Sunday, March 31, 2013

Review of Barron's -- Dated 1 April 2013

I was sorely tempted to try and pull an April Fool's here, but I sobered up...

Barron's S. Florida distribution may have gotten itself back on track again, as for the last three weekends Barron's has actually arrived on the weekends.  The Cover Story this weekend is about how Michael Dell, and his plot to take back Dell (ticker: DELL) at a cheap price.  Author Andrew Bary notes that this little drama has been going on for a while now, and that many observers have noted that Mr. Dell is trying to get the company for too cheap...  He has two competitors in trying to buy the company:

Carl Icahn (who has long prowled for cheap companies)


Blackstone (Stephen Schwartzman)

Bary thinks that DELL will fetch some $15.00 or more, Michael Dell's offer has been $13.65 per share and it is trading at about $14.33, hinting that Mr. Dell will not get his old company back for ridiculously cheap.


Randall W. Forsyth pitches in again for Alan Abelson.  Forsyth starts off by noting that despite what would appear to be scary stuff (Fiscal Cliff, Sequestration, Cyprus, etc.) the stock market was able to go up to new all-time highs (both the S&P 500 and the Dow Jones up approx. 11% in the first quarter of 2013, on top of about 13% for all of 2012).  The USA did better than most of the rest of the world (and that may help explain US$ strength lately).

Forsyth goes on to write about many other things we do NOT have to worry about:

-- the takeaway of the 2% payroll tax cut
-- Sequestration
-- disintegration in the Eurozone
-- the futility of fighting the Fed

NOTHING to worry about, "Clearly we can print our way to prosperity."

Next sentence: "Happy April 1."

Still for me, his best line on the article (while discussing why Europe id nothing to worry about):  "As for Italy not having a functional government, what else is new?"


Kopin Tan ("Streetwise") writes that some think we are likely to take a pause in the bull market.  Others think perhaps not.

I agree!


"He said":

"We intend to hold a significant investment in Goldman Sachs, a firm I did my first transaction with more than 50 years ago."

Warren Buffett

Hey, who says that we have an American Oligarchy?


Sandra Ward writes a bullish piece on capital goods manufacturer Eaton (ETN).  Eaton bought Cooper Industries recently, and so has diversified itself a bit from the cyclical automotive industry.  ETN now has but 18% of its business in the automotive sectore, its businesses now are more electrical equipment and energy-saving equipment.


Jonathan Buck writes a bullish piece on STMicroelectronics, Europe's largest semiconductor manufacturer.  Apparently the company is narrowing its focus on the faster-growing sectors (sensors and car-entertainment systems) while exiting its wireless chip joint venture with Ericsson (where it lost money).


Jack Hough picks four companies that have bought back stock in a way he approves of (not paying too much, not leaving the company with little cash, yet still allowing each company to pay a good dividend, etc.).  All four have a decent dividend yield.  Here they are:

-- AT&T (T), dividend yield of 4.9%
-- Seagate (STX), 4.2%
-- WellPoint (WLP, the country's largest health insurer by enrollment), 2.3%
-- Western Union (WU). 3.3%


Barron's breaks stories on occasion.  While many may see them as Wall Street's poodle, they do sometimes do break stuff even before Zero Hedge, and they are a weekly paper.

Bill Alpert writes that sleazy Russian operator Vassili Oxenuk has been playing a lot of bogus games with US (and investors from Kazakhstan...) investors...

Las Vegas!  Russian/US reverse mergers!  Guns and death threats!  Offshore hideaways!  Read all about it...

My take?  Too easy...: "Lie down with dogs, you get fleas."


Tiernan Ray ("Technology Week") writes that Google (GOOG) and Facebook (FB) are shaking up the server market.  Servers tend to be simpler than most PCs and can be built with commodity products, which is what Google and Facebook are doing, contracting out the servers they need with Asian manufacturers.

This is likely not good for Dell (DELL) and Hewlett-Packard (HPQ)...

He also writes that Blackberry (BBRY) has an uncertain future..., yes, with Apple (AAPL) and Samsung Electronics (0015930.Korea) dominating the smartphone business.


"Economic Beat" author Gene Epstein notes that both the R-Team and the D-Team have made budget proposals.  In his opinion (and IMO) neither proposal goes far enough.  Epstein suggests that instead of cutting the amounts of money for the various programs, that we ELIMINATE programs all together.

I believe President Reagan suggested killing off programs as well, a long time ago...


Lawrence C. Strauss interviews Carl Weinberg (Chief Economist at High Frequency Economics).  Weinberg believes that Cyprus IS very significant, he believes the contagion will spread and not even Germany is safe.  He is very negative on Europe and Japan (both entering depressions).

He thinks the USA will muddle along at 2% - 3% growth, that Latin America (as a whole) will do a little better, but that Asia (ex. Japan) is the place to be.  He likes China, but concedes there will always be bumps along the way.


PENTA editor Richard Morais writes that many wealthy families are leveraging up...


Editor Thomas Donlan finds problems with both the R-Team and D-Team budget proposals.  He writes that the Democrats are making all of the usual promises that cannot be financed (like they have for the past 80 years), while the Republicans are making assumptions that are unrealistic...

[Ed. Note:  Have I said today that we are freaking doomed?]


In the Market Week section, "Mr. Barron" on the front page observes that the S&P 500 is indeed at a new all-time high, and that these companies have half the debt, pay a higher dividend and have 13% hgiher profits than vs. 2007.  It could be QE...

Jonathan Buck ("European Trader") wonders if anyone's deposits in European banks are safe now.  In particular he notes that Mr. Dijsselbloem (affectionately know as "Diesel-Boom" at Zero Hedge) has advised us that depositors funds ARE at risk in future bank rescues.  Further, the capital controls imposed on the people of Cyprus are very troubling, the European Union was not supposed to be like this...

Assif Shameen ("Asian Trader") writes that Singapore is changing to a slower growth era.  Be selective in your investments there.

Shanthy Nambiar ("Emerging Markets") writes that the macro trends in the Persian (Arabian) Gulf countries are pretty favorable.  While Saudi Arabia is pretty closed, there are mutual funds and ETFs that can give you exposure to Kuwait, the UAE and Qatar (the countries he seems to like the best).  He gives us two ETFs to look at (tickers): GULF and MES.

Michael Aneiro ("Current Yield") writes that LOANS are doing better than bonds.  I believe he is referring to collateralized loan obligations (CDOs), in which loans are pooled, and investors can then buy in.  Ahh, haven't we had enough derivatives?  Taking on extra risk for a very small yield increase?  The adjacent "Bond Center" had one interesting graph this week: that global long-term rates are going down again, close to the Dec 2012 lows.

David Winning ("Commodities Corner")writes an interesting column on mineral sands, sands with zircon and rutile (zircon for ceramics and rutile for TiO2 for making paints more opaque and brighter).  He names two companies that can be had here in the USA: Tronox (TROX, often mentioned by Meryl Witmer) and Australia's Iluka Resources (IKLAF).

Need a job?  Attrico Company is looking for a Corporate Postman (Classifieds)!  $30/task, email Gerg:  Looks like th position is in Delaware.

