First up on Friday morning was Mickey Fulp, Mercenary Geologist. He took questions on his stock picks and other topics. He likes Athabasca Uranium and thinks that the SEC's probe into Molycorp is likely minor but will hurt other REE miners like Tasman Metals and Quest Rare Minerals. One guy in the audience threw out a random question about some movie called "Wall Street Conspiracy" that alleges organized crime is involved in uncovered shorting. Mickey thinks you have to find ways to make money in the markets anyway, although I think there's enough manipulation to make that difficult. Another guy asked about the disconnect between the price of gold bullion and gold mining stocks; Mickey uses the Toronto (TSX) Venture Exchange as a proxy for junior gold producers. He thinks big miners are now looking at dividend strategies and junior miners have underperformed because risk averse investors are dumping speculative stocks. Some clueless nutcase asked about a "billionaire gift tax;" Mickey had never heard of it and neither have I. When asked whether he likes silver producers, Mickey said he usually reviews silver companies that find silver deposits with base metals but would like to find a stand-alone silver company.
Jonathan Moore from Summit Business Media welcomed everyone to officially kick off the conference. Being an active participant is what I'm all about but the rest of the folks needed to hear it from Jonathan. He mentioned a couple of incentive games they had but I left those to attendees less fortunate than me.
Paul Van Eeden gave a keynote talk on "rational expectations." His take on monetary policy is radically different from what you'll find in most gold bugs' newsletters. He is correct in stating that the Fed will do anything to prevent deflation and that collapsed lending demand has destroyed the multiplier effect that would normally drive inflation. I differ with him in my expectation that this depressed multiplier is not at all a permanent condition. I expect some artificial stimulus to lending demand, probably from home mortgage modification programs. Anyway, Paul thinks the gold price's expectation of inflation is likely irrational because real world inflation hasn't fulfilled that expectation. I say just wait long enough for policy to force lending and gold will get all the inflation it expects. Paul also thinks gold, silver, and copper are still in a bull phase while every other metal has crashed (thanks to China's overbuilt infrastructure). He thinks junior stocks are acting like the prices of base metals because investors are losing their risk appetite, making them attractive buys. Paul concluded with his bullish case for the U.S. He said our high unemployment rate means labor is available, our low interest rates are good, and low energy costs from fracking and horizontal drilling are attractive. Maybe so Paul, but those interest rates won't stay low for long so any major producer that wants to buy a junior had better do so right now.
Adrian Day was up next, pondering whether miners have a tough road ahead if the resource boom is over. He noted that central banks have not restructured the balance sheet expansions they launched in 2008. He cited the U.S. Debt Clock's figures for how much the average American taxpayer owes in unfunded liabilities, which as of his address at the conference was over $1M/taxpayer. My SWAG-type estimate leads me to believe the Fed will be comfortable with a prolonged level of high inflation that reduces that liability to around $10K, or 1% of the present relationship. I have no historical basis for this estimate other than my impression that the average American won't tolerate outright cuts to entitlement programs and so policymakers must indulge this attitude by letting inflation do the job. Of course, the attendant second-order effects from high inflation won't be anyone's fault. I really need to get off this soap box and back to Adrian, who BTW said policymakers will do all it takes to keep interest rates low so the interest payments on government debt don't spiral out of control. He noted that many central banks are reducing their dollar holdings and that commodities move in long cycles as major economies industrialize and urbanize. I disagree with one thing Adrian said when he claimed China is still growing. I think their whole "industrialize and urbanize" phase is pretty much ending as they hit a demographic wave of peak earnings and wring debt out of government-backed development entities. I got over the China bull story even though it took me a long time to realize their numbers are fraudulent. Adrian's a smart guy and I'm counting on him to see the light soon.
I listened to Jeb Handwerger share some ideas from his newsletter. Here's one astute observer who notes that a significant portion of the U.S. population pays no income tax; he said two thirds but the exact number is up for debate if you include those who pay some state income tax. Jeb notes that Europe's socialist/Keynesian policies led to austerity and revolts, and that this is soon coming to the U.S. thanks to our entitlement programs (bingo, I agree). Jeb intrigued me when he said the fiscal cliff deal is already done in Washington and the public rhetoric is just politics. When you think about it, all Congress has to do is send the President a bill delaying the implementation of the year-end automatic cuts indefinitely. Presto! Cliff averted, can kicked, problems unresolved. I also agree with Jeb's statement that this means the Fed will print a way out of the fiscal cliff. He expects gut-wrenching hyperinflation to bring exponential gains to hard asset investors within a decade. Jeb picked up on something I've been seeing with increasing regularity since I started attending these shows, namely that new resource discoveries are getting harder. I even see that in weekly roadshow presentations from exploration companies that get excited over a few tenths of a gram of metal they claim to have found. Folks, these discovery dearths will drive major producers to acquire solid junior producers.
Keith Schaeffer told us that oil is worth a lot, natural gas is worth less than oil, and we can expect a boon for oil services. The Marcellus boon is enormous. Low inventories and rising production should support oil prices. Distillates are important to the world economy and demand for them remains high. New gas finds often have value-added products. A global policy shift against nuclear energy makes LNG attractive. No new refineries are being built in the U.S. He mentioned some stocks he likes because bottlenecks at refineries make them attractive, plus they pay dividends. I'll compare them in a separate blog posting once I have a chance to view their ROEs and other fundamentals. Good job, Keith.
I didn't spend much time with the exhibiting companies' pitches in the main hall but one had a funny tag line. The guy from Bullfrog Gold made my day when he said, "Bullfrog Gold is ready to jump!" That's a classic. I have no idea whether that's an accurate assessment so maybe I should cover them in a separate blog post.
Benjamin Cox from Oren Inc. gave an absolutely outstanding workshop on using data from financing rounds to evaluate a mining company's viability. Ben once worked for D.E. Shaw and brings a much-needed quantitative voice to the cottage industry of junior mining. His nuggets of wisdom came fast and furious and I enjoyed listening. Here it comes, line by line. A mining project that provokes NIMBY bumper stickers will likely have permitting problems. Management must work 70 hours per week. Companies repeatedly financing for small amounts with large dilution are problems. Inelastic demand for a commodity makes it desirable for mining (hey, I'm thinking there's hope yet for silver and rare earths). Zinc is useful in galvanized products for infrastructure so no zinc means buildings rust and fall down (listen up, China). The massive $5T in capital tied up in steel milling makes coking coal indispensable (well, I think there's more to it than that, like demand for steel and aluminum products, but it's an okay starting thesis). I was very intrigued by his admiration for co-branded mining companies because they can share supporting resources; I see these mining companies all the time but it seems to me like they're stuck between spinouts. Viewing them as mini-conglomerates puts them in a whole new light but let's not forget how the inefficiencies of conglomerate mergers in the 1970s put the whole "sharing resources" theory through a major wringer.
