Vancouver Venture

Dark Trading Pools and HFT explained

2013-05-24T09:58:00.001-07:00

Ever since the change of major North American stock exchanges to a for profit model they have all become infected with High Frequency Trading as the emphasis has changed from quality of trade executions to quantity of trade executions and there is only one winner. An algorithm trading machine.

Need a deeper explanation on the effects of Dark Pools and HFT? Skip on over to BNN and watch this segment with Doug Clark from ITG Canada.

http://watch.bnn.ca/business-day/business-day-am-may-2013/business-day-am-may-24-2013/#clip933397

DHX Media being groomed for the alter

2013-05-24T09:38:00.001-07:00

My regular Sunday MAMIL ride got me into a conversation about DHX Media (DHX.TO) on the long weekend. I picked up 1800 shares of DHX recently at $2.80 on the back of a string of announcements regarding their massive library of kids shows. And as any parent knows, a TV channel full of cartoons has become the baby sitter of choice these days. Plop junior down in front of Caillou episode and you just freed up an hour or two in your life.

From what I gather from my buddies in related industries is that DHX Media is really looking for a take out candidate as an exit at some point. When, where and at what price, I do not know nor am I privy to any insider information, it seems the consensus is that this is the game plan for DHX.

On thing that is for sure is the chart is going the right direction.

Now back to watching The Adventures of Paddington Bear.

Reigning in the trading

2013-05-24T09:11:00.000-07:00

It appears that fund outflow is still prevalent in the PM sector as the price of gold has stabilized for the time being but the mining stocks continue their downward path.

I have been looking for trading opportunities in the sector as there is usually volatility to profit from but the bounces are not manifesting themselves. In fact any news is now a liquidity event to sell off more stock.

I have found myself a new type of mining company, a company that mines your bank account with service fees because you are too lazy, drunk or inconvenienced to make it to your own financial intuitions ATM machine. And it pays a 5% dividend! (Listen to me, crikey mate, have I changed from being a risk on cowboy riding the bucking bronco of the Venture Exchange to seeking out dividend growth stories. My, my, my how this market has changed me.)

I have been plucking away at Direct Cash Inc. DCI.TO ($25.00/share) and if you ever see one of these machines around and used it, thank you, you have just been docked another $2.50 service fee.

The story at DCI is that they are consolidating the fragmented indpendent cash machine business in Canada, England and Australia. I can live with a company that profits from people that are lazy or inconvenienced and are willing to be docked a service fee.

Corvus Gold finds the power but keeps looking for bids

2013-05-16T16:28:00.000-07:00

Corvus Gold gave out this news release today that mixed a non material change in corporate affairs with a material change in corporate affairs. When ever I see these two mixed into one news release I always feel the Company has something to hide. These are two separate events and credibility is better preserved by announcing the resignation in one news release first and then a few days later letting the world know you got hooked to the grid.

CORVUS GOLD SECURES ELECTRICAL POWER AT THE NORTH BULLFROG PROJECT, NEVADA, ANNOUNCES DIRECTOR DEPARTURE
Corvus Gold Inc. has made significant progress in securing electrical power for the North Bullfrog project near Beatty, Nev. Valley Electric Association of Pahrump, Nev., will upgrade its existing electrical facilities, on the eastern portion of the project, beginning in mid-2013 and complete the necessary upgrades by 2014. This upgrade assures that adequate power will be available for all future mining operations at the project.
Carl Brechtel, chief operating officer of Corvus, stated: "An adequate and economical power source is a key infrastructural component to this project, which already has excellent access, favourable topography, a low strip ratio, good heap leach gold recovery and a talented local work force. These improvements to the power supply infrastructure represent a significant benefit to Corvus Gold in the development of the North Bullfrog mining project."
Director departure
The company announces that Daniel Carriere will be leaving its board of directors effective today to focus his efforts on his primary business interests. The company would like to thank Mr. Carriere for his important contributions to Corvus Gold over the past 2.5 years during its start-up phase and wishes him well with his current and future endeavours.

