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I Told You to Buy Mongolia!
I have been pounding the table on Mongolia for over a year now, as the fundamentals were stacking up nicely for it to become a high growth pioneer market (click here for the call at http://www.madhedgefundtrader.com/september_2__2009.html ). Never mind that you can’t buy it unless you become a resident of Ulan Bator and pay with local currency.
But the indirect plays I recommended are doing extremely well, including Ivanhoe Mines (IVN), up 93% in a year, and Rio Tinto (RTP), up 53%. Government officials were in New York this week negotiating with NASDAQ to take over the management of their nascent exchange, which even after the double, has only 300 listed companies with a total market capitalization of only $1 billion.
There’s nowhere I won’t go to make a buck, so I had to sit up and pay attention when friends in Tokyo told me that the next big Asian equity play will be in Mongolia. Genghis Khan’s ancestral land has enormous mineral resources which make it a natural commodity play (did he know?), and it has one of the world’s most GDP friendly population pyramids.
But incompetent government administrators with antiquated Soviet era sentiments managed to kill every development opportunity in the crib with onerous windfall taxes and harsh joint venture restrictions. The resources stayed in the ground. National elections finally turned over the regressive administration in 2008, and the anti growth tax regime was dumped last week.
Mongolia has inked a deal with Ivanhoe Mines and Rio Tinto to develop the massive Oyu Tolgoi mine, the world’s largest undeveloped copper resource, which could lead to a doubling of the GDP in five years. We’re talking a gigantic 450,000 tons of copper and 330,000 ounces of gold a year. Friends have been e-mailing in the results of core drillings from Oyu Tolgoi, and it is clear that this is one of the richest ores ever discovered. Also on tap is the development of huge coking coal and uranium deposits.
The spillover benefits for the rest of the economy would be substantial. Now that visas are no longer impossible to get, as they were in my day, my Japanese and Chinese speaking trilingual son tells me that Ulan Bator has become the trendy place for American college grads fleeing unemployment at home.
Who knows? Give me a low enough PE multiple and I might even develop a taste for the country’s national dishes, sheep brains and fermented mare’s milk.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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I've heard the expected life of the Oyu Tolgoi mine is 3 times that of a standard mine. Changes in tax laws and profit sharing do make it tough to have confidence.
As mentioned above, the Mongolians do not trust the Chinese and instead they are consulting Americans on sustainable development since they know they sit on one of the largest untapped mineral sources in the world. How sustainable "sustainable" actually ends up being will be seen, but a benefit of distrusting the Chinese is they don't want to develop like them.
Total gold produced since 1907: 186,000,000 ounces
Total copper-zinc ore produced since 1907: 450,000,000 TONNES (not lbs.)
Guess where? (Hint: Friedland is nowhere to be found)
Answer: The Abitibi Greenstone Belt stretching from Val D'Or Quebec to Duluth, Mn.
Why in the fuck would I invest a nickel in Mongolia?
P.S. Friedland made all his money through a nickel discovery in Labrador in CANADA!
By the way, I can count 20 companies lying in ashes and rubble that tried to secure title in China/Mongolia and were taken to ruin because after injecting huge money, the little bastards changed the rules.
No thanks, MHFT. Not only are you late, you are wrong.
Friedland found nickel while looking for diamonds! I do give him credit for "rediscovering" copper in Mongolia after BHP walked away from the deposit.
The Russians did a good job exploring Mongolia so I doubt there are too many large undiscovered deposits. The real potential is in coal in the Gobi desert but the distrust of China is so high, the stupid fucks were talking recently about putting a rail line through to Russia instead. And it would be different gage to the Chinese lines.
And have a look at the wonderful highway system.
http://www.dreamers1.com/russia/Tashanta/Mongolia_Pictures.htm
Mongolia is the text book case of bad government.
Thx for the insights and photos, too.
Robt Friedland has a huge following.
people think he's a mine god.
probably not far wrong.
Ivanhoe should be 35 in a few months.
Lives in Singapore in complete luxury ... close to JimR
So did you actually have lunch with Genghis Khan?
MrTheMad, did you by any chance happen to shag any Mongolian concubines.
Detailed field report if you please.
Is the reco to send my money to China? Not in my lifetime.
Why is the MHFT allowed to post this sell puffing bullshit on ZH. This organization sounds like the typical Wall Street churn and burn the dumb money puke. What a joke.
Gotta say I agree. Invest in Mongolia? Sounds like pure unadulterated horse hockey to me.
done right, great for the people of mongolia, done wrong .......
Mongolia. Great until it gets invaded again.
or starts invading. what would Uncle Ghengis say? Sad, really...
More I told you so,great.How's your silver shorts MHFT?
And no mention of Robert Friedland,nice work.Most average Canadian retail investors were all over Ivanhoe more than 4 years ago.A little late to the party are we?
umm how ya transport any of that stuff? there's no infrastructure in them their hills
aka no trains!
Nuff said...
http://ubpost.mongolnews.mn/index.php?option=com_content&task=view&id=52...
Clinton scored off of that list - read Kazakstan - with Frank Guistra's contribution to The Foundation - pays to have dictators of resorce wealthy countries take personal calls.
I think P Munk of American Barrick said the same about former CAD PM Mulroney when asked why AB had BM appointed to the board; he knows every 3rd world dictator on a first name basis - or something to that effect.
actually i think that's exactly what he said
I spent a month in Mongolia four years ago attempting to secure rights to some uranium exploration properties. The mineral potential is huge but so is the corruption. They failed to realize that any NYSE listed company must abide by the Foreign Corrupt Practices Act which meant we simply could not slip these guys a fiver under the table. For an interesting case study you should review the saga of Khan Resources.
