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Optimists to fore before Iran-US encounter
By Jim Lobe
Sept. 24, 2013
WASHINGTON - On the eve of a possible - if seemingly accidental - encounter between US President Barack Obama and Iranian President Hassan Rouhani in the corridors of the UN Secretariat building on Tuesday, speculation over the possibility of detente between Washington and Tehran has become rampant.
A series of conciliatory statements and steps taken by both sides in recent weeks has fueled the imaginations of foreign policy mavens here, with some warning against possible US "appeasement" of what Israeli Prime Minister Benjamin Netanyahu called, in a reference to Rouhani, a "wolf in sheep's clothing", and others giddy with the possibilities of ending 34 years of mutual hostility.
So far, the former group, which has clearly been spooked by the remarkably successful public relations offensive conducted by Rouhani and his less-than-two-month-old government, is more vocal, particularly in the United States Congress where the Israel lobby enjoys its greatest influence.
But among the traditional foreign policy elite and Iran specialists, the optimists appear dominant, encouraged and very pleasantly surprised by developments on the Iranian side of the past few weeks.
Not the least of these was last week's clear alignment, at least for now, by Supreme Leader Ayatollah Ali Khamenei - regarded as the ultimate "decider" when it comes to matters of foreign and strategic policy - behind Rouhani in an appearance before the hard-line Islamic Revolutionary Guard Corps.
Not only did Khamenei call for "heroic flexibility" in negotiating a resolution to the long-running stand-off with the US-led West over Tehran's nuclear program in a joint appearance with Rouhani. He also backed up the new president in reminding the IRGC, long regarded as a potential spoiler in any detente strategy, that the Islamic Republic's founder, the revered Ayatollah Ruhollah Khomeini, had warned against its involvement in politics.
"To the best of my knowledge, the Supreme Leader has never made a statement like that; nor has anybody at a senior level made a public reference to Khomeini's injunction. I don't think you'll ever get a clearer statement," according to Gary Sick, an Iran expert at Columbia University who served on the National Security Council during the Ford, Carter, and Reagan administrations.
"To me, that sounded like an endorsement of what Rouhani was doing and warning ... that, 'if you're thinking about a spoiling operation, think again'," he told IPS.
The current speculation goes beyond a possible resolution of Iran's nuclear program to include possible cooperation on regional security issues, including Syria and Afghanistan.
It comes as both Obama and Rouhani prepare to address the UN General Assembly Tuesday, a coincidence that has already sparked debate over the pros and cons of the two men "accidentally" meeting and exchanging greetings or more as they pass through the building's hallways.
Republican leaders generally opposed the idea, while Democrats offered wary support Monday. At the same time, half a dozen activist groups, including MoveOn.org and Win Without War, submitted on-line petitions with nearly 111,000 signatures calling on Obama to meet with Rouhani, while the neo-conservative Wall Street Journal warned that such a move would confer on Iran's "dictatorship new international prestige at zero cost".
While such a rendezvous would undoubtedly carry considerable symbolic importance, of more practical significance may have been the announcement after a bilateral meeting Monday between Rouhani's foreign minister, Javad Mohammad Zarif, and his European Union counterpart, Catherine Ashton, that Zarif, a US-educated former UN ambassador, will take part in a meeting of the so-called P5+1 (US, Britain, France, Russia, and China plus Germany) on the sidelines of the UN General Assembly this week.
US Secretary of State John Kerry is also expected to attend the meeting, a prelude to a long-awaited negotiating session to take place in Geneva next month and the highest-level meeting of the two countries since the 1979 UN General Assembly when then secretary of state Cyrus Vance met with provisional foreign minister Ibrahim Yazdi seven months after the Islamic Revolution, according to Sick.
Meanwhile, however, speculation about the possibility of detente continues apace. Of central importance, according to experts here, will be whether the two sides can agree relatively quickly on interim confidence-building measures (CBMs) surrounding Iran's nuclear program, at the very least - something that is likely to be touched on in the P5+1 meeting later this week and explored more fully next month.
At issue here is whether and to what extent the US and its partners should offer sanctions relief - or pile on more pressure - in exchange for Iran's implementation of CBMs. Most Iran experts here believe that there should be a reciprocal process and that Washington should be prepared to offer more relief than it has tabled in the past.
But Netanyahu, who will address the General Assembly later this week and meet with Obama next week, argues that the West should actually tighten existing sanctions and add new ones until Iran effectively abandons its nuclear program altogether. In the meantime, he is demanding that Obama take steps to make more credible his pledge to take military action, if necessary, to prevent Iran from acquiring a nuclear weapon.
Lawmakers close to the Israel lobby from both parties are urging much the same line. One letter to Obama from Republican Senator John McCain and Democratic Senator Charles Schumer released on Monday said there should be "absolutely no relaxing of pressure on the Iranians until the entirety of their nuclear situation has been addressed" and warned that "(r)emoval of any existing sanctions must depend on Iran's halting of its nuclear program".
Apart from the nuclear front, speculation about US-Iranian cooperation on regional issues has grown quickly in the wake of the US-Russian accord on placing Syria's chemical weapons under international control, particularly since Rouhani and Zarif have endorsed it.
Obama himself has hinted that he is prepared to lift US opposition to Iran's participation in a Geneva II conference to end the civil war in Syria, while Washington's chief envoy for Afghanistan and Pakistan, Ambassador James Dobbins, suggested to IPS last week that Iran could play a useful role in the transition in Afghanistan as US and North Atlantic Treaty Organization troops withdraw their combat forces next year as it did at the Bonn Conference 10 years ago.
Both moves, but particularly its involvement in Syria peace talks, would offer Iran something it has long sought: de facto recognition of its importance in a revised regional security structure - a move to which US allies Saudi Arabia, the United Arab Emirates, and Israel have long been opposed.
"Obama will face potent opposition from Israel, its supporters in the United States, and countries like Saudi Arabia," wrote Harvard international relations professor Stephen Walt on his foreignpolicy.com blog Friday. "These actors would rather keep Washington and Tehran at odds forever, and it's a safe bet that they will do everything they can to run out the clock and thwart this latest attempt to turn a corner in the troubled US relationship with Iran."
Nonetheless, the "opportunity for a breakthrough with Iran after 34 years of isolation is tantalizing for Obama and his foreign-policy team," wrote David Ignatius, a columnist with excellent access to senior administration officials and whose views often represent those of the senior foreign-policy elite, in Sunday's Washington Post.
Jim Lobe's blog on US foreign policy can be read at Lobelog.com.
http://atimes.com/atimes/Middle_East/MID-01-240913.html
Sprott Precious Metals Round Table
Sept. 24, 2013 at 2:00pm E.T
Where Do We Go From Here?
The Fed taper. Turmoil in the Middle East. Selloff in Emerging Markets. What does it all mean for precious metals?
To find out, join our webcast on September 24, 2013 at 2:00 pm E.T.
for a round table discussion with Eric Sprott, Marc Faber, Rick Rule and John Embry.
To register:
https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=681241&sessionid=1&key=75357E663B2D6F4FBAA2FF28FF79CFC4&partnerref=bullion&sourcepage=register
How Interest Rate Swaps Are Crushing America's Cities
Sep 23, 2013 - 12:54 PM GMT
By: Money_Morning
Garrett Baldwin writes: It's something you may not even have heard of, but the massive financial burden of interest rate swaps is pressuring city budgets and pinching taxpayers more every year.
But before I tell you what interest rate swaps are, let me show you how they've affected life in America's largest city - New York.
Last week, I drove through the Lincoln Tunnel. The cash fare to travel the 1.5 miles from New Jersey into Manhattan was a whopping $13 - more than 50% more than the last time I was there.
When I jumped on the subway a few hours later, a one-way fare was $2.50, more than 60% more than when I lived in the city in 2008. And my water at the hotel? Shut off in the morning because the water authority was struggling to handle maintenance requests due to being short-handed.
These increases are not the result of the expansion of the transit system or increases in union salaries (common misconceptions).
Ultimately, the explosion in costs and slashing of budgets in New York and many other U.S. cities in recent years are happening because of a little-known type of financial contract - known as an interest rate swap.
You see, U.S. cities and their agencies have been on the wrong side of bad bets with the Big Banks. Now, these municipal agencies are struggling to cover their losses.
Interest rate swaps are costing American taxpayers billions all across the nation as Wall Street rakes in taxpayer money years after the financial crisis.
Interest Rate Swaps: The Big Banks Are the Big Winners
The idea behind interest rate swaps seems logical enough. Interest rate swaps are financial contracts meant to protect borrowers from drastic increases in costs related to the yield of their debts.
All across the country, cities and local agencies got into bed with Wall Street in the hopes of reducing their financial burdens on borrowing costs.
Now, those plans have backfired...
To understand what went wrong, you need to know how interest rate swaps work.
In the case of the MTA, the transit agency pays the bank (for example, JPMorgan) a fixed rate on a bond in the form of interest. That rate is prearranged and is typically just a bit higher than the going market rate at the time of the contract as a means of "locking in" the best deal. In this case, that rate might be 4.5%.
Meanwhile, through the interest rate swap agreement, the bank returns a payment of interest on a variable rate (which floats according to the global debt markets). If the going market rate is above the 4.5%, the MTA would make money. If it is lower than 4.5%, they will end up losing money on the deal. In most cases, it is sold on the premise that both entities will break even over time.
Unfortunately, Wall Street has a funny way of being right all the time. Following the financial crisis, low interest rates have meant that the banks still pay the higher fixed rate, but low variable rates driven by the Federal Reserve's policies have meant lower payments from the banks to the municipal borrowers of these swap agreements. So if the variable rate is 1.75%, but the fixed rate is 4.5%, the borrowers have to somehow cover the difference.
That's where the taxpayers (or users of the agency's services) come in. Fees they pay are being raised to pay for that difference.
The New York MTA, which controls the subway, bus, and other transit systems, has interest rate swap agreements with a number of banks, including JPMorgan, Citigroup, Morgan Stanley, and UBS.
Interest Rate Swaps Have Cost Taxpayers Millions
In December 2011, Michael Stewart of United NY prepared a report on the staggering cost of interest rate swaps to New York City and its agencies alone. In it, he highlighted the impact of these swaps on every major utility and authority in the city.
Just look at the accumulated costs for New York's MTA.
From January 2000 to December 2011, the MTA paid out a net sum of $658 million, thanks to cheap monetary policy in Washington. In order to cover those losses, the MTA is now forced to raise fares or cut jobs and services.
In 2010, the MTA had to cut more than 1,000 transit jobs and steeply cut subway and bus service lines. A city that was already difficult to get around became all that more difficult.
According to United NY, the annual net payments in 2012 for the MTA sit at $117.6 million. The Port Authority, in charge of the Lincoln Tunnel and other crossings into the city, owed $27.7 million. And the water authority, which is struggling to keep the water flowing at all hours, paid $6.2 million. Another $80 million to $85 million on interest swap payments was paid by other entities, including the state, city, and local libraries.
And there's no easy way out.
To terminate these contracts, the city and taxpayers would be on the hook for more than $1 billion. For customers and workers, the results have been devastating.
These weapons of financial destruction have been detrimental all across the country as interest rates have remained low:
- The Bethlehem School District in Pennsylvania has faced immense cuts across the board.
- Oakland, which found itself on the wrong side of the bet, had been forced to cut back on police services at a time that crime is on the rise.
- Harvard University lost millions on a faulty investment by its leadership.
And Baltimore, my hometown, is locked in a massive legal suit after banks manipulated the LIBOR rate and led to the city losing millions on swap payments.
A Looming Multi-Trillion Dollar Crisis
In 2012, the Office of the Comptroller of the Currency reported that U.S. banks held $183.7 trillion in interest rate swap contracts on their balance sheets.
Only four financial companies owned 93% of total derivative holdings.
As you may have suspected, those companies are JPMorgan Chase, Citibank, Bank of America, and Goldman Sachs, all four of which received billions in bailout money following the U.S. financial crisis.
Now, they've been raking in billions on these interest rate swap agreements thanks to a little help from their pal Ben Bernanke at the U.S. Federal Reserve and his cheap money policies.
It's bad enough that taxpayers will have to foot the bill on interest-rate agreements and pay the short-term-minded banks the difference between these agreements.
But the real problem isn't the banks making money on the lower interest rates.
It'll be incredibly worse if interest rates rise significantly and the payments start to come from the banks into the coffers of the towns, and for one reason: Banking leverage.
If anything causes interest rates to rise significantly, the contracts could begin to implode on the banks. That could recreate the 2008 crisis all over again with one hook.
And this time, it would be way, way bigger.
If interest rates spiked due to a default by the U.S. government on its debt, or the Federal Reserve were unable to maintain its grip on lending interest, the result would lead to banks being unable to meet all of their obligations on the higher variable rates set forth in their swap agreements.
With these contracts spanning decades, it's uncertain whether this would be sustainable.
This situation was exactly the type of issue that the Dodd-Frank Act was supposed to fix. But bank lobbying and government's inability to foresee any crisis has left American taxpayers vulnerable to these contracts and the nation vulnerable to yet another Wall Street meltdown.
Note: Wall Street's bubbles are everywhere. And we have plenty of reasons to fear any number of them bursting. But there's one that dwarfs all the others. Here's how to prepare for "the mother of all bubbles"...
Source :http://moneymorning.com/2013/09/19/how-interest-rate-swaps-are-crushing-americas-cities/
http://www.marketoracle.co.uk/Article42391.html
Sprott Precious Metals Round Table
Sept. 24, 2013
Where Do We Go From Here?
The Fed taper. Turmoil in the Middle East. Selloff in Emerging Markets. What does it all mean for precious metals?
To find out, join our webcast on September 24, 2013 2:00pm E.T. for a round table discussion with : Eric Sprott, Marc Faber, Rick Rule and John Embry.
To register:
https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=681241&sessionid=1&key=75357E663B2D6F4FBAA2FF28FF79CFC4&partnerref=bullion&sourcepage=register
Jim Rickards: We're Witnessing One of the Greatest Failed Experiments in Economic History
It all ends in the collapse of the dollar
by Adam Taggart
Saturday, September 21, 2013, 3:50 PM
Jim Rickards, author of the best-seller Currency Wars, sees the world's central banks embroiled in a "race to debase" their currencies in order to restore – at any cost – growth to their weakened economies.
In the midst of the fight, the U.S. Federal Reserve wields oversized power due to the dollar's unique position as the global reserve currency. As a result, actions by the Fed create huge percussive ripples across the battlefield, often influencing events in ways little understood by the players – and especially by the Fed itself.
In Rickards' words, the policymakers at the Fed "think they are dialing a thermostat up and down, but they're actually playing with a nuclear reactor – and they could melt the whole thing down":
It will play out in all markets. When I say collapse, it is a loss of confidence in paper money.
Take the Fed, for example. The Fed has printed almost $3 trillion since 2007. Now, that is without a liquidity crisis. I mean, we did have a liquidity crisis in 2008. And the first round – I would say QE1 was a legitimate central-bank response to liquidity crisis. But QE2 and QE3: we will look back over them and we will see them as enormous blunders in one of the greatest failed experiments in economic history.
But the problem is, the Fed printed trillions of dollars without a liquidity crisis. What is going to happen when we do have a liquidity crisis, which I expect in the next couple years, where there is a 2008 panic starting again? What are they going to do? Print $6 trillion? $9 trillion? There is a limit on what they can do. And so at some point, it is going to get handed over to the IMF, and they are going to have to print SDRs (special drawing rights). That is the IMF world money. Because none of the central banks have clean balance sheets at this point; they look like hedge funds.
And so it really is a loss of confidence. Confidence is the key word – a loss of confidence in paper money. And that confidence is going to have to be restored somehow. And there are really only two ways.
One is the SDR, which no one understands. So maybe they can re-liquify the world by printing SDRs and that will create massive inflation, but no one will really understand where it is coming from.
And the other way is gold, which would restore confidence. But to have a non-deflationary price of gold, you are looking at $7,000 an ounce – very possibly higher, maybe as high as $9-10,000 an ounce. I know that sounds extreme. But it is really just eighth-grade math, if you look at the money supplies and look at the physical amount of gold. People say you cannot have a gold standard because there is not enough gold. Well, that is not true. There is always enough gold; it is just a question of price. So the theoretical question is, what is a non-deflationary price for gold if you have to go back to a gold standard? And the answer is, it's north of $7,000 and up.
So that is the kind of thing that you might see. It is not what any central bank wants. It is not what the elites want. But it is the kind of thing you could get if you had to restore confidence. So that is what the future of the international monetary system will look like. But right now, the Fed is still behind the wheel, and they are still driving the bus over the cliff.
Click the play button below to listen to Chris' interview with Jim Rickards (32m:46s):
http://www.peakprosperity.com/podcast/82998/jim-rickards-were-witnessing-greatest-failed-experiments-economic-history
Gold: Options Expiry Mouse Versus Asian Tiger
Stewart Thomson
email: stewart@gracelandupdates.com
email: stewart@gracelandjuniors.com
email: stewart@gutrader.com
Sep 24, 2013
1. Is sizable QE tapering really going to happen? Perhaps, but the Fed has based the implementation of tapering on a consistent drop in the employment rate, and a steady increase in the housing market.
2. Horrifically, one of the two drivers of the “taper caper” may be close to incinerating. “The Mortgage Bankers Association projects a decline in mortgage refinancing volume from $1.247 trillion in 2012 to $973 billion this year, and to plunge to $388 billion in 2014. The MBA expects total mortgage loan origination to decline from $1.750 trillion in 2012 to $1.592 trillion in 2013 and $1.091 trillion in 2014.” – CNBC News, September 24, 2013.
3. The numbers being projected by the Mortgage Bankers Association are ghastly. If the mortgage origination and “REFI” markets suffer a collapse going into 2014, any tapering that occurs during that collapse could arguably be called the work of a madman.
4. Fed presidents Dennis Lockhart and Bill Dudley made public statements on Monday. They expressed serious concerns about the health of the US economy. I doubt that Ben Bernanke wants to go down in history as the madman who caused a new global markets crash.
5. Having said that, the gold price continues to decline, albeit modestly. Many gold investors are rightfully frustrated, after watching gold stocks give up all their “no taper” rally gains.
6. I think the key issue causing this situation is comex gold options. Please click here now . The next key expiry day is September 25.
7. Gold often tends to decline as options expiry approaches, and I think that is the main short term price driver of gold right now.
8. In the big picture, Chinese & Indian demand is probably the most powerful driver of higher gold prices. It’s important not to make decisions that affect your long term core positions, using events like “options expiry day”.
9. On that note, the just-announced clarification of the 80-20 gold import rule, by the central bank of India, is a critical victory for the bulls, in my professional opinion.
10. Please click here now . You are viewing the daily gold chart. From a technical standpoint, I don’t see anything to be concerned about. From the lows in the $1180 area, gold surged about $250.
11. As it arrived in the $1410 - $1430 area, sentiment became overly-bullish. I labelled $1425 as key sell-side HSR (horizontal support & resistance).
12. It’s true that the black uptrend line “broke”, but by the time that happened, gold had already declined to about $1360. That trend line probably isn’t as important as the bears think it is.
13. Tactically, gold enthusiasts should now be light sellers at $1350 and $1425, and decent buyers at $1266 and $1200.
14. Note the position of my gold stokeillator at the bottom of that chart. It is heavily oversold, and flashing a crossover buy signal. Once options expiry day is over, I think a nice gold rally is very likely.
15. Please click here now . That’s the daily silver chart. After completing a small head & shoulders top, silver declined slightly.
16. It’s now approaching key buy-side HSR in the $20.75 area. Note the action of my stokeillator, at the bottom of the chart. Silver enthusiasts should have buy orders in that general $20.75 area.
17. If gold surges out of an “options expiry day hole”, silver could perform even better.
18. What about gold and silver stocks? Please click here now . You are looking at the six month chart for GDX, and the gold bears are afraid there’s a head and shoulders top formation.
19. I think it’s just a shape, rather than a real chart pattern. The gold stock bears may be overly-focused on the price action that is likely due to expiry.
20. The bears are also probably under-focused on the rising demand coming out of India, as the Diwali festival approaches. Barring government restrictions imposed on buyers, gold demand in China and India is relatively inelastic.
