics. and GMP today is but one example. 

*On that one, most times not. Gonna give myself a little extra credit.

Chart of the day is...

...silver, dailies:

A few days ago I posited on the potential for silver as a long trade. FWIW I didn't buy the metal but have slowly and carefully, been picking at a silver junior trade (subbers know which one). Today's silver price re-lapse puts that theory in doubt and it sure looks as though the metal needs a bounce, right here right now, else stocks are going feel the welter burden of the 18 handle.

As usual, a reminder that trading mentality isn't investment mentality. I'm looking for the near-term play here, longer term stuff unrelated.

UPDATE: And bounce it did. We live in a world where an unexpected result from a very noisy US data number can add U$20 to an ounce of gold in Bangladesh. Oh the humanity.



A little more detail in private placement news releases would be appreciated. Some honesty, too:
...the proceeds of the Offering will be used for exploration and general working capital purposes. By "exploration", we refer to your money being used in order that humanity might add to its knowledge of geological anomalies. By "general working capital purposes", we refer to how our CEO is fed up with traveling coach class. And the hookers and blow, obviously. This is Vancouver, after all.

Gold/Silver ratio, miner prices, GS, things of the ilk

On this...

..., the gold/silver ratio, the song remains the same. After flicking through a few other trackers, the overall sentiment is one of a sector in wait'n'see mode, looking for a catalyst to take it lower or higher. So for the meanwhile we drift, we follow a weak trend, we wait (and if only for that your humble scribe's general call in this period to pick at and buy decent beaten down mining names is reiterated; all good things to those who wait, Clarice).

Switching gears slightly, as it happens and after making a large cup of sweet tea, sitting down, pulling up that GS note yesterday evening (ty reader N) and reading it carefully, I happen to agree on their value-oriented call that producers concentrating on cash flows and bottom lines (rather than the growth model miners, or those running to stand still at current bullion prices) look cheap and are buys on their fundies. You should know by now that I'm no fan of the house and think them complete fuckers for a whole multitude of reasons, but credit where due, that note was a good argument and well put.

GS is still talking complete stupidities about gold price, however. The juxtaposition is best explained (in my own biased brain) by one set of GS analysts doing decent, oldschool, straight, numerical, value analysis work on stocks and seeing them cheap, while the bullion lower call from the very same company is sheer political bullshittery from a different place, department and mindset. Así termina mis dos centavitos.

On RIOM and rumours

After several e-mails arriving on the same subject, a quick note (if only to staunch the flow). Yes I've heard the same rumour as you, the one that apparently made the stock pop yesterday afternoon. No I'm not going to repeat it here because it's straight hearsay and I'm long the stock, so not going to join in the games. I'll say here that it looks like a classic rumour structure, with a grain of truth in the centre but then a whole heap of guesswork and conjecture is added on top, and as such I do not believe it. That's all and apologies if this sounds cryptic to others.


Football: It's nothing personal, it's just business

Manchester United (MANU) $MANU share price this morning hit its highest level since Fergie resigned.

So now you know.

Quel surprise! After trying and failing to jawbone gold down, Goldman Sachs (GS) now likes the sector

This morning the Vampire Squid made a new call on gold and the sector. Here's the front page blurb of the PDF:
Americas: Metals & Mining: Precious
Coverage view up to Neutral; initiate on five names and adding leverage; Buy ABX.TO
Becoming more constructive on gold and silver equities; raising coverage view to Neutral. After underperforming the SPX by 21% since September 2013, gold and silver equities now appear more fairly valued, offering an average 7% total upside. We raise our coverage view to Neutral as we believe (1) more responsible capital allocation, (2) successful cost cutting initiatives, (3) a refocus on maximizing free cash flow, and (4) sound strategic portfolio optimization should improve the positioning of our companies offsetting our below-consensus outlook for commodity prices (we forecast $1,200/oz for gold from 2015 onwards).  
Carving out 3 sub-sectors; prefer exposure to Seniors; expanding our coverage by 5. We are creating three sub-sectors across our Americas – Precious Metals coverage; Seniors, Juniors, and Royalty/Streaming. We see the largest upside risk in the Senior sub-sector as we become more constructive on the sector. We are also initiating coverage on five companies (BTO.TO, AGI.TO, FNV.TO, DGC.TO and BVN) and their ADRs, where relevant. 
Still prefer the harvesters over the investors We continue to focus on low-cost, FCF-generating names with strong balance sheets and fully funded volume growth. We maintain our Buy ratings on G.TO, YRI.TO and SLW.TO. Avoid our Sell-rated names IMG.TO, PAA.TO and ELD.TO.  
Adding leverage to the portfolio; we upgrade 
ABX.TO to Buy ABX.TO has actively shrunk to profitability over the past twelve months, focusing on its key FCF generating operations and divesting non-core strategic assets. Following the equity raise in 2013, we believe the company’s financial flexibility has significantly improved.  
Initiate BTO.TO at Buy; imminent volume growth drives FCF generation. We initiate coverage of BTO.TO with a Buy. BTO.TO has imminent production growth from Otjikoto project which enhances the company’s FCF generation and should fund future development.

Though it beats me how anyone can take this house of forked tongues seriously on any of its gold-related utterings.

Chart of the day is...

