Tuesday, March 31, 2009

The American Dollar Sunrise or Sunset?

US dollar chart, 1 year. Fibonacci extensions have been marked vertically and horizontally to highlight some critical points. Mixed signals all around, but note the RSI (14) and W%R (14) both almost academically turned down at the mid-line EOD today.

Ive used the "sunset" option on Stockcharts for a reason; is this a picture of the sun setting on the US dollar, or the sun rising on a US dollar bull market?

Tuesday, March 10, 2009

The oracle of OMG....

Is there a conflict of interest when a man of Mr. Warren Buffett's influence goes on camera to sound the financial alarm? Did anyone ask what his short position was on the market and gold prior to clearly negative comments?





I think the financial world has made a false prophet of Mr. Buffett. Countless books and praise were written about him as Berkshire shares rose through the late 90's and the early part of this decade.

People quoted Mr. Buffett adinfinum about derivatives being weapons of financial mass destruction despite his continual involvement and losses in these and other SIV's. His most recent pronouncements to buy in late 2008 were wrong, along w/ others, but his new pronouncements that we are going to hell in a hand basket a few short months later smacks of indignation. What happened to the disciplined value investor who buys when there is blood in the streets?

How could a few months transform the Oracle of Omaha from American patriot buyer of stocks to doomsday sayer? Media focus is saturated with his predictions, yet ignore the suspect aspects of Berkshire's performance and a paradoxical involvement in derivatives, and his roundabout way of not fully counting current losses.


Buffett has become at least for the mass-media, a product unto himself, and people who turned to his style of investing and Berkshire shares the past few years are now in trouble. I suppose he will co-author another book titled "How to survive in tough times, the Buffett way" or something as such. Selling books seems to be the only profitable part of his current business.

It reminds us not to make false-prophets of people, that they make mistakes like everyone else, and lie/bullshit just like everyone else. The more you deconstruct Mr. Buffet's statements and so-called apologies the more you can see an overly-publicized and politicized figure, increasingly detached from the value-investment philosophy originally espoused.

Im waiting for the books that will eventually be written about the fall of the oracle as losses mount.

J



Monday, March 9, 2009

Afghanistan...a defense of history

Its sad what passes for op-ed's these days in Canada's largest newspaper The Toronto Star. Last week's article highlights everything that is wrong with people who not only ignore history but are defiant in the face of what lessons it can teach us about occupation, insurgency and exporting democracy.

Canada has over 2000 troops in Afghanistan, one of the largest contingents after the United States. President Obama has pledged more troops to the region as focus shifts away from Iraq to Afghanistan, in recognition that things are getting worse for the current expeditionary force in the region and Afghan citizens.

4 Canadian soldiers have been killed in Afghanistan in the past week. Over 100 troops out of a force of just over 2000. This map highlights the home town's of each fallen soldier. An almost %5 death rate, which would translate to approximately 15,000 dead American soldiers in Iraq. There are many forces at play in the current Afghan conflict. For Canadians there is a constant need to temper analysis with homage and respect for the soldiers in the field, but we do them a disservice when we choose to portray our mission in grand terms which generations of Afghans have heard before from different colonial masters. And generations have not only fought back against Western nation's so-called "good judgment" of how the region should be governed, they have been successful in deterring the worlds largest armies.

Yes of course Canada is not Russia. Yes our soldiers do not treat entire populations like the Russians did and continue to do in other Caucus states. But for many there is little difference among uniforms, invaders are invaders. To ignore this fact, and to whitewash our mission as a unique almost divinely sanctioned act is to be the biggest fool of all.


Afghan past wars not a harbinger

March 06, 2009
Rosie DiManno
http://www.thestar.ca/


Whenever I hear or, more frequently, see published the lament "Has history taught us nothing about Afghanistan?" in relation to foreign intervention there, I know instinctively that the speaker or writer has precious little knowledge about Afghanistan.
(your instincts are that sharp that the mere suggestion that history could teach us something allow you to rush to judgment? J)

They've never read the history texts, the military archives, the memoirs or the poetry. They've probably never been there.
(i dont have to go back in time to the 18th century to study the French Revolution or consider how the collapse of a state from within could be replicated in modern times. There are many who have traveled and lived in Afghanistan who hold contrary and varied views from the North American mainstream, they are not granted full authority because of their passports. J)

It is found wisdom, most likely a repetition of superficial commentary digested from elsewhere, a circular axiom that invests in the ill-informed a phony patina of insight. More disapprovingly: "Did we learn nothing from the Russians?

