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Posts tagged ‘Rubicon Minerals Corp (RMX)’

Red Lake reports

April 8th, 2013

Confederation/Redstar and Rubicon work towards Ontario gold PEAs

by Greg Klein

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Should Newman Todd begin with a small starter pit or go directly underground? That’s the question Confederation Minerals TSXV:CFM will address with its just-commissioned preliminary economic assessment, to be released later this year. On April 8 the company announced another batch of assays from its winter drill campaign in northwestern Ontario’s Red Lake Greenstone Belt. Some highlights include:

  • 1.92 grams per tonne gold over 36 metres, starting at 103 metres
  • (including 7.56 g/t over 1 metre)
  • 1.3 g/t over 38 metres, starting at 75 metres
  • (including 9.1 g/t over 1 metre)
  • 2.62 g/t over 19 metres, starting at 202 metres
  • (including 10.9 g/t over 1 metre)
  • 63.1 g/t over 0.5 metres, starting at 297 metres
  • 1.21 g/t over 22 metres, starting at 297 metres
  • (including 8.66 g/t over 1 metre)
  • 1.82 g/t over 16 metres, starting at 53 metres
  • (including 2.54 g/t over 9 metres).
Confederation/Redstar and Rubicon work towards Ontario gold PEAs

Mineralization closer to surface distinguishes
Newman Todd from other Red Lake projects.

The down-hole depths provided don’t reflect vertical depths. Intercept true widths weren’t available. No topcut was applied to assays.

Confederation describes the Newman Todd structural/alteration system as approximately 200 metres in width, with significant intercepts to depths of 850 metres from surface. Most of the April 8 assays came from drilling “within a relatively restricted area” about 200 metres along the zone’s strike length and at least 50 metres on sections perpendicular to strike, the company added. The maiden resource and PEA will focus on the project’s Hinge zone.

“One of the things with Red Lake and this type of geology is that it tends towards more vertically oriented systems,” Confederation president/director Brian Bapty tells ResourceClips. “But we have a very, very long strike length of 1.8 kilometres with good grades near surface. So if you look at other people drilling at Red Lake, they tend to be drilling quite deep. We can find near-surface ounces, which are cheaper to drill, but they don’t speak to the size of the opportunity.”

With size, however, comes challenges. “One of the problems of having a strike length of 1.8 kilometres by at least a kilometre deep is that it would take us years and cost millions to drill the entire thing out. So we want to focus our business plan on the most economic ounces, on what’s the best way forward—a starter pit or direct to underground. Answering those questions early is important to us.”

More assays are pending and drilling continues. Winter allows work on a frozen lake and marsh, Bapty points out. “After break-up we can move back onto solid ground.”

Confederation funds and operates the project under option with Redstar Gold TSXV:RGC. With its initial $5-million work requirement already complete, Confederation can achieve a 50% interest by paying Redstar $75,000 and 150,000 Confed shares. The PEA, along with another 500,000 shares, would boost Confederation’s portion to 70%.

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Auguries — TBTC

June 22nd, 2012

June 22, 2012

By Kevin Michael Grace

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Gold was down (at press time) $54.10 (-3.3%) for the week to $1,564.50, and silver was down $1.47 (-5.2%) to $26.94. Reuters reported, “Gold fell 2.5% Thursday, nearly wiping out this year’s gains as renewed fears of a global economic slowdown and disappointment over a lack of aggressive US Federal Reserve stimulus dampened bullion’s inflation-hedge appeal.”

Translation: Bernancus Magnus descended from his Olympian redoubt Wednesday and delivered a gloomier assessment than previously. Zero Hedge comments, “In April, the Fed saw 2012 GDP between 2.4%-2.9% and unemployment of 7.8%-8%. The just released updated forecasts table has these two critical for the election campaign data points at 1.9%-2.4%, or a major drop since April, for GDP and unemployment declining to 8%-8.2%. One thing is certain: whatever GDP and unemployment are at the end of 2012, they will not be whatever the perpetually inaccurate Fed forecasts.”

June 22, 2012

In the event, the Fed did not unleash the Kraken, ie, the much anticipated and feared QE III. Instead, it “extended its Operation Twist program and will swap $267 billion in short-term securities with longer-term debt through the end of 2012.”

At Seeking Alpha, Gary Tanashian called Thursday’s selloff “a disgusting display indeed with the gold sector doing exactly what yesterday’s policy release…said it should do.” He explains, “What does Operation Twist do? It seeks to negate the natural forces (and thus the signals we derive) of the [Treasury] bond market in favor of painting a handy picture. As for gold, the monetary barometer to systemic and inflationary pressure, it has—since the acute phase of the credit bubble implosion began in 2007—tended to follow the spread between 30-year bonds and 2-year bonds.”

And thus the Great One has delivered “A nice, quaint and sanitized way of going about interest-rate manipulation that seeks to bail out and fund the areas of the economy (housing, mortgages, etc.) that experienced the most egregious abuses while pretending that all bonds are equal and selling short-term (excluding ‘Fed funds,’ of course, the inflationary ZIRP) notes to sanitize the process.”