Three companies had insider sales of stock over $30 million: SSNC, TRLA and AMTD (last is TD Ameritrade).

My reader "Nobody" keeps me honest re the Mighty Peruvian Sol, which barely eked out a gain vs. the US$ last week.

Verdict:  I covered most of the basics, if you want to learn more, buy it!

Wednesday, March 27, 2013

Review Of American Hard Assets, Issue No. 2

About six weeks ago I reviewed the first issue of American Hard Assets (referred to as "AHA" for the rest of my article), a new magazine that I had found at Barnes & Noble.  I was happy to see it, enjoyed reading it, and of course wished them well.  I then sent them $29.99 to subscribe.

Issue No. 2 is out, I received it by mail.  I also received the happy news that they would "comp me" for a one year subscription, my FIRST tangible benefit of writing this blog...

Two general comments on this magazine.  As I get more issues to read, I will become more familiar with their "rhythm", the same sense that I have become familiar with Barron's, I will better understand how they structure their regular features and columns.  Also, the magazine is geared to the wealthy, especially collectors.  You pretty much have to have a decent amount of money to be a collector of anything of high quality.


The Cover Story is about diamonds.  Diamonds are a hard asset, and so count as a class worth examining for ownership.  The first article ("Rock Solid: Diamond Investments") is a primer on "Investment Diamonds 101", investment diamonds serving just that: NOT meant to be worn, but to be securely stored.  Diamonds, while extremely hard (the hardest natural material) are not particularly TOUGH, they can be chipped or cracked if they are struck.  Better to just keep it in the safe...  A loose definition of an "investment diamond" would be a colorless diamond of 5 carats or more (less weight if a fancy colored diamond, more below).

There is a handy one page introduction to grading of diamonds as well as a table showing approximate values of a 1 carat diamond of various colors (colorless to well off-white in color) vs. clarity (how many and how serious the flaws that are present.  Fine diamonds are usually colored on a scale of D to Z, D being colorless (fine diamonds are typically D - F in color) and have a clarity (flaws) of flawless through a 10x loupe (F and IF grades) and the scale sliding down through the very, very small inclusions (flaws) towards larger flaws.  Let me illustrate PART of the table (from 21 April 2011 at

1 carat flawless (IF) colorless (D): $28,400
1 carat VVS1 (very, very small inclusions 1), very slight yellow (E): $17,400
1 carat VVS2 (slightly more inclusion than VVS1), color F: $$11,900
1 carat VS1 (very small inclusions), color G: $9000
1 carat VS2, color H: $7500

Investment diamond prices are not "linear"!  The author estimates that a 5 carat clean (say VVS1 or higher, my estimate) of D color would go for perhaps $1,000,000 at auction in Hong Kong, well over 5 times the 1 carat flawless D colored above...

Note!  I briefly worked at a jewelry store as my first job!  I found it relatively easy to only grossly grade diamonds (you really need to be trained...), especially grading color.  Diamonds are graded by trained professionals using a 10x loupe.  At lower grades (starting S1, colors h - J), an amateur can see off-color and the flaws (dark spots or internal cracks) by careful observation.  I never got to the point where I could grade colors D - G, nor being able to tell a VVS2 from a flawless...

Let me get to the Bottom Line re investing in diamonds.  The article states (and I strongly agree) that anyone entering this arena of investing must do a LOT of work to learn about diamonds, and that would take a lot of time and not be easy.  Diamonds are NOT like gold in that sense!  You can be almost brain-dead and succeed in gold.  Also, there is a big "Bid / Ask" spread that I have seen (in smaller diamonds) that is very unattractive.


The second article on diamonds I found very interesting ("Adding Some Color to Your Portfolio: Investing in Natural Fancy Colored Diamonds") by Benji Margolese.  "Fancy" here means rather strongly colored diamonds, these are rare, and the colors are strong enough that they go for a premium to colorless diamonds.    A few years ago I first learned about colored diamonds, they had outperformed, and apparently have still outperformed, clear diamonds.  Here is a quotation of interest from the article:

"Colored diamonds are among the rarest items in the world.  Less than 0.1% of diamonds mined are considered quality colored stones."

Quality diamonds are "brilliant" they shine..., so fancy colored diamonds will not only display rare colors, but sparkle while doing so, very attractive!

The prices are very high, and fancy colored diamonds are even more specialized (and so need even more education...) that regular diamonds.

Margolese's article discusses pink "Argyle Diamonds", Argyle being the source of most good pink diamonds.  The Argyle mine (owned by Rio Tinto) is in Western Australia.  These diamonds are in much demand by the very rich...  And the Argyle Diamond Mine is approaching closure...

At the end of the article, Margolese mentions some points, I comment on most of them below:
  • "Well Established", meaning that colored diamonds are well known and accepted by the wealthy (especially in Europe).
  • "Long Term Growth", well, uh, at least for the past few years...
  • "Portability", yes, you can carry a fortune in your palm...
  • "Privacy", he writes that they are not reportable for tax purposes, but what about any capital gains on re-sale?
That final point (taxation of gains from re-sale of diamonds or gold) as well as information re declaration of valuables (gold, yes, diamonds?) upon leaving the USA if the total "monetary instruments" (etc.) is over $10,000...  THIS would make a fabulous article, I will email this notion to the publisher...

A major supplier of colored diamonds (retail I imagine) is Leibish & Co. of Israel.  Check out their website (they had an ad in the magazine this month), chock full of beautiful colored diamonds:


It looks like AHA is going to collect short articles in their "World News Updates" section near the beginning of each issue.  I like this, they can provide several different items that otherwise might get lost.  Inc Liberty Head Nickelluded this time are short articles on a 12 lb gold nugget found by an amateur prospector in Australia (a winner!), a hike in import taxes in India re gold and a piece (for coin collectors) on a 1913 Liberty Head Nickel that has surfaced recently (one of just five in existence).


Mike Woodcock edits "2013 Predictions", an article with predictions from experts on a few different hard assets.  I will mention each prediction with a comment.

-- Resources and Commodities, Haydn Pallister  (Associate, Corality Financial Group) is kind-of bearish on the group (Europe, China) while Stan Shamu (IG Market Analyst) is bullish, especially if the global economy grows.

-- Gold, David Lennox (Fat Prophets Resource Analyst) expects no meaningful changes in our US deficits and debt while also expecting China to buy ever more gold, his target is $2300 - $2500, (I presume by year-end).  Ben Woldridge (Associate, Corality Financial Group) predicts a stagnating gold price.

-- Silver, David Lennox expects overall demand for silver to continue to rise, his target is $40 - $45 per oz.

(I pass on commenting on the Iron Ore and Crude Oil predictions, as it is hard to invest in the particular commodities per se, you can buy the companies producing them).

Mike Woodcock provides his brief summary, as well as a "Contract For Difference" (looks like a hedge to me, example: buy gold, sell iron ore) comment.

