Friday, August 31, 2007

Google GOOG and coming Crisis.

From Economist:
"It is rare for a company to dominate its industry while claiming not to be motivated by money. Google does. But it has yet to face a crisis"
"If it goes wrong, how? Beyond its attempts to expand into new markets, the big question is how Google will respond if its stunning success is interrupted. “It's axiomatic that companies eventually have crises,” says Mr Schmidt. And history suggests that “tech companies that are dominant have trouble from within, not from competitors.” In Google's case, he says, “I worry about the scaling of the company.” Google has been hiring “Nooglers” (new Googlers) at a breathtaking rate. In June 2004 it had 2,292 staff; this June the number had reached 13,786"
"Yet for some on the inside, it can look different. One former executive, now suing Google over her treatment, says that the firm's personnel department is “collapsing” and that “absolute chaos” reigns"
"Another Xoogler, who held a senior position, says that by trying to create a “Utopia” of untrammelled creativity, Google ended up with “dystopia”. As is its wont, Google has composed a rigorous algorithmic approach to hiring, based on grade-point averages, college rankings and endless logic puzzles on whiteboards. This “genetic engineering of their workforce,” he says, means that “everybody there is a rocket scientist, so everybody is also insecure” and the back-stabbing and politics are reminiscent of an average university's English department.
Then there is the question of what all these people are supposed to do. “We kind of like the chaos,” says Laszlo Bock, the personnel boss. “Creativity comes out of people bumping into each other and not knowing where to go.” The most famous expression of this is the “20% time”. In theory, all Googlers, down to receptionists, can spend one-fifth of their time exploring any new idea. Good stuff has indeed come out of this, including Google News, Gmail, and even those commuter shuttles and their Wi-Fi systems. But it is not clear that the company as a whole is more innovative as a result, as it claims. It still has only one proven revenue source and most big innovations, such as YouTube, Google Earth and the productivity applications, have come through acquisitions. (S)
In practice, the 20% time works out to be 120% time, says another Xoogler, “since nobody really gets around to those projects for all their other work.” The chances of ideas being executed, he adds, “are basically zero.” What happens to the many Googlers whose ideas are rejected? Once their share options are fully vested they consider leaving. The same phenomenon changed Microsoft in the 1980s, when allegedly T-shirts popped up saying FYIFV (“F**k you, I'm fully vested”). Already some are going to even “cooler” start-ups, such as Facebook or Twitter.
This week George Reyes, Google's finance chief, said he would retire. At 53, he is a multi-millionaire. Mr Reyes has maintained the company's policy of not providing guidance to Wall Street on future earnings, although his comments on growth prospects have moved its share price."

Thursday, August 30, 2007

Google GOOG WEB 2.0 Bubble is going to burst with Subprime mess.

"After listening to the Bankrate conference call, our conviction is increasing that the mortgage mess is the canary in the coalmine for a cyclical bust in online advertising"

We believe most analysts are severely underestimating the impact the mortgage collapse could have on online advertising spending.

Add these two to Slowing Growth in Q2 2007:

Google GOOG Stock is sitting right on the support with Bearish Target 438.

CEO of Lundin Mining LUN.TO LMC Karl-Axel Waplan, told Reuters the base metals producer sees buying opportunities.

"Elsewhere, the chief executive of Lundin Mining (LUN.TO: Quote, Profile, Research), Karl-Axel Waplan, told Reuters the base metals producer sees buying opportunities in the wake of recent market turmoil, but declined to give specifics."

Rio Raises $40 Billion in Loans for Alcan Purchase

Miners still can get money for expansion. It is very positive news for all sector. Once the dust will settle expect new wave of consolidation. Strong, agressive companies with a lot of potential will be the target. I think now you recognise Lundin Mining profile.

Tuesday, August 28, 2007

Lundin Mining LMC shareholder buys eight million shares

Stock has retested today recents Lows and is ready for Value Play.

Lundin Mining shareholder buys eight million shares
2007-08-28 14:48 ET - News Release
Mr. Aksel Azrac of Ellegrove reports
Ellegrove Capital Ltd., a Barbados resident company, through its joint actors, has acquired eight million common shares of Lundin Mining Corp.
As a result of this acquisition, Ellegrove together with its joint actors, hold as at the date hereof, a total of 59,614,854 common shares which total holdings represent approximately 15.2 per cent of the issued and outstanding shares of Lundin Mining.
Ellegrove and its joint actors acquired the securities of Lundin Mining for investment purposes only and not for the purpose of influencing control or direction over Lundin Mining. Ellegrove and its joint actors will, however, review its holdings in Lundin Mining from time to time and may increase or decrease its position as future circumstances dictate.
Ellegrove is owned by a trust whose settlor is the estate of Adolf H. Lundin.

