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Rhonda Bennetto
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Vice President Corporate Communications for Great Panther Silver and am responsible for all aspects of corporate communications including the strategic direction of investor relations, social media, regulatory compliance and best practices. I have effectively designed and coordinated investor... More
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Great Panther Silver Limited
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  • What Do Goldman, Government and Gophers Have In Common?
    I am an insider of TVI Pacific Inc., a copper mining company. Even though this column mentions the commodity market, and I have a vested interest in that market, the opinion expressed herein is my own and does not reflect the opinion of TVI Pacific and is unrelated to my role with the Canadian Investor Relations Institute.   

    Evaluating investments has become increasingly difficult these past few years. Besides the old steadfast financial fundamentals you can use to decide whether or not to invest in a company, there are influencing factors that you can’t punch out on a calculator. Some have always been there like geographical risk, political risk and even full disclosure risk. Now, on top of those, we have ‘Gopher Risk’ to contend with.
    Living on the edge of the Canadian prairies, I can’t help but draw a parallel between the ever-increasing barrage of allegedly "fraudulent” accusations coming in waves off Wall Street and the seemingly endless supply of gophers that infest the otherwise beautiful Alberta landscape. 
    Consider this metaphor. There are prairie towns that pay cash for ‘gopher tails’ to inspire homesteaders, and the odd unemployed teenager, to organize “Gopher Derbies” to rid us of the pesky, destructive rodents. Side note about gophers: Although they love to pop out of their holes and strut around all cocky and arrogant, the danger lies underground in their destruction of the prairie farm land root systems, where you can’t see them, and you don’t realize what they’ve done until your crops die sometime in the future. No matter how many Gopher Derbies are carried out, the destructive field rats breed at an alarming rate and pop their furry little heads up another hole before you can say “completely unfounded in law and fact”. 
    April 16, 2010, the SEC carried out a Gopher Shoot exercise and fired a round at Goldman Sachs with defrauding investors, misstating and omitting key facts about a financial product tied to subprime mortgages.  Shares of Goldman Sachs plunged nearly 13 per cent and wiped out $12.4 billion of its market value.  
    But Goldman wasn't the only stock to drop on the news. Commodity stocks fell sharply, due in part to the position of Goldman Sachs in the precious metals market. The TSX Global Base Metals Index slipped 1.85% and the S&P/TSX Composite Index closed down 1.15%. 
    Goldman holds a large stake in the biggest exchange-traded fund backed by physical gold, and the hedge fund managed by billionaire investor John Paulson was the biggest investor as of the end of 2009.  Side note about Paulson: John Paulson is at the heart of the Goldman charges. Paulson & Co. asked Goldman Sachs Group to structure mortgage deals that would include some of the poorest quality mortgages. The hedge fund's plan: bet against the deals and then hope for a bursting of the housing bubble—exactly what happened. 
    Some argue that the SEC charges serve as a shot across the bow to the entire banking sector to clean up their act while others argue the timing is related to the heated banking reform debate in Washington DC. Either way, markets react negatively every time the SEC firing squad takes a shot at Wall Street. Whether you believe the SEC is acting in your best interest or their own, you can expect a lot more of this type of ‘aim and shoot’ news, and each time it will have a negative effect on the broader markets. I can only hope that the SEC is picking off gophers in the name of Joe Main Street.

    I could go on forever about markets and the infinite number of factors that influence them, but I’ll stop here and summarize why I’m unsettled by all this Wall Street commotion.  What bothers me the most is that one shot by the SEC at one company in one industry results in a negative effect in many markets over numerous industries.  I would argue that this effect reflects the size and scope of the banking industry challenges (i.e.: break up the banks?) but that's another article all together.  I’m not advocating that banks be allowed to run amok unregulated like a  field of frenzied prairie rats, I am all for regulation.  What I am saying is that something had to be done and Gopher Derbies are the new Sport de Jour so we better get used to it. 
    As Joshua M. Brown said in his Blog, The Reformed Broker, “Do me a favor...spare me the faux-populism and the sudden bouts of outrage, this garbage CDO factory stuff has been very widely known for a long time.  When was Zuckerman's Greatest Trade Ever book published?  Last year.  When did the New York Times start telling this story? January”.  In addition to these, Lawrence MacDonald's A Colossal Failure of Common Sense hit the shelves June 2009, Sorkin's Too Big To Fail was published in October 2009 and Mchael Lewis released The Big Short earlier this year. There's no shortage of information on this subject. And Brown is bang on. “The sun will come up the next day, you will go to work, then pick up your kid at Karate, then pay the utility bill”.   
    Whether or not the field rats ever get eliminated by the Gopher Derbies or whether they just burrow under a different pile of cow manure, popping up again when the coast is clear, is anybody's guess (See point #6 in Joshua’s blog). Either way, the SEC cannot give up the chase.  I think its fair to say there will be plenty of bullets flying around for some time to come.
    So, until Wall Street quits giving the SEC reason to accuse it of fraud and other misconduct, or investors get bored and lose interest, you will have to add a new metric to evaluate your investments … the ‘Gopher Ratio’, and discount accordingly for short term market volatility every time you hear gunfire on Wall Street.

