Ugh! This Drama is EXACTLY Why I Stick To Physical Silver!

Like Christine, in the Phantom of the Opera, most of us have been seduced by that Phantom called “the mining sector” at some point.  We’ve all been taken by the hand into some dark lair, and lulled into a spell, with sweet, sultry whispers about “wonderful profits”.   All that was asked of us was that we just forked over more of our cash to these knowledgeable and responsible companies.  Many of us have done so, only to end up in a terrifying place, that we did not wish to be!
If gut-wrenching twists and drama is what you’re looking for, then knock yourself out with these with paper distractions.  Yes, there are some profits to be made….if……if your dart hits the right part of the dartboard, and you make it out of that gauntlet with all of your digits(financially and literally) intact.
I hope you do make out with huge paper profits!  I truly do.
As for me however, I’m sticking to physical silver ounces, in my hand!  When I want more drama in my life, I’ll plunk down the cash for a box-seat at my local theatre, thank you very much!
At least there, my entertainment won’t be in wondering whether my future and livelihood are going to evaporate with the latest company press release!

 

 

Submitted by The Wealth Watchman

“Life’s under no obligation to give us what we expect.”  -Margaret Mitchell

It Was Credit(Crunch) Time

Shield brothers, I remember it just like it was yesterday.  The air was crisp, the leaves were still falling, and there was an unmistakable something blowing on the wind.

Hmm, now to put my finger on it…what was it, exactly in the air?  Oh yes….paralyzing fear.

For it was the fall of 2008, and I had the unfortunate chore of going to my local bank to make a simple withdrawal.  Not a big deal, right?  Wrong.  That September, it was a very big deal to be a depositor in any bank.

The events had been crazy, and were getting crazier by the day: the Dow had just finished several one-day collapses, each over 500 points, that week alone, and people were more unsettled than I’d ever seen them.  In fact, from what I recall, everyone I worked with, would go from cubicle to cubicle, asking questions like:

“Well, how are your mutual funds doing?”(hoping their case wasn’t isolated)

“Do you think the plunge is almost over?(if we say it out loud enough, maybe it will self-fulfill)

“Are they going to bail-out this bank, too?”

“How many more banks are going to fail?”

“How many more years will I have to wait now, in order to retire?”

“Will I be able to retire at all?”

That was all the “water cooler” talk that I could remember hearing…..for weeksand believe me, it wasn’t getting any better.  There weren’t any folks talking about “buying the dips”, or “blood in the streets”, or “how much of a value the Dow was”, no, those musings had stopped weeks ago.

For the first time, everyone finally began to understand: the system itself was on the ropes.

They’d all come to expect an easy, stable path to retirement…..and now? That time had seemed so very far away.

As I finally drove past the curb at my bank, I remember seeing my teller that day at the drive-in window.  She was mid-management, and middle-aged; she was sweet, but very “by the book”.

As I asked her kindly to withdraw the amount I’d pre-written on my sheet of paper, she kept eyeing me carefully, as she counted out the bills, one by one.  Finally, she spoke:

“Ya know, some people are actually driving through here, and demanding that we give them all their money back,” she quipped, looking nervously at me, and then she said it:

“That’s just plain crazy, right?”

At that moment, I looked up, and gazed straight at her, and it all became clear: this poor teller’s job was now to reassure every single customer that day(and maybe that week), that their banking establishment had “more than adequate capital” to sustain any panic, and that this whole, sordid “credit crunch”/TARP affair/bank-liquidation-event, was just a crazy flash in the pan!

Just some crazy hiccup!

Now, I didn’t know then nearly what I do now, but even back then, I’d never trusted the banks.  I just looked at her, and remarked:

“Well, I don’t know, ya know?  I mean, aren’t all fractional reserve banks inherently bankrupt to begin with?”

The effect was immediate.  I don’t think I could’ve shocked her more, if I’d just told her that her house had just burned down.

She stared at me, with a blank stare, I could tell that she hadn’t received anything like the sort of response I’d given her!  She kept struggling to find an answer for me.  Finally, feeling sorry for her, I added:

“Naaa, don’t worry about it.  I’m not here for all my cash, I just want a normal withdrawal, please,” this woman’s job was already tough enough, and I certainly didn’t wish to add to her anguish.

I took the cash, inwardly thankful that my bank and not yet become the next domino in the daisy chain.

Investing Drama

There’s a reason why I bring that story to mind today.  Yesterday, I was rifling through my mail, and discovered a notice about a company which I didn’t expect.  

The company was “Silvercorp Metals”,  a once ‘darling’ company in the precious metals mining sector, and the opening lines read as follows:

If you purchased publicly traded shares of Silvercorp Metals, Inc. common stock on the New York Stock Exchange market or by other means involving transactions in the United States between May 20th 2009, and September 13th, 2011, inclusive, and incurred damages, you could receive a payment from a class action settlement.

Ugh.  Indeed I had purchased shares of that total disappointment many moons ago, and had the financial scars to prove it.  This news didn’t make the already sour taste in my mouth any better.

Now, if the name “Silvercorp” sounds familiar to you, it’s because they’ve been the subject of perhaps more controversy than any other company of their size, in the entire mining sector!

Several years ago, they were involved in what was called a “Short and Distort” campaignwhereby certain hedge funds, and bloggers, had accused their management of actually lying to investors and shareholders about their reserves.