They were buying almost every single day in this downturn:

George Reyes To Retire As Google CFO

Ooops, something happening?! Normally if CFO is "retiring" new one will be already found, what is really going on?
"MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Google Inc. (NASDAQ: GOOG - News) announced today that George Reyes has informed the company of his intention to retire as Chief Financial Officer. Reyes indicated that he will remain to assist in the search for a new CFO and to assure an orderly transition, which Google expects will occur by the end of the year."
Do I smell ENRON here? Or maybe Mr Reyes invested in ABCP couple of Google Billions of cash?
In any case it is not positive sign for the company experiencing pressure of "Law of Big Numbers" and its inability to sustain implyed growth rate.

There is never one cockroach in the is only beginning.

Nemont Mining NEM Buy out Rumor is Lundin Mining Next LMC?

My calls on NEM are flying today:

If buy out is Real it will ignite the whole sector.

Lundin Mining could be Next:

Google and Subprime crunch - it is just the begining.

Google's slowing growth and falling earnings with unsustainable valuation at recent price is just the beginning of fundamentals deterioration in the coming recession. advertisement budgets will be cut first when companies will brace themselves for tough economic conditions.
"Sixteen per cent of all online advertising comes from financial services companies, making it the second biggest source of advertising behind the retailing sector, said Sandeep Aggarwal, an internet analyst at Oppenheimer.
Companies that lent to subprime borrowers relied heavily on the internet to attract customers, concentrating the effect of the meltdown, said Rick Sizemore, an analyst at Multimedia Intelligence.
According to data from Nielsen/NetRatings, mortgage lenders Countrywide and Low Rate Source were two of the 10 biggest online advertisers in the US in July."

Sunday, August 26, 2007

Collapse of US Dollar is the trade of the decade.

Dubai gold sales rise 33% in July despite high prices

Who is buying, who is selling...why they are not buying ABCP instead of gold?

How Gold and Silver stocks will behave in new Bear Leg down in Nasdaq?

Just look at this chart: after initial sell off Goldies were quick on recovery path and outpaced Nasdaq during correction and following rebound. All it happen on the face of continuous Fed rate cuts:
This old post is still valid:

Silver Seven Juniors from Summer 2006 and few research ideas.

This is Silver Seven from 1 year ago June 2006, just before the move up. For your home work few ideas at fire sell prices: Mines Management MGN financing closed, repermitting the mine in Montana; Avino Gold and Silver Mines ASM.v new high grade drilling results; Continium Resources CNU.v continuing progress with Fortuna mines and its own drilling programme in Mexico; Silverstone Resources SST.v new Silver Wheaton SLW in the making, after financing, below Lundin Mining deal price limit; Sterling Mines SRLM.ob financing closed, obtaining Canada listing and on the road to production this year; Minera Andes MAI.v close to production with new discovery in Los Azules in the making; Copper Fox Metals CUU.v below financing, funds available to make FS; Baja Mining close to production Copper Mexico story; Mantle Resources MTS.v, Sunridge Gold SGC.v, Sanu Resources SNU.v Lundin Mining strategic investments, all three below recent financing; Rainy River RR.v recent discovery, below financing. Before wasting your time (and money) consider for yourself:
1. Is it end of the world?
2. Subprime crises is building confidence in US based paper assets?
3. China needs its 1.3 trillion in USD to pave the new roads and to fire power plants?
If your answer Yes to at least one of the above, sorry for your time.

Silver Seven Juniors Chart is at Buy

It is always dark before the dawn. Nobody believes in Gold and silver any more. All weak hands and those reckless to be on margin are wiped out. All charts "are broken" and new bear market in goldies is pronounced. If you are first time here - welcome to the club: we are hitting Major bottom in goldies and silver juniors, only those who believe in fundamentals and are not squeezed by margin left - it is solid foundation for new Bull Leg Up. Look for those who just recently made financing and are trading below it: they have resources to deliver results. Next Bull Leg will be acquisition driven and juniors with solid management, properties of merit and sufficient cash will benefit most. If FED is so scared that came to save the market after recent modest plunge in general markets the financial system is rotted to the core. Look at all those European, Australian and Chinese subprime victims of the latest and biggest export from USA: IOU with AAA rating backed by "Liars loans". Who would believe in any rating now? Confidence in USD based assets and USD itself is damaged worldwide. Massive exodus from all that paper assets will bring USD down and part of all those money will find its way into gold, silver and commodities story. Just a fraction of high risk funds availible will ignite junior mining sector. Expect a lot of volatility, retest of recent lows and very explosive move up. For refference I will provide chart from year ago.