My summary: I myself am becoming less interested in predicting...  I have been reading books saying that most predictions are worth very little.  N. N. Taleb and Nate Silver (in recent -- 2012) books both make the case that it is better to find one's risks and vulnerabilities (and then plug those holes in your financial ark) than try to identify what will happen...  Nonetheless, I always read predictions by people who know more about something of interest than I do.


Greg Canavan (who writes a PM-oriented newsletter) writes: "Silver: A Brief History of Demonetization", in which he shows silver's role as money in the USA, its demise as money and its possible re-emergence as money.  Canavan clearly likes silver!

Gold and silver have both served as money in US history.  But, there have been fairly dramatic swings in whether silver or gold was the "most favored" money.  Much of this was due to discoveries in big New World mines.  As a large amount of gold was discovered, for example, gold would displace silver (and vice-versa).  These swings in relative gold and silver prices caused "monetary issues", one metal would be pushed out...  Gresham's Law (bad money drives out the good) in action, repeatedly...

By 1900, the US government had de-monetized silver, that is, instead of gold and silver counting as money, we were essentially on a gold standard.  It took some time for the rest of the world to join (China and others stuck to silver for a while, silver was inflationary, due to more silver entering the world system), but in the end even China (in 1935) left a silver standard.

But, China is now buying silver as well...  He predicts silver will become re-monetized, and that the future is bright for silver.


AHA provides a nice two page graphic spread on world regional production of and demand for gold.  The graphic is very "macro" and general, the production of and demand for gold varies considerably by world region (eg, North America produces more gold than it consumes, Asia is the opposite).


Numistatist (coin expert) and author Fred Reed writes "Encore, Encore" an article about the US $50 Gold Buffalo bullion coin as well as providing a history of the design (the same as for the Buffalo Nickel).  There may be a special "Proof" piece that might become available (the US Mint will assess demand for the "Reverse Proof" proposed coin) this year.  Reed also provides a history of the Buffalo Nickel / Gold Buffalo design.  If you like coin-collecting, this article will likely be of great interest.


The next article "New Money From Old Money") (author not given) is a history of the Krugerrand!  The South African government wanted to find a way to sell more gold, but not peg its value to their own currency (the Rand).  The solution was to make the coins with 1 troy ounce of gold, and allow its value to just float alongside the value of gold.  The Krugerrand by 1980 owned over 90% of the gold bullion coin market...


Nigel Moffat writes: "What's Best for You: 'Allocated' or 'Unallocated' Gold?".  He explains the difference (in brief: allocated gold is held by someone else: you own the bar, unallocated means you have a claim on a pool of gold).

What's best for you?  Well I don't know about you, but for me it is best to just hold the gold yourself.  Jon Corzine (MF Global scandal) robbed their customers of ALLOCATED gold...

But, the article has some beautiful pictures of 400 oz bars of gold from the Perth Mint!  (Mmm, gold porn...)


Except for an article on "Renovating to Sell" (discussing economics of flipping condos as well as fixing them up for resale), the rest of AHA has articles on Collectibles.  And here I refer back to my general comment in the third paragraph re AHA being somewhat-strongly oriented to wealthy collectors.  It takes serious money to collect items like the below...

Nicholas Forrest ("Is It Or Isn't It?") writes on the problems in the art world of getting the genuine thing (fraudulent or forged art).  This problems is most serious in prints, as many artists allowed prints to be made, but in different quantities...

Ed Estlow ("Best Watches for Investments?") advises us that Rolex and Patek Philippe are the two brands of watches of greatest interest as collectors' items...  Another article (no author named) explains "complications" in high-end watches, "complications" are additional features (beyond showing you what time it is) such as dates, days of the week, phases of the moon, etc.  Complications require more workmanship to produce, so in fine watches, they contribute to scarcity and higher prices in investment watches.

Hillary Gates ("Wine: Consumer Good or Investment Gold Mine?") writes on investing in Bordeaux (SW France, arguably the premier wine production are of the world) wines.  An expert she quotes said that top end wines have outperformed stocks since the Great Depression and that wines follow a seven year cycle.  Gates also writes about "wine futures" (similar to futures in the financial markets, except that most people actually delivery).  They key issue (beyond having to LEARN about wine, like learning about diamonds...) is that wine must be stored properly to retain its value.

Mark Prendergast writes ("Questions of Ownership") about the dangers of buying art whose provenance (ownership history) is not clear...  Careful who you buy expensive art from...  (He provides a source for checking authenticity and provenance on some art:

Johannes Werner interviews Mark Salzberg (he is now Chairman of Numismatic Guaranty Corporation (NGC), one of two recognized companies who grade and "slab" (put into tamper-resistant plastic holders)).  It is a long interview.  Salzberg has been a collector of many things, starting with coins when he was very young.  He then went on to collect a variety of other things (California art, wines, Zsolny vases, Van Erp lamps...  His collections would be worth A LOT more money than I am ever going to see.  Salzberg has been trimming his collecting of some things and re-focusing on coins, his first and greatest love (my words).


Near the end of this AHA issue are some short pieces in "Mining News" as well as upcoming events of interest to investors and collectors.

Finally, John W. Garibald writes "HindSight" which looks suspiciously like an editorial (see Thomas Donland of Barron's...).  It is a rhetorical letter to incoming Secretary of the Treasury Jack Lew.  He asks Mr. Lew to tackle the real issue: spending, particularly entitlement spending.  Well, OK, I agree with sentiment (and prescription) of his piece, but it isn't going to happen...  And, those decisions would have to be made by President Obama (with the "help" of Congress), not the Secretary of the Treasury...



If you are interested in hard assets in general, particularly beyond just gold, then I highly recommend this issue and the magazine in general.

Sunday, March 24, 2013

Review Of Barron's -- Dated 25 March 2013

Perhaps Barron's heard me (and others in my city) about the poor distribution I had noted in recent weeks past.  It still took until today for me to get my copy (it was not at the airport last night either), but it arrived, and, there is a lot of ground to cover this weekend, so let's get on it!

Note:  Cyprus is not mentioned ANYWHERE on the cover...

The Cover Story (World's Best CEOs) is in a special section.  I was expecting this to be boring, but reading the mini-bios of most of these CEOs turned out to be interesting.  While, of course, there would controversy and disagreement about WHICH CEOs should make this list (30 of them), the list seemed reasonable.

I pick a few names that for me are the most compelling:

Bernard Arnault (LVMH), the French billionaire who reacted to French President Hollande's idea of greatly increasing taxes on the wealthy by threatening to move to Belgium.  LVMH is one of the few kings of luxury brands, and Arnault has been adept at making sure LVMH went along for the ride.  Annualized total return while CEO: 11.3%

Warren Buffett (Berkshire-Hathaway), while much-reviled in some quarters, has delivered out-sized returns to shareholders for decades, including a 50% increase in the value of the Burlington Northern railroad (arguably the best managed railroad) he bought a few years ago.

