Five years of gold and copper

Today's chart is a kind of state space diagram obtained by plotting the gold price (dollars per ounce) against the copper price (dollars per pound).

There are a couple of regions of pitched battle outlined in blue; the first lasting about 18 months, and the second going on about two years (with the little tail poking out the back).

Overall the graph resembles the dogs in the following:

Operation Spectrum

In the last few days, I have gotten a number of hits on this post. It seems that the Marxist Conspiracy arrests of 1987 have been a topic of much discussion in the wake of the death of Lee Kuan Yew.

In my blog posting I gave the impression that the entire government was in favour of detaining the so-called Conspirators without trial. In this article, we learn that at least one Cabinet Minister resigned in protest of the government's actions. I applaud his courage.

More on the "Marxist Conspiracy" can be found here.

Tear down this wall

On the way to work the other day I found these guys busily knocking down a wall.

Early the next morning it looked like this.

The power of manual labour. And all for us to be able to see electric trees.

Spring time in Henan

Neat things

These.

They are 2 g wafers of gold, about the size of paper money bills, sealed in plastic. They are flexible, and are sold at local banks in China at a price a little less than double the value of the gold. They look to be stamped rather than "printed" as the Valaurum bars.

USDX vs gold indicates inflation not yet dead

I have been plotting the US dollar index against the US dollar gold price for some time, looking for a sign.

Since about Hallowe'en, the graph of USDX against gold price in USD has suggested deflation, as both parameters were increasing. I have previously argued that this behaviour benefits gold miners outside the US, as the number of US dollars they get for their product increases along with the purchasing power of those dollars.

In the past couple of weeks, the graph has reverted to the historical norm, wherein a rising US dollar is met by a falling dollar price for gold.

The blue line represents the deflationary trend discussed here and here, and the gold hyperbolae are isoquants, described here and here. An isoquant is a locus of points where the product of the USDX and the USD gold price is constant. The "traditional" behaviour of gold with respect to the US dollar is for the system to evolve along an isoquant--with the gold price rising as the US dollar falls and vice versa.

In the graph above we have plotted the isoquants for the 1000 and the 1150 level. The 1000 level has been important in the past. The initial rise in the gold price in 2010-11 began by migrating along the 1000 isoquant level, and the collapse in gold price in 2013 resulted in the graph bouncing several times off the 1000 isoquant (and penetrating it slightly twice).

Over the last few weeks the system has been moving along the 1150 isoquant. The 1150 isoquant has had some small influence on the system in the past--there is a knot just below the 1150 isoquant as the gold price rose sharply in 2011, suggesting that 1150 was a difficult level to break above. Similarly, during the collapse in 2013, the curve bounced twice off the 1150 isoquant before running down to the 1000 level.

In the last few weeks, we have seen what looks like a transition from deflationary behaviour to a more traditional behaviour in which gold acts as the "anti-dollar". I don't think this represents a sea-change--I still think there is more deflation to come. But we might see a change in behaviour for some time before deflation returns.

As noted before, deflation was temporarily overcome by the various central bank interventions since 2010. We then had over four years without deflation, before it re-established itself late last year (at least in this index). It is unclear whether we are seeing the result of a new intervention, which will once again probably be temporary (but this could be a long time). Alternatively, we are seeing a battle between investors who see inflation and those who foresee deflation, with the inflationistas holding the better hand, for the moment.

Online banking in China

Online banking here carries a level of security so high, I'm not sure I'll ever be able to use it.

Went to the bank to set it up. The usual struggles with an acceptable user name and password. But that isn't enough. You have to supply the bank with your cellphone number. During a transaction, after entering your name and password, the bank will send another number to your cellphone, which you have to enter into the correct box on the webpage (which is all in Chinese).

After that you take your e-banking key, (shown below) and enter the number it is showing into another box on the website.

The number changes every couple of minutes. There doesn't seem to be a pattern.

If you are able to navigate all that successfully, you may be able to view your account online.

The last PDAC thing

. . . is this tag I got at the Chilean booth. I don't know if it is supposed to do anything.

Everyone in the wine line where these were handed out was stumped by them. It looks like it is a catalogue, but there is nowhere to read anything. It looks like one of those keytags you hang by a lanyard around your neck. The whole card is quite substantial and could be carrying data in some format, I suppose.

PS. I'm back in god-damned China.

PDAC, part 2

A bit of a trying day today. It seems I am being invited on to somebody's Board of Directors, but until a formal offer is made there seems to be little point in going on about it. I was asked to identify a couple of projects or small companies for purchase by private money. I have a line on some money for a project.

Then I spent a lot of time hanging around the Chilean booth, waiting for wine and empenadas.

 Instead of going to the usual drunken company parties, I went to a reception organized by the government of India.

Unfortunately, there were too many dull talks and it took too long to get to the part with the drinks and the food, so we went to the Argentinian reception instead . . .

. . . which was a lot more lively. But after a few drinks, I suddenly found all the dancing couples depressing--probably because I met my wife at PDAC years ago. As I recall, there was a lot of dancing back then, too.

PS

No complaints about the swag this year.

PDAC 2015 part 1

The investors exchange was pretty dead in the morning.

No worries about broken toes here! But things picked up somewhat in the afternoon.

There is a lot more space than usual in the investors exchange, due to all the missing booths. There are a few more breaks in the rows to allow traffic as well as a little snack bar, which I never recall seeing before. There were a lot of booths which would normally have been in the trade show section, which is full to overflowing.

There was even a large contingent of trade show booths in the north building (where it used to be years ago), as well as the usual large area on the 800 level. And as I mentioned above, it almost took over a complete row of the investors' exchange. I haven't quite wrapped my head around what this means. I remember working an investors exchange booth back in 2002 and 2003 when the conference was so full that not only were there many additional conference rooms filled with mining company booths, but quite a few of us were put in the trade show, which really cut down on the number of questions I had to answer that year.

So raising money for mining projects is still pretty hard, why are there so many more service companies than usual? Is it a sign of desperation? Or is it a sign that there is a lot of innovation in the sector (because I am seeing a lot of new processing/interpretation services being offered)?

Once again there seems to be a lot of interest in uranium (at least in the company presentations).

Standing room only in the afternoon uranium sessions. I mean I went in there to take a nap, and not only couldn't get a seat but it was so stuffy I was ready to completely pass out by the end of the Denison presentation. I managed to make it to the precious metals room, where Silver Standard was presenting. The room was mostly empty.

Wandering the Investors Exchange did give me a line on some work and a potential financing for an African project (from different booths).