21. Can consistent and growing “Chindian” gold demand be met with ETF and euro government sales?
22. I think the answer is: No. It can only be met with gold that is mined out of the ground, and that means the long term outlook for gold stocks is superb. Should gold stock investors carry some short positions, to manage their emotional state, even if the long term fundamentals are excellent? I believe the answer is: Yes. They should not be added now, because of fear of lower prices. They should be added professionally into price strength, in the GDX $28 - $32 area.
23. Please click here now . This six month chart for GDXJ is a little concerning, because of the broadening action of the trend lines. Also, it’s unknown whether there is a buy signal in play on the stokeillator, or a “flat line” event (oscillator signal failure). Keep in mind that junior gold stocks can fluctuate wildly around events like options expiry day.
24. More importantly, when the price of gold enters the “COP” (cost of production) zone, the risk/reward ratio of gold stocks to gold bullion can soar dramatically. If gold declines to $1266 or $1200, I’d like to see the gold community step up to the junior gold stock “buy plate”, via GDXJ and their favourite individual issues, rather than drawing arrows on charts to lower prices. I’m not so sure that’s going to happen. After the options expiry traders have their short term day in the limelight, I’m laying odds at 60%, that junior gold stocks begin a sizable rally!
24, 2013
Stewart Thomson
Graceland Updates
website: www.gracelandupdates.com
email for questions: stewart@gracelandupdates.com
email to request the free reports: freereports@gracelandupdates.com
http://www.321gold.com/editorials/thomson_s/thomson_s_092413.html
Iran hails start of 'new era' with nuclear talks at U.N.: report
September 23, 2013. REUTERS/Jason DeCrow/Pool
DUBAI | Tue Sep 24, 2013 6:05am EDT
(Reuters) - A meeting between Iran's top diplomats and world powers at the United Nations this week will start a "new era" in efforts to end the dispute with the West over Tehran's disputed nuclear program, the Iranian foreign ministry said on Tuesday.
It did not hint at any concessions by Tehran.
The European Union said on Monday Iranian Foreign Minister Javad Zarif would join a meeting of major powers - including Britain, France, China, Russia and the United States and Germany - to discuss the Iranian nuclear program.
The meeting, due on Thursday and expected to include U.S. Secretary of State John Kerry, would be the highest-level encounter involving the two nations since relations were severed in 1980 at the height of the U.S. embassy hostage crisis.
"These talks are the start of a new era. The Islamic Republic has explicitly stated its views regarding its rights to peaceful nuclear energy and the right to enrich (uranium) on Iranian territory," foreign ministry spokeswoman Marzieh Afkham told a news conference, Mehr news agency reported.
"This meeting represents a serious commitment of the foreign parties to reach a solution based on a specified time-frame."
Before leaving for New York on Monday, newly elected President Hassan Rouhani said he wanted to present Iran's "true face" and to pursue talks and cooperation with the West to end the nuclear dispute.
Iran says it is enriching uranium only to fuel a planned network of nuclear power stations, and for medical purposes.
The United States and its allies have imposed tough economic sanctions on Iran over suspicions that it is seeking a nuclear weapons capability.
Refined uranium can provide the fissile material for nuclear bombs if processed further, which the West fears may be Tehran's ultimate goal given that Tehran has a history of hiding some nuclear activity from U.N. anti-proliferation inspectors.
U.S. officials have also said a meeting is possible this week between President Barack Obama and Rouhani, who are both due to address the General Assembly on Tuesday.
But on Tuesday, Afkham appeared to play down this possibility, telling reporters: "No programme has been organised for a meeting and it is rather (a) discussion in the media."
(Reporting by Marcus George, Editing by William Maclean and Alistair Lyon)
http://www.reuters.com/article/2013/09/24/us-un-assembly-iran-usa-idUSBRE98N0AT20130924?feedType=RSS&feedName=topNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=992637
Gold, Einstein And The Great Fed Robbery
Tyler Durden's pictureSubmitted
by Tyler Durden on 09/20/2013 18:42 -0400
Via Nanex,
One of Einstein's great contributions to mankind was the theory of relativity, which is based on the fact that there is a real limit on the speed of light. Information doesn't travel instantly, it is limited by the speed of light, which in a perfect setting is 186 miles (300km) per millisecond. This has been proven in countless scientific experiments over nearly a century of time. Light, or anything else, has never been found to go faster than 186 miles per millisecond. It is simply impossible to transmit information faster.
Too bad that the bad guys on Wall Street who pulled off The Great Fed Robbery didn't pay attention in science class. Because hard evidence, along with the speed of light, proves that someone got the Fed announcement news before everyone else. There is simply no way for Wall Street to squirm its way out of this one.
Before 2pm, the Fed news was given to a group of reporters under embargo - which means in a secured lock-up room. This is done so reporters have time to write their stories and publish when the Fed releases its statement at 2pm. The lock-up room is in Washington DC. Stocks are traded in New York (New Jersey really), and many financial futures are traded in Chicago. The distances between these 3 cities and the speed of light is key to proving the theft of public information (early, tradeable access to Fed news).
We've learned that the speed of light (information), takes 1 millisecond to travel 186 miles (300km). Therefore, the amount of time it takes to transmit information between two points is limited by distance and how fast computers can encode and decode the information on both sides. Our experience analyzing the impact of hundreds of news events at the millisecond level tells us that it takes at least 5 milliseconds for information to travel between Chicago and New York. Even though Chicago is closer to Washington DC than New York, the path between the two cities is not straight or optimized: so it takes information a bit longer, about 7 milliseconds, to travel between Chicago and Washington. It takes little under 2 milliseconds between Washington and New York.
Therefore, when the information was officially released in Washington, New York should see it 2 milliseconds later, and Chicago should see it 7 milliseconds later. Which means we should see a reaction in stocks (which trade in New York) about 5 milliseconds before a reaction in financial futures (which trade in Chicago). And this is in fact what we normally see when news is released from Washington.
However, upon close analysis of millisecond time-stamps of trades in stocks and futures (and options, and futures options, and anything else publicly traded), we find that activity in stocks and futures exploded in the same millisecond. This is a physical impossibility. Also, the reaction was within 1 millisecond, meaning it couldn't have reached Chicago (or New York): another physical possibility. Then there is the case that the information on the Fed Website was not readily understandable for a machine - less than a thousandth of a second is not enough time for someone to commit well over a billion dollars that effectively bought all stocks, futures and options.
The Data
Minutes before the Fed announcement at 14:00 on September 18, 2013, there was significant activity in Comex Gold Futures (traded in Chicago) and the ETF symbol GLD (traded in New Jersey). This gives us an opportunity to measure closely, the exact (to the millisecond) amount of time between trading between these two instruments. The first two charts show about 3.5 minutes of time around the Fed Announcement release, giving us an overview. The stack of charts that follow allow you to easily compare between GLD (New York) and GC Futures (Chicago) for 6 different active periods. You will see that in the first 5 pairs - before the announcement, activity first shows up in GC Futures, followed by activity in GLD between 5 and 7 milliseconds later. In the last pair, which compares activity at exactly 14:00:00.000, you will see both GC futures and GLD react exactly at the same time.
See also: More Charts of Evidence.
1. Animation of December 2013 Gold (GC) Futures followed by GLD stock on September 18, 2013 from 13:57 to 14:00:30.
2. Zooming in 150 milliseconds of time for the high activity periods minutes before and during the annoucement.
The chart shows first, Gold Futures (GC - traded in Chicago) followed by GLD (traded in New York)and clearly show events minutes before the news release: you can clearly see that Gold Futures (GC) trades before GLD. The chart shows the event at 14:00:00, where Gold Futures trades at the exact same time as GLD stock. This is physically impossible unless information was already present in Chicago and New York. It's easiest if you compare the bottom panels of each chart which shows trading volume for each millisecond.
Conclusion
There are 2 possibilities, and both aren't good news for Wall Street.
1. Released by a News Organization
The Fed news was condensed by a news service into a simple "No Tapering" message that was placed on news servers co-located next to trading machines in both New York and Chicago at some time before 2pm. The news machines are programmed to release the information at precisely 2pm, allowing the algos to react immediately at both locations. This is how some news services release privately compiled statistics like the Consumer Confidence or Chicago PMI.
In those cases, we see the exact behavior as in the last 2 charts above - an immediate reaction in New York and Chicgo. But the Fed news was released from a lock-up room which prevents transmission of any information to the outside world. Given that several large news organizations were recently caught doing this we think it's less likely they would do something so bold, so soon. That leaves us with possibility number 2.
2. Leaked to Wall Street
The Fed news was leaked to, or known by, a large Wall Street Firm who made the decision to pre-program their trading machines in both New York and Chicago and wait until precisely 2pm when they would buy everything available. It is somewhat fascinating that they tried to be "honest" by waiting until 2pm, but not a thousandth of a second longer. What makes this a more likely explanation is this: we've found that news organizations providing timed release services aren't so good about synchronizing their master clock - and often release plus or minus 15 milliseconds from actual time. Their news machines in New York and Chicago still release the data at the exact same millisecond, but with the same drift in time as the master clock. That is, we'll see an immediate market reaction at say, 15 milliseconds before[color=red][/color] the official scheduled time, but in the same millisecond of time in both New York and Chicago. Historically, these news services have shown a time drift of about 30 milliseconds (+/- 15ms), which places the odds that this event was from a timed news service at about 10%.
What also makes this the more likely conclusion is this: we know the Bureau of Labor Statistics has recently hardened access to their lock-up room, weeding out all but respected news organizations. So imagine a reporter for one of these news organizations who is tasked with distilling the Fed news into a simple message that machines could read in less than a millisecond and interpret to mean, "buy all the things now".; It's unlikely that Wall Street would place so much responsibility on one news reporter. It is also unlikely that respected news organizations would tolerate this behavior.
We think it was leaked. The evidence is overwhelming.
http://www.zerohedge.com/news/2013-09-20/gold-einstein-and-great-fed-robbery
This is a fake petition just watch...
Coins & Confiscating Coins From Safe Boxes
by Charleston Voice - Knology
Published : September 19th, 2013
24hgold.com
244 words - Reading time : less than a minute
http://xrepublic.tv/node/5385
Description:
Obama supporters in San Diego, California sign a petition to ban and confiscate gold coins from people's homes and safe deposit boxes as part of the President's economic recovery plan. Author and media analyst Mark Dice uses the key words "will you help Obama" and that's all it takes for people to sign his crazy petition.
http://www.24hgold.com/english/news-gold-silver-obama-supporters-sign-petition-banning-gold-coins--confiscating-coins-from-safe-boxes.aspx?contributor=Charleston+Voice&article=4519256632G10020&redirect=False
No tapering!
By Alasdair Macleod
Posted 19 September 2013
GoldMoney
It was not too surprising that there is going to be no tapering for some very good reasons. The commencement of tapering would have led deliberately to bond yields rising, triggered by an increase in sales of government bonds to the public and at the same time escalating sales by foreign governments as they attempt to retain control over their own currencies and interest rates. This was the important lesson from floating the rumour of tapering in recent months.
The reason tapering was not going to happen is summarised as follows:
1. Monetarists and therefore central bankers believe that rising bond yields and interest rates will strangle economic recovery. They want to see more robust evidence of recovery before permitting that to happen.
2. Rising bond yields would have required the Fed to raise interest rates sooner rather than later to stem the flight of bank deposits from the Fed’s own balance sheet held as excess reserves, which only earn 0.25%.
3. Importantly, the global banking system has too much of its collective balance sheet invested in fixed-interest bonds, and is also exposed to rising interest rates through interest rate swap derivatives. Tapering would almost certainly have precipitated a second bank crisis starting at the system’s weakest point.
4. The cost of funding the US Government’s deficit would have risen, difficult when the debt ceiling has to be renegotiated yet again.
5. Rising US interest rates will most probably destabilise emerging market currencies, risking a new Asian crisis.
6. It is a bad time to shift the burden of government funding back into the markets, because foreign holders have shown they will sell into rising yields.
The Fed has reaffirmed that zero interest rates will be with us for some time to come. It simply has no choice: it has to play down the risk of inflation. The result will be more price inflation, which is bad for the dollar and good for gold. This was reflected in the US Treasury yield curve, where prices of long maturities fell yesterday relative to the short end.
The markets had wrongly talked themselves into believing that tapering was going to happen, when the rumour was no more than an experiment. In the process precious metals were sold, driven by increasingly bearish technical talk every time a support level was breached. It is hardly surprising therefore that the recovery in gold and silver prices last night was dramatic, with gold moving up $70 and silver by $2 from intra-day lows. It looks like a significant second bottom is now in place above the June lows and the bear position, coupled with the shortage of physical metal will drive prices in the coming weeks.
The implications of the Fed not going ahead with tapering are bad for the dollar and won’t stop bond yields at the long end from rising. It shows that the whole US economy is in a massive debt trap that cannot be addressed for powerful reasons. The reality is the expansion of cash and deposits in the US banking system is tending towards hyperinflation and is proving impossible to stop. That is the message from this week’s FOMC meeting, and I expect it to gradually dawn on investors world-wide in the coming weeks.
http://www.goldmoney.com/en-gb/news-and-analysis/news-and-analysis-archive/no-tapering.aspx?gmrefcode=dollarc
Brain Damage - And, Uh, QE Is Working (I'll Explain)
Sept. 19, 2013
truthingold.blogspot.com
by: Dave
The Fed has lost control of the markets and Wall Street economists, media analysts and most blog writers suffer from tragic and terminal mental disabilities.
First off, I'd like to say that I'm really quite amazed at the degree of "surprise" over the FOMC policy statement yesterday. Anyone who understands the nature of QE and why it's being done knew back in May when Helicopter Ben first mumbled the word "taper" that the Fed wouldn't reduce QE. Given the response reflected by the media and the fact that 100% of Wall Street's brain trust expected a $10-15 billion "taper," I'd say that every single Wall Street economist is brain damaged. What he hell are they getting paid for when they get their forecasts so egregiously wrong every god damn week? Seriously.
And now I'm seeing articles which are reporting that now the big debate is the timing of an eventual taper. Einstein is credited with attributing insanity to the act of making the same mistake repetitively. I guess Wall Street, and the media who regurgitates Wall Street's vomit, must not only be brain damaged, but they all must be insane as well. Analyze this you brutes: Ben Bernanke said - almost verbatim - that the Fed will reduce its stimulus policy when the unemployment is below 6.5%. He specifically said that "we are tied to the data, we don't have a fixed calendar schedule" and that a low interest rate policy will be in effect until unemployment goes below 6.5%. The Fed is tied to the data not the calendar[. If you know how to use google you can find the exact quote from Bernanke's mouth. If Wall Street's overpaid finest - and paid with taxpayer largesse, I might add - wants to figure out when the Fed will "taper," then they should spend their time figuring out what it will take to get unemployment below 6.5%. Here's my call: we won't see that number in our lifetime.
Now I'll explain for Zerohedge, CNBC, Fox Business, Bloomberg News and ALL the severely mentally challenged Wall Street analysts exactly why the Fed is printing money. Follow the f#cking money.
The Fed is printing money in order to keep the banks - both the domestic too big to fails AND the foreign too big to fails - from failing. That's the policy. In fact, I believe that in the whirlwind of wealth transfer in 2008 - led by the Obama Government - that Congress may have even legislated into law the too big to fail idea.
If QE is about the economy and jobs, why is more than 50% of the money being printed going to - and sitting in - the Fed bank account held by the U.S. subsidiaries of foreign-owned banks? Here's the money trail. Since "QE" began, the Fed has printed up roughly $2.8 trillion dollars. I've gone through this exercise in past posts, but here's the updated numbers. Of that $2.8 trillion, roughly $2.3 trillion is sitting in the banks' "excess reserve" account at the Fed. Of that $2.3 trillion, $1.193 trillion has gone to U.S. banks charted in this country. However, $1.225 trillion has gone to the foreign banks with operations in the U.S. You can find these numbers in the Federal Reserve Board report on Assets and Liabilities in the United States, Table H.8 - here's the pdf for you: LINK
I'm not sure I need to state the obvious here, but if QE is all about trying to stimulate an economic recovery, then how come 82% of everything the Fed has printed up is sitting in the "cash accounts" of the banks at the Fed? The only explanation is that the Fed is engaging in this money printing in order to prevent the banks from collapsing. There can be no other explanation. None. Not throw salt on the wound but, as I've demonstrated ad nauseum in previous posts, the economy is not recovering.
And this is why I never believed that the Fed would "taper." Especially after that interest rate spike in May. I think the Fed actually wanted to extend a token taper, which it knew would have to be reversed, but could not even do a meaningless token amount after Helicopter Ben's mid-May faux pas caused the biggest interest rate spike in 50 years of data.
The fact that they can't even dish up a token taper really says a lot about how bad things are behind the scenes with bank balance sheets. The banks that have a big exposure to interest rate derivatives got crushed when the interest rates spiked up in May. That spike was the biggest spike in 50 years of data. What that means is that bank hedge models weren't even close to predicting that event AND the banks weren't even close to being properly hedged against this mega-multi-trillion dollar interest rate derivatives exposure.
Think about Long Term Capital. Remember that abortion? It was "outlier" black swan type market movements that sent LTCM to its grave. That's the kind of market movement we had in May with interest rates in the context of the kind of interest rate derivatives exposure that the banks have when there's an outlier move like that. There is no other explanation and this is why the Fed kept injecting money into the system that went directly to the banks cash account at the Fed even after Bernanke mumbled something about it being time to pull back on QE.
Here's how it works: the need that $2.3 trillion in cash to put up as collateral against their multi-trillion dollar market-to-market losses on their interest rate (and credit default) swaps. That keeps them in the game longer and extends the amount of time they have for a divine miracle to come along and save them from completely incinerating from a big nuclear derivatives melt-down. The fact that the Fed can't even pull back by a token amount tells us that the situation is still unstable and probably getting worse. You could see that I'm right in the expressions on Bernanke's face and in his eyes when he was giving his post-FOMC press conference. He's frightened and that's why he's leaving the Fed.
Any other analysis of this no more than sound and fury, a tale told by an idiot. Anyone who thinks that QE is about helping "main street" and the middle class is severely brain damaged. And, by the way, as long as the banks don't collapse, QE is indeed working. It will probably take a collapse of the dollar for it to fail, but stay tuned on that one because if you pay close attention to what China is doing with the yuan and with gold, on a clear day you can see the dollar's cliff.
POSTED BY DAVE IN DENVER AT 10:33 AM
http://truthingold.blogspot.com/2013/09/brain-damage-and-uh-qe-is-working-ill.html
Precious Metals Summit 2013 -
Colorado - Sept. 18-20th
(special thanks to basserdan)
Probe Mines Ltd. -
Dave Palmer, President & CEO (TSX-V: PRB)
Video Presentation:
http://www.gowebcasting.com/events/precious-metals-summit-conferences-llc/2013/09/19/probe-mines-limited/play/stream/7989
http://www.gowebcasting.com/conferences/2013/09/18/precious-metals-summit/day/2
Sandstorm Gold: More Than Meets The Eye
Aug 18 2013
by: Hyperinflation
Disclosure: I am long SAND. (More...)
Sandstorm Gold (SAND) has been a long favorite of mine even prior to any articles I've published here and here on SA regarding the company. One thing they've had a very good eye for are streaming interests with significant exploration upside potential. This has already been seen in Aurizona (initially forecast when acquired to produce 60,000 oz. per annum at capacity, which just a few years later will produce 120,000 oz. (in 2014) with mgmt. also planning a phase II expansion likely to begin in 2015). This has also been seen in its 20% streaming interest in Silvercrest's Santa Elena, which was initially projected to produce 33,000 oz. per annum (currently undergoing a multiphase expansion including a new CCD processing facility, heap leach reprocessing and completion of the underground mine in Q3 2014), increasing annual production to 65,000-70,000 oz. annually. These, however, are well known by the market. This article will focus on what has been overlooked by the market.
1) Bachelor Lake: Bachelor Lake has ramped up on schedule and as planned. Some critics like to cite the fact that Bachelor lake will just begin to generate positive cash flow in September, which will make Metanor not viable financially as more capital investment is needed to reach capacity. Those same critics also miss the fact that Sandstorm has retained its $100m in net cash to ensure its stream operators don't run into trouble. Given the recent rise in the gold price and the fact it will likely remain at least above $1,300/oz., following the Philly Fed Index, Metanor is unlikely to need any additional capital, but if they do need a cash inflow, Sandstorm would gladly loan it to them.