(a circular axion...a phony patina of insight?... great grouping of words that tell us nothing other than the presupposition that people who refer to Afghanistan's history of foreign occupation not only lack insight but have probably never traveled to the region.... quite a leap of intellectual faith. J)

Or, to quote our own prime minister: "We are not ever going to defeat the insurgency. My reading of Afghanistan's history is that they've probably had an insurgency forever, of some kind." Stephen Harper may have a big brain for economics – that's debatable – but he's talking through his hat here. More likely, because he's singularly lacking in communication skills, Harper was attempting to make contextual observations about the Afghan dilemma and sank under the weight of his own leaden language.

A further 17,000 US troops are on their way, dispatched by Obama. Despite the torque in some quarters by those who claim Obama is going to shift the focus by emphasizing diplomacy and reconstruction, combat troops don't do détente.


As Americans discovered in Iraq, nothing can be done to smother an insurgency without first protecting the populace and then making allies with regional militias.
(A sad over-generalization, they fought regional militias for year and still are in many respects, its a blanketed statment to suggest you cannot defeat insurgency unless you protect the populace make allies with local fighters. Each situation calls for a different approach. The line between "populace" and "regional militias" is often a grey one, making the writer's prescription all the more untenable, and ill-informed. J)
Afghanistan isn't Iraq, or Vietnam for that matter. There is no nation-wide, grassroots guerrilla war. Even with the Taliban now at its most powerful since its 2001 ouster, on-the-ground polling shows they have only 10-15 per cent support among Afghans – and zero among Uzbeks, Tajiks, Hazaras, Turkoman or any other Afghan ethnic group beyond the Pashtun.
(On the ground polling? is Ipsos-Reid conducting polls in Kandahar and Kabul? No source is provided for these polls, and it is difficult to expect open and honest answers from Afghans if we dont know the circumstances of the polls. Even if we accept the %10-15 amount, we neglect to appreciate how few people are required to initiate and maintain an insurgency in a state like Afghanistan with a sparse population base outside of Kabul and weak infrastructure.

If %10-15 support the Taliban, they are quite effective thus far in battling the International Security Assitance Force or ISAF in the region. More troops are being promised by member states because as it stands the mission has not succeded in stabilizing the country. Be it by account of more troop deaths, lack of democratic progress or development and ongoing strife in the border region with Pakistan we have nothing but propaganda that tells us "all is well" simply because Canadian boots are on the ground bringing democracy. BS. J)
It is far from a lost cause, except among the defeatists, entrenched isolationists and jihadist sympathizers. More crucially, the NATO mission – about to have its chestnuts pulled from the fire by the U.S. cavalry – is not remotely similar to what the Soviets attempted in the '80s.

In support of a teetering Afghan Communist government – and these were made-in-Afghanistan Marxists, who'd unleashed revolution against religious fundamentalists in the early 1950s – Moscow went in with gunships blazing. Where the indigenous Communists had already plunged Afghans into social upheaval – instituting land and marriage reforms, liberalizing attitudes toward women, removing dedications to Allah from government statements and replacing Islamist green with socialist red in the Afghan flag – the Soviet occupiers were even more ruthless and terrorizing.

Their helicopters pounded villages. They used chemical poisons in the form of short-duration gas bombs, littered the land with butterfly bombs – often camouflaged as children's toys and designed to maim rather than kill, a far more disruptive outcome for guerrilla forces on the move – and anti-personnel mines dropped from aircraft. They killed livestock, ruined wells, blew up mosques.

The mujahideen favoured sabotage operations. The more common types of sabotage included damaging power lines, knocking out pipelines and radio stations, blowing up government office buildings, air terminals, hotels, cinemas, and so on. From 1985 through 1987, an average of over 600 "terrorist acts" a year were recorded. In the border region with Pakistan, the mujahideen would often launch 800 rockets per day. Between April 1985 and January 1987, they carried out over 23,500 shelling attacks on government targets. The mujahideen surveyed firing positions that they normally located near villages within the range of Soviet artillery posts, putting the villagers in danger of death from Soviet retaliation. The mujahideen used land mines heavily. Often, they would enlist the services of the local inhabitants, even children.

