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Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.

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Message: Perth Panics

Hi Bujjai!

I do not think it is part of a government agenda to collapse the mining shares. The simplest explanation is more likely: since the regulatory agencies have been staffed from former players of the same institutions they are supposed to oversee, I believe that in some cases these people look the other way to allow their friends to bend the rules.

Here is a simple example: we all know of many brokered placements where the market price of a stock has been crushed immediately following a discounted offering. Since the brokers are awarded incentive options that are risk free, it stands to reason that some of these deals must involve shorting of the stock to lock in the discount of those broker warrants. The shorts would then be covered by exercising the warrants and delivering against the short. Since the warrants are cannot be traded, and there is a hold of at least 4 months before they can be exercised, this transaction then becomes a naked short. And I think any investor would agree that such behaviour is against the interests of the company in the placement, and also Canadian brokerage houses may not short the stock of companies that they are agents for in a placement. Yet it happens all the time. Where are the regulators?

Is this part of a government conspiracy? Of course not. It is a handful of crooks that are gaming the system, knowing full well that their friends at the securities commission will look the other way. Now what if this kind of scam is far more pervasive? What if it is an open secret that some houses get a green light to get away with all kinds of fraud because they have friends in high places that will not investigate? What if on the odd time that some of this crap is actually exposed, only a token fine is assessed and the majority of the illegal gains are untouched, and no one goes to jail? Welcome to our Canadian markets. And there is no transparency in the regulatory process, so even if we file a specific complaint, there is never any disclosure on the results of an investigation, or even if any investigation was ever completed.

So having this system where some pigs are more equal than others, and greed rules the game, it would be no surprise to me that some crooks have gone way off the reservation and shorted the hell out of some stocks beyond any capacity to ever cover if the market runs against them. All of this is purely speculation but I do not think it is impossible that my fears are reality. And if so it has nothing to do with any conspiracy to spook people into bullion. It is just greed, and criminal negligence on the part of the people who are paid to ensure the system is fair for everyone. I think its very clear that some abuse of this system is a part of the daily market reality. How deep does the rot go?

cheers!

mike

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