• Tag Archives Mexico
  • Gold mine output turning down this year. Is Peak Gold with us? — Lawrie Williams

    The latest weekly Precious Metals newsletter from London-based specialist consultancy Metals Focus at last sees gold output growth grinding to a halt during the current year. Many commentators have been predicting this to happen almost every year since the metal price fell back sharply in 2011, largely ignoring new mega-projects already under construction and too far advanced to be dropped (like Pueblo Viejo in the Dominican Republic) and the industry’s propensity to switch to mining higher grades, where this was possible, to counter declining revenues. As a result of these trends annual global gold output has actually been rising over the past few years, albeit relatively slowly, but Metals Focus now sees this increasing output trend coming to a halt during the current year.
    And along with the halt in increasing gold output, the consultancy sees All in Sustaining Costs (AISC) beginning to increase again. The newsletter notes global AISC rose in Q1 2017, both quarter on quarter(+4%) and year on year (+8%), driven by a recovery in some key producer currencies (most notably the South African rand), the general pickup in the commodities sector (which is fuelling an increase in labour expenses and the costs of mine-site consumables) and an increase in sustaining capital expenditure (as the industry looks to adequately reinvest following a period of austerity).
    Indeed, Metals Focus comments that the annual supply of new gold (as opposed to recycled material) has grown by around 800 tonnes since 2008, an increase of around 25-30%. It puts this growth trend down to being driven by production increases in countries like China, Russia and Mexico coupled with a number of new mine startups across Africa (outside of South Africa) and a recovery in more mature mining jurisdictions, such as Canada and Australia. But now it sees this increasing production pattern coming to an end. Could Peak Gold, so beloved of gold bulls actually be with us at last?

    This post was published at Sharps Pixley

  • Remember When Ford ‘Cancelled’ That Plant In Mexico? Well, They’ve Just Moved It To China

    Back in January, Trump took a very public victory lap when Ford decided to scrap plans to build a $1.6 billion manufacturing facility in Mexico and invest in its Michigan facilities instead (we discussed it here: Trump Takes Victory Lap After Ford Cancels $1.6 Billion Mexican Expansion Plan As “Vote Of Confidence” In President-Elect).
    "@DanScavino: Ford to scrap Mexico plant, invest in Michigan due to Trump policies"— Donald J. Trump (@realDonaldTrump) January 3, 2017

    This post was published at Zero Hedge on Jun 20, 2017.

  • Argentina 100 Year Bond Sale 3.5x Oversubscribed

    When we previewed yesterday unexpected announcement that Argentina would join Mexico, Ireland and the U. K. in issuing a 100 year bond, just one year after emerging from its latest default, we said “we expected the potential yield of 8.25% to come down as the offering will likely be many times oversubscribed.” It was.
    According to Reuters, late on Monday Argentina sold $2.75 billion of a “hotly demanded” 100-year bond in U. S. dollars, and as expected the surge for yield resulted in 3.5x oversubscription: the South American country received $9.75 billion in orders for the bond, which in turn lowered the final yield to 7.9% with a 7.125% cash coupon, from the initial price talk of 8.25% in what Reuters dubbed an “otherwise low yielding fixed income market where pension funds need to lock in long-term returns.” Luckily for those same pension funds, they never have to worry about returns on capital as there is zero chance Argentina will not default again in the next 100 years.
    Meanwhile, courtesy of yield-starved investors around the globe, the Argentina government increased its overall 2017 foreign currency bond issuance target even more, to $12.75 billion from its previous plan of issuing $10 billion in international bonds, Finance Minister Luis Caputo told reporters in Buenos Aires, in large part to fund its soaring budget deficit. As Reuters notes, Argentina will tap international capital markets to finance a fiscal deficit of 4.2% of GDP. Caputo said Argentina has $2.6 billion in bonds left to be issued this year. The new paper could be denominated in euros, yen or Swiss francs. It is not clear if the remaining issues will be in 100 year or longer maturities.

    This post was published at Zero Hedge on Jun 20, 2017.

