start here

start here

The Daily IKN email digest, get all daily posts sent to you next day (& no ads)

4/19/14

Mike LaSusa with a good analysis of Venezuela today

One thing that strikes this reader about the information provided in the English language about Venezuela to the world is the role reversal of traditional media sources and blogs; for most other subjects the mainstream provides the measured voice and (reasonably, with editorial slant showing) factual reporting while blogs steam off on their tangents and stomp their feet on soapboxes. With Venezuela it's the other way around and if you want to read reasonable viewpoints that examine facts and opinions of both sides, you're far better off avoiding the agenda-ridden high traffic shows. 

In this post, Mike LaSusa puts together a measured view of how Venezuela looks today, as the worst of the protest violence recedes. Here's how he wraps things up, but you'd do well to read it all because it's far more nuanced than a single paragraph can show:
It remains to be seen what will come of the peace negotiations, and there are real issues President Maduro has to address aside from the recent social unrest. However, with deepening split between those who see Capriles as a sellout and those who view the hardcore wing as anti-democratic extremists, it will be difficult for the opposition to present itself as a coherent alternative to the well-established Chavista system. As the saying goes, “better the devil you know than the devil you don’t.”

4/18/14

The WSJ scoops on Barrick $ABX (ABX), Newmont $NEM (NEM) and failed merger talks: Thoughts arising

We're going to have all sorts of repercussions and bouncing of news this weekend from this WSJ report on the apparent failed merger talks between ABX and NEM. As long as the intel is sound it's a  nice scoop for the WSJ team for sure ( @GillianTan @macdonaldajm @DanaMattioli ) and as a house like WSJ is unlikely to have run the story without decent reason we can be fairly confident of its veracity too (have to trust people at some point, right?). It also fits right in with ABX's specific situation, as it's well known that just about everything they have is up for sale at the right price. Therefore, NEM could feasibly swoop in and pick up the whole lot at a nominal discount (while of course both sides carefully explain to the world that it's a 50/50 merger of equals. Right).  However there are caveats that come with the news and here's a handful by way of IKN-type reaction:
1) There's scant detail offered, apart from the fact that talks broke down. Shout 'duh' if you like, but it also means the journos weren't given massive inside track material.
2) The news means that the talks broke down, i.e. the main takeaway here is that there isn't going to be a merger. Duh again, but Occam's Razor beats derived speculation so don't expect some massive stoking on Monday's markets for gold majors just because of this.
3) This isn't the first time ABX and NEM have talked seriously about a deal, but just like before it's seen as a very difficult fit. Both companies have baggage, noisy balance sheets, uncertain growth profiles. What's more there'd be internal opposition from both sides about any deal (middle management, upper management, even high level execs sweating on the phrase "cost synergies" and how it relates to "pink slips"). That and a dozen other reasons why this mooted merger has failed before and apparently failed again. It's not one we should ever hold our collective breaths on.
Finally, it wouldn't surprise me if there's a larger game being played here. I mean, just for one example, it's understood down Chile way that ABX wants to JV with Chinese capitals (Citic) on Pascua Lama and there'd be nothing better to chivvy a hesitant partner into signing on the dotted line than a nicely sourced (and easily deniable) story about the big catch almost getting away. But hey, that's just my squirmy brain being squirmy, right Mr Munk?

PS: And another thing; Good Friday? This news leaked at the start of a long weekend (and WSJ can't afford to sit on it for fear of being out-scooped)? Hmmmm....


Not a clue where Reuters is getting Peru mining report ideas from

Not a clue.

(Reuters) - Gold production in Peru, the world's sixth biggest exporter of the precious metal, will likely either plateau or dip slightly this year compared with 2013, mining companies, analysts and the government said.
Gold output will fall by at least 4 percent in 2014 to between 4.4 million and 4.6 million ounces, according to company and analyst estimates.
But the government hopes continues here


And you only have to wait a mere six days from the IKN post to that yearned-for moment when we get approval from Reuters, too. Oh how we are anointed.

