Phase 1’s “Urgent Gold Information” takeover teaser for “Tiny Gold”

Deciphering Frank Curzio's tease for a potential "overnight doubler" tipped by secret contact "J"

By Travis Johnson, Stock Gumshoe, June 13, 2012

This teaser is going to get a lot of attention from Gumshoe readers, partly because Stansberry Phase 1 Investor teasers always get a lot of attention (they usually tease a small stock and they charge $5,000 for the newsletter, which gives them an aura of awesomeness — deserved or not), and partly because the pitch is for a near-term takeover of a mining stock … and folks who like to trade love takeovers that bring quick returns. And, of course, recent Gumshoe readers will note that the last time Phase 1 teased a gold stock, it took off nicely — that was a very different situation, but it still sticks in the mind.

This time around Frank Curzio (he edits Phase 1) is teasing a mining stock that owns a big chunk of land next to one of the highest-grade gold mines in the world, and that he thinks will be taken over by the huge mining stock that owns that high-grade mine. So who is it?

Well, they try to obscure in the ad — here’s how they put it:

“Urgent Gold Information From Our Multimillionaire Contact, ‘J’ …

“The situation I’ve just come across is urgent. So I’ll get right to the point.

“I’ve just received information from a very credible source in the gold industry.

“It concerns an event that, when set in motion, could occur in less than 24 hours. And to the right people, could be worth $100,000 or more.

“In short, it has to do with two gold companies, one of which you’ve almost certainly heard of.

“If this event occurs, it may be the single most profitable opportunity of the year in the gold industry.

“It could hand you the chance at a 100% gain. Practically overnight. And that’s a conservative estimate.”

This “J” that’s teased is apparently some muckety-muck in the gold biz who feeds good ideas to the Stansberry folks … here’s more on him:

“J has made a personal fortune in the gold markets on situations very similar to the one I’m about to show you.

“Please understand: I must conceal our contact’s name from you in this presentation…

“…Because revealing this information would allow too many folks to figure out the details of this opportunity. It could ruin the profit potential for our most serious subscribers….

“… this gentleman is one of the most prominent analysts in the gold industry. Dozens of the biggest money managers in America and Europe follow his analysis. He personally knows and meets with top mining executives and geologists… And gets invited to visit the most promising mines in North America….

“… the Financial Times has gone on record as saying: Anyone looking into gold stocks should pay attention to [J’s] opinions.”

It doesn’t necessarily help us much in our search to ID the pick, but I can tell you that the secret “J” here is almost certainly John Doody, who runs Gold Stock Analyst and has a marketing relationship with Stansberry & Associates.

But more importantly, what is this gold stock? They start to sprinkle in a few clues …

“In addition to J’s information, we’ve also uncovered 6 separate pieces of evidence that point to this event – with near certainty…

“As I said, the situation involves two gold companies.

“For the sake of simplicity (and because circumstances require that I keep a lot of this information secret)… I’m going to call the two firms ‘Big Gold’ and ‘Tiny Gold’.

“You’ve almost certainly heard of Big Gold.

“It’s one of the world’s largest gold producers, with 10 world-class mines operating across North and South America.

“Big Gold produces around 2.5 million ounces of gold… And generates nearly $2 BILLION in profits every single year.

“And unlike a lot of gold producers, Big Gold pays out hundreds of millions of dollars in dividends to shareholders every year.

“In other words, it’s one of the most stable and cash-rich companies in the gold industry.

“And just over the past few days, we’ve gathered reliable evidence that Big Gold might make a bid for a small gold operator… We’ll call it Tiny Gold.

We recommend you consider buying shares of Tiny Gold as soon as possible. This is potentially one of quickest gains you could see in your lifetime.”

So … “Tiny Gold” is the stock they’re recommending, but it’ll make it a bit easier if we first identify who the potential acquirer is (“Big Gold”). Let’s sniff out a few more of the “Big Gold” clues:

“In 2008, Big Gold made a bid for another small miner, operating right next to Tiny Gold’s property.

Why are they so interested in this area?

“Quite simply, it’s where Big Gold’s flagship mine is located. This gold-producing district is the single biggest source of revenue for the company every year.

“It’s a region I’m going to call the “Yellow Sea”. (As I said earlier, I must keep a lot of details secret. If too many folks figure it out by doing a simple Google search, this opportunity will be ruined.)”

