EDITOR: | June 16th, 2013 | 3 Comments

New TSX Venture Exchange Association Sets the Stage for Vulture Feeding Frenzy

| June 16, 2013 | 3 Comments

whitesocks-180x128Saw a gentleman who had his suit pants rolled up over the top of his socks on Bay St. Thursday afternoon and it occurred to me that it is an accurate metaphor for what seems to be happening on the TSX Venture exchange right now – it’s time for a reality check.

Found Joe Martin’s open letter to the industry in a piece titled Strangulation by Regulations: Can the Junior Companies listed on Canadian exchanges survive this “Double Whammy?” compelling on many levels. In this letter he states that over 700 companies on the TSX Venture Exchange do not have the capability of meeting the financial requirements to survive the year.

To deal with this crisis head on, he has created the Venture Company Association and they will launch their first meeting on Tuesday, June 18th from 2-4 PM PST at the Four Seasons in Vancouver, BC. To register, click here.

I’d love to be there…but I would be there for a different reason. My angle is to get there early and score a seat in the back to scan the audience for the inevitable vultures seeking to take advantage of the feeding frenzy. After all, I embrace the quote by Chicago’ Mayor Rahm Emanuel who aptly states: “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” Frankly, I think we need a list of these 700 companies with some analysis on these companies ASAP — just added to my to-do list.

Let’s talk M&A deals for a moment…

One of our InvestorIntel guest editors David Urban sent me the M&A highlights and he writes: “Despite gold and silver prices that are down by more than 40% from their peaks the M&A market has been interesting to say the least. Coeur Mining Inc. (NYSE: CDE) swept in stealing Orko Silver from First Majestic Silver Corp. (NYSE: AG) and Hecla Mining Co. (NYSE: HL) picked up Aurizon Mines Ltd. in a diversification effort into gold from silver. Agnico-Eagle Mines Limited (NYSE: AEM) grabbed stakes in quite a few juniors mining companies as well.  New Gold, Inc. (NYSE: NGD) snapped up Rainy River Resources taking one of the last remaining large projects off the market while major miners like Barrick Gold (NYSE: ABX), Goldcorp Inc. (NYSE: GG), and Kinross Gold Corporation (NYSE:KGC) remain on the sidelines dealing with constraints from large projects either purchased or developed in house.”

The point is that this is not the time to go underground, but to make sure your team is lined up and you are in the game.

Speaking of events, I noted that there is a free online webcast called “GOLD: Dead Cat or Raging Bull?” at 2PM EST on Tuesday, June 25, 2013. Featuring Eric Sprott, Founder and Chairman of Sprott Inc.; Jim Cramer, host of CNBC’s Mad Money and chairman of TheStreet.com; Steven Feldman, co-founder and CEO, Gold Bullion International; Rob McEwen, Chairman and CEO McEwen Mining Inc.; Doug Casey, Chairman of Casey Research and Jeff Clark, Senior Editor of Big Gold. To register, click here.

I plan on listening to it, even though there is at least one guest that is too conspiratorial for me; but considering its Father’s Day and 90% of our audience is men, want to insure our readers know what’s going on. And speaking of reality checks, we all know that there is money, there is always money – and there is always people seeking investments and some are actually, securing capital. This said, it will not be on terms that anyone likes as these vultures have never been more powerful…and who knows, perhaps by the end of 2013, we may all own a Venture company…or two.

Tracy Weslosky


Tracy Weslosky is the CEO for InvestorIntel Corp. and founder of InvestorIntel.com, a trusted source of online market information for investors in the capital markets, ... <Read more about Tracy Weslosky>

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  • Eric Coish

    The solution to ensuring the survival of the TSX Venture exchange is quite simple. Ban shorting, all shorting of any kind. That’s it, nothing more, nothing less. If shorting were not allowed, a company could stand on its own merits and attract investors who would step in and buy shares, assured these shares would not be ripped to shreds by shorters. Shorting is unbridled theft, plain and simple.
    If I had $10,000 in a bank account and anyone was allowed to withdraw from it, without charge or penalty, what do you think would happen? The account would soon end up with a zero balance, I would be out $10,000 and those who robbed my bank account would be enriched by the amount they had stolen.
    Similarly, let’s say I own 10,000 shares of Company A, which I bought and paid for at say 20 cents a share, using $2,000 of my own money. Broker B steps in and sells 10,000 shares of Company A which he didn’t buy at let’s say the same 20 cents per share. That broker just pocketed a cool $2,000, without investing a penny. Did he get my permission to sell my shares. Of course not. Do I get compensation for those shares Broker B just stole from my pocket? Of course not. Is this fair? Of course not. Is that broker every required to buy back those shares? I’m not sure, but I doubt it, because the fox appears to be watching the henhouse. The fox won’t stop stealing hens until someone shoots it. Even if broker B does buy back those shares, he’s already reduced the value of my 10,000 shares of Company A. Furthermore, he can sell another 10,000 shares, and another 10,000 shares, and another 10,000 shares in Company A, ad infinitum, forcing its shares to plummet. What do I, the legitimate investor, get in return? Nothing but grief and worthless shares.
    Shorters would have us believe that shorting helps create what they euphemistically call “an orderly market.” That is a self-serving myth, used to shore up their baseless argument and keep my money and your money flowing into their pockets. Shorting creates a very uneven playing field, tilted grossly in favour of the shorters. One would think that some small advantage would be given to buyers who actually pay for shares; instead, the overwhelming advantage is given to sellers, especially shorters. It’s as if the brokers view the negative impact on the Exchange as mere collateral damage in their pursuit of profits from shorters and high-frequency traders. Perhaps they don’t realize that if the Exchange is destroyed, there will be no profits for anyone. Shorting has, to use the words of Watergate’s Sam Ervin, “no redeeming social value”. In short, shorting should be banned completely from the Venture Exchange.

    July 9, 2013 - 7:00 PM

  • J. Best

    Wow! This was a super interesting article and the commentary by Mr. Eric Coish incredibly insightful. Really great conversation happening here.

    July 10, 2013 - 2:28 PM

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