Morris Chang (Taiwan Semiconductor) built the first semiconductor foundry (that is, a manufacturer of chips for companies too small to make them on their own, these smaller players contract out the manufacturing to a foundry).  Annualized total return while CEO: 17.7%

Larry Ellison (Oracle), a shaker in Silicon Valley for decades is playing catch-up in cloud computing.  Even with Oracle's stock down last week on a profit miss, it is probably a big mistake to bet against mighty Oracle  (the most profitable company in the software industry).  Oracle has awesome data analysis software...  Annualized total return while CEO: 25.7%

Hugh Grant (Monsanto), even though Monsanto is also hated in many quarters, Grant has delivered the seeds that farmers want.  Annualized total return while CEO: 28.4%

Nick Hayek (Swatch) has built another Swiss giant in luxury brands, not just cheap Swiss watches.  Annualized total return while CEO: 22.6%

Carol Meyrowitz (TJX) built a multi-branded retail empire of women's clothes, she refreshes her stores' items and his thinking ahead.  Annualized total return while CEO: 21.7%

Alan Mulally (Ford) has done well for Ford, refusing the bailout and leading Ford back from the brink (although there are still plenty of challenges ahead).  Annualized total return while CEO: 7.6%

Larry Page (Google) is focusing Google's efforts a bit more after big acquisitions.  Don't bet against Google!  Annualized total return while CEO: 23.4%

Howard Schultz (Starbucks) has added Teavana and Square (a mobile-payments platform)...  Annualized total return while CEO: 24.4%

Tadashi Yanai (Fast Retailing (of Japan), "Uniqlo" brand stores), his company makes "fastidiously minimalist basics in multiple hues", meaning basic well-made clothing.  Annualized total return while CEO: 19.0%

There are 19 others in the Special Section I did not mention...


Randal W. Forsyth writes Alan Abelson's column this week, and he DOES discuss Cyprus and how Cyprus resembles past small dominoes that fell over to unleash recent financial crises (Thailand, Iceland and Greece).  He pretty well chronicles the past week of Cyprus and Europe, nothing that Zero Hedge readers don't already know, but he does a good job of putting Cyprus into context as well.

Maybe it is only in Abelson's column where the bears are allowed to growl at Barron's...


Kopin Tan ("Streetwise") writes of earnings misses...  He then goes on to write about water companies, especially those involved in "fracking" and shale hydrocarbon exploration.  One of those companies is Xylem (ticker: XYL) that was spun-off from ITT in 2011, XYL is a company involved in various facets of water.  XYL is a company I am looking at, one of the few I would consider buying now...


At "Review and Preview" William Waitzman has written both short pieces, one on a complaint that Budweiser has been watering their beer (probably NOT true) and a nice piece on whether or not it is smart for the EU to be messing with Russia over Cyprus...

"He Said:"

"Those who adhere to the ideology of rejecting Israel's right to exist might as well reject the earth beneath them and the sky above, because Israel is not going anywhere."

President Obama


At "Follow-Up", we find that there is a rumor that Pepsi (PEP) might buy Mondelez (MDLZ).  The potential merger would make sense writes Andrew Bary.


Andrew Bary also writes about Sarepta Therapeutics (SRPT), and how if they can get the FDA to move faster on its new drug (eteplirsen) for muscular dystrophy (fatal), that might be good for sufferers of that awful disease and shareholders as well...


Jack Hough writes that five companies are increasing R & D spending, and he approves!

Gilead Sciences (GILD): HIV, cancer and hepatitis C treatments
Google (GOOG): more money coming in, and in, and in....
Forest Labs (FRX): Lexmpro's patent expired, but six more drugs poised to launch
Intel (INTC): inked a deal to make chips for Altera, becoming a high-end chip foundry
EMC (EMC): expanding its data analytics unit and developed a public cloud service


Christopher C. Williams writes a bullish piece on Seacor Holdings (CKH) a provider of offshore work-boats for the oil & gas drilling industry.  He writes that CEO Charles Fabrikant has sold off some units and done well with his fellow shareholders.


"Technology Week" author Tiernan Ray writes that although Meg Whitman seems to have done well at Hewlett-Packard (HPQ), the shares are up and morale at least in part restored (despite a LARGE number of planned layoffs: 29,000 people), well, there is still a lot more to do.  But, so far so good is this widely watched story of HP...


Gene Epstein ("Economic Beat") writes that, at least for now, the economy has not yet suffered under the "Sequester".

(In fact, I have asked a number of people (not scientifically of course) for their observations on whether teh Sequester has meant anything, so far only ONE person said she KNEW someone who MIGHT suffer...)


Lawrence C. Strauss interviews David Winters (Wintergreen Fund, WGRNX).  Winters searches the world for undervalued jewels and offers the follwoing picks:

Swatch Group (UHR.Switzerland), they own Harry Winston (big diamonds...)
Richemont (CFR.Switzerland), they own various luxury brands
Canadian Natural Resources (CNQ), Winters believes this is an undervalued player in O & G
Wynn Macau (1128.Hong Kong), Macau is bigger and more exciting than Las Vegas now...


Jim McTague ("D. C. Current") informs us that it looks like a Sales Tax for internet purchases is coming, apparently there is bipartisan support for this.


Editor Thomas Donlan writes that we should give priority to highly-skilled and similar immigrants.  This is controversial (many tekkies here complain how hard it is now to get jobs...), but I am with Donlan here.  Highly skilled immigrants have helped our country grow and prosper...


The Market Week section's COVER features "Old Mr. Barron" pondering Bitcoins...  It seems that some bookmakers are saying that a Bitcoin may reach $500 by year end.

Assif Shameen ("Asian Trader") writes that Chinese battery and electric car maker BYD (1211.Hong Kong) may be in a bubble, even though Warren Buffett's (guy is everywhere, no?) Berkshire-Hathway owns 9.9% of it...

Ben Levisohn ("Emerging Markets") writes that it is harder to find good picks in developing markets (?), one easy way, he suggests, is low cost ETFs in the emerging markets sector.

"European Trader" author Digby Larner writes of Cyprus...  Monday is the big day, we'll be watching!

Michael Aneiro ("Current Yield") writes that events seem like they will keep the 10-Year Treasury around 2.0% or so for a while.  Low rates because so many are nervous about Europe and stocks, yet at some point the Federal Reserve will likely have to stop purchasing the $85 billion in Treasuries each month...  Sometime...

Simon Constable ("Commodities Corner") writes that oil and LNG shippers will do well, at least in part due to shut down refineries as well as the NatGas boom here in the USA.

Insiders sold some $66 million in LinkedIn (LNKD) and some $48 million in Fleetcor Technologies (FLT, who?) recently.

Gold finally moved up (for the week, $1606 / oz) even as the other precious metals moved down...

Now that the Federal Reserve has finally had to some clean with its holdings, I will resume watching (with occasional reporting) on increases in it Balance Sheet, now at 3.226 trillion dollars (recall only weeks ago it finally broke the $3 trillion mark), up $56.4 billion last week.

And finally, the Mighty Peruvian Sol lost a bit vs. the dollar, of course after I am back from Peru where I paid a scandalous $6.00 for my haircut...  Alert reader "Nobody" has been keeping me informed of central bank actions of the Sol, and recently mentioned to me that I might ought to "STFU" about expensive haircuts (he lately paid $30.00, which is about what I have to pay here)...