As per IWNATTOS post on my prime view of Corvus's backside view, I might as well pull up the comfy chair, make some popcorn and get the snugglie out, as I am here for awhile. Oh, and that $0.75 share I was hoping for, well I have had to take my expectations much much lower and ~~hope~~ ~~pray~~ ~~beg~~ ask for divine intervention to get off this position at $0.65.

Judging by the chart above and the market depth below perhaps some bids might be found in the $0.40/share range and I do stress perhaps. At this point it looks like one or more of the funds that got on board this deal are selling at any cost.

Wait, what was that Mr. Market?

" you think you bought something on the cheap? I'll really show you what cheap is".

Thank you sir, may I have another?

Silver Bullion Selling for $100 ounce.

2013-05-16T11:40:00.000-07:00

The Canadian Mint is not to be out done by some legend like McEwen Mining over pricing an one ounce silver bullion coin.

No, no, no, the mint has stepped up and issued an one ounce silver bullion coin with a face value of $100 and a melt value of what ever spot is today.

Call now as strict limits of 3 coins per household are enforced. Only 50,000 are available to ~~suckers~~ investors.

Think $100 for one ounce of silver is too much, then skip on over to the McEwen Mining site where silver is on sale for $50.00. But wait there is an AGM special on where you save 15%. That is a low low low price of $42.50 an ounce.

Or if I was going to keep stacking why not just pay $27.00 an ounce over at First Majestic.

Besides a lottery ticket this has got to be another great way to tax stupidity.

Daniela Cambone at the New York Hard Asset Show

2013-05-15T13:42:00.001-07:00

Probably the best thing that happened at the New York Hard Asset Show is Daniela Cambone doing interviews.

Watch how everyone can not stop smiling in the presence of Daniela as they spell doom and gloom for the industry.

BTW we are not there yet. We will be there when the sell off in the PM's is not amplified threefold by the miners. (Example: Silver is off 3.59% and First Majestic is off 9%) When the PM's drop 5% and the miners are flat then you know they have hit bottom.

Brent Cook says we are not there until Stan Bharti starts doing tech deals.

So put on your Daniela Cambone rubber boots, makes some popcorn, sit back and enjoy the doom and gloom.

Mr. Market by Benjamin Graham

2013-05-09T10:31:00.002-07:00

A little something to think about.

He is your eternal partner in investing. He is patient if somewhat bipolar fellow. Subject to wild mood swings, he is always willing to offer you a bid or an ask. If you are a buyer, he is a seller - and vice versa. But do not mistake this for generosity: He is your opponent. He likes to make you look like a fool. Sell him shares at a nice profit, and he happily takes the prices so much higher you are embarrassed to even mention him again. Buy something from him on the cheap, and he will show you exactly what cheap is. And perhaps most frustrating thing of all, Mr Market has no ego - he does not care about being right or wrong; he only exists to separate the rubes from their money.

What I wrote about on Surge Energy yesterday...Well never mind

2013-05-09T09:10:00.000-07:00

As I posted yesterday I was looking to play Surge Energy from the $2.80-$3.00 range up to the $3.20 range. Well it looks like the management infighting is all but done and the stock has gapped big time.

There is a long winded news release but he broad strokes are changes in the board of directors, an asset sale and a private placement by the new President. If you really want to read the details head on over here.

I'll just be on the side lines for the time being.

How far the knife fell

2013-05-08T14:37:00.001-07:00

Now that I know how far the knife has fallen I have started to dabble again in a few plays, but I am going to exercise patience and not chase any stocks.

Timmins Gold found support in the $2.20-$2.25 range and I made a small trade yesterday, in at $2.25 out at $2.36. I am back on the bid at $2.28.

Rio Alto seemed worth a kick today at $3.55, I am up at the close and it looks like $3.75 might be the short term trading range.

