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XMFSinchiruna (26.59)

Ready for the New Chapter in Gold?



November 13, 2009 – Comments (23)

Well ... are you?  :)

I've been quiet on the blogs for the past couple of weeks, mainly because there has been so much to write about that I've had no time to spare for blogging. Which leads me to my next question ... are you finding my work?

I can't always find time to post articles here on the blogs, so are you finding my articles on your own? I haven't heard from many of you in a while, which leads me to believe that perhaps you only find my articles when they're posted here on the blog. Is that the case?

If so, and if you're interested in tracking my work as it comes out, may I recommend that you bookmark the RSS feed for my Twitter account. I hope you all know that I'm not the Twittering type ... I created the account solely as means to provide readers with a convenient way of tracking my published contributions. I could be wrong, but I don't think a Twitter account is required to access this RSS feed:

Please bookmark this, and please someone conform for me that non-Twitter users are able to access this with no problem. 

I will still try to post my compendia from time to time, but sometimes life gets in the way. :P

Here are a few recent articles:


Gold and Silver:

Hop on the Pan American Highway

Silver Wheaton's Flawless Performance

Cash Flow 4 Gold

The Shiniest Catch in Silver

Gold's Smoothest Operator

No Shareholder Love from Kinross Yet

Gold Remains a Coiled Spring

The Titans of Gold Strike Again



How Do Shippers Look Now?

Top 5 Coal Picks for the Next 20 Years


Please let me know if you find the Twitter "timeline" link useful. Thanks!














23 Comments – Post Your Own

#1) On November 13, 2009 at 8:37 PM, puccini3005 (30.24) wrote:

Welcome back, Sinch!  I was able to access the RSS page (I don't have a twitter account), and will bookmark it.  That's very useful. I'll try to set up the RSS feed too, and let you know how it goes.  I do miss alot of the articles that don't get a blog mention, just because its so easy to watch the "last blog entry" column in my favorites, guess I got a little lazy.  Now that bookmarked page will let me stay lazy :)  But I'm looking forward to going through the list when I get home.

I did leave some really late feedback for your AEM article in the comments of your 10/29 blog.

Thanks for compiling the list!

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#2) On November 13, 2009 at 8:49 PM, TBoner101 (< 20) wrote:

Hi Chris, I have been tracking your work ever since I've become a Fool over six months. You gained credibility quite quickly with Silver Wheaton and after picking Yamana Gold before everyone else, you earned my respect. Your articles have become part of my routine as I read them before making any commodity based decisions, and also make decisions after reading your articles I would not have made before :)

If they don't show up on your blog, and not on the front page, I find your articles through links of other related articles or posted as news on stocks I'm researching. The last blog from my reader was on October 30th, and noticed I was only receiving the feeds from your caps account TMFSinchiruna, so for the past two weeks I've been using the search engine to find articles under your name. Not a Twitter guy either, but just tried the link and it works. Hope that helps. Keep up the good work!


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#3) On November 14, 2009 at 4:03 AM, Tastylunch (28.67) wrote:

Sinchi I regularly RSS to follow twitter accounts, have done so for the past year. I'm sure it works.

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#4) On November 16, 2009 at 1:55 PM, LiveOakGrey (< 20) wrote:

Hi Sinch,

Like TBoner just said above, I regularly hunt for your articles and blogs, and when you disappeared for a while, I figured it would come down to two likely possibilities.  We'd either see your face over our breakfast cheerios on the milk carton, or hear you'd last been seen at the airport on your way to Aruba, with 43,000 pieces of extremely bulky luggage in tow, allegedly containing the entire assets of CEF.  They don't want to talk about it, and have sent out the new office intern to get alka-seltzer.

I've learned lots from your input, and have you to thank for a much better understanding of miner stocks (still lots to learn though). Speedybure should ALSO start writing his blog postings more often!!  I keep waiting for more on his chapters 4-10 on company evaluations, but he's gone AWOL.  Since the man is down under, tell him it's a 'booting offense,' to be this remiss with supplying his online, greedy and insensitive readership with our data-fix for stock evaluations!

I haven't spoken in many of these blogs, but before asking some questions about issues you've raised for a long time, I wanted to put in some of my thinking on what a lot of these issues and others have suggested to me on reflection.  I'd like to thank you, Sinch, and quite a few other caps bloggers, ( who I try to find the time to systematically follow and then take copious notes on their commentaries!) - for the great amounts of effort you (and those same nameless masses of huddled, unwashed, etc.- other bloggers) put out in tracking down information on miners, economic trends.  

