Avocet Mining Share Discussion Threads

[saucepan] 05/1/2006 16:55

Another massive bowl chart, to compare with the one in post 1627. I am invested in AVM because I believe there is a reasonable chance (compensated with relatively small downside risk) of the AVM share price completing the right-hand side of the bowl, and shooting quickly beyond, just in the same way as JKX:



[I shall repost the AVM chart below for ease of reference. To my mind, the similarities are striking.]

[yikyak] 05/1/2006 14:12

goml, I hear what you say but if you view them from a taxation perspective, with no taxation due on any gain I believe, then they are simply bookies and as such aim to out smart their clients. I don't have a spreadbet account and nor do I trade CFD's so I may be completely wrong in my assumptions.

We could do with an un-biased reporter digging a little deeper and have e-mailed the question to minesite, I hope they pick the question up and run with it.

[goml] 05/1/2006 14:03

Chipper, yes the market will always push in the opposite direction to the majority position. it does that anyway even without the help of companies offering dirivatives. i suppose its possible that some companies work 'too' closely with some market makers (re shares bets/CFD's) so the MM's know where stops on large positions are, etc.. none of it is probably illegal...strictly speaking but is definately unethical. its a dog eat dog world though and most punters can't resist the temptation to gear their positions and SB's and CFD's make that so easy. it sets people up for a fall cos they feel the fear when the market moves against them.

[chipperfrd] 05/1/2006 13:25

goml,

I seem to remember that REGUS had these kind of issues when the total derivative short positions were a multiple of the shares in issue!!

The shorts lost big time!

[saucepan] 05/1/2006 13:25

I take the point, regarding the chart, but I believe it tends to retain its relevance: support and resistance points are in part related to when people and institutions bought and held shares, as well as to the fundamentals of the company.

For example (non AVM specific): if a lot of people bought at a resistance level, then the share price tanks, many of those punters will hope for a return to their entry price so they can get out at break even. When the share price recovers to the previous resistance level, those who want to break even get off the roundabout; this sudden volume of sellers creates a downward pressure on the price and resistance is once more confirmed. That is why breaking through resistance is so significant. None of this has to do with the fundamentals of the company.

[goml] 05/1/2006 13:20

yikyak et al,

There has been a lot written about spreadbetting on here recently and some of it is not correct. They aren't bookies in the traditional sense at all. In theory they make their profit from increasing the spread available in the market when you open the bet. In general they always hedge the bets their clients open by entering the underlying market themselves. The bet is a dirivative. Spreadbetting companies often claim they like to see their clients winning as it doesn't affect their profit margins. If they fully hedge their positions this should indeed be the case. Strictly speaking they are more like money lenders making money on the interest (i.e. the increased spread) they charge you for the priviledge of going long or short. CFD's are very similar if perhaps a little more exotic because if you go short they pay you interest.

The problem that is being highlighted on here is to do with rather underhand practises that may...or may not.... be going on. For example, if a spread company has a client (or aggregate group of clients) who is/are substantially long or short in a particular financial instrument (eg. a share) and the company choose not to fully hedge their position, they then have a motivation to try to manipulate the underlying market in order to get the client(s) stopped out of their positions.

[yikyak] 05/1/2006 13:03

If we do stick to the chart then it looks like we should get around £1.50 on this run but as you say holdontight it's a very different company now with a very different price of what it mines.

[holdontight] 05/1/2006 12:49

This longer term chart compares to very differenyt companies, though.....dont really think you can apply it. Value of AVM is far greater than previous highs, imo

[yikyak] 05/1/2006 12:47

Andy, i'm not sure how it works behind the market and you may well be right. I'm in the belief though that the spreadbetting company trades against you in order that it wins the trade, afterall like any bookies - it's you against them.

Is spreadbetting just a UK thing and if so could it explain why precious metal stocks within the UK market have moved so little compared with North American, South African and Australasian. Is it because many spreadbet clients have been going long 'off' market and consequently the companies have been going short 'on' market.

They are bookies afterall!

ps; I'll send this off to minesite to see if they can get to the bottom of it as it's important imho.

[saucepan] 05/1/2006 12:21

The bigger picture, to remind ourselves of the significance of the current threshold:

[royalt] 05/1/2006 12:02

6 vs 1 at the moment. expect move up anytime soon.

[saucepan] 05/1/2006 11:52

Today's move is very convincing, in view of short-term gold weakness.

[kojak78] 05/1/2006 10:11

2005 performance
HUI: +50%
AVM: +10%

[andy] 05/1/2006 01:13

chipperfrd,

Ok sorry if I misread your post.