I got out of Surge Energy too soon but I am back bidding at $3.00 even though $2.80 is a better price.

Last but not least is the position I am probably most fucked on, Corvus Gold. Just to be a sucker for more punishment I have picked up 10,000 more here at $0.61/share. I would be happy to see the back side of the 10,000 shares at $0.74.

I have sold off my Puts on the CIBC, Royal Bank and BMO. I did not maximize my money on this trade as I held on to long and the stocks seem to be melting up with the balance of the crazy market, but I did profit over all.

Hindsight on Osisko

2013-05-08T14:12:00.001-07:00

Now that a few weeks have past since the nearly 50% jump in short positions on Osisko I can clearly see with hindsight.

This weeks short report came out and it looks like of the 17 million shares sold short up to April 15th, 6 million have been covered by April 30th, still leaving a substantial short position.

Judging by the gap down and spike in volume it looks like a large position was put on at the $4.50 and under mark. There is still 10 million more shares short on April 30th. than on March 31st.

The open call interest for May has the largest contracts at $4.00 with 2405 contracts worth 240,500 shares. To buy one contract will cost $455 or about $4.55/share. There is also 509 $4.50 May contracts.
The next largest open contract is July $7.00 contracts with an open interest of 10,214. Someone has a 1 million short position with a stop loss at $7.00 good till the 3rd week of July.

Although our favorite gold narcissist openly commented on not liking Osisko or large low grade gold miners for that matter, it is looking like $4.00/share is a support level that I can start trading off of again.

Where do I send my balloon?

2013-05-03T08:17:00.000-07:00

Must be a market top

2013-05-03T08:03:00.000-07:00

I capitulated once again and sold off my small HIX position on the TSX and bought XSP so I am no longer short the TSX and gone long the S&P.

You know the broad market is going higher when Gilead Sciences which I own, goes up $3.29/share to a new high of $55.65/share on this news.

Gilead Misses on Earnings, Sales in 1Q

Hard to be on the sidelines

2013-05-02T15:12:00.000-07:00

Being successful in trading you have to have confidence in your decisions and I will be the first to admit the last smack down in gold has shaken my confidence. When you can no longer rely on your convictions it is best to stand aside, once you make a series of bad decisions more follow.

That being said, this market is by far the wackiest I have seen. The S&P, Dow and Nasdaq keep plowing higher with defensive stocks leading the way. The commodity market is screaming slow down, Europe needs to cut their interest rate to almost nothing to try and get things going and defensive stocks seem over bought.

Up 150 today down 150 tomorrow.

My only conclusion is the Fed and BOJ buying of so many treasuries is that is forcing the stock market higher but the money is only going into defensive consumer staples and medical stocks.

My favorite sector, mining, is so far out of favor I refuse to play anymore. Barrick Gold and Kinross are turning out to be the poster boys for all that is wrong, there are some good miners out there but no one cares. I would have thought we would be near a bottom by now but when the price of gold goes down the miners drop even more and when the price of gold goes back up the miners flatline, we are not there yet.

I have a hard time stepping in and buying the S&P on the buy high and sell higher mantra, which brings me back to confidence in my decisions. As soon as I decide to buy the S&P it will be the top.

I bought some iShares Monthly Income ETF's (FIE) yielding 7% and I need to walk away from the trading terminal. Walk away!

Another Mining Conference?

2013-05-02T14:48:00.001-07:00

Well I just got my invite to pre register for the World Resource Investment Conference 2013, the second mining show in Vancouver this year.

As usual, the same Posse of guest speakers are going to be there and I would assume Rick Rule is going to be crowned Homecoming King and since there is only one female speaker, Danielle Park will be crowned Homecoming Queen by default.

Looks like there is a serious hollowing out of Junior Explorco's with booths.

