Saturday, November 22, 2014

MICKEYMAN SAYS OMG NOW IS THE TIME TO HOLD GOLD MINERS


World Complex - OMG NOW IS THE TIME TO BUY GOLD MINERS!!!!1!

I dunno if it's enough of a sample size just yet, but his data does seem to say that gold-USD correlation has now flipped to positive.

Which btw I thought might be seen if there was an unwinding of the long-USD-short-GDX trade. Because GDX is too tiny a pool for pair-trade elephants to flop around in.

I don't think it's the end of gold miners sucking™, but I do think it really looks like a safe time to play a quick (weeks or months) rebound.

Anyway, maybe if GDX and GDXJ do well enough in this little rebound, it'll reduce the level of disdain in the market for miners, and we can be on the way to building a real base for the next longer-term rise. After all, the S&P shouldn't be booking >10% wins for the next few years, while (as we smelly goldbugs know) junior miners can book you 50% wins in just a couple months.

We've got the action, bitches. Too bad the past 3 years of it has been to the downside, but hey, if even just that negative bias left the market it would make for fun trading ahead.

Anyway, we'll see. I would doubt the possibility that a bottom was in, if Ritholtz hadn't spent the past two weeks baiting goldbugs daily with end-of-gold dooooom stories.


Another great post of the past: "CEO Technician" botches a top call over the space of a week


Here's another popular post of the past:

My blog is awesome - "CEO Technician" botches a top call over the space of a week. And with a further 6 months behind us, the worthlessness of CEO.ca's "analysis" is made even more evident.

Quoted in full:




CEO.ca - a market on the brink!!!1! Here's what he said:
Never before have there been so many warning signs of an impending market decline while the senior equity indices remained within 2% of all-time highs.
I guess the rotation out of tech spec stocks and the transports upside breakout were only so many warning signs of an impending market decline for this guy. Because he probably doesn't read much outside of the goldbug sphere.

Here's his hilarious chart with arbitrary silly TA lines drawn on it:


And by the title of this post from May 8th ("a market on the brink"), as well as the title of his post from May 10 ("diamond top for the S&P?") you can surmise that this clown was predicting a market top.

Oh there's also these other posts:

May 6 - how long can energy hold up the market?
April 14 - this chart is flashing a red light for the stock market.
April 7 - the market is sending ominous signals.

And I don't even want to go into all his embarrassing "gold is at an inflection point" and "gold is set up for a strong move higher" posts. That's for later.

Well? How's your "diamond top" formation resolving itself, just two days later?


Broken to the upside. There's yet another top call ground into the dust, forgotten by all. A whole month of dooming, wasted.

Oh and by the way: SPY isn't the index. $SPX is the index. SPY is an ETF and doesn't track $SPX exactly. Here's your proof:


I guess Tommy Hump has to keep posting this silly, amateurish, always-wrong patter on his website, since he probably feels his job is to get people the hell out of the S&P 500 and into the gold stocks.

But dammit man, this "technician" fellow has become Raoul Pal level embarrassing. How long are you going to keep posting stuff from a guy who's always wrong, every single day?

Maybe later today I'll post a summary of his last few months of gold TA.

UPDATE: it was a guaranteed slam-dunk, the only question was how long it'd take IKN to plug this post.


Friday, November 21, 2014

DPM sucks BUT....


Dundee Precious Metals has turned up:


Yabut the price of gold has dropped and DPM is a marginal producer, no?

Yeah, well it's been that way forever, and yet look at this:


It's been down this low before and popped back up to $5.

I got me some on a lark, yesterday. It's always been a good play when I time it right... it seems the robots move the price more than humans do, and now the robots should be sending DPM's stock price back up if this is a new bull move in junior miners.

If not? Well, it's a flip trade.


Chinese rate cut: party on, Garth!


A certain acquaintance (a swarthy fellow with a British accent, with a name that rhymes with Blichael Blaoul) noted that he was going to be very interested in the commodity market's reaction to China's surprise rate cut.

Well, as of the last few hours anyway, copper's up gold's up silver's up.

Do you remember that story about how China's leadership are idiots who are going to just sit back and let their economy collapse, like a bunch of Republicans or something? And how that means the commodities are in for rough times?

Well, now that this assertion has been disproved, let's watch and see how short the market was and how unshort it's going to have to get over the next few weeks.

Party on, Garth!

Oh, and for those of you interested in Mickey Fulp's noted supertight negative correlation between gold and USD - you might want to check and see how uncorrelated they get now.

That's the other problem with putting on a USD-gold pair with the assumption that gold is negatively correlated to USD - it only works until it suddenly, brutally, viciously doesn't.


IS ZEROHEDGE A RUSSIAN DISINFORMATION OPERATION? Wait, did you really have to ask that?