Not to mention, of course, the need-to-be-heard-rants against generations worth of truly shameful bipartisan AND rarely acknowledged non-U.S. corruption, criminally irresponsible indifference and willful rationalizations of incentive bias.  "Your tax dollars hard at work." ::Scene of five men and women in blue 'business' suits standing around a man-hole, huddling in a circle and very intently watching the sixth person in that hole (take your pick)... corporate executive-type/ government bureaucrat-type/ politician-type/ public academician-type/ diplomat-type/ lobbyist-type/ union 'worker'-type... that person, who is standing in the hole, but instead of digging he/she is... ALSO ... very intently watching himself not actually working, but taking a two hour lunch break::

Our society needs serious rethinking, reorganizing, and a thorough disgusted rejection of the: 'it's not my problem, and the consequences will land on somebody else's watch, so who cares-attitude.'  Too often in most of the world's societies there is an entrenched entitlement attitude that parasitizes the Other Individuals in Society.  It's 'Everyone else' is supposed to owe you the favor of providing for you, what you refuse to provide for yourself (let alone provide for those same others).  Too many people in government bureaucracies, the unions, the corporate bureaucracies supposedly antithetical to those unions and to that governmental bureaucracy - expect that nobody is responsible to fix anything, and it will just keep coasting forever on it's own momentum. Any efforts to promote change are met with vehement opposition and indignation that long-term sustainability and accountability involves even moderately painful personal sacrifices of perks that weren't their right to accept (let alone GIVE) in the first place. 

Maybe a year ago, while checking out articles and used books, online, I got into Peter Schiff (who I mostly, but not completely agree with on most issues), Jim Sinclair, some of Jim Roger's thinking, Speddybure's articles and your own.  All these and a few other sources I mention below led to some big insights into how mismanaged our economy is, and how deeply cognitive biases affect the judgement of those who seemingly should be so hugely in touch with how things really work, that we could trust them to run our investments, banks and government. Nope.  Very few out there aren't blinded by their own emotionally safe and rewarding preconceptions, that blind them to any newer input.

Before these blogging revelations, I was wandering in the investment wilderness for forty years.  You know what that's like?  After that long, the manna from heaven tasted like knock-off Wonderbread crumbs, missed by the crows chasing after Hansel and Gretl's path markers.  I still think value-investing with a long-term buy and hold philosophy is great for a more stable environment.  One where you 'keep your ear to the ground,' for any coming changes to the system, as a blogger the other day said his grandpa told him.

Silver Wheaton, Yamana, and many others, initially looked hopelessly overpriced by the usual forward P/E or Cash Flow measures, and I ignored them in the past.  I've picked up a lot of books on precious metals, and economic collapses due to hyper-inflation, and I'm convinced that's where we're heading.  I don't know how long it will take, but I think at some point, currencies will have to be replaced with newer ones, maybe based on some basket of goods like land, commodities, PMs, etc. 

1)  Sinch, you wrote a blog back in October 12, "Gold Overload," and I posted a comment October 23.  I was wondering about any Australian intermediate miners you'd recommend.  Silver preferably, but if there aren't any worthwhile, then gold, too.  

I've found it's hard to find much with Google searches, and even going to sites dedicated to miners, you get lists of Australian miners that have lots of explorers nobody this side of the planet has ever heard of, and none of the rating agencies (Morningstar, Motley Fool, Yahoo Finance, Google Finance, or even wikipedia) has any info on.  So far, about the only Australian miner I kinda like is Newcrest, and that's not really ideal, either.  At least they had enough data that I could find out they were a former subsidiary of Newmont, but that seems to be information overload compared to most foreign listed companies.  

Maybe the various outback-accented speakers are afraid that publishing any more data beyond their ticker, might make American-dialect users heads implode from the strain of getting our minds around the Aussie, Canuck, or NZ accents?  As it is, it's such a challenge finding any data and cross-checking it to make sure it's a legitimate outfit, you wonder what resources the locals in Australia, etc. have available to cross check their own stocks.

It makes me think that one thing the U.S. manages to do relatively well in comparison, is a much better level of transparency requirements for companies that list in this country's public exchanges, vs. those overseas.  If you ever want to compare the information supplied to the investing public that doesn't have access to privately funded corporate analysts, try looking up companies on the Swiss exchanges!  You can't believe anyone would trust that those statements could give you enough data to know if the stocks are a good price for the long/short term values being offered.  Or even that the accounting statements can tell you enough to determine if management is honest enough to manage your money for the next six weeks. 

Unfortunately, while the U.S. has the beginnings of admirable oversight for corporate disclosures of data listed on the public exchanges, we've got a long way to go in correcting those agencies supposedly charged with policing those industries (SEC, anyone?) who have proven themselves repeatedly, all too willing to rely on bribes and a near-universal easy acceptance of the safety and social-acceptability of moral hazard- to commit financial mismanagement.  No one stands out as any worse a social-leper, than anyone else, so lets risk other people's money and futures by making ours so much brighter!

Our government is a perfect example of the tragedy of the commons. It's a free for all of personal feather-bedding by political embezzlers out to grab all the free goodies before the system collapses under it's own weight, or the 'opposition' takes over their subcommittee chair, and they can't use it to extort bribes or sex from lobbyists and/or those corporations that will offer up sinecure positions, once those politicians leave office (till they come back again the revolving door) as one-hour-a-month-'advisors' for the very same corporations they are supposed to oversee and avoid conflicts of financial interests with.  

If you want to read a great and honest expose on the corruption of both parties in Washington's higher offices, and it's extremely negative effects on our foreign policy decisions and our long-term financial common sense positions- read Robert Baer's "Sleeping With the Devil, How Washington Sold Our Soul for Saudi Crude."  Another amusing and often astonishing book, is one discussing 'Capture Theory,' by corporations against the agencies that were set up to monitor them (and other issues): "Wall Street Versus America- A Muckraking Look at the Thieves, Fakers, and Charlatans Who Are Ripping You Off," by Gary Weiss.

