Thom Calandra: Colombia via Toronto -- InterBolsa drama, seizure, and empanadas
1:30p ET Saturday, November 3, 2012
Dear Friend of GATA and Gold:
GATA's longtime friend the financial writer Thom Calandra was perhaps the first mainstream financial journalist to take note of the gold price suppression scheme when he worked at MarketWatch.com, the news organization he co-founded. He recently revived his gold- and silver-mining-oriented newsletter, The Calandra Report, and today provided a sample of the letter to be shared with GATA supporters along with his pledge to donate to GATA 8,000 shares of his largest mining company holding when the gold price passes $2,000. That is a most generous pledge.
So yesterday's Calandra Report is appended. A year's subscription is $54 and frequency of publication seems to be running at around twice weekly. Subscription information is here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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Colombia Via Toronto: InterBolsa Drama, Seizure, and Empanadas
The Calandra Report
Friday, November 2, 2012
TORONTO -- Heading back here in two days. Poking around some fresh Colombia leads.
In the meantime, this just in: Colombia regulators seized a leading brokerage as liquidity ebbed. InterBolsa Comisionista is a broker there I have known for many years. We discussed in previous reports the work of one of its mining analysts, Gabriel Bayona Fetecua, a brilliant geologist who follows Solvista and other junior prospectors.
A growing number of Canada and USA-domiciled natural resources developers trade locally on the Colombian exchanges. The largest that is a native, Mineros SA, was falling in price Friday. But then gold was taking a beating as well at the hands of a rising U.S. dollar. Several oil companies, including Colombia's largest, Ecopetrol, also were declining. Regulators said they were undertaknig the seizure to protect InterBolsa investors and customers. In what might not be a coincidence, the action came on a day when gold was declining more than $35. Such a one-day decline, after a fall Thursday, might have unwound InterBolsa trading positions on its proprietary desk. Note I said "might have."
More speculative: If that is so, in the perverse way markets work, equities of companies that trade largely on outside exchanges yet do business in Colombia might benefit from the regulatory action. We'll keep an eye on this.
... Dispatch continues below ...
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InterBolsa handled almost a third of all trading activity in Colombia. Its ETF partner is Global X Funds of Manhattan. Global X operates exchange traded funds that represent country indexes -- among others, Colombia and Brazil. InterBolsa and its parent also have operations in Brazil, Panama, and elsewhere in Latin America. As one of several gold prospector CEOs told me this morning, "This is not just bad or very bad. It's #$@%# real bad."
The Global X/InterBolsa FTSE-20 Colombia Fund, an ETF, is up about 70 percent since January 2010. Colombia's economy and currency, the peso, are among the best-performing in Latin America and among Second World nations. It is my favorite nation outside of Tiburon, California. I expect extreme fallout from the seizure in coming days, perhaps linked to exchange-traded funds in general or to proprietary trading.
FAMILY EVENTS: I will be meeting the CEO of Gran Colombia Gold for a second time (Maria Consuelo Araujo likely does not remember the first time, at a crowded conference booth in Medellin, or Toronto, or Vancouver). Members of the The Calandra Report family are invited to a 5 p.m. cocktail and reception this coming Tuesday in Toronto. I will be there with several analysts and investors who are examining the company's recent gold and silver note financings.
Gran Colombia and Toronto bank GMP Securities this week closed a $100 million financing using gold notes backed by Segovia-produced gold in Antioquia, Colombia. I know some of the largest purchasers of the notes, whose capital raising will aim to build a mill at Segovia and reduce what plainly is an expensive operating cost of $1,200 to $1,300 per ounce.
Gran Colombia's El Marmato, as longtime TCR family members might recall, was the reason I started returning to Colombia in 2007. Marmato is one of the world's 20 largest gold (and silver) deposits, pegged as high as 20 million ounces when the entire mountain is factored.
Attending will be the Gran Colombia Gold CEO Araujo. Conshe, as she is called, was Colombia's minister of foreign affairs from August 2006 to February 2007. She also served as minister of culture from August 2002 to February 2006. She studied diplomacy and economics in Milano, Italia. She could be president of Colombia one day. Her influence has assisted Gran Colombia with the operation or purchase of El Marmato, Segovia, Zancudo, and other properties in Colombia. Who knows? Perhaps she also had something to do with Madonna deciding to appear at this month in Medellin and not the capital city of Bogota.
