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9/6/14

We wonder how Reuters got the idea for its "exclusive" report on Peru gold mining

IKN September 3rd on the gold production drop (one of a series)

IKN, also September 3rd, that notes the minor level of negative impact that the crackdown in informal production has had on figures.

(Reuters) - Peru's gold output will likely drop by 20 percent this year and keep falling through 2016 as aging mines churn out less of the precious metal and a government crackdown curbs informal production, a ministry official said on Friday. 
Peru's Deputy Mines Minister Guillermo Shinno told Reuters that (continues here)

Alibaba $BABA language trivia

The Alibaba IPO snowball starts rolling on Monday.


The stock ticker chosen by the company for the New York Stock Exchange is BABA.

In Spanish, "Baba" means "Drool" (as in saliva, spittle).

You may think this is mere coincidence. That is, of course, your right as a free-thinking individual. 

An Argentina Wikileak, dated November 2009, that's doing the rounds on Twitter today

Fascinating stuff, right here. Some excerpts:

[2015 Presidential race hopeful Sergio] Massa said that the Kirchners have no chance to capture the presidency in 2011. When asked to estimate their chances, Massa replied, "zero." 
Massa was scathing in his criticism of the first couple, especially Nestor... he called Nestor "a psychopath," "a monster," and "a coward" whose bullying approach to politics masks a deep sense of insecurity and inferiority. (Massa's wife registered such alarm at these uninhibited comments that he asked her to "stop making faces at me.")
[Ex Cabinet Chief Alberto] Fernandez also commented on the Buenos Aires race, opining that  Scioli's political moment had passed.  Calling the governor "a nice guy," he observed that Nestor had used him (by grabbing him as his slate-mate in the province during the midterms) and then cast him aside.  "Scioli is trapped, and he knows it," Fernandez said.

I don't know whether this is a freshly leaked Wikileak (not hanging around Twitter long enough to find out, better things to do today) or whether it's something old that has been given a resurrection today due to the Sergio Massa angle, but either way it's fine fabric for the backdrop to the 2015 race. It also shows how bad top politicos in Argentina are on forecasting the future.

PS: Ok, this probably explains things. A new book is out. Thanks Kurt.


How Peru's lacklustre GDP growth in the first half of 2014 breaks down

While checking out a different dataset this morning for purposes of The IKN Weekly, your humble scribe's eyes fell upon this interesting post in Peru bizmedia Gestión that shows how the GDP growth of 3.3% in the first half of 2014 (1H14), a figure that was a mile away form the 6+% forecasts at the beginning of the year, breaks down into its component sectors. So after a quick check of the baseline data at Peru's Central Bank here, I think this table of numbers interesting enough to stick up on the blog today (then I can get back on subject and finish the note I was writing for the weekly):

Percentage Change in Peru GDP per Industrial Sector, 1H14
SECTOR WEIGHTING ON OVERALL COUNTRY GDP CALC CHANGE IN 1H14
Agriculture 5.30% 0%
Fishing 0.50% -4.20%
Mining/Hydrocarbons 12.10% 0.10%
Manufacturing 15.10% 0.40%
Construction 6.90% 2.40%
Commerce 11% 4.80%
Service 38.70% 6.10%
SOURCE: BCRP/ Gestión

As overall GDP growth in Peru in 1H14 was 3.3%, this means that overall number was heavily propped by the 6.1% growth in the service sector (thanks also due to its 38.7% weighting). Fishing dropped for both regulatory and weather reasons. But the one that most concerns the government (or darn well should) is the drop in construction activity to just +2.4%, as that has been a big driver of growth the last ten years.

9/5/14

The Friday OT: Soda Stereo; Sobredosis De TV (Live)

Sobredosis de TV is one of the standards in the Soda Stereo canon and it's a fine song in its own right. This live version is altogether another and higher level of quality.


It's about two or two and a half minutes in, with the first cycle of the song just about complete and the argument set out that the band's musicianship reveals itself, they move up the gears and show how truly kickass they were in concert. It was going to be a Soda song this Friday, it's so difficult to choose just one, this is the call because it's the band on top form, feeding off each other and nailing the song in front of the assembled thousands. Sheer Brilliance.

A message to Pierre Lassonde

You're a genius.


The end.

The scene this morning

Today the youngest turned eight years old. We had cake for breakfast.


Happy Birthday, sweetheart. Have a great day at school, presents and favourite food later.


Gold's reaction to the US jobs print

We do headline writing so that you don't have to.