2)  Do you know of any non-U.S., non-Canadian miner stocks, non-Mexican silver miners worth buying into, that aren't overly involved with mining industrial metals to keep their costs down?  Miners that are currently pure plays on gold or silver, even if they are only barely profitable, currently?

3)  Another question I've had, is if so many Canadian or other miners have great profits from large sales, but lose huge value because the currency exchange is done in dollars that devalue for that year... how can mining ever be profitable if we're trying to escape a US dollar currency crisis that will endlessly get worse till a complete collapse and recall of the currency for some newer replacement?  When can SLW or others be profitable during depreciating dollar value years?  As it seems that every year will be just like this.  I guess they could value their PM sales in some other inflating currency, but that might not work either. Is there any answer to this in the next few years?

4)  As far as being an American purchasing Canadian stocks, I think I recall either you or Speedy, mentioning in one of your blogs, that one of you thought it was best to buy shares on an exchange in the stock's home country.  Is there a reason for this?  Would it be because an ADR might be unable to collect your stocks if the bank holding them collapsed in the USA?

6)  Since you're a fan of CEF, I've looked into them, as well as and Perth Mint.  James Turk and others don't trust the Perth Mint for some reason.  Anything you've heard about instances they would be referring to?

7)  James Turk of course has great credibility, but I don't know what anyone thinks of for reliability in case of widespread economic chaos.  What's your take?  Anyone else have any ideas on  

8)  Some people like CEF, but I can't determine why they should be so safe, if their vaults can be seized by Canada's government, maybe at the behest of the U.S. government 'to stabilize the currencies to prevent late stage panic.'

9)  If at least some personal gold/silver ownership is an idea, how can you pick up quantities of eagle coins (etc.) from a reputable dealer (can you name some, please?) and also do it relatively anonymously, so your name and your total amounts bought aren't known to too many people?

b)  Do it through a lawyer? (sounds expensive).  

Have it delivered to a P.O. Box in a brown paper wrapped box?  Maybe with some helpful stickers on the outside to discourage post office theft, like:

"This wholely unremarkable, yet heavy parcel, is to be delivered to an anonymous PO Box and contains absolutely no gold bricks, so please do not steal it. It's heavy because of all the spent uranium fuel rods it contains-to be used for peaceful purposes only.  Thank you, American stooges."

Thanks for any help with these questions!


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#5) On November 16, 2009 at 2:15 PM, silverminer (30.01) wrote:

Hey LiveOak,

Sinchi here ... let me get some lunch in me and then get back to you. :)

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#6) On November 16, 2009 at 10:39 PM, SnapDave (48.35) wrote:

It looks like I can just bookmark that RSS page and click thru a twitter page to the article.  I don't know what their game is but the Fool homepage is and has been very irritating in part because authors aren't listed.  It would be nice to go right to a Barker or Housel article while avoiding another tired Lomax populist rant (I'm sure she draws in readers, I just want to read something I don't already know).  The titles are not helpful either in that they are meant to be cute but often don't indicate subject. 

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#7) On November 17, 2009 at 3:04 AM, TBoner101 (< 20) wrote:

Nice post LiveOakGrey. I follow the same guys you mentioned and agree with nearly everything you said. Although historically he's been on the money, and was the initial and most influential figure for me regarding this ridiculous rally and the bubble it has called, Peter Schiff can be a little too negative. and now his vlogs are starting to become advertisements for his Senate campaign. I guess strategic campaigning comes with the territory in politics, although personally I would like to hear more specific solutions other than the obvious and redundant message of gold as the only answer to all our problems, even if he has earned the right to say "hate to say i told you so", which he does fairly often.

That is what I like and admire about Chris. His focus is on how to deal with the hands we've been dealt, rather than finger pointing and consistently blaming others. 

I too have been looking to Australia for VALUE stocks, as it is no doubt a hot spot but EWA has already been bombarded just like Brazil, and am looking for solid companies other than BHP. The countries are solid fundamentally, but the funds are overpriced and volatile. Because of this, they don't provide the stability and true transparency ETFs are known for. I know this is a tough question to ask, and don't expect any definite answers nor will I hold you to them, but do you foresee a commodity pullback before Christmas or the New Year?

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#8) On November 17, 2009 at 9:09 AM, silverminer (30.01) wrote:

Sorry I never got back to it yesterday, guys. I will be back after writing deadline this afternoon. :)

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#9) On November 17, 2009 at 4:38 PM, SnapDave (48.35) wrote:

I try to keep in mind that Schiff and others who predicted the crash aren't necessarily going to be right about what happens next, especially in the next two years.  The short term is never easy to figure out.  The short term we face now has rarely been so critical.  Huge fortunes will be won and lost.  I'll risk getting beaten up here in SinchiLand by saying that deflation is still a huge driver, for now, in the US.  I'd point you to Mish Shedlock's excellent blog for much better explanations than I can give for deflationary credit contraction.  Looking at commodities that seems like a stupid thing to say.  But I think rising commodities and falling prices for things like services, more complex manufactured goods and homes are a reality right now.  Does anyone really think Apple wouldn't be charging $350 for a new iphone in better times than the $100-200 now?  The obvious result of my assertion is that company profits will be squeezed in the middle by rising input costs and falling revenue per unit of goods.  I don't think I need to point out to anyone here the fundamental supply reasons commodities have to go up regardless of what the rests of the world thinks it's willing to pay.  You can't squeeze blood out of a rock.  If there aren't enough mines there won't be enough silver, zinc, iron.  The run up in sugar this year is blamed on too much rain in Brazil and too little in India.  But the fact is that was a train wreck waiting to happen.  And it will happen again.  Indian farmers know from past experience that if they plant more this year they'll get hammered next by lower prices and the cycle will repeat.  And so on...