Benjamin continued on a roll by mentioning free tools investors should use: Google Earth to view a property's geography; USGS Mineral Resources Program to learn about metals; SEDAR for viewing Canadian public company filings; the Fraser Institute's Economic Freedom index to assess political risk; and common sense. He was of course pitching Oren's paid notification services but much of the data he used to walk us through mining deal financing was free of charge. Here comes more free wisdom from this sharp guy. Successful financing closes indicate a company that's executing its business model. Brokers are rational and charge more to raise money for harder projects. Broker fees are thus indicators of a project's difficulty. A fully subscribed book indicates success. A short time to close a deal is good, and so is an oversubscribed deal. Companies can review Oren's tear sheets to see if a broker fits their deal by average deal size, number of total deals, and percent of deals with warrants. A bought deal is a broker's promise to close a financing round with its own money, and for Benjamin that's a useful indicator of a broker's confidence in a company's prospects.
Benjamin surprised me when he said he likes companies that pay management decent salaries because real talent doesn't come cheap. Management that works for free indicates little value added. The exception for him is a management team that owns a big stake in their company because they're getting paid in equity. That's actually in line with Silicon Valley metrics for tech startups. One thing I like about Oren's model is their use of this data to find troubled deals, then examine the company from a vulture investor's standpoint to see if they have quality hidden assets worth buying. Man, this talk was a joy to behold because it's so rare to see a serial entrepreneur lay out a value creation philosophy with multiple applications.
It wouldn't be a hard assets show without a keynoter from James Dines, legendary analyst and employer of attractive female models. He was in classic form, sticking with his prediction of a further slowdown in China. He expects China to spark a dollar crisis when it reduces its dollar holdings for gold to bail out its insolvent banks. I'm skeptical of global warming, so I have a hard time swallowing his admonition against buying sea-level real estate. I further doubted his claim that rare earth mining stocks will recover after tax-loss selling. Come on James, a slowdown everywhere will keep REE demand down. He sees the U.S. government becoming the world's largest landlord with housing bailout programs. I think James is counting on more foreclosures while the Fed retains ownership of massive amounts of mortgage-backed securities to make that prediction come true. James is obviously a precious metals fan but warns us not to keep precious metals on our person or in our homes (yeah dude, that means you have to trust a bank vault instead). James predicts a whole bunch of disruption from online learning, religious wars, regional separatism, cyberwar in World War IV, and a U.S. police state. He restated the main geopolitical thesis from one of his books, that political activity oscillates between whether the state or the individual is supreme. He also plugged Photocyclops, his reprint service for his fine art photography. I had no idea he was into taking pictures, but then again his models provide some great scenery.
Rohit Savant from CPM Group broke down the costs of production, 50% of which is labor. The lead times of bringing new mines online mean supply changes will lag changes in operating margins, so profits rise or fall ahead of supply changes. Metal prices are the most important factor driving exploration spending. Country risk is the largest risk in mining. The dental sector is the third largest source of gold demand but palladium is becoming a more cost-effective substitute. A recent sharp rise in cash costs squeezed margins across the mining sector, explaining why gold mining stocks have underperformed bullion. His figure that 90% of gold from primary mines had a cash cost of less than $1052/ounce leads me to believe that many gold producers can survive as long as fear of inflation keeps gold prices high, even though they'd be unprofitable in normal times.
I skipped Ian McAvity's address because I heard enough of him in the past and I don't need to hear him anymore. I instead went to hear about Precious Metals Warrants but after forty minutes I realized I had heard precious little about how to invest. I did hear that currencies will engage in competitive devaluation at some point but with no indication of which those would be. I also heard praise for limit orders, which I consider to be amateur's tools. I stopped using limit orders years ago when I figured out that selling options could accomplish the same thing and even generate cash. I'll blog the stock picks I heard separately.
Rick Rule was the next keynoter. This guy is one terrific salesman. If I were running a brokerage I'd show recordings of his talks to the sales force because he can spin any macroeconomic environment into a bullish argument. Rick used a sales sign analogy to argue that people are good at shopping for goods on sale but not for financial assets. He thinks we're in a cyclical decline within a secular bull market for commodities because supply constraints will persist from a lack of exploration. He thinks the "return-free risk" proposition of Treasuries is questionable (I agree, which is why I no longer own fixed income). Rick expects to see takeovers in the gold sector; it produces a Carlin trend equivalent annually with no replacement from discovery. He laid out Sprott's three criteria for buying a mining stock: NPV greater than enterprise value of the company plus the capex of its mine; an IRR greater than 25% (ideally 30%); and a payback period of three years or less. He finished by noting that a company's timeline from preliminary economic estimate to bankable feasibility should be about two years, as this progression adds value and allows for arbitrage by investors. My takeaway from that observation is a company that can't go from PEA to feasibility in two years isn't a worthy investment.
Lindsay Hall from RMB Group gave a workshop on commodity futures options. She was one seriously hot chick and I wouldn't mind exploring an option in her future, if you know what I mean. It's too bad I didn't have time to get her phone number because I was too busy taking notes in her workshop. Maybe that's just as well, because she probably would have been too overwhelmed by my sheer manliness to focus on her presentation. Anyway, she cited figures projecting the U.S. will still have an imported oil dependency in 2035, which contradicts the IEA's recent report concluding the U.S. is on its way to oil independence. She devoted a large portion of her time to a bunch of scary headlines about Iran's threats to stability in the Persian Gulf. That is too much emphasis on sensational Iranian rhetoric with no analysis of the country's order of battle or out-of-cycle force movements. She mentioned some report that Iran successfully tested a missile that has range to U.S. bases in the region, but offered no consideration of the warhead's blast radius or circular error probability. I think it's cute when amateurs with sales backgrounds try to frighten other amateurs. Her pitch on option spreads made sense and even introduced the concept of an "oil CD," where you devote a portion of your capital to a bull call spread on oil futures and the rest to a CD with a matching maturity.