    Disclosure: Long
    Tags: GS
    Apr 18 3:57 PM | Link | Comment!
  • Is Copper The New Precious Metal

    I was honoured to help a well respected economist write a blog regarding Copper, Perhaps the New Precious Metal? (Dian Chu, see profile on Seeking Alpha  I am an insider and employee of TVI Pacific, a copper producer - see my profile here. 

    By Economic Forecasts & Opinions, Dian Chu, MBA, C.P.M., Chartered Economist 
    Special thanks to Ms. Rhonda Bennetto for her contribution to this article

    Copper soared this week in London and New York, striking a new 16-month high, and headed for the biggest annual gain (140%) in more than two decades, as traders fretted about possible strikes at Codelco’s giant Chuquicamata mine may disrupt supplies from key producer – Chile. (Fig. 1)

    Defying the Dollar

    The dollar remained strong against the yen and other key rivals, but copper took its cue more from the looming strike as well as the better than expected Chicago PMI. As such, the rebound in dollar had little impact on copper (as well as other industrial metals) on confidence about the bull-run into 2010, thanks mostly to speculative buying.

    So far, the red metal has more than doubled this year, leading gains in the CRB Index of 19 raw materials, and climbed almost fourfold in the decade as consumption rose in emerging economies including Chindia.

    However, despite the improving global economic backdrop, there is far from a consensus on how copper will fare throughout the next 12 months.

    2009 - Beyond Reality

    Despite its red hot streak in 2009, copper's continuous rally in the face of swelling inventories, a sign of weak consumption, has perplexed many in the market. Stockpiles and production worldwide have steadily increased this year alongside with copper prices. (Fig. 2)

    The latest data showed London Metals Exchange (LME) stocks rose 6,375 tons to above 500,000 tons, their highest level since April. Furthermore, the almost 600,000 tonnes in LME and Shanghai exchange warehouses are enough to cover the lost output from strike at Chuquicamata for more than a year.

    Copper A LA Gold

    China's unprecedented $585 billion infrastructure-focused stimulus package and strategic stockpiling efforts have had a major impact on copper prices this year. This is evidenced by the 165% year-over-year surge of China's imports of refined copper to 2.58 million tonnes in the first nine months of 2009.

    On that note, the market has looked beyond warehouses. Some even say copper is behaving more like gold rather than strictly a base metal. (Fig. 3)


    Of course, a number of other factors such as an anticipated global economic revival, new investment cash, index/fund buying, a weaker U.S. dollar, concern over labor disruptions, have also contributed to overshadow bearish indications of the copper inventory build-up.

    Copper Currency Standard?

    While India is trying to accumulate gold reserves, China is going one step forward by buying up industrial metals on a scale that appears beyond the usual commercial reasons. Some believe Beijing may have made a strategic decision to stockpile metal as an alternative to US Treasuries and dollar holdings as it safeguards China's industrial revolution, while the West may one day face a supply crisis.

    Speculation of an ultimate “Copper Standard” also swirled when in March, 2009, Zhou Xiaochuan, the governor of People’s Bank of China, reportedly called for a world currency modelled on the "Bancor”. The Bancor was to be anchored on 30 commodities - a broader base than the Gold Standard.

    Copper “The Red Gold”?

    Meanwhile, India’s $1.2 trillion economy expanded 7.9% in the 3rd quarter of 2009, the quickest pace in six quarters. The growth lagged behind only China among the world’s major economies with equally strong demand from auto and power sectors. Copper demand in India is expected to soar by 6% next year, in line with the GDP growth forecast of 7%. .

