Member Info for schlemiel

*Share price spikes

Coming back to the market makers getting in a pickle, spikes can occur in share prices where the stock is illiquid yet there is higher than average volume going through the stock. We know the market makers set the spread and therefore the mid price is used as the share price. This means the share price can even rise or fall on no trades as a market maker ticks up or down on the bid or ask. This combination of the wide spreads and the mid price being used can often mean a stock can move 15 to 25 per cent on just a handful of trades. This only happens on illiquid stocks with a wide spread, because when the market makers tick up their bid price and ask price it can mean a substantial shift.

For example, if we are a looking at a company with a bid-ask spread of 10p-12p, the mid price is 11p. If a buyer takes the market makers’ stock, they then need to replenish that stock and so they will up their bid, perhaps to 11p. This means the mid price is now 11.5p, and the share price is up 4.5 per cent. However, the market makers want to deter anyone from purchasing stock at 12p because they no longer have any, so they increase their ask price to 13p. The mid price is now 12p and the stock has jumped 9.1 per cent from 11p!

This can lead to short-term speculation traders jumping in and this can even push a stock up by 50 per cent when there has been no news. We must always be mindful of suffering FOMO (fear of missing out) and stick to our calculated plans. Short-term speculation can be highly profitable, but the vast majority of those who attempt it lose money, because they either do not have a system in place or they do not have the discipline to follow that system...cont

I'll post excerpts for anyone-newbies interested, those who don't like them can filter me -

*Do market makers have an advantage?

Many private investors believe market makers have an advantage over the rest of the market in that they get the RNS (Regulatory News Search) news first. Well, not while I’ve been trading they haven’t. Up until recently this year, a small-cap company could release a piece of hugely positive news intra-day, and before the market makers had adjusted their price it was possible to clean out the ask of stock at the same price offered before the news came out. Even better, if a piece of bad news came out on a stock you could dump your shares quickly and then even take a short position through a spread bet before the bid had dropped. Surely, if they’d seen it, they would’ve done something?

Unfortunately, that trick is no longer possible with online brokers, as I have noticed when a piece of news now comes out on an illiquid stock intra-day it is impossible to buy or sell a share and no quote is offered online. My guess is that there is now an algorithm in place that shuts off limits in this situation when an RNS is released, which allows the market makers to adjust their pricing and stop being forced to deal before they’ve read the news. However, you can still deal over the telephone – where the market makers are obliged to deal. You can also take a position through a spread bet. In my opinion, market makers should be obliged to deal at the price and size quoted online because this would lead to more liquid markets. It can be frustrating when one intends to trade a profit warning, and all of a sudden the only stock available to buy online is 10 per cent higher than the price quoted on Level 2. If you want to deal but can’t, then this is the time to get on the phone to your broker or open a spread bet position. Market makers know that the vast majority of dealing is online and so they can be relatively flexible about their pricing on Level 2 and what they actually quote online*

For anyone interested in how the MMs perform their duties I have posted a superb article on ADVFN on the Proton GGP thread

https://www.afr.com/companies/mining/ramelius-tips-more-m-and-a-in-gold-sector-despite-high-valuations-20200210-p53zfg

From Primorus (Dec 2019) - "We came away from the Greatland Gold AGM and follow-on management meeting with a new sense of excitement as to the potential scale of Havieron. Drilling reported last week from hole HAD023 has demonstrated that Havieron continues at least 300m to the North of the initial discovery area around HAD005. A review of drill plans in the AGM presentation and publicly available Satellite data suggest that even today current drilling is still working to find the limits of the deposit.



With a working geological model now developed at Havieron, we also look with some excitement at GGP's nearby Scallywag Project where analogous geology and new geophysical modelling make the case for similar mineralisation but at levels much closer to the surface than at Havieron. Importantly the Scallywag Project is not subject to the Newcrest Farm-in Agreement and is thus 100% owned by Greatland.



Back in late 2018 we took an investment position based on a handful of exciting drill holes and a belief that Havieron may prove to be a meaningful deposit. Twelve months later, with Newcrest now farming in to Havieron is, in our opinion, shaping up as a truly Tier 1 Australian Gold/Copper discovery that with continued exploration success has the potential to deliver in excess of 20Moz of gold and associated copper.