Louis James from Casey Research was on the platform talking about "quality, man." He meant that engineers' economic studies on feasibility drive a mining company's quality. A published study that doesn't move a stock's price may mean the study was meaningless. Saying "no" to many deals is good because we can wait for Warren Buffett's fat pitch when an engineering study shows us quality. I like this Louis guy. I first heard him last year at the Rare Earths Summit and he's definitely sharp.
The keynote panel on up and coming stocks churned out a bunch of picks in uranium, phosphate, and energy technology. I'll get to them all eventually in separate articles but it was cool to hear more about uranium in particular. I did not know that the uranium market had a supply glut when Japan's reactors all went offline.
Saturday morning brought back Rick Rule for some introductory Q&A prior to the official opening of the second day. Someone asked him about stories on fake gold bars; he mentioned that Sprott's policy is to buy only bars with well-known custodial histories and store them in the Royal Canadian Mint. Rick senses the possibility of a psychotic break in the market and was glad he had lots of cash on hand in 2008 to use when people made panic sell decisions. He thinks the euro/dollar ratio at 1:1 makes sense but they have two common problems. First, they are transfer mechanisms for unsustainable liabilities in societies that have lived beyond their means. Second, they are subject to downward manipulation (I presume through monetary stimulus). I like Rick's florid use of language when he says interest rates area function of confidence and that Western governments are at war with savers. I'll bet Mitt Romney would agree with Rick's statement that spenders outnumber savers and are a bigger constituency for low interest rates. Rick was astonished that the official CPI calculation doesn't factor in taxes and doesn't account for the aggregation of debt. I'm not so astonished myself, partly because we all have different effective tax rates and partly because accounting for unpayable debts would drive the official CPI through the roof. I was pleased when Rick said he had a high opinion of Allied Nevada, a junior stock I owned until it doubled a few years ago. I re-connected with one of that company's principal backers at this conference to thank him personally for doing a great job.
Rick Rule then got to the main part of his talk on how to interview the management teams of junior mining companies. Here's my recollection of his thought process. The first thing to know in interviewing management is that their prepared pitch minimizes management stress. Juniors create value by answering unanswered questions. Will they make a discovery? Is the discovery worth anything via execution? Junior companies are not asset plays because they typically don't have proven and probable reserves. They're really more like an intellectual property play in Silicon Valley that needs R&D. People are more important than property in early stages. Rick advises us to ask CEOs about their specific skill sets and previous successes. This will help find the Pareto 20% of managers who have the best chance to succeed. More questions for the CEO: Who's the second most important person in your company and why did you hire them? What are their specific skills and successes? What role does each director have? Use these questions to reach an early conclusion that some CEOs just want to raise money so they can cash out. Rick says that a small mine can't make you big money. If a CEO seeks a more attractive deposit they can expand, ask for evidence. Ask the CEO how they will test their exploratory thesis. A good explanation of an execution plan helps you eliminate companies that will generate a random result rather than a deliberate one. Another thing to ask a CEO: If your last success was at a different location, in different terrain, with different minerals . . . what makes you think you can apply those skill sets to a project you haven't done before? A medical analogy would be that oncology is not the same as neurology, so gold expertise does not necessarily translate to copper. Not all mining is the same. Rick's further questions for a CEO: How much money must you spend on ground over a specific time period? What's your monthly burn rate? How much cash do you have on hand now? Know that it takes money to answer the company's unanswered questions and succeed. More questions: What if limited drilling yields poor results? Will you continue? Most projects lose, so you need big winners to subsidize many losses. More questions: How will I find out about your company's success? Via press release, or may I call you to find out results? These answers reveal whether management thinks granularly about drill results. Rick warns us that we'll never get perfect answers to every question. The purpose of asking is to whittle down one's list of companies to a small list that will increase the chance of successful investing. Rick closed by saying that his prospect generator companies have significantly outperformed.
Pam Aden from the Aden Forecast was one keynoter I did not need to hear. She claimed we're in the twelfth year of a bull market, so I guess she hadn't heard of the 2007-2009 bear market. Maybe she meant gold and not stocks but it really wasn't clear from her data. She projected some charted bubble peaking in 2013, but what she meant still wasn't clear. Her whole thesis for buying gold rested on technical analysis of channels. Puh-lease. That's when I picked up and left.
Chris Berry from House Mountain Partners gave a great workshop on the supply and demand fundamentals behind the rare earth sector. I first met Chris this past March at TREM12 in Washington, DC, when I was on a panel with his father Dr. Michael Berry. He's a chip off the old block and sharp as a tack. He argued that each REE has its own supply/demand mix. Problems for major REE producers like Molycorp and Lynas spell opportunity for juniors. China's REE exports are down because global demand is weak. Chris thinks Moylcorp's book value is greater than its market value, so its problem is management rather than assets. He thinks that makes Molycorp a buyout target; I'm not so sure, because with earnings going negative and ROE negative for the last twelve months an acquirer would be hard pressed to add value simply by changing management. The debt load Molycorp carries from its last big acquisition will persist. Anyway, Chris also noted that lanthanum's record price increase last year only added one cent per gallon to the price of gasoline. He believes that REE juniors need to raise cash with a dilution strategy, off-takes, intellectual property, and supply chain integration. Bigger does not mean better for REE producers because they must have what the market wants; just look at Molycorp. Well done, Chris.
Brent Cook from Exploration Insights shared his wisdom. He said producers' margins are not increasing with the price of gold because cash costs are increasing and deposit quality is declining. Discoveries are down significantly and annual production is outpacing new discoveries. Majors must replace their lost production and quality deposits command a premium. Not all deposits are identical; geology must confirm an investment thesis. Topography determines whether mining facilities are physically realistic, and showed a photograph of steep hills cut by deep ravines as an example of an infeasible site with no flat areas for milling or heap leaching. Brent likes prospect generators with smart business models, some of which he describes in his free articles. His website has an excellent free report with insights into geology and mining, and a link to Sprott's free mining investment explanatory materials.
