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7/24/14

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

As subscribers know, as they're almost certainly are now 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