My new prediction for the market bottom for the PM sector will be when we get down to 1 show in Vancouver with the Round Up and the PDAC in Toronto for the whole year. (oh.... and also when the bad news stops whacking Barrick like a donkey Pinata at a 5 years old birthday party).

Not a bad point of view

2013-04-26T17:40:00.001-07:00

This was sent to me from the usual Market Call Tonight email from BNN. Last weeks gold smack down point of view from Jaime Carrasco, Macquarie Private Wealth. All it really did is just put more hurt to those who own mining stocks.

Paper gold price was smashed once again by selling the equivalent of 2700 tons of paper gold in two days. However, this selling had a completely adverse effect intended by the sellers as it accelerating the already depleting global stocks of physical PM. Investors around the world realized that a 20 percent sale on the price was a really good deal. If somebody was trying to scare investors away they did not succeed.
From my vantage point this is to be expected as we see the beginning of the disconnect between the price of paper gold and physical gold. I have always said that as we proceed through this paradigm power shift this disconnect would accelerate as global powers begin to ask for their physical inventories back. Case in point, Cyprus cannot sell it's gold to cover their debts until they unwind their leasing agreements with the bullion banks; buy it back.
In essence the music is stopping in this global game of musical chairs involving 100 players and only 10 golden chairs. The first round started last year as Germany asked for 300 tons back from the New York Fed, this amount was only one-fifth of the gold that is supposedly stored in New York, and it will take seven years to deliver. How in gods name will the sellers of 2700 paper tons ever deliver when it will take seven years to deliver 300 tons to Germany? Truth be told the gold is not there and it must be purchased back. We saw further evidence of this four weeks ago when ABN Amro nullified all their gold certificates, stating that they will not be converting to physical even though the holders had been paying a storage fee. Going forward the holders of those contracts will only settle in cash for the paper price.
Further stresses in the physical market arose a week later when some European politicians started asking that Cyprus sell it's gold in order to pay for some of their debts. This was quickly countered by Mario Draghi, head of the European Central Bank, who said that politicians should not be hasty as central bank gold is only to be used when the central banks get in trouble. What he was really saying was that we should not go there because the gold has already been sold. These strains in the physical market were next followed by the shut down of the Pascua Lama project in Chile and the massive land slide at the Kennecotte Copper mine in Utah, one of the worlds largest mines, shutting down 10 percent of the U.S.'s silver supply, and 5 percent of the U.S.'s gold supply. Lastly we also saw a massive 20 percent reduction of COMEX gold inventories in March as more and more physical transfers from East to West, as evidenced by the 350 tons delivered to Asian markets that month. The drains in physical inventories will only accelerate this month due to increasing global purchases by individual investors and Eastern Central Banks, global mints are currently reporting shortages, the premiums of physical are increasing, and the biggest global refiners are reporting greater and greater waiting periods for delivery.

Until Q1 2013 the realities of the physical market were driven by accelerated demand from Developing Economies Central Banks, as they have continually purchased and amass physical inventories in their own countries. Going forward the demands on the physical market will only accelerate as Western Central Banks are forced to unwind their leasing agreements to meet their fiscal realities. Just like in 2008 I once again stand with a contrarian opinion to my peers, and feel that this correction in the price of gold will be quickly countered by the realities of the physical market. As the music stops Western central banks will be scrambling to buy back their gold in a very tight global market, of which 40 percent is currently controlled by the BRICS nations. Thus one of the main focuses of my practice, gold and silver producers in the Americas.

Venture Exchange Town Halll Meeting

2013-04-26T13:15:00.000-07:00

To bad I missed this meeting it would have been fun to go to.

This week the TSX-V held two "Town Hall" meetings, one in Vancouver at Robson Square on Monday, the other in Calgary on Tuesday. The TSX-V said it called the meetings to discuss current market conditions, which are unfamiliar to some of its customers. Panelists in Vancouver included Kevan Cowan of the TMX Group, Rick Rule of Sprott Global Resource Investments and Gordon Keep of Fiore Financial. The meeting in Vancouver verged on the rowdy as attendees complained loudly about high regulatory fees imposed on public companies. This was not the discussion the exchange had in mind, but the attendees were intent on giving it a piece of their mind, and did so.

