I think there is some malignant activity on the part of hedge funds shorting the juniors, not necessarily because they want to discourage retail specs, but because they are already out on a limb with extensive short positions and want to contain any further losses until the next big correction (they hope) is coming. Such a strategy has worked in past and I think each of the last five years we got a severe corretion during the April-May window.

However I do not think the shorting explains the entire story. I doubt for example that there is a short presence in all of the juniors. Yet, almost every PM junior has been behaving as if an anchor is holding it down. Also, the volume is very low for most of the juniors. ECU is a good example of this. If there was a rush to buy this stock on the basis of the rising metals, the price would rise. The fact that the entire sector is in lockdown is not a matter of widespread shorting, IMO. I think it has more to do with a lack of interest from the general public. Money flow is headed out of the sector, in anticipation of yet another smackdown, overbought metals, and the usual trend to take money off the table ahead of the summer doldrums.

I believe there is also a major economic summit set to go this weekend. When the G8 or G20 has met in the past, it has corresponded with a takedown in the PM sector. Regardless of whether there is another round of intervention on the way, just the THREAT of a takedown is enough to motivate some people into selling.

I know so many individual investors that are completely fed up with the non-stop manipulation, to the point that they have given up and left the market. Even though the metals have been rising for 10 years, some people just get fed up with being screwed in full view of the corrupt regulators and not having any hint of a fair market.

Having stated all of this, I still think the upcoming drill results will be decisive for this stock. If the numbers come in even close to the MS grades and intervals reported a couple of years ago, I do not think there is any intervention or short interest that can cap ECU ahead of the wave of buying that will come. ECU was once a top performing stock on the entire TSX-V and that was due to speculative interest in the discovery play. It can return to that level of excitement.

The market manipulation will come and go as it has for 10 years. In time I think the PM sector will enjoy yet another revaluation upwards and the shorts will be hammered. It is difficult to remain patient and to deal with the constant overhang of crooks that are playing games in this market but those who have done so are big winners and I do not think there is any reason that will change in the months ahead.

cheers!

mike

Voluntary disclosure: as always I remind everyone that ECU is a paid advertiser on my website, although my opinions are entirely my own speculation.