Three days earlier, Tanashian asked, “Really, how long can they keep it up?” That remains to be seen. How long will they try? Until the day after the end of the world or the day after the world economy collapses, whichever comes first. ZIRP is essential to the “stimulus” that has done so much in aid of the “recovery,” but there is another reason why it must remain perpetual. That would be the $200 trillion [sic!] in derivatives held by US banks.

Ellen Brown writes, “When Jamie Dimon, CEO of JPMorgan Chase Bank, appeared before the Senate Banking Committee on June 13, he was wearing cufflinks bearing the presidential seal. ‘Was Dimon trying to send any particular message by wearing the presidential cufflinks?’ asked CNBC editor John Carney. ‘Was he…subtly hinting that he’s really the guy in charge?’”

It was asserted by many that the Senators were obsequious to Dimon because JPMorgan has them in its pocket. Brown reports, “Financial analysts Jim Willie and Rob Kirby think it may be something far larger, deeper, and more ominous. They contend that the $3 billion-plus losses in London hedging transactions that were the subject of the hearing can be traced, not to European sovereign debt (as alleged) but to the record-low interest rates maintained on US government bonds.

“The national debt is growing at $1.5 trillion per year. Ultra-low interest rates MUST be maintained to prevent the debt from overwhelming the government budget. Near-zero rates also need to be maintained because even a moderate rise would cause multitrillion-dollar derivative losses for the banks and would remove the banks’ chief income stream, the arbitrage afforded by borrowing at 0% and investing at higher rates….

Interest rate swaps are now over 80% of the massive derivatives market, and JPMorgan holds about $57.5 trillion of them. Without the protective JPMorgan swaps, interest rates on U.S. debt could follow those of Greece and climb to 30%. CEO Dimon could, then, indeed be ‘the guy in charge’: he could be controlling the lever propping up the whole US financial system.”

How long can they keep it up? Brown believes the jig may already be up and that JPMorgan may already be bankrupt, not that hoi polloi would be allowed to know this until too late. We say that the banks are TBTF, Too Big To Fail, but it would be more accurate to say that their failure would be TBTC, Too Big To Contemplate.

Stock Tips and the Joke of the Week

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Rubicon reports Ontario Phoenix gold assays as high as 152.4 g/t over 1.5m

May 14th, 2012

Resource Clips - essential news on junior gold mining and junior silver mining Rubicon Minerals Corp TSX:RMX announced drill results from its Phoenix Gold Project in the Red Lake gold district of Ontario. Assays include

156.9 g/t gold over 1.7 metres (including 221.6 g/t over 1.2 metres)
152.4 g/t over 1.5 metres (including 437.8 g/t over 0.5 metres)
8 g/t over 5.5 metres (including 44.7 g/t over 0.5 metres)
8.2 g/t over 12.8 metres (including 30.6 g/t over 2 metres)
28.8 g/t over 5.0 metres (including 135 g/t over 0.9 metres)
4.1 g/t over 17.4 metres (including 21.4 g/t over 1 metre)
33.6 g/t gold over 3.0 metres

President/CEO David Adamson remarked, “These results continue to build upon those released March 29, 2012. Our infill drilling near surface to date has been successful and has added to our geological confidence in these areas as well as identifying extensions to known zones. Drilling of expansion target areas continues.”

View Company Profile

Bill Cavalluzzo
VP Investor Relations

by Dennis Dale

Auguries—Confirmation Bias

May 3rd, 2012

May 3, 2012

By Kevin Michael Grace

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Gold was down (at press time) $20.60 (-1.2%) for the week to $1,636.70, and silver was down $1.01 (-3.2%) to $30.15. MarketWatch attributed gold’s decline to “a report show[ing] fewer US residents applying for unemployment benefits” and “the European Central Bank [having] left unchanged its key lending rate.”

According to GoldCore, “Gold has been under pressure in Asia and Europe despite very disappointing economic data further igniting concerns about global growth and the debt crisis.” So is the economic data good or bad? That depends on one’s definition of “good.” The more important question is whether our leaders have the crisis under control.

Stephen Harper, as would be expected, believes they do. Speaking on the first anniversary of his majority, he gazed into the future, and “What do we see? That the financial and debt crises of the past few years may not in many countries be a passing phenomenon, that world economic power and wealth are shifting in a way that is historic and that we, as Canadians, must decide that we will be on the right side of that history.”

May 3, 2012

Apart from its irritatingly Marxist tone, this is a statement devoid of meaning. Indeed, it is something that could have been said by any Canadian Prime Minister at any time in the last hundred years. How precisely does Harper intend to keep Canada on the side of right? Jobs, growth, prosperity, a “vibrant” economy, etc. Yes, yes, but how?

