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Regarding Porter Stansberry's latest pump job (from IKN361)

This from IKN361, out on Sunday evening. A little light reading from the edition, far from the most important piece this week

Porter Stansberry brings a bazooka to a knife fight
He moves in darkness as it seems to me,
Not of woods only and the shade of trees.
Mending Wall, Robert Frost, 1914

As mentioned in today’s intro, last week’s biggest market moving event came from the money side of the mining sector, rather than the mining or operational side. For those unaware as to who Porter Stansberry is he’s the brains behind Stansberry Research, that bought out the Agora empire a few years ago (where Stansberry started work as a file clerk in 1996) and in 2014 bought out Casey Research from its founder Doug Casey. He’s also the person who was fined $1.5m in 2007 by the U.S Courts for disseminating false stock tip information, with a court that said during its ruling that, "Stansberry's conduct undoubtedly involved deliberate fraud, making statements that he knew to be false”. When he tried to take his case to the U.S Supreme Court under a First Amendment appeal, he wasn’t even let in the door (10). He moves, he shakes, he sells dreams and investment tips, he tells his largely hard-right-wing audience what they want to hear (a recurring theme is the Death of the Dollar, the pitch is to sell gold, sometimes punctuated with warnings how Barack Hussein Obama is about to hijack the constitution and claim a third term of office), he’s short on morals, long on spiel. In short Stansberry is a stock tout and obviously a successful one as these days his touting moves markets in a way his peers and wannabes only dream about.

Last week Stansberry rolled out a new promotion and it’s a doozy. You can find it if you like on the internet, not difficult to come across, in which for the low low price of U$1,500 (one thousand five hundred United States dollars) down and $49 per month you get immediate access to his suite of 15 investment recommendations that tie in closely with the...yes you’ve guessed it,...imminent death of the dollar and a gold price about to jump to $2000, $5000 and even $10,000 per ounce on wholesale financial sector meltdown and destruction. Bless him.

After noting the moves in stocks apparently under the Stansberry pump on the blog last week and after posting (12) on possibles and probables on the list, I decided to stop being so lazy and chase up the story a bit more. It turns out that the 15 Stansberry investment recommendations aren’t all mining stocks, but there are seven precious metals mining stocks highlighted and recommended and they are the following:

  • Silver Wheaton (SLW)
  • Franco Nevada (FNV)
  • NovaGold (NG)
  • Pretium (PVG)
  • Almaden ( (AAU)
  • Midas Gold (
  • Lundin Gold (

That’s an interesting list for several reasons, so let’s start by splitting them down the three obvious sub-sets, small medium and large:

1) The smallest ones, AAU/, These are straight plain juniors all. Here’s a five day chart that shows how they’ve performed compared to gold (GLD):

Those are big, nay massive two day percentage price moves. The type of move that catches the eye of regulators and Lundin Gold was required to comment on the activity on Friday (14).

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr 8, 2016) - Lundin Gold Inc. ("Lundin Gold" or the "Company") (LUG.TO)(LUG.ST), in response to a request by Market Surveillance (IIROC), today confirmed that it is not aware of any material, undisclosed information related to the Company or its Fruta del Norte gold project in Ecuador that would account for the recent increase in the market price and level of trading activity of its shares.

As is often the case, it’s what they don’t say which is as important. LUG is under no obligation to state everything it knows, it needs to disclose its own position and nothing else, but nobody in their right mind runs a multi-million dollar public listed gold mining company and doesn’t know within seconds the whys and wherefores of significant price movements in its shares. Or put more simply, Ron Hochstein isn’t going to say, “We are not aware of any material, undisclosed information related to the Company or its Fruta del Norte gold project in Ecuador that would account for the recent increase in the market price and level of trading activity of its shares but we do know that Porter Stansberry just pumped the merry bejeez out of our stock and it’s flying because a whole bunch of people are scrabbling for the few shares on the ask”. Not LUG’s problem, frankly, but you could reflect to yourself how “fortunate” this timing is for Lukas Lundin, what with LUG’s big financing to raise the capex required to build the mine has been flagged by the company itself for this quarter.

2) The medium-sized companies, NG, PVG: These are liquid stocks with decent sized market caps of around $2Bn and $1Bn respectively and as you’d expect they do much better average market volumes in both share count and cash terms than the smaller fry noted above. Here’s how those two traded on on Thursday and Friday compared to GLD, as well as the GDX and GDXJ benchmarks which also had good days:

As you can see, PVG and NG out-performed GDX and GDXJ by around 4% on Thursday and Friday, which is a reasonable return for one’s efforts but nowhere as impressive as the little guys noted above.