I went to Paul Van Eeden's workshop to hear more of his contrarian perspective. He's bearish on gold because he thinks it's too expensive. He also thinks the world has passed Peak Oil and that U.S. oil shale deposits are experiencing much more rapid decline rates than first predicted, making it unlikely the U.S. will fulfill the IEA's prediction of becoming a leading oil producer. He sees opportunity in natural gas given its low prices but depletion rates are high. I think Paul should read the NYT's investigative series on the shale gas bubble because it will help confirm his thesis that there's less to the shale revolution than what's advertised. He puts the fair value for gold at $800-900/oz (I say that's still too high, far above its historical average) and openly questions valuing it in U.S. dollars given U.S. inflation rates. I personally don't mind gold measured in U.S. dollars because I'm a U.S.-based investor, my portfolio is denominated in U.S. dollars, and my living expenses are in U.S. dollars. Paul noted that high gold prices mean miners produce low grade ore veins first, saving high grade deposits for times when gold prices are low. It was interesting to hear him say the Fed has stabilized its balance sheet by matching purchases of new securities with sales of ones it currently owns. Paul is a fan of this Fed's anti-deflation strategy. I marvel at the risk the Fed takes and wonder why it has yet to lose money on a trade. The next couple of years will reveal whether Paul is correct to place such confidence in Ben Bernanke's PhD thesis / wish fulfillment.
Chris Gaffney from EverBank keynoted his macroeconomic perspective. Investors now understand that Greek debt is riskier than German debt and so PIIGS interest rates have risen (IMHO hedge funds still haven't figured this out and that's why they're so dumb). Europe's rescue fund is too small to cover a potential default by Italy (IMHO analysts haven't figured this out yet and that's why they're so dumb). Chris thinks the euro will survive because it's too important to Germany as an export promotion mechanism. I strongly disagree with that notion. IMHO losing one eurozone member breaks a taboo and others will follow to avoid being the last Prisoner's dilemma victim remaining. I'm also pretty sure German taxpayers have limits to their patience and will vote out incumbents who wantonly subsidize profligate countries' debts. Anyway, back to Chris' arguments. He expects the U.S. federal government to push its fiscal responsibilities onto state and local governments forcing them into their own budget crises. He is not alone among the other gurus here in expecting a false solution to the fiscal cliff that will delay its consequences into the future. He likes Shadow Stats' inflation measure (so do I) and notes Paul Krugman wants more inflation (revoke that man's Nobel Prize in Economics). Chris uses the Economist's back page statistics to show how countries with high current account balances generate demand for their currencies. He finally gets to some currency picks. He likes Norway because it's an oil-based economy; Sweden for some odd reason I can't recall; Australia for its exports of natural resources to China (yeah, not for much longer); Canada for its strong banks; and also Singapore, China, and gold. I can't agree with his pick for Singapore because it's such a thinly traded currency or China because I think they'll have to hyperinflate away their debts just like the U.S. Otherwise, Chris really did his homework.
I never miss Al Korelin's address because the guy's a legend in financial journalism, although I'm pretty sure he hits the same basic themes every year at this show. He advises us all to get information from as many sources as possible, and to be diversified even within metals and other hard assets. He predicts the growth of U.S. government involvement in the economy will hurt the stock market and help hard assets. He prefers to invest in companies rather than commodities because companies give him leverage (i.e., it's a truism in mining that companies with a levered balance sheet will rise faster when metal prices rise because their prospects of paying off that debt just increased mightily). He evaluates mining companies on management, asset quality confirmed by assessment, ability to execute, and location in the world (i.e., minimal political risk). He also thinks the current administration will favor taxing mining companies as a revenue source. That's a scary thought, sort of like a windfall profits tax taken to an extreme for a hot sector.
I had to hear more from Louis James over at his workshop because his address on "quality, man" was so great. I like his irony when he said President Obama's victory provides clarity with an open advocacy of higher taxes and an anti-rich mentality. Louis thinks the precious metals markets haven't peaked yet. I think that's a kind way of saying they're overvalued, which is why I've reduced the gold portion of my portfolio from the large concentration I had a couple of years ago. Louis says not to panic when the market drops, just keep averaging down. His counterpoint to skeptics who say companies can't raise billions in capex for big projects is to evaluate the project's potential returns. Global capital markets are big enough to fund desirable projects now matter how big they look. Louis' next piece of advice will probably fall on deaf ears but it's worth repeating. He advises investors not to invest unless a company meets their decision criteria with high standards. I really do think too many people will ignore that and instead give in to some great story's temptation, but Louis does the public a great service by putting this out there anyway. Louis framed his "cash, courage, and contrarianism" approach for everyone to benefit. Courage enables you to ignore short-term market action if you are confident in your long-term strategy. Contrarianism enables you to buy a stock even if its price has been beaten down. Cash allows you to make this happen. Have all three factors and you're probably going to win, at least some times IMHO. He added that there's no one safe place to invest in mining because it's unpopular everywhere for being dirty, messy, and costly. His criteria for investing in a mining stock includes a 2x return in 12 months, which interestingly enough reminds me of Mickey Fulp's philosophy. Louis also thinks the gold/silver ratio is a poor indicator of either metal's price movement. I totally agree, and I roll my eyes whenever some analyst throws out a ratio of a metal to another metal, the DJIA, or anything else except a currency an investor must use to buy said metal.
It wouldn't be a Hard Assets show without Peter Schiff on the keynote roster. I got my picture taken with this true icon of finance when he appeared in his booth (check my Facebook archive). Peter went on a tour de force of the U.S. and its dollar. Here comes my summary of this man's brilliance, with no adulteration on my part. At some point, the Fed won't be able to fool the world anymore. It won't be able to withdraw liquidity (by selling securities) to fight inflation. The Fed must thus continue to lie and pretend there's no inflation. Inflation drives up mail delivery costs but the price of stamps is fixed to the CPI. That's why USPS is going bankrupt. "Fiscal cliff" means we actually have to pay for government spending with taxes, not debt. Politicians' promises aren't free and the fiscal cliff is the price we have to pay. Even the fiscal cliff's spending cuts aren't really cuts, but smaller future increases. The real cliff comes when the Fed can no longer keep interest rates artificially low. Artificially setting interest rates creates distortions, especially if inflation is greater than the official interest rate. Peter believes interest rates must rise to around 7% but this will cause pain. The U.S. government has admitted its debt is a Ponzi structure when our leaders say the government will default if they can't raise the debt ceiling. About one third of U.S. debt matures in a year and the Treasury plans to keep rolling it. Big banks will fail if interest rates rise and the Fed never stress tested this outcome. Banks profit now from the spread of the Treasuries they buy over Fed credit they owe. Higher rates will flip that spread and destroy banks. The deficit skyrockets when the U.S. government can't collect taxes in a recession to cover exploding spending on freebies (i.e., EBT cards for the bottom 47%). The U.S. has a reprieve right now due to Europe's problems making the dollar relatively stronger. If the U.S. tried to finance its sovereign debt by selling long term bonds, then long term rates would be skyrocketing. A sharp rise in interest rates will put trillions of losses on the Fed's balance sheet. The world will call the Fed's bluff when it takes its attention off Europe (if/when it blows up) and starts a run on the dollar. The U.S. Dollar Index will go into freefall, consumer prices will rise, and the Fed's credibility will be gone. Peter believes we face either hyperinflation or a deflationary collapse worse than the 2008 crisis. Politicians will opt for inflation because it buys them time but each round of monetary stimulus is less effective than the last. Peter expects a monetary crisis and sovereign debt crisis right here in America. My loyal readers know I expect a similar outcome. The funniest part of Peter's talk came when he asked rhetorically how the Fed and Treasury will bail each other out, because Treasury is required by law to make whole the Fed's losses but the Fed is buying Treasuries! The audience LOL'd but I was too sad to join in. I expect the government will have to invent brand new accounting rules for itself to make that problem disappear after the dollar crisis.