US Jobs report

Don't stick with second rate information, read Calculated Risk's call on the numbers. Here.

Layoffs in mining companies

There have been a lot of anecdotal reports and messages reaching IKN Nerve Centre™ concerning layoffs in mining companies in the last three to four weeks. Jobs losses are across the board, white collar and blue collar, all departments and offices affected, all sizes of miner from the smallest exploreco (many of which are shutting up shop) to the largest of the big Tier 1 operators. Much of the information received is via private mails, therefore sensitive and not for public dissemination, but just by monitoring the junior NRs you can see the trend at the high officer level, the people for which resignation and a material company event that must be reported.

So no figures or stats in thsi short post, a simple headsup is what you have here.

9/4/14

Gustavo Cerati

QEPD, maestro.


A sad day for music this end of the world. Here's AP in English on the news, if you'd like to know more.

The USA isn't "losing LatAm"

So says Greg Weeks in this op-ed at Al Jazz today. It's a decent argument too, well ahead of the binary screaming stuff you normally get on the subject. Here's an extract:

"The basic argument goes like this: Presidents George W Bush and Barack Obama alike have focused on other parts of the world, primarily the Middle East. They have therefore responded to events in this hemisphere in a reactive and insufficient manner which allows adversaries - Venezuelans, Cubans, Chinese, Russians, Iranians, Hamas, among others - to throw their political weight around.
The "losing" thus refers to a perceived loss of influence on a major scale. Some consider the trend positive because, they say, Latin American countries are enjoying more sovereignty. Others believe it to be negative because it entails a threat to US security.
The argument is so pervasive that it has reached the level of conventional wisdom. The problem, though, is that" continues here

Gran Colombia Gold (GCM.to): People beginning to notice that Serafino Iacono's hobby ship is sinking

On August 18th IKN explained how unprofitable Gran Colombia Gold (GCM.to) was as a gold mining operation. Then on August 19th IKN wrote a little on the upcoming debt repayment problems, including:
"The fun starts in November, when the gold notes start coming due. We can only hope the creditors behave themselves, form an orderly queue and don't start squabbling over who gets paid first. Impressively, this thing still has a market cap of around $35m. That won't last, though."
Seems as though the message is finally getting through:



Wonder if it's Giustra that's selling? Their ex-puppet media brown-nose Thom Calandra, maybe? Or their latest pet sycophant asslicker Tommy Humphreys, perhaps? Though in this case the KY Jelly application to the collective recta of equity holders won't be called "bankruptcy", merely "restructuring". Gotta love Serafino.

Comedy gold: NYT Dealbook on Argentina's debt default

It's not a subject I was planning on bringing up again at this humble corner of cyberspace, but this piece on the default that appears in the NYT's Dealbook today is so stupid and accidentally hilarious that it must be pointed out to this esteemed audience. It's basically a puff-piece about Domingo Cavallo, ex-FinMin in the Carlos Menem era, and the position he has that Argentina would be better off paying the holdouts. No surprises there of course, Mingo being of the straight neolib economics school, as well as strongly anti-Kirchnerist and vociferously so for years on end. But it's the way in which the Dealbook note begins that caused one of those cornflakes-on-screen moments at IKN Nerve Centre™. We quote:
"Domingo Cavallo, the architect of Argentina’s first debt restructuring deal in 2001, has a solution for the country’s worsening debt drama: pay the holdouts."
Yes indeed, the man whose policy decisions were the direct cause of the 2001/2002 default, the man who created the welter burden of Convertibility, the man who then came back in 2001 during the De La Rua government because he had a "plan" (and ask any Argentine about Cavallo and his "Tengo Un Plan!" statements of the time) which rather than save the country as was the "plan" caused the immediate sinking of the country, the default, the riots, the government's fall and all the caboodle that came with the period: Yes Sir Yes Ma'am, Domingo Cavallo is now framed by The New York Times (!!) as the "Architect" who "restructured" Argentina's debt. You cannot make this shit up, it takes a gringo to be this stupid about South America and today that stupid gringo is you, Landon Thomas Jr. There are more comic idiot savant moments later on in the note such as when Landon Thomas Jr (don't forget the junior) tells us:

"In the arcane corners of global finance, Mr. Cavallo is a bit of a rock star..."

Indeed. And here's how popular Mingo is in polite rock star Argentina society, as this was the scene when he last appeared in public in the country just a few days ago, on August 20th to be exact while giving a presentation at a university in Buenos Aires.