Sorry, Frank — but you tease, we de-tease … it’s kind of our thing. More on “Big Gold” …

“Explorers have been interested in the area since the 1920s, when gold was first discovered here. But it wasn’t until the 1990s… when Big Gold acquired mining rights in this area… that it truly shot to fame.

“You see, using the latest technologies, the company discovered the Yellow Sea district has some of the richest, most concentrated gold veins in the world….

“Big Gold’s Yellow Sea property has, on average, 62 grams of gold per ton.”

That, along with the little slightly misleading diagram that they include of the “yellow sea” tells us that this “Big Gold” is almost certainly Goldcorp (GG), and their major producing mine is the Red Lake Mine in Canada (get it, “yellow sea” instead of “red lake”? Yes, super clever) … and yes, they have acquired other mines nearby, including the one teased as their 2008 acquisition (that was Gold Eagle, whose Bruce Channel/Cochenour discovery is near enough to be connected to the Red Lake complex by a proposed high speed tram). The High Grade Zone at Red Lake is responsible for much of Goldcorp’s annual production, and it does indeed have a high concentration of gold — two ounces per tonne, which is roughly the same as the teased 62 g/ton (there are about 31 grams in a troy ounce).

So who is this other landowner nearby that Goldcorp is supposedly going to offer to take over? Well, there are at least a couple explorers in the region … which makes sense, when there’s one huge mine in a region you always find little junior miners trying to sneak in to pick up any little scraps of leftover exploration acreage that might share the same geology.

How about a few more clues?

“Tiny Gold’s market cap is 35 times smaller than Big Gold. It’s among the smallest stocks we’ve recommended at S&A… You could buy it right now for just a few bucks a share.

“Tiny Gold’s mine is fully financed and 100% debt free. In other words, Big Gold won’t need to spend a penny to build a mine on the property.

“Big Gold’s head of mining operations just ‘defected’ to Tiny Gold. It’s a move that signals huge potential growth for Tiny Gold’s property… And direct interest from Big Gold’s executives.”

Ah. That’s getting closer to an answer for us … we toss it all into the Thinkolator, and out the other end comes our high-probability answer (I’m pretty sure it’s right, especially given the general confirmation of the location of the mine from the “Yellow Lake” diagrams in the ad): This is almost certainly Rubicon Minerals (RBY)

Which, you might notice, ain’t all that tiny — it’s small, sure, and a lot smaller than Goldcorp, but it’s close to being (and was until recently) a billion-dollar company. Tiny compared to Goldcorp, but downright enormous compared to most of the junior mining stocks we’ve seen teased by Phase 1 and others in the past, so absent a takeover or other “real” news we shouldn’t necessarily expect this one to make a really massive run like Gold Standard Ventures did after Curzio’s last gold teaser. It is about 35 times smaller than Goldcorp if you measure by market capitalization, just for confirmation.

Not that there’s necessarily anything wrong with being big — they’re big, after all, because they have a prime asset … and if you think the acquisition of Gold Eagle in 2008 was made on good terms, then it could well be that Rubicon is still undervalued (there’s a chart in the latest Rubicon presentation laying out the roughly comparable numbers from their own Phoenix project and the Goldcorp-acquired Bruce Channel discovery). I don’t know if the details are close enough to draw a direct comparison, or the stage of development similar enough, but there does seem to be some value here.

Part of the reason that this jumped out for the Phase 1 folks, I’m sure, is that the stock has gotten clobbered this year — I don’t know what investor expectations might have been for this year, or why the stock is falling (other than the fact that most gold explorers have fallen this year), but it is perhaps notable that Agnico-Eagle (AEM), which seems to have also provided some exploration support, recently told them that they’re selling a “significant portion” of their RBY holdings… and, as you might have guessed from the fact that they are teased as being “fully funded”, they did raise a lot of money recently that also helped to depress the share price (they raised $200 million at the end of February).

And, of course, they’re just entering the hugely expensive stage of operations — starting to actually build a mine, with still an optimistic projection that they can start producing gold in the fourth quarter of 2013 (whenever a miner says they’re going to start producing “late next year” you can guess that the best likely outcome is one wheelbarrow full of ore processed on December 31, 2013 … saying “late next year” just sounds better than “2014”). They do have the funding to get at least a lot of the development done, more than $200 million in cash and no debt, and they are advanced enough in their development and permitting (they say they have all the required permits now) that one would presume they’d have no trouble raising some more cash if they turn out to need it (assuming, of course, that the gold market doesn’t collapse).

