Resource World Magazine

66 www.resourceworld.com o c t o b e r / n o v e m b e r 2 0 1 6 L ife was simpler for small investors before the Internet which has clearly accelerated the velocity of change in the marketplace. Today, high frequency trading systems, a type of algorithmic trad- ing, allow investment firms to leverage financial data and electronic trading tools – some would argue at the expense of smaller retail investors. One of my long time business associates is a day trader who has finally admitted (after years of vocal skepticism on my part) that his skills in technical analysis just don't seem to work anymore. But I expect they never really did when his profits and losses are aggregated and measured over a meaningful timeline. The amount of information on the Internet these days – contradictory and otherwise – is nothing short of mind bog- gling. You can even cherry pick weather reports to justify a reason to go somewhere – something I've been known to do. Perhaps my main gripe about Internet- based coverage of gold is the number of so called "analyst" reports that you see on various gold sites. I expect the willingness of these sites – at least in recent years – to publish negative reports in disproportion- ate numbers to positive reports – reflects their desire to appear objective given the reputation that so-called "gold bugs" have in the marketplace. Let's face it, there are a lot of "crazies" in this segment of the mar- ket whose views undermine the genuine case for owning gold and perhaps justifi- ably make them good targets for opposing views. In my experience if you have to rely on any analyst to guide your investment decisions you're positioning yourself for market losses. Also, analysts sometimes have a conflict of interest through their investment firms which often have under- writing agreements and or an equity interest in their specific recommendations. Amusingly, this reminds me of an annual feature The Vancouver Sun used to have some years back. One of their columnists would cut out the stock tables that ran daily in The Sun, pin them to the wall, and throw darts at them. Then he'd create an imaginary port- folio of stocks based on where the darts landed. (Keep in mind that the Vancouver Stock Exchange had more than 2,000 listings at the time, most of them junior mining companies, thereby increasing the randomness of the selection process). For as long as I can remember this methodol- ogy exceeded by orders of magnitude the performance of any analyst-picked port- folio which I expect was the reason they finally nixed the feature. Before the recent bull market in gold got underway, the majority of analyst reports on gold sites were decidedly negative. Only after the tide turned (in most cases several months after) did their views shift predictably with the prevailing winds. Long term gold bears including Citigroup's Chief Economist Willem Buiter – the man who posited that gold was in a "6,000-year bubble," has finally admitted that he would even own the metal as part of a diversified portfolio of currencies. In my opinion, it's hard to reconcile the enor- mous disservice people like this did to their clients by not presenting a more rea- sonable, balanced, longer term view of the gold market, one that would have enabled their clients to get positioned before the inevitable market turnaround. One solution to this credibility problem might be to run a tally of analysts' previ- ous investment recommendations with any report they release for public con- sumption. Individual investors who rely on this type of investment advice would be best served by doing this themselves. Somehow I expect you'd see a lot more 'qualifiers' in these reports along with a merciful decrease in volume reaching the marketplace. For investors focused on gold – more specifically on junior explorers – a lot of other factors have made this market seg- ment more risky and frustrating to play. The heavy compliance burden imposed on public companies by regulators has increased the cost of doing business; meaning less money is going into the ground. Is it any wonder that there hasn't been a major grass roots mineral discovery in Canada for almost 25 years? On top of that, the time frame from discovery to commercial production has increased exponentially in the past two decades for various reasons. Foremost among these are increasingly onerous envi- ronmental regulations imposed on resource companies by governments, largely to pla- cate special interest groups. Much of this opposition is funded by radical US-based environmental groups who have aligned themselves with equally as radical groups in this country including some within our indigenous populations. Not long ago, I reviewed a press release from a radical First Nations group which listed a call back number in New York State. The Internet has proved to be the perfect platform for disseminating misin- formation on just about everything which has clearly heightened the risk for stock market participants. n Epilogue by David Duval Mining the Internet can be hazardous to your investment health

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