The popular and universally adored rock star diving for cover to avoid the rock star eggs being thrown at him. Just like Beyoncé, or something. Because Rock Star. So thank you NYT Dealbook for making my day.

h/t to the excellent twitterpal @mecasullo, as sharp as they come on Argentina politics and economics, plus a fine eye for football.


Charts of the day are...

...to show context on the US Dollar (USD) rally.

Here's the recent move from 80 to 83 and woah!dude! that's a remarkable move, no?


Well, maybe not so much.

Context, y'see. When you go through a period when micromoves are the norm, something like the greenback's summer move catch the attention. But we here at IKN Nerve Centre™ confidently contend that the dollar's mouse-like quiet in 2013 and 2014 is clearly the more remarkable event, not the recent move away from the Doldrums.

9/3/14

How Peru's clampdown on Madre de Dios gold production affects national gold production totals

The question raised by inquiring minds was the following:

1) Peru's gold production has been dropping, as seen most recently in the chart and post from this morning with the latest July 2014 figures.
2) We know that Peru's government has been clamping down on the illegal, informal, non-duty paying and highly polluting alluvial gold mining in the Madre de Dios (MDD) region of the country.
3) Therefore, how much has the clampdown affected its monthly national production figures?

A good question, here's the answer via two charts. First for reference, the monthly production figures for gold in Peru, as published by the country's Ministry of Energy and Mines (MEM):


And now the same chart with three differences

a) We do it in ounces, rather than kilos, so us old-timers get the drift more easily (the shape of the chart is identical though, ain't no biggie in the end).
b) We cut down the Y-axis and start it at 250,000 oz Au, to make the monthly changes easier see.
c) We split total production between Madre de Dios production figures, then everything else.

Here's the result:
NB: Please note cut down Y-axis on this chart, done to make changes more visible


As you can see, the tailing off of MDD production has taken the edge off the total numbers, but they've been dropping as well with or without the MDD gold on top. So there you go.

Rio Alto Mining $RIOM (RIO.to) produces 19,434 oz gold in July 2014

The first month's production of 3q14 at Rio Alto (RIOM) (RIO.to) was filed at the Ministery of Energy and Mines (MEM) yesterday evening (though you need to know where to look on that link, start by clicking on the "Estadística" button half way down on the left menu, then good luck), with RIO telling its host government that it produced 604,414 grams of gold during July, which is 19,434.53 oz in old money. Here's a chart:


That puts total production for the first seven months of this year at 126,990 oz at the mine. For what it's worth, if RIO.to keeps at that monthly average for the last five months of 2014, it'll end up producing 217,692 oz gold. Therefore I stick a thumb in the air, note the steady acceleration of production we've seen during 2014 and best-guess that RIO.to will beat its upper end guidance target of 220,000 ounces for 2014.

A resource valuation primer, courtesy of Levon Resources (LVN.to)

This short post is designed for people who are beginning to get interested in the junior exploration stage mining sector, believe this to be a good time to move in and buy cheap stocks and are looking for companies that have beaten down share prices but also properties of merit that might become mines one day down the line. What we offer you today is a simple baseline, a benchmark if you like, which comes via two simple statements:

1) The resource announced by Levon Resources (LVN.to) in this news release today is worthless. For sure the market might price some optionality, marginal or remnant value to it but in reality it is completely worthless. Zero dollars, zero cents.

2) With that in mind, open the NR and have a good close look at its contents. With the application of some brainpower, memory and a little good fortune you'll learn to recognize this benchmark level next time around.

That's all. Apart from stating another fact, that there are very few places where you'll see straight truths about mining company resources put into print in this way. There will always be a thousand people encouraging you to buy these type of stock and if you don't know why that might be you're better off walking away from the junior mining world right now, before it's too late.

Doug Casey knows you can flog that dead horse forever, as long as there are enough people who think it's still alive