Streetwise Professor - how you know Zerohedge is a Russian disinformation operation. Apparently, the Russians want us to believe that Ukraine's central bank's gold was looted by the Americans, for no comprehensible reason whatsoever - and not by Yanukovych, for personal enrichment.

But then again, this is the country that wants us to believe the Ukrainians are the next Third Reich.

Y'know, when I was a tiny little gipper, even then I was pissed off at the childish propaganda games that the superpowers played while I tried to live my life - especially so because of the constant threat of nuclear war, which you the reader simply can't understand if you're younger than 35 or so.


Friday videos: Goldfrapp live


Here's Goldfrapp doing "Strict Machine" at Glastonbury:



Never have I seen so much sound and fury and flashing lights about a bloody back massager.*




* - That's the joke

Thursday, November 20, 2014

Here's some pictures of Buffalo snow


Here's some pictorial Schadenfreude with Buffalo's 24-hour 6-foot snowfall:



More after the break:

Some reading


Some news for you:


Calculated Risk - the GS model for market cycles. Quote:

The likelihood of the economy showing late-cycle behavior or being in recession by the middle of 2015 is very low, according to the model. However, we expect a transition from early- to mid-cycle over the next half year. ... since early 2010 the model has characterized the economy as "early-cycle." This reflects the high degree of slack, a solid growth rate of activity, subdued inflationary pressure, and financial market outcomes consistent with an easy stance of monetary policy. ... Over the past year, the signal strength has declined considerably, showing that the choice between early- and mid-cycle has become more difficult. While mid-cycle behavior is qualitatively similar in many ways to early-cycle behavior, key differences include (1) smaller output and employment gaps, (2) slightly firmer inflation outcomes, (3) a trough in credit spreads and stock market volatility, and (4) a higher fed funds rate and related flattening in the yield curve led by the front end.

Either you can believe Goldman Sachs, who probably have 1 or 2 people who've taken university-level economics courses, or you can believe the incompetent blather of some idiot blogger who repeatedly warns of an upside blow-off in US equities and insists that only gold is money. Up to you.


Bloomberg - S&P 500 companies spend 95% of earnings on buybacks. And that is why there is no economic growth - corporations aren't investing in it. Quote:

CEOs have increased the proportion of cash flow allocated to stock buybacks to more than 30 percent, almost double where it was in 2002, data from Barclays show. During the same period, the portion used for capital spending has fallen to about 40 percent from more than 50 percent.

The reluctance to raise capital investment has left companies with the oldest plants and equipment in almost 60 years. The average age of fixed assets reached 22 years in 2013, the highest level since 1956, according to annual data compiled by the Commerce Department.

I'm going to be uber-bearish here and point out that you can't get a lasting US secular bull market until the idiot US government forces these corporate fuckers to spend money on growth. Til then, yes share buybacks are a kind of special dividend to investors; but they don't grow the US economy.


FT beyond brics - EM corporate hard-currency debt sucks. And that is yet another element of a secular bear market in EMs. And that is why you don't listen to Manhattan cracker clowns who tell you to increase EM exposure.


Permashave Dave - doing some Christmas shopping. He seems to think the bottom is in for the miners, and so he bought Timmins, Silvercrest, and some stuff that I've never even heard of. Which makes me feel better that I haven't bought them. Dude, just because it's down doesn't mean you buy it! You're supposed to buy the stuff that's already started going back up!


The Clive on BNN last Friday


By the way, The Clive appeared on BNN last Friday, mainly to counter the scurrilous rumours and misrepresentations that certain bloggers have been spreading across the internet.

BNN - The Clive interview.

By the way, I know BNN is reading this blog (I see you in the stats). Can you guys maybe have fewer fucking stupid javascripts on your page? You fuck up my entire browser experience whenever I try to watch something on your site.

Which means I end up never watching anything on your site.

Which means you're not getting the eyeballs.

Look into it.


Why is someone from Tsumeb reading a post about The Clive?


Ah, the interesting inside info I can get from my blog stats.

Behold!:

click to make big

So... Tsumeb is where DPM's smelter is.

BTO's Otjikoto mine is about 100km away. That's a bit far for wireless access.

So why was someone in Tsumeb reading one of my posts about B2Gold and The Clive?

Interesting!

GDXJ's status and what I think will move it


Here's GDXJ:


For what it's worth, even after all of yesterday's shenanigans, it's still not broken down below the EMA(9) yet.

And, again, this is what I think will move it:


US dollar needs to shit or get off the pot.

If USD moves up again, that'll mean more white-ass hedgie crackers going long-USD-short-gold and more long-USD-short-miners, and thus more pain for the GDX and GDXJ as the short sales pile in and swamp out the underlying market for shitty gold miners.

If USD is done moving up, which FFS you'd think it has to be eventually because the US market has been doing a great job recently of moving into things too fast too early and this was a heck of a move, then the shorts get closed out and we can move back to reality, grim as it may be.