Another problem we have is unwillingness by governments, in particular, to understand that major changes are upon us and they have to adapt.  This recession/mini-depression is not just a result of housing or low Fed rates or lack of regulation.  This should be a wakeup to the instability and unsustainability of government spending at all levels in the US and the trade situation most exemplified by the US/China relationship.  The many states with serious budget problems are, for the most part, enacting temporary tightening instead of wiping out entirely parts or whole programs.  I can't remember where, but someone suggested an excellent idea: furloughing federal employees.  That's one short term state idea that makes a lot of sense.  I won't beat a dead horse re the US gov debt or our role in the trade deficit.   But I'd point out that China, while busy pointing a finger this way, is not busy preparing for a world in which endless goods flow from China to the US and endless credit flows back to the US - of course it may anyway, in which case we're back to Sept 2008.  The people of China have to have money with which to consume - no they are not simply saving it.  China's banking has to evolve.  China has to stop the currency manipulation - this is as much to blame as anything for the severity of the recession.  I understand the effort to build into a major economy, but this needs to evolve to avoid major hardships for the entire world.  China needs to realize it is killing the golden goose, albeit a bird that is handing them the hachet.  Enough.

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#10) On November 17, 2009 at 5:59 PM, XMFSinchiruna (26.59) wrote:


Okay ... here we go. :) I don't have loads of time, but I'll answer / comment as I'm able.

Before these blogging revelations, I was wandering in the investment wilderness for forty years.  You know what that's like?  After that long, the manna from heaven tasted like knock-off Wonderbread crumbs, missed by the crows chasing after Hansel and Gretl's path markers.

-That is classic stuff right there. ;P

I have tried to reach out to people who may be stuck in a pre-collapse paradigm. All I can do is wish them the best.

I'm not familiar with any primary mid-tier silver or gold producers in Australia that are available to American investors through vehicles other than the pink sheets, and as I have been reducing my exposure to pink sheet holdings in recent months, I have not closely followed any Australian miners as a result. Newcrest is the obvious name, but I recall hearing some good things about Medusa Mining some many moons ago. Speaking of which, I noticed the other day that there are several Australian issues on the list of holdings for the new Van Eck Market Vectors Junior Gold Miners ETF(GDXJ). That's your starting point for further research right there, as I can vouch for the selection process employed by that ETF's underlying index. The Australian nammes worthy of further research are: Kingsgate Consolidated, St. Barbara, Avoca Resources, Medusa Mining, and Dominion Mining. I'm sure we'd all love to hear the results if you find any useful information about the companies listed above, or any others that you feel are worthy of further research.

Your #2 above may be something of a pipe dream ... by-product metals are a plus to be cherished rather than a hindrance to pure pm exposure. Be happy to gain some copper and other base metal exposure within your pm portfolio, as this will keep costs down in any environment that is positive for gold and silver prices.

To your #3, let me say at the outset that most investors completely misunderstand those non-cash charges. Some are huge red flags, while others are not. Understanding the difference takes very close scrutiny of the quarterly and annual releases, and even then it is sometimes very hard to tell the difference. The key thing to look for is relative transparency ... none of these companies are coming right out and saying: we have $X million in exposure to future derivative losses, but some visibly go to lengths to conceal the level of exposure, and those tend to be the kind of companies that I red flag in my articles. I have learned so much on this tpoic over the past few months of research, but there is still so much complexity to the underlying instruments that short of having the key to the CFO's file cabinet it's difficult to get a clear picture of what's going on. HOWEVER, not all currency-related charges are created equal. Some are installments on future income taxes which are brought about be the dollar's positive translation effect upon corporate debt, as was the case with Kinross $58.6 million charge in Q3. That's a charge you're happy to take, because the debt reduction effect that triggered the tax is a huge net positive. Be aware of the nuances that differentiate the different kinds of charges ... from straight-up derivative revaluation write downs to realized losses on non-hedge derivatives. In most of the cases I have studied, while I recognize the exposure to dollar weakness as a significant problem for the sector, I do maintain that profitability will help to eliminate those exposures while a new paradigm of commodity prices will dissuade execs from relying heavily upon derivatives in the future.

To your #4, I would say that investors need to know what they hold. The comments I believe you refer to were in relation to pink sheets, not ADRs. ADR's are fine, when they are sponsored (as I learned the hard way with Anglo American ... I was mortified to learn that I too had been duped by the assumption that AAUK was a sponsored ADR!!!!).

