Dazed and Confused in Deutschland
In the balmy (barmy?) days before the global financial crisis in 2008, Germany was regarded as the Promised Land for Vancouver stock promoters. They had never seen anything like it… so many sheep to be fleeced and none of them up to date on the guiles and wiles of Vancouver’s best and brightest. It was a happy hunting ground. Even better the various German exchanges went out of the way to make their lists open to all and sundry. Stocks that you couldn’t even find a ticker for in Canada, trading on some third sub-tier of Yellowknife Adventurers Exchange could get itself a listing in Berlin or Stuttgart by merely existing. This not only gave an extra ticker to fill up embarrassing white spaces, between photos of the moose pasture, on the company website but also gave one status when one strutted the floor of the Munich Gold Show touting one’s vermiculite, granola or alfafa deposit. I have met executives who still sigh for the days when their registers frequently had 40% of the holders located on the Continent.
Sadly all good things had to come to the end and the severe fleecing the German sheep received at the hands of the promoters left their hides red raw and it was a long time in healing. Germany faded from view and most German-speaking investors forswore any involvement or interest in Canada besides the hockey scores at the Olympics.
Part of the problem for the mainstream German investor in mining stocks is the paucity of quality mining analysis and information in the language. There is clearly a space for a site such as Investorintel catering to the German market, which after all is 100 million-strong between Germany, Austria and Switzerland.
Back in the bad old days, bulletin boards in Canada were somewhat baffling to a non-English speaker with code words, jargon and nods and winks alluding to some of the less than salubrious activities of managements. For the Canadian corporates, the nasty things that Germans may have said, post-deal, on the German-language bulletin boards were unintelligible to the average geo/CEO of a TSX-V junior.
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If Churchill could say that the English and the Americans were two people divided by a common language then what to make of the mutual lack of comprehension between Canadian juniors and German investors. It’s time to put both parties on the same (web)page… just in different languages..
This Time it’s Different?
Many European exchanges, despite the torpid economies, are trading at rather ritzy levels, and it should not be forgotten that the German, Austrian and Swiss economies have largely left the Euro-woes behind. They have been the gainers at Greece, Portugal and Italy’s expense. Thus there is a large pool of money swishing around looking for a “cheaper” place to reside. Despite recent travails the Euro has been doing rather well vis-à-vis the CAD or the AUD.
Such was the bad memory that most German investors had of the boom days that they stuck to buying gold coins and eschewed any paper investments like they were Weimar Republic Reichsmarks. And they were not wrong in light of subsequent performance. I went to the Munich Gold Fair in November 2012 and you could not give away shares in a Canadian gold junior, meanwhile the merchants of gold ingots and coins were doing a business like the beer bar at the Yankee Stadium at half-time on a game day.
I suspect that revival of German interest in Canadian or Australian miners will NOT be the old crowd who were burnt, having forgotten what was done to them last time. Memories in Europe are veeeeeeeeery long. More likely it is a new group of investors who are dabbling their feet in the water who don’t even know what happened to their elders the last go around.
Europe used to be an obligatory stop on the peregrinations of the average Canadian mining executive in those dimly remembered days pre-2008. Since then only the hardy few bothered to traipse so far and expend so much on an air ticket to turn over the stones in Zurich or Munich to see if there were some stray francs or euros lying around uninvested. Hosting dinners in Munich and Zurich for professional platelickers (albeit sharply dressed ones) was an extravagant use of the diminishing shekels in a miner’s treasury.
It has been a long hiatus indeed with only a hardy few persisting with the effort. However, for a company like Commerce Resources, the persistence has paid off with household name recognition in German-speaking circles, while much bigger names or producers go largely unknown in the corridors of Frankfurt. It is interesting that the stock they can’t get enough of is a sometime specialty metal story and NOT a gold story. Is this indicative of a revived interest in non-precious paper? Will this eventually spread to gold and silver stocks or have they burnt their bridges one too many times with investors who got to see neither production nor dividends?
The first whispers that deals can be closed in Europe are starting to appear and if word gets around then we should see the Business Class of flights from Vancouver to Frankfurt bulging again as bust juniors go in search of funds with the old joie de vivre (well really the old “damn the expense, put it on the corporate card” attitudes of yore). However, many of these unworthies have gone the way of all things (and their corporate cards have long ago been cut up and tossed away) and the German investor today will not be so easily suckered. Certainly with better information at hand (in German) than the pump-and-dump bulletin boards of days gone by the vision opens up for a more sober and sustained evolution of the German capital markets as a place for some of the more serious miners to build a following.
Christopher Ecclestone is a Principal and mining strategist at Hallgarten & Company in London. Prior to founding Hallgarten & Company in New York in 2003 ... <Read more about Christopher Ecclestone>