Friday, March 22, 2013

Diversification In Precious Metals

Long-time readers of my blog knew this one would eventually come...  While I still have not written a piece on Silver (I have long felt that I could draft someone else to do a "Guest Post" on silver...), I include a discussion here, as the dynamics of holding silver are different than holding gold.  And both platinum and palladium have their own dynamics as well.

I use the acronym "PMs" often in this article, short for "precious metals".

"Gold is the money of Kings
Silver is the money of Merchants (Gentlemen)
Copper (Barter) is the money of Peasants
Debt is the money of Slaves"

- "Traditional" (I did a quick Google search and could not find the origin of this saying, "Traditional" found here:


An Extremely Brief History of Precious Metals Monetization in the USA

1)  The US Constitution says that money was to be ONLY silver and gold.

2)  They took away our gold in 1933 (Roosevelt's confiscation).

3)  They took away our silver in 1965 (clad dimes and quarters).

4)  They even took away our copper in 1982 (new pennies are mostly zinc).

5)  Will they take away our money in the banks soon (see Cyprus)?


An interesting forum-style website covering ALL precious metals is pmbug:

Gold and silver are also much discussed at the famous Zero Hedge website (which talks about almost all things financial as well):



Gold has been considered the wealth-preserver of choice for some 6000 years.  Most gold is hoarded, relatively little of it circulates (even back in the days of gold coins as "money", gold did not circulate much).  Because of this primary role of wealth-preservation, gold's highest and best use is sitting very still, held through time, generation-to-generation.

(Re gold and the statement in blue above, I am a follower of FOFOA:

Indeed, gold traditionally HAS been the choice of kings as well as the choice of plunderers for millennia.  Most civilizations valued gold highly (one interesting case that did not were the Incas of South America, who made decorative plates (etc.) out of it, but it was not really hoarded by them, although it WAS called "Tears of the Sun" even by them).

On occasion, LARGE transactions were often transacted in gold.  There is a (an apocryphal?) claim that in Weimar Germany during their hyperinflation that ONE OUNCE of gold bought an apartment building...

Gold is available from 1 gram - 400 oz (troy) sizes.  It is relatively EASY to buy gold coins (Gold Eagles are my choice) in one oz size, but Eagles also come in smaller sizes too (1/2 oz, 1/4 oz and 1/10 oz coins).  Gold Eagles are almost always available at "the largest coin shop in town", the retails price is typically about 6% over spot (6% premium) for Eagles, for certain other gold coins (Krugerrands, Austrian Philharmonics, etc.), the premium is typically less.  LARGE bars of gold (1 kg (31.2 troy ounces) for example) are a little harder to get, especially the 400 oz bars (seen movies...) -- a 400 oz bar would run you some $640,000 now...  One kilo gold bars are typically available at  Here is a picture from tulving, showing a typical 1 kilo gold bar:

Gold is the only metal stored by the central banks as monetary reserves (most central banks also use US dollars and other currencies as part of their reserves as well).  The central banks and the central bankers may be evil, but they are not stupid...

In my opinion, gold is most suitable for:

-- the already wealthy looking to hold it as a "store of value"
-- those with a long-term horizon (family holdings, to be passed down the generations)
-- those who may want to trade it at some point for other high-valued items (land, fine art)
-- those who might want to transfer a large amount of wealth with them...

Gold is less suitable for:

-- those who cannot afford it (a 1/10th oz Eagle costs about $190, which is not that much)
-- those who plan to "spend it" (for food, etc.) in a SHTF
-- those who do not have children or other heirs they love...

As of the date I write this piece, gold's spot price is about $1605 per ounce.  The price of gold has been range-bound for over a year now, ranging from the mid-$1500s to $1900 per oz.


The famous economist Milton Friedman has written that silver has been used for money much more often throughout history than gold, indeed his assertion is correct if you define "money" as something that circulates (although the definition of "money" is very slippery, see FOFOA's (very long) blog pieces on money).

One reason why I have not written much about silver is the huge amount of conflicting information about the metal as well as how much the price is manipulated.  In my opinion, there is no question that the price of silver (and gold to a lesser degree, probably...) are manipulated, but how much...?

Silver, it turns out, has a myriad of industrial uses.  I have seen claims that silver is used in more  different industrial applications than any other metal (though usually in very small amounts).  Silver is used (50 lbs worth?) in every Tomahawk missile (and not recycled) as well as iPhones and iPads.  A lot of silver is recycled, but a lot is not.  The fact that a LOT of silver is used by various industries means that its price is influenced by the general economic climate.  "Moar stuff, moar silver is used"

I have seen claims that the amount of the world's above ground (tradeable) inventories of silver are about the same as for gold (about one billion oz each), a claim I cannot verify to my satisfaction (LH!  I need an article from you on silver!!!)

Here is some reading material for those interested in silver (I do not include much information about silver here at my blog, there IS extensive information on gold and platinum here):

Silver is also easy to get (although Silver Eagles have been hard to get at certain times since 2008, the US Mint apparently cannot keep up with demand for silver from investors), typically in one ounce coins, there are MANY options, I choose Silver Eagles as they are made in the USA and so well-recognized.

Silver is most suitable for:

-- those who want to buy an ounce for less than $40...
-- spending in a SHTF, yes silver would be better than gold for that
-- those who are betting on silver "running out" (a common theme among silver bulls)
-- fabulous gifts that are not too expensive...
-- speculation..., there WILL be spectacular movements (up & down)
-- protection from germs ("a silver spoon...") and vampires...
-- jewelry (notice how hard it is to find GOLD jewelry nowadays?)

Silver is less suitable for:

-- holding in large quantity (this subjective, I know someone who has 5000 oz...)
-- those who prefer less price volatility...

Silver's price today is about $28.80.  Many consider this price grossly undervalued (a bargain).  The gold price to silver price (Au:Ag ratio) is about 55:1, relatively high by historical standards (this means that were the metals to revert back to their traditional 15:1 ratio often seen in history, that silver would outperform gold, although whether this will happen anytime soon is in much dispute...).

Interested in buying silver...?:  "DYOF Diligence"!


Platinum has been recognized as a precious metal now for some 150 years or so (depends on who's counting...).  Platinum is used in diamond mounts (engagement rings, for example) as it is harder than silver or gold.

Platinum is much rarer than gold, there are approximately 10 ounces of gold for every ounce of platinum around the world.

Platinum is also used in industry (as catalysts and in alloys), and so is similar in that respect to silver.  The metal's price shows some of the same industrial demand dynamics as silver does.

Platinum is relatively more suitable for:

-- people who already have decent holdings of other PMs
-- people prepared to pay the price (roughly the price of gold per ounce)
-- those OK with price fluctuation (more volatile than gold)

If you do not have gold and silver, I would recommend starting with those two first.  But, if you are not the kind of person who takes advice from the likes of me, well, owning platinum is better than not owning any PMs at all.

Platinum is harder to get than gold and silver, but if you look around, it is there.  tulving (see above) has platinum coins.  But, not Platinum Eagles, which are VERY HARD to find now (except for "proof coins". which are collectible coins with a high premium over metal value).  Platinum from Canada, Australia and the UK is fairly easy to get.

