Charts of the day are...

....all about the Bolivian economy, starting with the answer to yesterday's quiz.

And as most of you correctly called, it is in fact Bolivia that has added record reserves since Dr Morales took over the country. Congrats to all the correctos, but special congrats to reader "JW" who got the right answer in like greased lightning. He wins a special prize that, due to the circumstances, must remain a secret. All I can say is "you got your wish, JW :-)"

Meanwhile, check up on other parts of the Bolivian economy, we see that money supply is largely under control....

Particularly good to see M2 flattening and even dropping off this year, the sign of a well managed currency. The practical result of reeling in M2 is that inflation is coming down quickly from last year's peak...

...with the double-digit days of 2007 and 2008 now very much a thing of the past. And I'd like to remind you that the gov't forecast for GDP growth this year is +4%.

I never cease to be amazed by the good job the Evo gov't is doing with its economy. This is, of course, why the robotic and idiotic English media never mention the subject when talking about Bolivia. It must pain them no end to compare the neat an effective macroeconomic policies of a coca chewing indio to the unmitigated disasters of countless blue-eyed whiteys that screwed their own country in return for a fat personal bank account. Hey Enders...try reporting some facts next time, dumbass racist apologist.

Charts of the day are.....

....these. They come with a message.

Click to enlarge

Click to enlarge

Preserve Your Capital.

Charts of the day are....

.....the main regional stock markets 12 month charts.

It's easy to do this because this bloomie page is a nice way of keeping up with indices in the Americas. Nice on the eye and quick reference stuff. But put next to each other, we notice the shape of each index:

Brazil

Argentina

Mexico

Peru

Colombia

Chile

There are variations of course, but the general shared theme of "big sell off, consolidation, recent rebound" holds true for them all. As for differences, the bigger markets featured in the top three, (Mexico, Argentina, Brazil) seem to have lagged the smaller markets at the bottom (Peru, Chile, Colombia). As for the quickest to recover, it's not much of a surprise to see Chile at the top but Colombia is right there with Chile, too. Considering the structural weaknesses in the Colombian economy that's quite surprising.

Charts of the day are.......

....copper, zinc and lead, last 24 hours.

Usually the shortest-term chart isn't so interesting (for me at least) but today's Kitco versions, especially the copper, have that B.A.S.E. jumping look about it. Be careful out there and remember at all times that we're still in a bear market. Here's the zinc action...

....and here's the lead (Pb) situation

Cocaine: Like Charts?

Plan Colombia and Beyond got lots and lots of charts. Check out the article "A compendium of drug-war statistics" because it's all you need to read on the raw numbers of the whole issue.

Applause deserved for this simply excellent resumé of the Andean cocaine sector, including UN and US numbers for Colombia, Peru and Bolivian production. I'm not going to paste any of the charts here because they're better seen all together, but I will indulge by posting PC&B's concluding paragraph as it's one with which I wholeheartedly agree.

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"All of these metrics indicate clear failure, despite heavy U.S. and Colombian investment - in money and lives - in a decades-long effort to reduce cocaine supplies coming from Colombia. The argument in favor of a new drug policy could hardly be stronger."

Evo's Bolivia is Combatting Narcos better than the DEA ever did

So much for the DEA. Here are the solid statistics that show how Bolivia has increased drugs interception and confiscation since the DEA were thrown out of the country.

Yes, that says 'increased', gringos. Read on.

Click to enlarge

This top chart shows the amount of cocaine confiscated in Bolivia every year since 2000. The 7.19 metric tonnes so far this year is right on schedule to match the 2008 totals. Remember that the DEA were thrown out in 2008. Since that time drugs interceptions have clearly rocketed.

On to the perhaps even-more impressive bottom chart. Although cocaine is the headline drug of Bolivia, the country is also a big marijuana-growing area especially in the eastern provinces of Santa Cruz and Beni. This second chart shows the really impressive job the Bolivia FELCN anti-narco police force has been doing against the marijuana traffickers since the US DEA left town. In the first three months of 2009 Bolivia has already confiscated more marijuana than in the whole of 2008, in itself the all-time record year. Again, it surely makes you wonder what the DEA was doing all this time, doesn't it?

Oh, and by the way, since January 2008 the FELCN has grounded nine light aircraft used by the drug scum out of commission and locked away 4,363 people, too. All details from the relevant website right here.