  • German Politicians Hammer the ECB, But Only to Get Votes

    They know: the Eurozone would plunge into a sovereign debt crisis all over again, only worse this time.
    By Don Quijones, Spain & Mexico, editor at WOLF STREET. These days it’s easy to tell when general elections are approaching in Germany: members of the ruling government begin bewailing, in perfect unison, the ECB’s ultra-loose monetary policy. Leading the charge this time was Finance Minister Wolfgang Schaeuble, who on Tuesday urged the ECB to change its policy ‘in a timely manner’, warning that very low interest rates had caused problems in ‘some parts of the world.’
    Werner Bahlsen, the head of the economic council of Merkel’s CDU conservatives, was next to take the baton. ‘The ongoing purchase of government bonds has already cost the European project a great deal of credibility and has damaged it,’ he said. ‘The ECB can only regain trust with the return to a sound monetary policy.’
    As Schaeuble and Balhsen well know, that is not likely to occur any time soon. Indeed, like all other Eurozone finance ministers, Schaeuble is benefiting handsomely from the record-low borrowing costs made possible by the ECB’s negative interest rate policy. But by attacking ECB policy he and his peers can make it seem that they take voters’ concerns about low interest rates seriously, while knowing perfectly well that the things they say have very little effect on what the ECB actually does.

    This post was published at Wolf Street on Jun 18, 2017.

  • Fear of Contagion Feeds the Italian Banking Crisis

    At first, deny, deny, deny. Then taxpayers get to bail out bondholders.
    By Don Quijones, Spain & Mexico, editor at WOLF STREET.
    Spain’s Banco Popular had the dubious honor of being the first financial institution to be resolved under the EU’s Bank Recovery and Resolution Directive, passed in January 2016. As a result, shareholders and subordinate bondholders were ‘bailed in’ before the bank was sold to Santander for the princely sum of one euro.
    At first the operation was proclaimed a roaring success. As European banking crises go, this was an orderly one, reported The Economist. Taxpayers were not left on the hook, as long as you ignore the 5 billion of deferred tax credits Santander obtained from the operation. Depositors and senior bondholders were spared any of the fallout.
    But it may not last for long, for the chances of a similar approach being adopted to Italy’s banking crisis appear to be razor slim. The ECB has already awarded Italy’s Monte dei Paschi di Siena (MPS) a last-minute reprieve, on the grounds that while it did not pass certain parts of the ECB’s last stress test, the bank is perfectly solvent, albeit with serious liquidity problems.

    This post was published at Wolf Street by Don Quijones ‘ Jun 16, 2017.

  • Nike Cutting 2% Of Global Workforce

    In a preview of more pain to come for US, and global, workers, moments ago Nike announced that it will soon be parting ways with approximately 2% of its 70,700 global workforce, or roughly 1,500 employees.
    Nike introduced the Consumer Direct Offense, a new company alignment, resulting in leadership and organizational changes as part of which the company would see an overall reduction in about 2% of the company’s global workforce to “streamline and speed up strategic execution.”
    In addition to the mass layoff, Nike is realigning its regional units as it focuses on driving growth in its most important markets and getting new products to market more quickly. Among the details:
    Cutting product styles by 25%, but will offer deeper selection of key franchises Aiming to cut creation cycle in half to speed new products to market Consumer Direct Offense program under NKE Brand President Trevor Edwards to focus on improving growth in New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, Milan Sees targeted cities accounting for 80% of projected growth through 2020

    This post was published at Zero Hedge on Jun 15, 2017.

  • Mexican Industrial Production Crashes In April

    Delayed blowback from Trump? Mexico’s Industrial Production crashed 4.4% in April – the biggest drop since Oct 2009 – with manufacturing dropping 1.7% after surging 8.5% in March.
    This is the 3rd MoM drop in a row (and biggest MoM drop since Nov ’15)…
    However, Manufacturing was not the worst of it as Mining plunged 9.6% YoY, Utilities declined 3.0%, and Construction tumbling 6.5%.
    Whether it is the recent surge in the peso or fears oif trade wars, this is a somewhat unprecedented and sudden downshift.

    This post was published at Zero Hedge on Jun 9, 2017.

  • Trump Talks Tough on Trade, but His Team Is Treading Lightly

    President Trump has called the Trans-Pacific Partnership deal a ‘rape’ of the United States. He has scolded Germany for being ‘very bad’ on trade because it runs a surplus. And in April he said that he was ‘psyched’ to terminate the North American Free Trade Agreement with Canada and Mexico, only to reverse course.
    Despite Mr. Trump’s incendiary talk, his top trade advisers are taking a more cautious approach to dealing with America’s trading partners, striking a more moderate tone than the president but still laying the groundwork for the changes he has promised.
    That more moderate tone has come as a relief to those who feared the Trump administration would swiftly usher in a wave of protectionism, while disappointing some people who hoped that a sweeping rewrite of trade deals would come in the administration’s early days.
    Signs of greater moderation were on display this week when Wilbur Ross, the secretary of commerce, suggested that the administration would actually try to build off some aspects of the Trans-Pacific Partnership trade agreement, or T.P.P., that Mr. Trump abandoned in January as NAFTA renegotiations begin this summer.