I don't see how the USD can sustainably move up against JPY during a Japanese election, and I don't see how it can sustainably move up against the Euro because the hopes for a Draghi QE are far ahead of the German jackboot of European fiscal reality. But I guess I'm open to be proven wrong.


IWM vs SPY


Here's IWM vs SPY:


It's at the lower Boll right now, so on the one hand it should turn up, but on the other hand it rode the lower Boll down all through September.

Then again, some guy on the internet says small-caps typically outperform through the end of the year.

Far as I'm concerned, I've been wondering if small caps have been hated enough this year.

Anyway, I'm taking money out of my Japan position (made good money cos it's CAD-hedged in CJP.to) and wondering where else to put it - IWM seems like a good place, maybe I'll try that.

Someone passed me a doc from BAML where they noted that the whole world is overweight Japan right now, so that's a good reason to close out. But in my case, I just don't want to own Japan through an election cycle. No reason, I'm not super-wise about Japan, I just don't want to hold anything through an election.

But knowing the rest of the world is now overweight Japan, and yet the EWJ hasn't really broken out, tells me it was probably a good idea to be scaling back.

As far as the US markets - I dunno if this is a roll-over we're seeing now. It looks more like a horizontal consolidation. And there's no reason for the market to roll over except for profit-taking. And we already had that in that insane October sell-off.


RUSSIA LIBERALIZES GUN LAWS: hoo boy you just know this is going to end well


He just keeps getting more and more Republican!

New Republic - Putin just gave all Russians the right to carry guns everywhere. Hoo boy!:

Today, the Russian government changed its gun laws to allow citizens to carry rifles in public for the purpose of self-defense. Sound terrifying? It is.

Let's think about the context into which guns will be introduced. The Russians are the second-biggest consumers of hard liquor in the world (first in Europe). According to the World Health Organization, risky drinking—defined as "frequency and circumstances of alcohol consumption and the proportion of people drinking alcohol to intoxication"—is highest in the Russian Federation. Drinking in that country already often leads to suicide and accidents and fights.

Russia is also a country where people are massively suspicious of their fellow citizens, and equally unsure of their future. And that was before the Russians invaded Ukraine and whipped its own population into an aggressive, nationalist frenzy.

This will certainly end well. Especially when Putin accompanies the announcement of this law with the following quote:

As if to punctuate the point, President Vladimir Putin, speaking Tuesday at the United People's Front said: "You can get a lot more done with politeness and a weapon than with politeness alone."

That's actually an ignorant translator's mangling of a quote from Willie Sutton.


Wednesday, November 19, 2014

CIBC finally realizes that Sandstorm sucks


IKN - CIBC was blind, but now they see. Of course, that's after they reccied Nolan Watson's Carcrash through a 75% price collapse in 2 years.

I know that CIBC reads this blog, I've seen you in the stats. So would you mind explaining why it took you this long to change your reccie on Sandstorm? Did it take you this long to lose your trust in Nolan?

Or do you just want to remain silent and hope the attention goes away?

GDX premarket comment


GDX's chart:


For the past 6 months there has not been one day when GDX was this far above its EMA(9).

So it wouldn't surprise me to see a bit of backfilling today. So maybe I shouldn't buy more junior miners, since I'm going to be incommunicado this afternoon. Especially with gold opex on the 24th.

The question is, can this continue? I guess that depends on this:


USD ended yesterday in a precarious position. If it looks like it's about to lose 87.6 and its governing short-term EMA, that might stimulate more short covering and thus buying of miners - if you believe that half-assed pair-trade thesis of mine from last night.

We'll see!


Repeat post: Mark Cuban's reminder that fundamentals mean NOTHING


At the beginning of 2013, I reposted a Mark Cuban blog post from 2004.

I just re-read it now and realize it's still an absolute gem that anyone in the market should read.

Basically:

1. Stocks go up because more buyers than sellers. No other reason. Certainly not fundamentals.
2. Stocks go down because more sellers than buyers. No other reason. Certainly not fundamentals.
3. There are no exceptions to 1 or 2 above.


So I'll repost the repost of a repost below:



The Number. I recommend that anyone with an interest in the market jump at the chance to buy it.

In 1990, I sold my company, MicroSolutions which specialized in what at the time was the relatively new business of helping companies network their computer equipment to CompuServe. After taxes, I walked away with about $2 million. That was going to be my nest egg, and my goal was to protect it at all costs, and grow it wisely.

I set about interviewing stockbrokers and settled upon a broker from Goldman Sachs, Raleigh Ralls. Raleigh was in his late 20s, and relatively new to Goldman. But we hit it off very well and I trusted him. As we planned my financial future, I made it clear that I wanted my nest egg to be invested not like I was 30 years old, but as if I were 60 years old. I was a widows and orphans investor.