One does not mean to pick on Harper. One could choose any other world leader for expressions of similar vacuity. Mario Draghi, for instance. The Associated Press reports, “‘We have to put growth back at the center of the agenda,’ he said at a news conference after the bank’s governing council left its key interest rate unchanged at a record low of 1%. However, Draghi went on to stress that he saw ‘absolutely no contradiction’ between a broader agreement on longer-term pro-growth reforms and the austerity cuts that are now weighing on growth as governments try to bring down their borrowing costs on the world’s debt markets. He urged governments to engage in ‘decisive structural reforms’ and to ‘give the sense that there is a joint effort, an overall effort.’”

Not exactly stirring, but it will have to do. For this week, anyway. Canada’s GDP fell 0.2% in February, following an anemic 0.1% rise in January. Not exactly vibrant but rather better than the Eurozone.

Which, according to Martin Hutchinson, is about to achieve its “Oh, the humanity!” moment. “[The Euro] resembles nothing more than the ill-fated German airship LZ-129 Hindenburg.” Hutchinson explains that the Euro was doomed from the start: “The reason for the mysterious disappearance of credit differentials between northern and southern Europe is now clear—it is the Target (and, from 2007, Target-2) EU payments system.” These are too complicated to explain here, but suffice to say they have rendered the Eurozone a mutual suicide pact.

James Burnham said famously that when there’s no solution there’s no problem. Hedge-fund trader Hugh Hendry says that this is the corner Europe’s leaders have backed the continent into. Back on May 26, 2010, Hendry told the BBC’s Jeremy Paxman, “I would recommend you panic.” On May 1, 2012, Hendry addressed the Milken Institute on the question, “Is it time to invest in Europe?” Short answer: No. Slightly longer answer: “You just can’t make up how bad it is.”

If that is the case, why don’t Europe’s leaders do something about it? Because, “We have reached a profound point in economic history where the truth is unpalatable to the political class—and that truth is that the scale and magnitude of the problem is larger than their ability to respond—and it terrifies them.”

As Marc Faber tells Hard Assets Investor, “The public is being brainwashed by governments and the media that interventions by the government are desirable and that more stimulus is required, and more government spending on all kinds of programs is needed. And they argue if the banks hadn’t been bailed out, you would have a catastrophe.”

Stock Tips and the Joke of the Week

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Auguries — The Great And Powerful Oz

March 1st, 2012

March 1, 2012

By Kevin Michael Grace

Gold was down (at press time) $59.10 (-3.3%) for the week to $1,722, and silver was up $0.14 (+0.4%) to $35.62. Gold made a modest (and silver a more robust) recovery Thursday, but on Wednesday gold fell almost $100 at one point, with silver falling over $2.50.

The Globe and Mail noted, “Gold’s plunge to less than $1,700 an ounce marked the biggest one-day percentage drop for the metal in more than three years.” It attributed the Leap Day Massacre to the Ben Bernanke having “delivered three hours of testimony without once indicating he felt the need to create more money.” This was the majority view. The Globe quoted Jon Nadler of Kitco, who “said some investors had been expecting that Mr Bernanke, in Congressional testimony, would indicate the Fed was open to another round of so-called quantitative easing—a policy that creates new money and causes people to flock to the perceived safety of gold to protect themselves from inflation.”

March 1, 2012

With all due respect, the majority view is rubbish. If it’s quantitative easing goldbugs were looking for, they just got plenty of it from Europe. Ambrose Evans-Pritchard reports in the Telegraph, “Some 800 banks took up €529.5bn of loans at [European Central Bank President Mario] Draghi’s second long-term refinancing operation (LTRO) on Wednesday, borrowing at 1% for three years with almost any form of collateral. Citigroup said this amounts to €316bn of fresh liquidity, stripping out renewal of old loans. This compares with €200bn in extra stimulus at the first LTRO in December.”

US$421 billion of fresh liquidity at 1% with notional collateral to prop up a doomed monetary union. That’s a good day’s easing and the stuff goldbugs’ dreams are made of. So what’s the real explanation for Wednesday’s gold collapse? GATA says it’s a heavy hand on the scale, and it has evidence to back up its claim. CIBC reported, “Looks like a large seller of gold in the market, as a 10,000 contract traded, down-ticked the price by $40 per ounce and represents 1 million ounces of gold sold. Roughly 200,000 contracts trade per day, but unusual to see such a large single trade. Not likely due to contract expiry either. Bernanke isn’t really helping either, but we haven’t seen any either-size transactions post the one big trade, so hopefully will see the price decline settle down. Shortly after the 10,000 order, which was closer to 11,000 contracts, looks like one size seller out there. Sold 1.8 million ounces of gold on the day. Smells like a liquidity squeeze.”

GATA’s Chris Powell observed, “Another gold fund manager, Gabelli’s Caesar Bryan, today tells King World News that yesterday’s bombing of gold was done by a not-for-profit seller, the strange sort of selling that keeps turning up at strategic moments in the market, and he’s starting to wonder if it has something to do with central bank intervention. Welcome to Planet Earth, Mr Bryan!”

Powell noted that GATA President Bill Murphy’s “frequent observations about this sort of selling led to GATA’s formation in January 1999, and GATA has been screaming about it for the 13 years since then.”

