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Armodios Papagianakis
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Armodios serves as Managing Director for Dynamis Capital Management LLC and lead portfolio manager for Dynamis Partners Fund LP. He has nearly 20 years of both retail and institutional investment, trading and management experience with some of Wall Street’s leading financial institutions.
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Dynamis Capital Management LLC
  • Golden Opportunity For Greece 0 comments
    Sep 18, 2013 4:33 PM | about stocks: GLD, EGO

    Gold; the word itself has always evoked grand images of splendor, money and power. Throughout the ancient world, gold was the ideal medium of exchange because it encompassed the four characteristics of "good money", as defined by Aristotle himself.

    Gold was, and still is; durable, portable, divisible, and most importantly widely recognized by society as having intrinsic value due to its relative scarcity and physical appeal.

    In ancient Greece, gold financed the Peloponnesian Wars, and adorned the heads of Greek monarchs King Philip of Macedon and Alexander the Great. Much of that gold was extracted from the Olympias and Skouries mines in Chalkidiki, and the Perama Hills mines in Thrace. Today, those same centuries-old mines, either mothballed and/or under-exploited for decades, due political pressure from left leaning unions, politicians and environmentalists have become a hotbed of controversy, violence and strikes that now includes residents from the surrounding villages and Canadian mining company Eldorado Gold (EGO) as it attempts to expand its existing mining operation.

    Most of the controversy of course, revolves around the potentially detrimental impact on the surrounding water, soil and trees. However, modern mining techniques have improved dramatically and now include extensive environmental and agricultural protection and rehabilitation (i.e. recycling, drilling new water wells, replacing trees, etc.) Eldorado Gold in particular, has been safely developing, operating and decommissioning mines for over 20 years and presently mining ore in China, Brazil, Romania and Turkey. In addition, the company has provided a €50 million letter of guarantee to the Greek Government to further ensure future environmental rehabilitation of its projects, along with approximately €3 million (annually) currently provided to the Municipality of Aristotle for community programs of its choice.

    Certainly, EGO's sizable commitment is not motivated by altruism, but by potential future profit. Nevertheless, it seems that almost no amount of proprietary/private capital investment, along with environmental and social good-will, will appease the car burning, road blocking, apoplectic radical leftists. Perversely, these same critics feel no similar qualms over taxpayer subsidized, woefully (energy) inefficient and chemically toxic solar panels to light their dim socialist utopia. Fortunately, after numerous meetings and consultations held by local municipalities, communities, company and government officials in Chalkidiki, a large majority of the villages decided that the economic benefits far outweigh the risks, and voted for expansion. Prime Minister Samaras must demonstrate similar foresight.

    Since Greece's last elections in 2011, scores of private companies domiciled in Greece for decades, including Fage Yogurt, Coke Hellenic and others have moved their headquarters and/or operations to Luxembourg, Switzerland, and Russia respectively, due to stifling economic and political uncertainty. Meanwhile, a dispirited Greek nation, wallowing in a morass of un-payable sovereign debt, continues to wait for her next quarterly tranche payment (interest bearing, Euro taxpayer subsidized loans euphemistically coined as "bail-outs") from unelected bureaucrats in Brussels, much like welfare recipients in urban projects.

    Conversely, Eldorado has invested more than €78 million of proprietary shareholder capital (as opposed to taxpayer monies) in Greece since February 2012. Over the next five years, EGO is prepared to invest, and RISK, nearly €1 BILLION to expand its operations. Perhaps most importantly, and in stark contrast to the Troika's feudalistic and stagnant economic paradigm, this refreshingly capitalistic endeavor will create thousands of jobs (both direct & indirect) to spur the moribund Greek economy strapped with near 30% unemployment. Also, expanding her natural resource industry will diversify the Greek economy by reducing her economic dependence on seasonal tourism

    Furthermore, the Olympias, Skouries and Perama Hill deposits have the potential to make Greece, Europe's leading gold producer by 2016; and although the Greek state will not receive royalty payments (Note: the Greek state assumes little, if any, commensurate start-up capital costs or risks), the aforementioned projects will generate an estimated €1.6 billion in direct revenue taxes for the Greek state over the next 20 years.

    It is imperative for Prime Minister Samaras to keep true to his market oriented rhetoric, and quickly roll out the "red carpet" and reel in the "red tape" as promised during his countless tours and speeches in his quest to attract foreign investment. The recent sales of Greek "trophy" islands to Russian oligarchs, or Kuwaiti princes, provide politically correct public relations, but only negligible economic impact for the nation. This long term wealth producing venture (mine expansion) will help rebuild both the waning Greek economy, and possibly PM Samaras' rapidly waning political legacy.

    The precious metals of Olympias, Skouries and Perama Hill may not restore Greece's ancient glory, but they will provide sought after private sector jobs and real economic growth; a Herculean step in regaining a semblance of national pride, dignity and wealth. Indeed, a golden redux for the Greek nation that will leave both socialists and environmentalists, green with envy.

    Stocks: GLD, EGO
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