Metanor plans on a mill expansion for very minimal capital investment in late 2014, increasing 2015 production 50% to between 80-90,000 oz. per annum.
2) Ming: Ming has once again began to focus on the 1806 gold rich zone, at least for a few months. Although not explicitly stated, this is likely because it will be expanding the mill from 600 tpd to 1,000 tpd. In other words, base gold production from 13k oz. Au per annum to 21k oz. per annum. The reason why this is worth mentioning is that Sandstorm will continue to receive 25%+ of the gold produced for the next 6+ years at no ongoing per oz. cost.
3) ROFRs: Most Sandstorm investors have likely forgotten about the NSR royalty acquisitions with Magellan and Solitario. The rationale for those purchases was to convert those into streams once everything else was in order except the part of the financing (Yes, Sandstorm likes to be the last money in, however, due to the low capital investment required on these projects, Sandstorm's upfront payment will account for the vast majority of the funds needed, i.e. Coringa needs just $65m to bring into production). Mt. Hamilton and Coringa will begin putting together financing and soon thereafter commence production in 2H 2014. It is highly likely Sandstorm will exercise these ROFRs as the operating companies don't have enough capital available for investment in addition to the cost of equity being extremely high.
4) Bracemac-Mcleod: Donner still hasn't run out of financing options. Sandstorm has agreed to make a $2m loan (none of which has been drawn). For those who aren't familiar with the situation, Donner still has outstanding monthly payments it must make to Glencore-Xstrata. Subsequent to that Sandstorm has allowed Donner to defer all metal payments in order to help Donner meet its obligations. At this point in time, given the metal payment deferrals plus the $2m loan, Donner will likely only need to raise minimal additional capital. Cash flow generation to Donner has just recently began from copper/zinc, which will continue to increase month/month. Additionally, Sandstorm has the right to acquire the entire JV should Donner default by remedying the payments due to Glencore-Xstrata.
5) Cash costs will start to decline next quarter and for the next several years (the degree to which has yet to be seen). This is due to Sandstorm now being able to record production from Premier at $0/oz. cash costs, which will be followed by a further decrease when platinum production from Serra Pelada commences as each oz. of platinum will be purchased at $200/oz. Additionally, with the completion of mill expansion at the Ming mine, costs will have further downside pressure as that stream has no ongoing per oz. costs.
6) Now that Sandstorm has acquired Premier Royalties in full, G&A expenses will decrease significantly at least relative to the last two quarters (as SAND had to record Premier's full SG&A expense). Sandstorm will be laying off most of the Premier staff, likely keeping 2-4 individuals. It is rumored SG&A expenses will see a 30-40% reduction relative to Q2 2013.
7) Oyu Tolgoi is going far better than expected in regards to interference from the Mongolian government. While this is 6-7 years away from production (at least on the portion Sandstorm holds a stream on, only a portion of Entree Gold's JV), this will undoubtedly look like a great investment at some point in time.
The following production profile looks significantly different from that provided by Sandstorm but keep in mind, Sandstorm uses the base case scenario with 0 of the 4 planned expansions.
(click to enlarge)
I would include a valuation, however, if you click on previous articles, you can find them.
http://seekingalpha.com/article/1642292-sandstorm-gold-more-than-meets-the-eye
A Premier Deal For Sandstorm Gold
Aug 19 2013, 18:54
Steve Nicastro
After purchasing 60% of Premier Royalty back in January 2013, Sandstorm Gold (SAND) has agreed to acquire the remaining 40% of the company, with the total value of $28.3 million in this transaction. I had previously written in an article that I thought Sandstorm would eventually buy out the remaining shares of Premier, and I was a little surprised that it came this soon.
I believe this is a decent, low-risk deal for Sandstorm because it adds immediate growth to their production profile and cash flow from a number of quality mines, operated by major mining partners like Yamana Gold (AUY) and AngloGold Ashanti (AU):
The Arrangement values the Premier Royalty Shares at approximately C$0.89 per Premier Royalty Share, which represents a premium of 16% to the 20-day volume weighted average trading price of the Premier Royalty Shares on the Toronto Stock Exchange (the "TSX") of approximately C$0.77. Premier Royalty shareholders will receive common shares of Sandstorm (the "Sandstorm Shares") on the basis of 0.145 of a Sandstorm Share for each Premier Royalty Share held. (Source: Aug. 14 news release.)
The previous deal on Jan. 29, 2013, saw Sandstorm acquire roughly 60% of the company, or 46,678,221 shares, at a value of $1.98 per share for approximately $92.4 million (when gold was at a much higher price, over $1,700 an ounce). So This brings the total takeover to about $120 million.
At first glance it might look like $120 million for company currently bringing in less than $8 million annual cash flow is a bad deal. However, as I mentioned previously, the first transaction was made when gold was several hundred ounces higher. As gold (GLD) heads higher, so too will the value of these NSRs.
What does Sandstorm land in this deal? Premier Royalty has a number of cash flowing royalties that will add immediate ounces to Sandstorm Gold's production profile, as mentioned previously.
Click to enlarge images.
Credit: Premier Royalty
* 1.5% NSR on the San Andres deposit in Honduras and the Sao Vicente and Sao Francisco Mines in Brazil, operated by Aura Minerals, Inc.
* 1.5% NSR on the new (Q4 2012) Emigrant Springs Mine operated by Newmont on the Carlin Trend in Nevada, U.S.
* 1% NSR on the new (Q1 2012) Thunder Creek Deposit of the Timmins West Mine operated by Lake Shore Gold Mines in Timmins, Canada.
* 1% the Mine Waste Solutions (MWS) tailings processing facility operated by AngloGold Ashanti in South Africa.
* 1% on the new (2010) Gualcamayo Mine operated by Yamana Gold in San Juan Province, Argentina.
Premier Royalty had given a Q2 estimate of 1,745 ounces attributable. They smashed this estimate on their recent Q2 earnings release, with 1,859 ounces recorded.
Premier Performance in the Second Quarter
Here is the actual ounces attributable to Premier in Q2 vs. the company's estimates:
Gualcamayo (Yamana Gold)
Estimate Actual
450 290
Emigrant Springs (Newmont Mining)
Estimate Actual
250 390
Mine Waste Solutions (AngloGold Ashanti)
Estimate Actual
200 307
Thunder Creek (Lake Shore Gold)
Estimate Actual
175 98
San Francisco and Sao Vincente (Aura Minerals)
Estimate Actual
420 513
San Andres
Estimate Actual
185 259
Total Ounces
Estimate Actual
1,745 1,859
San Francisco and Sao Vincente are slated to close in 2013.
Why the Deal Is Good for Premier Shareholders
As you can see from the chart below, ounces attributable are expected to decline in 2014 from the closure of the two mines mentioned above. Production is then expected to remain flat until 2016.
Credit: Premier Royalty
I think that in the current environment, Premier was having a tough time finding NSRs that would add immediate or near-term cash flow. The company had over $30 million cash and a credit facility at their disposal, but couldn't get any significant deals done since the first transaction with Sandstorm was announced in January.
Why This Deal Made Sense for Sandstorm
With the gold price low, CEO Nolan Watson is a little bit more hesitant to use up the company's large $95 million cash balance to acquire streams. This deal allows the company to add roughly 7,000 annual ounces to their portfolio and a number of high-quality exploration and development assets.
Previously, Sandstorm was only allowed to record sales and royalty revenue from their 60% interest in Premier:
As a result of acquiring a 59.9% controlling interest in Premier Royalty, the transaction was accounted for as a business combination. As such, the Company is required to consolidate all the operating results of Premier Royalty post acquisition date (Jan. 30, 2013) and reflect the consolidated financial results for both companies.
As you can see from the picture of the recent Sandstorm quarterly results, they were not able to add ounces attributle this past quarter.
Credit: Sandstorm Gold Quarterly Report
Sandstorm will now likely increase their annual production guidance from this deal by at least 6,000 ounces. Here are their previous estimates:
Credit: Sandstorm Gold
In conclusion, while this deal is not a home run for Sandstorm Gold, it does make sense for the company. This deal will add high-quality assets to Sandstorm's portfolio and the company should have no problem beating their previous guidance. Sandstorm Gold still has nearly $100 million in cash plus a $100 million credit facility to complete more streams -- not to mention quarterly cash flow of $9 million at current gold prices.
My biggest concern previously was the financial health of Metanor Resources, which operates the Bachelor Lake mine (Sandstorm owns a 20% stream on that mine and the mine is expected to produce 60K ounces a year at full production). With the price of gold breaking out to $1,375, Metanor's stock has nearly doubled over the past one to two weeks, giving the company a current market cap of $39.2 million.
The Premier deal feels like a safe one and with the price of gold recovering, I would urge Watson to consider getting more aggressive here. Having said that, I would like to see the next one to two deals focus on near-term production and cash flow, as opposed to long-term potential like the Entree Deal. It will be interesting to see how much value the company can add in their next few deals, and I hope they go for triples and home runs as opposed to singles and doubles. I continue to buy shares and warrants on any dips, and I am quite optimistic on the price of gold going forward.
http://seekingalpha.com/article/1645362-a-premier-deal-for-sandstorm-gold
Faber: On Bernanke Failure to Taper QE
Interest-Rates / US Federal Reserve Bank
Sep 19, 2013 - 08:11 AM GMT
By: Bloomberg
Marc Faber, publisher of the Gloom, Boom and Doom Report, stopped by Bloomberg Television's "Street Smart" today and told Trish Regan, Adam Johnson and Matt Miller that Janet Yellen would "make Mr. Bernanke look like a hawk."
Faber also said, "When I look at the market action today, I would like to see the next few days, because it may be a one-day event. The markets are overbought. The Feds have already lost control of the bond market. The question is when will it lose control of the stock market."
Faber on the reaction that there's going to be no taper for now:
"My view was that they would taper by about $10 billion to $15 billion, but I'm not surprised that they don't do it for the simple reason that I think we are in QE unlimited. The people at the Fed are professors, academics. They never worked a single life in the business of ordinary people. And they don't understand that if you print money, it benefits basically a handful of people maybe--not even 5% of the population, 3% of the population. And when you look today at the market action, ok, stocks are up 1%. Silver is up more than 6%, gold up more than 4%, copper 2.9%, crude oil 2.68%, and so forth. Crude oil, gasoline are things people need, ordinary people buy everyday. Thank you very much, the Fed boosts these items that people need to go to their work, to heat their homes, and so forth and at the same time, asset prices go up, but the majority of people do not own stocks. Only 11% of Americans own directly shares."
On whether interest rates are held down when the Fed continues this type of policy:
"On September 14, 2012, when the Fed announced QE3, that was then extended into QE4, and now basically QE unlimited, the bond markets had peaked out. Interest rates had bottomed out on July 25, 2012--a year ago--at 1.43% on the 10-year Treasury note. Mr. Bernanke said at that time at a press conference, the objective of the Fed is to lower interest rates. Since then, they have doubled. Thank you very much. Great success."
On what the endgame is:
"Well, the endgame is a total collapse, but from a higher diving board. The Fed will continue to print and if the stock market goes down 10%, they will print even more. And they don't know anything else to do. And quite frankly, they have boxed themselves into a corner where they are now kind of desperate."
On Janet Yellen:
"She will make Mr. Bernanke look like a hawk. She, in 2010, said if could vote for negative interest rates, in other words, you would have a deposit with the bank of $100,000 at the beginning of the year and at the end, you would only get $95,000 back, that she would be voting for that. And that basically her view will be to keep interest rates in real terms, in other words, inflation-adjusted. And don't believe a minute the inflation figures published by the bureau of labor statistics. You live in New York. You should know very well how much costs of living are increasing every day. Now, the consequences of these monetary policies and artificially low interest rates is of course that the government becomes bigger and bigger and you have less and less freedom and you have people like Mr. De Blasio, who comes in and says let's tax people who have high incomes more. And, of course, immediately, because in a democracy, there are more poor people than rich people, they all applaud and vote for him. That is the consequence."
On where he sees gold heading:
"When I look at the market action today, I would like to see the next few days, because it may be a one-day event. The markets are overbought. The Feds have already lost control of the bond market. The question is when will it lose control of the stock market. So, I'm a little bit apprehensive. I would like to wait a few days to see how the markets react after the initial reaction."
On whether the 10-year yield will float back up to where it was before 2pm today:
"I will confess to you, longer-term, I am of course, negative about government bonds and i think that yields will go up and that eventually there will be sovereign default. But in the last few days, when yields went to 2.9% and 3% on the 10-year for the first time in years i bought some treasuries because I have the view that they overshot and that they could ease down to around 2.2% to 2.5% because the economy is much weaker than people think...I think in the next three months or so."
On gold prices:
"I always buy gold and I own gold. I don't even value it. I regard it as an insurance policy. I think responsible citizens should own gold, period."
(Video interview link);
bloomberg.com
http://www.marketoracle.co.uk/Article42336.html
SND – 34 Year Old Sandstorm Metals & Energy CEO Nolan Watson Buys $50K Worth Of His Own Shares
POSTED ON SEPTEMBER 18, 2013
BY TOMMY HUMPHREYS
This week 34 year old Sandstorm Gold (NYSE:SAND) CEO Nolan Watson bought approximately $50,000 worth of his Sandstorm Metals and Energy stock in the open market, according to INK Research, bringing his total ownership of the Sandstorm Gold spinoff to 159,399 shares, or approximately half of one percent of the company.
Last September, Nolan and I spoke on the subject of insider ownership in mining deals. He told me, “Where we’ve found we’ve had the most success is with mining companies where the management owns a lot of the actual stock. If management owns a lot of stock they feel the pain of diluting themselves through an equity issuance.”
Investors in SND believe in Nolan and wish he owned more of the stock.
SND Chart
Sandstorm Gold has still been a strong performer:
Here’s our interview from last September:
http://ceo.ca/snd-34-year-old-sandstorm-metals-energy-ceo-nolan-watson-buys-50k-worth-of-his-own-shares/
Can’t Attend Colorado Gold Week? Watch Webcasts Online
POSTED ON SEPTEMBER 18, 2013
BY TOMMY HUMPHREYS
CEO.CA
Today marks the beginning of Colorado Gold Week, where companies in the precious metals space, at exploration, development and production stages, join institutional investors in Vail and then Denver Colorado for high quality conference sessions.
The 2013 Precious Metals Summit in Vail, Colorado, runs today through Saturday, and features the more early stage precious metals companies. This three year old show has gained a reputation as the best conference for junior miners for its high quality audience. Joe Wickwire of Fidelity Investments and Diana Walters of Liberty Metals and Mining are among keynotes worth watching, you can skip Peter Schiff.
Exhibitors list
Webcast schedule
The 2013 Denver Gold Forum then begins on Sunday through Wednesday at the Hyatt Regency Hotel in Downtown Denver, Colorado. With the BMO Conference in Miami and the Melee that is the PDAC, Denver Gold is one of the most important precious metals shows for institutional investors each year. The who’s who of the gold business will be giving presentations, many of which will be available online.
Exhibitors list
Webcast schedule
CEO.CA has no reps at either conference but wishes best of luck to friends attending and exhibiting. We look forward to Kitco’s coverage and watching webcasts online
http://ceo.ca/cant-attend-colorado-gold-week-watch-webcasts-online/
The Platinum Series: Part II
Source: Visual Capitalist
(9/16/13)
"The entire world supply of platinum is far less than gold or silver."
http://www.theaureport.com/pub/na/15592
Fake 10-Ounce Silver Bars Reported
By Patrick A. Heller
NUMISMASTER.com
September 17, 2013
Last Friday, Sept. 13, a customer came into our store in Lansing, Mich., with some genuine silver dollars plus two specimens of what he claimed were struck Engelhard 10-ounce .999 fine silver ingots of the variety that had the globe on the front (not the eagle as used in later issues). One was wrapped in plastic, while the other was not.
The employee assisting this customer immediately knew the pieces were counterfeit as they were too large. Genuine struck Engelhard 10-ounce ingots are about 90 millimeters high and 45mm wide. These two pieces were each about 120mm high (4.8 inches) and 60mm wide. Please see the accompanying photographs showing how these measure against a ruler.
The piece with the plastic was put on a scale. Including the plastic, total weight came out to 9.66 troy ounces, far too light to be genuine.
In addition, the serial number punched into the front has the appearance of each digit being separately hand-punched, with an irregular look. Genuine ingots have the entire serial number evenly struck in a single stroke.
We asked the customer how he came by them. He did not say who had sold them to him, but claimed that he had purchased them a few years ago as an investment. We don’t have any way of knowing if this is an old or a new scam, similar to the fake “replica” 1-ounce brand name silver rounds and ingots that were being sold in internet auctions.
In a quick review of eBay auctions, for instance, I was not able to find these obvious counterfeits. Whoever made these pieces, you can expect that they did not stop at just these two specimens. We have never seen them before in our store. Has anyone else encountered them? Can you provide the time and circumstances?
Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Other commentaries are available at Coin Week (http://www.coinweek.com and http://www.coininfo.com). He also writes a bi-monthly column on collectibles for “The Greater Lansing Business Monthly” (http://www.lansingbusinessmonthly.com/articles/department-columns). His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.
http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=27240&et_mid=637323&rid=238174063
The Armageddon Looting Machine: The Looming Mass Destruction From Derivatives
Sep 17 2013
Ellen Brown
Increased regulation and low interest rates are driving lending from the regulated commercial banking system into the unregulated shadow banking system. The shadow banks, although free of government regulation, are propped up by a hidden government guarantee in the form of safe harbor status under the 2005 Bankruptcy Reform Act pushed through by Wall Street. The result is to create perverse incentives for the financial system to self-destruct.
Five years after the financial collapse precipitated by the Lehman Brothers bankruptcy on September 15, 2008, the risk of another full-blown financial panic is still looming large, despite the Dodd Frank legislation designed to contain it. As noted in a recent Reuters article, the risk has just moved into the shadows:
Banks are pulling back their balance sheets from the fringes of the credit markets, with more and more risk being driven to unregulated lenders that comprise the $60 trillion “shadow-banking” sector.
Increased regulation and low interest rates have made lending to homeowners and small businesses less attractive than before 2008. The easy subprime scams of yesteryear are no more. The void is being filled by the shadow banking system. Shadow banking comes in many forms, but the big money today is in repos and derivatives. The notional (or hypothetical) value of the derivatives market has been estimated to be as high as $1.2 quadrillion, or twenty times the GDP of all the countries of the world combined.
According to Hervé Hannoun, Deputy General Manager of the Bank for International Settlements, investment banks as well as commercial banks may conduct much of their business in the shadow banking system (SBS), although most are not generally classed as SBS institutions themselves. At least one financial regulatory expert has said that regulated banking organizations are the largest shadow banks.
The Hidden Government Guarantee that Props Up the Shadow Banking System
According to Dutch economist Enrico Perotti, banks are able to fund their loans much more cheaply than any other industry because they offer “liquidity on demand.” The promise that the depositor can get his money out at any time is made credible by government-backed deposit insurance and access to central bank funding. But what guarantee underwrites the shadow banks? Why would financial institutions feel confident lending cheaply in the shadow market when it is not protected by deposit insurance or government bailouts?
Perotti says that liquidity-on-demand is guaranteed in the SBS through another, lesser-known form of government guarantee: “safe harbor” status in bankruptcy. Repos and derivatives, the stock in trade of shadow banks, have “superpriority” over all other claims. Perotti writes:
Security pledging grants access to cheap funding thanks to the steady expansion in the EU and US of “safe harbor status." Also called bankruptcy privileges, this ensures lenders secured on financial collateral immediate access to their pledged securities ...
Safe harbor status grants the privilege of being excluded from mandatory stay and basically all other restrictions. Safe harbor lenders, which at present include repos and derivative margins, can immediately repossess and resell pledged collateral.
This gives repos and derivatives extraordinary super-priority over all other claims, including tax and wage claims, deposits, real secured credit and insurance claims. Critically, it ensures immediacy (liquidity) for their holders. Unfortunately, it does so by undermining orderly liquidation.
When orderly liquidation is undermined, there is a rush to get the collateral, which can actually propel the debtor into bankruptcy.