Gold’s biggest one-day percentage drop in three years blamed on a lack of QE on a day when the ECB declared “QE or Bust!” is such an obvious sleight of hand that one might expect the entire financial world to start screaming. But the mainstream media knows its job—when the great and powerful Wizard of Oz speaks, they paraphrase his remarks and publish them as “informed sources.”

Thankfully, there are some willing to look behind the curtain. Jim Sinclair told King World News, “If, in fact, what Bernanke attempted to tell the investment world today, that QE may not be necessary because of a modest improvement in the statistics of unemployment, if that was truly to be believed, then the stock market should have been off 800 points while gold was down $100. Because the same thing moving the stock market is what’s moving the metals, and that is pure liquidity.”

Sinclair said of the latest European bailout, “We know the money that’s been coming into the ECB has been coming in from two places. It’s been coming in from the IMF and from swaps done by the US Federal Reserve. (This money flows, in order, through these entities) Federal Reserve (to the) IMF, IMF (to the) ECB, ECB (to the) member banks. (This is) pure QE on a global scale. [Wednesday] does qualify as one of the biggest injections of liquidity into the system in the history of the system. Today was a cover-up by the US Federal Reserve and by the mainstream media of one of the largest injections of liquidity into the system that has ever occurred.”

And even before Draghi’s latest injection, Donald Coxe of the Bank of Montreal knew the score. He told Martin Mittelstaedt of the Globe, “What we’re seeing now is something that an earlier generation of gold enthusiasts would have said: ‘If that happens, the price of gold will be infinite.’ In the last four months the club of the unlimited printers of money has trebled, so we’ve gone from the Fed being the only one, with some help from the Bank of England, to the European Central Bank and the Bank of Japan. What we’re having is an unbelievable amount of paper money being created.”

Echoing what this column has long asserted, Coxe says that ever stronger gold is a counterweight to an ever weaker global economy. Specifically, “If we’re talking about $3,000 gold or something, I’m telling you that’s going to be a very bitter world to be in.”

Any chance gold miners might cash in before the apocalypse? At the Globe, noted goldbear David Berman declares, “If gold keeps rising, small is beautiful.” He means junior miners.

And now to cases. Berman notes that “Detour Gold Corp TSX:DGC is a great example. The share price has surged a total of 680% over the past five years, more than four times the gain in gold and more than 12 times the gain of big-cap producers such as Barrick Gold Corp TSX:ABX and Goldcorp Inc TSX:G over the same period.” Similarly, Premier Gold Mines Ltd TSX:PG, Semafo Inc TSX:SMF and Rubicon Minerals Corp TSX:RMX have produced stellar five-year returns, ranging between 167% and 347%, that have beaten gold.” Caveat: “This is a backward-looking analysis, of course. But it demonstrates why these smaller companies can be so alluring when gold is shining.”

Here are some analyst price targets as reported by Reuters. February 24: NBF has Golden Star TSX:GSC up from $1.85 to $2.10 (currently $1.92) and has Virginia Mines TSX:VGQ at $12.70 (currently $9.35), while Canaccord Genuity has Prodigy Gold TSXV:PDG down from $1.90 to $1.75 (currently $0.77). February 27: Canaccord has Alamos Gold TSX:AGI up from $23.50 to $26.50 (currently $18.37). February 28: CIBC has Rainy River TSX:RR up from $10 to $11 (currently $7.46) and Trelawney TSXV:TRR down from $6.50 to $4.25 (currently $2.36). February 29: RBC has Lake Shore Gold TSX:LSG down from $3 to $2.70 (currently $1.54), and CIBC has Thompson Creek TSX:TCM down from $14 to $13 (currently $7.20).

At the Gold Report, Resource Opportunities Publisher Lawrence Roulston asserts, “If I were to describe the ideal company for the present market, it would be in gold. It would have near-term production potential with longer term, large-scale discovery potential. One company, Lion One Metals TSXV:LIO, fits that description well.”

And Simon Lack of SL Advisors is sweet on Coeur d’Alene Mines TSX:CDM, projecting an “upside case” of a $50 share price (currently $27.72).

Finally, the Vancouver Sun has announced the cast of the breathlessly awaited The Real Housewives of Vancouver. Auguries’ favourite is “free-spirited jet-setter Christina Kiesel,” who is unmarried and has no children. A rum sort of housewife, that. Christina, who boasts, “My primary source of income is two divorces,” is described as “a modern-day Brigitte Bardot.” Passing strange, for Bardot is a legendary model, actress and singer, while Christina has no known accomplishments. Perhaps, like the iconic Frenchwoman, Christina holds controversial opinions on Islam, immigration and the ritual slaughter of livestock. Surely there must be more to her than sacrificial mutton dressed as lamb.

