Friday, August 30, 2013
I guess it's reasonable to expect a somewhat elevated $VIX while this Syria nonsense is going on, whether or not that country really affects anything?
I'm really itching to buy some XIV but I guess it's best to wait til $VIX is +3SD.
Maybe we can get some of that next week when the rentier class gets back to work.
Then again, maybe we get more tension in September with John Boehner and the American Taliban threatening to blow up the US by refusing to extend the debt ceiling.
I wonder what Manhattan Fatty will think that should do to the price of gold?
Krugman - I don't believe all this EM crisis nonsense.
Another opinion, to go with the FT article, that the EM crisis isn't going to become a big mess like in the 1990s: in Krugman's view, the external debt problems aren't there this time.
I'm happy to change my operating narrative when someone smarter than me points out some important info. Still, the question remains what will happen to EM economies as their currencies drop and inflation increases.
Maybe the BJP will inherit a positive starting point in 2014? A low rupee enabling higher exports?
I guess my fear, that eventually the playing out of the India crisis would resolve in a flood of scrap into the gold market as the rupee bottoms, is somewhat unfounded?
Who knows. Gotta puzzle this out.
Four more things I stumbled across just now:
Calculated Risk - final August consumer sentiment. To freak out over one number in a noisy dataset is disingenuous, ignorant, and probably outright malicious. It's not a datapoint of importance, it's the trend that is of importance. That's why Bill McBride gives us this chart:
And that's why outside of Bill McBride and Hale Stewart, I strongly advise that you actively ignore all other economic commentary.
BI - Euro area July unemployment didn't get worse.
FT Alphaville - the options for emerging markets. Summary: they're all bad.
FT - Asia: storm defenses tested. More opinion on the topic. Maybe there is no Asian Tigers crisis looming?
BI - investors are dumping EMs at an increasing pace. Though not China, it seems.
BVN printing a lower low here would mean its chart really really sucks, I think.
I find btw that weakness in BVN usually corresponds quite well to weakness in the GDX, with maybe a couple minutes delay.
Check out the volume bars:
3x long gold got a lot of action beginning at the start of July, which I guess could have been a tell that the bottom was in.
Starting in late July, 3x short gold started seeing a lot of action, and volume truly exploded these past couple weeks.
So yesterday there was $300M in trade in DUST.
I should maybe look up precisely what DUST buys and sells - could these bets move the market?
Then again, GDX saw $1.7 billion in trade yesterday, so maybe $300M in 3x short doesn't have as much effect.
Anyway, the change in volume since the bottom is what's really interesting to me.
Not much in the way of news. Syria has something to do with gold only insofar as Whitey thinks it does; it's still really all about China and India.
Here's two newsbits for you:
BI - Nomura: "we can't emphasize enough that a strike on Syria will have no effect on oil". Nevertheless, it does give you a great example of the idea of "speculative premium over fundamental price": white people bid up oil because something something war something something Middle East.
der Spargel - economist Jayati Ghosh warns of crisis and violence. It's some valuable background on the India situation.
Now go out there and cause some shit!
Katie, "analog" isn't just when you ditch midi.
Anyway, that little snit out of the way, the new Austra album is out, and Katie Stelmanis is still a great signer, but this video is a whole big sloshing pail full of "what the fuck did I just watch":
Seriously, can someone explain to me what's happening here? I see Lady Gaga's birthing vessel pop out three rollerbladers, and then there's neon stuff and a TV showing the band in an 80s-style City Limits video.
And then all of a sudden there's an alien or something. It's like Videodrome meets Kenny Everett.*
This is not congruent with the lyrics, dude.
Is this just an ironic homage to the history of Toronto music videos? Please let it not be ironic.
* - I guess I could have just summed up the video with "imagine Sid Snot saying 'Death to Videodrome. Long live the new flesh.'"
Thursday, August 29, 2013
I was thinking about the recent action in the miner ETFs - how someone would turn on a switch and start puking at precisely 2:30PM. I now figure it's someone who's trying to short them into oblivion, and who wants to make it look obvious so that others join in. It's the only real explanation, no? Otherwise it'd require someone being a purposeful idiot in trade execution.