3) The big cap miners, FNV and SLW: These are highly liquid Tier 1 names, worth $11Bn and $7Bn by market cap. Here’s the five day chart of these two against GLD, GDX and GDXJ:

FNV performed right on the GDX/J average, SLW didn’t have such a great time (perhaps because it’s still in the overhang period of its recent $550m equity placement) but performed closely with GLD.

Discussion of promotion effects. The seven stocks performed very much in line with what a market watcher would expect from them under these circumstances, targets of a big promo pump by a market tout with a following of people who can easily shell out $1,500 for a list of names. For sure the whole mining complex had a good week and that helped things pop nicely too, but the small non-liquid stocks’ massive moves weren’t mirrored by the bigger and more liquidity traded issues. That makes sense, as even the biggest mining promo pusher can’t bring in the type of cash that would move up FNV 50% on its own, but it’s perfectly feasible to have a $5m anomaly entering Almaden and seeing it pop like crazy.

So let’s look a little more closely at the big movers, with LUG popping over 30% in two days, MAX around 40% and AMM up 60%. As for the volumes involved, Lundin Gold ( isn’t a good example because it’s a very tight share structure and there’s little width available even if you pay up. Also, after running the numbers on that one just a few weeks ago I know it’s now way over-valued (and for my taste, a perfect example as to why this isn’t some carefully DD’d scientific’s just another stock pump). However Almaden and Midas are fairer yardsticks so let’s note volumes in those stocks these last two days:

  • Almaden did around 5.5m shares more than its daily average on its US ticker (AAU) and 1.3m more than its normal on the Canadian ticker ( It’s never easy to be exact, some arbitrage may have caused some of that volume, but it’s fair to say that AMM saw around $5m dollars flow into it from this promotion and that’s more than enough to get a normally thinly traded exploreco to jump like a kangaroo.

  • Midas did around 2.5m shares more than its daily average in its US OTC ticker (MDRPF) and the same in Canada ( Let’s go for around $2.5m in extra volume in this company’s shares the last two days of last week. We should also note that as a Canada listed stock with just an OTC entry point for US investors (apparently the lion’s share of Stansberry customers, I’m reliably told), it’s a lot easier to move cash into AAU than it is

From those, it’s fair to say that between $2.5m and probably closer to $5m is the kind of money Porter Stansberry can conjure up in just two of the 15 investment recommendations he put in front of clients who paid U$1,500 each for the privilege of reading his words. That’s not bad at all and as I noted on the blog Saturday (11), “I'll give Porter Stansberry credit too, he sure knows how to run one of these and makes the rest (of the junior miner newsletter writer and stock picker community) look like pikers”. He gets an extra $5m moving into an illiquid stock like Almaden and I don’t have to check out my stock radar page, just my e-mail page is enough as I’ve received at least 20 mails since Thursday with “AMM” in the title line.

It also makes sense that the entry of a “fresh” $5m over two days into PVG or NG, stocks that average around U$10m in trade volume per day, will move their dials a little compared to benchmarks but not by anything like as much as the little guys in percentage terms.

It also makes sense that $5m “fresh and extra” moving into Franco Nevada over two days (does U$70m to U$70m per day average) or Silver Wheaton (does U$80m to U$90m per day average) won’t move their dials so very much.

It all fits in fairly well and that type of “Let’s say $5m” per investment idea means Porter’s clients are not short of cash to play with. Which is fair enough when it comes to the big names, I’ll even take the medium sized names as fair game for large money at a pinch, but you can’t tell me that Stansberry Research didn’t know exactly what was about to happen to, and as soon as he pumpo started. Which makes me wonder just why those names were chosen.

Focus on Midas
I’m not going into all three of the smaller names today, but there are reasons to suspect that both LUG and AMM aren’t just names Stansberry pulled out of a hat or eventually decided upon after close DD. Today I’m going to try and keep it short (ish) so my efforts are now concentrated on Midas Gold (

In IKN325 dated August 2nd 2015, we ran a feature on what looked like a set-up for a promo pump in Midas Gold. There were several points and point six noted details about the May 2015 $8m placement, which sold 19.1m units at 42c apiece (unit = 1 share + ½ warrant at 60c strike, valid for two years). Here most of that point 6 from IKN325 (go see the edition for the whole thing, or if you’re new round here and would like a copy, just drop me a line):

6) The people who bought the placement. There were a total of 83 persons (natural or judicial) who took parts of the placement and in among them are many that are involved in the typical Canadian pump job. There are more promo and insto names on the list of placement takers (23) than you can shake a stick at, but by way of a sample...