Rubicon reports Ontario Gold Assays as high as 156 g/t over 4m

December 9th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningRubicon Minerals Corporation TSX:RMX announced drill results from the F2 Gold System of its Phoenix gold project in the Red Lake gold district of Ontario. Highlights include

13.1 g/t gold over 1.1 metres
8 g/t over 2 metres
90.9 g/t over 0.5 metres
184.7 g/t over 0.5 metres
6.2 g/t over 2 metres
23.3 g/t over 1 metre
6.1 g/t over 4 metres
4.5 g/t over 7.5 metres
3.8 g/t over 9.5 metres
4.2 g/t over 26.6 metres (including 16.9 g/t over 1 metre)
10.7 g/t over 3.7 metres (including 34.8 g/t over 1 metre)
8.1 g/t over 4 metres (including 18.5 g/t over 1 metre)
20.5 g/t over 1 metre
156 g/t over 4 metres (including 1,219.6 g/t over 0.5 metres)
5.2 g/t over 6 metres

President/CEO David Adamson said, “These latest results are encouraging. Firstly, they identify an emerging shallow target area, and secondly and perhaps more importantly they are confirming and extending known high-grade gold intercepts in the important area around 1,200 metres, an area where we are assessing the potential to optimize the PEA mine plan grades through further drilling. Our exploration to date extends to only moderate depths compared to other major deposits in the Red Lake gold district and we are looking at ways to drill below 2,000 metres to test whether the F2 Gold System extends to depth.”

View Company Profile

Bill Cavaluzzo
VP Investor Relations

by Ted Niles

Rubicon reports Ontario Results of 61.6 g/t Gold over 2m

September 12th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningRubicon Minerals Corp TSX:RMX announced results from its Phoenix Gold Project in the Red Lake Gold District of Ontario. Assays include 61.6 g/t gold over 2 metres, 37.7 g/t over 3 metres, 28 g/t over 3 metres, 160.4 g/t over 0.5 metres, 128.2 g/t over 0.6 metres, 13.4 g/t over 5.1 metres (including 95.3 g/t over 0.5 metres) and 56.7 g/t over 1 metre (including 112.2 g/t over 0.5 metres).

The project has a March 2011 resource estimate of 1 million tonnes grading 14.5 g/t for 477,000 gold ounces indicated and 4.23 million tonnes grading 17 g/t for 2.32 million gold ounces inferred.

View Company Profile

Bill Cavalluzzo
VP of Investor Relations

by Greg Klein

Auguries — Preventable Evils

August 18th, 2011

August 18, 2011

By Kevin Michael Grace

It is in the nature of politicians to present themselves as indispensable men. Remove me from office, they warn, and all manner of chaos will ensue. Why, the very sun may fall from the sky. It is for this reason that politicians can abide being hated or feared, but they cannot abide being ignored or mocked.

Jimmy Carter suffered the latter fate, and this doomed him to a single term. Fairly or not, he came to be seen as irrelevant to the economic and foreign policy crises that bedeviled America. Then he became a laughing stock. On April 20, 1979, Carter was fishing on a pond near his home in Plains, Georgia, when he was allegedly assailed by a “killer rabbit.” According to one report, “It was hissing menacingly, its teeth flashing and nostrils flared and making straight for the President.” Carter flailed at the beast with a paddle. It is disputed whether he managed to strike it, but it is beyond dispute that he was left shaken—and ridiculous.

August 18, 2011

Cecil Adams commented on the failure of the Secret Service to preserve the safety and dignity of the President of the Free World, “An amphibious rabbit assault is a tough thing to defend against.” Indeed. As Enoch Powell once observed, “The great function of statesmanship is to provide against preventable evils.” Unfortunately, the great function of politics is to always take the credit but never the blame.

According to the Washington Examiner, President Obama delivered a mini-State of the Union August 15, wherein he claimed that he was doing a helluva job—”We had reversed the recession”—until he was assailed by some killer “bad luck.” Specifically, the Arab uprisings, the Japan tsunami and the European debt crises. “Those are things that we can’t completely control,” Obama said. He then asked, “How do we manage these challenging times and do the right things when it comes to those things that we can control?”

Never mind that the events in Japan and the Arab world have had a negligible effect on the US economy. The European debt crises are a different matter, for they proceed from the same causes that have produced the American debt crisis. As the Congressional Oversight Panel reported last year, the $700-billion 2008 TARP bailout “flooded the [international] markets with money to stabilize the system,” and a large amount of US taxpayer-guaranteed money ended up in the vaults of European banks.

To be fair, TARP was on Bush’s watch. But Obama has been in office since January 2009, and he must answer the rhetorical question he posed above. At close of trading August 18, the Dow Jones had fallen 420 points for the day to 10,990. This was attributed to further grim financial indicators. Paul Dales of Capital Economics commented, “The plunge in the headline index of the Philly Fed [manufacturing survey], to -30.7 in August from +3.2 in July, was simply awful. It leaves it at a level last seen in March 2009, when the US was last in recession… Meanwhile, the 3.5%-month-over-month fall in existing home sales in July, to 4.67 million from 4.84 million in June, shows that the housing market will not save the US economy.”