Platinum is priced around $1580 per ounce, less than gold.  This is relatively rare, historically speaking, the ratio of Pt:Au typically varies from approximately 1:1 (now for example) to 1.3:1 (platinum more expensive).


Palladium is the last of the PMs as accepted by most commentators...  Palladium (like gold, silver and platinum) are traded on the COMEX, and palladium is used for some jewelry (esp. in China and as one the accepted alloys for "white gold").  Palladium is also used in industry (like platinum), but in lesser amounts.

Palladium's price volatility is very high (it traded over $1000 / oz before crashing to under $200, wow did Ford Motors lose a LOT ($1 billion) on palladium when the Russians let 'em have it...).  Palladium is also even harder to get than platinum, but too can be found at tulving...

Palladium is now trading about $750 / oz.

Other metals (as investments) and comments

With Cyprus the being the "disaster du jour" lately, I have seen various comments on holding metals that are NOT PMs...

Perhaps the most common are people who are (and have been for over a year now) hoarding NICKELS (5 cent coins).  Nickels are 75% copper and 25% nickel.  The US Mint is likely to STOP making nickels very soon, as they cost some 10 cents to produce (transport of base metals is expensive...).  The metal value of nickels is around 4.9 cents now, lately it has been above and below 5 cents.  Metal value, of course, does not include the expenses of melting nickels to separate the two metals (now currently illegal).

Many people also are culling the copper pennies (1981 and before) pennies that are 95% copper from the modern (1982 on, although some 1982 pennies are copper...) pennies which are some 97% zinc with a copper coating...  The copper pennies are worth (metal value, although ZH-er DCFusor has informed us (at that "penny alloy" is not considered desirable by recyclers of copper...  Also, is it really worthwhile to spend your time sorting PENNIES?!?!

Metal values of US coins can be checked at


The question probably will arise: "how much of each PM to hold?"  That, kind reader, is up to you!  In the above comments I have discussed suitability in a general sense.  In my own case, here is my $-value percentage holdings of the above PMs (values approximate):

Au:   78%
Ag:     3%    <--- lots of ounces (for "SHTF"), but my gold is worth far more
Pt:    18%    <--- I value platinum's "price density" (value per ounce)
Pd:     1%    <--- token speculative position only

Friday, March 15, 2013

Customers And Bearings

This is the last installment of my series on my latest Peru trip.  Here, I show some of our customers (in Cajamarca and Lima) and show some photos and comments on what it is like to receive 21 pallets of bearings...

This first picture of Gilmer Correa, who sells auto parts in Cajamarca, Peru to the public.  "C & C Repuestos" is currently our only customer in Cajamarca, but we hope to land more.  A city of 250,000 people!  And, while the fleet is fairly different than Lima's (more below), we need our bearings to be more available there.  I just dropped by to visit, without notice, and yet he talked with me about the bearing market in his city.  The most prominent piece I saw while there was our Chinese hub & bearing assembely number 54KWH02, the front wheel piece for the newer Toyota HiAce (Toyota's van).  GRACIAS por su tiempo, Gilmer, muy amable!

I had some time to wander about downtown Cajamarca when my wife and her toured the area.  I was most interested in seeing the differences between what vehicles are in Cajamarca vs. Lima.  It turns out that Toyota is more popular there in Cajamarca, as the vehicles are considered very sturdy, and the locals will often pay up for a stronger vehicle...  Also, there are LOTS of mototaxis (tri-wheel vehicles based on motorcycles, these are all made in India, mostly by India's Bajaj).

Here are three mototaxis (the last one is way back there...) along a minor street near downtown Cajamarca (click on any image for a better view):

The below picture (downtown, at the Plaza de Armas) is either ALL Toyota or nearly so.  In the center is a white Toyota Probox, it is noticeably different than the Toyota Corolla Station Wagon (bery popular as a taxi all over Peru).  The Probox can haul more volume and more weight than the the Corolla, and so has become very popular.

Other Toyotas of note (hey, I took this photo for a reason...), are the two Toyota HiLux pickup trucks parked at the left, the small blue car "in front of the Probox" is a Toyota Yaris (smaller than the Corolla, they DO sell the Yaris here in the USA, and it is failry popular), and the van in front is the Toyota HiAce van (I do not know if it is the "new" one (using the hub & bearingt assembly) or the older version (using two tapered roller bearings).

My trip to Cajamarca was wonderful and very informative.  I will always remember the people and how nice they were to us.  Not to mention the scenic beauty...


Soon enough we were back in Lima, this time the bus trip only took 16 hours as it was not attacked this time...

Monday evening we invited some of our customers to dinner, a "US-Style" business dinner.  Here is a picture I took of our customers and three of Ameru's employees:

Seated, left to right: customers Julio Flores, Carlos Alcantara (Roma Bearing), Ameru salesman Raul Quispe (our expert in Toyota Probox...), and customer Gino Ñaupari (Repuestos Ñaupari SRL).  Standing are Roberto Arce (Ameru's Sales Manager) and Cesar Rodriguez (General Manager).

Our dinner was enjoyable and informative, just the kind of meeting I like!  I would like to thank Messrs. Flores, Alcantara and Ñaupari (as well as our own Ameru guys) for a great dinner.


Yet another high point of our trip was the arrival of 21 pallets of bearings (Delfu brand from China, double-row wheel bearings and hub & bearing assemblies).  This was by far our largest order (by weight and volume) ever.  It took TWO trucks (a VW Brazil truck in front of the forklift (yellow) and a Ford Brazil in the back (closer to the camera, note that you partly make out "Ameru Trading" on our building above the second truck) to make the delivery.  The first truck was just opened and the forklift is about start working...:

Ameru now is at the point that when we get a large order, we hire (by the hour) a forklift ("pato" in Peruvian slang ("duck", because a forklift looks a little bit like a duck..) or more formally: "montacarga") to do the heavy lifting (rather than breaking down the pallets by hand in the back of the truck and moving boxes to the edge by hand).

This picture shows the very little clearance we have for a forklift at our entrance as well as two of Ameru's team (Roberto Arce and Gonzalo Rodriguez), as a local señorita (not ours) also looks on):

This next photo has kind of a lot going on, at least for those who have not worked in a warehouse or similar. In the back of the truck is our newest employee (Erick Cerrato) who might also be our strongest guy...  He was helping the forklift driver pull that pallet that was near the front of the truck (beyond the reach of the forklift's prongs.  They use the olive-colored cloth straps, wrapped around the pallet of bearings and dragged toward the back by the forklift.  The pallet is now in position to be picked up by the forklift and brought into Ameru.  Note also under the rear of the truck are two hollow steel prongs, these, when put on the forklift's own prongs give about one foot further reach, but they had already gotten the easy-to-reach pallets.  Also in the picture are Roberto Arce and Nestor Cardenas (Warehouse Manager, at the far right).

