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November
17, 2006
By:
Tom Szabo
SILVERAXIS.com
I
don't know about you, but I get dozens of stock
tout e-mails caught in my spam filter
every day, yet rarely have I seen a silver
or gold stock as the subject of these scams.
As I deleted roughly 3000 spam e-mails
yesterday--an accumulation of several weeks
in the "spambox"--I was wondering
why exactly this might be. With the
last spam deleted and still no answers, I
decided to go over my universe of silver
stocks for unusual activity, something that
I do every day. All of a sudden, something
amazing jumped out at me that made me question
even more deeply whether and when the
fraudulent practice of e-mail stock touting
is going to infect the PM sector. After
all, gold and silver have never been
a stranger to shenanigans of the more conventional
variety.
What
jumped out at me and initially made me jump
was a silver stock that was up 40,000%.
No, that is not a typo, this stock was up
400 times. But the real interesting part
is that this phenomenal performance was
achieved in a single trading session!
That's right -- one day: November 16,
2006.
What
company was it? None other than Sino
Silver, the defrocked China wonder that sold
all of its assets to Silver Dragon in a
deal that was wrapped up earlier this week.
The deal called for Silver Dragon to pay
Sino Silver $650,000 cash and 4.25 million
of its shares--valued at $5,735,500 based
on today's last trade of $1.35
per Silver Dragon share--upon closing (see this
company
press release).
Alright,
don't get too excited here, I'm not trying
to tell you to buy, sell or trade Sino Silver
or Silver Dragon stock. Read on.
Since
its SEC delisting a year ago, little is
known about Sino Silver other than the press
releases issued by Silver Dragon pertaining
to its acquisition of Sino Silver's assets.
For all we know, Sino Silver could have
issued billions of shares and racked up
millions in liabilities. And clearly it
has sold all its assets to Silver Dragon.
On the other hand, it could be relatively
debt free with under 100 million shares
outstanding; according to its final SEC
report, Sino Silver's authorized capital
was 100 million shares in late 2005. The
latter situation would presumably make
the book value of Sino Silver at least 6
cents per share. But we just don't know.
And that's exactly my point.
See,
I think a situation like this begs
for an opportunity to be abused. And unfortunately
it is likely to be abused at some point.
In the meantime, inexperienced "investors"
in the resource sector should study and
learn from it. It's only a matter of time
before the new generation of stock
touts and scammers (too young to remember
Bre-X) figure out that gold and silver exploration are
the most promotion-oriented ventures in
the business world and thus prime
real estate for low-life's to
practice their nefarious art. When it happens,
the few amateur touts who are
currently giving the resource sector a bad
name, more through ignorance than pure evil,
will need to pack up their bags in the face
of professional competition.
Before
I get to what the scam might look like if
a professional tout got hold of Sino Silver,
let me first tell you precisely what happened
to create this "once in a lifetime"
move in its stock price.
To
start, I need to note that Sino Silver
was involved in a convoluted set of circumstances
in early 2005 resulting in an SEC investigation
and voluntary delisting that was essentially
a death knell for the company. Unable to
raise the money required for exploration
and blackballed by the resource community,
its only realistic option was to liquidate its
exploration projects. It finally did
so in early 2006, selling everything to
Silver Dragon, its joint venture partner
in China. As I previously mentioned, the
deal closed this week.
The
last trade in Sino Silver on November
15, 2006 was reported at $0.0001 or
0.01 of one cent. Clearly there is no interest
in this company widely believed to
have zero prospects. But on November 16,
2006 (today as I write this), someone who
is either extremely sharp or out of his
(her?) mind paid a mind-boggling $0.04 per
share, or 4 cents, in the only trade of
the day. Do the math, that is a one day increase
of 400-fold and might represent the most
spectacular price action to ever occur with
any stock, much less a silver stock! So
what gives?
Calm
down and let me put things into perspective.
You see, the 0.01 cent trade was apparently
for 100 shares (i.e., for 1 penny--no, that
is not the commission but the total amount
of the trade) while the 4 cent trade was
for 10,000 shares (a $400 trade). Given
the trade sizes and the fact that percentage
gains can be meaningless with extremely
low priced stocks, what happened here is
actually not that incredible.
At
the same time, hopefully you can see
how a silver-tongued scam artist can
take this type of irrelevant event and turn
it into a tout without actually telling
a lie. If not, you are at risk for becoming
a victim of this type of scam and as a service
to you, let me give you an example of what
to watch out for:
(coming
to an inbox near you)
SCREAMING
HOT SILVER STOCK!
SILVER
IS BELIEVED BY MANY EXPERTS TO BE THE MOST
DESIRED AND RARE METAL IN THE WORLD! THE
FEW COMPANIES INVOLVED IN THE SILVER MARKET
HAVE ALREADY MADE A KILLING FOR THEIR SHAREHOLDERS
. . . BUT YOU HAVEN'T MISSED THE BOAT,
THE REAL FIREWORKS ARE JUST GETTING STARTED!!!
RECENTLY,
A COMPANY WITH INTERESTS IN CHINA COMPLETED
A DEAL VALUED AT OVER $6 MILLION THAT HAS
IT SITTING ON A SILVER ROCKET READY TO LAUNCH!
THE DEAL HAS BLUE SKY POTENTIAL AND TRANSLATES
DIRECTLY TO THE BOTTOM LINE. THIS COMPANY
HAS VERY LITTLE IN THE WAY OF OVERHEAD OR
OTHER EXPENSES HAVING INNOVATED A NEW WAY
FOR INVESTORS TO PARTICIPATE IN THE SILVER
MINING BOOM! FOR THOSE FAMILIAR WITH MINING
STOCKS, THINK "SILVER WHEATON ON STEROIDS"
-- ONLY BETTER!!!
HURRY,
THIS OPPORTUNITY WILL NOT LAST. THE STOCK
WENT ON A TEAR EARLIER THIS WEEK RISING
BY 40,000%. IMAGINE, A 400 TO 1 RETURN ON
INVESTMENT . . . BUT THIS IS JUST THE START!
OUR PROJECTIONS CLEARLY SHOW THE INCREDIBLE
RUN LEFT IN THIS STOCK FOR THOSE FORTUNATE
FEW WHO MANAGE TO LASH THEMSELVES TO THE
SINO SILVER SPACESHIP!
DO
NOT LET THE OPPORTUNITY OF THE CENTURY GET
AWAY!
COMPANY:
SINO SILVER CORP.
TICKER:
SSLV (PINK SHEETS)
RECENT
PRICE: $0.04
TARGET:
$1.00
Of
course, the above is tongue-in-cheek and
nobody could be expected to take it seriously.
But I think my point is still valid: it
is only a matter of time before many unsuspecting
members of the general public get their
first and painful introduction to mining
and precious metals by way of the fraudulent
promotions of professionals operating outside
the resource community. Inside is bad enough,
outside is intolerable. I plan to do my
own part to keep promotion safe from external
plunder by maintaining at www.silveraxis.com
a free list of silver stocks vulnerable
to unwanted promotion. And the first
stock on that list is Sino Silver. More
to follow.
(Disclaimer:
Mostly out of boredom, I entered an order
for 20,000 shares of Sino Silver at $0.015
limit--that's right, a $300 trade--a few
days back. Should the order get filled,
I could presumably contact management as
a shareholder and urge an immediate distribution
of assets. No fills have been made as of
the date of publication. I do not own or
have immediate plans to purchase the shares
of Silver Dragon Resources.)
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