Other reasons that confirm this ID? Well, Rubicon is now getting a new CEO from Goldcorp — Michael Lalonde, he was the guy who ran the Red Lake operations and Goldcorp’s underground mining projects, though I don’t know that his title was technically “head of mining operations.” And yes, I would guess that the job looked appealing to him because he knows the potential of the Red Lake district … but, of course, so would anyone else in the industry. Maybe he has a better perspective on it from running operations at the big Red Lake mine, or maybe he’s headed in there as his retirement project because he knows Goldcorp is going to want to take them over, I don’t know. He’s President and COO right now and will transition into the CEO job over the next few months, the current CEO is being bumped up to Chairman — it looks, from a glance at their bios, that they’ve basically brought in a “mining operations” guy to take over from the “raising money and exploring” guy, which makes sense at this stage of development.

I have no idea whether or not Goldcorp will try to take over Rubicon Minerals, but I’m quite certain that’s what’s being teased by Frank Curzio. I’m not a gold mining expert, but I will note that there’s also another large landholder in the neighborhood that’s a bit closer to the big Red Lake deposits — that’s Premier Gold Mines (PG in Toronto, PIRGF on the pink sheets), which already has a joint venture with Goldcorp to explore and/or develop the potential deposits along the tram route between the Bruce Channel/Cochenour mine area and the main Red Lake deposit. They look a bit interesting at first glance because they also have a couple other large potential deposits in Canada and Nevada, as well as a small portfolio of royalties that they’re planning to spin off as a separate company this year. Haven’t looked at the valuation in any great detail, but if you’re interested in Red Lake you might want to also sniff around Premier while you’re researching Rubicon (though since they’re already JV partners with Goldcorp, they’re probably not as likely to get a huge takeover bid for that project).

And of course, you can also always take a look at Goldcorp itself, which has a lovely portfolio of massive mines that are mostly in Mexico and Canada and has a pretty aggressive growth profile for a mega-miner (though one of their potential biggies is in Argentina, too, which worries some folks).

Given the beaten-down price, the fairly compelling takeover thesis, and the fact that the Stansberry folks might push this one pretty aggressively for a couple weeks, I’m willing to take a small speculation on this potential takeover — particularly because this happens to be an option-able stock in the US. So I’m ordering a small number of call options on this one right now, as I publish, and will promise, as usual, to hold that position for at least three days so I don’t trade off of any immediate impact our publication might have on the share price (any such impact is usually a lot smaller for billion-dollar companies, but it can still happen). This is, to be clear, the stupid gambler in me, not the sage investor (the two of them tend to fight it out a lot, frankly). I don’t write about my options trading very often and don’t specifically cover them in my portfolio notes for the Irregulars (mostly because I do a lot of dumb things in this vein, and I don’t trade options often), but since I’m mentioning this trade I will post a portfolio note if and when I decide to sell those options. As I told the Irregulars on Friday, my “sober” side — which, thankfully, gets to handle a lot more of my portfolio — is still very much convinced that the lower-risk royalty and streaming plays are the way to go for stock market gold exposure.

And now we can leave it for the rest of you — including many folks who know far more about mining than I do — to chime in. Is the decline in Rubicon Minerals a buying opportunity for a potential takeover from Goldcorp? Think Frank Curzio and John Doody have a good one going here? Or is there a good reason for the lower share price? Let us know what you think with a comment below.

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43 Comments on "Phase 1’s “Urgent Gold Information” takeover teaser for “Tiny Gold”"

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wikiderm
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wikiderm
June 13, 2012 12:15 pm

So that’s why my RBY popped this am 🙂

Norma
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Norma
June 13, 2012 12:31 pm

Hi Travis…I m reading you from Argentina I ´m argentina, UPS!).
When you say “… a small number of call options …” I want to know….how much is “a small number”? As I don t live in USA, I can t realize how much is profitable tu buy or just a nonsense action. THANKS, I love your news letter

Norma
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Norma
June 13, 2012 12:51 pm

gracias!!!!