The below picture shows some "pallet tags".  If you click on the image, you will see at left-center our popular piece 54KWH02 for Toyota HiAce, mentioned above (customer in Cajamarca):

12 of the pallets (actually 13, you can see one at the far left further back):

Ameru team members breaking down pallets.  From left: Erick, Nestor and Cesar.  I put some of the tools we use for this picture.  Note size of the crowbar...

My wife's dad had visitor by chance come by when Ameru was unloading: his brother Zacarias.  I asked them to pose for a picture while "working".  Left is Zacarias (about 85 years old) and right is "Super Lolo" (Eleodoro, 92 years young).  Super Lolo is the right nickname for him though.  He spent about four hours doing the equivalent of construction clean-up work (with no gloves...).  Some of you may remember him from the front page of that Peruvian newspaper demanding their pensions.

Labor laws?  "Que son esas, señor?"

Saturday, March 9, 2013

Review Of Panorama Cajamarquino

This is the second article covering our trip to Cajamarca, and for me, the highlight of an excellent trip.

The Department (roughly equals a US state) of Cajamarca has but one big city one real newspaper (circulation: 10,000 copies, published daily, roughly 32 pages or so); Panorama Cajamarquino (The Cajamarca Panorama).  For a few reasons, I thought I would like to have an interview with someone at their paper.  Our hotel kindly called them up, and I soon got an email from Mr. Jaime Abanta Padilla, their editor, inviting me over Thursday morning.  I brought along my camera, as any budding reporter would (remember my interview in Italy with the big gold buyer...), the walk was just 6 blocks or so from my hotel.  Here is the entrance to their building:

Rather than fob me off with some junior reporter, Mr. Abante was kind enough to give me over two hours of his time.  Here is a picture of him next to a publicity sign of theirs:

Also on the first floor was an old printing press they keep "just in case" I would guess.  He told me it was about 40 years old, and that given a fair of maintenance and some spare parts that it would still work.  Keeping machinery around "just in case" is perfectly valid in Peru and many other countries.

Here is one the two more modern presses that they use, the other has about the same capacity, they use both each day.  They print each edition in the afternoon, and distribute it so readers can buy them early in the morning.  The printing press is from Germany, but I do not know which company.  He told me that they have locals who can do some maintenance, more complicated work is done by bringing in experts from Trujillo (a few hours away, and Peru´s second largest city).  He told me that a machine like this (used) would run some $20,000.


We then went upstairs to talk.  After the pleasantries ("How do you like Cajamarca?", "How many children do you have?", etc.) we got down to business.  He told me that Cajamarca was not only the capital of the Department, but also a "regional capital" that served border areas of other Departments, their newspaper circulated throughout various parts interior parts of northern Peru.

The city has some 250,000 inhabitants, that has grown a LOT since about 1990 (50,000), most of the growth is due to the mining industry, Peru´s largest economic sector.  The mining is done well away from the city.  There has been a COST to all of this revenue and people moving there: a higher crime rate, but tourists are not molested.

The city itself and the surrounding area possess remarkable beauty (see my last article), and this brings in a lot of tourists too.  He estimated that tourism brings in 10% - 15% of the money to Cajamarca.  Tourism is DOWN somewhat due to social strife (see comments later below), but it is slowly coming back.  Our hotel, for example, was not at all empty nor their restaurant...

We briefly covered a little bit of the city´s history, most of which is in my last article.  But one important fact I did not know until he told me: the Spanish first found gold and silver in 1772 (while Peru was still a colony), and gold mining has been continuosly mined ever since, and has always been a very important part of their economy.


Because of my personal interest in gold (shared by many of you, dear readers), I asked  lot of questions about that whole industry there.  Almost all of this information came from him, Mr. Abante knows his turf...  The biggest mine in the Department is the famous Yanacocha gold mine, it is the largest gold mine in South America.  Yanacocha is a joint-venture project of Canada´s Newmont and Peru´s Buenaventura (by far Peru´s largest mining company).  There is another large gold mine run by Canada´s Goldfields, but is not as big as Yanacocha.

But, the BIG news in the gold mining business in Cajamarca is the HUGE new discovery named "Conga".  Conga´s gold lies underground, and unfortunately also lies under between 3 and 6 (depends on who is counting and how -- Mr. Abante said four) Andean lakes.  Conga is such a large deposit that if developed it would be one of the very largest in the WORLD.  The problem is that those lakes would be destroyed in the mining process, and there are many locals who depend on those lakes for water...  And they have always lived there...  When (not if, the deposit is so big that at some point it will get mined) they start serious work up there, the population would probably have to be moved...  And, as far as I know, there is really no convenient vacant land for them to move to...

[Sidebar on mining in Peru in general.  The laws are different there than in the USA.  The national government owns ALL underground mineral resources.  While private land owners (say an ecological minded rancher -- common in ecology-concious Cajamarca) can say "No" to miners coming on to his land, there are a variety of tricks and coercions the government and others can do to "convince" them, in the end, they all sign..., for peanuts.  It is also important to understand that mining is still a dirty business, especially in Peru where the national government is fairly lax in enforcing "best practices" (as miners do in the USA).  Yanacocha, for example, even while it is relatively "green" and responsable, did have an accident when a trucker wrecked his truck filled with poisonous mercury that spilled into a river with over 1000 affected to some degree...]

So, mining is a LITTLE BIT cleaner now than in the past, Mr. Abante told me, but not very much.  There is still corruption and all...  And the government needs the money (Cajamarca Department gets to keep about 30% of the money from mining)...  So keeping in mind that mining is still dirty and pollutes a lot there in Peru, it is understandable that a LOT of locals are against Conga...  Many (most?) are in favor of the project, however, as it would bring in a lot of money.  $ Billions and $ billions...  But, the lakes disappear, the really big problem is WATER.  And reservoirs (dams, a proposed solution) bring their own problems and are not as good as lakes...

At this point the project has not been started, and there is a rough stand-off between rural locals (and their environmental allies) who would be affected and almost everyone else (who would make more money).  The gold miners at Yanacocha, for example, are very well paid and treated well.  And mines bring in all sorts of service-sector work (alas including crime like prostitution, etc.).  Another problem is that radicals have infiltrated the local protest movements (hey, do you think all those really bad "Sendero Luminoso" guys just disappeared into the night?).

So the project has not been started. It is not clear when things will get moving, and a few of the protests wre violent enough (recall: Sendero Luminoso) that the government imposed a state of emergency three times due to rioting, and THAT is what hurt tourism as well.

Just based on what I "know" now, "Presidente Mix" would pay each affected citizen, say, $5000, and put each onto a decent patch of land as nearby as feasible.  This will not happen though, because in general the rural poor are treated badly by TPTB (The Powers That Be)...

One other important mining project, apparently LESS controversial is the "HUGE-ISSIMO" (sorry, lo siento mucho...) copper deposit at Michiquillay (Quechua is a wonderful language by the way, I honestly mean that, it is so much more connected to the natural world than any other language I have looked into...).  Michiquillay is so big that once in production, Peru would overcome Chile as the world´s largest producer of copper.  Peru is now No. 2 in copper production (I think), Peru and Mexico are both essentially tied for No. 1 in silver, and Peru is about No. 5 in gold production.

