by Travis Johnson, Stock Gumshoe | May 6, 2010 3:53 pm
I looked at the crafty FR Y-9C teaser from Peter Krauth[1] 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[2] 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[3]), 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[4] and silver[5] 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[6].
“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[7], and they also have a nice investor presentation that runs through the basics of their projects and plan available here [pdf file][8]. 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.[9]
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[10], who has visited us here from time to time, is apparently recommending these shares as well[11], as are a bunch of folks whose opinions are encapsulated in The Gold Report[12].
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.
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Good grief, Gummy I can't believe I'm first to throw down on this on. Been there, done that and I think after this weeks loss of considerable coin in our beloved wall street market, I'll hide and watch. PZG has taken a 12% hit this week alone. Thanks Travis. Learned a lot under your wing and those of your followers.
Doug kCasey recommended this stock perhaps two or three years ago. When ;yuo buy into mi;ning stocks, the amount of compliant resosurce is very important. From w;hat the article states, PZG is about where you might want to start following it, not buying it until the complinalt resourse is reported. The author is getting you excited by what has been mined in the past in a vast regeion, that's no guarantee there's that much left to mine economically. Also note the resosrce is given in gold equivelent ounces, What are the actual minerals? Silver at $18/oz and copper at two or three dollars a pound is a lot more expenseive to mine than gold at $1000.00 per oz.
Correction regarding
“the resosrce is given in gold equivelent (sic) ounces, What are the actual minerals? Silver at $18/oz and copper at two or three dollars a pound is a lot more expenseive to mine than gold at $1000.00 per oz.”
Confuses actual ounces (of non-gold) with gold-equivalent ounces (of non-gold). “Gold equivalent” already takes into account the much higher price of gold.
Mining expense has to do with processing variables like refractory vs non-refractory ores. Not with value (vs weight) of metals contained per ton of material in the ground.
Doug kCasey recommended this stock perhaps two or three years ago. When ;yuo buy into mi;ning stocks, the amount of compliant resosurce is very important. From w;hat the article states, PZG is about where you might want to start following it, not buying it until the complinalt resourse is reported. The author is getting you excited by what has been mined in the past in a vast regeion, that's no guarantee there's that much left to mine economically. Also note the resosrce is given in gold equivelent ounces, What are the actual minerals? Silver at $18/oz and copper at two or three dollars a pound is a lot more expenseive to mine than gold at $1000.00 per oz.
Doug kCasey recommended this stock perhaps two or three years ago. When ;yuo buy into mi;ning stocks, the amount of compliant resosurce is very important. From w;hat the article states, PZG is about where you might want to start following it, not buying it until the complinalt resourse is reported. The author is getting you excited by what has been mined in the past in a vast regeion, that's no guarantee there's that much left to mine economically. Also note the resosrce is given in gold equivelent ounces, What are the actual minerals? Silver at $18/oz and copper at two or three dollars a pound is a lot more expenseive to mine than gold at $1000.00 per oz.
E"Explor Resources has the information listed below in their "Corporate Presentation", which is a pdf link on their website. Most, if any, of this information, has never been released in a PR. I just read their entire Presentation, and it's very well done:
Explor Resources States "New Major Discovery":
Explor Resources, in their Corporate Presentation, which is on their web site, released some very important news recently, in their "Corporate Presentation".
Explor stated that in their "Eastford Lake Gold Project ($1 million Canadian, exploration budget), Lynx Gold Zone" that they had a "New Major Discovery" in Hole #7:
404 meters to 416 meters, .485 oz. of gold over 39.4 feet. Visible Gold Observed. They said that "Modeling was now Complete!"
In Hole #7c they found 142.26 g/ton over 3 meters.
Also in Hole 7c, 4.15 oz/ton over 9.84 ft. "Visible Gold Observed"
Explor Resources is doing a whole lot more work than what they have mentioned in their Press Releases.
Checkouthttp://www.paramountgold.com for all their news releases. If you wait until they release their next resource report to buy this stock you will paying 2-3 times the current price.
http://www.thewizard.com is a Scam stock picking service they are selling it through Multi Level Marketing if you can believe that, its a guy named Gene Stunkle in California who signs off his email spam with God Bless You and running a scam, go figure.
The Silver Stock that Paid Annual Gains of 852% Over 9 Straight Years… the teaser says it's NOT Silver Standard… what is this company?
Oh brother…Paramount Gold and Silver is a dead man walking! They have a major outstanding SEC issue that could very well see the company delisted at any moment. The issue is that the people who originally set up the company and got it registered with the SEC committed fraud by taking over a dormant pink sheet symbol. This allowed Paramount Gold and Silver to go from a twinkle in CEO Chris Crupi's eye to fully trading as a public company in under a year. They tried to make it look like it was a reverse takeover of a shell company but they never had control of the supposed shell company, they simply registered a new company in the name of some dissolved corporation! The day the SEC gets around to following up on this will be the day that Paramount shareholders will be very sad. If that weren't enough, they only have a couple of hundred thousand ounces of gold that is perhaps economic out of those supposed 2.6 million gold "equivalents". It's all readily apparent if you have a basic understanding of geology and bother to read their NI43-101 report carefully enough. In summary, this company is one of the most overvalued POS I've ever run across and I wouldn't touch it with a 2.6 million mile long pole.
Tom, you have the SEC story backwards. The scammers were the ones that took the shell and changed the name to Paramount Gold & Silver the day after the real PZG registered. They have been caught and are being prosecuted by the SEC.
You also are wrong on the economic value of the gold and silver. This is easily-mined metal in an area with infrastructure support and low costs.
Do you think Albert Freidberg is stupid or crooked, as he would have to be to make either of your objections valid?
Peter krauth = http://www.lautorite.qc.ca/pdf/com25sept2008-acam…
CAVEAT EMPTOR
This one is RED HOT again but may be for real. They have proven Gold/Silver plus lots of news coming. I hear they are worth over $15 in a buyout