The amendment to the Bankruptcy Reform Act of 2005 that created this favored status for repos and derivatives was pushed through by the banking lobby with few questions asked. In a December 2011 article titled “Plan B – How to Loot Nations and Their Banks Legally,” documentary film-maker David Malone wrote:
This amendment which was touted as necessary to reduce systemic risk in financial bankruptcies ... allowed a whole range of far riskier assets to be used ... The size of the repo market hugely increased and riskier assets were gladly accepted as collateral because traders saw that if the person they had lent to went down they could get (their) money back before anyone else and no one could stop them.
Burning Down the Barn To Get the Insurance
The Barn Safe harbor status creates the sort of perverse incentives that make derivatives “financial weapons of mass destruction,” as Warren Buffett famously branded them. It is the equivalent of burning down the barn to collect the insurance. Says Malone:
All other creditors – bond holders – risk losing some of their money in a bankruptcy. So they have a reason to want to avoid bankruptcy of a trading partner. Not so the repo and derivatives partners. They would now be best served by looting the company – perfectly legally – as soon as trouble seemed likely. In fact the repo and derivatives traders could push a bank that owed them money over into bankruptcy when it most suited them as creditors. When, for example, they might be in need of a bit of cash themselves to meet a few pressing creditors of their own.
The collapse of . . . Bear Stearns, Lehman Brothers and AIG were all directly because repo and derivatives partners of those institutions suddenly stopped trading and ‘looted’ them instead.
The global credit collapse was triggered, it seems, not by wild subprime lending but by the rush to grab collateral by players with congressionally-approved safe harbor status for their repos and derivatives.
Bear Stearns and Lehman Brothers were strictly investment banks, but now we have giant depository banks gambling in derivatives as well; and with the repeal of the Glass-Steagall Act that separated depository and investment banking, they are allowed to commingle their deposits and investments. The risk to the depositors was made glaringly obvious when MF Global went bankrupt in October 2011. Malone wrote:
When MF Global went down it did so because its repo, derivative and hypothecation partners essentially foreclosed on it. And when they did so they then ‘looted’ the company. And because of the co-mingling of clients money in the hypothecation deals the "looters" also seized clients money as well ... JPMorgan allegedly has MF Global money while other people’s lawyers can only argue about it.
MF Global was followed by the Cyprus “bail-in” – the confiscation of depositor funds to recapitalize the country’s failed banks. This was followed by the coordinated appearance of bail-in templates worldwide, mandated by the Financial Stability Board, the global banking regulator in Switzerland.
The Auto-Destruct Trip Wire on the Banking System
Bail-in policies are being necessitated by the fact that governments are balking at further bank bailouts. In the US, the Dodd-Frank Act (Section 716) now bans taxpayer bailouts of most speculative derivative activities. That means the next time we have a Lehman-style event, the banking system could simply collapse into a black hole of derivative looting. Malone writes:
The bankruptcy laws allow a mechanism for banks to disembowel each other. The strongest lend to the weaker and loot them when the moment of crisis approaches. The plan allows the biggest banks, those who happen to be burdened with massive holdings of dodgy euro area bonds, to leap out of the bond crisis and instead profit from a bankruptcy which might otherwise have killed them. All that is required is to know the import of the bankruptcy law and do as much repo, hypothecation and derivative trading with the weaker banks as you can.
... I think this means that some of the biggest banks, themselves, have already constructed and greatly enlarged a now truly massive trip wired auto-destruct on the banking system.
The weaker banks may be the victims, but it is we the people who will wind up holding the bag. Malone observes:
For the last four years who has been putting money in to the banks? And who has become a massive bond holder in all the banks? We have. First via our national banks and now via the Fed, ECB and various tax payer funded bail out funds. We are the bond holders who would be shafted by the Plan B looting. We would be the people waiting in line for the money the banks would have already made off with ...
... The banks have created a financial Armageddon looting machine. Their Plan B is a mechanism to loot not just the more vulnerable banks in weaker nations, but those nations themselves. And the looting will not take months, not even days. It could happen in hours if not minutes.
Crisis and Opportunity: Building a Better Mousetrap
There is no way to regulate away this sort of risk. If both the conventional banking system and the shadow banking system are being maintained by government guarantees, then we the people are bearing the risk. We should be directing where the credit goes and collecting the interest. Banking and the creation of money-as-credit need to be made public utilities, owned by the public and having a mandate to serve the public. Public banks do not engage in derivatives.
Today, virtually the entire circulating money supply (M1, M2 and M3) consists of privately-created “bank credit” – money created on the books of banks in the form of loans. If this private credit system implodes, we will be without a money supply. One option would be to return to the system of government-issued money that was devised by the American colonists, revived by Abraham Lincoln during the Civil War, and used by other countries at various times and places around the world. Another option would be a system of publicly-owned state banks on the model of the Bank of North Dakota, leveraging the capital of the state backed by the revenues of the bank into public bank credit for the use of the local economy.
Change happens historically in times of crisis, and we may be there again today.
http://seekingalpha.com/article/1699602-the-armageddon-looting-machine-the-looming-mass-destruction-from-derivatives?source=email_authors_alerts&ifp=0
The BRICS “Independent Internet” Cable. In Defiance of the “US-Centric Internet”
By Umberto Pascali
Global Research, September 17, 2013
The President of Brazil, Dilma Rousseff announces publicly the creation of a world internet system INDEPENDENT from US and Britain ( the “US-centric internet”).
Not many understand that, while the immediate trigger for the decision (coupled with the cancellation of a summit with the US president) was the revelations on NSA spying, the reason why Rousseff can take such a historic step is that the alternative infrastructure: The BRICS cable from Vladivostock, Russia to Shantou, China to Chennai, India to Cape Town, South Africa to Fortaleza, Brazil, is being built and it’s, actually, in its final phase of implementation.
No amount of provocation and attempted “Springs” destabilizations and Color Revolution in the Middle East, Russia or Brazil can stop this process. The huge submerged part of the BRICS plan is not yet known by the broader public.
Nonetheless it is very real and extremely effective. So real that international investors are now jumping with both feet on this unprecedented real economy opportunity. The change… has already happened.
Brazil plans to divorce itself from the U.S.-centric Internet over Washington’s widespread online spying, a move that many experts fear will be a potentially dangerous first step toward politically fracturing a global network built with minimal interference by governments.
President Dilma Rousseff has ordered a series of measures aimed at greater Brazilian online independence and security following revelations that the U.S. National Security Agency intercepted her communications, hacked into the state-owned Petrobras oil company’s network and spied on Brazilians who entrusted their personal data to U.S. tech companies such as Facebook and Google.
..
BRICS Cable!
http://www.bricscable.com/(see video)
netw_geo
BRICS Cable… a 34 000 km, 2 fibre pair, 12.8 Tbit/s capacity, fibre optic cable system
* For any global investor, there is no crisis – there is plenty of growth. It’s just not in the old world
* BRICS is ~45% of the world’s population and ~25% of the world’s GDP
* BRICS together create an economy the size of Italy every year… that’s the 8th largest economy in the world
* The BRICS presents profound opportunities in global geopolitics and commerce
* Links Russia, China, India, South Africa, Brazil – the BRICS economies – and the United States.
* Interconnect with regional and other continental cable systems in Asia, Africa and South America for improved global coverage
* Immediate access to 21 African countries and give those African countries access to the BRICS economies.
* Projected ready for service date is mid to second half of 2015.
See also
http://www.thehindu.com/news/international/world/brazil-plans-to-go-offline-from-uscentric-internet/article5137689.ece
Brazil plans to go offline from US-centric internet
http://www.excitingrio.com/brazil-looks-break-us-centric-internet/
Brazil Looks To Break From US-centric Internet
http://www.globalresearch.ca/the-brics-independent-internet-in-defiance-of-the-us-centric-internet/5350272
How Fiat Dies
Hyperinflation is that transition period when a paper money is clearly failing as a store of value but has not yet died as a medium of exchange. This blog is to look at this and any other interesting economic issues. Vincent Cate
Sunday, September 15, 2013
Hyperinflation Explained in Many Different Ways
Hyperinflation is part of the experimental data that any good economic theory should be able to explain. There are many different economic schools of thought and they often have very different views of hyperinflation. I am trying to collect as many different explanations here as I can. I think it is fun to be able to understand this problem from many different angles. If you know of any others please comment.
Equation of Exchange
There can be a feedback loop where the more the central bank makes money and buys bonds the less people want to hold bonds, but the less people hold bonds the more the central bank has to monetize so the government has cash to operate. This can result in a flood of new money and an increase in the velocity of money. Governments almost always try to fight inflation with price controls. The resulting shortages reduce the real GNP. Using the equation of exchange view of hyperinflation we can see that if the money supply is going up fast, the velocity of money is going up fast, and GNP is going down that prices will go up very fast. Hyperinflation can be simulated using this view.
Corrected Modern Monetary Theory
A simple model makes it easy to understand hyperinflation. In this model all government spending uses newly made money and we imagine money collected from taxes and bond sales is just destroyed. In this model bonds are paid off with newly made money. If much of the government debt is short term, and people stop rolling over bonds, then the government would end up paying off lots of bonds with lots of new money. If there is a full bond panic, then this could result in hyperinflation.
Unsustainable Interest Expense
If the deficit is large then the debt and the interest on the debt can both be growing faster than the tax base. In this case then, at some point, the interest on the debt adds so much to the debt that it is clear there is no hope of really paying this off. Often about when this is becoming clear the interest rates go up and the interest expense shoots up so that it is obvious to all this can not go on. The alternative is for the central bank to peg interest rates by buying bonds very fast. Either way, it gets to where the government can really do is print money to pay off the debt. This then makes lots of new money and the value of each unit goes way down.
Krugman's View
Inflation is a tax on those who hold money. The higher taxes are the more people change their behavior to avoid the taxes. As the inflation tax gets higher and higher people change what they do so that the real value of the money they hold goes down. This involves spending money faster and keeping lower real balances. This can make the total real value of the currency outstanding go down even as the nominal value is shooting up. But the lower the real value of currency out there the faster the government needs to print money to collect enough inflation tax to keep in operation. This can spiral out of control, often to where people avoid that currency altogether. Search for Krugman here for more.
Backing View or Real Bills Doctrine
In the Real Bills Doctrine a bank can issue as many notes as it wants without causing inflation as long as it gets assets of real value that could be sold to withdraw the notes. If it is getting bonds they should be for less than 60 days and come with collateral. In hyperinflation the central bank buys government bonds. The problem here is that the only collateral is a real tax base. So the more bonds they buy the less real collateral they have per bond. Also, they typically buy long term bonds which go down in value as interest rates go up. So the current value of the assets backing the notes per note issued goes down. The value of notes is determined by the value of the assets per note, so the value of the notes goes down if the value of the assets goes down. This can spiral out of control. As the notes go down, the value of the bonds goes down, but as the value of the bonds goes down, the value of the notes goes down. As you get hyperinflation the government gets weaker and the amount of real taxes collected goes down. This further reduces the value of the backing/bonds at the central bank. This feedback loop can go on and destroy the currency.
Supply and Demand
If a currency is losing value fast the demand for that currency goes down. This makes the value of the currency go down even more. If the government needs to print money to cover a deficit of a certain real total value, to cover real expenses in the real world (employees, retired people, unemployed), then as the value of the currency goes down it is forced to increase the supply faster and faster. This can spiral out of control with supply going up fast while demand goes down fast and the currency gets destroyed.
Rational Expectations
Rational expectations theory holds that economic actors look rationally into the future when trying to maximize their well-being. History shows that when the government starts using new money to fund a big deficit that the currency will go down. Once economic actors expect the currency to go down, they work to avoid that currency. The faster it is going down the harder they work to avoid it. The more people try to avoid the currency the more it goes down. You can get a feedback loop or panic. Eventually everyone is out of that currency.
Half Dead Money
Good money is both a store of value and a medium of exchange. During hyperinflation the currency is no longer a good store of value. It can be viewed as half dead money. Such money often keeps losing value till it eventually becomes completely dead.
Loss of Confidence
For some reason the public becomes less confidence in the currency. This may be from too much new money, from central bank monetizing government debt, from war, from corrupt government, or whatever. As the public loses confidence they don't want to hold the currency as long and the velocity of money goes up. However, as the velocity goes up the prices go up, which makes confidence even lower. This can spiral out of control.
Inflate Away the Debt
The idea here is that those in charge have decided to inflate away the national debt by printing money and this causes hyperinflation. If politicians have ever made such a decision I can not find them admitting it publicly. To me hyperinflation happens when there is no good way out of a bad situation. I doubt there was ever a "vote for hyperinflation". Perhaps they voted to monetize the debt but did not understand it would cause hyperinflation. I can not even find that though.
When Politicians Get Control of Printing Press
Politicians can spend unlimited amounts once they are able to get as much money as they want from the printing presses. Usually this is done by getting control of the central bank and making them buy as many government bonds as needed. Once this is how things work, all restraints on the amount of money are gone. The more they print, the higher the prices. The higher the prices, the more they print. They print and spend into oblivion.
Khan Academy
The Khan Academy video explains hyperinflation as two feedback loops. First, the more the government prints, the higher the prices go, but the higher the prices go, the more the government needs to print to pay for whatever it needs to pay for. The other cycle is that the faster prices go up the more people hoard real goods. But the more people hoard real goods and less cash, the bigger the impact of constant real value of new money (and so bigger nominal value). Hoarding can be done by buying extra stuff ahead of when they normally would or waiting to sell things until prices have gone up. They keep less cash and more real goods. These two cycles can go on and on and prices keep going up.
Addiction to Monetary Heroin
The economy and government get addicted to cheap money. If at any point the cheap money is removed the economy and government will nearly fall apart. But over time a larger and larger dosage is needed. Eventually the patient dies.
Taxes for Bond Holders
Bond holders that are paid with money collected from taxes can expect to get the value of their initial investment back plus interest. However, when governments start printing money to pay bond holders the value of the money will be going down and holding bonds for years is a bad deal. Bond holders know this and can head for the exits when governments start doing this. The faster bond holders exit the faster the government will print. So this can spiral out of control in a bond panic.
Lenin's View
There is no subtler, no surer way to overturn the existing basis of society to than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner, which not one man in a million is able to diagnose. -As reported by Keynes
Modern Monetary Theory and Monetary Realism
In these theories hyperinflation is viewed as a political issue and not a monetary issue. They look for some trigger to blame the whole hyperinflation on. This may be a supply shock, a loss of productive capacity, corrupt or unstable government, or external factors like war. This will be some reason the government was deficit spending. While normally very into detail, even at the level of each debit and credit for monetary operations, when it comes to hyperinflation, they skip over all the detail of the mechanics of hyperinflation.
They always name the initial trigger after the hyperinflation has started and they know to go looking for one. They do not seem to have any ability to predict hyperinflation ahead of time and never discuss the mechanics of how it works or goes on for so long. If Japan gets hyperinflation, then they might trace things back to the tsunami and say that was the core cause; however, they could not tell you now if the tsunami will lead to hyperinflation in the future.
These two theories do not seem to help at all in warning when hyperinflation might start nor in really understanding how it works. All the other theories above can give you some insight to how hyperinflation happens. These are more like, "sometimes war causes hyperinflation", without talking about how or any of the steps that go on so you might be able to predict which wars would cause hyperinflation.
Since these two schools of economic thought seem unwilling to explain the mechanics of hyperinflation in their own theories, I will do it for them. In these theories government bonds are part of the money supply. Each time the government makes a new bond out of thin air and sells it, they add to the money supply. In these theories, if the government budget and deficit are out of control, then the money supply is also out of control. As prices go up the government needs to make more bonds to be able to handle the new higher prices. However, the more bonds they make the more prices go up. This spirals out of control, making hyperinflation.
Mix and Match
Note that you can mix and match parts from different explanations above to make your own explanation. They are not contradictory but just different ways of talking about what is going on. It reminds me of the blind men describing an elephant. Maybe with all of these together we are getting close to understanding.
Predicting the Timing
I think that you really can understand the mechanics of hyperinflation if you can understand all these different explanations. However, predicting when hyperinflation starts is a much harder problem, one that I do not claim to have solved, yet.
Others Views of Hyperinflation
As I think of other ways to explain hyperinflation I will add them. If you know of any more please comment.
Posted by Vincent Cate at 5:19 AM
http://howfiatdies.blogspot.com/2013/09/hyperinflation-explained-in-many.html
Takeover Target Could Offer 35.7% Upside Very Soon: Probe Mines Limited
Sep 17 2013,
The Critical Investor
1.Introduction
The TSX Venture is near a 4 year low, gold is barely recovering from a 3 year low, and only one large and undervalued gold deposit is left in Ontario after some consolidations, making the controlling junior mining company which owns it a very interesting takeover target: Probe Mines Limited (PROBF.K, or on the TSX Venture where it is much more liquid: PRB.V).
As of September 16, 2013 Probe Mines has a share price of $2.07 and a market cap of $156.49M, with 75.6M shares outstanding (fully diluted 88.5M), and made a big run in the last four months already as is shown on this chart:
(click to enlarge)
Share price over 1 year period
Nevertheless I will try to explain why this stock could go up even considerably higher. Another respected SA author already showed some of the potential of Probe Mines by describing it as a long term investment. My intention is to show in-depth how much potential this could be, and highlight Probe Mines more as a takeover target and explain why this could be the case in my opinion.
2.Executive summary
Probe Mines (PROBF.PK) is a junior mining company which fully owns two very interesting projects, namely their flagship 4.3M oz @ 1.03g/t Au Borden Lake gold project, and the 3.82M t Black Creek chromite project, both located in mining friendly Ontario.
The Borden Lake project is the last multi-million ounce gold project in Ontario which isn't already owned by a mid-tier or senior producer. This project also has additional upside exploration potential and proximity to existing infrastructure. Probe Mines has plenty of working capital (about $40M) to complete an extensive drill program and a PEA. It could even release a Feasibility Study on Borden Lake as well without further equity dilution.
The Black Creek chromite project is one of very few large chromite projects located in the Western hemisphere. It has an average grade of 37,5% so the ore can be shipped directly as the limit for this is 37%. This saves a lot of processing costs (for example milling and upgrading). It is located in between two chromite projects of the mining giant Cliffs Natural Resources (CLF).
There are several catalysts for the Probe Mines share price, I will describe them in a time-sequential order. The first but negative catalyst is about Agnico-Eagle Mines (AEM), which already purchased a 9.94% stake in this company on May 28, 2013, clearly seeing value in Probe Mines' Borden Lake gold project. The holding period for shares and warrants ends at September 29, 2013.
Next and positive catalyst for Probe Mines will be an updated NI43-101 resource estimate, to be released by the end of this year. If Probe Mines can surprise the mining community with more ounces and a higher average grade compared to the current estimate, chances are this will create a serious uptick in the share price.
The final and most important positive catalyst as far as I am concerned is the upcoming PEA, planned for Q1 in 2014. A positive PEA indicates Borden Lake directly as a premier takeover target for producers.
Another positive catalyst came very recently, by Larry Summers pulling out of the race for the FED presidency. He was rather critical regarding the very loose monetary politics (QE and low interest rates). Accelerated tapering would have caused serious downside pressure on the price of gold, therefore having a negative impact on the business case of Probe Mines. The development of a physical gold market could be supportive as well, providing a possible foundation of solid demand, to a certain extent neutralizing volatility caused by the trading in gold related securities like GLD (GLD).
As always, risks often mirror the catalysts, and for Probe the biggest risks are a lower than expected resource estimate, and especially a negative PEA. The resource estimate doesn't seem to be a great risk because of recent, very encouraging drill results. Another risk preventing a takeover is the gold price. When it does decrease (which I highly doubt) below $1000 levels as several analysts forecast notwithstanding FED continuing its loose monetary politics, it is very likely this project will not be very profitable anymore, and therefore Probe Mines will lose most of its current attraction as takeover target.
To determine the value of the company, calculations were performed on three different ratio's. These ratio's were market capitalization to net present value for Borden Lake, take over price to resources, comparing this project with other relevant takeovers, and the enterprise value to resources compared to peers, on a base case scenario with a close to current gold price of $1300/oz. Taking into account a current share price of $2.07 (9/16/2013), based on 88.5M shares fully diluted (at $2.00 or higher all options and warrants are in the money) we get a target share price of $2.81, for a profit of 35.7%.
