Osceola Gold Inc (OSCI)

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I had a chance to tour a boiler room in Zurich during the ramp-up of the gold boom in 2005. A company would pay a 20 to 30% brokers commission and the room of phone chimps would get to work. The phone lists must've been pretty good because they were effective at raising cash. The company meanwhile would engage in a full-blown media blitz to get analyst coverage, and the spam-bots would start posting on the bulletin boards. The "XYZ is going straight to the Moon!!!" type of post you still see.

These companies actually had decent projects that might've produced a discovery if serious exploration had been done. The only giveaway was when you saw how little money was going for exploration. In addition to the 20 to 30% brokers commission, management would pay themselves consulting fees and handling fees and salaries and whatever so that only 10% ever slipped through their fingers.

These guys in Zurich suckered some pretty savvy investors. They even suckered guys who had reputations for suckering other guys. When everything blew up in 2007 / 2008, a lot of people who should have known better had egg on their faces.

And it is still going on today. That is why I only invest in companies where I personally know the management. Exploration projects - no matter how good they are - don't develop themselves.