The next big speaker I cared about was Dr. Michael Berry, my fellow TREM12 panelist. I read his Morning Notes daily for insights into junior producers, and here come more of his insights with as little filtering as I can manage. Dr. Berry believes debt and taxes are negatively correlated (right on!) and some tax increases plus austerity are likely. It's easier to raise taxes than cut spending. Entitlement expectations finally make deliberate debt reduction impossible (hey, thanks to the 47% who enjoy being victims). The final curse of the reserve currency dollar is unrestrained debt issuance. The administration will demand much higher taxes in its second term (IMHO probably a negotiating tactic for now but who knows). "Taxmageddon" means rates up and credits down. The non-partisan Tax Foundation publishes tax changes by state. The effect of more taxation will be to decrease consumption and GDP. The Fed's ZIRP is financial repression (yes indeed!), forcing savings into Treasuries. Austerity's effect on household income will hurt the housing market. The administration believes it has a mandate to force more taxes on the wealthy but entitlement spending is unlikely to be seriously considered for reductions. This is all good news for precious metals, energy, and agriculture. Investments in ordinary debt and equity markets are likely to fall. Commodity volatility means trading opportunities (IMHO options and futures will come in handy). Dr. Berry looks for growth in water, potash, and silver stocks. Less liquid markets will sell off more quickly. Policymakers will expropriate your wealth! Dr. Berry showed his latest Discovery Investing scorecard and I noticed that some of the same companies were listed twice, both by their OTCBB ticker and TSX or TSXV ticker. Hopefully he can develop a filter that will prevent double-counting companies, unless of course the scorecard allows for arbitraging the same ticker in different markets. Dr. Berry's bottom line is that risk plays will help beat financial repression and taxation. Good show, Doc!
Quinton Hennigh from Exploration Insights gave a terrific workshop on separating the wheat from chaff in junior gold deposits. He mentioned that the DOW/gold ratio declines in tough times and heavy gold exploration coincides with that ratio's troughs. Costs are stable when mining proliferates but drilling costs have escalated in the last 20 years (I disagree with this scenario, as we see heavy mining activity today but with rising costs from higher energy prices). Digging deeper through more complex ore bodies drives up processing costs. He said he likes royalty companies because they pay better than junior producers! I think Louis "quality, man" James would like Quinton's investment criteria, so here they are. Criteria 1: Quinton likes juniors that find deposits a major would want to acquire. Criteria 2: Simple metallurgy suggests low processing costs. Criteria 3: Deposit veins are good when they good lateral and vertical continuity and are open in most directions. Criteria 4: Good deposits have uniformly high grades. That's a good wish list, so anything that doesn't fit is an investment candidate to throw away IMHO. Quinton also says juniors should avoid "chaff" veins. These ephemeral veins display poor continuity and tend to be "shooty" (I guess like shoots on a tree branch). Mineralogically complex veins have high processing costs. Mine engineers on site exercise "grade control" by differentiating ore from waste as truckloads of rock exit a pit. Too much waste means lost money. Oxidized rock is cheaper to process, so seeing it at shallow depth is a good sign. A high sulfidation gold system is bad because it is notoriously refractory and harder to process. It should also go without saying that concentrated ore bodies that are closer to the surface are cheaper to extract than dispersed ore bodies deeper down. Quinton's workshop answered a lot of the questions I had always pondered while staring at geological findings in company roadshow presentations.
The last key speaker I saw was Jay Taylor, another gold legend. Jay noted that debt in the U.S. has grown faster than income, making us an insolvent nation. M2 velocity is very low. Speculative investment vehicles hurt first in contraction periods (LOL bye-bye stupid hedge funds!). Jay is another guy who likes royalty companies and well-funded project generators! Maybe I'm missing something here, but it seems like experts recognize value in business models that return the value of extracted resources to investors by way of dividends and royalties.
Louis James from Casey Research was on the platform talking about "quality, man." He meant that engineers' economic studies on feasibility drive a mining company's quality. A published study that doesn't move a stock's price may mean the study was meaningless. Saying "no" to many deals is good because we can wait for Warren Buffett's fat pitch when an engineering study shows us quality. I like this Louis guy. I first heard him last year at the Rare Earths Summit and he's definitely sharp.
The keynote panel on up and coming stocks churned out a bunch of picks in uranium, phosphate, and energy technology. I'll get to them all eventually in separate articles but it was cool to hear more about uranium in particular. I did not know that the uranium market had a supply glut when Japan's reactors all went offline.
Saturday morning brought back Rick Rule for some introductory Q&A prior to the official opening of the second day. Someone asked him about stories on fake gold bars; he mentioned that Sprott's policy is to buy only bars with well-known custodial histories and store them in the Royal Canadian Mint. Rick senses the possibility of a psychotic break in the market and was glad he had lots of cash on hand in 2008 to use when people made panic sell decisions. He thinks the euro/dollar ratio at 1:1 makes sense but they have two common problems. First, they are transfer mechanisms for unsustainable liabilities in societies that have lived beyond their means. Second, they are subject to downward manipulation (I presume through monetary stimulus). I like Rick's florid use of language when he says interest rates area function of confidence and that Western governments are at war with savers. I'll bet Mitt Romney would agree with Rick's statement that spenders outnumber savers and are a bigger constituency for low interest rates. Rick was astonished that the official CPI calculation doesn't factor in taxes and doesn't account for the aggregation of debt. I'm not so astonished myself, partly because we all have different effective tax rates and partly because accounting for unpayable debts would drive the official CPI through the roof. I was pleased when Rick said he had a high opinion of Allied Nevada, a junior stock I owned until it doubled a few years ago. I re-connected with one of that company's principal backers at this conference to thank him personally for doing a great job.