3. Company
Probe Mines is a junior mining company which fully owns two very interesting projects, namely its flagship 4.3M oz @ 1.03g/t Au Borden Lake gold project, and the 10M t Black Creek chromite project, both located in mining friendly Ontario.
Probe Mines' Borden Lake project is the last 4M+ oz gold deposit in Ontario which isn't already owned or about to be bought by a mid-tier or senior producer. This project also has additional upside exploration potential and its main advantage is its proximity to existing infrastructure.
The company is currently completing a large drill program in order to release an updated resource estimate in Q4 and a PEA in Q1 2014. There is sufficient working capital (about $40M estimated after the last cap raise of $14.5M at May 28,2013) available to achieve these milestones without further dilution.
Agnico Eagle Mines was the senior producer which bought all of the shares in this capital raise, resulting in Agnico holding a 9.94% interest in the company. This obviously implies Agnico is very interested in Probe Mines, but there are more big parties, looking around these days for relatively cheap assets in mining friendly districts, especially solid deposits near good infrastructure.
4. Projects
A. The Borden Lake Gold Project
The Borden Lake Gold Project is located near the town of Chapleau, about 1km away from existing infrastructure, and in between two large, recently acquired gold deposits (Magino and Cote Lake, more on this later on):
(click to enlarge)
Location of Borden Lake
Resource estimate
Probe Mines released a NI43-compliant resource estimate on the Borden Lake project in January, outlining an in-pit resource estimate of 4.3M oz @ 1.03 g/t gold in the indicated and inferred resource categories. The company is continuing exploration efforts on the property to upgrade the current indicated category towards measured resources and maybe even proven and probable reserves. Another target of the company is to expand the high grade part of the resources as much as possible. The last drill results bode well for this, as shown by recent results like 51m @ 10.3g/t found in the South East section of the property:
(click to enlarge)
Because the company also continues to find near surface high-grade intercepts such as 44 meters at 4g/t gold and 41 meters at 5.1g/t gold in its infill drill program, there's a good chance Probe Mines will be able to start its mining operations at the high-grade zone to achieve a faster payback of the initial capex.
(click to enlarge)
Resource estimate, January 2013
According to this estimate Probe has a resource estimate of 2.34M oz Au @ 1.7g/t (average grade) M&I using a different cutoff-grade of 1 g/t. As the gold grade is much higher, the project seems to be more robust when compared to the 4.3M oz @ 1.03 g/t (average grade) M&I resource. Higher average grade deposits require a smaller capex to be brought into production.
At this moment, the company has completed almost 150,000 meters of drilling in almost 500 drill holes. The mineralization is still open along strike and although it continues under the lake, there's a good chance these resources could be recovered as well through an underground operation.
(click to enlarge)
Map of drill hole locations at Borden Lake
(click to enlarge)
High grade intercepts at the left, open along strike
Probe Mines recently expanded its land holdings to the northeast of the Borden Gold Project. The company now controls the majority of the eastern extent of the Borden Gold Belt with the acquisition of the East Limb Property's contiguous claim group. Now totaling 2.157 claim units, the project is over 41 kilometers long and covers over 350 square kilometers. These claims are believed to cover the same horizons that host the Borden Gold deposit.
Historical grab samples from outcrops on the East Limb Property have yielded of up to 3 g/t Au and hold high potential for new discoveries:
(click to enlarge)
East Limb Property
B. The Black Creek Chromite Project
Probe Mines also owns the Black Creek Chromite project, which is strategically located in the McFauld's Lake area of the James Bay Lowlands in Ontario, otherwise known as the "Ring of Fire", in between Cliffs Natural Resources' Big Daddy and Black Thor deposits:
Big red star locating Probe Mines' Black Creek project
The project currently has a resource estimate of 10.2 million tonnes at a relatively low average grade of 37.5% Cr, but which would just make it suitable for direct shipping ore (which usually has a content of in excess of 37% Cr) without any milling required. This would obviously reduce the capex and enhance the economics of this project.
Resource Estimate Black Creek project. Source: Company documents
Black Creek block model
Chromite is one of the most important and strategic minerals there is, as it has unique characteristics and almost no substitutes. It is mainly used in the production of stainless steel, but the US Department of Defense has a strategic stockpile of chromite as well.
Three countries (South Africa, India and Kazachstan) produce about 80% of global output, and these countries can't really be interpreted as reliable and stable long-term export partners, as they aren't ranked very high on the Frasers' List (ranking the mining policies of most countries). As production in Western countries is limited, I consider every economically viable chromite deposit in the Western hemisphere to be of strategic importance for Western hemisphere companies and governments. For example the nearby large Ring of Fire chromite projects owned by mining giant Cliffs Natural Resources could play an important role when Cliffs' manages to overcome current setbacks.
As Probe Mines is now completely focusing on the Borden Lake gold project, I think it's very likely it would like to sell the Black Creek project to raise cash to fund a part of the initial Borden Lake capex when the company doesn't get bought out.
5. Valuation
As Probe Mines owns two different, large projects with one of them approaching PEA status, it is appropriate to estimate the value of the company based on several ratios. The ratios I am going to calculate are:
A. market cap vs. NPV
B. EV/oz vs. peers
C. in situ value/oz vs. peer takeovers
Based on these ratios I will estimate a target share price composed out of a weighted average, combined with other assumptions.
A. Market cap vs. NPV
In order to calculate the Border Lake gold project I use my own regularly updated database which contains most TSX- and TSX-V mining companies, in order to derive certain ratios. I found this more reliable than ratios used by mainstream sell side analysts. I always have had a more conservative approach than analysts because their modus operandi just doesn't work out most of the time, probably caused by doing their job as a sell side analyst of course.
For this project I would like to calculate 2 different scenarios, one with the 4.3M oz gold @ 1.03g/t deposit and the other with the 2.34M oz gold @ 1.7g/t scenario. The 2.34M scenario (#2) is a relatively more underground operation than the 4.3M scenario (#1) because it has a smaller open pittable part, so therefore the initial capex is relatively more expensive, as is sustaining capital. I used a slightly better recovery grade for scenario #2 as it has higher average grade.
I am introducing my own ratio to determine the capex, based on data of most juniors having released an economic study, which parameters are all entered in my database. Therefore I can generate a lot of averages, which I can use to estimate certain ratio's. The capex ratio is based on the ratio between capex and daily mill throughput, and I have it calculated for two types of mine: underground and open pit. For a combination of these two types like the Border Lake project I had to average the two capex ratios, assuming a certain part is underground and another open pit.
Part one of the calculation of capex and cash cost:
Sce nario
Res. MM oz
Mine able MM oz
Av grade g/t
Minetype
LOM y
oz pa
Rec.
Product. T pa
Tpd
1
4.3
3.6
1.03
OP/UND
18
200000
90%
6911111
19746
2
2.34
1.9
1.7
OP/UND
18
105556
93%
3529869
10085
Part two of the calculation of capex and cash cost:
Scenario
Capex ratio $M/tpd
Capex $MM
Sustaining $MM
G&A etc $MM
Cash cost $/oz
Cash cost all in sustaining $/oz
1
35
564
250
50
650
733
2
25
403
200
30
500
621
After I have estimated the capex and all in sustaining cash cost, I continue by calculating the NPV in different scenarios for the gold price.
I assume for corporate taxes in Ontario 31%, it is always a bit confusing with this mixture of local and federal taxes in Canada to get to the right percentage. As mining companies can deduct expenses like exploration, environmental assessments, permits etc, I estimate this accumulated deficit for Probe at about $70M, based for the largest part on exploration costs, resulting for scenario #1 in a tax free first three years, for #2 in a tax free first four years. Discount for NPV is 5%.
My base case scenario's have a gold price of $1300/oz:
As a bigger capex is no problem for a large company and the smaller scenario #2 isn't much more profitable relatively speaking, I assume in case of a take over a valuation based on scenario #1: NPV@5% of $406M @ gold $1300/oz.
In case Probe doesn't get bought out soon, it is more likely it continues as a stand alone company with scenario #2, as it requires less initial capex and sustaining capital.
Nowadays, for an advanced explorer like Probe, located in a very miningfriendly and M&A active region with very good infrastructure, an NPV is conservatively multiplied with 0.6 in order to derive a hypothetical market cap. This generates a potential market cap just based on Borden Lake of $406 x 0.6 = $243.6M, or a fully diluted target share price of $2.75.
Chromite
As the Black Creek chromite project isn't going into production anytime soon as mentioned, it doesn't make any sense to calculate future cash flows for this project. Instead I would like to make an estimation of the project based on an in-situ valuation with different chromite prices and different percentages of the in-situ value.
B. EV/oz vs. peers
The enterprise value (EV) of Probe Mines, just based on the Borden Lake is calculated as followed:
EV = market cap - cash + debt (estimated liabilities without project debt)
EV = $143.65M - $40M + $5M
EV = $103.65M
As the Borden Lake deposit has 4.3M oz Au, the corresponding ratio EV/oz is:
EV/oz = 24.1
The Black Creek chromite project is by far a secondary object in a takeover, but still represents a certain value. This deposit is 10M t chromite and using a price of $220/t, resulting in a gross metal value of $2.2B. The gross metal value of the Borden Lake gold deposit is 4.3M x $1315 = $5.65B, so globally three times larger, generating a hypothetical AuEq resource of 6.0M oz. Because of ongoing issues on nearby chromite projects, I value the Black Creek project at just 0.2M oz gold-equivalent, combining both projects to a hypothetical AuEq resource of 4.5M oz.
The ratio EV/oz results in: $103.65 / 4.5 = 23.0
As the EV/oz ratio according to my database is on average 21 for gold exploration companies in the same stage as Probe, it could be concluded on this ratio this company is slightly overvalued compared to his peers. When the EV/oz ratio for Probes' Borden Lake would be 21, the corresponding share price would be: $129.5 / 75.6 = $1.71.
However, the recently acquired claims adjacent to Borden Lake called the East Limb property, are very promising according to management, and offer considerable upside exploration potential. Maybe some kind of expectation has already been priced in by the markets as well.
C. In situ value/oz vs. peer takeovers
In order to estimate a takeover indication for Probe based on the Borden Lake gold project, I compared three cases in Ontario: Rainy River, Prodigy Gold and Trelawney Mining.
1. Acquisition of Rainy River by New Gold
New Gold is paying $364.3M for Rainy River. Its Rainy River flagship project holds a mostly M&I defined resource of 8.85M oz AuEq @1.21g/t. This results in an average value for this deposit of $41.16/oz. The Rainy River project is designed as a combination of underground and open pit, just like the Borden Lake project. Just 3.65M oz Au was a pit constrained resource, Probes resources however are mostly pit constrained, so I consider them relatively more valuable, and would estimate a comparable average value of $55/oz just for the pit constrained resource of Rainy River.
Gold price at the time of acquisition (8/9/2013): $1314/oz
2. Acquisition of Prodigy Gold by Argonaut Gold
Argonaut paid $341M for Prodigy. Its flagship project Magino contains 6.25M oz Au @ 1.06g/t, of which half was in the M&I categories. This results in an average value for this deposit of $55/oz. Just 2.75M oz Au was a pit constrained resource, and would estimate a comparable average value of $75/oz just for the pit constrained resource of Magino.
Gold price at the time of acquisition (10/15/2012): $1754/oz
3. Acquisition of Trelawney Mining by IAMGOLD
IAMGOLD paid $505M for Trelawney. Its flagship project Cote Lake holds a mostly inferred resource of 6.9M oz Au@ 0.89g/t. This results in an average value for this deposit of $73/oz. An economic study for Cote Lake was never released. Therefore I value Probe's resource more valuable as this is an M&I and pit constrained resource. I would like to estimate a comparable average value of $100/oz for Cote Lake.
Gold price at the time of acquisition (6/21/2012): $1594/oz
Cote Lake project
Considering the average value of these three recently acquired deposits, and considering the current gold price at $1325/oz, I would like to assume an average in situ value of $60/oz for the Borden Lake project.
This would mean a takeover price for Probe Mines based on Borden Lake of 4.3M oz x $60/oz = $258M, which generates a corresponding share price of:
$258 / 88.5M shares F/D = $2.92.
Chromite
As the Black Creek chromite project isn't going into production anytime soon, it doesn't make much sense to calculate future cash flows for this project. There are also no peer take over projects to compare. Instead of this I would like to make an estimation of the project based on an in-situ valuation with different chromite prices and different percentages of the in-situ value. Most of the resource is measured and indicated (M&I), 8,65M tonnes, and 1,6M tonnes is inferred. Frequently applied in-situ valuation methods use 1% in situ value for inferred resources, 2% for M&I resources and 3-5% for proven and probable (P&P)resources.
The Black Creek project consists out of relatively low average grade lumpy chromite (FeCr) direct shippable ore (DSO) at 37,5% chrome. Prices for comparable 40% FeCr DSO are:
(click to enlarge)
Calculations in situ value (ISV) for chromite prices between $200-240/t:
I would like to apply the current chromite price of $220/t, and like to add a small discount for the slightly lower average grade, resulting in an in situ value of $40M.
This would mean a value of $40M / 88.5M shares F/D = $0.45 per share.
Update as of September 15, 2013: Cliffs' Ring of Fire chromite projects have to endure considerable setbacks lately. The only way out for Cliffs' seems to buy out KWG (KWGBF.PK), a much smaller rival miner, which seems to have a better but far more expensive transportation proposal in the same area for the same purpose, unfortunately not without problems either. However, Cliffs is facing headwinds in the iron ore business with cost of production rising in face of low prices, and its balance sheet is stretched. Therefore, an acquisition may be the last thing on the management's mind at the moment. Besides this, an increase in the initial capex of the Ring of Fire chromite project is very likely because of the more expensive transportation proposal. Last but certainly not least there are Cliffs' ongoing long term problems with the environment assessment process, land surface rights, and negotiations with the Province of Ontario.
(click to enlarge)
Cliffs' Black Thor project
As I consider Cliffs the most important candidate to buy Black Creek as it is the primary chromite player in the region, but having all kinds of trouble now related to this very same region, chances are other competitors are not very keen on intertwining in these kind of problems either as Black Creek most likely will face some of the same issues as well when developed towards production. Therefore I prefer to value the Black Creek considerably lower at $10M, or $0.11 per share fully diluted.
This results in an estimated total valuation for both projects based on resources of:
$2.92 + $0.11 = $3.03.
Valuating the company
Three ratio's have been calculated, now it's time to compose a combined target share price based on these ratio's. The more a ratio tells about the company, the more valuable it is and therefore the more weight it deserves.
A. market cap vs. NPV: A NPV is a good way to value a project as it takes into account most parameters. As Probe isn't very close to production, the discount on the NPV is considerable with 40% (near term producers get 0-10% discount on NPV), and could be subject to many changes over the years as well. The businesscase and NPV could change a lot in 3-4 years time, therefore I would like to weight the estimated NPV based share price by 30%
B. EV/oz vs. peers: EV/oz is a very limited valuation, and doesn't tell much about the future cash flow potential of the deposit. Therefore it is more of an indicator of share price sentiment for the moment. Because of this I would like to weight this ratio by 10%.
C. in situ value/oz vs. peer takeovers: This is the most important ratio as it shows how much the company could actually be worth as takeover target, compared to several peers who recently got acquired. Especially the Rainy River take over presents very accurate information as it is located in Ontario, has the same underground/open pit mine plan and most of its resources are M&I just like Borden Lake. Therefore I would like to weight this ratio by 60%.
This results in the following components of the target share price:
A: market cap vs. NPV: $2.75 x 30% = $0.82
B: Ev/oz vs peers: $1.71 x 10% = $0.17
C: In situ value/oz vs. peer takeovers: $3.03 x 60% = $1.82
Adding these three components results in a conservative target share price of $2.81. Taking into account a current share price of $2.07 (9/16/2013), this means a profit of 35.7%.
6. Catalysts & Risks
There are several catalysts for the Probe Mines share price, I will describe them in a time-sequential order. The first catalyst is about Agnico-Eagle Mines , which already purchased a 9.94% stake in this company on May 28, 2013, clearly seeing value in Probe Mines' Borden Lake gold project. The holding period for shares and warrants ends at September 29, 2013. As AEM is holding a considerable amount of warrants at $2.00, exercising them could cause downside pressure on the share price directly after this date. Usually big parties wait until the expiry date, so I don't expect serious price action.
Next catalyst for Probe Mines will be an updated NI43-101 resource estimate, to be released by the end of this year. If Probe Mines can surprise the mining community with more ounces and a higher average grade compared to the current estimate, chances are this will create a serious uptick in the share price.
The final and most important catalyst as far as I am concerned is the upcoming PEA, planned for Q1 in 2014. A positive PEA indicates Borden Lake directly as a premier takeover target for producers. If precise modeling results in a NPV exceeding $400M, my guess is the investing community will be pleasantly surprised, sending my NPV/market cap component of the target share price even higher.
Another positive catalyst came very recently, by Larry Summers pulling out of the race for the FED presidency. He was rather critical regarding the very loose monetary politics (QE and low interest rates). Accelerated tapering would have caused serious downside pressure on the price of gold, therefore having a negative impact on the business case of Probe Mines. With Summers out, Janet Yellen became the top candidate, who is one of the architects of the loose monetary politics, and very supportive of it. This could very well create some kind of foundation underneath the price of gold, preventing it to go lower than $1200-1300/oz for quite some time.
Besides this, another positive development which could be supportive for the price of gold is the development of a large physical gold market as I wrote about in another article, preventing the price of gold to decrease to $1000/oz levels because of current massive demand for physical gold. This may not send the price of gold much higher in the near future, but it could to a certain extent neutralize possible selling pressure caused by gold related securities like GLD.
As always, risks often mirror the catalysts, and for Probe the biggest risks are a lower than expected resource estimate, and especially a negative PEA. The resource estimate doesn't seem to be a great risk because of recent, very encouraging drill results, therefore I don't expect a lot of risks for the PEA either, especially since Summers pulled out, which caused support for the gold price. When it does decrease below $1000 levels as several analysts forecast, it is of course very likely this project will not be very profitable anymore, and therefore Probe Mines will lose most of its current attraction as takeover target.
Another thing that could prevent a fast buy out at high prices are, as already mentioned, the setbacks Cliffs' Natural Resources goes through at the moment on their own nearby chromite projects. Cliffs' is the only big chromite player in this region, and most likely the only party interested in the Black Creek deposit. As an asset almost impossible to sell, Black Creek could shed some shadows on Probe as a whole, therefore lowering expectations on a takeover target share price. However I dismissed Black Creeks' value almost entirely in my valuation, so I don't expect much downside risk on this subject.
7. Conclusion
Probe Mines is the last junior company with a resource estimate over 4M oz Au in a region which saw considerable M&A over the past year and a half, as other nearby gold explorers Trelawney, Prodigy Gold and Rainy River were acquired by producers.
The company is working towards an updated resource estimate and the release of a PEA soon after, which will in my opinion very likely prove the value of Borden Lake. Although the market already recognizes the potential of Probe Mines, I consider this company for several reasons as an attractive takeover target which still has an upside potential of at least 35.7% for a conservative target share price of $2.81, and it might be up to Agnico-Eagle Mines or perhaps Barrick (ABX) or Osisko (OSKFF.PK) to prove my thesis soon.
http://seekingalpha.com/article/1699442-takeover-target-could-offer-35-7-upside-very-soon-probe-mines-limited?source=email_rt_article_readmore
Silver-Based Memory Devices May Replace Flash Drives
The Silver Institute
Sept. 13, 2013
You may not have heard the acronym ReRAM, but you will soon. Resistive Random Access Memory or ReRAMs (sometimes written as RRAMs) operate like tiny battery cells and store data through changes in the electrical resistance of the cell. The presence or absence of an electrical charge can be used to store bits of information. Although there are different types of ReRAMs, those using silver ions show excellent promise, according to industry officials.
This burgeoning technology for storing information will eventually replace flash memory – used in thumb drives and many notebooks. Currently, all tablets and smartphones use flash memory, but that too will change in coming years as ReRAMs take their place.
