Barkerville (BGM.v), BCSC, stupid investors (from IKN167)

Here's how we opened IKN167 yesterday. I call it op-ed, you might call it frothing-mouth rant.

The abject stupidity of market participants should never be underestimated

For years (rather than days, weeks or months) your author has compiled an ever-growing list of complaints about the way in which Canadian regulatory bodies, specifically in today’s case the BCSC, generally fail to protect the investment community. The beef du jour (or maybe ‘boeuf of the day?) are the issues arising out of the Barkerville Gold Mines (BGM.v) situation that ratcheted up a couple of notches on Thursday morning when the company announced (1) that the BCSC had been looking into the company’s recent news release on the now rather famous 43-101 technical report that put Cow Mountain at 10.6m oz gold (see IKN reports passim and a thousand other places). The BCSC’s role in this saga can be questioned on many levels, not least of which the way in which BGM was halted the morning June 28^th and then was allowed to resume trading after the release of the “we got 10.6m oz gold” NR the next day. The simple question is why was the halt lifted? The BCSC was in its right to have insisted BGM remain halted until it completed a review there and then, but preferred to allow the stock to trade, become subject to a massive pump, a nasty drop and high volume, extremely lucrative (for somebody) price movements.

So yet again, the BCSC looks woefully inept and incapable of fulfilling its brief of protecting the investment public in British Columbia (and Canada and beyond). However, its ineptitude pales in comparison to the dumb cluck trading action in BGM late last week. This is the five day chart for BGM and we see the drop at the bell on Thursday, but we can also clearly see the action on Friday when BGM saw solid buying action all day. This action can only be proscribed to retail investors “seeing an opportunity” and “buying into a story” and it beggars belief. There’s a big pump going on around BGM, on that score there’s is little room for debate, and the fact that the pump can still work well after a belated BCSC investigation, after a NR of the type seen on Thursday and after the world has been clearly warned by the company itself (under obvious legal obligation to do so, else face the consequences) is testament to the abject stupidity of retail market participants in the junior sector.

The Barkerville case shows the need for Canadian Securities Commissions that can do far more than the current batch of inept bodies working under rules and laws long past their sell-by dates. If not, the quantity of scumbags and thieves that pervade the junior mining community and prey on the stupidity of its investment community will only multiply. But in the meantime, it’s worth noting that just a few ounces of common sense and a basic ability in critical thinking puts you a nautical mile ahead of many of your investor peers, something you can take advantage of in true Darwinian style.