Rick Rule then got to the main part of his talk on how to interview the management teams of junior mining companies. Here's my recollection of his thought process. The first thing to know in interviewing management is that their prepared pitch minimizes management stress. Juniors create value by answering unanswered questions. Will they make a discovery? Is the discovery worth anything via execution? Junior companies are not asset plays because they typically don't have proven and probable reserves. They're really more like an intellectual property play in Silicon Valley that needs R&D. People are more important than property in early stages. Rick advises us to ask CEOs about their specific skill sets and previous successes. This will help find the Pareto 20% of managers who have the best chance to succeed. More questions for the CEO: Who's the second most important person in your company and why did you hire them? What are their specific skills and successes? What role does each director have? Use these questions to reach an early conclusion that some CEOs just want to raise money so they can cash out. Rick says that a small mine can't make you big money. If a CEO seeks a more attractive deposit they can expand, ask for evidence. Ask the CEO how they will test their exploratory thesis. A good explanation of an execution plan helps you eliminate companies that will generate a random result rather than a deliberate one. Another thing to ask a CEO: If your last success was at a different location, in different terrain, with different minerals . . . what makes you think you can apply those skill sets to a project you haven't done before? A medical analogy would be that oncology is not the same as neurology, so gold expertise does not necessarily translate to copper. Not all mining is the same. Rick's further questions for a CEO: How much money must you spend on ground over a specific time period? What's your monthly burn rate? How much cash do you have on hand now? Know that it takes money to answer the company's unanswered questions and succeed. More questions: What if limited drilling yields poor results? Will you continue? Most projects lose, so you need big winners to subsidize many losses. More questions: How will I find out about your company's success? Via press release, or may I call you to find out results? These answers reveal whether management thinks granularly about drill results. Rick warns us that we'll never get perfect answers to every question. The purpose of asking is to whittle down one's list of companies to a small list that will increase the chance of successful investing. Rick closed by saying that his prospect generator companies have significantly outperformed.
Pam Aden from the Aden Forecast was one keynoter I did not need to hear. She claimed we're in the twelfth year of a bull market, so I guess she hadn't heard of the 2007-2009 bear market. Maybe she meant gold and not stocks but it really wasn't clear from her data. She projected some charted bubble peaking in 2013, but what she meant still wasn't clear. Her whole thesis for buying gold rested on technical analysis of channels. Puh-lease. That's when I picked up and left.
Chris Berry from House Mountain Partners gave a great workshop on the supply and demand fundamentals behind the rare earth sector. I first met Chris this past March at TREM12 in Washington, DC, when I was on a panel with his father Dr. Michael Berry. He's a chip off the old block and sharp as a tack. He argued that each REE has its own supply/demand mix. Problems for major REE producers like Molycorp and Lynas spell opportunity for juniors. China's REE exports are down because global demand is weak. Chris thinks Moylcorp's book value is greater than its market value, so its problem is management rather than assets. He thinks that makes Molycorp a buyout target; I'm not so sure, because with earnings going negative and ROE negative for the last twelve months an acquirer would be hard pressed to add value simply by changing management. The debt load Molycorp carries from its last big acquisition will persist. Anyway, Chris also noted that lanthanum's record price increase last year only added one cent per gallon to the price of gasoline. He believes that REE juniors need to raise cash with a dilution strategy, off-takes, intellectual property, and supply chain integration. Bigger does not mean better for REE producers because they must have what the market wants; just look at Molycorp. Well done, Chris.
Brent Cook from Exploration Insights shared his wisdom. He said producers' margins are not increasing with the price of gold because cash costs are increasing and deposit quality is declining. Discoveries are down significantly and annual production is outpacing new discoveries. Majors must replace their lost production and quality deposits command a premium. Not all deposits are identical; geology must confirm an investment thesis. Topography determines whether mining facilities are physically realistic, and showed a photograph of steep hills cut by deep ravines as an example of an infeasible site with no flat areas for milling or heap leaching. Brent likes prospect generators with smart business models, some of which he describes in his free articles. His website has an excellent free report with insights into geology and mining, and a link to Sprott's free mining investment explanatory materials.
I went to Paul Van Eeden's workshop to hear more of his contrarian perspective. He's bearish on gold because he thinks it's too expensive. He also thinks the world has passed Peak Oil and that U.S. oil shale deposits are experiencing much more rapid decline rates than first predicted, making it unlikely the U.S. will fulfill the IEA's prediction of becoming a leading oil producer. He sees opportunity in natural gas given its low prices but depletion rates are high. I think Paul should read the NYT's investigative series on the shale gas bubble because it will help confirm his thesis that there's less to the shale revolution than what's advertised. He puts the fair value for gold at $800-900/oz (I say that's still too high, far above its historical average) and openly questions valuing it in U.S. dollars given U.S. inflation rates. I personally don't mind gold measured in U.S. dollars because I'm a U.S.-based investor, my portfolio is denominated in U.S. dollars, and my living expenses are in U.S. dollars. Paul noted that high gold prices mean miners produce low grade ore veins first, saving high grade deposits for times when gold prices are low. It was interesting to hear him say the Fed has stabilized its balance sheet by matching purchases of new securities with sales of ones it currently owns. Paul is a fan of this Fed's anti-deflation strategy. I marvel at the risk the Fed takes and wonder why it has yet to lose money on a trade. The next couple of years will reveal whether Paul is correct to place such confidence in Ben Bernanke's PhD thesis / wish fulfillment.
