I end my post this evening by recommending an excellent Stockhouse article that made mention of CGX. We are not the only ones suffering in the junior market at the moment as it may very well be that the hedge funds have now destroyed the confidence of all retail buyers with the relentless pursuit of destroying any value left in the markets by dumpi and shorting. I consider this as a form of economic terrorism as without investment capital the economy cannot move forward. When a stock is not allowed to make gains but is relentlessly ground down, people will stop investing. At that point the only solution is for direct government investment of key industries involving natural resources if they cannot meet their needs due to inefficient output. A lack of exploration leads to longterm shortages. With the hedgies killing any incentive to invest in an exploration company, the end result is worse than if Al-queda came in and blew up the wells. My only hope is that things get so bad they really start to investigate these market makers and hit them where it hurts like the Russians did to a few of these high flying profiteers - a jail cell where billions are of no help in gaining freedom.
Though I disagreed with the methods of the wall street protesters - maybe in the end they had it right. Time will tell. What I can say is that the concentration of wealth to the hands of the richest 10% of America has never been at these levels since... get ready ... since 1928 - the start of the great depression. The percentages in terms of the control of wealth is at a percentage greater that at any other time in US history. The problem with accumulation is that it eliminates a middle class which creates a larger working poor which in turn creates a downward spiral. If you give a wall street executive a $250M cash bonus and tax him at 10%, only $25M returns immediately back to the economy (in many different forms). The rest theortically could be invested to create more business which would equate to more jobs but only if demand is there to justify the new capital expenditures. More often than not, the wealth is shopped around the world (including investments in Canadian companies like CGX) and may not return to the country until traded for exports. This is fine if you are a country with a lot to export but for a consumer nation like the US with a huge trade deficit it only fuels less wealth being available for local investments. Think of it this way, the guy with the $250M bonus puts the money in an off-shore bank. He thinks about opening up an appliance manufacturing plant back home but finds that in a recession the demand for new appliances is not great. Either is the rate for a t-bill. So he looks around the world and invests in Tullow instead as they seem to get a good rate of return. Point is no new jobs are created except maybe for Tullow and the guy working at the Cayman bank.
Now let's say that instead of the guy getting a $250M bonus, he only gets $10M. Enough for some nice toys for the year and 10% of CGX stock if desired. The other $240M goes to the workers who helped make the company the $$$ required to pay out a $250M bonus in the first place. $240M divided by 10000 workers is $24000 per employee. What does the average employee buy with $24K? A new washing machine - a car - home renovations - a trip - .... the list goes on. The $250M dollar man likely only needs one washing machine. Maybe two or three if he buys 2 or 3 houses. But he is not buying 10000 washing machines which is what is possible by distributing the bonus to 10000 people.
I do not hold judgement on whether or not the guy deserves the $250M bonus or not. But I do judge the effects of having that money concentrated into less hands than more hands. It results in a shrinkage of the economy. As this consolidated wealth is more immune from taxes given lobbying groups and special interests in Washington, the cycle continues until things finally break. The cracks first started in 2008. The stimulus package in the US went to the wrong place in that the banks that were bailed out did not change their tactics and now the cracks are getting larger. The stimulus money never made its way down to consumers. 1.3 of car dealers closed as their clients could not afford to pay full cash for a car and the banks would not lend out any money. The same banks that were bailed out and paid millions in bonuses that same year.
Recently J.P. Morgan reported a paper loss of $2 B last week and from what I read today this could be as high as $10B next week as the hedgies will be unrelentless in giving them any reprieve from making the incorrect bet - they bet on a market recovery and better bond yields. Making money are those who continue to bet against recovery and who work to ensure that outcome.
With CGX, we see this played out as holding the share price down to force the company into issuing PP shares at a lower price which in turn dilutes the shares. This takes money out of the hands of the original investors who held most of the risk for the longest time and places it in the hands of those powerful enough to manipulate the price. A consolidation of wealth into fewer hands. Burn enough retail investors in enough different stocks and the market makers will have nobody to sell their PP shares to. Not that it matters as the hedgies are not interested in growth but bet on failure and want to see a stock price at zero. They make money while the economy loses.
I would rather see a stock over speculated and corrected with a company that had a chance to raise needed funds at the higher share price then a company held hostage to not raising capital because of the acts of a few reckless greedy MFs. CGX is just one example of where the motivation to drill a well will be next to zero for any company given the games that take place after just one bad well. Not that the company itself did not play a hand in things (the board room politics) but the assets should speak for themselves and the resultant share price. A 90M market cap on what they currently possess in licenses and seismic is out of whack given the value of recent block auctions in Suriname next door. That and we are still drilling Jaguar with two world class companies (and one Argentinian dictator) as partners.
It may be a rough ride in these markets for awhile but like I said in an earlier post, Oil is like gold as it is always in demand. A hit on Jaguar should bring in investors looking to capitalize on the next big thing - this being Jaguar-1 and a second hit (after Zadeus) in the region. That is if there are any investors left.
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Today's Feature View Now Pacific North West Capital Corp. Pacific North West Capital Corp. (TSX: PFN; OTCQX: PAWEF; Frankfurt: P7J) is a mineral exploration company focused on the discovery, exploration and development of PGM and nickel-copper sulphide deposits in geologically prospective regions in North America, particularly Canada. The Company's key asset is its 100% owned River Valley PGM Project in the Sudbury region of northern Ontario. The River Valley Project is one of North America's most advanced primary PGM deposits... read more
AGS Price at posting:
20.0¢ Sentiment: Hold Disclosure: Held