Christopher Weingartner
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Christopher Weingartner
June 13, 2012 1:28 pm
I am an irregular for a couple of years or more. Never brought anything to Travis’ attention nor even replied to anything, but I was just reading Frank’s teaser and was going to send it in (with instructions on where to start and read just one page to see if he/you was interested in following up this tease). When I went back to email to get the Gumshoe email address, there was the answer, so I still haven’t sent anything in besides this first Reply. They say there is no fool like an old fool, but I took a small… Read more »
Venture Shadow
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Venture Shadow
June 13, 2012 3:16 pm

Motley Fool is teasing Rubicon mightily, and saying that it is their special #1 pick. They gave away this recommendation free in return for my email address (which they already had from a previous freebie). Motley sent me a Very “special report.” This report was $5000 cheaper than Phase One.

Anyway I’d bought Rubicon before their fall, so I already feel very “special.” My dream–perhaps the impossible dream–is to break even.

Victor
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Victor
June 13, 2012 4:03 pm
Rubicon is pricey at this moment with indicated reserve of only 477,000 oz and inferred of 2.317 mio oz. Buying into this stock is a gamble that the company will be able to substantially increase their reserves in the future. Try calculating the market cap per oz and compared that to its non-producing peers and you will be shocked how much higher it is. Joddy and Frank are promoting it for three reasons: the cash of $243 mio that the company has to commence construction, the location of the mine and the reputation of the management. Non cash share value… Read more »
Coherence02
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Coherence02
June 13, 2012 4:03 pm

AEM just recently notified Rubicon that it has been selling its shareholdings in the company. Why wouldn’t AEM know that Rubicon was going to be taken out for a hefty premium?

Victor
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Victor
June 13, 2012 6:13 pm

This issue linger in my mind too. I wonder who is the buyer…is it Goldcorp? If it is not, I am actually quite skeptical about Goldcorp mounting a takeover of the company. Having said this, I am pretty sure that the price will move up (but limited) due to heavy promotion by two well know gurus.

Coherence02
Member
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Coherence02
June 15, 2012 10:48 am

AEM sold on public mkt. Looking at 10-day chart, RBY is outperforming. Of course, 1 yr still down 20%. RBY has been mentioned as take-out candidate for longer than that, but so far, nada.

dock 581
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dock 581
June 13, 2012 7:16 pm

An option service I follow just advised buying Dec5 calls on RBY–said there was unusual activity–FYI

Arizona T1
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June 13, 2012 9:36 pm

This Stock Gumshoe article is only 10 hours old and I can already find in using Google by searching for “yellow sea tiny gold”.

Dave
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Dave
June 14, 2012 11:37 am
Having been an investor in RBY since before their first discovery announcement at their F2 zone, I tend to believe their first NI 43-101 was more accurate than their current one. (The BCSC made them lower it drastically.) The first NI 43-101, written by a professional with a lot of experience in the Red Lake mines, said they had an inferred, 16 million ounces. This was because they hadn’t explored down to the deeper (mile +) area, where GG found their gold and that kept the Campbell Red Lake mine going on for years and years. RBY has now done… Read more »
Victor
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Victor
June 14, 2012 2:51 pm
I have been monitoring the movement of the shares for the past two days and yes, I can confirm that someone is intentionally driving up the market..you can see the volumn in the bid and ask..it is moving little by little..calculated and planned movement…goodness…this is a very dangerous world to live in. It is beyond your imagination what people will do to create their own demand…draw the crowd in..throw in the tower and said to the world “Hey, I told you guys so”. Well, enjoy the ride while you can before the horse is let into the pit and buried.… Read more »
Boa1952
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Boa1952
June 14, 2012 10:03 pm

A real junior that will make you real money is CHPGF.

Mart
Irregular
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Mart
June 15, 2012 9:38 am

CHPGF: Based on what?

Boa1952
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Boa1952
June 15, 2012 9:58 am

Do you own DD, but, their Metates claim will show a new valuation (due next month) that will place the value at ~$24.00 per share! It’s all out there. Low float, Canadian junior. Do you remember Francisco Gold in the 90’s? Same type of thing! Went from $6 – $64!

Mart
Irregular
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Mart
June 15, 2012 10:58 am

Thanks for your reply. Will certainly take a look at it.

Boa1952
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Boa1952
June 15, 2012 12:04 pm

RBY – can’t tell you if the hype in the above article is true or not. However, fundamentally, RBY looks pretty good at these levels. Bought a few shares and a few 12/12 $7.50 calls, just in case.

boydo
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June 15, 2012 8:57 pm

Ok, lets say RBY is taken over by Goldcorp, How then is the stock price of RBY then decided or determined ?

jerome
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jerome
June 16, 2012 12:38 pm

send me more info i like when sombody honest sends good content thanks

William
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William
June 18, 2012 7:02 pm

So is the play undoubtedly RBY?