So did Obama reverse the recession? Karl Denninger doesn’t think so: “This is a continuing Depression that our government, conspiring with the banksters and media, has intentionally and fraudulently covered up.” Denninger is incensed with the allegedly “extremist” Tea Partiers in Congress. He asks them these questions, which could just as easily be asked of President Obama: “Has anyone heard any demands to lock up the fraudsters stealing homes with fraudulent documents? To break up the ‘too big to fail’ banks and toss their executives in prison where they belong? To put a stop to the fraudulent issuance of credit economy-wide? To take Bernanke out behind the woodshed and stuff a sock in his mouth…”

No, Obama thinks the world of the Ben Bernanke, and his response to the terrors in the equity markets will be, as always, to create more “money.” As it happens, we shall have to wait until after Labour Day to hear from the President, as he has urgent business in Martha’s Vineyard. The Secret Service would be well advised to keep a close watch for water-dwelling mammals.

Three cheers for Jim Flaherty, who takes a brave stand against fiscal irresponsibility. Canada’s Finance Minister told the CBC August 13, “This is a fundamental need both in the United States and certain European countries. We need governments to demonstrate that they can get their financial issues straightened out in terms of deficit and debt.” What, no more Canadian stimulus? “It will take economic contraction” for that to happen, Flaherty said. Coincidently—or conveniently, take your pick—the Wall Street Journal reported August 17, “The Canadian economy, a stalwart of growth among the Group of Seven in the post-recession recovery, is at risk of shrinking in the second quarter, data released Tuesday indicated.”

Meanwhile, the inverse relationship between equities and precious metals continues. Gold traded at $1,826.80 at press time, with silver at $40.74. As $2,000 an ounce beckons, Wells Fargo sees a “bubble that is poised to burst.” Bank analyst Dean Junkans warned, “There could be substantial risk to gold once the fear that the world is coming to an end subsides.”

On the other hand, Jonathan Chen at Seeking Alpha sees $2,000 by the end of the month. He explains, “There is a crisis of confidence around the world, and when there is a crisis of confidence, people freak out. When people freak out, everything [in equities] is sold, whether it deserves to be sold or not… [And] when you get a crisis of confidence, money all piles into one place: precious metals, particularly gold.”

With the gold-silver price ratio now at 45:1, there are some who expect a silver breakout. Silver Wheaton CEO Randy Smallwood said last week the price could top $50 before January 1. Eric Sprott is even more bullish, in an interview today: “As you know I have opined very often that I think silver should trade at a 16:1 ratio to gold. That would imply a price today of something like $110 or $120.”

And yet gold and silver stocks stubbornly refuse to rise. In the Globe and Mail, Shirley Won reports this could result in a “frenzy” of takeovers. Potential targets? She quotes analysts who suggest several: Osisko Mining, Perseus Mining, Keegan Resources, Sandspring Resources, Guyana Goldfields, Extorre Gold, Allied Nevada, Trelawney Mining and Rubicon Minerals.

Simit Patel at Seeking Alpha believes Vista Gold to be “grossly undervalued.” Rob Chang of Versant Partners tells the Globe that Premier Gold is another takeover target. He has “raised his price target to $11.55 from $10.15.” (It trades now at $6.60.)

Finally, and again at the Globe, self-described “WhigJohn Ibbitson adds his voice to the growing “Is the world coming to an end?” controversy. “It’s still possible to feel good about the way things are going,” he writes. “You just have to try very, very hard.” He admits that globalism has impoverished North Americans to the betterment of Third Worlders but concludes this is “simply the price of making a better world.” One does not recall this robbing-Peter-to-pay-Paul argument being made when globalism was sold to us as a universal panacea. Surely Dr Johnson was correct when he said, “The first Whig was the Devil.”

Auguries — Politics, Man

July 29th, 2011

July 29, 2011

By Kevin Michael Grace

As this column is written the Congress of the United States in engaged in momentous deliberations. Whatever the decision on the debt ceiling limit made by the assembled Democrats and Republicans, one thing is certain. It will go down in the annals of American history as one of the great legislative compromises, perhaps even as crucial as the Missouri Compromise of 1820, the Compromise of 1850 or … Sorry, folks. Got caught up in the moment there. Checking the Drudge Report too often will do that to a man.

No, the debt ceiling “crisis” is nothing of the sort, and whatever Great Compromise Obama, Boehner and Reid arrive at will be forgotten as quickly as yesterday’s microwave dinner. The latter-day Solons of Washington are reminiscent of nothing so much as the drug-addled desperados of Bruce Robinson’s Withnail & I. And in defence of the latter, they were at least amusing and had some awareness of the place where their depravity had led them.

Consider the metaphysical puzzler presented in Withnail by Danny (pictured below): “Politics, man. If you’re hanging on to a rising balloon, you’re presented with a difficult decision—let go before it’s too late, or hold on and keep getting higher. Posing the question: how long can you keep a grip on the rope?”

We don’t know how long Washington can hang on, but the feeble “cuts” proposed by the Republicans demonstrate that even the “hard-liners” will not let go, even as the debt balloon swells to bursting.