It's strange that left to its own devices, Bolivia (as it said it would) has become far more effective in the fight against drug trafficking. Remember that the USA took away the ATPDEA preferential trade deals in late 2008 because it said it wasn't doing enough in the so-called "war against drugs", but even without trade deals and DEA leadership, Bolivia is doing a far better job than at any point under the US anti-narco lead. As the Vice Minister in charge of operations, Felipe Cáceres, said yesterday:

"Despite the fact that the opposition and media want to discredit the work of the FELCN, the national government is hitting this illicit activity hard. "The neoliberal governments that protect nacrotraffickers and repress coca producers ran between 3,000 and 4,000 operations every year, something that doesn't happen with this government that, under its policy of zero cocaine and zero illegal drugs, is leading a massive struggle against the people and family clans involved in narcotrafficking, and with positive results."

Seriously, it's about time people started asking the DEA exactly what it was doing all this time in Bolivia and whether, as both long-standing rumours and the recent statistics indicate, the DEA really was part of the trafficking problem and not its solution.

And what are they doing in Colombia?

Charts of the day are.......

......all about copper (and supplied by those friendly dudes at kitco).

Here's the 60 day copper chart that includes this morning's action in London that sees it at U$1.61/lb. As we can see, this strong upmove is not the first this year but it does come (yet again) off the U$1.45/lb level that's become the baseline in 2009 so far.

The reason for the latest optimism is basically the Chinese government over the weekend and its forecast of 8% GDP growth in 2009. Otto sez "hmmmmmmmmmm". Regarding exports, they might grab all the headlines on this side of the Pacific but they haven't contributed much more than 3% to the Chinese GDP growth figure in the last few years (I checked). So thinking about the 10% to 12% recent yearly growth figures and sticking a finger in the air, if The People's Government really pulled out all the stops 8% GDP growth in 2009 is technically possible, I suppose. But it would be one helluva internal stimulus and kinda makes me wonder just how many empty apartment blocks they want in their cities. On balance it's difficult to see China coming in at 8%, no matter what they might do. Even 5% would be chunky enough for me, given present conditions.

Let's just point out in passing that copper is a good barometer for China growth. They need 4.5 times more copper imported than they produce themselves, biggest import/export ratio of any base metal shipped to China by quite some distance. So with that in mind, let's check the longer price chart again:

The above chart is the main reason why iIm not getting hot under the collar about copper yet. U$1.60/lb is a help for the producers for sure (go CS.to!), but there will be no repeat NO new project funding for the greenfields while the spot price begins with a "1".

Another thing that has perked up spot prices is the slight drawdown in warehoused copper. We can see the LME figures in this chart......

...and that's another small positive in the mix. The general market thinking is that China is stockpiling at these low levels. That may well be true, but let's again check the longer chart and get some context on the post Chinese New Year drawdown.

Yeah, context sucks, doesn't it? That, gentle lector, is a boatload of surplus in anybody's book.

Charts of the day are...........

......three charts that compare Southern Copper (PCU), Freeport McMoRan (FCX) and the Philadelphia Gold and Silver Sector Index(XAU). First here's the ten day chart, and the recovery in all three is clearly marked.

Then we have this one that shows the 12 month evolution. This one suggests that FCX is the place to be as it's the most beaten up of the three.

You'd have thought that FCX, with its copper-plus-gold product mix, would have survived the last few months better than the heavily copper (and moly, with some minor credits) PCU, but that ain't necessarily so, Joe.

Finally the long five year view. This one shows that owning gold stocks from late 2003 to late 2008 has been (dare I say this out loud?) a zero sum game.

It also shows just how high PCU flew after it had been discovered by the market.

So what's the bottom line here? Well draw your own conclusions, but I think there are several things to take away from this chart study. Here are just four of them:

• PCU compared to the others on the long term chart shows the value in picking good stocks at the right time. It also shows how even the best can fall back if the underlying market sucks.

• The one year chart shows how gold stocks have held up better than base metals stocks. This stands to reason and is part of the 'preservation of capital' drum I've beaten ever since this blog started in March.

• The 10 day chart shows that the breath of life is being blown into all miners, not just the goldies.