The Kitco gold forecast debate rages on

Rages, I say! Rrrawwrr

After the original post which pointed out the useless calls made by Kitco's gold price experts, then this from mickeyman, then this, then this, then other things, Mickeyman over at World complex goes further in his "yeah but it's not even any good as a contrary indicator call Otto, sorry" opinion in this post (as usual, great graphs to back up his call). so I left this underneath in his comments section...
Leaving aside the Time Lord thing, I've already noted in a couple of places (admittedly intuitively) that the contrary indication is more obvious on the "strong signal" weeks, i.e. when any option gets more than 50% of the term-used-loosely-expert opinion. In other words, the more vehement the term-used-loosely-expert opinions, the more likely it is to be wrong. Isn't that the archetypical definition of contrary indicator?

...because I do think there's still a decent chance of a contrary (i.e. potential money making trade) indicator buried here. Anyway, go read his latest if you're suitably greedy or numbernerdy (guilty both charges, m'lud) 

The Ubinas volcano in Peru is entering into an eruption phase

Here's a pretty cool video...


...that was shown on Peru news TV last night of one of the explosions at the Ubinas volcano in the Southern region of Moquegua yesterday. This morning the alert level has been raised further and 4,000 people (plus many thousands of head of livestock) are being evacuated.

However, overall Ubinas isn't a volcano that the world should fret about unless you live very close to it, within let's say 20km or so (and what's more, it's a sparsely populated area). Ubinas is one of the most active volcanoes in the Andean chain at the moment and belches out pretty regularly, but in this cycle at least (100+ years, which is like a human yesterday in geological timespans) hasn't gone in for a catastrophic full blown eruption. Ash and health issues for locals, yes. More activity and regional nuisance, yes. Mount St Helens II, very unlikely indeed. 

Good Friday Art (repeat)

FWIW, repeated from this April 2011 post and this one in 2012. Christ of St. John of the Cross, Salvador Dali, 1951. People love it, people hate it, but it's one of the few paintings around that are truly breathtaking when witnessed. Even its haters agree on that.

 click to enlarge (gets very big)

Further comments from the man himself, Dali. 
"In the first place, in 1950, I had a 'cosmic dream' in which I saw this image in colour and which in my dream represented the 'nucleus of the atom.' This nucleus later took on a metaphysical sense; I considered it 'the very unity of the universe,' the Christ!"
For more, here's the wiki page on the painting.

4/17/14

Gabo


And this weekend...

...is a long one. And part of it will be spent by your humble scribe updating the call on Dalradian Resources (DNA.to), one of the rare winners we've called this year (bot the thing at 65c), after its pretty interesting NR earlier this week. So that will keep me out of mischief, as will laying the egg hunt for the kids.

BREAKING: Excellent, bullish news for the price of gold next week

Considering the record of these charlatans and how they're an obvious contrary indicator, the news just out from Kitco that its band of self-appointed experts on the gold price has turned collectively bearish on the price of gold next week is good news indeed for those of us looking for higher gold prices.

A big thank you to the Monkeys with Dartboards. To Da Moon, Alice.

UPDATE: Mickeyman's take on the excellent bullish news for gold is here. He's not so enamoured and sees a better take, but then again Time Lords always make good traders. 


Selling bullion in the main gold ETF(GLD)

GLD is the reference point of the bullion ETFs. Here are a couple of charts of its bullion holdings. This from 2013 onwards...


...shows the nasty liquidation of bullion we all know about (in hindsight) and the flattening out of the drop in 2014. But this year has been interesting one so far, because once January was out the way there was the start of a rebound beginning to show. However the last few days have seen that trend fall off, as this 2014 to date chart explains:


NB: Please note the cut-down Y-axes in both charts, done for 
illustrative purposes, not to fool you in true Fox News Style

Yesterday GLD holdings dipped back under 800 tonnes Au for the first time since February 21st. So now you know. All data from here

How's that 2014 uranium bull charge make tonsamoney thing going?

Oh, that well?


That's the Globex uranium contract chart. From here

I'm running this Silvercrest $SVLC (SVLC) (SVL.to) post again, because...