ReRAMs hold advantages over conventional flash drives. Because ReRAMs use so little power – in the nanowatt range compared to hundreds of milliwatts for flash drives – they could allow your smartphone to operate up to a week without recharging. A ReRAM chip the size of a postage stamp can hold a terabyte of data, enough to store 250 high-definition movies. Information is written to ReRAMs faster, nanoseconds compared to milliseconds for flash drives. ReRAMS also last longer; they are able to handle millions of rewrites compared to flash drives that fail after about 10,000 rewrites.
One company, Crossbar Inc., based in Santa Clara, California, touts its silver-ion based technology for its memory devices, which CEO George Minassian expects to be commercially available next year. Their ReRAM version relies on the formation of a filament produced by the movement of silver ions within a silicon base.
"Non-volatile memory is ubiquitous today as the storage technology at the heart of the over a trillion dollar electronics market – from tablets and USBsticks to enterprise storage systems," said Minassian in a prepared statement. "And yet, today's nonvolatile memory technologies are running out of steam, hitting significant barriers as they scale to smaller manufacturing processes. With our working Crossbar array, we have achieved all the major technical milestones that prove ourReRAM technology is easy to manufacture and ready for commercialization. It's a watershed moment for the non-volatile memory industry."
Other companies including Toshiba, Panasonic, HP, Micron and Samsung are also working on their own versions of ReRAMs, with many of their designs based on silver ions, too
Silver Ions Deposited on Glass by High-Speed Spinning
South Korean scientists have discovered a new way to coat glass with a layer of silver ions to prevent the growth of bacteria. This glass can be especially useful for medical apparatus, food service and other applications in which glass equipment must be kept sanitary despite germ-filled environments.
The team at Yonsei University in Seoul spin-coats the glass with 'sol-gel,' a gelatinous solution holding silver ions in the form of silver nitrate. The gel is spun at 2,000 revolutions per minute in a temperature of 392 degrees F. and deposited on the glass with great force. The result is glass with a silver ion coating that is more than 90 percent transparent compared to uncoated glass. In addition, tests showed that the coated glass is slightly more resistant to bending pressure than regular glass. Further testing showed that the glass exhibited all of the antibacterial properties expected of silver ions.
The researchers plan to try their spin-coating technique on other substances such as metals and plastics which would benefit from an antibacterial layer of silver ions
Silver's Antibacterial Power – College Doors Coated With Silver
Doors in four buildings at Penn State Erie have been coated with silver ions to help keep students healthy, according to school officials, and the project may lead to an industry-wide logo touting the antibacterial benefits of silver coatings. "It does seem to be effective," said Beth Potter, assistant professor of microbiology. Potter's students swabbed 50 door handles on campus and measured bacteria on surfaces with and without the silver treatment. The door handles treated with Agion silver were consistently cleaner, she reports.
School officials and representatives from Advanced Finishing USA, the company that sprayed the silver ion solution onto the handles, are considering other targets such as water bottles, bus strap handles, gas pumps and emergency exit door bars. The school's marketing department got involved in the project, too. Students of marketing professor Mary Beth Pinto used the coating to answer the question: How do you market an invisible product? Early tests on a stair railing at the college used a white coating, and the students found that people were reluctant to touch it, thinking it was wet paint. Tests in which they employed a clear coating to door handles at two local convenience stores showed that customers had no hesitation about touching it, but this presented a new issue: How do you let users know that they just received a benefit from the silver ion coating? This led students to develop signs and logos explaining the value of Agion products.
"Ideally, we'll get to some kind of identifiable symbol," said GregYahn, president of Advanced Finishing USA. "Something like the Nike swoosh, where you know from 10 feet away: 'That’s antimicrobial. It's OK to touch it.'"
goldsilverworlds.com
http://www.silverbearcafe.com/private/09.13/reram.html
Sprott Precious Metals Round Table
Where Do We Go From Here?
The Fed taper. Turmoil in the Middle East. Selloff in Emerging Markets. What does it all mean for precious metals?
To find out, join our webcast on September 24, 2013 for a round table discussion with Eric Sprott, Marc Faber, Rick Rule and John Embry.
To register:
https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=681241&sessionid=1&key=75357E663B2D6F4FBAA2FF28FF79CFC4&partnerref=bullion&sourcepage=register
Billionaire Miner Robert Friedland Sounds Off
POSTED ON SEPTEMBER 14, 2013
BY TOMMY HUMPHREYS
Global Opportunities And Leadership
I was able to catch up with billionaire Ivanhoe Mines (TSX:IVN) Executive Chairman Robert Friedland in Toronto yesterday. The Singapore-based mining legend was in Toronto this week to announce the launch of Ivanhoe Pictures, a new film and TV finance and production company, and to host the first investor presentations for his Ivanhoe Mines after a summer spent relaxing and reflecting on the Italian coast, where Mr. Friedland acquired a hotel property earlier this year.
Friedland says that the Chinese are determined to fight air pollution. “I have a home in Beijing but I’ve been avoiding it in recent years because the air pollution has become absolutely diabolical,” Friedland commented. This alone would be enough to drive the conventional Platinum market crazy, he added, noting that catalytic converters which reduce toxic emissions in automobiles use substantial amounts of platinum and palladium.
There is a revolution coming to the automobile industry via the Japanese, according to Friedland. Senior officials in Japan tell him that the Toyota Motor Company will announce hydrogen fuel cell automobiles later this year with a commercial roll out coming in 2015. “These cars will use ounces, not tenths of ounces of platinum,” Friedland said. This is why the Japanese government bought 10% of Ivanhoe’s Platreef project for $300 million, Friedland believes.
The Japanese will also spend as much as $100 billion upgrading their high speed trains, requiring massive amounts of metals, said the always enthusiastic Ivanhoe chairman.
“You will need a telescope to see how high the price of Platinum will go.”
On the subject of quantitative easing in the US, Mr. Friedland commented, “Now we have this new word written by idiots called tapering which is basically the breast of your mother is being taken out of your mouth but just for a few minutes and slowly, and while you’re getting deprived of your mother’s milk, they’re going to give you baby formula instead, and assure you at the same time that money’s going to be free forever. All of the world’s central banks are printing capital. We are not going into a deflationary meltdown. It’s not going to happen. Europe is starting to recover.. The US is clearly in a recovery… Growth in the developing world continues at pace.”
Friedland thinks the sacking of CEOs at major mining companies was a mistake by the boards and chairman at these companies. “Mr. Munk dispensed of Aaron Regent, which was a ridiculous decision, in my considered opinion… The new personage in the CEO positions are risk averse. They’re cutting costs and selling assets, sticking their heads in the sand… What do you think is going to happen in the mining industry where at the top all of the major mining companies are downsizing or shrinking?”
Copper
Friedland says that a growing global economy, coupled with a downsizing mining industry, and constricted exploration finance markets are contributing to a very bullish setup in commodities, in particular copper.
Electrical energy consumption per person on planet earth has never done anything but go up, said the mining legend, and power takes copper. “Copper is the king of metals.”
“These old mines are dying, and their grades are declining, and we’re going to have to have a much higher copper price.”
Friedland believes $4.50 – $4.75 per pound copper prices are necessary to justify the construction of new mines, with one exception, Ivanhoe’s high grade Kamoa project in the DRC, one of two copper development projects in that challenged but resource rich African nation which Ivanhoe owns stakes in. “Did you know the Katanga province [in the DRC] now produces more copper than all of Canada?” Friedland asked rhetorically.
“I think copper is going to hang around $3-$3.25, maybe for a nano second $2.75, but 5 years from now it’s definitely $4-$5 per pound, and this is what a bottom looks like.”
Friedland also suggested a new use for copper. Because of its antiviral and antibacterial properties, the mineral could replace stainless steel as a surface material in hospitals. Silver is another anti-bacterial alternative, albeit more expensive than copper. Whether we’ll be seeing copper counters in hospitals soon is unknown.
On the subject of Iron ore, Friedland commented, “Iron, I’m sorry to say it, but WE’RE FLOATING ON AN IRON BALL, THE EARTH. Iron is either the first or second most common element on the periodic table and everyone and his brother are building iron mines. But copper is rare and hard to find and without it we don’t have a modern world.”
Friedland Track Record
Mr. Friedland is considered to be the most successful mining entrepreneur of our time (Rick Rule to CEO.CA). In the early 1990’s one of Friedland’s companies discovered and developed the Fort Knox gold mine in Alaska, now owned by Kinross. According to Friedland, the project cost investors $7 million and was sold for approximately $600 million.
Friedland’s Diamond Fields International then discovered the Voisey’s Bay nickel project in Newfoundland, Canada, which sent his Diamond Fields stock from $1 to $161 in 13 months adjusted for splits in 1995. “So many trees died to generate the wood pulp in the Globe and Mail to gloat about the fact that Inco paid too much for Voisey’s Bay, $4.3 billion. But actually when the Brazilian’s came to buy Inco they ascribed $12 billion to the value of this asset, so I just want to remind you that the real wealth in the mining industry is generated by FINDING something,” Friedland emphasized.
Friedland turned his attention to Mongolia in 1999. With only $100,000 remaining in Ivanhoe Mines bank account, on the 153rd drill hole, the company discovered a massive copper gold ore body in the Gobi Desert at Oyu Tolgoi. Ivanhoe Mines then executed the largest drilling campaign in the history of the mining industry, over 1 million meters of diamond drill core, to delineate over $400 billion worth of reserves, which Friedland described as giving birth to a 100 kilogram baby.
Oyu Tolgoi mine in Mongolia (Company)
Robert Friedland’s 100 kilogram baby, the Oyu Tolgoi mine in Mongolia (Company)
Over $7 billion was spent developing a mine at Oyu Tolgoi and a $5 billion expansion is now under way, however the market capitalization of the company which owns the mine (Turquoise Hill Resources – TSX:TRQ) is only $5.25 billion. Turquoise Hill will be producing copper at a negative cash cost (thanks to the gold) for over 100 years, Friedland said.
“All the drama about the Mongolian government and the investment agreement is long forgotten. This is the largest lowest cost new copper and gold mine in the world trading at a discount of the capital cost of building the plant right here on the Toronto Stock Exchange right under your nose because we have a bubble in panic.”
Friedland didn’t stop there. “Consider picking up a few shares as a speculation… Pack them away for your favourite nephew.”
Friedland says that he still holds some 80-90 million shares in Turquoise Hill, despite no longer being officially involved with the company, having relinquished control to Rio Tinto, one of the world’s largest mining companies, in 2012.
Ivanhoe 2.0
The team who discovered and built the mine at Oyu Tolgoi are still with Friedland at his Ivanhoe Mines 2.0 (TSX:IVN), and Friedland says that the company now has the three best undeveloped mines in the world, Kamoa, Kipushi and Platreef.
“These are world class mines opening soon at a theatre near you in one package trading at a radical discount to the price the Japanese government was willing to pay.”
Mr. Friedland did not discuss his plans for Ivanhoe Pictures, although rumours are circulating that Ivanhoe’s first film could be a biopic of Friedland himself. The legend’s life does deserve to be told on the silver screen, but who will they cast to play the man?
On the subject of junior mining stocks, Friedland thinks they are extremely undervalued. “We’re much closer to the bottom of this cycle than you imagine. This is not the end of the super-cycle… The financial markets are like a school of fish, they all head in one direction until all of a sudden, they turn on a dime.”
More: Ivanhoe Mines
Disclaimer: This is not investment advice. All figures approximate and all facts to be verified by the reader. We own shares in Ivanhoe Mines. Do your own due diligence.
http://ceo.ca/billionaire-miner-robert-friedland-sounds-off/
IVP – Watch mining legend Robert Friedland send Ivanplats shares over $2 in the near term
POSTED ON AUGUST 22, 2013
BY TOMMY HUMPHREYS
Global Opportunites And Leadership
Last week I bought some Ivanplats at $1.56 thinking it was too beaten up for the calibre of people and projects it has. Summer months are also historically the best times to pick up junior mining shares.
I also just learned that IVP Chairman Robert Friedland (who owns some 135 million IVP shares) will be hosting a site visit in the DRC during the first week of September.
Friedland has been called the greatest mining executive of our time by Rick Rule. Books have been written about him. He was an early mentor to Steve Jobs and legend has it he taught that gentleman how to sell.
I suspect that the excitement this investors field trip generates will be enough to send IVP above $2 in the near term, if not higher.
I see tonnes of value in Ivanplats and I’m jealous of those attending the trip.
Here’s the 12 month IVP Chart:
Related: I made a similar call on Lucara Diamond Corp on August 18, 2012. Lucara has returned over 60% since.
Do your own due diligence.
http://ceo.ca/watch-mining-legend-robert-friedland-send-ivanplats-shares-over-2-in-the-near-term/
Wm. K. Black: The SEC Flacks Paint Lehman’s Looters as the Victims of a “Political” SEC
By William K. Black
Posted on September 11, 2013
(special thanks to basserdan)
This is the second installment in a three-part series correcting the NYT propaganda ( http://tinyurl.com/qycrxmx ) that seeks to transmute the SEC’s refusal to hold any of Lehman’s looters accountable for their myriad frauds. For the purposes of this article I assume that the reporters have accurately represented the SEC officials’ positions. I discuss the journalists’ analytical flaws. In my next column I’ll address critical facts excluded by the SEC and the reporters. Those facts demonstrate that Lehman was an “accounting control fraud.” The NYT article ends with this morality play about the SEC’s anti-enforcement “team”:
“The S.E.C. team also concluded that Repo 105 would not have been ‘material’ to investors because the firm’s leverage ratio was trending downward regardless of Repo 105.
That conclusion set off a wave of dissent inside the S.E.C. Senior accountants and the head of the S.E.C. unit that oversaw corporate disclosures questioned the findings. Ms. Schapiro urged Mr. Canellos to keep digging.
But Mr. Canellos, a former federal prosecutor who is now the co-head of the S.E.C.’s enforcement unit, did not budge. Despite the political pressure, he told colleagues at one of the meetings, they could not bring a case if the evidence was lacking.
‘Our job is to seek justice,’ he said.”
It gets better, the reporters claim that Cannelos and his teams’ “careers likely would have benefited from bringing such a prominent case.” So, they are not only uniquely ethical, they are selfless. As I will explain in the next installment, Cannelos failed to investigate Lehman’s largest frauds and concluded he would lose the case if he brought it. That would have harmed his career. But the article unintentionally allows us to see how the SEC leakers spun their heroic morality tale and how the reporters swallowed it whole. I am a former enforcement director and head of litigation for a federal financial regulatory agency that conducted real investigations.
To understand this example of non-enforcers pretending to virtue requires a bit of context. The Department of Justice (DOJ) and the SEC focused their “investigations” solely on Lehman’s quarter-end “Repo 105” transactions that were entered into for the sole purpose of deceiving investors and the SEC about Lehman’s liquidity, earnings, and leverage crises – crises that would soon cause it to collapse. A “repurchase obligation” (REPO) is a short-term borrowing that is nominally structured as a “sale” with a “repurchase obligation.” Lehman improperly treated these short-term borrowings as if they were a true sale with no repurchase obligation, which caused Lehman to report lower debt levels.
Note that the journalists report that the SEC’s experts on whether such deceit was “material” to investors (“senior accountants and the head of the S.E.C. unit that oversaw corporate disclosures”) concluded that it was material. The fact that Lehman was so desperate to deceive its investors about the crises that would soon cause it to collapse that it sought out a legal opinion in the City of London (which “won” the ethical race to the bottom) to bless the deceit and proceeded to recurrently make large transactions near the end of quarters for the sole purpose of deceiving its investors and the SEC demonstrates that Lehman knew its deceit was material to its investors. That is a central reason why publicly traded firms engage in accounting fraud.
If you are wondering, no, it is not (remotely) normal for a U.S. investment bank to go to a UK firm to obtain a legal opinion on U.S. law. Nevertheless, the cynical act by Lehman’s leaders of legal dumpster diving to obtain a legal opinion blessing an obvious fraud was not treated by the Department of Justice (DOJ) as it should have been as an aggravating factor, but rather as a “get out of jail free card.” Consider the implications of that DOJ policy briefly so that you can, unlike the NYT reporters, test the depth of the rot at DOJ and why they embraced “too big to jail” as their mantra. Under the DOJ position reported by the journalists, a large publicly traded company can search all over the world for the least ethical law firms and buy an opinion from them that will immunize the company and its officers from liability for any act of fraud because they “relied” on the legal opinion. Let’s extend that doctrine to street gangs. I’m sure they could get legal opinions on justifiable homicide in advance of their next murders.
Cannelos’ reported basis for denying that investors would have considered Lehman’s REPO 105 fraud scheme to be “material” is that “the firm’s leverage ratio was trending downward regardless of Repo 105.” It is difficult to respond to a claim that is a non sequitur because it has no logical relationship to the conclusion. As best one can guess, Cannelos is claiming that investors would have considered it irrelevant what Lehman’s true leverage ratio (debt:equity) was and would have only been interested in the direction of the trend in that ratio. Because Cannelos (falsely, as I will explain in my next column) believes that Lehman’s leverage ratio was falling as it approached collapse he asserts that investors would have considered the actual leverage ratio irrelevant. That assertion assumes that investors are incompetent. A rational investor would care about the actual ratio, not simply the direction of the trend in the ratio. Lehman collapsed due to the interaction of its severe credit losses and a liquidity crisis. As its credit losses surged its liquidity needs became far more acute because of collateral demands by its creditors and, eventually, the unwillingness of creditors to roll their loans to Lehman. Lehman’s true leverage ratio, therefore, would have provided critical information to its investors, which is precisely why it used the REPO 105 scam to deceive its investors about its debt exposure.
The reporters try to picture the scam as trivial, with this unsourced claim about the DOJ and the FBI’s alleged findings about Lehman’s Repo 105 scam.
“They discovered that Repo 105 had nothing to do with Lehman’s failure and was technically allowed under an obscure accounting rule. Noting that London lawyers had approved Repo 105, prosecutors in Manhattan also worried they could not prove that executives intended to mislead investors.”
First, an accounting scam does not have to “cause” a “failure” to be a crime or a violation of rules. Accounting frauds are frequently undertaken to cover up the failing firm’s problems. That is why Lehman engaged in the REPO 105 scam. So the first sentence was fed to the NYT reporters for the purpose of deceiving the reader. REPO 105 is an obscure accounting rule – that does not mean that Lehman was allowed to use it to deceive investors. I’ve explained why the desperate search by Lehman’s officers for an attorney willing to give them the opinion they were shopping to obtain. The attorney shopping actually confirms that Lehman’s officers intent to deceive investors.
Canellos, an SEC enforcement attorney, overruled the SEC’s experts on interpreting “materiality” and insisted on employing his own idiosyncratic view that investors would not have considered it important to know the truth that Lehman’s officers intended to hide through deceit. The journalists do not understand the implications of an enforcement attorney arrogating onto himself the ability to determine the agency’s interpretation of the agency’s rules. Instead, they mischaracterize Cannelos’ actions as evidence of his brave devotion to justice in the face of improper pressures from the head of his agency. Under the version of the facts presented by the journalists, however, this interpretation is untenable.
Cannelos is an attorney representing a client, the SEC. The SEC has experts in what “material” means. Cannelos’ ethical duty is to represent his client’s position unless that position cannot be argued in good faith. Cannelos is wrong – terribly wrong – about materiality for the reasons I have explained, but that does not begin to capture how wrong his refusal to act against Lehman’s senior officers’ recurrent frauds was. Cannelos’ refusal to enforce the law as his clients interpret the law could only be justified if there was no good faith basis for arguing that Lehman’s frauds were “material” to investors. The reality as I have said is that the SEC’s experts were correct about materiality, but Cannelos could not have believed that the SEC’s position that Lehman’s frauds were material was an interpretation of the agency’s rules that was so unreasonable that he could not ethically represent his client’s views. Even then, his proper course of action was to step aside and let another enforcement attorney present the agency’s position. Only if he believed that Lehman’s senior officers were the victim of some deliberate form of abuse prompted by illegal considerations (e.g., discrimination or a politically-driven effort at retaliation) should he have sought to block the agency from bringing the action against Lehman’s senior officers by blowing the whistle to the SEC’s Inspector General.
