Hoboken to Hollywood to Hoboken
Scam Avoidance in Precious Metals Shares
by James Sinclair
Has the price of your precious metals investment rocketed up to be followed by a faster trip down? Was there no support at all in the period of decline? This alone does not mean that your selection was unfortunately a promotion rather than a serious company. It is however a clue that it might have been. I would not just because of this experience dump the position but you certainly should review the following checklist. Even then if you suspect that what you own is not a serious company, I would simply plan to sell the holding on the next period of appreciation. Promoters are like taxes because they always keep coming back. Not that you want to profit on the back of some other investor that is unprepared but as I said, promoters never stop promoting. I don't want you to complicate one mistake of falling for the promotional story by bailing out right at the bottom. Just plan to get out. At least learn the bare minimum of TA. Might take you 30 minutes if you are a slow learner. Those basics are what is an up trend. The cost of your tools is the price of a plastic ruler and one pencil.

Scam Clue List

1. Did the CEO, President or any present officer of the company exercise and sell a significant portion (more than 25%) of insider options or any portion of options at all during the last 1/3 of the period/price of the situations appreciation defined as May 2002 to present? Clues are here.

2. Have the research reports issued on this situation that created the bullish interest been issued by individual analysts or by analysts associated with known mineral investment banking organizations? If no regulated investment bank mentioned your situation that is a clue.

3. Is the management of the resource company you have selected completely focused on your company? That means are the President, CEO and CFO of your selected company also officers or directors of other resource companies? A serious company is one in which the officers have no other focus than the entity you are invested in. As an example, if the same groups of people manage and direct various companies, and a new property of interest arises, how do they determine what entity that property goes into? My suggested answer to that is it goes into the company in which they have the most options or into a brand new public company. In my personal experience, I have known one most personable individual who was a director and officer of over 30 public resource companies at once. A stable of companies is a clue.

4. Are insider options granted at higher prices being repriced to the present lower levels? That is a clue.

Integrity Check List

  1. The officers of the company you are invested in have no other position as an officer of any other company. That means their success as your success is based on that company only.
  2. The officers of your company have no private other mineral interests such as personal mineral concession ownership.
  3. Your management has a success record in the industry. Creating a huge cap value on a past situation that failed is not a success record. It is a monumental failure record.
  4. Insider options on your company do not exceed 5% of outstanding shares.
  5. Your company is listed on some senior exchange or traded on the NASDAQ National List.
  6. The company you are invested in has some property transactions already with a major mining company.

Good people with good properties require a good precious metals market to completely succeed. Integrity is a key ingredient to success but even integrity needs performance to win. Integrity without performance isn't much in the investment sense, just good guys that get nowhere.

The formula then is all the above integrity ingredients + good properties + derivative-free deals with majors + property performance + a bull market in metals.

If you suspect your situation may be a promotion only do not bail out now. Rather make a plan to leave the next time an up trend is established and fails.


James Sinclair
Chairman of the Board
TAN RANGE EXPLORATION
www.tanrange.com

17 October 2002