Over the next year I stuck to my plan. I trusted Raleigh, and he put me in bonds, dividend-paying utilities and blue chips, just as I asked.

During that year, Raleigh began asking me a lot of questions about technology. Because of my experience at MicroSolutions, I knew the products and companies that were hot. Synoptics, Wellfleet, NetWorth, Lotus, Novell and others. I knew which had products that worked, didn’t work, were selling or not. How these companies were marketed, and whether or not they were or would be successful.

I couldn’t believe that I would have an advantage in the market. After all, I had read A Random Walk Down Wall Street in college. I truly thought that the markets were efficient, that any available knowledge about a company was already reflected in its stock price. Yet I saw Raleigh using the information I gave him to make money for his clients. He finally broke me down to start using this information to my advantage to make some money in the market. Finally after more than a year, I relented. I was ready to trade.

Notice I didn’t use the word invest. I wasn’t an investor. I just wanted to make money. The reason I was ready to try was that it was patently obvious that the market wasn’t efficient. Someone like me with industry knowledge had an advantage. My knowledge could be used profitably. As we got ready to start, I asked Raleigh if he had any words of wisdom that I should remember. His response was simple. “Get Long, Get Loud”.

Get Long, Get Loud. As we started buying and selling technology stocks, most of which were in the local area networking field that I had specialized in at MicroSolutions, Raleigh put me on the phone with analysts, money managers, individual investors, reporters, anyone with money or influence who wanted to talk technology and stocks.

We talked about token ring topologies that didn’t work on 10BaseT. We talked about what companies were stuffing channels – selling more equipment to their distributors than the distributors really needed to meet the retail demand. We talked about who was winning, and who was losing. We talked about things that really amounted to the things you would hear if you attended any industry trade show panel. Yet after hanging up the phone with these people, I would watch stocks move up and down. Of course as the stocks moved, the number of people wanting to talk to me grew.

I remember buying stock in a Canadian company called Gandalf Technologies in the early 90s. Gandalf made Ethernet bridges that allowed businesses and homes to connect to the Internet and each other via high-speed digital phone lines called ISDN.

I had bought one for my house and liked the product, and I’d talked to other people who’d used it. They had decent results, nothing spectacular, but good enough. I had no idea Gandalf was even a public company until a friend of Raleigh’s asked me about it. What did I think about Gandalf Technologies? It was trading at the time at about a buck a share. It was a decent company, I said. It had competition, but the market was new and they had as much chance as anyone to succeed. Sure, I’ll buy some, and I would be happy to answer any questions about the technology. The market size, the competition, the growth rates. Whatever I knew, I would tell.

I bought the stock, I answered the questions, and I watched Gandalf climb from a dollar to about $20 a share over the next months.

At a dollar, I could make an argument that Gandalf could be attractive. Its market was growing, and compared to the competition, it was reasonably valued on a price-sales or price-earnings basis. But at $20, the company’s market value was close to $1 billion – which in those days was real money. The situation was crazy. People were buying the stock because other people were buying the stock.

To add to the volume, a mid-sized investment bank that specialized in technology companies came out with a buy rating on Gandalf. They reiterated all the marketing mishmash that was fun to talk about when the stock was a dollar. The ISDN market was exploding. The product was good. Gandalf was adding distributors. If they only maintained X percentage of the market, they would grow to some big number. Their competitors were trading at huge market caps, so this company looks cheap. Et cetera, et cetera.

The bank made up forecasts formulating revenue numbers at monstrous growth rates that at some point in the future led to profits. Unfortunately, the bank couldn’t attract enough new money to the stock to sustain its price. It didn’t have enough brokers to shout out the marketing spiel to entice enough new buyers to pay the old buyers. The hope among the “sophisticated buyers” was that one bank picking up coverage would lead to others doing the same. It didn’t happen. No other big investment banks published reports on the stock. The volume turned down.

So I did the only smart thing. I sold my stock, and I shorted it to boot. Then I told the same people who asked me why I was buying the stock that I had shorted the stock. Over the next months, the stock sank into oblivion. In 1997, Gandalf filed for bankruptcy. Its shares were canceled – wiped out – a few months later. I wish I could take credit for the stock going up, and going down. I can’t. If the company had performed well, who knows what the stock would have done?

But the entire experience taught me quite a bit about how the market works. For years on end a company’s price can have less to do with a company’s real prospects than with the excitement it and its supporters are able to generate among investors. That lesson was reinforced as I saw the Gandalf experience repeated with many different stocks over the next 10 years. Brokers and bankers market and sell stocks. Unless demand can be manufactured, the stock will decline.

In July of 1998, my partner Todd Wagner and I took our company, Broadcast.com, public with Morgan Stanley. Broadcast.com used audio and video streaming to enable companies to communicate live with customers, employees, vendors, anyone with a PC. We founded Broadcast.com in 1995, and we were well on our way to being profitable. Still, we never thought we would go public so quickly. But this was the Internet Era, and the demand for Internet stocks was starting to explode. So publicly traded we would become and Morgan Stanley would shepherd us.