I have been a senior official in an agency in which the enforcement head followed Cannelos’ practice of arrogating to the enforcement attorney the client’s right to define its interpretation of its rules. Our enforcement head asserted that this action meant the enforcement attorney was uniquely virtuous for refusing to act against the senior officers leading the most notorious S&L control frauds. The enforcement head was particularly proud about refusing to bring an enforcement action that the supervisory client requested against Charles Keating’s frauds. The results were disastrous and played a critical role in producing the worst losses of any S&L failure during the debacle. It was only after the enforcement head’s monopoly on bringing enforcement actions was broken by delegating authority to the regions’ enforcement counsel that the Office of Thrift Supervision (OTS) made enormous strides in bringing effective enforcement actions.
It is disgraceful that the SEC enforcement team has been leaking to the NYT reporters the false claim (under their own account of the facts) that they bravely resisted “SEC Chair Mary Schapiro[’s] ‘political pressure [to] bring a case [where] the evidence was lacking.’” Cannelos and his teams were not brave martyrs for “justice” and Schapiro was not exerting “political pressure” to force them to bring an abusive suit motivated by the Obama administration’s (non-existent) desire to punish Lehman’s looters for their politics. Under the facts found by Cannelos, the SEC’s experts on materiality and fraud concluded that Lehman’s officers had engaged in a very large fraud that was material to investors. Schapiro and the SEC’s experts on materiality believed that Cannelos was wrong about materiality and that it was improper for him to override the client’s interpretation of “material.” Schapiro’s and the SEC’s experts’ positions were not “political.” They were substantive, and they were correct. Cannelos was in the wrong and he compounded his failure by making false claims that those who disagreed with him were “political” and “unethical.”
Let me be clear that the ultimate responsibility for the SEC fiasco lies with Schapiro. She was appointed to head the SEC by Obama for his traditional reason – she was an abject failure as the leader of securities industry’s self-regulatory body that took no effective action against the epidemics of accounting control fraud that devastated that industry and our Nation. Ultimately, Schapiro deferred to “Canellos’s team, which was closest to the evidence” rather than appoint a competent team and team leader to investigate Lehman’s looters. The issue as to “materiality,” however was not “close[ness] to the evidence” but the analysis of whether only the direction of the (dishonestly) reported trend in the leverage ratio (v. the actual leverage ratio) was “material” to investors. The experts on that issue were the “senior accountants and the head of the S.E.C. unit that oversaw corporate disclosures” and they understood correctly that the actual leverage ratio was material to investors.
Schapiro lacked the courage to replace an enforcement attorney who arrogated to himself the clients decision and who would have attacked Schapiro had he been replaced as unethical and political. The reporters claim: “Ms. Schapiro did not override [Cannelos’] judgment after S.E.C. officials cautioned her that it could be unethical for a political appointee like herself to do so.” But the relevant question was not overriding Cannelos’ judgment – it was Cannelos who was overriding the judgment of the client. That was contrary to the ethical obligations of an attorney, including an enforcement attorney unless the client was pressing a bad faith interpretation of “material.” Allowing Cannelos to override his client’s (eminently correct) interpretation of “material” was a dereliction of duty on the part of Schapiro and her head of enforcement. The SEC was so weak under Schapiro because she was such a weak leader. (my bolding for emphasis)
Cannelos was so out of control in his devotion to Lehman’s looters’ cause that he was insubordinate.
“But at a 2011 meeting of senior S.E.C. officials, Lorin L. Reisner, then the No. 2 enforcement official, suggested preparing a draft of potential charges so the agency could have a concrete document to review. Mr. Canellos’s team balked, officials who attended the meeting said.
Mr. Canellos, the officials said, instead proposed that the S.E.C. publish a report that would publicly explain the decision to forgo charges. Ms. Schapiro and other S.E.C. officials rejected that option, concerned that Mr. Canellos’s first draft was too sympathetic to Lehman.”
It was a perfectly reasonable and normal “suggest[ion]” by Cannelos’ boss that Cannelos’ team prepare a draft of potential charges against Lehman’s officers. When your boss makes a “suggest[ion]” of this nature you prepare the document. There is no “ethical” issue in providing your superior with the strongest notice of charges you believe is supported by the evidence. Cannelos’ real problem was that had he drafted such a notice of charges it would have been obvious that the evidence did support a finding of materiality under the agency’s interpretation of materiality. The limited nature of his draft would also reveal how little about Lehman’s far larger frauds Cannelos’ team had actually investigated.
Instead, Cannelos had already begun drafting the propaganda that has now become the NYT article. He wanted the SEC to publicly endorse his defense of Lehman’s officers’ fraudulent conduct as immaterial. Note that this would set a terrible precedent that was contrary to the agency’s much broader interpretation of “materiality” – a precedent that would allow many frauds to escape sanction and impair deterrence. No enforcement lawyer whose concern was the agency, rather than his personal reputation, would make such a self-serving suggestion. Naturally, after Cannelos caused the SEC to allow Lehman’s controlling officers to escape all accountability for growing obscenely wealthy by committing widespread fraud and arrogated to Cannelos the interpretation of an accounting provision where an attorney’s duty is to represent the client’s position rather than his own he was promoted for his failures and now co-leads the SEC’s exceptionally weak enforcement effort. (my emphasis )
The SEC leakers and the NYT reporters almost have to be admired for their audacity. Admittedly, the SEC enforcement staff, as my first column explained in detail, has nothing to be brag about in their entire response to the fraud epidemics that drove the crisis and caused the worst epidemic of securities fraud in history. Not a single elite banker who led a control fraud has had his fraud proceeds removed by the SEC. Not a single elite banker who became immensely wealthy by leading a control fraud has even had to personally pay a non-trivial portion of his fraud proceeds to the SEC. In this long list of failures Lehman stands out as a glaring failure. Lehman was destroyed by widespread looting that made it senior officers exceptionally wealthy. Lehman’s failure triggered the global financial crisis. The SEC allowed Lehman’s securities frauds to continue for many years when it was not only reviewing Lehman’s securities filings but also serving as Lehman’s “consolidated supervision” authority. The SEC compounded its total failure as Lehman’s supervisor through a total failure as an enforcer of the securities laws and its supervisory rules even after Lehman’s control fraud caused its failure. The mortgage fraud crisis represents the worst enforcement failure by the SEC in its history.
Cannelos and the SEC flacks now have the chutzpah to try to spin one of the SEC’s worst enforcement failures into a morality play in which Cannelos is the hero precisely because he refused to hold Lehman’s looters accountable for their violations and allowed them to walk away wealthy with the proceeds of numerous insider fraud schemes. The villain becomes Ms. Schapiro who is reimagined as a would-be unethical official who tried to sue the poor, innocent Lehman officers for “political” reasons but was blocked from doing so by Cannelos’ selfless valor and dedication to “justice.” It is an odd form of “justice” in which the most elite frauds became wealthy by scams that caused a $11 trillion loss to American households and cost over 10 million Americans their jobs and avoid all accountability for their frauds. But that is Cannelos’ definition of “justice” and the NYT reporters are so credulous that they have become the propagandists for Cannelos and Lehman’s looters.
http://neweconomicperspectives.org/2013/09/sec-flacks-paint-lehmans-looters-victims-political-sec.html
How Does Your State Rank?
Sept. 13, 2013
Mony Pelerin
Economic Noise
A fascinating infographic is shown below. It is from MoneyChoice.com and allows comparative viewing of the US states across a number of economic categories. Clicking on each state provides additional data.
http://www.economicnoise.com/2013/09/13/how-does-your-state-rank-2/
GoldSeek.com TV Interviews Jay Taylor: The Federal Reserve run by cartel of the big banks
-- Posted Friday, 13 September 2013
GoldSeek.com TV presents an exclusive interview with the editor of Gold, Energy & Tech Stocks and the host of the radio show, "Turning Hard Times into Good Times", Jay Taylor. He discusses several topics with interviewer Vanessa Collette of GoldSeek.com, including:
What's with the taper talk?
What's the real price of gold?
What types of miners are good buys right now?
J. Taylor’s Biography
Jay Taylor
The Buy and Hold Guy
Jay Taylor is the editor of J Taylor's Gold, Energy & Tech Stocks newsletter and host of the web-based radio show “Turning Hard Times into Good Times.” His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares.
In 1981 he began publishing his gold-orientated newsletter. His continuing interest in gold mining prompted him to study geology, supplementing his MBA in Finance & Investments. Throughout his career Mr. Taylor worked as a banker, including holding a job in the Mining and Metals Group of ING Barings in New York. In 1997 he resigned from ING Barings to devote himself full time to researching mining & technology stocks, writing his newsletter and assisting companies in raising venture capital.
In March of 2009, Jay began hosting the popular web radio show titled “Turning Hard Times into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. Jay's web based show is now by far the most popular show on the Voice America Business channel with 150,000 to 200,000 monthly listeners. He interviews CEOs of public companies as well as some of the best known Wall Street analysts, authors and political/economic thinkers.
Jay is also a frequent guest on CNBC, Fox, Bloomberg and BNN and guest speaker at various mining conferences in the U.S., Canada, Switzerland and Asia.
More: http://www.miningstocks.com
- See more at: http://news.goldseek.com/GoldSeek/1379084700.php#sthash.8g0Uges9.dpuf
GoldSeek.com TV Interviews Jay Taylor: The Federal Reserve run by cartel of the big banks
-
Matamec Exploration Inc.
The AuReport
Expert Comments:
Luisa Moreno, Euro Pacific Capital (9/5/13) "Matamec Explorations Inc. has potentially the first heavy rare earth (HREE) mine in Canada; the company announced the results of its feasibility study for the Kipawa, a joint-venture project with Toyota Tusho Corp. . .despite the lower net present value and internal rate of return in the feasibility study compared to the preliminary economic assessment, we are comfortable raising our target, as we believe the economic study is now more accurate and the project has been further derisked. We believe that Matamec's Kipawa project is the most advanced HREE project outside of China."
The Metals Report Interview with Anthony Mariano and Tony Mariano Jr. (8/27/13) Anthony Mariano: HREEs and yittrium can be obtained from other REE deposits in North America, such as Kipawa, Quebec. . . Matamec Explorations Inc. has conducted a considerable amount of exploration work at Kipawa. . .the best source for a sustained quantity of HREEs is Matamec Exploration Inc.'s HREE mineral-bearing deposit in Kipawa, Quebec. I can speak for the REE industry when I say that we are anxiously awaiting the results of the Kipawa feasibility study in September.
Tony Mariano Jr.: Geologically, the Kipawa deposit is very impressive. The textural properties of the Kipawa rocks and the abundance of several HREE minerals make Kipawa uniquely attractive. More >
The Metals Report Interview with Patrick Wong (8/13/13) "On the HREE side, Matamec Explorations Inc. [has low capex]. . .it's one of the more advanced projects. We're looking forward to reading the feasibility study." More >
The Metals Report Interview with Byron King (12/18/12) "Matamec Explorations Inc. is working with the Japanese and has support from Toyota. Overall, the demand is out there from the electronics, automobile and heavy industrial-type sectors. With the HREE players, there's much less risk of the kind of price crash issues we fear with the light rare earths lanthanum and cerium. . .the idea that a big company like Toyota is interested in Matamec is a selling point." More >
http://www.theaureport.com/pub/co/1431
Electric Transportation Could Jump-Start Rare Earth Markets: Patrick Wong
Source: JT Long of The Metals Report
8/13/13
Section from the article:
TMR: What are your projections for REE prices?
"REE prices are bottoming out, and customer inventories are running low."
PW: Prices are bottoming out. We keep track of customer inventories, and they are running low. The demand for magnet-based REEs remains strong and is growing, but dysprosium and the terbium, europium and yttrium for phosphors might stay flat until we see a larger adoption of energy-efficient lighting. A lot depends on whether or not the United States weans itself off incandescent lighting.
TMR: Funding is a challenge for all juniors in this market. How are rare earth companies, which sell on a less transparent market, finding the money to move their projects forward?
PW: Traditional bank financing won't be there because there is no way for banks to hedge out financial risk. The banks will lend off these forward contracts, but a substantial amount will need to come from traditional equity financing.
TMR: Gareth Hatch, who works with you, said in an interview last November that the vast majority of companies in the space would not go into production soon. How many are still out there, and how many can be successful?
PW: Just a handful will make it in the short term. In the long term, if the demand is there, prices will go to a point where marginal supply will meet marginal demand, and those projects will become economic. Anything could still pull a rabbit out of the hat, but investors shouldn't depend on being lucky.
TMR: When you say a handful, how many are we talking about?
PW: Five or six.
TMR: Are there still opportunities for juniors in the light rare earth elements (LREEs), or do Molycorp Inc. (MCP:NYSE) and Lynas Corp. (LYC:ASX) have that market cornered?
PW: Just because a few large companies dominate by volume doesn't mean a smaller player can't compete. There are always opportunities. In the end, it will come down to cost and capital expenditures (capex). With the high cost of capital these days, companies with a low capex have an advantage over large projects and can afford to sell cheaper. More volume will encourage more transparency. Eventually, an efficient market will form and the company with the lowest cost base will set the stage, regardless of its size.
TMR: What are some examples of companies with low capex that could be successful?
PW: On the heavy rare earth element (HREE) side, Matamec Explorations Inc. (MAT:TSX.V; MRHEF:OTCQX) and Tasman Metals Ltd. (TSM:TSX.V; TAS:NYSE.MKT; TASXF:OTCPK; T61:FSE). A bit further down the road is Namibia Rare Earths Inc. (NRE:TSX, NMREF:OTCQX). Having access to a refinery is key, especially for HREE projects.
TMR: Matamec has an agreement with Toyota Tsusho Corp. (TYHOF:OTC; 8015:JP) and a feasibility study coming out. Do those give it an edge?
PW: It's one of the more advanced projects. We're looking forward to reading the feasibility study. What makes me a little bit nervous is that, as far as I know, a third party will be pricing out the concentrate prices that Matamec will receive. Toyota doesn't have an HREE separation plant, so I don't know where it is going to ship this material.
TMR: Does being the first to market give Matamec an advantage?
PW: The whole first-to-market issue has been overglorified. It's nice to be first, but ultimately, the end users will buy from anybody with the lowest price as long as their specs and quality control are consistent. So whether you're first, second or third, there is still a large end-user market that needs the product. When you're first, you might get access to better pricing. That is a bit of an advantage.
Continued below;
http://www.theaureport.com/pub/na/electric-transportation-could-jump-start-rare-earth-markets-patrick-wong
Dolly Varden Silver Reports High Grade Drill Results From Torbrit Deposit Including a 17.1m Core Interval Grading 509 g/t Silver
Sep 11, 2013 -
Dolly Varden Silver Corporation (TSX VENTURE:DV)(OTCBB:DOLLF) (the “Company” or “Dolly Varden”) is pleased to announce assays from the first 4 holes of the Company’s 3,063 meter (14 hole) summer 2013 exploration program targeting extensions of the historically mined Torbrit deposit at the 6,400 hectare (15,800 acre) Dolly Varden property (the “Property”) in Northwestern BC. The Property is located approximately 120 km SSE of the historic Eskay Creek mine and 26 km north of tidewater at Alice Arm, BC.
CEO and President Ron F. Nichols, P. Eng., commented, “We are very pleased to see such thick and high-grade silver mineralization from our first batch of assays. The results provide us with a clearer picture of the local structure and where thicker and higher grade silver mineralization should trend within the deposit. I eagerly anticipate the assay results from the next 10 holes expected over the coming weeks.”
Dolly Varden’s drilling focused on confirmation and extension of mineralization from the Torbrit Mine, one of two historically mined high-grade silver deposits on the Property. Four “fans” of holes, each fan drilled from a separate surface drill pad, resulted in 350m of strike extent being examined in the 14 drill holes. Drill intersections are spaced approximately 50 to 100m apart in this 2013 program. The first “fan” of four holes (TB13-01 to -04), for which assays are complete, was drilled from surface at Pad D targeting extensions of the mineralized horizon adjacent to the historically mined Glory Hole stope of the Torbrit Mine. The composite intercepts for these holes are summarized in the following table and shown in plan and section on the Company’s website (http://dollyvardensilver.com/2013-drill-maps/).
TORBRIT MINE: DIAMOND DRILL RESULTS SUMMARY
DDH # From To Interval (m)* Ag (g/t) Ag (oz/ton) Pb (%) Zn (%)
TB13-01 108.7 141.4 32.7 91.1 2.7 0.48 0.63
including 108.7 117.5 8.8 140.0 4.1 0.55 1.10
including 137.0 141.4 4.3 220.0 6.4 0.26 0.26
TB13-02 92.8 134.0 41.2 198.0 5.8 0.56 0.41
including 92.8 102.8 10.0 239.0 7.0 1.26 1.12
including 110.7 134.0 23.3 242.0 7.1 0.43 0.21
TB13-03 126.5 143.6 17.1 509.0 14.8 0.73 1.20
including 140.4 143.6 3.2 1458.0 42.5 0.77 1.74
TB13-04 126.0 148.4 22.4 26.6 0.8 0.34 0.93
*Drill core interval: The true width has not been estimated
DISCUSSION AND INTERPRETATION: The past producing Torbrit Mine and the adjacent North Star deposit are hosted within a thick, laterally extensive, stratabound horizon (the “DVT Horizon”) that is composed of bedded and locally brecciated barite-carbonate-silica-rich units, which contain native silver and silver-rich sulphide minerals and are interbedded with volcanic rocks. Modern day examples of the formation of DVT-type deposits can be seen in actively forming sea-floor mineral deposits. Ascending, hot, mineral-rich fluids are vented out into sea water forming stacks of precious- and base-metal mineralization (“white smoker” and “black smoker”, respectively) that eventually collapse and reform adjacent to the vent areas, depositing mineral-rich horizons and volcanogenic massive sulphide deposits. Jurassic-age examples of this mineralizing process in the Hazelton group rocks of the region include the both the Torbrit and other deposits of the Property and the gold-silver rich deposits at Eskay Creek.
The DVT Horizon ranges in thickness from 5 to 100 meters, dips at 40-45° to the NW; is mapped across a strike length of 1,500 meters in an east-west direction; and spans a 400 m vertical range in drilling. The 2013 core drilling program tested the DVT Horizon that encloses the silver deposits of the Torbrit Mine and significantly advanced the definition of the geological controls of the thickest stratabound accumulations. The best grades of silver appear to have been controlled by an active sub-seafloor fault that likely served as a conduit for the upwelling of mineralizing hydrothermal fluids, venting at the seafloor, and the sub-aqueous deposition of the DVT Horizon nearby.
The 2013 program shows evidence that the silver mineralization was introduced in more than one phase, with a later native silver rich phase adding significantly to the overall silver grade. The high-grade silver plunges at -39° towards 309° azimuth (northwest from the 1025 level of the Torbrit Mine) within that mineralizing fault. The plunge line projects across a span of 600m of elevation below Torbrit. This plunge line is largely untested and passes onto the Company’s newly-acquired Musketeer property that is in close proximity to the north end of the Torbrit Mine.
The results from this year’s drill program suggest that there is significant thickening of the mineralized horizon, with higher silver grades, along one side of this newly-defined mineralizing fault structure. If continuous along the projected plunge line, this fault structure could yield significant thicknesses of the high-grade mineralized horizon, success contingent on drilling.
CEO and President Ron F. Nichols, P. Eng., further commented, “Identification of distinct mineralization phases, including a late phase which introduces native silver at Torbrit is a very important breakthrough in understanding the formation, structure, and distribution of the highest grade mineralization and will be extremely valuable in targeting future exploration.”
QAQC AND QUALIFIED PERSON (QP) PURSUANT TO CANADIAN NATIONAL INSTRUMENT 43-101:
Diamond drill core recovery in this 2013 program was almost always 100% in the mineralized intervals. Quality control procedures consisted of insertion of blanks, duplicates and standards. All analytical results reported herein have passed the Company’s ongoing QAQC review. All samples grading over 50 ppm silver were re-submitted and subject to metallic screen assay procedures. Due to the frequent observation of coarse native silver, all future samples will be assayed by the metallic screen process on large, one kilogram, pulverized sub-samples of each interval.
Paul McGuigan, P. Geo., Vice President – Exploration of Dolly Varden Silver Corp., who serves as a Qualified Person under National Instrument 43-101, supervised the preparation of the scientific and technical information concerning this news release. Information regarding data verification, surveys and investigations, quality assurance program and quality control measures and a summary of analytical or testing procedures are provided on the Company’s website.