Chris Gaffney from EverBank keynoted his macroeconomic perspective. Investors now understand that Greek debt is riskier than German debt and so PIIGS interest rates have risen (IMHO hedge funds still haven't figured this out and that's why they're so dumb). Europe's rescue fund is too small to cover a potential default by Italy (IMHO analysts haven't figured this out yet and that's why they're so dumb). Chris thinks the euro will survive because it's too important to Germany as an export promotion mechanism. I strongly disagree with that notion. IMHO losing one eurozone member breaks a taboo and others will follow to avoid being the last Prisoner's dilemma victim remaining. I'm also pretty sure German taxpayers have limits to their patience and will vote out incumbents who wantonly subsidize profligate countries' debts. Anyway, back to Chris' arguments. He expects the U.S. federal government to push its fiscal responsibilities onto state and local governments forcing them into their own budget crises. He is not alone among the other gurus here in expecting a false solution to the fiscal cliff that will delay its consequences into the future. He likes Shadow Stats' inflation measure (so do I) and notes Paul Krugman wants more inflation (revoke that man's Nobel Prize in Economics). Chris uses the Economist's back page statistics to show how countries with high current account balances generate demand for their currencies. He finally gets to some currency picks. He likes Norway because it's an oil-based economy; Sweden for some odd reason I can't recall; Australia for its exports of natural resources to China (yeah, not for much longer); Canada for its strong banks; and also Singapore, China, and gold. I can't agree with his pick for Singapore because it's such a thinly traded currency or China because I think they'll have to hyperinflate away their debts just like the U.S. Otherwise, Chris really did his homework.
I never miss Al Korelin's address because the guy's a legend in financial journalism, although I'm pretty sure he hits the same basic themes every year at this show. He advises us all to get information from as many sources as possible, and to be diversified even within metals and other hard assets. He predicts the growth of U.S. government involvement in the economy will hurt the stock market and help hard assets. He prefers to invest in companies rather than commodities because companies give him leverage (i.e., it's a truism in mining that companies with a levered balance sheet will rise faster when metal prices rise because their prospects of paying off that debt just increased mightily). He evaluates mining companies on management, asset quality confirmed by assessment, ability to execute, and location in the world (i.e., minimal political risk). He also thinks the current administration will favor taxing mining companies as a revenue source. That's a scary thought, sort of like a windfall profits tax taken to an extreme for a hot sector.
I had to hear more from Louis James over at his workshop because his address on "quality, man" was so great. I like his irony when he said President Obama's victory provides clarity with an open advocacy of higher taxes and an anti-rich mentality. Louis thinks the precious metals markets haven't peaked yet. I think that's a kind way of saying they're overvalued, which is why I've reduced the gold portion of my portfolio from the large concentration I had a couple of years ago. Louis says not to panic when the market drops, just keep averaging down. His counterpoint to skeptics who say companies can't raise billions in capex for big projects is to evaluate the project's potential returns. Global capital markets are big enough to fund desirable projects now matter how big they look. Louis' next piece of advice will probably fall on deaf ears but it's worth repeating. He advises investors not to invest unless a company meets their decision criteria with high standards. I really do think too many people will ignore that and instead give in to some great story's temptation, but Louis does the public a great service by putting this out there anyway. Louis framed his "cash, courage, and contrarianism" approach for everyone to benefit. Courage enables you to ignore short-term market action if you are confident in your long-term strategy. Contrarianism enables you to buy a stock even if its price has been beaten down. Cash allows you to make this happen. Have all three factors and you're probably going to win, at least some times IMHO. He added that there's no one safe place to invest in mining because it's unpopular everywhere for being dirty, messy, and costly. His criteria for investing in a mining stock includes a 2x return in 12 months, which interestingly enough reminds me of Mickey Fulp's philosophy. Louis also thinks the gold/silver ratio is a poor indicator of either metal's price movement. I totally agree, and I roll my eyes whenever some analyst throws out a ratio of a metal to another metal, the DJIA, or anything else except a currency an investor must use to buy said metal.
It wouldn't be a Hard Assets show without Peter Schiff on the keynote roster. I got my picture taken with this true icon of finance when he appeared in his booth (check my Facebook archive). Peter went on a tour de force of the U.S. and its dollar. Here comes my summary of this man's brilliance, with no adulteration on my part. At some point, the Fed won't be able to fool the world anymore. It won't be able to withdraw liquidity (by selling securities) to fight inflation. The Fed must thus continue to lie and pretend there's no inflation. Inflation drives up mail delivery costs but the price of stamps is fixed to the CPI. That's why USPS is going bankrupt. "Fiscal cliff" means we actually have to pay for government spending with taxes, not debt. Politicians' promises aren't free and the fiscal cliff is the price we have to pay. Even the fiscal cliff's spending cuts aren't really cuts, but smaller future increases. The real cliff comes when the Fed can no longer keep interest rates artificially low. Artificially setting interest rates creates distortions, especially if inflation is greater than the official interest rate. Peter believes interest rates must rise to around 7% but this will cause pain. The U.S. government has admitted its debt is a Ponzi structure when our leaders say the government will default if they can't raise the debt ceiling. About one third of U.S. debt matures in a year and the Treasury plans to keep rolling it. Big banks will fail if interest rates rise and the Fed never stress tested this outcome. Banks profit now from the spread of the Treasuries they buy over Fed credit they owe. Higher rates will flip that spread and destroy banks. The deficit skyrockets when the U.S. government can't collect taxes in a recession to cover exploding spending on freebies (i.e., EBT cards for the bottom 47%). The U.S. has a reprieve right now due to Europe's problems making the dollar relatively stronger. If the U.S. tried to finance its sovereign debt by selling long term bonds, then long term rates would be skyrocketing. A sharp rise in interest rates will put trillions of losses on the Fed's balance sheet. The world will call the Fed's bluff when it takes its attention off Europe (if/when it blows up) and starts a run on the dollar. The U.S. Dollar Index will go into freefall, consumer prices will rise, and the Fed's credibility will be gone. Peter believes we face either hyperinflation or a deflationary collapse worse than the 2008 crisis. Politicians will opt for inflation because it buys them time but each round of monetary stimulus is less effective than the last. Peter expects a monetary crisis and sovereign debt crisis right here in America. My loyal readers know I expect a similar outcome. The funniest part of Peter's talk came when he asked rhetorically how the Fed and Treasury will bail each other out, because Treasury is required by law to make whole the Fed's losses but the Fed is buying Treasuries! The audience LOL'd but I was too sad to join in. I expect the government will have to invent brand new accounting rules for itself to make that problem disappear after the dollar crisis.