Foggy Doggy
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Foggy Doggy
June 18, 2012 8:08 pm

If this is such a hot take-over deal, why did Agnico-Eagle Mines Limited reduce their holdings in Rubicon in early June ?

cloud guru
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cloud guru
June 19, 2012 4:38 pm
Straight from the sec filings. Item 5. Interest in Securities of the Issuer (a) and (b) Items 5(a) and (b) of the Schedule 13D are hereby amended in their entirety to read as follows: As of the date hereof, Agnico owns 10,671,827 Common Shares, representing approximately 3.7% of the outstanding Common Shares, calculated based on 287,179,669 Common Shares outstanding as of March 31, 2012, as reported by the Issuer in its Interim Consolidated Financial Statements for the First Quarter ended March 31, 2012, submitted to the SEC on Form 6-K on May 15, 2012. (c) Item 5(c) of the Schedule… Read more »
BillyMalibu
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BillyMalibu
June 20, 2012 8:01 pm

Thanks for posting for free what Stansberry wanted $5 k for. I appreciate the thoroughness of your research. I also enjoy reading your comments. Might just take a position …

flyersteve
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flyersteve
June 27, 2012 2:20 pm

Does anyone know if the the stock they were pushing was indeed Rubicon? Thanks!

Randall Stevens
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Randall Stevens
June 27, 2012 5:21 pm

I wonder how the meeting went today with stockholders meeting the new CEO?

John
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John
June 29, 2012 2:46 pm

Any updates on this? Anyone?

Peter J R Holt
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Peter J R Holt
July 2, 2012 11:36 am

If you are looking for a future take over target then have a look at BGM on the TSX or BGMZF on the Pinks

John
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John
July 13, 2012 7:59 am

Thanks Peter, but no. Just trying to stay focused on RBY. This is about as speculative that I want to get. It appears that it may be a while before this has any sustained upward movement. I’m new to gold miners (and in most everything else related to trading) but do appreciate their volatility and risk…just trying to gain some insights from others who were looking at this while doing my own research.

Mel1962
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Mel1962
July 2, 2012 11:08 am

Hey Boa1952 your comment back on June 15, what company was DD?, is it “DDs Wireless International” that is currently trading at $1.85

Jack
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Jack
July 21, 2012 10:54 pm

Check out impact silver isvlf They have huge land concession in Mexico and possible new Gold discovery. Tell me what you think if you DD it. I will check out chpgf thanks

Boa1952
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Boa1952
July 2, 2012 3:45 pm

DD stands for due diligence! I like two junior Canadian golds, one being RBY and the other being CHPGF. Ground floor opportunities for both and both have something special going for them! Do your own DD (due diligence), and you will see why, that is, if you are into gold stocks in Canada. Francisco Gold went frm $6/share to $64/share back in the 90’s. One of these has the same potential and both are great makeover candidates. In my opinion, gold will see $2,200/oz in 2013. Could be a little conservative!

Lilly
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Lilly
July 11, 2012 12:01 am

Also interested in any updates? Thanks for the great research.

boydo
Member
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July 26, 2012 12:25 am

Has anyone seen any updates on RBY or read anything good about this lately?

John
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John
August 14, 2012 10:05 pm

Wow… is this their way of pumping up the price by giving the impression that you better get in now b/c this company could be bought out in the next day or two? I have to wonder if RBY wasn’t the stock they were referring to… and if ANY stock in the jr miner’s sector did what they were suggesting.
Anyone have any additional insight on RBY?

Boa1952
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Boa1952
September 19, 2012 8:32 pm

Added more RBY and CHPGF. CHPGF up 15% today. Look for areport very soon on Metates.

Stock Snooper
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Stock Snooper
March 6, 2013 10:35 am

Guys you are all way off base on the Phase ! . .Stansberry teaser . . . not even
close. The mine is ‘Sukari’ located in Egypt. The miner is a UK mining company
Centamin (CELTF) . Google up Sukari and read all the info and you will get
a 100% match up on the teaser info from Frank Cursio. This was NOT hard to
find.

deepdiver
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DeepDiver
March 25, 2014 2:39 pm

Sure is nice to see how far off all the RBY teaser/comment was using hindsight. Now at $1.10 and never went anywhere.

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