    This post was published at NY Times

  • Peso Pounded As Political Risk Re-Emerges In Mexico

    The Mexican peso tumbled more than 1% this morning, more than every other major emerging-market currency except the South African rand.
    Bloomberg reports that traders were anticipating a victory for the opposition Morena party in this weekend’s gubernatorial elections in the state of Mexico, according to Win Thin, Brown Brothers Harriman & Co.’s head of emerging markets in New York.
    And the peso is back at one-week lows

    This post was published at Zero Hedge on May 30, 2017.

  • Banco Popular’s Co-Co Bonds Plunge as Balance Sheet Chaos Revealed in Potential Forced Sale

    ‘This sales process is atypical, as the seller itself cannot at this point make a rough calculation of what the value of the entity is, and if they can’t, neither can we.’
    By Don Quijones, Spain & Mexico, editor at WOLF STREET.
    The current share price of Spain’s sixth biggest bank, Banco Popular, at 0.67, is just pennies above its lowest point ever. According to analysts at 20 different investment banks consulted by Bloomberg, the ‘objective’ value of those shares could be anything from 1.50 (Oddo & Cie) to 0.25 (Kepler Cheuvreux).
    There’s good reason for this uncertainty: Popular’s books are filled with impaired real estate assets that date back to before the collapse of Spain’s gargantuan real estate bubble. They are now in varying stages of decomposition. And the prices at which they’ve been valued on the bank’s books appear to have little relation with today’s reality.
    It now turns out that not even Popular’s management knows what’s really going on on Popular’s books.
    Representatives of Banco Santander and majority state-owned Bankia, the two banks studying Popular’s books to decide whether or not to submit a binding offer for the bank before the deadline of June 10, are having serious difficulties trying to understand Popular’s accounts, according to Spain’s financial daily Expansin. Although there is ‘total collaboration’ from the struggling entity, Popular’s management has not yet completed its own review of the impaired assets on the bank’s balance sheets and therefore cannot offer a precise valuation of the bank.

    This post was published at Wolf Street by Don Quijones/ May 29, 2017.

  • Mexico’s Economy Reels from a Blast from the Past

    Inflation suddenly takes off. ‘Green gold.’ That’s the new name Mexicans have given to avocado, one of the country’s staple foods and most important agricultural exports. Unlike real gold, the price of green gold is soaring, having more than doubled in the last year alone, to reach an average price of 71.4 pesos ($3.85) in Mexico City, according to data from Mexico’s National Institute of Statistics and Geography (Inegi).
    Avocado prices are soaring for a whole variety of reasons, including rising global demand. Mexico is the world’s biggest exporter of avocado, accounting for just under half of the global market. And that market is growing by the day, particularly in the U. S., Europe, and China. But there’s another reason why the price of green gold is rising in Mexico, and it’s much closer to home: inflation.
    After decades of trying to tame the tempest of rising prices, with a reasonable degree of success, Mexico’s inflation rate soared to 6.17% in May, as measured by the INPC, the CPI version used by Inegi. It was fueled largely by the rising cost of food and energy after the government hiked gasoline prices by almost one-fifth at the beginning of the year. It’s the highest inflation rate since April 2009 and over double the Bank of Mexico’s benchmark rate of 3%.

    This post was published at Wolf Street on May 27, 2017.

  • Stocks Jump As Dollar Dumps And Bitcoin Explodes To Record Highs

    Just because it made us laugh…
    As Bloomberg notes, the S&P 500 climbed for the third consecutive session as President Donald Trump’s trip to Saudi Arabia netted deals that lifted defense shares. The euro remains firm having pared gains from Chancellor Angela Merkel’s comment referring to the single currency as ‘too weak.’ The 10-year Treasury yield climbed above 2.25% while gold rose and crude climbed to the highest in a month as Saudi Arabia said all producers agree on extending output cuts. Brazil’s real trimmed losses after the top court suspended its ruling on President Temer, while Mexico’s peso gained as interest rate differentials temporarily overshadow NAFTA concerns.

    This post was published at Zero Hedge on May 22, 2017.