The above commentary would lead one to think that Peru has very large mineral resources.  Yes.  The words Mr. Abante used were: "reservas INMENSAS".  But, Chile has large reserves in their uninhabited deserts, almost all of Peru´s mineral resources are co-located with people...

Two last things about natural resources.  I asked him about China, who is BIG in mining in Africa.  He said yes, the Chinese are exploring there in Peru.  And he expects LOTS of Chinese to be coming down to Peru, as tourists and owners (for better and worse...).  I also asked him for an update on the oil and gas sector, which is "fairly important" in Peru.  They HAVE indeed started exploiting their Camisea gas reserves) as explained in an earlier blog article: ) and they export some crude oil.  He told me that the geology seemed favorable for finding more oil in their Amazonian Basin, but that Peru would never become "a Saudi Arabia", that even if they find big deposits (who knows?) that it would not be a game-changer...

We then went on to talk about other important parts of the regional economy: agriculture (and related), handicrafts and other artisanal work and new fish-farms (which are apparently working out well, the fish are not diseased or toxic and the money is there -- they raise trout in their fish-farms the way we do, in pools).  Also, there are several infrastructure projects (especially roads and bridges, as well as some electric projects).


So, there it is.  I now know more about Cajamarca than any other American I know, LOL!  But, it was due to Mr. Abante being kind enough to give me HIS time and knowledge of his wonderful region.  Below is a picture of the front page of Thursday´s edition (the day I met with him):

The edition on Wednesday headlined the death of Hugo Chavez (BIG NEWS in Latin America), even more so than above.  Disclosure: neither Mr. Abante nor I shed a tear nor had moment of silence.

Jaime Abante!  Muchas gracias de mi corazon y de mi alma!  He is a gentleman and a scholar.


Jaime Abanto Padilla has a blog, he writes there daily (in Spanish), check it out if you are curious, I am adding his to my list of blogs to read!

Friday, March 8, 2013

Cajamarca, Peru

Today, Carmen, her sister Lily and I arrived back from the beautiful city of Cajamarca in the Andes of N. Central Peru.  The city has grown a lot over the past decades, mostly because of people moving there to support the local gold mines.  The population is about 250,000 (estimates vary), and the altitude is about 8900 ft. (just high enough to give each of us a little bit of soroche (altitude sickness), in our cases, just a mild headache for 24 hours or so.  (Cuzco at 10,500 ft is a different story..).  Cajamarca is a beautiful city, but its history is soaked in blood and gold, from early days even until now.

It is safe for tourists, and highly recommended however!

We traveled by bus (20 hours, we were delayed about three hours by someone throwing a rock at the windshield of the bus near Trujillo, it was damaged enogh that we had to wait for another bus to take us up into the Sierra).  We took "first class" which allowed us to sleep nearly flat in our seats.  We arrived in Cajamarca about noon.  After checking into our hotel, we went for lunch.  Here is what I had (for ALL photos, you can "click" on the image for a better view):

Recognize that delicacy of the Incas?  It is fried "cuy" (guinea pig), the first time I ever ate it.  A potato "guiso" is just to the right.  And Peruvians (even in the mountains) love their rice...

The next day we took a tour to "Cumbemayo", where the Incas and certain Pre-Incan civilations spent some time working wioth stone, both as art and to trasport water to Cajamarca (an important city before the Spaniards came).  Here is a panoramic view of Cumbemayo:

Petroglyphs from a Pre-Incan civilization (they think these are over 1500 years old), they do not have these figured out yet (there is a LOT of ancient Amerinidian remains of all sorts in Peru, they do not even have the Mexican Maya hieroglyphics figured as far as I know...). The easiest to see are those right of and below the center of the picture.  You can kind-of make out the "roof" above, it is rock that has prevented the rain from washing away all of this through the centruries:

Cumbemayo is at altitude of approximately 10,000´ to 10,500´ depending on who says it, it IS well above the city of Cajamarca.  This next picture shows some clouds coming in, that means rain will be coming soon! March is the height of the rainy season is Cajamarca, from about 1:00 PM to 8:00 PM it rains on and off, sometimes hard.

On the way back to the city, I asked our guide to stop so I could take a picture of the ancient and famous "Camino del Inca" (the Inca Highway, note that it could be a little rough as they did not have vehicles, llamas were their beast of burden, each can carry some 15 kg (35 lbs).  This part is no longer used.

After the tour, we went to their most famous landmark.  This next photo is perhaps Cajamarca´s most famous landmark: the "Cuarto de Rescate" (the ransom room).  The early Spaniards (under the still much-hated Pizarro to this day) had come to Cajamarca a few days ahead of Atahualpa (Atahualpa and his brother Huascar were engaged in a civil war to see who would be king).  The Spaniards captured him, and held him for a huge ransom (it is still not completely clear the chronology AFAIK) in the now famous room.  Here is the entrance:

The Inca agreed to turn over gold objects (plates, religious items, decorative artwork, etc. -- the Incas did not use gold or silver for money).  Atahulapa raised his hand to mark the level of the room where the gold would be piled up.  From all over the Inca empire, they complied, it worked out to 5000 kg of gold (worth some $240 million) as well as over twice that volume of silver (12,000 kg (worth some $10 million, all TODAY´S prices).  The picture below was painted somewhat recently (1900s?, I forget), but shows the Inca noting with his hand how high the gold and silver would be piled up.  And after the Incas paid the Spaniards the +/- $250 million worth of gold and silver?  Surprise!  They broke their word and strangled Atahualpa by garrotte...  To this day, most Peruvians still dislike the Spaniards, wait until you go to Cuzco and listen in...

They would not allow us into the roon itself, as it is under restoration (remind anyone of Italy?).  But, here are stonemasons restoring the room, the Spaniards destroyed ALL other Inca buildings in Cajamarca (unusual, because they often recycled Inca buildings into churches and other buildings), note the small rectangle to the upper left (of the door), which marks the level the Incas filled that room:

[Sidebar: the Spaniards took a LOT more gold than the $250 million or so from the Incas, these figures are just the RANSOM for Atahualpa, they went on to take/steal MUCH MORE later on]


The view of the "Plaza de Armas" (typically the main square in Peruvian cities and towns) from our hotel´s restaurant:

A corner scene, Cajamarca, Peru, note the lady´s hat at the left, each region of Peru has its distinctive local women´s wear...

A view up up to the shrine of Santa Apolonia (I do not know the story), I hiked up to the top (where the faint white cross is) to take a few photos.  Going up all of those steps at 9000 feet is more tiring than it looks...

Two panoramic photos from Sta. Apolonia of the city of Cajamarca, which sits in a kind of "bowl" in a valley, the first is towards the east, our hotel (obscure in this photo) is about dead center of the photo:

Another panoramic photo, to the southeast, note rain is coming!


My next two pieces on Cajamarca will be about:

-- Cajamarca and Ameru´s customer there as well as its automotive fleet
-- My interview with the Editor (an excellent and knowledgeable gentleman) of their newspaper!  Part of my interview with Mr. Jaime Abanto was about gold and the impact of the gold mines, present and future...