Pink sheets are a strange concoction of the financial world. I hope all holders of pink sheets are aware of what they represent. In cases where foreign companies are listing sponsored ADR shares as Pink Sheets, they might be very attractive, but understand that unsponsored pink sheet listings by U.S. brokerages and other market makers are common, and in that case what you hold is essentially a promise to deliver shares into the same proxy system if you look to liquidate a holding. The nefarious part of all this is that your pink sheet holdings can be used as ammunition by the large bullion banks in arranging their market-making short positions with great flexibility. In other words, whomever is writing your pink sheet on the other end of that exchange is essentially borrowing your supposed shares until you ask for them back. By using your long position as borrowed collateral, this enables those counterparties to short shares that you think you hold long. Wierd, huh? The whole thing gives me the willies, and in a systemic financial crisis I would worry for the entire pink sheet system's functional integrity.

Please understand, I am not an expert in the pink sheets market. The above represents my understanding based upon the research I have conducted, which itself was initiated because of the insultingly incomplete information that comes up in a cursory web search on the subject (Wiki, investopedia, SEC, etc... all fail to characterize the system properly). If anyone has further insight into the mechanics of thie OTC market, again I'm sure we'd all welcome the perspective.

#6 - #8: Because of trading restrictions, I am not at liberty to discuss the equity you mention at the moment, but in general I too am extremely wary of unallocated bullion storage services other than the specimen that you may have seen me discuss in thepast. DYODD. I have indeed heard the concerns about Perth Mint, for example, and they raised enough doubt in my mind to render me extremely cautious. Check for more. I always go back to the example of SLV, which one year removed all instances of the word bullion from its prospectus, and my own e-mails to the company requesting an explanation for the rather curious wording changes went completely unanswered. I have never held shares since.

#9: Without question, is the superior choice.

I hope you find this helpful, and please do share the results of any findings with respect to the Australian names listed above. :)








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#11) On November 17, 2009 at 6:04 PM, XMFSinchiruna (26.59) wrote:


That is what I like and admire about Chris. His focus is on how to deal with the hands we've been dealt, rather than finger pointing and consistently blaming others.

That is among the highest compliments I could have hoped for. Thank you so much! Feedback like that is precisely the kind of thing that keeps this Fool committed to sacrificing his eyesight and his one-active lifestyle for the time being in order to help people to prepare themselves for the currency crisis that comprises precisely "the hand we've been dealt". Thank you again! Fool on. :)

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#12) On November 17, 2009 at 7:29 PM, XMFSinchiruna (26.59) wrote:


If you still think it's an either/or scenario with respect to deflation / inflation, then you miss the nuance of the explanations I have offered. You can indeed, and history confirms this, have falling asset prices for all kinds of goods and services and all the economic malaise related thereto IN THE MIDST of a currency driven inflationary impact from a negative feedback loop of falling government revenue and rising givernment deficits ... when you rely upon foreign creditors, and their confidence in your currency wanes, you have the ingredients for a stagflationary event irrespective of domestic economic dynamics affacting asset prices.

[See my comments below this article, for example]



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#13) On November 17, 2009 at 9:27 PM, SnapDave (48.35) wrote:

Probably the reason I wrote that as is, is that you and Schiff, who I'd talked about in that paragraph, never utter the word deflation.  Sorry that I may not completely understand your point of view but you may have brought some of that on yourself.  Excellent reply to Anands article by the way. 

I gotta run but I'm curious if you are of the opinion that a letting a deflationary spiral clean things out and start over would have been a better way to go?  It seems we already tried that 80 years ago - of course it wasn't that simple. 

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#14) On November 17, 2009 at 9:35 PM, XMFSinchiruna (26.59) wrote:


Of course I think a deflationary spiral would have been the lesser of two evils, or else i would not have been on the lawn of the U.S. capitol on the eve of the TARP vote decrying the love as the entirely wrong approach to the crisis (although TARP itself is the least of our worries). It may appear that the interventions have ameliorated some of the biggest threats to the financial system, but no such thing has been achieved. The derivatives monster continues to feed upon those liquidity injections, reinflating a bubble that could leave nations in ruin when it finally pops a second time. the stakes are enormous, and the strategy our nation and others have embarked upon is entirely contrary to a rational approach to resolving the root problems at hand.

Schiff and I never utter the word deflation because the word is so grossly misunderstood, and the degree to which people cling to their Keynesian understanding of inflationary dynamics renders any discussion of deflation in the context of our present predicament completely useless. Therefore, I replace the word deflation with phrases like falling asset prices to break away from the paradigm that presumes that economic vitality and price trends are locked together like a pair of wrists in handcuffs.


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#15) On November 18, 2009 at 10:06 AM, silverminer (30.01) wrote:


lol ... "decrying the VOTE"...

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#16) On November 18, 2009 at 11:58 AM, SnapDave (48.35) wrote:

Thanks for taking the time to reply, Chris.  

I'll leave you with this thought.  What I hear a lot of from you, Schiff and many others of an Austrian bent is the gov't is doing everything wrong, the Fed is completely f'ed up and let's let everything fall hard and fast - there are certainly many valid points there.  What is conspicuously missing is specifically how all this would work if you had your way, what structures would be put in place and removed long term and how would we recover any faster from an out of control deflationary spiral than what we have now.  I'm not smart enough to intuitively get this and be convinced and I'd suspect most folks are clueless.  So for this to gain any traction it has to be fleshed out more publicly. 