...of three things:

1) Reader RK noticed a silly mistake of mine; I wrote "...it turns out to be a 10k to 12 k per month gold producer." instead of "...it turns out to be a 10k to 12 k per quarter gold producer.", which dilutes the whole message of the post.
2) I'm feeling really anal this morning.
3) I like the post, so RK gives me an excuse to run it again.

So here it is again, all fixed.

Silvercrest $SVLC (SVL.to) (SVLC) 1q14 production numbers

Also sucked. NR here:



SVL is a funny fish, as that chart above shows. The way it keeps the fact that the lion's share of its "silver" production come from gold ounces equivalent, for one thing. Because if you turned things around, ignored the silver word in its corporate title and ran its numbers on a more logical gold equivalent basis...


...it turns out to be a 10k to 12 k per quarter gold producer. That gets a $250m market cap (!!). Just goes to show, style beats substance every time.

What a weird and wonderful sector this is! You have small gold producers like SVL pretending to be silver producers because it makes them look better than they are. Meanwhile, you have small silver producers like Gold Resource Corp (GORO) shamming the world into believing they're a gold company in order to maintain their own preferred line of bullshit. And then people wonder why the markets don't take these companies seriously.

UPDATE: @jameskwantes contributes with this:
Re: Silvercrest, Sandstorm gets 20% of life of mine gold production at Santa Elena for $350/oz. Changes equation Au vs Ag
This is true. I was kind of keeping it all to the production rather than revenue side, but it's a wholly valid point because in the end it's not about production but about money made. So he's right, of course. It's now up to you to decide whether SVLC having a stream that takes blue sky away from a chunk of its gross revs makes it more or less attractive.

4/16/14

Sheer coincidence, of course

The OSC will not investigate.


Because the OSC never does. Because they're total fuckwits and allow Canada to run one of the dirtiest markets in the world right under their noses. 

And hey, why not laugh it off as a small isolated case? Oh how funny you all are.

This Osisko (OSK.to) thing is getting good

Yamana Gold and Agnico Eagle Announce a Friendly Acquisition Agreement With Osisko Mining Corporation
C$8.15 per share offer provides superior shareholder value
TORONTO, ONTARIO--(Marketwired - April 16, 2014) - YAMANA GOLD INC. (TSX:YRI)(NYSE:AUY) ("Yamana"), Agnico Eagle Mines Limited (NYSE:AEM)(TSX:AEM) ("Agnico Eagle") and Osisko Mining Corporation (TSX:OSK)(FRANKFURT:EWX) ("Osisko") are pleased to announce that they have entered into an agreement ("the Agreement") pursuant to which Yamana and Agnico Eagle will jointly acquire 100% of Osisko's issued and outstanding common shares for a total consideration of approximately C$3.9 billion or C$8.15 per share. The total offer consists of approximately C$1.0 billion in cash, approximately C$2.33 billion in Yamana and Agnico Eagle shares, and shares of a new company ("Spinco") with an implied value of approximately C$575 million.

The offer represents approximately an 11% premium to the implied value of the current Goldcorp Inc. ("Goldcorp") hostile bid. Yamana, Agnico Eagle and Osisko will host a joint conference call today at 10:00 a.m. EDT to discuss the transaction.

Whole thing is here. Well, I thought GG would snag its prize after the last sweetener, which proves how much I know about this charade. Cannot be bad for sector consolidation strategies, however (and I have those, as I reckon there are more deals in the pipeline).

Good luck, Chuck.

Chart of the day is...

...the gold/silver ratio since 2011:


Silverbugs, eh?

Anyway, here's the plan. Because our girls go to a school run by penguins (get thee to a nunnery) they get five days off for Easter, starting today, which means I'm going to take them out and buy ice-cream and stuff this morning once the markets have opened and things look settled. Therefore, assuming Mr. Putin or some fat finger in New York doesn't cramp my style, posting will be light today. Pip pip.