Part of the process of taking a new company public is something called a road show. The road show is just that. A company getting ready to sell shares visits the big mutual funds, hedge funds, pension funds – anyone who can buy millions of dollars of stock in a single order. It’s a sales tour. 7 days, 63 presentations. We often discussed turning up the volume on the stock. It was the ultimate “Get Loud.” Call it Stockapalooza.

Prior to the road show, we put together an amazing presentation. We hired consultants to help us. We
practiced and practiced. We argued about what we should and shouldn’t say. We had Morgan Stanley and others ask us every possible question they could think of so we wouldn’t look stupid when we sat in front of these savvy investors.

Savvy investors? I was shocked. Of the 63 companies and 400-plus participants we visited, I would be exaggerating if I said we got 10 good questions about our business and how it worked. The vast majority of people in the meetings had no clue who we were or what we did. They just knew that there were a lot of people talking about the company and they should be there.

The lack of knowledge at the meetings got to be such a joke between Todd and I that we used to purposely mess up to see if anyone noticed. Or we would have pet lines that we would make up to crack each other up. Did we ruin our chance for the IPO? Was our product so complicated that no one got it and as a result no one bought the stock? Hell no. They might not have had a clue, but that didn’t stop them from buying the stock. We batted 1.000. Every single investor we talked to placed the maximum order allowable for the stock.

On July 18, 1998, Broadcast.com went public as BCST, priced at 18 dollars a share. It closed at $62.75, a gain of almost 250 percent, which at the time was the largest one day rise of a new offering in the history of the stock market. The same mutual fund managers who were completely clueless about our company placed multimillion orders for our stock. Multimillion dollar orders using YOUR MONEY.

If the value of a stock is what people will pay for it, then Broadcast.com was fairly valued. We were able to work with Morgan Stanley to create volume around the stock. Volume creates demand. Stocks don’t go up because companies do well or do poorly. Stocks go up and down depending on supply and demand. If a stock is marketed well enough to create more demand from buyers than there are sellers, the stock will go up. What about fundamentals? Fundamentals is a word invented by sellers to find buyers.

Price-earnings ratios, price-sales, the present value of future cash flows, pick one. Fundamentals are merely metrics created to help stockbrokers sell stocks, and to give buyers reassurance when buying stocks. Even how profits are calculated is manipulated to give confidence to buyers.

I get asked every day to invest in private companies. I always ask the same couple questions. How soon till I get my money back, and how much cash can I make from the investment? I never ask what the PE ratio will be, what the Price to Sales ratio will be. Most private investors are the same way. Heck, in Junior Achievement we were taught to return money to our investors. For some reason, as Alex points out in The Number, buyers of stocks have lost sight of the value of companies paying them cash for their investment. In today’s markets, cash isn’t earned by holding a company and collecting dividends. It’s earned by convincing someone to buy your stock from you.

If you really think of it, when a stock doesn’t pay dividends, there really isn’t a whole lot of difference between a share of stock and a baseball card.

If you put your Mickey Mantle rookie card on your desk, and a share of your favorite non-dividend paying stock next to it, and let it sit there for 20 years. After 20 years you would still just have two pieces of paper sitting on your desk.

The difference in value would come from how well they were marketed. If there were millions of stockbrokers selling baseball cards, if there were financial television channels dedicated to covering the value of baseball cards with a ticker of baseball card prices streaming at the bottom, if the fund industry spent billions to tell you to buy and hold baseball cards, I am willing to bet we would talk about the fundamentals of baseball cards instead of stocks.

I know that sounds crazy, but the stock market has gone from a place where investors actually own part of a company and have a say in their management, to a market designed to enrich insiders by allowing them to sell shares they buy cheaply through options. Companies continuously issue new shares to their managers without asking their existing shareholders. Those managers then leak that stock to the market a little at a time. It’s unlimited dilution of existing shareholders’ stakes, death by a thousand dilutive cuts. If that isn’t a scam, I don’t know what is. Individual shareholders have nothing but the chance to sell it to the next sucker. A mutual fund buys one million shares of a company with your and your coworkers’ money. You own 1 percent of the company. Six weeks later you own less, and all that money went to insiders, not to the company. And no one asked your permission, and you didn’t know you got diluted or by how much till 90 days after the fact if that soon.

When Broadcast.com went public, we raised a lot of money that certainly helped us grow as a company. But once you get past the raising capital part of the market, the stock market becomes not only inefficient, but as close to a Ponzi scheme as you can get.