This from Feb 25th 2009 (seriously, five plus years ago and the same narrative):
Doug Casey: We’ve definitely entered what I describe as the Greater Depression. It’s not coming; it’s here. It’s going to get much, much worse as far as I’m concerned and unfortunately, it’s going to last a long time. It doesn’t have to last a long time, but the root cause is government intervention in the economy and everything they’re doing now is not just the wrong thing, it’s the opposite of what they should be doing. It’s almost perverse.
This from September 2011:
Daily Bell: Welcome, Doug. Let's jump right in. Are you still convinced we are heading into a "Greater Depression"?
Doug Casey: Yes. There is no question in my mind about that.
We are coming out of the eye of the hurricane and it's going to be much, much more serious than it was in 2007, 2008 and 2009.
Daily Bell: How long do you expect it will take before there is a complete breakdown in confidence of the US dollar?
Doug Casey: It's happening right now. 
This from yesterday, i.e. September 2014
Doug Casey: We are exiting the eye of the giant financial hurricane that we entered in 2007, and we're going into its trailing edge. It's going to be much more severe, different and longer lasting than what we saw in 2008 and 2009. Investors should be preparing for some really stormy weather by the end of this year, certainly in 2015.
Did you get that? 
  • In 2009 his made-up pet theory without anything to back it up except wharglebargle Fed Printing Press, this  "greater depression" was just starting and it was going to get much worse. The depression "is here", no waiting, no future dystopia, right here right now. Doom for you.
  • In 2011 we were encouraged to mentally skip over 2010, because compared to 2007-9 it's about to get a lot worse.
  • And now in September 2014, the benchmark is 2008 and 2009 and yup, you guessed it, it's going to get a lot worse in the near future.

Aside from the arrogance that drips off his every word, the joke that is Doug Casey has been proven wrong so many times you just lose count (those three above are from quite literally hundreds of possible examples, all the same utterly incorrect message) and any time his opens his mouth to spout on macro he obviously, and I mean obviously has no idea of what he's talking about. An intellectual zero, the sideshow owners, snake oil salesmen and dream peddlers such as Doug Casey exist as a barrier to wealth. He's just another parasite getting rich off your fears by telling you what you want to hear and charging you money for the privilege.

UPDATE: This feedback comes from A. Reader, who is an industry professional (and we'll leave it at that). Up to you to decide how much truth there is here, but I thought it interesting enough to ask for and receive permission to reproduce in the public realm:
So how do you REALLY feel about Casey?
 
The other more scary aspect of his monotonous pronunciations is how close he and his acolytes come to what sounds suspiciously like mass racism. He’s always making derogatory remarks about the 70% (or is it 80%) of the planet’s population that are classified by him as unworthy knuckle-dragging mouth-breathers who apparently have the audacity to try to sponge off the rich  (worthy) people like him. I’ve heard him say almost exactly those words on many many occasions. It’s a very fine line from that to the policies of eugenics. Live and let live as long as I consider you worthy.
 
As an aside, the “debate” between the massive intellect that is Casey and Karl Rove a few years back in New Orleans was hilarious. Rove proved himself to be an unbelievably smart man who’d done his homework on Casey and wiped the floor with him. Casey was relegated to, dare I say it… mouth-breathing helplessness who could only mutter “war criminal” between his bouts of nonsensical libertarian crap. Rove wiped the floor with him (don’t get me wrong, I have no love for Rove but he’s smart).


Chart of the day is...

...Peru monhtly gold production, 2003 to date:


The July 2014 figure out last night is another in the recently series of low numbers, at 11,006.99Kg

9/2/14

Expert copper supply predictions, episode 958

JP Morgan, September 2013: Toromocho will produce 167,000 tonnes of copper in 2014.

Toromocho, September 2014: Toromocho will produce 85,000 tonnes of copper in 2014.

Any questions?


Confusion

With gold down 1.75% today and silver following suit, wasn't my junior mining portfolio supposed to be tanking down like the proverbial lead Zeppelin? How come my junior mining account's in the green this morning? Why are there several stocks showing green on my list? Why do fools fall in love?

I'm not worried though, because it probably won't last.


Chart of the day is...

...gold, weeklies:


Gird your loins, the game's afoot.

This morning's dumpage down to $1,270/oz will of course be greeted by the normal splutterings and shouts of illuminati from the dumbass end of the sphere. Let 'em, they don't matter anyway, they're not selling any of their prepper stash and they have no money to buy any more. They don't matter.

People who buy and sell gold mining shares, now they might see opportunity here. Got to be the right ones, though.

9/1/14

Screwtape on gold

GM Jenkins over at the Screwtape Files is one of those rare birds; a smart and thoughtful technical analyst. We get two calls on gold from him today:

1) Gold is about to make its move after a long consolidation period
2) On balance, he thinks the move is going to be down.

God news: Voice meets hand

Today saw the "Match For Peace" get together in the Vatican that's all about sporting people getting smiley with The Pope and promoting good things for humanity. And that's fine by me. 

