Friday, January 3, 2014

And IKN responds by intentionally spiking my blood pressure


Never rile a Geordie. IKN responds to my teasing by forwarding a link to this:

24hgold - Early Xmas for Chinese silver miner, says David Bond, where he mounts a sterling defense of Silvercorp, the Chinese silver miner that was accused of fraudulently misleading investors.

David Bond, by the way, was the guy who last year mounted a sterling defense of Liberty Silver, long after higher-quality, more-conscientious analysts (Bob Moriarty, Jeb Handwerger, James West) had already disavowed the company (and in some cases deleted their writeups).

Bond's sterling defense of Liberty Silver can still be read at 24hgold (though I'm unsure if the content has changed recently; I don't remember his article mentioning Silvercorp before). Here, let me quote some of it for you, with highlights:
Wallace, Idaho – Speaking of scams, wouldn't it be nice if just once, just once, the Securities and Exchange Commission bore down on one or two of the sleazy short traders in the silver and gold markets? No. It's only the longs who get to be the bad guys. When have you ever seen a short trader in handcuffs, being led off the Comex floor to the awaiting bubble-top? Right. Me neither.

Our current case study is Liberty Silver (LSL on the TSX). Liberty, which is commanded by some of the most credible people in the financial and mining sectors of Canada. What Liberty has is a vast acreage of low-grade, cheaply recoverable, silver on the ground near Lovelock, Nevada within a stone's toss of Coeur's legendary Rochester Mine. It has a name and its name is Trinity. In my dotage I don't need to go down a deep dark hole and be courted by some name-upon-request geologist to be directed to some vein he says bares such-and-such gold or silver. I'd rather look him in the eye in the daylight of the portal.

After a property visit this summer, we decided that Liberty was a no-brainer. Get a track-hoe, lay down a pad, and start making silver (and money). Then, while we were there, LSL acquired its neighbour, the Hi-Ho property, which will in essence double or triple the play.

This writer, along with Midas Letter's Jim West, liked the property and the proposition. (I was hired by David Morgan to go take a look at the place and write it up as best I saw it, whether a dog or a winner. Morgan does not instruct his writers to reach a foregone conclusion, and I would never write (nor have I ever written) for someone whose standards were different. Morgan said: go down there and tell me what you see. I did and I wrote about it on David's subscriber's website.)

I digress, but my angst about resource newsletter writers is boiling to the surface here: They are 92 percent of the time bullshite artists, and they have taken a long or short position in a mining proposition long before they tell you poor snivelling paid subscribers about it. There should be laws against most of what is written in this field. And maybe there are here in the U.S., which is why when the concerted short assault got launched against Liberty Silver, it came from an off-shore source.

Liberty's management is above reproach; the enthusiasm for Trinity's development at SRK's Reno office infectious. I find it incredible that guys like Geoff Browne, Bill Tafuri, John Barrington, Paul Haggis, Tom Hodgson, George Kent, John Pulos, or Timothy Unwin – all of them world-class stalwarts in their respective fields (please, please, do a Google search on any one of this lot!) would participate in a penny-stock scam. It just ain't gonna happen.

So: A world-class management and a silver hole in Nevada ground. What could be possibly wrong about this? Oh, wait. Bobby Genovese bought into the play. Who is Mr. Genovese? There is no doubt that Bobby G. can charm the socks off a centipede, but is that a fault? He likes the Liberty play and so do I. When we first spoke about Trinity he was right up-front. He holds a fair bit of LSL's free-trading shares. “I've put money into this project and I would like your opinion,” he said to me. There was no offer of shares. No gimmes. In fact, I had to beat the travel costs to look at the mine ($900) out of him. Beginning. End. But somebody dropped a dime on Liberty with the U.S. SEC. Too much market cap considering the reportable historical asset, because the bean-counters at Liberty wisely decided to understate the value of Trinity and LSL's now-concluded acquisition of next-door neighbour Hi-Ho. Well, damn! A company that understates its asset value? Now, there's a first.

The short run on Liberty was indeed short. Due to an unpardonable regulatory screw-up, the Toronto tarantulas halted trading in LSL shares fully a half-hour after the U.S. S.E.C. halted trading of LSL shares, which sent LSL into free-fall in Toronto, where it had opened at a buck-fifty and closed at 97 cents. Who's going to jail for that stunt? When the regulators staggered off their bar-stools a week later and reopened LSL shares for trading, the stock opened no-bid, then quickly recovered. Who's going to jail for that? Who will make the longs whole?
Does that now make it obvious to you how useful David Bond's opinion is about Silvercorp? If not, look at this chart:


Since David Bond's sterling defense of Liberty Silver, it's fallen from $1.20 or so down to 4 cents. Has the chart proven David Bond correct, do you think?

(The news flow in the past few months has been especially hilarious; go do a websearch if you're interested cos I no longer care.)

So what about David Bond's opinion of Silvercorp? Well, compare his article to the following.

Globe and Mail - Silvercorp critic caught in campaign by police.
Globe and Mail - Silvercorp slammed on analyst's claims.
Barron's - The high price of digging up dirt in China.
Globe and Mail - SEC probes Silvercorp short-seller fight.
Vancouver Sun - Silvercorp faces class-action lawsuit over allegations in China.
HuffPo - Huang Kun arrested in China after alleging fraud against Silvercorp.
Globe and Mail - RCMP eyes Silvercorp investigation.

oh and also,

Alfred Little - Silvercorp topic.

So on the one hand you've got the Globe & Mail (who were nominated for an award for the one article up there), Barron's, the Vancouver Sun and HuffPo; on the other you've got the opinion of David Bond. Nuff said.

Oh, but there's more:
Oh, of course I owe you a disclaimer. I don't own a single share of LSL, much as I'd like to. Nor does my wife, any of my brothers, nor any of my nieces and nephews, or aunts and uncles I am aware of. I'd like to meet relatives of some of these short-hustlers, though. Preferably under a blanket, ball-bats in hand.
So, for all those people who've shorted, or even criticized, LSL and Silvercorp, beware this face:


I'm personally so frightened that I don't even think I want to go to PDAC 2014 in case I run into him!

3 comments:

  1. For confirmation of your opinion of Mr. BOND go get a copy of a book he wrote around 2002 that discussed all of of "silver Kittens" in the "Silver Valley". He touted all of these as the investment opportunity of a lifetime. All of them except one or two are zeros and were so even when silver hit $48/oz..... Including the biggest bust in the region, Sterling Silver. Anyone who listens to that guys advice is oblitered.

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  2. It's not a new year until IWNATTOS has tee'd off on Liberty Silver. Only tangentially, I grant you, but it's in there.

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  3. I wonder if he will be at the VRIC? better check the agenda.

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