As a public company, we got calls every day from people who owned Broadcast.com stock or had bought it for their funds. They didn’t call because they were confused during our road show, were too embarrassed to ask questions and wanted to get more information. They called because they wanted to know if the “fundamentals” – the marketing points – they had heard before were improving. And the most important fundamental was “The Number,” our quarterly earnings (or in our case, a loss). Once we went public, Morgan Stanley published a report on our company, as did several other firms. They all projected our quarterly sales and earnings. Would we beat The Number?

Of course, by law, we were not allowed to say anything. That didn’t stop people from asking. They needed us to beat the forecast. They knew if we beat The Number the volume on the stock would go up. Brokers would tell their clients about it. The Wall Street Journal would write about it. CNBC would shout the good news to day traders and investment banks that watched their network all day long. All the volume would drive up the stock price.

Unfortunately, patience is not a virtue on Wall Street. Every day, portfolios are valued by at closing
price. If the value of your fund isn’t keeping up with the indexes or your competition, the new money coming in the market won’t come to you. It just wasn’t feasible for these investors to wait till the number was reported by companies each quarter. The volume had to be on the stocks in you fund. To keep the volume about a stock up, and the demand for the stock increasing, you needed to have good news to tell.

Volume, The Number, whisper numbers, insiders granting themselves millions and millions of options - these are the games that Wall Street plays to keep on enriching themselves at the expense of the public. I know this. I have tried to tell people to be careful before they turned over their life savings and their financial future to someone whose first job is to keep their job, not make you money.

Till I read The Number by Alex Berenson, I never had a book that explained how the market truly worked that I could tell my friends, family and acquaintances to read. I never had a book that would truly warn them that the market was not as fair and honest as mutual fund and brokerage commercials made them out to be. I may be a cynic when it comes to the stock market, but I am an informed cynic, and that has helped me make some very, very profitable decisions in the market.

If you are considering investing in the market, any part of it, or if you are considering giving your hard earned money over to someone else to manage, please, please read The Number first.

Mark Cuban, Dallas, Texas, January 2004


Some Wednesday morning news


Got some work to do today, won't be posting much:

Bloomberg - GFMS says physical silver demand to drop 6.7% in 2014. Hey, guys? Guys? 2014's almost over, so your article is only telling us what's already been baked into the price. Oh and by the way - industrial fab is over half of all silver demand, so you should concentrate on that number and not on fucking jewelry or coins.

Bloomberg - meanwhile, everyone was bearish gold as of last week. That boat sure looks like it was leaning too far to one side.

Vitaly Katsenelson - on how much of a propaganda state Russia has become. My god, it's turned into North Korea, except 130 times the surface area. Someone might want to ask Marin Katusa how he expects a bankrupt fascist propaganda state with no revenue outside of oil and natgas to become a "world power".

Politico - whatever happened to overtime? I can't fucking believe that Americans don't get time and a half for overtime. Again, yet another illustration of how the capitalist class has confiscated the entire economy for itself. Happily, they've been so thorough that now the peasants can't provide them with enough demand for rental of their capital: thus interest rates will stay at zero til the pendulum swings back in the workers' favour.


Cookie interview


IKN linked to a Brent Cook interview, and I'll embed it below:



I wonder if the damage being done to the gold industry in this bear market (exploration budgets eliminated, deposits high-graded) is the same as the damage that was done in 97-02.

Oh, and also, please watch this video all the way through. At the end you'll see an utterly hilarious commercial for a Marin Katusa video, now on sale.

It's hilarious because Katusa has now come out of the closet as a hardcore Putin supporter.

Seriously, the paid Russian war propaganda on RT doesn't go as far as Katusa.

That video is going to be worth its weight in gold 6 months from now when Russia's forex reserves are gone and the country goes bankrupt.


Tuesday, November 18, 2014

HOW HIGH WILL GOLD MINERS GO?: the answer will shock you!


EDIT: Ha ha, as of 11:30 AM Wednesday they all got they asses smacked down. Oh well - at this very moment GDXJ and GLD still haven't violated their EMA(10)s, so I guess we can just puzzle out whether this is a buy point or not.



So gold miners have popped really nicely. I feel kinda stupid at selling some stuff today after just a quick 10% gain, but still have a quarter of my money in B2Gold and intend to ride Clive into the sunset. I really wanted to have some cash back in the kitty, since I'm going to be busy tomorrow.

But how far back can the miners pop?

Once I take a position, I'd like to puzzle out how far it might go. I don't like to guess, and I don't want to sell early and leave a possible 50% win on the table - especially when I've been waiting all year for the chance to put this trade on.

So here are some slightly more involved charts than usual for you that might suggest a freaky answer.

Some news


Here's some news:

Calculated Risk - LA port traffic in October. That's economic data for you!

Calculated Risk - ATA trucking index for October. More economic data!

BBC - Shinzo Abe calls snap election. I guess the market liked this.

Mining.com - India readies draconian new gold import rules. Or so they say. I find it interesting that OpEx is just around the corner.

