Specialty Metals Group Indium IPO: Commodities Ponzi Scheme

by: J. Amberger March 28, 2008 | about stocks: IND.U    

J. Christoph Amberger

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There is a difference between investing and hoarding. Investors and traders buy and sell equities and assets to make money. Hoarders pile up assets in the hope of values rising. Converting them back into money is often not a priority.

The commodities supercycle has taken hoarding to a professional level. Commodities funds have been buying up gold, metals, oil, sidelining them from the market, increasing demand while reducing available supplies.

Shell games like this have become increasingly popular as panicked investors are fleeing real estate and stock markets toward the presumed safety of gold, oil and metals. The more that pile in, the higher prices go. And the higher prices go, the more that pile in.

If this were real estate or internet stocks, people would call it a bubble. But since gold is involved, this is part of divine providence.

Tired of reading? Watch the video.

Bubble business

Back in the 1990s, budding Internet entrepreneurs still required a cocktail napkin to write their business plan on before they issued an IPO. Today, a Post-It note is sufficient.

Take the upcoming IPO of Specialty Metals Group Indium Corp. (IND.U). They want to take the proceeds from their IPO, buy a stockpile of indium, sit on it for a couple of years, and hope to watch their stock price rise along with demand for indium. They won't even bother with actively speculating on price fluctuations.

Indium is actually a useful industrial metal that is used in the manufacture of flat panel displays, touch-screen interfaces, iPhones and solar energy.

IPO mania?

The company filed on February 27, 2008 and intends to sell 11 million shares at five bucks a pop. No IPO date has been set yet.

Sad to say that this commodities Ponzi scheme is probably going to be one of the hottest and oversubscribed IPOs coming down the pipeline this year. It will make plenty of money for the underwriter and the market maker. Hey, even in this market, two out of three ain't bad.

Instead of chasing this stock in the aftermarket, you might take an early position in a few of the publicly traded small indium miners that could be profiting from tight supply.

One of them, Avalon Ventures [TSE: AVL], trades on the Toronto Stock Exchange. Stock prices have seen better days, but for C$1.28, it seems like a worthwhile speculative position on the publication of the word "indium" through the Special Metals Group Indium IPO.

Buy it between $1.00 and $1.30 and get ready to sell a few days after the IPO for potential gains of up to 50%.

Disclosure: None

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This article has 6 comments:

  •  
    Mar 28 10:16 AM
    totally agree.
    Reply | Link to Comment
  •  
    Mar 29 09:02 AM
    I had never thought that I was a hoarder until I read your article. Thanks for your in site.
    Reply | Link to Comment
  •  
    Mar 29 05:28 PM
    What a totally and completely inane premise (that's a nice way of saying "stupid" in case you wondered not so "Bright"). Well then putting paper dollars in a savings acct is "hoarding" dollars, eh? Now, if you stated that "hoarding" dollars was stupid, then I'd agree, since they are worthless pieces of paper, backed by nothing, growing more and more worthless day by day as the Fed continues to "print" them at a faster and faster rate...now closing in on 20%/year (you knew there was some reason they stopped publishing M3 back in March 06, yes?...and believe me, it wasn't b/c it was so hard to do or cost that much). But there is NOTHING stupid, evil, or sinister of "hoarding" something that you hope will retain its value as the value of the money it is bought in continues to collapse thru its willful and incessant devaluation by the powers that be.

    "Hoarding" gold!!!! You're either totally full of it, or you work for the Fed or one of its mainstream media brainwashing outfits!! Gold and silver are CHEAP by ANY standard at these levels. They are NOwhere near their top of nearly 30 years ago. Using the grossly understated CPI started in the Clinton administration (to underestimate inflation so as to underpay COLA to entitlement payouts), gold would need to be at LEAST $2400 and silver $130, but if you use the CPI used in the Carter administration and before, those numbers would be closer to $5500 and $300/oz, just to have kept up with price inflation...but that doesn't take into any consideration the absolutely MASSIVE inflation of the money supply by the Fed (and actually now by essentially ALL CBs out there) since then!!

    Perhaps those who are "hoarding" gold/silver/etc...real... hard assets are simply trying to NOT lose any more real value than they have to by trading worthless FRNs for things of REAL value [aside: one of the techniques of propagandists is to use words to describe normal activities that have emotional connections and therefore sway the public's opinion for or against. "Hoarding" is such a word...where "saving" or simply "buying up" or even "trading (worthless fiat currency) for" is actually the activity. Once again, they wouldn't speak of "hoarding" dollars in your savings account, now would they?]

    On the other hand, I would HIGHLY encourage those of you who are "hoarding" hard assets...gold/silver/?... ON!!!! You're a lot smarter than those who try to persuade the masses of sheeple people that their paper investments are safe and well as well as those who believe them. jt
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  •  
    Apr 11 01:54 PM
    Does your savings account earn interest? Then you're not hoarding. You're not making most of your money, to be sure. But neither did the gold bugs who've been sitting on their Krügerrands for the last 3 decades.
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  •  
    Jun 17 01:22 PM
    Laura, please let's put this in perspective. There is a difference between nominal interest rate and real interest rate. What do you make on your savings ? 3, maybe 4% if you are lucky.
    Well here's some news to you - real inflation is running at about 5-6% now and that is just the understated government data. It is probably more like 10% at this point. So good luck even retaining the value of your savings let alone making anything.
    Yes the Krugerrands and any other bullion coin would be a better bet as at least they will retain their value as the Fed has not figured out a way to manufacture gold yet.
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  •  
    Jun 17 01:29 PM
    Mr Amberger, this is interesting perspective but I fail to see the distinction. It seems like this is more semantics than anything else. Anybody buying a security, commodity, currency or what have you in a speculative or investing sense is hoping the value is going to rise. At some point they will have to convert it. So saying that there is distinction between buying stocks vs commodities is really maybe just splitting hairs in my opinion. There is little evidence to say that precious metals are in a bubble right now as the current price is about 60% of the inflation adjusted price of 1980. We should see gold move to about twice it's current price sooner or later. Any higher then we can start talking about bubbles.
    Reply | Link to Comment
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