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#17) On November 18, 2009 at 6:28 PM, silverminer (30.01) wrote:


Sounds good ... I'll make a point to address the hypothetical specifics at a future date. Thanks for the suggestion. But it's a moot question now ... purely academic, as the reponse strategy has been entirely set in stone.

I think part of the barrier preventing people from understanding the relative improvement in having let institutions fail revolves around a failure to recognize the systemic risks that remain baked into the financial system as a result of the reflation strategy. If people knew the dangers that still lurk within the shadows of the global derivatives market, they would cut and run from the equity markets tomorrow. At its core, the entire reflation strategy is like a declaration that there was never anything wrong with the financial system we had before 2008. I think every reasonable Fool knows that this is not the case. 

Also, history is entirely relevant here, as it is rife with examples of economic crises from which the greatest negative impacts came from the unforeseen consequences of those measures undertaken to address the original crisis, as I alluded to in this article today.

Fool on!

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#18) On November 19, 2009 at 8:51 AM, TBoner101 (< 20) wrote:

I think my activity on this site, or lack thereof, speaks volumes of how much I value your insight. When I started reading about commodities after the March lows, I didn't know my head from my ass. However, I noticed your unconventional writing style because you actually stood by your initial statements, consistently provided links to previous articles, and whether right or wrong, you actually stood by and maintained your beliefs proving how confident you were in your research.

I see that as a sign of an individual doing their homework and being honest while holding themselves accountable, which unfortunately is quite surprising in this industry. Considering how frequent I visit this site, and the fact that this will be my 2nd comment characterizes my foolishness in more than one way...

And that's the truth :)

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#19) On November 22, 2009 at 8:23 PM, LiveOakGrey (< 20) wrote:

Hi TBoner,

Sorry, I haven't responded sooner, but the computer I have access to in the evenings is old and doesn't seem to have the juice anymores to do postings on Motley.  When I try, it just gives me back 'void' at the bottom of the screen.  

As far as whether I think there will be a pull-back before the end of the year?  I couldn't give you any technical analysis, since I don't understand the details of how all of that works.  I'm somewhat interested in reading up on it when I'm done with due diligence on stocks first, though.  From what I understand it has no real predictive power, beyond the self-fulfilling prophesy value that enough people believe in it to recommend it to others, so it creates some of it's own momentum.  Just not enough to be very reliable as a fundamental indicator.

My thinking is that it doesn't make much sense that the propaganda and the 'stimulus' money has been this effective at reflating the bubble for this many months, but people seem to be desperate to believe in wishful delusions, over painful truths.  I think the market is more worried and showing signs of volatility, and that leads me to think it's played out long enough we'll have a pull-back before this year's end.

I can see this commodities market (not real estate) being ascendant for five, ten, maybe twenty years, and some buy-and-hold investing working here, just not buy and hold forever, Buffett style. Sinch mentioned in one of his articles or blogs a while back, that he watches for signs of when the markets may correct back to a stable equities economy, so he can get out in time.  Seems very wise. I guess he meant something like the GDX/Dow ratio?  

When I see things look better years from now, I'll get out of miners and back into whatever reasonably priced moaty survivors may become available in regular stock market.  Steady boring stuff, most of it, that will survive for 30 years (I hope).  

As far as watching trends, that isn't the same thing as 'market timing,' because even Buffett would have to agree that 'market-headwinds' are worthwhile to pay attention to.  If you see massive inflation, and you exit the market for one or two years, like 'dwot' recently said she did, then nobody should call you a 'market timer.'

I had one online 'friend' saying that to me.  I did warn him with tact and moderation, a very few times over several months, that the market would crash, and he just laughed at me, called me a perma-bear.  After a while, I was actually being condescended to by someone that didn't want to give up his cherished cognitive biases, and it taught me a valuable lesson about behavioral finance.  

I knew I might get blamed for what I was warning against, if it came to pass and because he'd ignored the line of my reasonings, his finances cratered.  Because most people refuse to accept responsibility for their own behaviors, and would rather blame the person they associate with the issue when they are reminded of the humiliation or loss.  I was right, the guy stopped speaking to me, and after multiple email attempts to renew the friendship, I just took him off my buddylist, so I wouldn't have to see the ungrateful, intellectually-dishonest bastard's screen name, anymore.

To semi-invert for my own investing purposes, I'll misappropriate Churchill's comments about regaining sobriety the next day when he was confronted by an indignant woman accusing him of being drunk: "Buddy, yes I'm a bear, but you're an intellectually-dishonest fool, and tomorrow I'll be hibernating in a gold mine, but you'll be a bankrupt fool- and no longer able to remain in denial about it.'  

There, I feel much better about the whole emotional incident, and have proved that reason triumphs over what would otherwise be my exercise in pointless anger and frustration! 

Well, maybe not.  Guess I'm not that spiritually advanced, after all.  ::Mauls aforementioned fool and eats him for lunch.  Belches and goes back into hibernation in shiny-cave::                                       "Petty vindictiveness is the best revenge."  You mean they DON'T say that? ;)

I think the 'smart money' was supposed to have pulled back from the market four to eight weeks ago?  They seem to leave early, but, they create their own momentum in the market, which if nothing else, makes others still in the market encounter that wall of a rip-tide when the 'smart money' pulls out or buys in.   