·      M&G Investment Management of the UK ($1m of the placement)
·      Sun Valley Gold Master Fund ($412k of placement)
·      Jeff Phillips of Global Market Development ($126k of the placement), who also earned $91k in finder's fees so there are plenty inside his sphere also in this deal
·      Casey Research via its KCR LLC fund (25) ($420k of the placement), run in cahoots with Rick Rule and his entourage.
·      Marin Katusa ($42k of the placement)
·      Plethora Precious Metals of The Netherlands ($84k of the placement)
·      Sprott Funds via Exploration Capital Partners fund ($840,000 of placement)
·      Kitco Gibson ($21,000 of placement)

All those and more with most of those less interested in the long-term wellbeing of the Stibnite property and more interested in the near-term lining of their back pockets. Between them, noise is bound to be made and we also note with interest that was one of the lunch sponsors at last week's Sprott/Stansberry conference, where those present got a plate of food while they watched the company present and pitch.

And that, ladies and gentlemen readers of The IKN Weekly, is a long list of usual suspects in the mining promo world, all with the chance to clip a warrant and then hold out for a liquidity event in which to take profits.

Next let’s consider one of the key parts of the Stansberry pitch last week. Listen to his spiel (I did, nearly fell asleep but I did) and you too will hear all about the secret phone call he took that got him a secret dinner meeting with one of the world’s top hedge fund people in New York. He then went on to tell us how he heard world top-table financial people talking about....yup, the death of the dollar and gold at $10k and all those wonderful things. We get no evidence that the conversation happened that way, or even that the meeting happened, but the whole hedge fund plus world famous player gold plus fear thing sure sounds like John Paulson to me. And oh look who’s long!

Let’s consider what happened in February this year (closed mid-March), when ran a much bigger round of fund-raising then in 2015 and the main taker was none other than famed New York hedge fund boss John Paulson. Here’s a chunk of the NR:

As a result of the completion of the Offering, including the issuance of the Advisory Fee Shares (as defined below), the Company's issued and outstanding share capital consists of 175,826,167 Shares. Assuming conversion of all of the Notes, the issued shares would increase to 317,081,748. Were just the Notes held by Paulson converted into Shares, Paulson would hold approximately 97,437,165 Shares, representing 35.7% of the issued and outstanding Shares on a partially diluted basis and 30.7% on a diluted basis (assuming conversion of all outstanding Notes). 

For the record, as well as the big Paulson position Sun Valley took 24.3m of the conversion rights (worth about $8.6m) and brought its overall holding up to just under 10%. Then other large takers of the share offering include M&G Investment Management as well as other names already listed above. At C$0.3541 per share, these guys are sitting on a real bargain it seems, now that the Porter Stansberry pump has pushed the stock to 58c. In fact that 42c placement last year is looking good too.

In other words, Porter Stansberry can time the gold market all he wants, he can pick out FNV and SLW and even NG too as solid investment vehicles, but the way in which a got equal billing stinks to high heaven because it’s on another level entirely. This is a pump job designed to benefit his friends, new and old alike. Paulson’s got a free ride on $35m and Porter’s got a new BFF. It’s the start of something....beautiful?

Bottom line: Once you see the modus operandi behind these people, you see them for what they truly are. What you do with this information is up to you, you may consider playing this pump alongside the ones that know when it was going to start and (more importantly) when it will stop. If you do there’s potentially money to be made, but it’s also the classic musical chairs situation so don’t get left standing when the music stops. It tends to stop very abruptly.

And a final word: I’ve also noticed that the Stansberry-owned stock tipping company Casey Research (Louis James et al) is pumping very hard on the same kind of theme and there have been out-sized volume moves on no news in some of their typical pump vehicles, such as Brazil Resources (BRI.v, an awful dog of a thing with mediocre assets in Brazil). These Casey people have alliances and connections with other market voices such as Marin Katusa and John Mauldin, the type of people who don’t think it strange for a person to recommend a stock and sell their own positions at virtually the same time. Other more trustworthy market people I’ve talked with this weekend have noted strange buying action in small explorecos such as Colorado (CXO.v). These and others are the type of size and shape better suited to a “stage two pump” from the Casey people, rather than the main Stansberry Research pump engine. We may be on the threshold of a multi-stage concerted pump effort by these so-called honest money people. Think about that, too.