(Yes the Russians did do this, but their enemies, the mujaheddin were known for large-scale destruction of civilian and military targets, including bridges, major roads, attacking convoys, disrupting the electric power system and industrial production. On September 4, 1985, insurgents shot down a domestic Bakhtar Airlines plane as it took off from Kandahar airport, killing all 52 people aboard. Lets not engage in military dick-swinging when discussing the Russian-Afghan war. J)

Worst of all, for deeply religious Afghans, they tried to impose godlessness on a nation that lives and breathes Islam. That, more than anything else, bound Afghans together in the ultimately successful mujahidin resistance: It was their collective duty to fight the kafirs.

NATO troops have done none of this, at least not by design, and neither will the incoming Americans. Every armed outsider bends over backwards to accommodate religion and tradition and consultation with elders. Arguably, NATO has been too respectful and self-restraining as the Taliban reconstituted under its watch.
( I am dumbfounded at the revisionist ramblings of the Russian-Afghan conflict presented as fact before the conclusion that NATO and other member states havent done anything similar and have given no reason for the populace to fight back against their occupation. The audacity to somehow qualify the rebellion against Russia as "the collective duty to fight kafirs" and assume this very same logic wouldnt be applied to any and all invading forces, because thats exaclty what many who took up arms against "kafirs" see the current NATO invasion as. J)

There is no aim to destroy Afghanistan in order to reinvent it in whatever dim echo of democracy, Islamic-style, the citizenry favors. The vast majority of Afghans understand this. Too many Canadians don't.
-------------------------------------------------------------

In reality that is exactly what the current mission in Afghanistan is meant to do; dismantling the remnants of the Taliban government, install a President (a former chief of an American-based energy company operating in Central Asia at the time) who only "won" an election by way of voting in the only remotely secure region in the nation: Kabul. Sadly the majority of soldiers being killed or injured are occurring outside the city, in regions less sympathetic to their hand-picked leader.

I find it ironic that this article begins with a generalization about anyone who suggests we attempt to learn something from history and proceeds to end their story with a larger generalization about what "the vast majority or Afghans" understand. To suggest we or any other nation knows what the majority of Afghan's understand is no different from the Russians, decades ago who believed communism and Russian rule was best for the region.

Too many Canadians probably have a better idea that this author is willing to ascribe to them. Not only are historians accused of misunderstanding the Afghan war, so are most "too many" Canadians. Only Rosie Dimanno and those who agree with her narrow and ill-informed world-view seem to know and have proceeded to tell us.

Its a sad day when we turn our backs on history and drink our own state-sponsored kool-aid on why our troops are deployed in a nation that never attacked Canada, that has never posed an identifiable threat to our nation, only elements that operated within its borders, and continues to show signs of defiance after 7 plus years and over 110 dead Canadians to show for our efforts.

What exactly do we intend to do other than pour in more troops in the region?

Even Wikipedia gives us a glimpse of whats to come... or what has already started:

In a 1998 interview with Le Nouvel Observateur, Brzezinski recalled: "We didn't push the Russians to intervene, but we knowingly increased the probability that they would...That secret operation (to support the mujaheddin) was an excellent idea. It had the effect of drawing the Soviets into the Afghan trap...The day that the Soviets officially crossed the border, I wrote to President Carter. We now have the opportunity of giving to the Soviet Union its Vietnam War."
March 1980-April 1985: Soviet offensives

The war now developed into a new pattern: the Soviets occupied the cities and main axes of communication, while the mujaheddin, divided into small groups, waged a guerrilla war. Almost 80 percent of the country escaped government control. Soviet troops were deployed in strategic areas in the northeast, especially along the road from Termez to Kabul. In the west, a strong Soviet presence was maintained to counter Iranian influence. Conversely, some regions such as Nuristan and Hazarajat were virtually untouched by the fighting, and lived in almost complete independence.



Mark Twain once said "history does not repeat itself, it rhymes".

J


Tuesday, March 3, 2009

Mexico in Crisis



Mexico is facing a crisis that could potentially topple its government within the year.