Better yet read the comment section on how fed up people are with the juniors.

Du-rag pretty much nails it for me.

This is the time of year Companies are filing the Management Info Circulars. You can read what they are paying their executives. I read a few from company's I own and am disgusted to see $15m mkt cap companys paying $500k salarys and director fee's.
Its not all the exchanges fault. The trend of Exec Officers treating the treasurys as personal bank accounts continues to be rampant.
What can the exchange do? Limit the remuneration paid to TSX Venture listed Executives. I suggest a TSX V listed CEO shld be paid no more than $250k with a bonus topped at 50%. And no golden parachutes when fired.
So its not all the exchanges fault, Company's need to show some guidance, no first class flights, cut back on the 20 "resource shows" a year, and steak and wine "shareholder dinners" - time to treat the shareholders with some respect.

Did Keith Neumeyer just set the bar?

2013-04-26T10:17:00.001-07:00

First Majestic Silver just won a court case where the President of a subsiduary tried to walk off with a property in his own name. If interested in reading the whole news release go here.

The quote from the news release that stands out to me is as follows:

It is my view that directors and officers of public companies need to be held to the highest ethical and moral standards, and should be role models for industry, to assure transparency and honesty for the benefit of all the stakeholders.

About time someone in the industry said it, as anyone that follows the mining industry knows how low the ethics and standards can go. If they exist at all?

Light on postings this week

2013-04-26T10:08:00.001-07:00

I am light on postings this week as we near the "sell in May and go away" season. Every year in the past I have taken on new positions in April only to watch them suffer over the summer. Not this year.

Currently I am cashed up and waiting until the doldrums of August to pick away at a few deals.

I also believe the smack down in gold that we witnessed this month will replay itself again over the summer.

In hindsight the past smack down was well orchestrated by the Hedgers and the powerful bullion banks.

Gold will take the escalator back up only to find the elevator down.

The short players know that fear is a greater motivator than greed is, that is why prices slowly go up and drop of the cliff on the way down. I will play accordingly.

Options Education Day

2013-04-23T13:01:00.003-07:00

Since I have opted to start using options the TMX and Montreal Option Exchange is running a 1 day workshop. $45 gets you breakfast and lunch on top of the course seminar. The fee paid really covers the food at the Fairmont Hotel.

Link to the May 4th course.

One dead cat gone

2013-04-23T12:57:00.001-07:00

I got out of my Osisko trade this morning. I employed the buy 1000 shares at $3.52 and sell 900 shares at $3.95 strategy and banked 100 shares de risked. It looks like there is a significant amount of short covering but we will have to see what the month end stats says. If there is significant covering then the market probably thinks a bottom is in but if the short position remains high then the bet is Osisko is going lower.

Osisko and Kinross penny stocks?

2013-04-19T10:27:00.000-07:00

Judging the massive short increase in Osisko Mining and Kinross Gold, does the market think these two deals are headed to the dreadful penny category? Osisko is not that far away!

Dead Cat Bounce Trades

2013-04-19T09:50:00.002-07:00

I did not try and catch any falling knives this week buy I did opt for a few Dead Cat Bounce trades.

How did Osisko do for me at $3.52?

Yup we can confirm dead kitties here.

How about Renegade Petroleum at $1.27 and their whopping 19% Dividend yield?

Splat!

And Surge Energy, how is that one workin out at $3.00/share?

I hate cats!

On the bright side I am still short the banks through put options, the call options I wrote on First Majecstic, Cresent Point and Element Financial look brilliant now. I am also short Blackberry directly and the TSX broad index through HIX, Horizons Single Inverse ETF. Half of me is cheering for the market to go up and the other half is silently chanting crash, baby crash.