  • Gold market rigging sneaks into Bloomberg profile of mining entrepreneur Giustra

    Frank Giustra likes to see big where others think small.
    The Canadian mining maverick’s latest target is a subterranean patch of red earth in southwestern Mexico. In January his new undertaking, Leagold Mining Corp., bought the Los Filos mine from Goldcorp Inc. for $350 million. It wasn’t the open pits churning out 200,000-plus ounces of the precious metal that caught this attention — it was the untapped deposit stretching for roughly 600 meters below.
    ‘We just looked at it and thought: This is a jewel,’ Giustra, 59, said in an interview at his downtown Vancouver office, where a George Rodrigue blue dog painting hangs at the entrance. The plan is to use Los Filos to build ‘a major gold producer over the next two, three, four years,’ he says. ‘Unless the world changes dramatically, I think we’ll pull it off.’
    Giustra has a track record of finding the sparkle in the dirt. He’s used what he calls a grow-by-acquisition model to help build Endeavour Mining Corp. as well as a predecessor to Goldcorp, which is now one of the largest gold producers and Leagold’s biggest shareholder. In his spare time, he founded Lions Gate Entertainment Corp., which became one of the world’s biggest independent studios.

    This post was published at bloomberg

  • The Pillage of Pemex Turns Bloody

    Gasoline theft is now the second most profitable activity for Mexico’s criminal gangs.
    Mexico’s state-owned oil giant, Petrleos de Mexico, AKA Pemex, has spent the last few decades being pillaged and plundered from the inside-out. The state-owned giant has been financially bled to the verge of collapse by its swollen ranks of senior managers and administrators, corrupt politicians, shady contractors, and the untouchable, unsackable leaders of the oil workers’ union.
    Now, Pemex is being bled dry from the outside-in. Those doing the plundering this time include armies of amateur opportunists who live close to the major pipelines that crisscross the country as well as some of Mexico’s most ruthless and organized drug gangs. Thanks to these groups’ immunity, bought with bribes and death threats, Pemex is estimated to be losing 20,000 barrels of gasoline daily, with a market value of around $4 million. That’s about $1.4 billion a year.
    That’s enough to put Mexico among the top in the world for fuel theft. In 2015, over 5,574 illegal pipeline taps were found. Pemex’s response to the problem has only made matters worse. The company has tried to stop running ready-to-use fuels through its pipelines. Instead, it now carries raw products from refineries to storage terminals where they are processed and shipped out in tanker trucks. But instead of eradicating or reducing fuel theft, it has merely made it easier as stolen fuel is taken straight from Pemex’s storage facilities, where thieves siphon fuel by the truckload and simply drive away.

    This post was published at Wolf Street on May 21, 2017.

  • Here Are The Three Choices Facing OPEC Next Week

    The last time OPEC (and Non-OPEC) member nations sat down to attempt a coordinated increase in oil prices by cutting production they succeeded… for about three months. Every since then, oil has been on a gradual declining path, boosted by a surge in US shale output and declining global demand, with WTI recently even sliding sliding below OPEC’s implicit price floor of $50/barrel. Which is why on May 25, after the failure of the first 6 month production cut, the same nations will try the same exercise, this time looking to cut output for 9 months, and hoping for a different outcome.
    At least that is the general expectation. Overnight, BofA’s Francisco Blanch has released a note previewing next week’s OPEC meeting titled “OPEC: extend and pretend“, and which boils down to the 3 choices faced by OPEC: maintain, curb, or hike output. For its part, BofA believes that OPEC will extend cuts and hope demand recovers. Additionally, Blanch also states that oOPEC’s goal for the oil market is to reach backwardation, not a specific price level and does not believe that OPEC will proceed with deeper cuts as this would likely mean ceding more market share to U. S. shale production.
    As Blanch explains in the summary, the global oil market deficit is smaller than the bank thought (see the dramatic, 500kb/d downward revision to global demand growth in chart 2 below) and as a result the cartel is struggling to bring down global stocks. This situation presents a major challenge for the cartel, as OPEC is targeting a shift in the term structure of global crude markets and not a specific oil price band according to Blanch: the idea is to penalize forward sellers and squeeze refiners. But soft demand in India and Mexico, a warm US winter, and an OPEC crude oil production overhang from 4Q16 have gotten in the way of a good plan.

    This post was published at Zero Hedge on May 19, 2017.