• But maybe the most important thing to note is how you can favour XAU, then PCU, then FCX just by changing the timescale of your chart. A great example of the biggest trap in charting. This is the thing that puts me off blowhards that say charts are the way the truth and the light. Charts are like statistics; if desired, you can pick and choose the one you want to make your preconceived point. The charts don't lie, but the people who write words around them certainly do. This is why I call TA (mostly) mumbojumbo and this is why a good chart-reader is as skilled as a good fundamental analyst (and also just as rare).

Charts of the day are...........

...24 hour and 60 day spot copper.

Wow, the US Congress has just laid us a beautiful trade (for those of us in cash, anyway). Because if copper rallied then failed due to the Detroit bailout plan and last night's backfiring.....

......and The Hawaiian has made is clear as a bell that he's going to save them creaking carmakers (and check the dude's statements.....this isn't some wild OttoGuess here) then copper will rally in the same style all over again.

It's not often we get to see a glimpse of the future. If you don't take advantage of this one come the right time I suggest you stick to time deposits going forward. The only question left is "when to buy"; let's see how this episode of the soap opera pans out. First part is to let the headless chickens and shills do their job.

Tin Foil Hat Spam and Jim Willie

A long-ish post, and it's possible that part two is more interesting to you than part one so that's why I've split it up. Here we go.

Part One
One of the nice things about this blog is the mail I now swap with an impressive cross-section of people (and a good % of mailers are wise enough to disagree with me but keep to the spirit of good, friendly debate). One of the boring things is suddenly being included in an unsolicited mailing list, and one such example happened last night. Some guy with the apparent name 'Randall' decided to include me in his spam sent to various others (quite a few recognizable names on his list) which urged us all to go read an article written by a guy named Jim Willie.

So just for once I decided not to immediately delete. Just for once I sent "Randall" a reply, asking him who he was. He very quickly replied with a smartass comment that included my real name and "and who are you?". So I sent him this:

"Allow me to explain; the person who sends unsolicited mail is the person who should explain himself. The addressee is under no obligations.

Now, let's start again: Who are you, and why are you sending me mails that i didn't ask for? This time, either answer sincerely or simply don't answer."

He didn't reply. Fair enough, I gave him the option. But I'd mention two things right now:

1) If Randall spams me again I'll publish his e-mail address on the open web. From there the spambots will pick up on it and I'd guess his mailbox will suddenly become very popular with people who'd just love to sell him a penis enlargement kit.

2) Sure Otto Rock is a pseudonym (says it out loud on my profile), but I've never made my real name an amazingly secret secret, either. In fact from the beginning of this blog I've laid a couple of internet breadcrumb trails to my real identity. And quite rightly, 99.9% of people don't give a damn as to who I am. FWIW, I like the dynamic of the pseudonym here, as it allows me to mentally separate this blog from my 'real life' and job. Every now and again I've received a mail asking me for my real name, and I've always supplied it (to the ones who don't come across as unhinged in mails, anyway). So Randall, your pathetic attempt at shocking me (that could almost be construed as blackmail) is a far greater reflection on you than it is on me.

Part Two
So on to the meat of the program. After being bugged by Randall and his link to this Jim Willie, I thought "well, just for once let's see what it's about anyway" and clicked over to his note, entitled 'Calling US Bonds Home' (I'm not going to link it here., but you can find it on kitco if you want to read it yourself...it comes with three exclamation marks in the title). What I found was a TA-loving goldbug tinfoilhat raver who can put together a train of logical ideas about the decadent society in which we live and how we're all gonna die and stuff but was so bad at forecasting that he probably couldn't predict tomorrow's sunrise.

It seems Mr. Willie likes his charts, so after reading his Technical Analysis-based forecasts for the days and weeks to come, I thought it'd make a lot of sense to have a look at how he's been getting on recently. First, here is how gold has performed in the time period:

Gold price, May 2007 to date (click to enlarge)

Now, here are the charts from five of Jim Willie's previous articles in this time frame chosen at random (honestly, I got bored reading them after five episodes and there are dozens more to choose from) ......

....and be it May, June or July...

....and as you can see.......

.....we can certainly call the guy consistent....

....because he's consistently bullish on gold.....

.....and consistently wrong. In fact, if I'd known about this guy previously I could have made a bundle by using him as one of the world's foremost contrary indicators.

The only question left in my mind is "Who's the dickhead?". Is it our man Jim for being so badly wrong all the time, or is it people like Randall who pay this guy subscription fees and praise him to all and sundry? My best guess answer is "both", but only one of them is getting rich from this total BS analysis.