So is he shorting the miners to pick them up cheap? Or is he playing a pair, shorting GDXJ (which is full of garbage that'll never be mines) while simultaneously picking up shares in the good miners?
That would be an interesting thing to look at. Has someone looked at relative valuations of the GDXJ components and realized that the crap that makes up 80% of the ETF has become grossly overvalued because everyone's been just buying the ETF instead of being picky?
We'll have to see what happens Friday when everyone's at home but the markets remain open. Will GDXJ get destroyed on nonexistent bids? Might be a great time to load up.
Anyway, here's the news.
BI- Q2 GDP estimate revised upwards a fair bit. I'm sure some automated script at Reuters has already generated an article saying this has something to do with the gold price.
Bespoke - credit markets not too worried. Does this mean it's just a selling game and there's no real worries out there? Or rather that the selling has nothing to do with fears of a liquidity crisis? Or, the third possibility, that the S&P selloff must continue until credit stress shows up? Three ideas, take your pick.
Black China Blog - did Li blink? China is quiety implementing a stimulus that isn't a stimulus. Maybe they've just decided to pursue targeted investment with strong oversight and full justification through rigourous cost-benefit and future cash flow analysis? Maybe cos they figured out that simply dropping money from a helicopter in 2008 caused a lot of problems, had limited economic benefit, and just made corrupt officials rich? Also, the Plenum date has been announced, and it's in November so there's probably been some delays in setting up the forward strategy; that would suggest they actually have a detailed forward strategy to implement, I'd assume.
Caijing - China quietly launches a mini-stimulus. As above. Quote:
"The '4 trillion yuan' investment stimulus plan launched in 2008 was made public; this round of investment has not been publicized, but it is quietly being pushed forward," said a source close to the State Development and Reform Commission.BI- India considers radical plan to buy gold from its own citizens instead of importing it. I... don't see how this fundamentally alters the supply-demand equation at all. Pawn shops are buying gold to resell it. India wants to make its banks buy gold from Indians to... resell it. What does this accomplish, besides driving pawn shops out of business? Can someone explain this to me?
The negative effects of the 4 trillion yuan investment stimulus plan in 2008, such as high levels of local government debt, inefficient investment, and worsened overcapacity, have become more prominent in recent years.
In the current round of investment, policymakers will be more concerned with efficient investment and structural adjustment. They will opt for projects that can optimize the economic structure in the long-term but also play a role in stimulating investment and economic growth in the short-term, such as shantytown reconstruction, Midwest Region railway construction, municipal infrastructure and public transportation construction.
Mining.com - the world's 10 fastest-growing copper projects. Seems like the world copper mining industry is doing a very good job of finding a Bingham Canyon every year after all, Brent.
As an aside, I think it'd be pretty friggin' awesome to go visit something like Bingham Canyon (after they clean it up of course) or Escondida. Or Grasberg. Holy crap nothing like a vast hole in the ground to make an engineer spooge himself.
Mineweb - Peru plans to invest part of $7B fund abroad. I hope it doesn't just end up in some corrupt politico's pocket. Oh well. At least Castilla sounds like a competent finance minister.
Wednesday, August 28, 2013
Reformed Borker (Bork Bork Bork!) - 90% down days. They usually come very close to the end of the correction. Not at the end, but very close to it.
Bespoke - % of stocks above 50-day average. Where we get this chart:
Bloomberg - an Indian jeweller thinks gold scrap is going to skyrocket. Um, no. He wants it to happen cos then he can mark the gold up 100% by turning it into jewelry. But that would mean an Indian selling gold to buy rupees; that's not going to happen til the bottom in the rupee. The average person doesn't sell something that's going up so he can buy something that's gone down. Especially when he sees doom straight ahead. "Gee, I'll just sell my insurance policy now and beckon my ruin from the onrushing storm of fate."
BI - Sam Ro is surprised that someone on King World News predicts $3500 gold. BI's pretty fucking lame if they are monitoring King World News for stories.
Reformed Borker (Bork Bork Bork!) - the financial media is not a toy to be used and discarded. Where we get this supremely funny quote:
And just like that, Manhattan Fatty books in at 2:30 precisely and starts puking GDXJ into insufficient bids.