    As China and India each is looking to compete and develop their economies together, India could step up their copper buying efforts as well. Then, currency standard or not, copper could become the ultimate red gold as a strategic asset as well as an inflation hedge.

    Electric Avenue Will Take It Higher

    China is expected to expand 8.5% this year, according to the median estimate of economists surveyed by Bloomberg. Urbanization plus the next industrial revolution led by hybrid cars need plenty of copper. China plans to boost its annual production of electric or hybrid cars to 500,000 in the next two years, up from 2,100 last year. Such a shift would require huge amounts of electrically conductive copper.

    Technically Bullish

    Copper prices are still off their all-time high of $8,940 on LME notched in July 2008, before the global economic downturn caused markets to tumble.

    Most of the technical signals for copper (Fig. 1) are very bullish, albeit a bit over-bought on some indicators like RSI & Bollinger Bands. But since the market just put in a new high, it may continue to become more overbought before corrections may occur.

    Right now, it looks like the $7,500 to $7,600 levels should be the next resistance with potential retracement towards $6,500 and $5,800 levels. But if Western recovery continues to disappoint, or remain mixed, as they currently are, then we could see prices revert back to between $5,000/t to $6,000/t in 2010.

    Chinese Copper Control

    China is the world's largest copper consumer with about 38% market share, and its record levels of copper imports this year has made up for some of the slack demand in the U.S. and Europe. Copper, the hottest among the base metals, is controlled mostly by China as the single largest buyer in the world.

    Now, some market participants say imports of refined copper into China may not reflect demand for at least the next six months, or longer, as China digests stocks built this year as a result of record imports.

    In addition, China Daily reported on Nov. 12, 2009 that copper stockpiles held in duty-free warehouses in China may be re-exported after surging to as much as 350,000 tons from almost none at the start of the year. The country's imports of refined copper may lower to 1.6 million tons in 2010. However, the 350,000 tons reportedly belong mostly to private speculators and account for a fraction of the total imports.

    Clearly, there is some copper supply/demand imbalance in China as the country is not entirely immune to this synchronized global recession.  However, with copper price doubling up in 2009 and as China generally prefers buying on the dip, this re-export could also be a strategic tactic of Beijing in an attempt to push down the prices of copper.

    2010 – Reality Bites

    The general “recovery trade”, predicated primarily on China and other emerging economies infrastructure and industrial growth, lifted copper to overshoot the underlying fundamentals and somewhat disconnected from reality in 2009.

    The continued rising copper stocks suggest demand has yet to recover outside China. As we enter 2010 with China taking an expected copper break, the trend for copper prices will increasingly be determined by the shape of economic recovery in the OECD.

    The U.S. is the dominant focus for signs of recovery. The EU 15, which accounts for about 20% of global copper consumption, is also important, but the lead will come from the US.

    The past 12 month it's been a variety of reasons that lifted all commodities higher. Copper will unlikely have a repeat performance of 2009. The strength in copper may remain at least in the first quarter of 2010, but after that the market will face a lot of uncertainties regarding the Dollar, interest rate, monetary policy, China's copper imports/exports change, and the high inventories as well.

    An Economic Precursor

    Either as a currency or as a new precious metal, one thing for sure is that copper is a bellwether for the economy because it is mainly used in housing, power generation and other cyclical sectors; therefore, it tends to lead other commodities.

    Copper price dynamics over the next year or two could serve as a precursor to see if Asia can shift its focus from an export-oriented model to one that’s more internal consumer-based, as well as a realistic gauge of the global economy.

    Disclosure: long TVI Pacific Inc.
    Jan 05 11:57 PM | Link | 2 Comments
  • Should Political Violence Interfere With Investment In The Philippines? I Don't Think So.

    By Rhonda Bennetto, TVI Pacific Exec. Dir, IR (see my profile)

    Despite recent violence and political turmoil, the Philippines is, for the most part, a safe place to travel and invest. 


    Having just returned from our Canatuan copper mine on the island of Mindanao in the Philippines, I was going to post my TVI On The Fly blog on current mining activity in the Philippines and the timely demand for the commodity from China, India, Korea and other SE Asia locations.


