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6/1/15

Bitgold (XAU.v): A final word (from IKN316)

This was a small section of yesterday's weekly. It wasn't going to make it to the open blog, but one specific reader told me to put it here. As he's somebody I rarely refuse (let's leave it at that) here you go. The only thing that's missing is the price chart, it wasn't particularly important to the piece, you can find that yourself if you care enough.

This really is the end of any sort of coverage of Bitgold (XAU.v) on these pages, hard, soft, praising, scorning, anything else. I reckon XAU.v has a good couple of years' worth of headline-making in it (good bad or indifferent) and isn't going away anytime soon, but I really have better things to do with my limited time on this planet. Amarillo Slim, step forward.

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Bitgold (XAU.v): A final word
Here comes an expansion on the post I stuck on the blog Friday (16) with the observation that this company cannot be taken seriously any longer. And then after today that's it, end of the line, I have better things to worry about.

In a previous post on XAU.v dated May 19th (17) entitled 'The funniest thing about Bitgold (XAU.v)' I wrote this little section (highlights today):

"...the fun has been watching the rise in seething hatred for the stock in people who play the Canadian junior mining companies, partly because they now feel stupid for caring about digging holes in the ground and thinking that precious metals are the true source of all wealth, partly due to the nostalgia and the "hey, remember when we could hoodwink em all like that too?" feelings it brings on by watching from the sidelines. Or maybe it's the thought of what XAU.v directors would do if they were offered a 100m share bought deal at $3 by some brokerage tomorrow morning. Or even $2. Fark, they could raise a quarter billion, buy out ten shitty explorecos and reinvent themselves as Sandstorm's next acquisition target. And face it, Nolan's bought into worse stories."

Strange. Although the details and how the chips have fallen (so far) aren't exact, the general thrust of the idea has been close to how XAU.v has unfolded.

Three days after that post, Bitgold announced (18) it was using 11.17m of those obviously overpriced shares to buy GoldMoney (we showed the troubled financial snapshot of that one last weekend). Then last Friday morning Bitgold announced (19) it was running a 5m share bought deal at $3.65 per share to raise gross proceeds of $18.25m and perhaps up to 21m if the overallotment is filled. 

Two comments to make.

1) First the confession of sorts; I wrote what I wrote on May 19th because I'd decided to let my mind wander free and suppose on what I'd do if I were heading up Bitgold and just in it for the quick hit profit. Yes you'd probably gathered that, but it wasn't meant to be a serious commentary, it was just a blog thing. As things turn out XAU.v hasn't emitted 100m shares, but 16.17m (plus another possible 0.75m) in the space of less than two weeks in exchange for hard assets is well on the way. Cut to the chase, it's what a company does when it knows that its shares are being wildly overpriced by the market and wants the easy cash-in quick hit.  

2) The day after that May 19th post I had an exchange with the main central figure in XAU.v, Roy Sebag, who mailed unsolicited and we had a cordial exchange of four mails, two apiece. In the course of that exchange it was made perfectly clear that according to the company CEO XAU.v didn't need capital. Therefore what I've witnessed from the sidelines is an attitude adjustment of Road to Damascus level in such a short time.

Somewhere in the background I hear that classic old adage of the Canadian junior market, "If they offer you money, take it", one that's far more common in better times for juniors than it is now. XAU.v isn't a junior mining company but it is connected with gold and it's hit the marketing sweet spot with enough people to get acclaim (and even weekend business feature slots in The Guardian (20), for which they'll thank the Soros backers for sure). But I'm just going to laugh at you if you tell me that "stock goes to $4 and we buy out GoldMoney and then we raise $18m in a $3.65 placement" was part of an integrated plan. This company came up with an idea that's captured the imagination of a bunch of rich hardmoney people and since then has improvised its way to treasury. Bitgold ATMs? Give me a break, I've watched as a hundred cryptocoins have floated that one at the market, let alone the big guy Bitcoin which still can't make a go of it.

That Guardian piece linked above ends with Bitgold's Josh Crumb saying this:

“If we’re right, we’ve built the next PayPal,” he says. “If we’re wrong, we’ve just built another one of those bullion trading businesses.”

Well maybe. And maybe if they're right it is the next PayPal. But if they're wrong it won't just be "a bullion company" as a consequence, because by the time the world has worked out they're wrong they'd have also transferred large wealth from the pockets of third party investors into their own via the sales of overpriced bubble shares. One thing I never swallow from a businessman is when they paint a no-lose scenario, because it's only ever no-lose for a very small group in the centre.


And that wraps up Bitgold on these pages, it won't be mentioned again.

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UPDATE: Al Korelin is not part of the solution, he's part of the problem. Until the two-faced stock touts of this world are ignored, there will be no improvement in the Canadian market.