FOUR, FIVE, SIX FEET OF SNOW IN BUFFALO: residents remember why it sucks to live in Buffalo


Your daily Schadenfreude!:

CBC - snowstorm buries Buffalo.

USA Today - lake-effect snow buries Buffalo.

Globe and Mail - four feet of snow and rising.

Washington Post - ha ha Buffalo you suck.

Buffalo News - yeah we know, it's Buffalo.


US dollar should be getting your attention right now

$USD:


Basically, the past week has seen $USD move horizontally, not up.

If the market decides the US dollar needs to retrace for a while, we maybe get a bit of a reprieve in PMs. Maybe a larger reprieve if the retrace causes pain for a bunch of basement hedge fund pretenders.


Rick Rule agrees with me



CEO.ca - Rick Rule thinks global boom will fuel demand for gold. I guess Rick Rule has sense enough to realize that the doomer goldbug narrative just makes people look stupid nowadays, and so he's started to talk some sense:

Well, my own experience goes back to the early 1970s, so sadly, that experience is long indeed. Confidence in resource markets can be as broad as confidence in the ascent of man—the longest running bull market in history. Despite the ups and downs, society over time increases its standard of material well-being, and simultaneously, increases its size. We’re at 7 billion and counting, there’s more people being born every day, and they all want to eat, Tekoa. That’s the broadest set of circumstances we’re in.

It’s odd to me that resource investors, perhaps because of the hard money origins of many of them, believe a catastrophic decline will be the best possible outcome for the resource business. That’s wrong. The best possible outcome for the resource business would be a boom, which increases utilization of commodities, and secondly, increases savings in gold which is an important part of the savings matrix of many people on earth.

Hence, the more wealth that’s generated, the more demand we’ll see for gold as part of the savings matrix. I believe the set of circumstances that’s in front of us is severe but survivable.[...]

OK, then he speaks like a doomer for a bit. The circumstances in front of us are awesome and amazing, Rick. Unless you're talking about the gold juniors, but even then if you truly are a "buy low sell high" guy you must also think the forward outlook for the juniors is great.

Anyway, he eventually shrugs off the brain parasite and gets back to sense:

The outcome is that the laws of supply and demand, and the laws of the market will ultimately prevail over the headlines.

The truth is that the material goods humans require will always do well. People will always need to eat, and they’ll always want access to electricity which requires coal, nuclear, and copper. As people (particularly people in frontier and emerging markets) acquire more wealth, they’ll require more savings products.

Again, an important part of the savings matrix in places like China, South Asia, India, and Pakistan, is gold. So ironically, an increase in living standards would probably be better for gold investors than a decrease in living standards. While I expect the time ahead of us will be turbulent, I also suspect that resource investors will do very well[...]

Now okay, maybe he hasn't learned this from me. John Kaiser's been saying the same thing, and Adrian Day also has an EM modernization-driven commodity bull market thesis beneath all his hard-money wharrgarbl.

Still, I guess in a way it's nice that Rule is speaking some sense to the market.

And as for USTs:

The best case value proposition offered up by the U.S. 10 yr. treasury is (if you believe their numbers) that you give them $100,000, and in 10 years they give you back $100,000. In other words—you make no money.

The mid case scenario is you give them $100,000, and given the decline in purchasing power of the basket of goods and services that you and I consume (not the CPI), they give you back $50,000. Now think about that. The promise is they deprive you of half of your purchasing power over 10 years.

So if the fight then is between gold and the U.S. 10 yr. treasury, I don’t see how over 5 years we can possibly lose that fight.

From a Summers/Krugman/Piketty standpoint, he's right: if there is going to be an extended period of ultra-low interest rates, then yes: there is going to be no reason to own USTs.

Then again, you'll get more return from the US stock market if we're in a secular bull.

Then again then again, gold is insurance. But yes it's also a luxury consumer good, and so you'll want to see growth in luxury consumer buying power.

Anyway, good to see at least one hard-money Ayn Rand worshipping loon is able to talk a bit of economic sense when it comes to the market fundamentals for gold. I guess Rick doesn't really believe all that Ayn Rand crap after all, eh?


Anatole Kaletsky on the secular bull market


Reuters - Anatole Kaletsky on the secular bull market. I find it hilarious, by the way, to remember all those guys I was chatting with a few years ago who reacted with disdain whenever I mentioned the possibility of a new secular bull market in DM equities.

However, I also feel ashamed that I'm not rubbing it their damn faces enough, now that years later they've been proven to not have a goddamn clue about economics after all.


KEEP IT UP, RITHOLTZ


Gold Kitco this AM:



Keep slagging gold on your blog, Barry! Maybe you can talk it all the way up to $1300.




Still hasn't broken down in CAD, by the way. Neither by the close nor by the intraday.


Monday, November 17, 2014

Gold miners - seems like a bit of an upward trend

GDX:

Seems like a bit of an upward trend forming. This is the kind of chart I buy, so I bought some stuff today.