Because getting a decent price for your position is so passe. Or maybe cos he's selling short?
Anyway, BVN broke down pretty conclusively, so I dumped that position at $13.40. I'll try and get back in at $12, though frankly I want to see the chart acting positively first.
I grabbed some BCM cheap this morning after the cross, then sold after it got walked back up to $2.45.
Still have some cash.
BCM's out with an NR today:
Bear Creek announces official submission of responses to comments; Corani ESIA, Peru 28 Aug 2013 08:30 ET CNW Group
Bear Creek Mining (TSX Venture: BCM / BVL: BCM) ("Bear Creek" or the "Company") is pleased to report that on August 27 it has officially filed with the Ministry of Energy and Mines ("MEM") all responses to comments arising from the Environmental and Social Impact Assessment ("ESIA") submitted in December 2012. A total of 147 comments were addressed in the responses; a very low number indicating the strength of the original technical report. The MEM has 30 days to request additional information, should any be required. The Company's responses were thorough and, in management's opinion, the submission of responses sets the stage for ESIA approval in Q3 or early Q4, 2013. Corani is a large, silver-lead-zinc deposit containing 270M ounces silver and 4.8 billion pounds of combined lead and zinc which is forecasted to produce over 13M ounces silver per year at negative cash costs per ounce of silver, net of by-product credits, for the first 7 years of its 22 year mine life. The project has solid local and regional community support as demonstrated by the endorsement of the project at the formal public hearing and the creation of social investment programs, in concert with the Peruvian central government, for the life of the mine.
Andrew Swarthout, President and CEO, states "We are pleased with the pace at which Corani is advancing through the permitting process. Bear Creek looks forward to the ESIA approval along with the continued support from the Peruvian government in order to make this important project for Puno and Peru a reality."
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note regarding blah blah blah:
I guess that's a good thing, no? I dunno, is it?
But all that really matters to BCM's stock price right now is whether Big Fatso in Manhattan is going to dump another $50M of GDXJ today.
I guess I'll load up when $2 or $1.80 or $1.60 comes.
This is suck a damn predictable stock to play. I love it.
I wasn't posting news yesterday, because frankly nobody out there was saying anything - aside from blah blah Syria, of course. And maybe some stuff about the market going down, which I figure you guys already knew about.
But I found some useful reading last night, and here it is:
FT - China companies feel the investment hangover. At least the government knows this and is going to be trying to fix it.
Bloomberg - emerging markets should quit their whining. They did well with the flood of cheap money; if they're now staring collapse in the face because UST yields went up then it's their own fault, right?
Mining.com - Mongolia to scrap foreign ownership law. And just like that, the uppity EMs begin to realize that the market fights back. But don't worry, Mongolia! I'm sure that when you repeal this law, all the big mining corporations will say "oh that's better then, now we'll invest billions in capex in Mongolia because we're sure that they'll never ever change their minds and go back to being cunts." Here's some advice for you: before you start throwing your weight around, make damn sure you're on solid ground.
Times of India - rupee has lost over 20% this year. Quote:
The rupee is emerging as a front-runner in a race to the bottom among emerging market currencies. In both absolute and percentage terms, Tuesday's drop is the highest ever. The rupee has fallen by around 20% since the beginning of the year. The only currency that has done worse is the South African rand which has fallen nearly 23%. Turkey's lira has dropped 14% while Brazil's real has fallen over 17%. The Chinese yuan has been the outlier, having gained nearly 2% in 2013.And guess what? The Indians understand something that Wall Street doesn't:
Given the uncertainty over the rupee, gold, seen as a safe haven investment, soared to a new high of Rs 32,585/ten grams. Silver also rose to a six-month high to retrace the Rs 56,000-per kg level, owing to heavy speculative offtake.What have I been saying? And related to this,
Times of India - gold hits nine-month high of Rs 32,000. By the way, Indrish is a funny language: they like using words like "spurted" and "scanty" in news reports. It makes these articles a fun read. Phrases like "the price of gold spurted by 3%" and "scanty rains over Andhra Pradesh" put a smile on my face.
Reuters - currency collapse confounds Indian corporations. To the extent that they have real business in India, they're finding it difficult to plan things even a month out with this fast currency depreciation.