Warning: Philosophical rant linked to why this market will begin reversing incoming.  Just close your eyes and it won't be able to see you, either... 

The stimulus can't convince everyone of a permanent fix to the markets for another four years of run-ups, and another business cycle.  There's too much observable volatility of by investors around the world, and in bond, precious metals, stocks, options, etc.  There are too many voices speaking out against the obvious criminal misconduct that is being allowed to go unpunished by both parties in power, in spite of promises of transparency in government, and accountability.  I voted for Obama, because as they say in the Queen's Navy...he was the lesser of two weevils...but he may do more harm than his former rival, McCain was capable of.  (as McCain probably have thrown less money at the markets, and unsustainable short-term feel-good 'entitlements,' that will crash our economy sooner, harder and make the misery that much more widespread and worse for even those it was supposed to 'help').  

Nobody running for political office, on anyone else's dollar, seems to have the depth of character to be worth trusting as a moral person who will keep promises when it's no longer politically expedient.  Nor do almost any modern politicians seem to have the depth of insight to take the long view, even if they know it may guarantee they and their party don't get reelected.  

Since when is it true in a democracy that merely being in power and having the limelight, and being 'important' because you enter the history books, more important than doing the job you are paid to do?  That job being looking out for the actual real-world welfare of your country, which is kinda the promise you made as a patriotic person running for higher office?  These people need to accept the public is fickle and accept they may not get reelected, but they didn't destroy the country, either.  Is that such a bad trade?

I guess, if the conduct of the actual politicians themselves once in office, demonstrates their motives are antipathetic to their claims of selflessness, then maybe our system is in need of serious improvements in the quality of person we allow to even run for office.  We don't allow air-traffic controllers at airports to get the job based on popularity contests.  Politicians have many more lives in their hands than a plane load of people, when they vote for war, or to misappropriate many of the taxes that should go towards better allocations in the market and ultimately the common good.  

Nearly none of the politicians really enters politics except to satisfy their vanity's hunger for adulation from audiences, being in the history books for great things that they didn't actually do they way it's claimed they did (see FDR, he wasn't such a 'great man'), and of course, opportunites to skim off those public funds that are kicked back to them from those beholden for their committee's awards.

There are real problems with Democracy-by-Popularity-Contest-and-Telegenic-Appeal-Takes-All systems of government.  It's pathetic.  Most worthwhile issues of real greatness are just squashed under the huge weight and power of commonplace necessities of appearances, that a boobocracy forces on any who would do a real job for their country. Survival of the shallowest end of the gene pool in higher office.  Anyone who's a worthwhile person, avoids the hypocrisy and superficiality of politics like the plague.



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#20) On November 24, 2009 at 11:48 AM, LiveOakGrey (< 20) wrote:


Those were all helpful points, thank you!

How long is the quiet period before and after you invest in a stock, when you can discuss it's merits? (aka: CEF).  Yeah, I know... you'll invest in CEF for the entire duration of the rest of the 'multi-year market in precious metals,' so it's kind of like the movie title: 'From Here to Eternity.'  You can never explain their merits, again...  Just my luck.

So you'd recommend  I've glanced at their site before.  They have a logo that looks something like a picasso sketch of don quixote, I think?  Not sure if the allusion is we're all tilting at windmills, or maybe they just believe in wearing shaving bowls for hats.  I know you've mentioned in your articles that focuses on monitoring the U.S. government's scam of denying it's long-standing sales of central bank gold reserves, to suppress the price of precious metal competitors to the fiat currencies.  For the record, I have absolutely no doubt that in this case, at least, all of those wild conspiracy theories are completely true.

Our government, past and present, both parties, lies to us on a regular basis.  Financial interests, Energy interests, other big businesses, big populist unions, big government bureaucracies, and the sanctimonious or radical ideologues of every stripe, exert undue influence over our politician's incentivizations.  The Chairman of the Fed, our President, our last President, etc, employ smiles and lies in the service of these groups, who enable them to collect kickbacks from the voting blocs, moral support and campaign contributions.  All of these politicians, are suborned by special interests, and those politicians and those special interests are very prepared to sacrifice the well-being of our country for petty short-term emotional gratifications.  This isn't crazy talk, it's the cold and clear eyed analysis of documentable facts from the record.  I'll take your advice and give a look over.

Thanks for those Australian miner possibilities.  I took your hint about looking into this stuff to see if I could make any recommendations to others.  So far, I'm not wild about what I'm finding, as the great values seem to be gone down under.  Maybe I can find some companies that are ok-ish for a bit of investment diversification, but I'm not confident they'll be both solid companies, operating in non-volatile regions, with great buy-in prices.  I think those prices may all be gone.