4/15/14

Goldcorp's (GG) $GG community relations in Mexico faring...maybe not optimally

After 15 days of its Los Filos mine in Guerrero State being closed due to locals' blocking the roads and protesting, here's what they said to the company today:
We ratify our total negative that you carry out any operations of any type inside of our territory, until you decide to continue negotiating or you close your business.
So...maybe they have a problem. To this point, GG estimates that it's lot 14,000 oz of gold production. And by the way, you can read the full missive sent to GG by the ejido holders right here and a decent English language translation here (ty to A. Reader for the headsup on those link).

Mickeyman: "You may have what it takes to be a Kitco gold expert"

We know that Mickeyman over at The World Complex is a whizzo when it comes to stats and numbercrunching, so it's a happy thing that he's picked up on this IKN post and data regarding the monkeys with dartboards that Kitco uses to "predict" forward gold prices and has added plenty more flavour to the mix.

Go see his script and especially his charts, right here. Here's how his post starts, in order to whet thine lips:
I know you've always dreamed of it. But you are probably asking yourself . .  how could I ever develop the wisdom and insight to be a Kitco gold expert? It must take years . . . no, decades . . . of intense study to develop the necessary mental acuity. 
Anyway, Otto at the IKN blog claims that the Kitco gold experts are as useful as monkeys with darts. I say they are less useful. Let's investigate, using the table of data helpfully posted at the above link.

Whole thing here, recommended reading.

What it's like being robbed at gunpoint in Guatemala


Two US tourists were happily motorcycling along in Guatemala when they were assaulted by one guy with a gun and another with a machete. As the rider had his helmetcam on and wants to warn the world about this spot, he uploaded what went on to Youtube two days ago:


Here's the blurb he published with the video:
Robbed at gunpoint on the road between San Pedro La Laguna and Santiago Atitlan. Footage caught on head-cam of my girlfriend and I being robbed on my motorcycle as we headed back to San Pedro La Laguna from Antigua. April 10, 2014. The guy ahead of us ran out of the bushes and pointed a gun at us, the guy to the right had a machete.
We have uploaded this video clip to serve as a warning to other travelers about taking this road. Robberies happen in Guatemala and this particular spot is apparently notorious... However, we don't want to in any way put people off from visiting San Pedro La Laguna or Guatemala in general as it's a beautiful place with generally warm and kind inhabitants. We have felt safe for the majority of our trip.
The sound is cut part way through at the request of my girlfriend who was understandably distressed.

Cochilco drops its copper price forecast for 2014

Well that didn't take long. Just four months into the year and Chile's metal beancounter brigade at Cochilco has decided that its U$3.15/lb forecast for copper in 2014 is too rich, so this morning they've dropped it to U$3.05/lb.

For 2015, they're still going with U$3.00/lb.

More monkeys with dartboards on display

Silvercrest $SVLC (SVL.to) (SVLC) 1q14 production numbers

Also sucked. NR here:



SVL is a funny fish, as that chart above shows. The way it keeps the fact that the lion's share of its "silver" production come from gold ounces equivalent, for one thing. Because if you turned things around, ignored the silver word in its corporate title and ran its numbers on a more logical gold equivalent basis...


...it turns out to be a 10k to 12 k per quarter gold producer. That gets a $250m market cap (!!). Just goes to show, style beats substance every time.

What a weird and wonderful sector this is! You have small gold producers like SVL pretending to be silver producers because it makes them look better than they are. Meanwhile, you have small silver producers like Gold Resource Corp (GORO) shamming the world into believing they're a gold company in order to maintain their own preferred line of bullshit. And then people wonder why the markets don't take these companies seriously.


The Argonaut (AR.to) hypnosis set to continue

Do these guys have porn photos of brokerages bosses with sheep or something? How can a serially underperforming gold producer with sketchy "growth" (term used loosely) assets like the marginal Magino and a San Antonio that continues to go nowhere (oh look, they're "appealing the appeal" now) and the production profile of a gold miner with 1/3 of its market cap (no joke, 120k per year is Timmins Gold's rate...check the valuations side by side) get continued brokerage love and affection otherwise? 