Lets examine the facts, and consider how regional instability can easily bleed into to the more stable tourist and mining regions of this fragile state.




Some background of the source of Mexican Instability from Wikipedia:

The Gulf Cartel (Cártel del Golfo) is a Mexican drug trafficking organization. The Gulf Cartel traffics cocaine, marijuana, methamphetamine and heroin across the border to major cities in the United States. The group is known for its violent methods and intimidation, and works closely with corrupt law officials and business people in Mexico as well as in the United States. The sphere of influence for the cartel has been determined to be from the Gulf Coast state of Tamaulipas to Piedras Negras, Coahuila.

The Gulf cartel does not limit itself solely to narcotics trafficking, as they have been known to kidnap local businessmen to collect money.

Once a radical fringe group Los Zetas headed by Heriberto Lazcano provide the muscle for the Gulf Cartel. Los Zetas are at the forefront of the recent spate of violence occuring primarily on the border regions with the United States.


The Zetas is the first criminal organization in the Americas to have been formed by former military personnel and defectors from a regular army. Mexico's General Attorney classified and filed the Zetas as an armed division of the Gulf Cartel in December 1996.

The Zetas represent a major threat to Mexico's national security. Organised crime was designated a national security threat in 1987, and the Zetas are now one of the major criminal groups operating in the country. As army defectors, the Zetas possess considerable military expertise, training and experience in combat, guerrilla and urban warfare.

The Zetas' formation represented the first time that a drug cartel possessed such a sophisticated and well-trained armed division. Since then they have been responsible for the cartel's security, logistics, assassination of its rivals and its ambitious expansion strategy to other territories that are under the control of rival drug syndicates.

The Wall Street Jounal's Joel Kurtzman characterizes the current spate of violence as potentially disruptive to whats left of any democratic institutions in Mexico:

Mexico's Instability Is a Real Problem

Don't discount the possibility of a failed state next door.

Mexico is now in the midst of a vicious drug war. Police officers are being bribed and, especially near the United States border, gunned down. Kidnappings and extortion are common place. And, most alarming of all, a new Pentagon study concludes that Mexico is at risk of becoming a failed state. Defense planners liken the situation to that of Pakistan, where wholesale collapse of civil government is possible.

One center of the violence is Tijuana, where last year more than 600 people were killed in drug violence. Many were shot with assault rifles in the streets and left there to die. Some were killed in dance clubs in front of witnesses too scared to talk.

It may only be a matter of time before the drug war spills across the border and into the U.S. To meet that threat, Michael Chertoff, the outgoing secretary for Homeland Security, recently announced that the U.S. has a plan to "surge" civilian and possibly military law-enforcement personnel to the border should that be necessary.

The problem is that in Mexico's latest eruption of violence, it's difficult to tell the good guys from the bad. Mexico's antidrug czar, Noe Ramirez Mandujano was recently charged with accepting $450,000 from drug lords he was supposed to be hunting down. This was the second time in recent years that one of Mexico's antidrug chiefs was arrested for taking possible payoffs from drug kingpins. Suspicions that police chiefs, mayors and members of the military are also on the take are rampant.

In the past, the way Mexico dealt with corruption was with eyes wide shut. Everyone knew a large number of government officials were taking bribes, but no one did anything about it. Transparency commissioners were set up, but given no teeth.

And Mexico's drug traffickers used the lax law enforcement their bribes bought them to grow into highly organized gangs. Once organized, they have been able to fill a vacuum in underworld power created by Colombian President Álvaro Uribe's successful crackdown on his country's drug cartels.

The result is that drug traffickers are getting rich, while Mexico pays a heavy price in lost human lives and in economic activity that might otherwise bring a modicum of prosperity to the country.

To his credit, Mexico's President Felipe Calderón has deployed 45,000 members of his military and 5,000 federal police to fight drug traffickers. This suggests that he is taking the violence and the threat to civil government seriously.

(Deploying 45,000 troops, the equivalent of 3 army divisions, or an entire corps of a possible 230,000 army soldiers suggests Mexico's President is scared out of his mind that things might escalate and topple his tenuous hold on power. J )

But the path forward will be a difficult one. Not only must Mexico fight its drug lords, it must do so while putting its institutional house in order. That means firing government employees who are either corrupt or not willing to do the job required to root out corruption. It will also likely require putting hundreds, or even thousands, of police officers in jail.