July 29, 2011

Fox Business reports that John Chambers of Standard & Poor’s has declared that only continued deficit cuts of $1 trillion a year will prevent a downgrade of America’s Triple-A credit status. Karl Denninger comments, “The ‘most-recent’ proposals cut anywhere from nothing in actual spending (Democrat proposal) for 2012 to $90 billion (Republican). And neither contains any actual cuts on a forward basis—the Republicans are at least honest about it and say they just ‘hold discretionary non-defense spending at 2011 levels.’ That’s not a cut in spending.”

Reuters reports today that Dagong Global Credit Rating of Beijing has already decided on a downgrade. Chairman Guan Jianzhong declared, “We will definitely cut the rating, regardless of whether there will be a compromise. It has already dealt a blow to investors’ confidence.” A downgrade will mean higher interest rates, leading to bigger deficits, leading to higher interest rates—and, before you can say “knife,” the world’s most powerful democracy will be in the same place as the world’s oldest democracy. And unlike Greece, there is no EU to bail out Washington.

The philosophical Danny said, “London is a country coming down from its trip… There’s going to be a lot of refugees.” In the event, he preferred to light up another joint. In Washington, they prefer to raise the ceiling, the better for the balloon to rise ever higher.

The bad news about globalism is that there are no longer any safe havens. We’re all in this together, so long as we all pledge our loyalty to the Paper Standard. The good news is that there is an alternative: gold and silver. It is for this reason that “metalheads” are no longer condescended to by the Establishment; they are increasingly regarded as “wreckers” were in the final days of the Soviet Union.

As Jim Willie, editor of the Hat Trick Letter, explains in a lengthy essay, “Conscience of a Gold Investor,” “We feel an urgent need to defend ourselves against a crippled corrupted US Dollar. The level of debilitation cannot be adequately put in words, as it has lost perhaps 70% of its value just since 1980… The US Economy cannot be rebuilt or sustained on bond fraud, debt auctions covered by the printing press, endless war, phony accounting, outsourced industry, home equity extractions, rigged financial markets, constant deception on economic recovery, falsified economic statistics, and pursuit of the next asset bubble. The end game is fast along.” He concludes, “Individuals must put aside all matters of conscience and focus on survival, real value and truth. The patriotic thing to do is to survive and preserve wealth, period!”

This is what those who decry “goldbuggery” refuse to understand. As investors increasingly feel as Willie does and follow his advice in betting on metal against paper, the prices of gold and silver will continue to rise, regardless of their supposed “real” worth. At press time, gold was worth $1,618.60 and silver $39.72.

At the Globe and Mail, Martin Mittelstaedt adds his voice to the swelling chorus, “Some market observers are even suggesting what might once have been unthinkable: that gold shares are becoming value investments, or compellingly cheap stocks with good prospects.” According to Ronald-Peter Stoeferle of Erste Group Bank AG in Vienna, “The best opportunities lie in intermediate producers that are posting significant output growth and have mines in low-risk jurisdictions, such as Canada, Mexico and Chile.” Four producers that Erste believes occupy that niche are Alamos Gold, B2Gold, Centerra Gold and Eldorado Gold.

Also at the Globe, Fabrice Taylor suggests Wesdome and New Gold may be significantly undervalued.

Over at Seeking Alpha, Ganaxi Small Cap Movers lists New Gold as the one junior favoured by “guru” hedge or mutual funds.

Peter Koven at the Financial Post notes, “Kaminak Gold Corp has only completed one season of drilling at its Coffee gold project in the Yukon, and it doesn’t have a resource estimate yet. No matter—Versant Partners analyst Rob Chang is very impressed with what he sees, and is initiating coverage with a Buy rating.”

And Koven reports that “Agnico-Eagle Mines Ltd. is making an aggressive move into Goldcorp Inc.’s backyard… It is investing $70-million in Rubicon Minerals Corp, the most exciting junior development company in the Red Lake gold camp in Ontario.”

Finally, Reuters reports that New Taipei City in Taiwan has instituted a new kind of lottery. Citizens who bag dog excrement from streets and parks and deliver it to the authorities will win tickets for a draw awarding gold ingots worth $2,100, $630 and $420.

One is tempted to suggest that the canny Taiwanese have solved the riddle of the Philosopher’s Stone, but on second thought it appears that they will shortly receive a rather disgusting lesson in supply-side economics.

Auguries — Gaga Economics

June 23rd, 2011

June 23, 2011

By Kevin Michael Grace

Lady Gaga is one of the most famous people alive, although, as is common to many celebrities, you might not know why you know her. For the uninitiated, she is the new millennium Madonna: a blasphemous Catholic Italian-American disco queen who never met a drag queen she didn’t like. Like Madge, she has gone from obscure to intolerable; unlike Madge, she has managed to bypass the stage of being interesting or attractive. She is most celebrated for her fabulous entrances: unveiled on stage from within a working model of the Hadron supercollider or some such.

