Saturday, February 23, 2013

More Bad News for the Juniors

The derivatives are part of what is setting the valuations of Juniors so low. Add naked short selling to the mix and ETF's who've drawn off huge numbers of retails combines with the flight of investment from traditional backers and you get valuations below cash value.

"Another way of saying that is that because of recent financial crises, the value of junior silver exploration and development companies have plunged to such an extent that when they rebound, their present value should double or triple in value if you invest in the right junior miner.

He went on to say, “So I can go to you and say you have a chance to buy into something which only happens every 30 years, how rare it is, you might be intrigued. There doesn't seem to be any interest in that right now.” 
Morgan was asked whether or not increased industrial demand for silver would help drive up silver values.

His reply was that while supply and demand always drive the market, in the case of silver this was somewhat distorted by the number of available derivative products out there, but that in the end supply and demand did affect the market."

This is not going to change any time soon. The robbery of the HFT abetted by the regulators and funded by the exchanges is going to continue. The proposed changes by IIROC and others are just lip service and lies.

The figures provided by IIROC are false. The truth is that they don't know. The USA figures are more accurate. This is actually tracked in the USA.

"Data collected by IIROC suggested that high-frequency players accounted for some 42% of trading volume, a figure that is dwarfed by some markets where the activity accounts for most of the daily volume — a recent Morgan Stanley report cited by the Financial Times pegged HFT as comprising 84% of the total market volume in U.S. equity trading."


"The technology that regulators have to monitor market abuse is far, far behind the technology used by traders,” says Mr. Piron, who traveled to Canada this summer to make a sales pitch to IIROC to use his firm’s technology.

He says high-tech experts, as those who employ high-frequency trading strategies are, will be able to calibrate their tools to stay just over or just under whatever thresholds are set by regulators, dampening the intended effect of the new rules."

The truth is ugly. IIROC lies to us and does nothing about the abuses that tiny Juniors have to deal with. You need to know what lurks under the covers. Here's an example I cited in a previous post.

A quick sum up:
Derivative pricing
Naked Shorting
Retails burned
Brokered Finance flight
High Frequency Trading
Chart Painting (red)

All the talking heads who say the interest will return are trying to fool you. It's not going to happen. The damage has already been done and the markets will never self repair.

What is not being said is what happens to those rolled up packages that people are buying when the Jr market gets the carpet pulled. All the big miners depend on the Jrs. If they evaporate who will bear the risk? The ETFs will be the first to collapse. Eventually the big guys will feel the heat.

Take copper as an example. They are already saying there will be some volatility to the supply side. They expect a shortage. With 90% of the explorers being wiped out where will the new supply come from? Given the current resources we can expect about 7-8 years of supply before the world wakes up to the urgency of the supply collapse.

Still, no one will invest in the explorers. There might not even be a market. I expect that without arrests and gargantuan fines that the TSX-V will not survive more than 5 years.  Within the next year all that will remain are the machines. With no retail to thieve from those traders will not have a reason to exist in the Jr space. I equate investing here like dipping your toe in a pool of Piranhas. Once you've lost a toe you'll never try that again. It is becoming common knowledge that this is the case. Witness, NO RECOVERY.

Your exchanges are to blame. Yes, they are just beginning to realize that an end is coming and so the news engine is being ramped up to try to convince people that they are all trying to do something. It's all lies! You can tell that IIROC and the others are lying because they blame. In addition, they claim they can't keep up with the technology. What a load of crap! They make the rules and as long as they are behind what's going on they and they alone are responsible.

I expect the cries of foul to increase as the end nears. Once the trading is near 100% machine and there's no one left to rob the market will suddenly go dark. Watch for the milestones. You'll soon see Jr after Jr go belly up. There will be a whole lot of consolidation of claims and a whole lot of noise from angry investors.

Last week 40 of the stocks I watch were hit by mini run offs. Those are the traditional backers trying to sneak out the door before the public knows about it. BMO hit HPY with a machine driven run on Thursday followed by more through anon on Friday.

I expect a big increase in floor and ceiling trading in the coming months as the market implodes. That's actually a good sign if it's happening to a stock you own. These guys have already picked their winners and plan to ride them out the door. When that crop is gone there will be nothing left.

The more noise you hear about what they are doing to change the market, to make a level playing field, blah blah blah, the more you need to focus on your getaway plan.

The stocks I'm focusing on are about as defensive as you can get. They have exit plans. They will still suffer the abuses such as F&C capping and NSS but they have specific values on exit. Protect yourself and come out swinging. Notice that Ernesto bought BHR? You need patrons to survive. Also, why did thqat billionaire come to roost there? Food for thought.


  1. Sad...that's all I can say. I had considered selling my HPY last week as it was sitting at my purchase price 22.5 but I thought I'd hold off and see what would happen...wasn't expecting the tumble. Any advice there? Also hung onto my BHR; don't mind a bit if Ernesto wishes to continue buying if the lift in price is going to continue. You're so right about the venture; it's just becoming too scary to park your money in even if you think you've found a 'winner'. At this point I have to hang in with CUU and hope to get my money out before everything goes 'belly up'.

  2. That's the last of it we should see for HPY. By my count there's nothing left to be dumped and now it should find its value. HPY has entrenched supporters who've followed the development for the last 10 years. Barker Minerals is the same way. without its staunch support group it would have been crushed. It got so bad that they commissioned the study to find out who was using Naked Shorts. They've found them and must now consider if they can win a legal action or even afford one. Shame on the exchanges and regulators.