The most crazy (Black Friday) day for silver

I have very little skin in the game for precious metals (aside from the indirect benefit Teck Resources, soon to be Anglo Teck, mines from the ground) but I was just looking at the futures trading today in gold, platinum and silver, and oh my god. Here is platinum (down 18%) and silver (down 26%):

Charts are Pacific Time Zone.

This type of trading reminds me of October 2008-styled selling. As in panic selling. Somebody got caught with long exposure on the futures and were clearly forced to dump – you don’t see 25% down moves in a day like this very often in any broad market! Silver actually got all the way to -35% before rebounding – timing this exact bottom would be an impossible feat. Just imagine you woke up, saw silver down 10% and thought to yourself “surely, this would be a great time to average down on my long” before receiving a summary financial execution hours later. Or at around 1:50am, you bottom-ticked the futures at US$95 long and was giving yourself a pat on the back until 7 hours later when you were underwater.

Volatility begets volatility and Monday will be very interesting. This should also be a warning shot across the bow of crypto traders, but will it be a portent to the main indexes?

Precious metals are the new crypto

The more things change, the more things stay the same.

We have two asset classes, precious metals (Gold, Platinum, Silver), and cryptocurrency (I will narrowly define this as Bitcoin, Ethereum, Solana and XRP as they are the only ones trading on the CME at present). They share some features in common – they are perceived to be a store of value and (using a crypto phrase) represent “proof of work”. They both have a yield of zero unless ‘leased’ or ‘staked’ in other parallels.

There’s now another characteristic in common – they are volatile. The chart of platinum, for example, has gone all over the place in the past week of trading. As I write this it down over 10% from 12 hours ago. There’s an obvious amount of speculation, day-trading, short covering, and media hype now covering the ascent of precious metals.

I am wondering whether we are entering in a phase where tangible is going to outdo digital, more broadly than what we are seeing with this trivial comparison. My level of general concern with the whole monetary system is also rising. I keep thinking about to my reflections on my brief attempts of being a corporate raider with Slate Office REIT, except instead of dealing with a borderline-insolvent REIT, we are all “financial flea” participants in our own national economy where there is no way to “win”, or even “staying even” – in real terms, not nominal. Even deciding what the measuring stick (which historically used to be the sovereign currency of the nation you live in) is going to be obscured – perhaps linking to Maslow’s Hierarchy of Needs is a better measure.

Weekly annuity or lump-sum payment

There was a story in the news about a woman in Quebec winning a lottery payout and she chose $1,000/week versus a $1,000,000 lump sum payout.

There were some very derisive internet comments against her decision. Intuitively it may seem to be the case – inflation and “bird in the hand” mentality, but when doing the math, it isn’t a terrible choice.

There are two strong variables here – your expected rate of return and your expected longevity. The higher your expected real after-tax rate of return, the more you should take the lump sum. The higher your longevity, the more you should take the annuity.

The woman in the picture looked to be around 60 years of age.

The finance math suggests that if your risk-free rate is 6% and you assume inflation of 3%, and your marginal tax rate on returns is 40%, your break-even is around 20 years.

If you expect equity-like nominal returns at 10%, then the break-even goes to about 28 years.

There are other lifestyle variables involved here, for instance, is a dollar spent today more valuable than an inflation-adjusted dollar spent tomorrow? Does this person have a pressing need for a large lump-sum amount of money today?

Perhaps the best reason I read in the discussion was that if she takes $1,000/week that her friends and family won’t hit her up for money, as this is what happens to almost all big lottery winners.

The lottery annuity is also iron-clad and virtually like a government-guaranteed and after-tax pension.

So I can respect this decision to take the $1,000/week. It can be justified.

General Fusion – How to make money appear from nowhere

I really have to give credit to these guys. Through a SPAC (Spring Valley Acquisition Corp. III, ticker SVAC), General Fusion is effectively going public. The SPAC traded up from US$10 to about US$11.50, give or take, on the announcement. The SPAC shareholders will own about 22% of the remaining entity after all is said and done – 23 million SPAC units are outstanding so the entity is already worth about US$1.2 billion off the get-go.

However, this is not the point of the post. I am writing about them internally cashing in before doing this. It isn’t like one day where you pick up the phone and order that your company get SPAC’ed – there is some lead time involved.

On August 20, 2025 they filed with SEDAR a report of exempt distribution, where from August 6 to 12, 2025 they sold $25.3 million in preferred shares, which will undoubtedly be converted into common shares. I am not sure what the conversion ratio of this transaction is, so let’s just leave it.

On November 28, 2025, less than two months before the announcement, $51.5 million in “Simple Agreements for Future Equity” and warrants with a strike price of $2.8035/share were issued. Unfortunately I do not know what the common share price subscription was effectively at, but one can infer from the warrant strike price that it was likely around CAD$2.50-ish.

So in two months, this is now worth about CAD$16/share, a cool transformation (or should I say creation?) of about $250 million from nothing in two months!

Well done! As much as this thing is going to get hyped up, I will be a spectator. And if their technology actually manages to produce sustainable and cheap fusion, they will be worth trillions in addition to decimating the natural gas market but as a physics major, I remember the in-house joke about fusion power, “Fusion is the energy of the future, and always will be”.

Velan – When getting bought out doesn’t mean going private

Velan (TSX: VLN) had an interesting transaction reported last Wednesday:

Velan Inc. (TSX: VLN) (“Velan” or the “Company”) today announced that its controlling shareholder, Velan Holding Co. Ltd. (“Velan Holding”), the sole holder of the Company’s multiple voting shares, has agreed to sell its 15,566,567 multiple voting shares and one subordinate voting share (representing approximately 72.1% of the Company’s outstanding shares and 92.8% of its aggregate voting rights) to funds managed by Birch Hill Equity Partners Management Inc. (“Birch Hill”), at a price of C$13.10 per share, for aggregate gross proceeds of C$203,922,040.80 to Velan Holding and two other entities associated with shareholders of Velan Holding (the “VH Transaction”). Birch Hill is a leading Canadian investment partner with a 30-year track record of deploying patient capital and operational expertise to scale market leaders for long-term global growth.

Velan, for those that are unfamiliar with the company, are a producer of industrial parts. It has been selling valves for roughly 20-25% gross margins (aside from the Covid times) for time immemorial and is relatively unremarkable other than when the founding family wanted to get out.

The voting shares were privately held by the family and the public (lesser-voting ‘subordinate’ shares) are traded on the TSX.

Subordinate shareholders were clearly anticipating that such a sellout would include the entire company.

Upon the announcement, the stock traded from around $19/share to under $15, likely because any speculation that they would be taken out at a premium faded away, and the final negotiated price was well under what the market was trading at.

Financially the company has had better days – like a decade ago. It is understandable how a $19-20/share valuation would be lofty.

But the overall lesson here is that when it is well known a controlled company is going to go private, the minority shareholders might not necessarily get a good deal, or in this case, any deal at all.