    But after learning of the recent massacre of 57 people, including 30 journalists in the Province of Maguindanao, on the island of Mindanao, writing about anything to do with capital markets, emerging markets, commodities or supply and demand all seemed trivial.  It is more important people understand the positive impact that industry, especially mining, has on the Philippine economy and the communities.


    The current situation is localized and confined to the province of Maguindanao on the island of Mindanao, 650 kms southeast of TVI’s Canatuan copper mine.  It is political in nature involving members of two families from the same group indigenous to the province.  Interactive map and timeline here


    My trip to the mine was uneventful.  After flying from Manila to Zamboanga City on the southern tip of the Zamboanga Peninsula on the island of Mindanao, we began the 3 hour drive northwest to Canatuan.  Standard security was in place and when I spoke to our head of security, he confirmed that the situation was normal and expected no disruptions in operations.  Our movements were not constricted and I felt completely safe the entire trip. TVI’s operations have significantly contributed to the peace and order that Canatuan and surrounding communities have been enjoying for the last six years with no recorded incidents of major crimes or security events. This reflects/represents the peace and order situation in the area.


    Local support for mining in the Philippines is generally thriving in spite of this political unrest. The communities surrounding TVI’s operation in particular (roughly half of our workforce at the site are members of the host indigenous tribe) are hardy, gentle, generous and dedicated, and are thriving with the help of some amazing sustainability programs.  I invite you to visit our web site at to read some uplifting success stories about our indigenous employees. 


    I can only speak for our host and local communities when I say TVI’s investment in the mining industry has garnered tremendous support from the surrounding barangays (counties).  We give priority employment to residents of these communities along with a number of other health, education and training programs.  At the Canatuan mine site, we have reached nearly 2 million man hours without any lost time incidents and it’s our belief that a safe work environment is indicative of a happy, supportive work place and professional management. 


    All our managers have intern or mentorship programs in place and work closely with the local communities to educate.  Where there were no schools just a few years ago, we have built 16 classrooms and helped finance construction of another 8 classrooms in 6 schools in and around our host community.  We now have over 600 students and 56 graduates.  Unquestionable support was shown by our community residents a short time ago when a Non-Governmental Organization (NYSEMKT:NGO) tried to block our trucks and the local women came out, without shoes, and blocked the NGO’s from blocking the road. It was a powerful statement of commitment from our community.


    In the words of Dr. Robert Armstrong, TVI’s Lead Director, “What a tremendous story this tells. In a nutshell, it says that mining development can bring security and prosperity to the nation. Canatuan is the microcosm of what the Philippines can become with good mine development.  What politician wouldn’t want to have this kind of phenomenal success in their portfolio”?


    Confirming the commitment to the communities by the mining companies is the more than US$10 million spent on livelihood, educational and health programs in more than 500 barangays in the country.  Also noteworthy is that indigenous peoples hosting mining operations have received almost US$20 million in royalty shares.


    The country is rich with minerals. Gold, nickel, copper and chromite deposits are among the largest in the world. Other important minerals include silver, coal, gypsum, and sulfur. About 60% of total mining production is accounted for by non-metallic minerals, which contributed substantially to the industry's steady output growth between 1993 and 1996.  Mineral exports generally slowed between 1996 and 2004 due to low metal prices, high production costs, lack of investment in infrastructure, and a challenge to a new mining law.  The industry went on a rebound starting in late 2004 when the Supreme Court deemed constitutional, the new mining law permitting foreign ownership of Philippine mining companies.


    In 2007 the International Monetary Fund recognized the Philippines as being the 37th largest economy in the world. Its growth rate in 2007 was 7.3%, the best the country has had thirty years.


    Comparisons are starting to be made with India, in particular because of the growth of the Philippine outsourcing business, in IT and particularly in call centers and business process outsourcing (NYSE:BPO). Low wages, a Philippino-speaking populace, and one of the highest literacy rates in Asia should drive this boom, with planners aiming to capture 10% of the $130 billion outsourcing industry by 2010.

    In addition to services, growth is also boosted by higher government spending and larger remittances from overseas foreign workers.  Economic growth has averaged 5% since 2001, and recent years have been marked by a reduction in national debt and debt service ratios and increased investment in infrastructure and social services.


    My personal conclusion is that travel and investment in the Philippines, in mining or any other industry, is a safe bet.  


    Disclosure: Insider of TVI Pacific
    Dec 15 2:33 PM | Link | 2 Comments
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