In other words, Lady Gaga’s popularity has followed her fame and not the other way around. This progression has been the model of the recording industry for some time: ubiquity = big profits. And so, in anticipation of her new album, Born This Way, Lady Gaga became omnipresent. It was once joked that Andy Warhol would go to the opening of a door. Gaga went one better—she would go to a press conference announcing the upcoming opening of a door.

June 23, 2011, seeking to trail in the wake of her voluminous (and possibly decomposing) skirts, made Born This Way available for download at the we’ve gone crazee price of 99 cents. Surely, then, the stupendous star power of Lady Gaga would reanimate the moribund music biz. At less than a buck, who could resist? It didn’t turn out that way. Born This Way managed to shift only 1,108,000 units in its first week. This sounds a lot, but, a decade earlier, No Strings Attached by N Sync (remember them?) sold 2.42 million full-price units in its first week. Only 444,000 customers took up Amazon on its Red Light Special, and the next week total sales fell 85% to 169,387 units. What went wrong?

Bob Lefsetz says, “They don’t want Gaga at any price. Welcome to the modern world… We no longer have to pay attention to what you want us to. You can pour on the hype, you can tell us to care, but most of just don’t.” Lefsetz has long argued that merchandising can’t save a business model that ignores fundamentals. This is a lesson that has a wide application.

Example #1: Charles Hugh Smith reports,

The [US] Federal government borrowed and spent $6.1 trillion over the past four years to generate a cumulative $700-billion increase in the nation’s GDP. That means we’ve borrowed and spent $8.70 for every $1 of nominal “growth” in GDP.

In constant dollars, GDP is flat: we got no growth at all for our $6.1 trillion: zip, zero, nada. In constant dollars, the GDP in 2011 might return to the 2007 level, if the economy continues “growing” at the same pace reached in the first three months of 2011. If not, then the GDP will actually be lower than pre-recession levels.

Ah, but what of all the jobs created by the splurge? What jobs? CNSNews reports, “Twenty-eight months after Congress passed President Obama’s signature economic stimulus law, and nearly one year after he declared the summer of 2010 to be ‘Recovery Summer,’ 1.9 million fewer people are employed.”

Example #2: The Washington Times reports,

The US Treasury next month will go back to relying on the kindness of strangers like never before to purchase the nation’s burgeoning debts—and taxpayers may have to pay higher interest rates to attract enough foreign investors, analysts say.

Though a significant rise in interest rates could be toxic for a softening US economy, the Federal Reserve has said it will end its program of purchasing $600 billion in US Treasury bonds as planned on June 30. The Fed is estimated to have bought about 85% of Treasury securities offerings in the past eight months.

That leaves the Treasury, which is slated to sell near-record amounts of new debt of about $1.4 trillion this year, without its main suitor and recent source of support, and forces it back into the vagaries of global markets.

Ah, but the Chinese will step up, right? Not so fast. Example #3: CNSNews reports,

China has dropped 97% of its holdings in US Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011…

Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term US Treasury securities. Thus, until October, China’s overall holdings of U.S. debt continued to increase.

Since October, however, China has also started to divest from longer-term US Treasury securities. Thus…China’s ownership of the US national debt has decreased in each of the last five months on record.

Behold the Age of Gaga Economics. Unprecedented Keynesian pump-priming has neither grown the US GDP, nor shrunk the army of American unemployed. It has served only to the blow up the deficit. And yet there are no alternatives in sight, only increasingly desperate merchandizing. One hesitates to imagine the we’ve gone crazee interest rates the Ben Bernanke will be forced to offer in order to shift his units.

It is in the context of these examples that we consider The Economist’s sneering look at gold as a commodity: “The quintessential gold bug is an investor who expects every form of paper wealth to collapse, along with civilization itself…Not all gold investors stockpile guns and tinned food in remote cabins, of course… But most agree that the world is a scary place. The euro zone is tottering, America’s deficit is alarming and inflation is looming, they reckon.” They “reckon,” eh?

Looking past the condescension, the Economist does present one nugget of data: “Gold and gold-mining shares used to rise and fall in lockstep. Over the past five years, however, the price of gold has trebled while the value of gold miners has merely doubled.” Indeed, with gold at $1,520.10 and silver at $35.34 (at press time), the underperformance of precious metals stocks remains a mystery.

At the Got Gold Report, Gene Arensberg suggests, with copious reference to charts, that this “disconnect” could well be coming to an end. At the Financial Post, Peter Koven reports that analysts at TD Newcrest “remain bullish on gold stocks and believe the equities are poised to outperform bullion as multiples stabilize. Their top picks are Goldcorp Inc, Eldorado Gold Corp and Iamgold Corp among gold producers and Canaco Resources Inc and Rubicon Minerals Corp among the junior developers.”

And at Seeking Alpha, George Maniere is very keen on US Gold.

Finally, the people of Greece remain strangely unmoved by the Economist’s suave assurances and are exchanging their bank notes for bullion as fast as they can. The quintessential Economist essay asks, “Who are you going to believe? Us or your lying eyes?”