Majors has reduced exploration budgets: "Juniors will explore for us"

In the mineral world now driven by aquisitions, there is no time for exploration effort, Juniors with the best properties will be winners in the next leg of Bull Market in things:

Junior mining companies and World Exploration Trends

With a record exploration budgets recent prices of exploration companies are very attractive Entry point:

Friday, August 24, 2007

Lundin Mining LMC should benefit from "Fly to Quality" or even become an Aquisition Target.

Known for his own aggressive strategy could Mr Lukas Lundin and his Lundin Mining company (LMC, become a pray in recent consolidation game? This question is not so rhetoric in the industry after turmoil in the market. Recent sell off shaved out 26% or more then 1 billion in Lundin Mining market cap just in a matter of few weeks (all amounts are in US dollars). With solid cash position, diversified asset base with primary producing mines in stable Europe and explosive growth rate Company is becoming very attractive acquisition target. According to conversation with VP and CEO of the company MR Andres Haker Lundin Mining does not have any exposure to Assets Backed Commercial Paper, as of latest reported date Company has 390 million dollars invested in short term investments with majority outside of Canada and all these investments are liquid and Company has not experienced any problems with their withdrawals. After recent acquisitions of Tenke Mining and Rio Narcea Lundin Mining became emerging mid-tier producer with Zinc, Copper, Lead and Nickel portfolio with majority of mines in stable Europe. This asset portfolio is spiced with Silver, 25% in one of biggest in the world developing Copper and Cobalt mine in Congo and 49% in one of the biggest zinc deposits Ozernoe in Russia. Add to the basket investments in few promising juniors and record earnings last quoter. The Company according to Reuters data has ultra conservative Long Term Debt to Equity ratio at 0.02 vs 0.38 in the industry and 0.61 in S&P 500, which is a prise in recent market conditions. Just raising debt to industry's level could fuel LBO of the company. Financial strength of the company measured in Quick ratio is almost double of industry level at 2.87. At yesterday closing quote of $10.81 Lundin Mining is trading at P/E=8.55 vs industry's 12.14 and 19.52 of S&P 500. Its growth after recent acquisitions is really impressive: 183.3% in sales and 303.3% in earnings! Business model is supported by healthy Gross Margin of 67.3% and Operating Margin of 44.1%. It is 52% and 26% above industry averages respectively. Lundin Mining growth story with solid financial foundation should benefit in the case of "fly to quality". With shifting demand to China, India and other developing economies its customers are not exposed to credit subprime collapse, falling US Dollar will support commodities boom according to recent BHP Billiton report. Smart money are still waiting on the side according to industry insiders in Canada. Should they find the full Lundin Mining story company will benefit enormously. On the other hand with recent stockpile of cash mostly unaffected by exposure to commercial paper industry majors will start their move in the consolidation game once the dust will settle. Just consider Freeport-MacMoRan Copper and Gold (FCX) with 2.o billion cash position. FCX is already holding majority position in Tenke Fungurume Copper/Cobalt deposit in Congo, which is promising to become one of the biggest mines in the world starting operations in 2008. Lundin Mining with Lundin family holding under 20% will become very attractive target. Just recently Lundin Trust has increased his position by 1 million shares at Cad 13.2. With insiders buying and industry spotlight company is becoming one of the interesting commodity play for institutional and retail investors. Desjardins' take over price of CAD 25.00 for Lundin Mining based on Spring aquisitions value looks like adream now, but time is flying fast and such bargains a not forever.

Lundin Mining Does NOT Have Any Exposure to Asset Backed Commercial Paper: Cash position is Solid.

After all scare with Canada's Coventry fall out and few miners caught with illiquid assets in ABCP including majors like Cameco, shareholders of Lundin mining will be relieved to know that company has a solid cash position.
Resource Investor reports: "Several Canadian miners with exposure to the asset-backed commercial paper (ABCP) market could get hit hard if banks and trusts prove unable to pay up despite the flood of liquidity and credit easing provided by central banks around the world. The latest - and one of the largest - firms to announce its exposure is Cameco Corp. [NYSE:CCJ; TSX:CCO], which said yesterday it has about C$120 million of its C$332 million “portfolio”, or nearly two fifths of the total, invested in the short-term notes."
According to conversation with Andres Haker VP and CFO this morning Lunding mining does not have any exposure to Assets Backed Commercial Paper, as of latest reported date Company has 390 million dollars invested in short term investments with majority outside of Canada and all these investments are liquid and Company has not experienced any problems with their withdrawals. I have suggested that Press Release will be very helpful in this situation and Mr Haker assured that they will look into this matter again.