It also included this moment:


Or as Twitterpal RickB aptly put it:

Things that don't get talked about that you don't talk about in South America

After a while in LatAm you begin to notice the gaps in the noise, rather than the noise itself. An example of this is the lack of protests about freedom of speech and right to protest in Colombia, compared to Venezuela where you'll get marches and student rallies on a regular basis. Colombia doesn't have a militant political ideology split driving public opinion and opposition to the consensus view is most definitely not funded by overseas slush money. What Colombia has in the militarized areas is a population that won't protest, march or kick up a fuss because the people who do tend to be shot dead straight afterwards. That's not fakey fear, that's a wholly understandable silence in the face of real danger.

Another is the drugs trade in Peru. Now, over time there have been a couple of occasions when I've been gently informed by the outside world (not going into details) that it really would be best not to get interested in the cocaine business in Peru, start poking around, investigating and asking questions, sticking a post or two up here on this humble corner of cyberspace. The hints and advice has always been gentle and friendly, but you also know that behind the soft words there are harder ones waiting if necessary. What's more I have no problem at all with ignoring the subject because a) I'm a coward b) I'm a married coward with two small kids c) I have enough to fill my limited mental capacity already without complicating things for no apparent reason. As a result I generally ignore the subject and its coverage gap, there are better and easier things to do.

But I will say one thing about Peru and cocaine in the 21st century today, only because it's on my mind and it won't cause a fuss: The small-time narco-biz gets normal coverage, but when it comes to the big-time action, the multi-million dollar business of manufacturing and moving white powders from A to B, the Peruvian press and polite society will always, but always blame either foreign nationals or the terrorist remnant organization left over from Shining Path for the big trafficking action. Colombians, Mexicans, Bolivians, whoever else. It's never the fault or responsibility of Peruvian nationals and that's not a coincidence. It's just another one of those holes in the noise.

Here endeth the post.

UPDATE: To back up the point made about Colombia, this news today.

Bolivia knowledge test

Your pro-tip of the day is to read the comments sections of posts in high traffic economics blogs in order to gauge the level of public ignorance about the subject in question. Today's example is Marginal Revolution on Bolivia, right here (h/t drunkeynsian). Tyler Cowen gets most things right-ish inside the boundaries of fair opinion (the only thing he really misses is how Bolivia's gas exports to Brazil and Argentina are covered by long-term contracts, so Brazil's apparent near recession isn't Bolivia's) but the people lining up to give their two cents are already cringeworthy.

PS: There's another thing. If you notice the previous post on MR, it's a fair guess that Cowen has just picked up a book on Bolivia and managed to put together a pretty cogent post on the country's outlook (again, within a margin of error and taking into account personal views and tastes) in a short period of time and without being any sort of deeply read expert. The hallmark of smart scholar is to be able to do that sort of thing.

Fe erratum

I've waited until Sunday evening to run  this correction because weekend traffic for the financial-mining things is always light. In this way it gets to been seen at the top of the page Monday morning, and in the Monday email digests. 

On Thursday 28th August in this post I stated that Geologic Resource Partners was owned by Klaus Zeitler, CEO of Amerigo Resources (ARG.to) and as such, the implication was that he owned 22m shares of his company ARG.to via that holding company.

That was incorrect information. In fact Zeitler has no connection to Geologic Resource Partners and is not the person who has been buying the stock recently, either directly or indirectly. Although the post was written in good faith I got my wires crossed and apologize for the error.

The IKN Weekly, out now


IKN277 has just been sent to subscribers. River Plate is now one point clear at the top of the league after tonight's excellent 3-1 win at San Lorenzo. And the Weekly has 12,000 words. Purple prose. Nailbiting stuff.

8/31/14

The rise of Marina Silva

The Graun has a good and in-depth profile of Marina Silva, who's currently shaking up the Brazilian Presidential election in no uncertain manner. Here's the sample:
Following a strong performance in the first TV debate between candidates, polls suggest she will come second in the first-round vote on 5 October and then beat the incumbent, Dilma Rousseff, in the runoff three weeks later. 
This is a spectacular turnaround for a candidate who did not even have a party a year ago, when the electoral court ruled that she had failed to collect enough signatures to mount a campaign. It was also the latest in a series of remarkable steps for a mixed-race woman who grew up in a poor family in the Amazon, and went on to become her country's most prominent advocate of sustainable development.
Read it here. Meanwhile, subbers get your humble scribe's view on this suddenly interesting race, who'll likely win it and what it all means in IKN277, out tonight.