TCR family, I do not own shares or warrants of Gran Colombia (GCM in Canada), nor do I own the interest-bearing gold or silver notes. The silver notes trade in Canada as do warrants that are starting to look attractive below 10 cents. I am considering a tour of Gran Colombia Gold's Segovia operation in Antioquia this month. The cocktail party this week will be downtown in Toronto and, in Colombian style, offer what I think will be delectable empanadas and other fulfilling fare. Get an invite by e-mailing email@example.com. Tell them The Calandra Report sent you.
CONSOLATION: U.S. Global Funds's Frank Holmes the other day schooled us in the geometry of volatility. Holmes and his Texas company (GROW in USA) handle almost $2 billion in assets. Much of that is in resources and in equities of emerging markets. Thus shares of GROW rise and fall like a banshee devil cross-dressed as a lemur.
Holmes explains volatility -- sharp rises and falls in equities, gold, oil, and such -- in strict statistical terms, with his Canadian flair for drama. I owe our family a review of his latest rap, but until then, metals and metals equities investors might take note that "historically, if gold rises 30 percent over an X-month period, there is a 93 percent (or is it 98 percent?) chance it will retrace most of that move." And vice-versa. GROW has a 5 percent dividend right now and I am thinking of buying shares. Holmes is an active buyer of gold, silver, and metals equities and purchases on behalf of his mutual funds shares of coal companies and even those interest-bearing gold and silver denominated notes that we pointed to just above. More to come.
TCR'S ANOINTED FIVE: Colt Resources (GTP in Canada), Solvista Gold (SVV in Canada), Gold Standard Ventures (GSV in Canada and USA), Pilot Gold (PLG in Canada), and Seafield Resources (SFF in Canada). All others researched in these reports to our TCR family are highly speculative.
On price points for the anointed five, Pilot Gold and Seafield are within acceptable purchase limits at $1.65 and 14 cents Canadian, respectively. Our other three, Solvista, Colt, and Gold Standard, dwell well above our earliest coverage price points.
Still, those wary of dollar strength and gold weakness who wish to sell their Solvista shares with profits from 25 cents to 30 cents to the current level of 75 cents should be my guest. The shares failed to regain $1 Canadian a week ago even as CEO Miller Oprey visited potential investors in St. Louis, Texas, and elsewhere. That concerns me. I will hold personally and sell only if the shares go below 70 cents.
I saw Friday that a Peruvian unit, the same one whose increased stake in Antioquia Gold (AGD) has capped that Colombia operator's stock price, is now doing the same with Batero Gold (BAT in Canada). All I can say is that the group, Consorcio Minero Horizonte, or CMH, is by throwing premium cash at Canada-domiciled metals prospectors, effectively shutting down any stock appreciation. Just look at shares of AGD.
Batero operates next to Seafield Resources (SFF), which we research here at TCR and which is a holding, one of the anointed five. If you believe as I do that the Quinchia district of Colombia, on the other side of El Marmato, will one day produce untold riches for its operators, then the one with the potential for sharp price appreciation is Seafield. I own it, as we all know, at the current price.
Don't sweat the gold volatility, folks. As Mr. Holmes, a sometimes kick-boxer (so is Bob Dylan, by the way) tells me, "Learn to understand volatility. If gold falls 10 percent in a day, and it does that rarely, there is a 90-odd percent chance it will rise just as much later on. Buy it."
On another note, Holmes expects many long-short eqity hedge funds to have dissolved, evaporated, Fifi Goes Poof, by year-end or early 2013. He also sees merger and takeover consolidation among Colombian oil companies.
I am so in I am out of breath.
Personal purchases that in no way should be duplicated here in recent days include Cayden Resources, a Mexico prospector in the Guerrero Gold Belt, and Pacific Coal (PAK in Canada), a Colombia coal operator. As stated numerous times, I am increasing my holdings of all things Colombia-related if they are 1) cheap, 2) up to snuff on growth and assets, and 3) have folks on board I trust. I have not been to Cayden's nor to Pacific Coal's properties but I hope to.
I also am excited about the progress NuLegacy Gold is making on its Red Hill property drilling in Nevada. I also see Gold Standard Ventures (GSV) as being eminently buyable if the shares go below $1.55.
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