The Mongolians hate the Chinese but tolerate the Russians and they are simply too incompetent to develop their own resources. And UB is a smog choked hell hole with one nice Irish pub.
But other than that, how did you like it?
MHFT has finally hit his stride. Mongolia is the perfect place for him.
actually Ivanhoe Mines has done nothing but pretty much go up on pretty much no real anything whatsoever no less. and Hillary Clinton paid a visit, too. did i say some about no real or something?
Mongolian women are interested in meeting hedge fund traders.
william,
like to see what you have in mind for that image........if possible, of course.
Some Mongolian women playing traditional Chinese instruments
Those are some big Chinese instruments. I guess what they say about Asian "instruments" isn't true. Now if it is based on their 2.4 trillion is reserves......
why, thank you william. i'll take 2, please, and the 1 in the middle. more than 1 is still allowed? the Khan knew how to do it right.......wonder what the kids will look like???
some parts of mongolia are described as much like Wyoming of 100 years ago.......nice taimen and greyling fishing too, i know.
kill yourself one of those "desert ram" things. what are their names? dudes pay tens of thousands for the chance.
And not unlike Montana either - big skies and very few people. Ulaanbaatar is a complete shithole however and makes Detroit look like Palm Springs or in UK speak Wolverhampton/Tunbridge Wells! They may have the mineral wealth but absoltely zip infrastructure. 30 miles outsude UB there are no roads; no railways; zip! So the only way out is via China ( they speak Mongolian or Russian not Chinese) or Russia so that will be a huge drain on profits. Corruption endemic but an absolutely beautifully stunning country ex UB. Cant we just let them get on with their wonderfully simple way of life?......
The locals universally hate and despise their wonderfully simple big-sky way of life. They utterly despise everything about it. They universally want copperdollars, fast food, ARM mortgages, sport utility vehicles and so on. Every single time they suck on brains or gag down mare's milk, they are hoping that the Big Macs and MacMansions are getting closer and closer.
Cant we just let them get on with their wonderfully simple way of life?......
You know the unfortunate answer to that question.
Speaking Chinese in Mongolia? A sure win.
Son must be a customer of Ulan Bator ring of prostitution. How impressive it is to watch the one million + Ulan Bator be flooed by girls coming from the other 1M mongolian population.
Only point worth any consideration: the former USSR satellites are the only places left for hope of expansion as they were out of the optimal pattern of exploitation due to Commie Grand Daddy.
The joke: them exporting their finite assets and doubling their GDP, that unambigous measure of wealth, is going to be good for Mongolia. Great.
Been looking to get into a bit of IVN.
Go for some EGI rather than IVN. More bang for the buck over the next two-three years, IMO.
http://www.entreegold.com/
Hey everyone,
Anytime you are having a conversation with someone and the conversation turns to money or finance, please ask them this question,
"Why does a private bank control the printing of the U.S. Dollar?"
That is all that I would request of you.
why ... because they can
I junked ya. Your putting this same exact message, word-for-word, on every thread on the board.
The essence of JUNK.
ditto.
So, have you ever wondered why a private bank controls the printing of the U.S. Dollar?
Between Charles I Holy Roman Emperor & his son Philip II of Spain (God is Spanish) dominant powers of the day, despite ripping off hundreds of tonnes of gold & silver from the Aztec & Inca empires took the country into bankrptcy three times, goods quintupled in price, & PMs were both partly to blame & not enough. PMs were used for exponential expansion of credit to fund their prorams, mostly wars, adventuring, colonizing, quelling revolts, expelling the Jews & Moors who did most of the work. By the end of it the financiers had decamped to Antwerp where the subtle refinements of fractional lending were perfected. England required a new non Catholic monarch, thus the Dutch Prince William of Orange-Nassau was invited bringing with him a clutch of Jewish fractional experts whose purpose was,, to finance the expansion of the British Empire to all corners of the known world & take possession of the choice parts before the French, Germans & Dutch beat them to it. The Battle of the Boyne 1690 in Ireland dispensed with the 1400 year old Catholic ponzi scheme in the form of James II' threat to derail the Reformation (James ran away & hid in France ). After clearing the decks the Bank of England was created in 1694, keystone of the Protestant global fiat fractional lending machine lasting 316 years to date. 140 years later money-changer Mayer Amschel R was born. Specializing in gold coins he became friendly with various European aristocrats & made a fortune as their prime moneylender. Business was always good as they always needed to borrow more money. Estimating the Rothschild fortune today is impossible, some put it a several trillions inc hundreds of tonnes of gold. There have been three hyperinflationary periods of note in the Western world; 3rdC Rome, 100 years of 40x inflation, 16thC Spain/Europe, a hundred years of inflation & the 20thC West, also 100 years 40x inflation as per UK statistics 1900-1980. In the first two cases hyper-I burned out & collapsed everything it touched. The current hyper-I period is close to exhaustion & by the time the boomers are dead & gone so too will this hundred year period of bank thuggery & extortion designed to double prices every 10 years with clockwork regularity and reduce the saved wealth of all ordinary mortals every second of every day in perpetuity. Inflation everywhere and always. The status quo are naturally reluctant to give up such a rewarding scheme voluntarily so the next stage of proceedings will very likely be the launch of their new experimental toy in development, namely, relentless authoritarian government for purposes of blaming the pples as the fiat scourge finally goes to terminal stage.
Whether printing currency is under private or state control makes no difference at all. None.
I wrote about the same as an answer to the post.
The dichotomy between public and private is irrelevant in this sector.
What matters is the use and the followed purpose.
What is involved here is expansion, a natural Ponzi scheme.
Gold, not gold, private, public, all these are irrelevant and have never removed the negative features of expansion.