For more than a century, Mexico and the U.S. have enjoyed friendly relations and some degree of economic integration. But if Mexico's epidemic of violence continues, that relationship could end if the U.S. is forced to surge personnel to the border.






As traders an investors in precious metals exploration, we need to look well beyond the PR work of mining firms who never tire of painting a rosy picture of geopolitical tensions. Consider what has happened to mining projects in other Latin American states where democratically elected regimes have taken charge such as Bolivia's Evo Morales. Dont expect any of the booths at Toronto's PDAC to give you a straight answer on the growing instability of Mexico.

Here is a not so brief list from Mineweb of mining companies from Canada with current projects in Mexico:

Alamos Gold (Toronto): Sonora
Aquiline Resources (Vancouver): Sonora
Aurcana Corporation (Vancouver): Queretaro
Avino Silver and Gold Mines Ltd. (Vancouver): Durango
Baja Mining Corp. (Vancouver): Baja Peninsula
Bralorne Gold Mines Ltd. (Vancouver): Durango
Canasil (Vancouver): Durango, Sinaloa, Zacatecas
Canplats Resources Corporation (Vancouver): Durango, Chihuahua
Capstone Gold Corp. (Vancouver): Zacatecas
Cardero Resource Group (Vancouver): Baja California,
CDG Investments Inc. (Calgary): Sinaloa
Chesapeake (Vancouver): Oaxaca, Sonora, Durango, Sinaloa, Chihuahua
Columbia Metals Corporation Ltd. (Toronto): Sonora
Comaplex Minerals Corp. (Calgary): Mexico State
Coniagas Resources (Toronto): Zacatecas
Continuum Resources Ltd. (Vancouver): Oaxaca
Copper Ridge Explorations Inc. (Vancouver): Sonora
Corex Gold Corporation (Vancouver): Zacatecas
Cream Minerals Ltd. (Vancouver): Nayarit
Diadem Resources (Toronto): Zacatecas
ECU Silver Mining (Rouyn-Noranda): Durango
Endeavour Silver (Vancouver): Durango
Energold Drilling Corp [Impact Silver Corp.] (Vancouver): Mexico State
Evolving Gold Corp. (Vancouver): currently exploring acquisitions in Mexico
Esperanza Silver Corp. (Vancouver): Morelos
Excellon Resources (Toronto): Durango
Exmin Resources Inc. (Vancouver): Chihuahua
Dundarave Resources Inc. (Vancouver): Chihuahua
Farallon Resources Ltd. [Hunter Dickinson] (Vancouver): Guerrero
Firesteel Resources (Vancouver): Durango
First Majestic Silver Corp. (Vancouver): Jalisco, Coahuila, Durango, Zacatecas
Fording Canadian Coal Trust [NYCO] (Calgary): Sonora
Formation Capital Corporation (Vancouver): Tamaulipas
Fronteer Development Group (Vancouver): Jalisco, Chiapas
Frontera Copper Corporation (Toronto): Sonora
Gammon Lake Resources (Halifax): Chihuahua, Guanajuato
Genco Resources (Vancouver): Mexico State
Goldcorp Inc. (Vancouver): Sinaloa, Durango, Chihuahua, Guerrero, Zacatecas
Gold-Ore Resources Ltd. (Vancouver): Sinaloa
Golden Goliath Resources (Vancouver): Chihuahua
Grandcru Resources (Vancouver): Sinaloa
Grayd Resource Corporation (Vancouver): Sonora
Great Panther Resources Ltd. (Vancouver): Durango, Guanajuato, Chihuahua
Grid Capital Corporation (Vancouver): Chihuahua
Hawkeye Gold and Diamonds (Vancouver): Nayarit
Horseshoe Gold Mining (Vancouver): Oaxaca
Iamgold Corporation (Toronto): (royalties) Chihuahua
Iciena Ventures (Vancouver): Sonora
Impact Silver Corp. (Vancouver): Zacatecas
International Croesus Ltd. (Vancouver): Jalisco
Intrepid Mines (Toronto): Sonora
Kimber Resources (Vancouver): Chihuahua
Linear Gold Corp (Halifax): Chiapas, Oaxaca
Macmillan Gold (Toronto): Durango, Sinaloa, Zacatecas, Jalisco, Nayarit
MAG Silver Corp (Vancouver): Chihuahua, Zacatecas, Durango
Minefinders (Vancouver): Chihuahua, Sonora
Morgain Minerals Inc. (Vancouver): Durango, Sonora
Metallica Resources Inc. (Toronto): San Luis Potosi
Mexoro Minerals Ltd. (Vancouver): Chihuahua
Northair Group (Vancouver): Durango, Sinaloa
Northwestern Mineral Ventures (Toronto): Durango
Oromex Resources (Vancouver): Durango
Orko Silver Corp. (Vancouver): Durango
Pacific Comox Resources (Toronto): Sonora
Palmarejo Silver and Gold (Longueuil): Chihuahua
Pan American Silver (Vancouver): Sonora
Pinnacle Mines Ltd. (Vancouver): Mexico State, Oaxaca
Quaterra (Vancouver): Durango, Zacatecas
Rome Resources Ltd. (Vancouver): Sonora
Ross River Minerals (Vancouver): Sinaloa
Roxwell Gold Mines (Vancouver): Sinaloa
Santoy Resources Ltd. (Vancouver): Sinaloa
Scorpio Mining Corporation (Vancouver): Sinaloa
Silver Crest Mines (Vancouver): Sonora
Silver Standard Resources (Vancouver): Durango, Mexico
Soho Resources Group (Vancouver): Durango
Sonora Gold Corp (Vancouver): Sonora
Sparton Resources (Toronto): Sinaloa, Sonora
Starcore International Ventures (Vancouver): Puebla
Stingray Resources (Toronto): Chihuahua
Southern Silver Exploration (Vancouver): Jalisco, Chihuahua
Stroud Resources (Toronto): Chihuahua
Teck Cominco Ltd. (Vancouver): Guerrero
Terra Novo Gold Corp. (Vancouver): Michoacan
Tumi Resources (Vancouver): Chihuahua, Sonora
Tyler Resources (Calgary): Chihuahua
UC Resources (Vancouver): Durango, Nayarit
Valdez Gold (Toronto): Chihuahua
War Eagle Mining Company (Vancouver): Chihuahua
West Timmins Mining Corp. (Vancouver): Sinaloa, Chihuahua
Zaruma Resources Inc. (Toronto): Sonora