FORWARD-LOOKING STATEMENTS:
Certain of the statements and information in this press release constitute “forward-looking statements” or “forward-looking information”. Any statements or information that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “believes”, “plans”, “estimates”, “intends”, “targets”, “goals”, “forecasts”, “objectives”, “potential” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements or information. Forward looking statements or information relates to, among other things, the Company’s exploration plans for the Dolly Varden silver property and the Company’s expectations with respect to the geological features of mineralization on its properties.
Forward-looking statements or information are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements or information, including, without limitation, the speculative nature of exploration and the stages of the Company’s properties; and that expected geological, mineral or metallurgical expectations or models may not prove to be correct. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements or information. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information.
The Company’s forward-looking statements and information are based on the assumptions, beliefs, expectations and opinions of management as of the date of this press release, and other than as required by applicable securities laws, the Company does not assume any obligation to update forward-looking statements and information if circumstances or management’s assumptions, beliefs, expectations or opinions should change, or changes in any other events affecting such statements or information. For the reasons set forth above, investors should not place undue reliance on forward-looking statements and information.
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 news release.
Vanguard Shareholder Solutions
Martin Gagel, MBA, CFA Vice President
604-608-0824 or 877-608-0829
Dolly Varden Silver Corporation
Ron Nichols, P. Eng. CEO and President
1-778-383-3083 or Toll Free: 1-855-381-3530
www.dollyvardensilver.com
Head-To-Head Analysis Of 6 Junior Gold Producers In Mexico
Sep 8 2013
Visual Capitalist
Seeking Alpha
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
(Editors' Note: This article discusses micro-cap stocks. Please be aware of the risks associated with these stocks.)
Gold Producers in Mexico
After conducting a thorough analysis of all junior and mid-tier gold producers in Mexico, we have come to the conclusion that there are a handful of opportunities to be found in the jurisdiction that have high potential to return value to shareholders.
Analysis Methodology
Our algorithm that we use for Tickerscores breaks down each junior producer based on four major areas, which are weighted according to the current economic climate. Each area has multiple sub-variables that are also weighted. The four major areas are: financials, management, efficiency and growth, and performance and valuation.
The "Financials" section studies liquidity, debt ratios, cash flow, and cash relative to other producers in the jurisdiction. "Management" examines insider ownership, institutional ownership, YTD insider transactions, previous merger and acquisition experience, and experience with a major producer. "Efficiency and Growth" looks at revenue growth, ounces produced, net income, cost control within the business, and the growth prospects for the mine. "Performance and Valuation" is measured by performance vs. a basket of other junior producers, their enterprise value per ounce, book value per share, and return on equity.
From these 20+ variables, a score out of 100 is calculated for each company. The scoring system is extremely stringent and a score of 60+ is considered a very well-rounded. Companies that score well have excellent growth prospects, financial stability, and could provide market-beating returns.
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Alamos Gold (AGI)
Financial score: 99/100
Management score: 71/100
Efficiency & Growth score: 52/100
Performance & Valuation score: 38/100
Visual Capitalist Tickerscore: 62
Comments: Alamos Gold is in a very strong position with a cash balance of $464 million at the end of the 2nd quarter. Management is getting aggressive acquiring two companies in the last several months. An all-in sustaining cost of $861 per ounce ranks among the best in the industry.
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Argonaut Gold (ARNGF.PK) (AR on TSX)
Financial score: 78/100
Management score: 83/100
Efficiency & Growth score: 67/100
Performance & Valuation score: 47/100
Visual Capitalist Tickerscore: 69
Comments: Argonaut Gold is a well-rounded company that is flush with cash. Production metrics are impressive and shareholders are well-leveraged to a higher gold price with approximately 12.5 million reserve ounces. They are investing $80 million into capital expenditures and exploration this year and have multiple new mines planed through to 2017. Management has the track record to transition from 130,000 ounces in 2013 to the forecasted 300,000+ ounces by 2017.
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Timmins Gold (TGD)
Financial score: 51/100
Management score: 75/100
Efficiency & Growth score: 33/100
Performance & Valuation score: 63/100
Visual Capitalist Tickerscore 51
Comments: Timmins Gold has increased production 20% per annum and operation has been profitable since the first day. Timmins has the best-combined ownership out of all Mexican gold producers. Management owns ~4% of the stock and institutions own 65%. A major hiccup for Timmins is its $18 million loan payment due to Sprott Resource Lending Partnership on December 31, 2013. Insiders appear to be bailing out in front of the payment. Insider selling is $127,000 so far, year to date.
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Primero (PPP)
Financial score: 80/100
Management score: 70/100
Efficiency & Growth score: 59/100
Performance & Valuation score: 69/100
Visual Capitalist Tickerscore 67
Comments: Primero is in a strong position to continue its growth plans with $130 million in cash. It is currently focused on increasing the number of ounces mined (16% Q2 2013 vs. Q2 2012, 40% Q2 2013 vs. Q1 2013). Primero's recent acquisition of 69.2% of the Cerro del Gallo project has the potential to add a further 95,000 ounces to Primero's annual production. Goldcorp owns the other 30% stake in Cerro del Gallo and has a 27% stake in Primero.
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Starcore International (SHVLF.PK)
Financial score: 62/100
Management score: 37/100
Efficiency & Growth score: 40/100
Performance & Valuation score: 57/100
Visual Capitalist Tickerscore 47
Comments: Starcore is a small producer having only produced 6,315 AuEq ounces last quarter. Starcore is not in the same league as the mid-tier Mexican producers but it runs a tight ship. Starcore earned an impressive $1 million in comprehensive income that would have been 50% higher had it not suffered a $500,000 currency loss. The 180,151-ounce reserve base seems to be keeping investors away even though the mine has been producing continuously for 20 years. In the MD & A, management appears to want to give back to the shareholders by paying a dividend sometime in the near future. This seems a tad ambitious, but possible.
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NWM Mining (NWMMF.PK)
Financial score: 37/100
Management score: 27/100
Efficiency & Growth score: 33/100
Performance & Valuation score: 71/100
Visual Capitalist Tickerscore 40
Comments: The horizon for NWM looks extremely bleak at this time. The CEO, COO and President have resigned in the last 12 months. Additionally, NWM has had to extend payments on its $18.5m debt, which it owes to Renvest Mercantile Bancorp Inc. NWM is very poorly capitalized with only $1.6 million in cash - this comes nowhere close to paying off their short-term liabilities. The cash costs on the Lluvia de Oro / La Jojoba are quite high at $1,100 per ounce.
http://seekingalpha.com/article/1680112-head-to-head-analysis-of-6-junior-gold-producers-in-mexico
Riverside Resources Receives Additional $300,000 in Target Definition Funding from Alliance Partner Hochschild Mining to Advance Riverside's Clemente Project, Sonora, Mexico
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sept. 9, 2013) - Riverside Resources Inc. ("Riverside" or the "Company") (TSX VENTURE:RRI) (RVSDF) (R99.F), is pleased to announce that an additional $300,000 has been received from its alliance partner, Hochschild Mining Plc ("Hochschild"), for target definition at the Company's Clemente project in Sonora, Mexico. The additional funds will be used to carry out further mapping, geochemistry and trenching work this fall to refine targets ahead of potential drill testing in early 2014. Target Definition funding will provide Riverside and Hochschild an opportunity to further evaluate and advance Alliance properties as potential Designated Projects (DP's) before entering the earn-in stage of the agreement. Once a project is selected as a DP, Hochschild can earn a 65% interest by spending $5M in exploration over four years and making a one-time cash payment to Riverside of $3M.
Riverside's President and CEO, John-Mark Staude stated, "Riverside is pleased to be forwarding the Clemente Project and following up on initial exploration work previously completed by Riverside geologists. Previous work identified strong gold and silver values and we are confident that this current target definition program will outline quality drill targets for future testing. This area of Sonora has good surface access, is readily workable year round, and is in sight of open pit gold mines."
Exploration Program Details:
There are several important structural intersections at Clemente which require detailed attention from mapping and sampling to understand the structural controls on mineralization. The current field program will include detailed mapping and rock chip sampling, which will quickly identify areas for soil sampling lines and ground mag geophysics. These will guide the placement of trenches to expose mineralized zones of interest. Detailed mapping of surface and trench exposures will include lithological, structural and alteration mapping to understand the character, distribution, and controls on mineralization. Drill targets will be developed based on the resulting data.
An image is available at the following address:
http://media3.marketwire.com/docs/896985_1.pdf.
About the Clemente Project:
The 100% Riverside-owned Clemente Project was identified and acquired using Riverside's 66,000 mineral location proprietary database. The Project is located in the heart of the Sonora Megashear and only 7 km from the Cerro Colorado Mine. Previous field work completed by Riverside discovered high-grade silver exceeding 2 kg/t (58 oz/t) in outcrops.
The previous work program (News release September, 28, 2010) consisted of 152 rock chip samples and returned silver assay values from
Qualified Person and QA/QC:
The scientific and technical data contained in this news release pertaining to the Clemente Project was reviewed by Riverside's Chief Geologist, David S. Smith, MS, MBA, CPG, a non-independent qualified person to Riverside Resources who is responsible for ensuring that the geologic information provided in this news release is accurate and acts as a "qualified person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects.
About Riverside Resources Inc.:
Riverside is a well-funded prospect generation team of focused, proactive gold discoverers with the breadth of knowledge to dig much deeper. The Company currently has more than $5,000,000 in the treasury and 37,000,000 shares outstanding. The Company's model of growth through partnerships and exploration uses the prospect generation business approach to own resources, while partners share in de-risking projects on route to discovery. Riverside has additional properties available for option with more information available on the Company's website at www.rivres.com.
ON BEHALF OF RIVERSIDE RESOURCES INC.
Dr. John-Mark Staude, President & CEO
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.
Contact:
Riverside Resources Inc.
John-Mark Staude
President & CEO
(778) 327-6675
(778) 327-6671
info@rivres.com
www.rivres.com
Riverside Resources Inc.
Joness Lang
Manager, Corporate Development
(778) 327-6675
(800) RIV-RES1
jlang@rivres.com
www.rivres.com
http://finance.yahoo.com/news/riverside-resources-receives-additional-300-154500124.html
Silver Miners Analyst Watch: September Edition
Sep 9 2013
includes: AG, CDE, EXK, FSM, HL, PAAS, SSRI, SVLC, SVM
http://seekingalpha.com/article/1681422-silver-miners-analyst-watch-september-edition
Great video itsonlymuni.
Russia Launches New Surprising Strategy: Appeasement
Tyler Durden 09/09/2013
Update: Just as suspected, Syria promptly complies with the Russian check: SYRIA WELCOMES RUSSIA'S PROPOSAL FOR DAMASCUS TO PUT ITS CHEMICAL WEAPONS UNDER INTERNATIONAL CONTROL- FOREIGN MINISTER WALID AL-MOUALEM.
Mate next?
* * *
In a time when Obama is pitching his entire campaign around one core, if strawman, theme - preventing future chemical weapon attacks by the Assad regime, Putin once again shows why when playing geopolitical chess, it is safe to bet on the pesky Russian. Moments ago, Russia suggested that Syria skip straight to step 2 of the US military campaign, and hand over its chemical weapons to "international control" which would immediately obviate the US campaign completely, whose entire premise for public consumption is just that - to put Syrian chemical weapons under adult supervision and third party control.
* RUSSIA SAYS WILL URGE SYRIA TO PUT CHEMICAL WEAPONS UNDER INTERNATIONAL CONTROL IF THAT WILL AVERT MILITARY STRIKES
* SYRIA SHOULD GIVE UP WEAPONS IF IT WILL AVOID STRIKE: RUSSIA
* LAVROV SAYS SYRIA’S CHEMICAL WEAPONS COULD BE DESTROYED
More from RIA, google translated:
Moscow calls on Syria to transfer chemical weapons under international supervision if it is to avoid military attack by the United States, Russian Foreign Minister Sergei Lavrov.
"If the international control over chemical weapons in the country to avoid strikes, we are immediately involved in a job with Damascus" - Lavrov said.
"We call on the Syrian leadership not only agree on a statement of storage of chemical weapons under international supervision, but also the subsequent destruction, as well as about the full accession to the Organization for the Prohibition of Chemical Weapons," - said the Minister.
According to him, Russia has already submitted its proposal to the Minister of Foreign Affairs of Syria, who is currently in Moscow. "And look forward to a quick and hopefully for a positive response," - concluded Lavrov.
Earlier, the head of the U.S. Department of State, John Kerry said that Syrian President Bashar al-Assad can avoid foreign military intervention, if over the next week will give all chemical weapons the international community. At the same time the head of the State Department added that the Syrian president is not going to transfer chemical weapons and to ensure full accountability. Later in the words of the State Department Kerry called "rhetorical argument."
And now the ball is in Obama and Kerry's court following this surprising move of appeasement by Russia, and implicitly by Syria.
Because if the underlying motive behind the intervention is gone, then there is no need for an "Unbelievably Small" strike. Or any strike. In other words, should the US proceed with agitating for, and engaging in, war, it becomes very clear that the only goal behind US actions is not to contain Assad's weapons arsenal, but to destabilize the region, overthrow the Assad regime, escalate the conflict to involve Iran and Israel as final outcomes, boost the US deficit, facilitate the Untaper, and allow the trans-Syrian natgas pipeline originating in Qatar.
Finally, Putin also kills two birds with one stone, as any further and future chemical strike, in a case where there is supervision of the official arsenal, will automatically mean it was launched by the Qatari mercenaries with the intent of concocting yet another false flag.
http://www.zerohedge.com/news/2013-09-09/russia-launches-new-surprising-strategy-appeasement
Thrive, Survive or Die: Barry Allan on Stress-Testing Junior Gold Miners
Source: Brian Sylvester of The Gold Report
(9/4/13)
Barry Allan Analysts at Mackie Research Capital crunched the data to stress test which junior miners would thrive, survive or die at $1,000/oz gold and $18/oz silver. In this interview with The Gold Report, Barry Allan, director and vice chairman of Mackie's mining group, delves into details on some of those companies and offers hope that the sector, instead of going to hell in a handbasket, is actually rebounding.
Section of article;
TGR: What other companies are you following?
BA: We've been involved with Probe Mines Limited (PRB:TSX.V) for some time. What started off as something that looked like a better-quality 1 grams/tonne (1 g/t) bulk mining, open-pit deposit has morphed into what is likely to become a high-grade underground mine that will grade somewhere between 6 and 15 g/t. As subsequent drill results have confirmed, there is a very high-quality component to the resource—better than 10 g/t—that allows Probe the flexibility of investigating a smaller-scale, higher-grade development scenario. It would have a smaller footprint and a more affordable up-front capital cost. And interestingly, mineralization remains open. It has been one of the better gold discoveries in years.
http://www.theaureport.com/pub/na/thrive-survive-or-die-stress-testing-junior-gold-miners-barry-allan
Top Cyber Security Experts Meet for Smart Grid Security Summit
Tuesday, August 07, 2012
Contributed By:
Larry Karisny
I have spent the last few days moderating and recording for "The Smart Grid Security Virtual Summit", which will be webcasted on August 9th, and where you can get the real scoop on the past, the present and the future of smart grid security.
The list of speakers includes a who’s who list of top industry experts that will offer their opinions on how to correct the the real issues related to securing the power grid.
From what we have done to what we need to do, the summit pre-recorded sessions are real eye openers disclosing problems and giving the answers to critically needed smart grid and critical infrastructure security.
I moderated the panel discussion "Smart Grid Security, Past, Present and Future" which include industry professionals I have previously interview for Digital Communities. Bob Lockhart lead the session discussion and has followed smart grid security from the very beginning.
Mr. Lockhart is a senior research analyst contributing to Pike Research’s Smart Grid practice, with a focus on cyber security markets. Bob has co-authored and white paper with Research Director Bob Gohn on the Seven Trends to Watch in Utility Cyber Security. From market projections for this new multi-billion cyber security business to the current state of near chaos in securing the power grid, Bob's pre-recorded discussion was packed with reality checks of where we are and where we need to be in security the grid.
The panel discussion continued with outspoken industry leader Patrick Miller who views the need for cyber security from both the public and private sector side. Mr. Miller is President and CEO, EnergySec and Principal Investigator of National Electric Sector Cybersecurity Organization (NESCO), public-private partnership between the US Department of Energy and EnergySec to enhance cybersecurity in the electric sector.
Patrick's echoed Bob ‘s comments in less talk and more action in addressing these security breach concerns. With a diverse background in the energy sector, Patrick discussed what he sees with his birds eye view of power grid security. II got straight experienced answers from Mr. Miller just as I received from him in a May interview this year.
Ending the panel discussion was Ted Wood, Director at Sterne, Kessler, Goldstein & Fox. Mr. Wood's job, at D.C.-based Sterne Kessler Goldstein & Fox, is the discovery and protection of intellectual property in things like smart-grid security. From international cyber security espionage to plain old American ingenuity, Mr. Wood offered a unique view to the realities of cybersecurity.
Ted leads the firm's Grid Industry Group, where he focuses on helping innovators involved with ensuring power grid resiliency in an evolving smart grid infrastructure. His discussion focused on how small business ingenuity can protect their intellectual property while fast tracking their creative solutions through the bureaucracies of big business and big government. Ted presentation was a big step in addressing how we can get there and quickly.
I spoke in the second panel discussion, Is Current Legacy IPS And IDS Security Enough For The Smart Grid And Critical Infrastructure?. My presentation focused on how current security solutions may not be too costly, too complex and too inefficient for critical infrastructure requirements.
From securing Intrusion Prevention Systems (IPS) that now must securely encrypt the new end point of nano sensors chip sets to Intrusion Detection Systems (IDS) that must now be able to view real time event anomalies and business processes, this discussion showed the need for security technology change.
The subject of why we need to look at smart grid security differently was first discussed in my recent article, Smart-Grid Security Will Force New Ways of Thinking. This presentation expanded on this article and discuss proof points of why new security solutions are required for smart grid and critical infrastructure security.
The second session speaker was Phil Smith, Founder and President of TLC Secure who has had a long and illustrious career with senior technical and managerial roles at HP, Cisco, NASA, Lawrence Livermore National Lab and many other positions. He is the innovator, architect and developer of several implementations of mobile devices as well as the cryptographic libraries and identity management components.
Mr. Smith has worked with critical infrastructure encryption security used in wireless sensors in atomic power plants and Department of Defence applications. His time tested applications of Intrusion Prevention System (IPS) security showed how true end to end security can be achieved for the smart grid.
The last prerecorded panelist, Rajeev Bhargava, is CEO of Decison-Zone and an expert in the information management field that has architected, developed and built next-generation cyber security, risk, fraud, and privacy solutions. In 2010, inventor Rajeev Bhargava received a US Patent (#7908160) for the world’s only technology capable of 100% fraud and system security protection.
Mr. Bhargava discussed a completely new way of addressing Intrusion Detection Systems (IDS) security through the prediction, detection and correction of event anomalies in real time business processes. This discussion revealed why current IDS solutions are not enough for smart grid system security.
Additional session discussions included Identifying and Mitigating Cyber and Physical Threats to Smart Grid SCADA Systems, William Lawrence, Chief Technologist; Energy & Cyber Security Lockheed Martin; A Utility Perspective on Smart Grid Security Status and Challenges, Ward Pyles, Senior Security Analyst, Southern Company; Regulators' Role in Smart Grid Security: What They Want to Know, Alan Rivaldo, Cyber Security Analyst, Public Utility Commission of Texas; Recent TVA Experiences and Insight on Smart Grid Cyber Security, John Stewart, Specialist Engineer, Power Control Systems, Tennessee Valley Authority and Security Issues Surrounding Cloud Computing and Big Data in the Smart Grid, William Souza, Manager - Security Integration, Reliability Services Division, PJM Interconnection.
The conference will be web broadcasted next week Thursday 9 am to 5 pm EST. This is a real best of the best security summit that you won’t want to miss it and can be viewed and heard from the convenience of your own computer.
Larry Karisny is the director of Project Safety.org, a smart-grid security consultant, writer and industry speaker focusing on security solutions for the smart grid and critical infrastructure.
http://www.infosecisland.com/blogview/22092-Top-Cyber-Security-Experts-Meet-for-Smart-Grid-Security-Summit.html