A mining and exploration retrospect for December 15 to 21, 2012
by Greg Klein
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Algorithmic short-sellers could drive juniors to ASX
“The world’s number one stock exchange for mining companies”—that’s the consensus about Toronto, even from companies with operations and headquarters in other countries. But John Kaiser fears TSXV traders will drive juniors to the Australian Securities Exchange. In a Business News Network interview posted by Equedia on Sunday, the editor of Kaiser Research Online explained why.
Monitoring systems now in use can immediately spot significant buying, allowing traders to “intercept the capital that’s flowing in from real investors who are betting on fundamental outcomes, and they sell into this. Then, when that inflow is exhausted, they can simply lean into the order book and continue selling stock that they don’t have, selling short on a down-tick, creating a cascade of buyer’s regret and discouraging the longs, and actually facilitating being able to cover by the end of the day. So their intent to deliver the borrowed stock never has to be materialized. This sort of culture now lurks on top of a system where trading value has been in steep decline since April and May of last year.”
That’s especially troubling, he emphasized, because he believes the sector is moving back to a “discovery/exploration cycle” as prevailed during the 1980s and ’90s, “after a decade of resource feasibility demonstration.” Early-stage exploration companies are especially vulnerable, he said.
But Down Under has its downside too. “I don’t like the Australian stock exchange system because they don’t have a proper reporting system on a scale of technical detail that we in Canada have,” Kaiser added. “I think the Canadian system is fabulous for the entire resource exploration and development cycle. And I think it’s a shame that they allow this type of algorithmic hook-up that basically victimizes real speculators, as opposed to those simply trying to harvest the volatility that they’re literally manufacturing in this sector.”
Credit-card-sized gold bars as a crisis currency
A new product might make physical gold a more practical response to economic fears, according to a Friday Reuters story. The size of a credit card, the CombiBar is made up of 50 one-gram gold squares that can be broken off to use as currency. It’s selling well in Switzerland, Austria and especially Germany, where memories linger of post-WWI hyperinflation. The CombiBar is produced by the Swiss refinery Valcambi, which wants to introduce it to the American and Indian markets next year, while producing platinum and palladium CombiBars for Japan. Valcambi, by the way, is owned 60.6% by Newmont Mining TSX:NMC.
European demand “is rising every week,” Reuters quoted Andreas Habluetzel, head of the Swiss gold trading company Degussa. “Particularly in Germany, people buying gold fear that the euro will break apart or that banks will run into problems.”
Another company, Ex Oriente Lux, has sold 21 million euros of gold through its 17 vending machines in the United States, Europe and United Arab Emirates, Reuters added. “Sales rise according to the temperature of the crisis,” CEO Thomas Geissler told the news agency.
Former Solid Gold CEO accuses natives of slander
Darryl Stretch, the former CEO of Solid Gold Resources TSXV:SLD, has accused two native chiefs of “slanderous and defamatory remarks,” the Sudbury Star and Timmins Daily Press reported this week. He’s demanding public apologies from Wahgoshig chief Dave Babin and Nishnawbe Aski chief Harvey Yesno, who called him a “racist” at a Sudbury press conference in November, the Daily Press stated on Wednesday.
Stretch’s letter to the chiefs warned, “In the event that you do not respond to this notice I will take whatever action is available to me.”
Monday’s Star said Babin has no plans to respond and Yesno couldn’t be reached for comment.
Rhodes redux in Zimbabwe
Zimbabwe’s policy of “indigenisation and empowerment” requires foreign miners to divest 51% of their operations to Zimbabwean companies and community groups, as these examples show. Monday’s Harare Herald quoted Defence Minister Emmerson Mnangagwa explaining that the country was willing to work with foreign companies as long as Zimbabweans were the major beneficiaries.
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