Here's a question.  So many of the more productive mines are located in Mexico or Latin America.  I won't touch any stock that has mines in Africa, as it's far too politically unstable, and the mines may be expropriated by whichever populist dictator rises to power.  However, Mexico is supposed to be one of the more stable countries for investing in miner stocks, and it seems like it's anything but.  How do the analysts arrive at a conclusion that Mexico is stable, when their government has to bring in their national army to police the cities that the various drug lords have taken over?  Those private drug-armies, often composed of elite-trained, formerly anti-drug troops, who were ex-government special forces/police...that are killing (etc.) people in the border-regions?  Isn't it likely that in a world-wide depression that gets worse for at least several years (and I don't see how it can't get worse), that we aren't going to have much more widespread social disorder?  Tell me something positive here, cause I like lots of the companies that have home offices in Canada, or other stable countries, but have mines scattered in Mexico, Peru, Brazil, etc.  Maybe there's no way around it, and SLW for example, will just have some or many of it's mines expropriated by either the governments of the countries it does business within, the drug lords, the Sendero Luminoso, you name it, depending on which country you are talking about. 

There's all this talk of the developing countries beginning to supply their own markets, and 'decoupling,' but I don't see that it can happen without an extended period (at best) of withdrawals from supplying our markets and then realignments of companies to find local buyers for their goods and services (those local buyers, who now haven't had jobs for years on end).  

Please tell me why I'm all wrong.  But I'm skeptical that the world is going to find strong enough new local markets to replace the ones it's lost by exporting to the U.S. and to Europe. I'm not going to go all Alstry on anyone, and I'm not gloating about this 'apocalypse,' but I worry the misery may become so bad, we'll see around the world, many more instances of rioting (as in Europe the past two years: Greece, Iceland, Spain) populist uprisings (China has about 1,000 a year, I think) with many of these riots/uprisings leading to full scale revolutions. And frankly, varying degrees of wide-spread anarchy in many places, that stretches on for long periods of time.  

Good thing I'm such a happy camper, or all this gloom would be murder on my already dangerous intake levels of radically experimental anti-depressant medications. 

I've read some accounts of Argentina's repeated currency crises, and its hyperinflation back around 1975-1991, and the social consequences were chilling.  One author on SilverBearCafe, experienced it and was giving urban and rural survival tips.  He also mentioned that almost 20 years later, the culture hasn't recovered, and its not safe anymore.  Parents in cities don't let their kids play in the streets in front of their homes. Everyone takes their kids directly to parties at the homes of others, because of fears their teenagers will be kidnapped for ransom.  Sounds horrible, and I really worry, our own country may have it's own crises.

Hate to be more bleak and dire than Peter Schiff, or Marc Faber, but I also think looking unpleasant facts in the face allows you to plan for the various more likely scenarios to protect yourself. Maybe it's overblown, and we will somehow muddle through all of this, with a recovery based on something I just don't see.  I'd be glad to buy into any of those rosier scenarios, if there's good reason to support them.  Any ideas?

Somebody else can wear the 'gloomy paranoid survivalist-we're all gonna be clubbing squirrels to survive' /conspiracy theorist hat,' my head aches from the weight.  Know any kooks around here that write articles about how has proof of government conspiracies?                Me, neither.  ;)

Here, have some more squirrel. 

Until then, I'll wear my steel shaving bowl for extra security, grow a beard, and tilt at windmills.


P.S. I wanted to post some links to some articles, or even pics/vids- can anyone tell me how to do that for CAPS?  Thanks guys!  Maybe CAPS could even give a little glossary that itemizes the steps to do these various links, next to this posting-box?..... 


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#21) On December 09, 2009 at 1:12 AM, TBoner101 (< 20) wrote:

Hey LiveOakGrey, I forgot about this post and just read your reply right now. Good call on the pullback! :) I don't know how much longer it will last, but I think this dip is a fantastic opportunity to buy. Personally, I will be buying long in my favorites such as Yamana Gold & Silver Wheaton, as I sold my positions of many months in them within the last couple of weeks and the timing couldn't have been any better. Also will buy a few calls for value amongst the mining industry. Just bought some shares of Fronteer Development Group and noticed TMFSinch added it to his caps on his silverminer account, might be one to look out for. Not sure about its longterm potential to tell you the truth, but I researched a bit and at its current price it looks like a great bargain

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#22) On December 18, 2009 at 11:39 AM, LiveOakGrey (< 20) wrote:

Hi TBoner,

So you and Sinch recommend Frontier Development Group?  I'll have a look. If you sell shares you've had for many months, but I'm assuming, under a year- do you worry about higher cap-gains taxes killing lots of the share price growth you've collected over those months? I debate with myself whether there are many shorter than a year and a day periods where it makes sense to sell off a stock at all, unless you expect it to crater.  I'm sure there are ratios or theories, how do you figure it?

I see Sinch talks about 'trimming' shares in this or that company, and I'm never sure how that avoids excess taxes and transaction costs, since that money has to be invested some place else.  Unless, of course, you spend it on living expenses?

Catch up with you later, man-


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#23) On January 12, 2010 at 2:50 AM, TBoner101 (< 20) wrote:

Whats up LiveOakGrey? I have this page under my following column but I never get any notifications when there is a new post, so again sorry for the late reply. Yes, I like Fronteer Development Group. Up 14.4% since I bought it, so can't really recommend when to buy it at the moment, but nonetheless I am bullish on FRG.

Personally, I just graduated college, moved back with the folks and have been looking for work since spring. So I don't realy have an IRA or income, but have a signficant percentage of my savings in stocks. However, this is a miniscule number that pales in comparison to the size of the average fool's portfolio. I am not sure what I will file under this year, but I am so poor any sort of taxes on my gains shouldn't hurt the bank too bad.

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