The next big speaker I cared about was Dr. Michael Berry, my fellow TREM12 panelist. I read his Morning Notes daily for insights into junior producers, and here come more of his insights with as little filtering as I can manage. Dr. Berry believes debt and taxes are negatively correlated (right on!) and some tax increases plus austerity are likely. It's easier to raise taxes than cut spending. Entitlement expectations finally make deliberate debt reduction impossible (hey, thanks to the 47% who enjoy being victims). The final curse of the reserve currency dollar is unrestrained debt issuance. The administration will demand much higher taxes in its second term (IMHO probably a negotiating tactic for now but who knows). "Taxmageddon" means rates up and credits down. The non-partisan Tax Foundation publishes tax changes by state. The effect of more taxation will be to decrease consumption and GDP. The Fed's ZIRP is financial repression (yes indeed!), forcing savings into Treasuries. Austerity's effect on household income will hurt the housing market. The administration believes it has a mandate to force more taxes on the wealthy but entitlement spending is unlikely to be seriously considered for reductions. This is all good news for precious metals, energy, and agriculture. Investments in ordinary debt and equity markets are likely to fall. Commodity volatility means trading opportunities (IMHO options and futures will come in handy). Dr. Berry looks for growth in water, potash, and silver stocks. Less liquid markets will sell off more quickly. Policymakers will expropriate your wealth! Dr. Berry showed his latest Discovery Investing scorecard and I noticed that some of the same companies were listed twice, both by their OTCBB ticker and TSX or TSXV ticker. Hopefully he can develop a filter that will prevent double-counting companies, unless of course the scorecard allows for arbitraging the same ticker in different markets. Dr. Berry's bottom line is that risk plays will help beat financial repression and taxation. Good show, Doc!
Quinton Hennigh from Exploration Insights gave a terrific workshop on separating the wheat from chaff in junior gold deposits. He mentioned that the DOW/gold ratio declines in tough times and heavy gold exploration coincides with that ratio's troughs. Costs are stable when mining proliferates but drilling costs have escalated in the last 20 years (I disagree with this scenario, as we see heavy mining activity today but with rising costs from higher energy prices). Digging deeper through more complex ore bodies drives up processing costs. He said he likes royalty companies because they pay better than junior producers! I think Louis "quality, man" James would like Quinton's investment criteria, so here they are. Criteria 1: Quinton likes juniors that find deposits a major would want to acquire. Criteria 2: Simple metallurgy suggests low processing costs. Criteria 3: Deposit veins are good when they good lateral and vertical continuity and are open in most directions. Criteria 4: Good deposits have uniformly high grades. That's a good wish list, so anything that doesn't fit is an investment candidate to throw away IMHO. Quinton also says juniors should avoid "chaff" veins. These ephemeral veins display poor continuity and tend to be "shooty" (I guess like shoots on a tree branch). Mineralogically complex veins have high processing costs. Mine engineers on site exercise "grade control" by differentiating ore from waste as truckloads of rock exit a pit. Too much waste means lost money. Oxidized rock is cheaper to process, so seeing it at shallow depth is a good sign. A high sulfidation gold system is bad because it is notoriously refractory and harder to process. It should also go without saying that concentrated ore bodies that are closer to the surface are cheaper to extract than dispersed ore bodies deeper down. Quinton's workshop answered a lot of the questions I had always pondered while staring at geological findings in company roadshow presentations.
The last key speaker I saw was Jay Taylor, another gold legend. Jay noted that debt in the U.S. has grown faster than income, making us an insolvent nation. M2 velocity is very low. Speculative investment vehicles hurt first in contraction periods (LOL bye-bye stupid hedge funds!). Jay is another guy who likes royalty companies and well-funded project generators! Maybe I'm missing something here, but it seems like experts recognize value in business models that return the value of extracted resources to investors by way of dividends and royalties.
Alrighty, it's time for the closing keynote panel moderated by Rick Rule. He had to get in a jab at James Dines for his attractive models but they mostly behaved themselves this year. Rick asked his panel how this year's election will matter. They thought is eliminated the possibility that a new President would fire Ben Bernanke, thus continued QE. James raised his usual ruckus about a coming calamity. Rick asked what the equity market is indicating. Some panelists said it portends a serious bear market and more poverty for Americans. James (of course) didn't even answer the question except to mention tax loss selling and even obliquely predicted a new political party (where that came from, who knows). Rick poked James by saying, "There's a couple of candidates in your booth that I'd vote for." Rick asked if the bond bull bubble would continue. One panelist thought that any reversal would mark the trade of the decade. James (again the original) thought pension funds will disappoint people and that it's smarter to live off capital than negative yield (yes, folks, there's a difference and some part of that capital will at least pay a dividend). Rick asked about monetary inflation and gold. Someone said a comment I really liked: "Gold is not an inflation hedge, it's a crisis/inflation hedge." I suppose I should put the emphasis on crisis but I'll let my readers chew it over. Rick asked whether deflationary periods are bullish for gold. One guy said that historically gold did better in real terms during deflation but we no longer have analogs for comparison because the world has used fiat currencies since the 1930s. Here's where Jim Dines went off on a wild tangent about China pursuing resources in Africa. I wish the guy would just give a straight answer once in a while, but when you're the senior mind in the precious metals analyst community I guess you have free reign. That means I have something to look forward to in three decades. Anyway, Rick's final question was about where the markets are in the junior resource cycle and whether anyone has a favorite subsector or stock. One guy thinks we're in a tremendous buying opportunity thanks to short selling. Jim likes REE stocks and said bullions are outperforming their respective stocks. He was a classic at the end, saying, "Whether you're rich or poor, it's good to have a lot of cash." I should have mentioned that one of my life goals is to be on one of these panels someday. I also should mention that the only real standout stock I noticed this year was Ucore, and I'll have more to say about it in a later article.
My only pet peeve about the show is that the organizers change the name every couple of years. It was the Gold Conference for a couple of decades, ending with the first year I attended in 2005. Then it was the Resource Conference, then Hard Assets, and next year it will be the Metals and Minerals Conference. These constant changes dilute the brand and lead to confusion for people who might be attracted to the resource sector but don't follow it regularly.
I'll render a final observation on my incentive to keep attending. James Dines deployed his local models once again but wouldn't allow me to have my picture taken with them. Bummer. I did notice that the investor relations dude hired by one of the junior miners kept hitting on those Dines Newsletter models. I've seen this IR dude do this at other conferences and I wonder when he'll find the time to promote the company that hired him. Argh, kids these days.
Full disclosure: No positions in companies mentioned unless specifically noted. No consideration was offered, rendered, or accepted for any mention of any financial or information service mentioned. Nothing in this article constitutes an endorsement of any product or service.