That trendline from end of August through mid-October is the next interesting thing on this chart.

GDXJ:



That trendline is a little ways away here, but it still looks hopeful.

Will this trend continue? Well, as of this morning Ritholtz was still talking about how much gold miners suck, so I figger we probably have another week of bull move at least.

Thanks, btw, to the guy who gave me those 100,000 shares of Coro at 3 cents. I just puked them into someone else's lap for a 50% win.


Aaugh! GDP QoQ vs GDP "annualized" - one of these things doesn't exist


Michael Shaoul just made more of my braincells die by saying something stupid about Japan's GDP report.

Quote:

...this recovery was insufficient to lift aggregate GDP back into positive territory, with the official estimate showing a -0.4% decline in GDP QoQ (-1.6% annualized), up from -1.9% in Q2.

See the problem?

It jumps out more when you're me and you read something even more idiotic on the weekend (probably on some joke site like Business Insider) saying that Japan's Q2 GDP was -7.6% annualized.

You do not annualize GDP growth rates by multiplying by 4 unless you want me to hunt you down and beat you to death with the severed limbs of those you love.

The "annualize" in this case means nothing: all you're doing is multiplying a very noisy, variably trending, dataset by 4.

Yes, sure, if the Q3 -0.4% move in GDP remained exactly the same for 12 months, you'd get an "annualized" -1.6% drop; but Japan's Q2 was -1.9%, and Japan's Q1 was a revised +1.6%, and so far that totals up to -0.7% for the three quarters so far.

See how far away "-0.7%" is from "-1.6%"?

Shaoul's thesis is that Japan will grow just fine, and the recent bump was the result of the sales tax increase which has now worked its way through the system; so if Japan gets back to a (say) +0.4% growth in Q4, that would mean an "annualized" GDP growth in 2014 of -0.075%.

If Japan instead got back in Q4 to just half the growth rate of Q1, that would give an "annualized" growth rate of +0.025%. (Still sucks, but as Kruggers would say that's what you get when you implement the contractionary policy of a sales tax increase.)

Shaoul probably took math in school, so I don't see why the hell he feels the need to "annualize" the butt end of a one-off pothole.

Don't go "annualizing" things that can't be "annualized". In a variably trending, noisy dataset, all you're going to do is confuse everyone with bullshit numbers.

Sunday, November 16, 2014

IS DANIELA CAMBONE MARRIED? - the gift that keeps on giving!


My blog continues to rise in the search rankings, all due to one person:


I guess, in a way, she deserves a share of my ad revenue.

However, in a way, I'm also a selfish bastard who loves money. And in the words of William Munny, "Deserve's got nothin' to do with it."

A modest proposal to counteract the present cold snap


As those of you in Ontario know, fuck snow in the ass right about now.

Happily, I'm a doer not a whiner, and I've come up with a modest proposal:

Mickey Fulp knows I'm right


Remember how I've been screaming from the rooftops that gold has only broken down in US dollars, and the chart is fine ex-US? Well, now Mickey Fulp has crunched the numbers and proven me right.

Mickey Fulp - mercenary musing (pdf). Like I said, gold's price moves over the past 120 days have been entirely a US dollar story. A correlation coefficient of -0.96 is pretty damn convincing if you ask me.

And since Americans don't buy gold, the action on the USD gold chart doesn't have the effect on demand that you think it should have. All I'm saying is that perspective is imperfect and you need to look at a wider view, and you may as well ignore the clowns in the media who stick with this imperfect perspective.

A funny corollary of that -0.96 correlation is that gold's price ex-US has bottomed and gone to sleep. Um... which it has.

Anyway, so Mickey's takeaway from this is that we're in the beginning of a long USD bull move, and that will make for a long-term bear market in metals. If he hasn't yet, I'd strongly suggest he read Jim Rogers' Hot Commodities, because Rogers (though he is a loony) did nail the macro explanation for this secular bull/secular bear mechanism decades ago.

Buy it for yourself for Xmas. It really is a good book. 

Anyway, interestingly for a hard-money type, Mickey finally accepts that the US dollar is still the world's safest currency. How's that Ben Bernanke look now, bitch? Huh?

Oh and Mickey says he cheated in university. Quote:
As an aside, I had 14 hours of high-level mathematics beginning with engineering calculus in college, but did not take statistics, a low-level course that would not credit toward my undergraduate degree. However, it was a requirement when I entered graduate school at the University of New Mexico. To get around taking a freshman-level math class, I convinced the geology department that a course shown as “Statics and Dyn” on my undergrad transcript, was a sophomore statistics course. In actuality, it had nothing to do with statistics but was a civil engineering course called “Statics and Dynamics”. LOL.
You're a very bad person for faking your way out of a university stats course, Mickey, and you should feel bad.