Wednesday, August 22, 2007

Royal Gold RGLD at Buy.

Newmont Mining NEM at Buy.

Gold - who knows it better than people producing it from Mud?

Gold dehedging hits record high in 2nd quarter: GFMS
Wed 22 Aug 2007, 5:51 GMT
NEW YORK (Reuters) - Gold dehedging hit a new high in the second quarter of 2007, with 5.2 million ounces (161 tonnes) removed from producers' hedge books compared with the first quarter, a quarterly study by precious metals consultant GFMS Ltd. released on Tuesday said.
The study, compiled by GFMS on behalf of Societe Generale, said that the outright elimination of two substantial hedge books, Newmont Mining and Lihir, led the reduction for the quarter. The companies reduced nearly 3.5 million ounces, accounting for nearly half of the total decline among all forward corporate gold sales contracts, GFMS said.
In recent years, mining companies have increasingly reduced hedges to take advantage of the rising bullion prices.
Spot gold was quoted at around $657 an ounce on Tuesday, compared with its 26-year high of $730 set in May 2006.
Total outstanding producer hedge positions was now 34.2 million ounces (1,064 tonnes) in delta-adjusted terms at the end of the second quarter, GFMS said.

Tuesday, August 21, 2007

Subprime crises and its victim USD: Gold ETF has reached all time high in Gold Holdings contrary to what Mass Media would like you to believe.

From Jim Sinclare site:

Subprime collapse of credit markets and its application to Gold, Silver and Commodities.CS

Imaging that you have 50 million CAD dollars in cash and blood bath in Junior mining stocks like we had last Thursday. Is it bad for you when "solid names" are selling with 30% off in one day? What has changed from Spring when the same guys were making private placements and YOU can not get it?! I had first hand experience when by the end of the day of financing announcement it was completely sold out to investors. Now the same stocks are selling below PP levels. Almost all juniors completed private placements in record numbers this spring using the opportunity of free flowing money. Now they are busy drilling and news of new discoveries and confirmation of resources are starting to come into the market and stocks are still going down? So you must be very happy with your 50 million - you can accumulate on fire sale the same stocks you have dreamed about last spring with 40-50% discount. Now imaging that you have not 50 million but 1.5 trillion like China. With this amount you will not be able to play in tiny juniors market but look no further then Lunding mining: emerging mid tier producer with Zinc, Copper, Lead and Nickel portfolio with majority of mines in stable Europe and spiced with Silver, 25% in one of biggest in the world developing Copper and Cobalt mine in Congo and 49% in one of the biggest zinc deposits Ozernoe in Russia. Add to the basket investments in few promising juniors and record earning last quoter. And this company now could be bought at P/E=7.9 and forward P/E=6.82? I would dare to say that even if tomorrow China stock market will BE closed completely, its economy will still need commodities for its growth. So recent situation with sell off in Real Things, metals, gold and silver is nothing more than dream for newly appointed managers of SAFE investment agency in China. With temporary bounce in USD triggered by margins calls on loans in USD they can start their duty of diversification from USD into Gold, Silver and commodities needed for their explosive growth. I think now nobody is talking about FED rate hike any more. Financial economy which is now constitute almost all economy in USA is in deep trouble due to sub prime collapse in credit markets, recent shake out in stock markets will deepen consumers wounds already hurt buy housing melt down and its ability to spend will deteriorate further. If you look at the history in 1998 with LTCM bail out we are facing not one but few Fed rate cuts in a row just in order to keep things together in the financial markets. With real inflation still going up real rate will be deep in negative territory like in 2002 and it will propel prices of metals, gold and silver up into a new bull leg. When central banks of Spain and Switzerland were busy selling gold it went no further then to Saudis. India, China and Middle East demand for gold is up in 2nd Q 2007 as high as 30% in Saudi Arabia case. So if you are not squeezed on margin and preserved your capital now it is time to shop for good names with solid management and resources which will be needed always even if USA will be in recession and China will close its stock market. I must add that when insiders are buying and you can get a better deal than their purchase price it is becoming even more appealing. Lundin family just recently in August bought one more million shares in Lunding mining at CAD 13.2, Sterling mining, Mines management, Copper fox metals, Mantle resources are trading below last private placements, Silver wheaton and Tanzanian Gold Royalty companies have taken the hit as well. They are effectively call options on silver and gold price respectively without time decay. New wave of consolidation in the sector will ignite the upside move and these sale prices will not be for long time.

