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12/13/17

Eric Sprott and Garibaldi (GGI.v) Part Deux: How Eric reduces his cost average

Once the game-changing move into a stock like Garibaldi Resources (GGI.v) gets made and a guy like Eric Sprott holds all the cards...
  • Control position in the market and active purchases continuing
  • BS-spouting company run by people with a track record of hype-and-fail
  • Hoards of True Believers on one side who will stake their grandmother on the BSsers being right about it being next Voisey's Bay
  • Another hoard of people on the counterbid, i.e. those people who see GGI for what it really is and know the chances are stacked high on it being a long-term failure.
...what do you do if you're Eric Sprott and you want to play the company like a cat with a mouse? Well, you do two things:

1) For a start, you make sure the volatility continues. In order to stay in control, you want to whip the stock price around as much as possible and deter those who think they're smart. So when bad news comes out, you whack on the asks and run the stock up 10%. On (what passes for) good news, dump into the bids get it to dive 20%. Nobody in their right minds will step in and daytrade something with no set direction and with price action that defies newsflow. After a couple of rounds of burnt fingers the rest of the world stays away and Eric has his toy all to himself.

2) You lend out stock to shorters and/or you trade short yourself. The most obvious play of all, as you get to hedge your own position and once in control of the price swings, in the enviable position of being able to reduce one's cost average by flipping several times a day (which also accounts for the multiple block-type ticker action I'm seeing most days, whether or not Mr. Sprott files new aggregate insider purchases). This is again the type of smart marketcraft you'd except from a guy like Eric Sprott and as he's better at this than you, his cost average will quickly ratchet down over time.

As long as Eris Sprott is active and GGI can spin out its BS story (i.e. at least until the Canadian Spring when they'll be obliged to drill again...then count eight to ten weeks as they drag heels on first results....then another eight as the project-killer holes finally show up...man this can go on til this time next year) the people who are short are in for a rough ride on GGI, they'll be screaming and wailing and telling us it's not fair. Which is fine, because there are ignorant greedy dumbasses on both sides of this story* and the only smart ones are 1) the officers of GGI who have raised the cash to guarantee their paychecks for years and 2) the person playing you all like a toy trumpet. His name is Eric and he's richer than you for a good reason.


*The arrogant conceit of the shortside is just as annoying as the plugdumb ignorance of the greenhorn longs who have been sold a vision of Scrooge McDuck diving into a pool of money. The only people worse are those running the scam, pretending to be long and cheerleading the stupid into holding...they have a special place in hell waiting for them.

PS: Dear retail holder of GGI: When you hear people referring to this post as nonsense and made-up rubbish (and you will, I promise), take a note of that person's name. Because they are either 1) utterly stupid in the ways of the market or 2) lying to you. Now you have a nice day there, yeah?