Gold bugs are a strange lot. Forever suspicious of the words of governments, of analysts and mainstream media. Always on guard for the end of fiat money, the end of finance and the end of the world. But too easily swept off their feet by a mining man and a good story.

Dont believe the hype, the Jr. Mining Sector is under duress, the values of far too many Jr. mining outfits represent not great bargains but indications that mining on a small scale has become increasingly expensive and difficult due to global instability in all but a few of the richest mining regions of the world. Not only have Jr. stocks collapsed in price, further erosion has been prevented only by a much higher gold price. Bank stocks would be much higher today if office supplies suddenly exploded in value- it says nothing about the intrinsic ability of these equities to generate any sort of sustainable cash flow.

Good luck, and be careful on your next vacation.

J
aka dr. cosa

Sunday, March 1, 2009

PDAC Log Day 1

Day 1 of the 2009 Prospectors and Developers Association Convention in Toronto.


Held in Toronto's convention centre downtown I decided to check out the early afternoon action at this year's PDAC on Sunday.

I was fortunate enough to obtain a press pass which granted me access to both the investor exchange and the trade show delegations. It was moderately busy, though I expect it to pick up on Monday. This year's convention was somewhat muted compared to 2008 when commodities and precious metals were becoming a first page story and Jr. Miners were THE place to be to benefit from the craze. We all know what was to transpire in just a few short months.

Many of the mining and exploration junior's that were struggling last year to get their name known and respected were all the more dire this year. With financing scarce and base metals still dazed from their waterfall collapse, it would seem only pure gold and silver plays with 43-101 compliant resources could ride out the storm and move forward with something to offer investors.