Gold and silver stocks HUI Liquidation Panic is Over or it is End of the World?

I need to repost One More Time Very Important piece from May

To those who are listening: capital preservation is N1 priority now. CS
I am never saying SELL to my bullish calls: it is always up to you: listen to me, do your thinking and establish position and then sell when it is time. Time is different for everyone, but today I will call for Capital Preservation. Take profit and go to cash at least 30% within next week. Do not rush and destroy your markets, but if decided act boldly and timely and with limits, spreading your orders. Individual charts will be published later. Nothing has changed, but do not forget that we are not marring our stocks - they are the way to create positive energy in the form of capital available for new creations. I should share my positions at the moment for more transparent play: No technology stocks, no big names, puts on GOOG, QQQQ, builders, real estate ETF, first time unleveraged and has taken profit on 30% on my biggest winning position. Reason: I feel definitely uncomfortable with general markets and would like to be in different mode: not trying to get last 20-30% on run up, but to buy value when everybody will be in panic. My value is in commodities: markets are very nervous and any drop back in China because of apparent disaster in USA and its economy could send shock waves across ALL ASSET CLASSES. Downside: Gold and Silver on the wedge of break out, but I think this time it will be VERY Political, just look at gold sales by Central banks this spring. More shake out will come. Time to build cash and build new positions on every desperate sell offs. Check your positions one by one. Fundamentals, management, TA. Will you buy it now again? If all intact: keep. If you are not sure sell 30%. Take profit on those with big run. Kill leverage. We are in the Great Bull market and survive in it. If I am wrong and our juniors will be unshaken we will enjoy further run and build new positions in places where nobody is going, no hype and pump - just value. Remember my very expensive lessons: if you feel too confident, check your cash position - Sell Off is coming. The best strategy so far is to buy when nobody wants and hold if value unchanged or going higher with metal prices and new exploration results. Never go for 50%, thousand things could go wrong - you need very big cushion of Potential value in order that its Realisation by trustworthy team will protect you from downside. What is the difference with juniors? Commodities will be needed - no questions here, if you have resources in the ground which are economical and confirmed by reputation of the Team and Industry Insiders positions - you have value in any market. Nowadays this value is exceptional and you must be prepared for the Next Big Run. Take profit where maybe 100% profit left and go where your next 500% could be. If you can not find it at the moment read some books and think, think, think with capital intact new ideas will come...

Gold Stocks HUI P&F chart after recent liquidation Bearish Projection has been reached

Wednesday, August 15, 2007

Lundin family bought 1 million shares of Lundin mining more

According to insiders report Lundin family has bought via family Trust another 1 million shares at CAD 13.2 in Lundin mining on August 8th, 2007. So now we have some more credibility to my Buy issued few days ago. This unique company is combining assets all over the world in order to become one of the major players in commodity boom. This boom is far from over and now is the time to accumulate your favorite stocks of Juniors hit by waves of redemption's from hedge funds. First they are selling where the profit is and with low liquidity stocks are becoming just bargains.

Thursday, August 09, 2007

Lundin Mining time to BUY again

Daily chart is at Buy for Lundin Mining stock is right at the support level and today very strong candle is developing:

Gold is in very bullish CUP and HADLE formation

I am totally agree with following chart from JIM SINCLARE web site.
With mounting Subprime meltdown and threat from China to unload their USD bonds holdings USD has a very bleak future and Gold and Silver will make their way to defenite break out:
In July Swiss and Spanish central banks were selling gold and still they can not break the chart. It is battle without rules and stay safe without margin, accumulate good juniors which are on garage sale now, keep watching SubPrime: today French BNP is in trouble...they "can not price 3 of their funds"

Saturday, August 04, 2007

Google GOOG is a barometer of WEB Bubble 2.0

Formula is simple but powerfull: housing bubble/subprime dry out of credit avalible and liquidity; consumers are hurt; spending power is going down (housing, cars, big ticket items, consumer electronics); business revenue is going down - first cut is advertising; GOOGLE growth is going down, it already apparent fact for two Qs in 2007; crowd will be late as usual as it happened with subprime; overextended on margins positions will collapse forcing selling.
Some people are telling that correction is over - not until GOOGLE will correct, as it was sad here before 300.00 range is still rich valuation in recession.
Where to be? Not in financial economy but in real things, fundamentals of which are driven by law supply and demand and powerful rising of the new world.