  • Key Events In The Coming Quiet Week: US Industrial Production In Focus

    It is a relatively quiet week for economic news in the and Eurozone with focus turning to UK data, Japan 1Q GDP, inflation in Canada & Australia’s employment report. Norway GDP should show continued improvement and the Riksbank proposal on a new policy target will also draw interest. In EM there are monetary policy meetings in Chile, Indonesia, Mexico and Poland.
    The start to the week is even more quiet today with no significant data to highlight, while in the US the May empire manufacturing reading is due along with the NAHB housing market index for May.
    On Tuesday, with little of note in Asia it’ll be straight to Europe where the final April CPI revisions are due in France along with the April CPI/RPI/PPI data docket in the UK. Euro area Q1 GDP and March trade data follows, while the May ZEW survey is also due in Germany. In the US tomorrow we’re due to receive April housing starts, building permits and industrial production data.
    We’re kicking off Wednesday in Japan where the March industrial production print is due. In the UK we’ll get March and April employment data, while April CPI for the Euro area is also due.
    There is no data of note in the US on Wednesday.
    Thursday kicks off in Japan again with the Q1 preliminary GDP report, while in China we’re also due to get April property prices data. In France on Thursday we’ll get Q1 employment data while in the UK we’ll get April retail sales. In the US on Thursday the data includes initial jobless claims, Philly Fed business outlook for May and Conference Board’s leading index for April.
    It’s a quiet end to the week on Friday. In Germany we get April PPI while in the afternoon session we get the flash consumer confidence reading for the Euro area in May. There is no data in the US on Friday.

    This post was published at Zero Hedge on May 15, 2017.

  • From West to East: Asia Gobbling Up Gold as US Exports Surge

    Gold exports from the US nearly doubled in the first two months of 2017 compared to last year. Where is all of this gold going? Most of it is heading east.
    Total US gold exports in the first two months of 2017 totaled 101 tons. That compares with 56.5 metric tons in 2016. Nearly two-thirds of the gold flowing out of the US ended up in Asia. China and Hong Kong imported 51 tons of US gold, and India gobbled up another 10.8 tons. Switzerland was the leading non-Asian purchaser of US gold, importing 28 tons. England imported 5.6 tons of US gold, and the UAE took in 3.3 tons. The remaining US gold exports went to countries such as Germany, Canada, and Mexico.
    To put things into perspective, gold exports to China, Hong Kong, and India doubled in the first two months of 2017 compared to the same period the previous year.

    This post was published at Schiffgold on MAY 11, 2017.

  • Panic! Like It’s 1837

    180 years ago today, everyone panicked. On May 10, 1837, New York banks finally realized that the easy money they were lending was unsustainable, and demanded payment in ‘specie,’ or hard money like gold and silver coin. They had previously been accepting paper currency that for every $5 was backed by only $1 in silver or gold.
    Things culminated to that point after years of borrowing the paper currency to expand west, buy land, and build infrastructure. As silver came in from Mexico, banks lent out five times the amount of their deposits – fractional reserve banking.
    At the same time, the value of silver was falling because its supply was increasing in America. Great Britain, which had been lending much of the money, was less interested in silver because they could pay for trade with China in opium. So even though Britain had a year earlier begun demanding payment in specie, the abundant silver in America did not hold the same weight, so to speak, it had previously.

    This post was published at Zero Hedge on May 10, 2017.

  • Trump Explans Why He Flipped On NAFTA: Canadian, Mexican Leaders Called Me To Renegotiate

    In one of the most striking reversals for President Trump to date, as reported earlier, just hours after the White House said the president is contemplating terminating NAFTA before his 100th day, sending the loonie and peso crashing, Trump reversed his position and as Bloomberg put it, made a “huge U-turn” in his NAFTA stance, allowing the trade agreement to continue after he spoke with the presidents of Mexico and Canada about ways to renegotiate the accord.
    ‘Both conversations were pleasant and productive. President Trump agreed not to terminate Nafta at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the Nafta deal to the benefit of all three countries,” the White House said in a statement late Wednesday. Needless to say, currency traders were turmoiling, first watching Mexico’s peso and Canada’s dollar plunged then surge after the White House’s Wednesday night announcement.
    As Bloomberg added, Trump’s top advisers had been embroiled in a debate over how aggressively to proceed on reshaping U. S. participation in Nafta, with hard-liners favoring a threatened withdrawal as soon as this week and others advocating for a more measured approach to reopening negotiations with Canada and Mexico.
    This morning, it appears that Trump has gotten an earful on his latest stark reversal, and as a result the president took to twitter, tweetsplaining the motives behind his move. This is what he said:
    ‘I received calls from the President of Mexico and the Prime Minister of Canada asking to renegotiate NAFTA rather than terminate. I agreed’ Trump tweeted, and in a following tweet added “subject to the fact that if we do not reach a fair deal for all, we will then terminate NAFTA.” He concluded: “Relationships are good-deal very possible!’
    I received calls from the President of Mexico and the Prime Minister of Canada asking to renegotiate NAFTA rather than terminate. I agreed..
    — Donald J. Trump (@realDonaldTrump) April 27, 2017

    This post was published at Zero Hedge on Apr 27, 2017.