I remember the 2008 PDAC, I was conducting research on Miranda Gold (MAD.V) that was in virtual freefall at the time despite being the darling of Paul Van Eeden and others. (a dire sign of things to come I suppose) There it was, amidst the flash and glitz of Valgold and US Gold's booths (and showgirls) a simple unadorned booth manned by an equally unadorned gentleman sat before a stack of neatly arranged pamphlets and maps. I introduced myself as a "long-time" investor of Miranda, which he understood to mean that I had owned Miranda when it was much higher in price.

We discussed the recent stock price decline and some negative news that had been released about poor drill results. He was optimistic things would improve and felt the quality of management and land packages would save the day. I think working in the mining industry requires a degree of corruption or cock-eyed optimism. Rarely does a person with sufficient technical aptitude posses both in enough quantity to fool everyone. The slick-suited men with silver hair and their back-slapping counter-parts seem out of place against the scores of geologists, former-mining men and investment geeks passing through the various booths. But the man of Miranda seemed earnest in his appeals to better days, clearly the optimist.

I wonder where he is today...and I wonder if he was among the officers and staff who received the generous stock options Miranda recently granted. Its a shame the only news coming out of this company as of late seems to be either newsclips of rosy predictions by Miranda chiefs or financial activity designed to enrich staff. Drill results and core samples would be a great change of pace with most Jr. Miners non?

With gold on the doorstep of $1000 some believe that the Jr. Sector will once again assume its place as the ultimate leveraged play for a higher gold price. Without delving into silver/gold ratio's, capitalization structures and financing activity, I have observed in the past few years a notable decline in interest among gold-bugs in Jr. Miners thanks to the proliferation of double leveraged Gold ETF's.

With that in mind I browsed the many booths and sights of this years PDAC amassing pamphlets and free mints along the way. Today was just a high level overview of the convention, I spent little if any time engaging in shop talk with any of the mining outfits. There was a decidedly muted feel to the booths this year, a welcome change from some of the more flashy displays of 2008. Perhaps the great commodity crash of 2008 make humble men of some.

I enjoyed the ability to access the trade delegation section this year, feeling like a VIP of sorts as others with "civilian" passes were barred from entrance. I was fortunate enough to view the displays of the back-end world of mining and exploration: the equipment dealers, chemists, geological technologists and governmental agencies. I ran into an acquaintance from AMEC Natural Resources, a consultancy company currently working on a variety of PM and base-metal projects. Check out their booth if you get a chance.

After a quick walk-through of the exhibit floor I took a break in the press room, it was there I overheard a conversation by a PDAC delegate discussing her rosy outlook for commodities and among other topics that Don Coxe, former BMO commodity guru was eating crow for his bullish persistence on commodities through last years market collapse. After holding back a bursts of laughter that some PDAC ass-hat involved in organizing the worlds largest mining and exploration Convention would accuse someone of Mr. Coxe's pedigree of making bad bets on commodities. The cherry on top was her insistence that things would improve "as they always have" to which her companion heartily agreed between unusually large bites of free cake and fruit.

This entire scenario reminded me why I love and why I hate the mining industry. I am an outsider, a part-time investor in commodities and gold, I have never been to a mine, read a geology book, or held a piece of gold in my hand. Ive done nothing but read and follow the industry for 4 years, studied its price movements and its players. Ive grown cynical of much of an industry I know very little about. I suspect there are many others like me, metaphorically holding Miranda Gold stock from $2.50 to $0.45, doing late night google searches for free commentary from the Van Eeeden's and Puplava's of the world, feeling like Jim Sincliar is the only person alive that knows your pain as you watched gold kiss $1034 last March never to see it again 1 year later.

This isnt a review of the PDAC as much as its a soliloquy of my feelings on an ancient industry, dedicated to digging up shiny objects that have been ascribed value for time eternal. The lust for these shiny objects drove world trade and exploration for centuries, the side effects were the development of new worlds and societies against the destruction of old worlds and even older cultures. Precious and base metal exploration are the backbone of the industrial roots of the Western Hemisphere. While conditions have improved, slavery abolished and concern for environmental impact becoming required reading for all involved, the investors still face the same uncertianty, suspicion and frustration they did hundreds of years ago trying to make any profit in this sector.

I guess its true what they say: some things never change.

More to come this week on my PDAC oddessy!!!!

J
aka dr. cosa