Mining.com - two things copper price bulls are ignoring. The fact is, when it comes to common metals like copper and iron, you can build out supply to meet increased demand. Anyone who ignores this probably doesn't have an economics degree.
Yahoo Finance - clarification of technical disclosures as a result of a review by the BCSC. #1, I like how Mineral Hill doesn't put their name in the NR title, so you don't know it's about them; that shows that the good old Venture hasn't changed. #2, I like how all they have to do is change their website and issue an NR saying "we redact this and that", instead of (say) seeing all their executives sent to prison; that also shows that the good old Venture hasn't changed. Good work, BCSC! I like continuity and am distressed by change! Keep the Venture a haven for fraud!
Tuesday, August 27, 2013
GDXJ did this today:
which is fine, because GDXJ is mostly full of bullshit companies that aren't worth owning. But Rio Alto did this today:
And all this despite gold and silver being up, and La Arena not being located in Syria.
I think what probably happened was some "big player" decided to sell 1,000,000 GDXJ because fuck you. I say "big player" in quotes because $50M is rather silly, actually. I'd expect that the GDXJ selling was enough to drive a lot of these stocks down; why would you leave a bid at $2.90 for Rio, say, when you know an ETF is going to be forced to dump shares into bids?
So a lot of my positions have damage on the charts: we'll just have to wait and see what tomorrow brings. At least it got me to sell my Silvercrest at a win.
GDXJ is seeing some selling despite higher silver and gold prices, and thus the GDXJ-heavy stocks like AR and OGC are red on the day.
Now here's the weekly GDXJ chart:
I'd be surprised if it didn't back off from the +2SD line here.
Then again, last August & September it briefly went above +2SD for a few weeks. And gold & silver seasonality are in our favour, no?
Still, GDXJ is up 50% from its low.
Then again, that low was something like 40% of its 50-week SMA. So GDXJ was grossly oversold at its low.
I'm still holding my junior miners, but I can do that cos I'm showing nice big 4-digit green numbers beside them.
A drop would be an opportunity, I guess.
So in the US market selloff, all the hedge-fund favourites are down more than the S&P 500 index.
Ford, homebuilders, regional banking, Europeriphery, and semiconductors are all getting slammed.
I guess this is just one of those "sell the things you bought before" days.
Probably enough damage has been done on the chart that it'll take a while for the US to recover. Maybe we end up with a month of wailing and gnashing of teeth in September?
All I own now is the PMs.
Monday, August 26, 2013
Gold and silver went up, and now they're coming back down. Because fuck you is why.
Here's the news:
Calculated Risk - The future is still bright.
Schwab - Liz Ann Sonders wants to buckle us up! She expects some short-term market trouble thru September.
Mining.com - PIMCO says first Fed hike may not happen til 2016. I have to agree with them that the market's gotten ahead of itself. Bernanke set out clear criteria, and the market is ignoring these criteria because they hate math or something, fuck I dunno.
The Guardian - India's economic downturn: fear the worst! What have I been saying?
Daily Telegraph - India: it all ends in tears. Again with the English newspapers reporting on the collapse of India.
Qz - Chinese "investors" buying a quarter of all new London homes. By "investors", we mean "corrupt local party officials using fake identities".
Mining.com - Where all the ETF gold ended up. Please read the Macquarie note linked to in the aritcle. As noted, Whitey sold all his gold to the Chinese, who aren't going to give it back to the physical market any time soon. It really is all about India and China, dumbass.
Mining.com - Hedge funds have gone long gold. Oh god. I hate when those clowns tag along for the ride, it always ends in tears. I could hope they've joined in on a long-gold-short-rupee trade, but the truth is probably that they're buying gold expecting skyrocketing UST yields - in which case they're going to be disappointed pretty soon, in which case they'll then pile out into the next trade like a bunch of lemmings, puking into thin markets as they go. Because hedge funds are fucking morons.
Silvercrest is definitely going foom, and on high volume too.
Question is, at what point do you call it exhaustion volume?
I'm happy to have bought some... last week, I think. I always thought Silvercrest was the bee's knees, as you probably remember. Question is, should I buy more now that it's decided to move?