The Government of Peru announced yesterday (article reading time 1 minute) an incremental mining tax aimed at raising a further U.S.$1.1 billion in tax revenues from that country’s mining sector.  This is a further example of the importance of assessing and understanding specific ‘Country Risk’ when one invests or trades in resources stocks.

I discussed the question of whether the newly elected Peruvian Government would impose incremental mining taxes during the course of my July 7, 2011 interview with Jean Martineau, Chairman and CEO of Dynacor Gold Mines.  His view at that time was that imposition of incremental taxes by the Government of Peru was possible, but that it was not then a big concern of his because he didn’t think any such tax change would be material to the foreign owned mining companies operating there.  Mr. Martineau has spent time in Peru since my last interview with him, and I will be interviewing him again in early September.  Subscribers to StockResearchPortal.com ought to look for, and listen to, that interview if they are concerned about what I think to be escalating ‘Country Risk’ in a number of developing countries in South America and elsewhere.

In a second article yesterday it was reported that Argentina rejects Coro’s flagship project – reading time 3 minutes.  The article says that Argentina’s Mendoza province’s government yesterday voted down an environmental approval that Coro Mining Corp. require to proceed with its ‘San Jorge copper-gold project’.  The article says this Provincial Government action comes shortly before an October Provincial election, in circumstances where the Coro Mining President is quoted as saying “Both (political) parties decided it was to their advantage to paint the other as being more pro-mining, and decided the best bet was to kill the project right there and then”.  He blamed a small number of “very motivated and noisy” anti-mining environmentalists for influencing the Provincial Government unduly (my word).  While it may be that following the October election the Mendoza Provincial Government will revisit Coro’s environmental application (my thought, and not mentioned in the article) there obviously is no guarantee of this.  Yesterday Coro Mining’s stock price closed at Cdn$0.26, down Cdn$0.31 (54%).  The article says this event highlights “the political risk hampering Canadian miners in parts of South America”.  The article also mentions the Argentina province of Chubut as a ‘difficult mining environment’.

I have discussed what I see as escalating ‘country risk’ frequently in my e-mails over the past several months.  Because of my heightened concern with respect to ‘country risk’, StockResearchPortal.com will be introducing a feature in the coming weeks that will enable its Subscribers to better assess specific ‘Country Risk’ in a highly efficient and time saving way.  I suggest that you look for the introduction of that new feature.  It will be announced in these e-mails and elsewhere

Visit Stock Research Portal for free stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• Greek Eurozone Exit Consequences?
• Mining Cost Escalation – Impact?
• Sprott On Economic Fundamentals (and Gold)
• Commodity Production Cost Curves
• Can Italy Be Far Behind?

In yesterday’s e-mail I reported on Fitch’s Credit Downgrade of the State of New Jersey – see ‘Moody’s downgrades Japan’ – reading time 3 minutes.  Wednesday Moody’s Investor Service downgraded Japan’s Debt Rating by ‘one notch’ to the equivalent of AA-.  Again, the big question I have is whether these Credit Downgrades that began with S&P’s U.S. Credit downgrade on August 5 are a serous harbinger of things to come.  Credit downgrades in theory, and presumably in practice, will lead to higher interest rates on country, state and municipal borrowings – something that is not needed in the current world and developed countries economic respective environments.

Visit Stock Research Portal for free stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• Greek Eurozone Exit Consequences?
• Q1 2012 Europe and Eurozone GDP!
• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!

Listen to this commentary

As a subscriber to StockResearchPortal.com’s daily commentaries, I think it reasonable to assume you are interested in, and likely participate in, the small cap resources equity sectors.  This past Monday I commented on the influence of computerized trading on the world financial markets generally, and in the past few weeks in particular.  That afternoon I received an e-mail from a StockResearchPortal.com subscriber who had read that commentary.

