I looked at the crafty FR Y-9C teaser from Peter Krauth a couple weeks ago, when he was telling us that the big investment banks, particularly Goldman Sachs, were effectively manipulating the commodities markets.
He teased an oil stock most aggressively in that ad (you can see that article here, along with the basics of the FR Y-9C, which is a real form), but he also hinted at a couple miners — one of whom a lot of folks have asked me about, so I thought I should go below the fold on this letter and get into those clues for you …
Here’s how he pitched that gold and silver stock:
“Join Now and Supercharge Your Profit Potential by Another 17 Times…
“It’s an emerging gold and silver explorer, with their flagship project located in the fabled Sierra Madre gold fields of Mexico.
“This region has already produced 40 million ounces of gold and 2 billion ounces of silver. And that’s a good sign of things to come for this company, because gold is often found in wide swathes throughout a region. Like the oil play I’ve been telling you about, this is massively leveraged to the price of gold – and is poised to take off after the coming May 10th announcement [Gumshoe note: that’s the FR Y-9C date, not anything specific to this stock]. So why consider it?
“One – it’s sitting on a current resource estimate of 2.6 million ounces of gold equivalent.
“Two – excitement is building over its latest drilling results… and the announcement of their resource estimate, due out any day.
“Three – it’s currently trading for an insanely low $ 1.65 a share. Especially when you consider the gold equivalent they’re sitting on is worth approximately $2.86 billion – at current market prices.
“If gold hits Goldman’s estimate of $1,425 next year – that would make this company’s gold worth $3.05 billion.
“Once their confirmed resources are announced, this company’s stock could launch into the stratosphere It’s already made a big move up – from .38 cents in the beginning of 2009 to 1.92 a year later. That’s a 405% gain, about twice the move of gold during that same period –
“And each time the banks filed their FR Y-9C, this company sees a quick bump up. The last time, they made a sharp 21% move higher…
“My Tortoise-and-Hare estimate for this company:
“3-month target: 100% gain
“6-month target: 350% gain
“12-month target: 1500% gain
“24-36 month target: 1700% gain”
OK … so, we toss all that stuff into the Thinkolator, and it churns for a while. Do keep in mind, the only clues we really have are the share price, historical share price, and the gold equivalent resource estimate, sometimes our trusty ol’ Thinkolator needs to chew a bit.
Ah, there we go! This must be: Paramount Gold and Silver (PZG)
Remember these guys? They were a very active teaser target for one of the high-priced newsletters last year, teased as the “next Seabridge” thanks to their financing connection with Albert Friedberg, and, along with most junior miners, they did have a heckuva year in 2009.
So why a match here? The shares did close at 38 cents on January 9 last year, and reached $1.92 on Jan. 15 of this year … not sure why Krauth picked those random dates, assuming I’m right, but I’m happy to consider that a match.
And depending on when you did the math for the price of silver, Paramount has had roughly 2.6 million ounces of “gold equivalent” at its San Miguel project in Chihuahua, Mexico, which is indeed in the fabled Sierra Madres (and fairly near to several other historical or current mines) — they give the basic pitch about this project on their investor relations page, and they also have a nice investor presentation that runs through the basics of their projects and plan available here [pdf file]. They are apparently drilling now, and have been releasing news of new discoveries or delineations over the last few months, including this most recent one.
There isn’t going to be a mine built on their site over the next year or two, to be certain — their only projections that I’ve seen so far are for additional resource identification and booking of reserves, and the preliminary feasibility and economic studies over the next year and a half … not that either is insignificant, booking more reserves and having a bankable feasibility study (probably quite a ways off still) would certainly make the stock more valuable to investors, all else being equal. My guess would be (and it is only a guess) that they’ll aim to get their reserves firmed up, the best targets explored more fully, and boost their valuation considerably over that time as they try to get a partnership deal or a buyout from one of the major miners. That is just a guess, I haven’t read up enough on these folks to know if they aspire to actually operate mines.
Michael Murphy, who has visited us here from time to time, is apparently recommending these shares as well, as are a bunch of folks whose opinions are encapsulated in The Gold Report.
So whaddya think? Were you one of those who jumped on board when the Phase 1 folks at Stansberry were recommending PZG? Otherwise interested? Think this one will really bring 1700% returns? Let us know with a comment below.
Personal Capital is an advertiser with Stock Gumshoe, but Travis also uses it every day for his personal accounts and finds it invaluable. Here's what he said: "They offer a great (and genuinely FREE) 'second opinion' for your financial plan, but what I love most is their automated financial dashboard -- it will look at all your assets and debts, tally up your asset allocation, project where you'll be at retirement, and suggest ways to manage risk or improve returns. It's free, I think their free tools are great, and I think it's worth checking out -- you can do so here.