...ten days of Argonaut Gold (

Maybe Mr Mkt isn't so stupid after all. Certainly hope this previous blahblah isn't to blame for the dumping.

This Thing Isn't Like That Thing, Dynasty Metals & Mining ( edition

This thing: There was "an incident" at's operation in Ecuador yesterday Sunday 20th April and we got to hear about it from the company this evening. In the NR, DMM wrote:
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr 21, 2014) - Dynasty Metals & Mining Inc. ("Dynasty" or the "Company") (DMM.TO)(DMMIF) reports that on April 20, 2014 it safely evacuated all employees from the main decline, Cabo de Hornos (the "Mine"), at its Zaruma Gold Project, as a precautionary measure due to a significant amount of smoke that was being emitted by a generator which was located inside the Mine, near the portal entrance. 
The smoke was produced as a result of a poor fuel mix in the generator, and although a significant amount of smoke was emitted there was no fire in the Mine or generator. The evacuation of the Mine meant that the Company missed the day shift of mining operations, however mine operations were quickly recommenced and is now operating as usual. 
The company thanks the government for their cooperation on this matter. 
About Dynasty Metals & Mining

That thing: Here's an excerpt from the local press about the same incident:
"The 66 workers managed to stay in a ventilated zone for five hours while rescue operations took place; 25 of them were hospitalized and 12 were admitted due to asfixia."
So much for the sanguine NR out of the company all cool and calm and nothing to see here move along. With 66 workers trapped and 12 of those suffering from enough breathing problems to be checked into hospital beds, you kind of get the feeling DMM missed a very big bullet this Easter weekend.


Turns out ARENA's Norman Quijano nearly won the El Salvador election by cutting deals with the worst street gangs in The Americas

On March 9th, LatAm political watchers of all stripes were surprised to see just how close Norman Quijano of the ARENA got to beating Salvador Sánchez Cerén of FMLN in El Salvador's second round run-off vote for President. Over 10 points down on Sánchez Cerén in round one, Quijano got to within a waferthin 0.22% of winning the whole caboodle in what would have been an almighty shock result. It was so close that Quijano refused to acknowledge defeat, accused FMLN of fraud at the polls and wouldn't climb down until the Supreme Court in the country had handed down a judgement.

Well, thanks to this excellent report from El Salvador's El Faro, we learn that Norman Quijano got that close because he decided to enter into secret deals with the notorious (and that's putting it mildly) street gangs of El Salvador, such as the Mara Salvatrucha and Barrio 18 (learn just how nasty those groups are on those EngLang wiki links, but rest assured these are very nasty people indeed). 

It's a long and fascinating piece of investigative work published by El Faro so a few words here does it little justice, but to try to get it all into a nutshell after the round one defeat the ARENA candidate agreed to soften its hardline policy with the gangs and offer them an active role in decision-making in the country in return for the gangs' pledges to stop forcing people to vote against ARENA and for FMLN in the run-off. 

You really need to read the whole thing, but the bottom line is that we came THAT close to getting a hard right wing President in El Salvador who would have given a whole heap of leeway to gangs heavily involved with drug running, murder, human trafficking, extorsion, prostitution, child prostitution and several other branches of organized crime to boot. And yes, of course Quijano was the USA right wing's preferred candidate while accusing the leftist FMLN of exactly the type of things that are now being uncovered about their champion. What else would you expect?

Now I'm no fan of silver...

...and on that there's plenty of evidence to wade through on this humble corner of cyberspace. Not a big fan of technical analysis, either. However this...

...does look rather buyable. For a trade, at least.

UPDATE: Iwnattos offers the rebuttal. Right on time.

A century of neuroses

1910s: Slaughtered in war
1920s: Rise of fascism
1930s: Ditto
1940s: Slaughtered in war fighting rise of fascism
1950s: Disease
1960s: Collapse of society, also nuclear war
1970s: Nuclear war, also collapse of society
1980s: Nuclear war
1990s: Not rich enough
2000s: Need that small electronic gadget
2010s: Excuse me, but I said skimmed milk for this latte

Chart of the day is...

...12 months of GLD, SLV, GDX, GDXJ and the S&P500 index:

Big money wins.


The IKN Weekly, out now

IKN258 has just been sent to subscribers. Moo.

A short, secular poem for Easter

Nudged forward by Tom Holland and the news which he picked up on about hedgehogs being threatened with extinction, IKN offers up a short but famous verse. A good read for Easter Day, whatever your religious persuasion might be.

The Mower
Philip Larkin

The mower stalled, twice; kneeling, I found   
A hedgehog jammed up against the blades,   
Killed. It had been in the long grass.

I had seen it before, and even fed it, once.   
Now I had mauled its unobtrusive world   
Unmendably. Burial was no help:

Next morning I got up and it did not.
The first day after a death, the new absence   
Is always the same; we should be careful

Of each other, we should be kind   
While there is still time.

Peru Presidential polling: Ollanta hits a new low

Admittedly it's inside the margin of error, but the 24% approval scored by Ollanta in today's monthly ratings snapshot from Ipsos is his new low as President.

So, he sucks. What's new? Data here

Cam Hui on greed

A good one for Easter Sunday reflection, from Cam Hui over at Humble Student of the Markets. I do like it when he goes off on his semi-OT tangents.