-

So Clayton has meetings with GGP management and then issues a RNS publicly stating that he believes there's 20m oz at Havieron and it's a T1 deposit. Did GGP management give Clayton permission to say this? They certainly haven't denied the contents of the RNS issued by Primorus.
Even Reddirt believes Hav is 20m oz....

https://seekingalpha.com/article/4323702-newcrest-mining-limited-2020-q2-results-earnings-call-presentation

For a company of Newcrest's size, it's quite telling that they should choose to highlight Havieron in their Q2 results. They're investing quite a lot of faith in this discovery. I doubt it'll be in GGP's portfolio by EOY

Please, let's not go down the Solgold route of an exploration company scrambling around looking (dilution) for funds to finance a route to mining. Prove it up and sell the entire shebang. Project overruns, higher costs, mining problems etc etc..all equals more dilution and more cost..leave this stuff to those who have the capital flexibility and deep-pockets to absorb that level of financial uncertainty

http://www.cipherresearch.com/reports/150601_The-Real-Value-of-Gold-in-the-Ground.pdf

'This article focuses on advanced gold exploration & development companies. We examine a 24-year history of mergers and acquisitions to determine the real value of gold in the ground and to incorporate that value into our project and company valuation models. Many portfolio managers, analysts and newsletter writers promote the idea that management is the most important criterion in valuing an exploration and development company. However, can you recall a company being taken over for its management team? While management is an important factor in finding and developing an asset in the most efficient manner, ultimately the project is what delivers the real value'

PROJECT IS KING

The value of a mineral asset is derived solely from the prospect of ultimately extracting the mineral for a profit. In order to perform a fundamental valuation of mining companies the amount of mineral resources and ultimately reserves must be estimated'

cont.........

new - OK,cheers fella

That's good work. Appreciated

Still holding

Top research...thanks all especially to the top Irish dude..appreciated. A positive start to the weekend is something we all need after last week's battering

No one knows what Newcrest have uncovered or what price sensitive information they hold but if anyone knows what's going on around the drill areas at Havieron then Sandeep Biswas does. I believe his current opinion is supported by new information embedded in that big brain of his

'but NI' and 'about how a'

https://en.wikipedia.org/wiki/National_Instrument_43-101

This is for TSX natural resource companies (gold, copper, silver etc etc). The NI 43-101 is an important document. The LSE doesn't have an equivalent by NI 43-101 gives you all you need to know about a discovery becomes a proven reserve. This process isn't black and white, it's fifty shades of grey at times. I;m not a geologist,

' This BB is not worth reading '? LOL. Then don't

Relative volume is off the scale. That in itself requires an explanation either formally (RNS - TR1 or some other RNS confirming warrants exercise either partial or whole) or informally in the form of media comment (newspaper, finance website).

And the person who questions why a shareholder would want to exercise their warrants at current prices. Well, they've been in the money and still are. That's a risk free profit for them and that may prove tempting for some while others may spurn the prize for higher returns over an extended period. Shareholders have varying objectives and demands. Some shareholders may be distressed. I have a distressed shareholder on another stock, FOG. He's been shifting stock now for months. He needs the cash to repay creditors.

I am looking forward to an explanation to explain the intrigue. Positions are being taken, some are shifting down their holding, some de-risking, some up-risking.

I know some will be sat on losses now having bought at higher prices. That's unpleasant but I've been watching this stock for months and I believe it's entering a new period of fundamental change which should drive the price higher, and as we have seen the price can shift higher (and indeed lower) when the market gets behind it.

I've seen my paper profits falls by over £10k and that's a lot for me. I am sure others have seen considerably larger falls. It's gut-wrenching, morale crushing, an almost purging experience.

The price will reverse though simply because the fundamentals are now in the company's favour and those that have sold will be looking to enter when it does start to move higher again. You'll see a flow of capital back into the stock

signing off....good w/e all

L2

Berg and Wintefloods active bid v Bobby peel

most MMs now at 4 or under. 1 at 4.15

MMs not very active on the bid as they were at start of the week...I think they're churning. and BERG's interest is flaccid...but, it can change and change quite quickly so who knows

no way,

MM's use VWAP tradnig strategies but the process is complicated and way beyond my understanding of the markets, which I admit is severely impoverished