Canaccord Capital, keeping me behind the curve since 1950

2013-04-18T18:45:00.001-07:00

Nothing like like a pre market report at 3:30 pm PST. Thanks for the heads up!

Santacruz Silver finds their dore bars and their neighbors

2013-04-18T10:15:00.002-07:00

Santacruz Silver must read Otto's blog or this corner of the blog sphere as Santacruz Silver announces commercial production as of April 1st, with a little help from their neighbors pile rocks. If PM's did not shit their pants this week the market might actually care. Let's see if management can keeps its' guidance of 500,000 ounces for the year.

Santacruz Silver Mining Ltd. has reached commercial production at the Rosario mine in Charcas, San Luis Potosi, Mexico.
The commissioning of various mill circuits commenced in December, 2012, and continued through January, 2013. During February and early March, the company ran low-grade mill feed through the mill circuits and confirmed that all circuits were functioning to specification. The initial mill feed used for commissioning was extracted from veins exposed on surface at the Rosario mine. In the last half of March, the company began milling ore and making final adjustments to the mill circuits, with the result that effective April 1, 2013, the Rosario mine is in commercial production. In addition, Santacruz has negotiated the purchase of approximately 5,000 tonnes of ore from a nearby private mining operation to ensure continuous mill operation.

The initial production capacity of the mill facility is currently 300 tonnes per day. Substantially all additional milling equipment is on site, which will allow for the next expansion phase to reach a projected production capacity to 700 tonnes. This phase 2 expansion is planned to be completed by year-end.

The company is working two adits to provide immediate access to the Rosario I and Rosario II veins near the surface. These adits, one accessing the veins from the southeast and the second from the northwest, are supplying initial plant feed. In parallel, the company is developing an underground ramp of approximately 120 metres to intersect the Rosario I and Rosario II veins. Santacruz is anticipating intersecting the veins within one month, after which the ramp development will continue parallel to the veins downdip in the footwall.

Long-term planning has developed a flexible sublevel mining method, which will accommodate the variably dipping veins with minimum dilution. This will allow efficient and safe mining of the Rosario I and Rosario II veins.

Average throughput for the mill is targeted at 150 tonnes per day for the second and third quarters of 2013, increasing toward 200 tonnes in the late fourth quarter. In the second quarter of 2014, Santacruz is targeting a further throughput increase to 500 tonnes per day when the underground development is scheduled to be completed and additional working faces on the main Rosario I and Rosario II veins become operational.
President Arturo Prestamo stated: "We are very pleased with the on-site developments to date that have brought Rosario to commercial production on time and under budget. Our staff should be commended for a job well done for constructing the Rosario mill on time and under budget with capital expenditures coming in approximately 20 per cent lower than our original budget of $12.5-million (U.S.). Our chief operating officer, Francisco Ramos, has once again done an extraordinary job building and leading a strong and motivated operational team. This is an important milestone for the company as it sets the platform for future growth as we work towards our goal of becoming a mid-tier silver producer."

Santacruz Silver currently employs approximately 250 staff and contractors at the Rosario mine. The company anticipates production of 500,000 silver equivalent ounces at the Rosario mine in 2013.

Algo and High Frequency Trading part 2

2013-04-18T09:37:00.002-07:00

Yesterday I post the closing order book on Osisko Mining and how the bids pile in to cover or establish position just at the close.

Below is a typical days order book on Osisko or any other liquid stock for that matter. More Algo than actual real investors.

Clearly visible is a plethora of Algo orders driven through CIBC with Merrill running a distant second.

Just a note to those who think High Frequency Trading has infected the Venture Exchange and driven out all the retail guys, I would disagree. I know quite a few guys running juniors that blame HFT for helping the demise of the Venture Exchange, but all they have to do is look into the mirror. This is what HFT looks like, show me a Venture deal that looks like this.