By way of background, I have believed from the time I began developing StockResearchPortal.com that a Research Website focused solely on the Mining,  Oil & Gas Industries was, and would continue to be for the foreseeable future, positioned in the ‘best possible prospective economic and investment/trading sector’.  My reasoning had entirely to do with what I then saw (and continue to see) as very positive prospective long-term demand/supply curves for most minerals, and for oil and gas. The possible influence of computerized and professional trading on the prospective success of StockResearchPortal.com had not occurred to me prior to my receipt on Monday afternoon of the aforementioned e-mail.

That e-mail began by saying: “All the commentary about “computerized trading”, etc, applies to Wall St and the big-company side of Bay St. It does not apply to most of the companies followed by StockResearchPortal.com“.  The subscriber went on to say that a “whole new frame of reference” may be developing around “considering investment in the exploration sector”.

The e-mail then said that one avenue open to investors who want to control their own destinies in financial markets dominated by computerized and professional trading might prove to be a gravitation toward investment opportunities ‘where those large scale traders don’t trade, and likely won’t trade in the future’.  The e-mail concludes that small natural resource exploration companies may be one investment/speculation arena where those investors will be able to participate in markets unfettered and uninfluenced by those large scale traders.  The reasons for this are stated in the e-mail to be:

• it is unlikely there will be significant computerized trading in small capitalization natural resource exploration stocks that will ‘trash their markets’;

• in those markets there likely will be fewer hedge fund managers and pro traders to contend with; and,

• Therefore, in those markets there likely will be a greater opportunity for individuals to control their own destinies (investments or speculations).

The e-mail concludes by suggesting that in the past very little has been done to increase the universe of natural resource investors, but that investors prospectively may be driven to these sectors by a lack of viable alternatives.

Having had time to consider the foregoing, what this subscriber suggests makes conceptual sense to me, and I think is certainly something to reflect on and watch for going forward.  I would add that in addition to ‘lack of viable alternatives’ that future events, economic and otherwise, may result in the precious metals, oil & gas, and other natural resource stocks proving to be ‘investments of choice’ for reasons beyond those having to do with a proliferation of computerized and professional trading in larger market segments.

I would like to thank the subscriber who forwarded that e-mail to me very much for what I think is a very potentially insightful view that I hadn’t, and likely wouldn’t have, considered – but for him taking the time to send his thoughts to me.

If readers have follow-up comments or related thoughts I will be very interested in receiving them at icampbell@stockresearchportal.com.

Visit Stock Research Portal for free stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

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Listen to this commentary

An article yesterday reported that U.S. ‘New Home Sales Fall to Five-Month Low in July‘ by almost 1% to a seasonally adjusted rate of 298,000 – reading time 4 minutes.

The article further reported that:

• This was about 43% of the 700,000 monthly new home sales economists consider represents a ‘healthy market’

• All types of home sales remain weak, with resale home sales falling for the third time in four months, with more sales not closing than usual.  The figure cited is that 16% of transactions were cancelled in July, which was four times the rate of ‘deal cancellations’ experienced in May

• Foreclosure and short sale prices are running about 20% lower than ‘normal sale’ prices, and are forcing house prices downward.  A ‘short sale’ is a term used for a house sale where the price is less than the debt amount owed on the house prior to the transaction

• The U.S. median new and resale house price was $222,000 (down 6%), and $174,000 respectively

• At the July ‘new home’ sales pace, it will take almost 7 months to exhaust the new house inventory

• Percentage wise, house prices have dropped more since 2007 than they dropped during the 1930′s Great Depression, which is ‘saying something’.

All in all, as I see things this paints a bleak future for America’s economy.  The U.S. housing industry was one of America’s largest employers prior to 2008.  At a high level, one has to wonder about structural unemployment issues arising out of this housing crash.  At a Main Street level one has to wonder where jobs possibly can come from to fill the employment void the changed U.S. housing market has contributed to, where the U.S. will continue to experience a depressed U.S. housing market (or so I think) for the foreseeable future.

Visit Stock Research Portal for free stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• Greek Eurozone Exit Consequences?
• Q1 2012 Europe and Eurozone GDP!
• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!