AR has "failed plan" written all over it, but that continued underperformance is studiously ignored by the Canadian brokerage cubicle whores, most probably on directives from the corner offices. It's getting to the point where you have to ask why.

Chart of the day is...

....gold since last Friday , and it comes with an air of inevitability:

With 63.6% of the Kitco gold experts (aka worse than monkeys with dartboards) calling gold higher this week, it was bound to happen; gold dumped overnight.

must be that blood moon or something

4/14/14

GATA writes to Putin

Dear Mr Putin,

Can you please start killing people? We want more money.

Yours, GATA

How Fortuna Silver's (FSM) (FVI.to) 1q14 production numbers for silver (and gold) stack up against previous quarters

They stack up like this:


So now you know. Data from here

UPDATE: Oh, you want the gold numbers too? Ok, here you go:


That 1q14 gold production total is an AgEq of about 530,000 oz silver, if you assume the current gold/silver ratio of 1:65. 

Chart of the day is...

...the US Dollar (USD):


Though more seriously, anyone looking at any price chart today needs to have the USD action in the corner of at least one eye.


Calling bullshit on the gold experts at Kitco

The Emperors with no clothes in question are long past being called out on their random stupidity. Here's the latest from our Kitco Gold Survey monitor and it shows, just like it did at the end of 2013, that the people who Kitco call experts and ask their opinion on the direction of the gold market... 

Know

Fuck

All

About

The

Gold

Market

What you see in the chart below is a tracker of the last 31 weeks of the gold survey results and predictions. It works in the following way:
1) On the left, the date of each survey
2) Next the number of participants surveyed (part)
3) Next the number of responses received
4) And then, how many of those responses were bullish, bearish or neutral according to Kitco.
5) We then have those numbers crunched into percentages, with a highlight for the dominant call of that week
6) Then comes the acid test. You see the price of the gold bullion ETF (GLD) on the date of the survey. That's then compared with the close of the following week and the "result %" (also colour coded) shows which way gold went during the week (nb: if it moved less than 0.5% in either direction, it's called neutral). 
Finally, we have the "survey accurate?" column, which gives us the verdict on the experts scores. Also note here that many of the results are coloured in yellow; that's when the collective prediction was a strong one and had at least 50% of participants in agreement on one of the three options:


And the results:

  • Over the last 31 weeks, the survey has been accurate on the price of gold just 13 times.
  • On the 21 "strong signal" (i.e 50% or more) weeks, the survey has been accurate on the price of gold just 8 times.
Or put another way, this is monkey with dartboard predictive accuracy. Or it's "my seven year old daughter could make a living at this" accuracy. Or put yet another way, here's a heartfelt message to the self-styled experts of Kitco's gold survey:




The IKN Weekly, out now



Well blow me down, things I had absolutely no idea about before searching for a 257 picture. Turns out that Alprazolam (aka Xanax) is "...the most prescribed and the most misused benzodiazepine on the U.S. retail market." Kinda makes you wonder just how many people you meet along the way, outside and in the general public throng, are drugged up to their eyeballs on this poison. Anyway, IKN257 has just been sent to subscribers. I think it's a pretty good edition this week, even if I do say so myself.

4/13/14

U$5.85Bn: Las Bambas changes hands

Today Glencore Xstrata and China's Minmetals have nailed down their deal. The massive Las Bambas copper project in Peru is sold for U$5.85Bn (and all this time I was guessing $5.5Bn...how silly of me) and the whole charade is over. Details here in Spanish, or wait a while and you can read all you'll ever want to read on it in English tomorrow.

Biiwii Gary's letter today was excellent


Notes From The Rabbit Hole (NFTRH) is his weekly subscription letter, which you can read about (and get a few example copies) on the blog's links. It's always a good read but this weekend's, NFTRH286, was particularly sharp and excellent. You should subscribe to it, too.

And no, I'm not on commission or anything of the sort. I just want to get you reading smart, intelligent and independent market commentary and you'll find some of that for free on his blog, but his paid-for work is 10 times better. He charges U$29/month for the letter and that's stupidly cheap for the amount of quality it contains, so give it a spin for a month and find out yourself.