This “Federal Court-Authorized” notice dealt with that exact same thing, 3 whopping years later!  What makes it even more painful for investors still with the company, is that this proposed settlement by the court, could dole out(if approved) $14 million dollars to those who bought Silvercorp shares, but only if they bought on the NYSE(it doesn’t include the Toronto Stock Exchange, or any other exchange).

It was an ugly, bitter, affair that, in fact, has never ended.  Even after some very well-respected mining analysts in our community (whom I won’t name) personally visited Silvercorp, and gave them the nod of approval….the accusations haven’t gone away.  In fact, they’ve only grown worse!

Now, if you’re thinking, “Watchman, this all sounds as clear as mud”, just you wait brother, I’m not done yet!

You see, it gets even uglier, for now Silvercorp is involved in litigation in Canada, from one Kun Huang, who alleges that Silvercorp actually conspired with local police in China, to have him hounded and arrested, for payback in his role of bringing about the entire “hedge fund shorting campaign”.

Phyzz only

Yeeeeees.  It all kinda sounds like a bad soap opera, doesn’t it?

Will Kim agree to have Kevin’s love-child?

Will Jason stand for this new passionate affair of Kim’s?

Meanwhile, will Stephen make a full hospital recovery, from the vicious knife attack of his former lover, Jen?

Tune in for all and this and more, in the next exciting episode of…

Phyzz only 3

Yes, it’s amusing to jest about this sort of thing….but for tens of thousands of people, this endless nightmare is no laughing matter.  Not only have countless investors lost their shirts in this ordeal….they’ve lost a bit of dignity in this mindlessness, too!

Other Concerns

Watchman, this is just one company, there are lots of other companies out there which aren’t facing a host of court battles.

Yes, that’s true, but court battles and financial scandals aren’t the only concern in this sector!  Scandals are just one part of the concern, my friend!

Just a few weeks prior, I received another notification, from another mining company, which I’d previously owned, I kid you not!

 

This particular note explained to me that the board of directors had recently met, and had unanimously adopted a recommendation for all shareholders to approve…and I was to call their toll-free line, and vote to adopt their proposal or not.

“Why not?” I thought, after all, I was curious what they had to say.

When I dialed the number, the woman patiently explained that “in order to ensure that the company had the liquidity it needed in the trying times to come….they needed shareholders to immediately approve their plan to authorize them to issue more of(read inflate) their own shares!” 

Trust me, such extreme actions would not have been taken if this emergency contingency wasn’t highly necessary.  It’s not just malfeasance that investors have to worry about in miners.  They also have to worry about mismanagement, currency crisis, insolvency, and dilution of their own shares, to boot!

Conclusion: The Takeaway

So, let’s take a look at the growing laundry list of angst you’d have faced if you’d sunk your cash into this company, and had chosen to ride out the storms:

Intrigue?  Police cover-ups?  Forced court settlements?  Fiduciary negligence?  Hostile takeovers?  Hedge fund wars?  All with a cliff-diving price?

 

Are you kidding me?  And that’s just with one company!

Now, whether you’re the type of person who says:

Watchman, SilverCorp has proven time and again, that they’ve done nothing wrong,” or

“Watchman, that ugly company is getting what they deserve.”  

It doesn’t matter.  If that’s all you’re getting from this whole muddled fiasco, then I submit you’re missing the point of what I’m saying.

My point isn’t to speak to their innocence or guilt in this never-ending, cascading waterfall of litigious battles, I don’t know, nor do I even really care about that stuff at this stage.

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My point is:

Isn’t life uncertain enough already, without worrying about that kind of drama?

Who needs any of this garbage?

Who needs all these twists and turns?  Who needs all this nonsense?!  

I know very well that the right mining company, at the right moment, can bring life-changing gains.  I know that, I’ve been on the receiving end of some fantastic gains(and losses).

The entire point of why I got into silver in the first place, was due to that scene of near-panicked desperation in the folks at my local bank!  I realized (instantly) back then, just how fragile and breakable it all wasand I was determined to find a way to give myself peace of mind. I was determined to find a solid, and unshakeable place for my wealth that wouldn’t keep me up at night.

I can assure you that there are tens of thousands of regular joe’s out there (and some wealthy institutional investors), who not only lost a great deal more than merely their peace of mind with ole SilverCorp!

Look, we already know our enemies, the TBTF banks, are going to hammer silver without end, until doing so is no longer possible.

We already know that silver’s price is going to be under repeated pressures…

We already know that the richest, most powerful people in the world are all out to ritually sacrifice silver’s(and gold’s) price on their bloody altars of Money Power..

So, knowing that, why on earth would you choose to pile even on more pressures, and even more uncertainty and angst for yourself and your cash, on top of all that?  

Like Christine, in the Phantom of the Opera, most of us have been seduced by that Phantom called “the mining sector” at some point.  We’ve all been taken by the hand into some dark lair, and lulled into a spell, with sweet, sultry whispers about “wonderful profits”.  All that was asked of us was that we just forked over more of our cash to these knowledgeable and responsible companies. Many of us have done so, only to end up in a terrifying place, that we did not wish to be!

If gut-wrenching twists and drama is what you’re looking for, then knock yourself out with these with paper distractions.  Yes, there are some profits to be made….if……if your dart hits the right part of the dartboard, and you make it out of that gauntlet with all of your digits(financially and literally) intact.  

I hope you do make out with huge paper profits!  I truly do.

As for me however, I’m sticking to physical silver ounces, in my hand!  When I want more drama in my life, I’ll plunk down the cash for a box-seat at my local theatre, thank you very much!

At least there, my entertainment won’t be in wondering whether my future and livelihood are going to evaporate with the latest company press release!