I think AVM look a solid bet at this price personally, and a roll on the SEP 2006 contract gives a year from now.

[chipperfrd] 05/1/2006 00:34

Andy,

If you re-read my post I am saying exactly what you state in your first paragraph!

I am including their back office - which must be short if they are effectively selling to longs. To balance their books on large volumes they may need to buy on the market.

It is, perhaps, clearer on cfd's, but I assume sb's are the same.

[andy] 05/1/2006 00:23

"chipperfrd - 4 Jan'06 - 12:38 - 1614 of 1619

yikyak,

If punters are heavily long the SB companies will be short and need to buy on the market to hedge their exposure".

------------------------------


I thought the spread betters went the SAME way as the punters, ie you go long on AVM, they cover (in theory) your long by buying in the market, hence their profit is the spread.

If you go long AVM, and they go short, and you are correct, then the spreadbetter will be heavily out of pocket, whereas if he follows your trade, he makes on the spread, so you win, and so does he.

In practice I believe spreadbetters offset longs and shorts, rather than cover in the market, as they will make more money that way.

I am going to go long AVM SEP contact, as I believe AVM will do well this year, with a guaranteed non trailing stoploss around 20%, and will build into the position if the price rises.

[nikolaos17] 04/1/2006 22:16

yes
www.igindex.co.uk
I also saw your comments about avm and you impress me so as I saw gold catching fire on tusday I went long on AVM at 109p just before the breakout...pretty luckey I think..
I also have great gains materialising today from going long on BP capita
British Gas and vodafone...
I still hold on my super ones
BGS
BGFD
EFM
also saw breakout on BATM (BVC) and went long today at 35p
BVC BATM
my weighting is 50% Japan 25% Dragon economies
7%% gold 10% cash from oil/vod realised today
3% tech

[chipperfrd] 04/1/2006 15:07

CFD's & SB's may not appeal to some investors but they go some way towards levelling the playing field for the retail trader.

Case in point:
YAU - I have a 150% gain on cfd stake in less than 4 weeks whereas my shares have taken 3 months to double.
RRS - 200% up in 4 weeks using cfd leverage. My shares are up 80% in 6 months or so.

Also makes the point about North American markets v LSE.

We can only deal with the markets and tools available to us. So, much as we can agree about what is wrong with the system we still have to get on with making money the best way we can. That's what it's all about after all!
Chip.

[mr ashley james] 04/1/2006 14:48

Bionic LOL!

BTW Could you feed the Mudwarbler some Tennants Super or something wake the daft gold bird up a bit?

[kojak78] 04/1/2006 14:44

Sold my Golden Star holdings.. who knows what opportunities arise in the short term. I fear some miners could have seen their highs for 2006 already, e.g. those disguising copper mines as gold mines.

[kojak78] 04/1/2006 12:47

"need to buy on the market.." why?

If I managed a SB company I would have my statistics. Don't forget that many of the deals collapse because of volatility. And if you loose from time to time it is still cheaper than buying the shares as a hedge. The last option is "managing" the share price. Why not? 70000 shares were enough to bring down the price by 2p. Perhaps 350000 are enough for 10p. If punters are long with say 1 mio shares (1:10 lever) that will be profitable.

[chipperfrd] 04/1/2006 12:38

yikyak,

If punters are heavily long the SB companies will be short and need to buy on the market to hedge their exposure.

[pecker1] 04/1/2006 12:22

yikyak,

Very well put - sad but true. Would also add that AIM has allowed a load of rubbish to be listed without any real scrutiny whose lingering but sometimes quick deaths will blacken its reputation further and damage the good stocks that are on AIM.

[yikyak] 04/1/2006 12:10

kojak, AIM has a dreadful reputation amongst investors for being manipulated and expensive so all in all be thankful that Avocet has achieved 13%. When a single entity controls the market it can do with prices as it so wishes, the problem now though is that they have eroded the aftermarket.

I'm afraid AIM is dying as I have been banging on about for ages. It refuses to face up to the reality of online trading and the ease at which traders/investors can trade internationally at far less cost and risk. The bait-ball of investors for the sharks to feed on has swam to warmer waters leaving the sharks to feed on themselves.

I retain just a handful of UK stocks, Avocet included, but as you say it's pathetic. I also wonder what effect spreadbetting has on the market, do spreadbetting companies hedge by going short in the market if the majority of the offmarket trade through them is long to make sure the trade remains 'out of the money'?