“Territory 4: How to Make a Fortune in the World’s Richest Gold Belt” — “Thinly Traded Gold Firm” for “75 People Only” (Frank Curzio’s Phase 1)

A special swap -- Friday File moves to Wednesday to cover a heavily hyped stock that's too small for broad coverage.

By Travis Johnson, Stock Gumshoe, January 11, 2012

I generally don’t like to write about super-heavily-hyped microcap stocks for the whole Gumshoe readership, because we’re almost guaranteed to cause a spike in the price for that stock. So when I saw the latest teaser for the Phase 1 folks over at Stansberry, and those teasers always cause a huge flood of emails to come our way, I thought I better cover it just for the Irregulars.

Phase 1 is a self-limiting high-cost newsletter from Stansberry & Associates — they generally cover very small companies and try to offer value-added stuff like conference calls with management. In the past they’ve usually offered Phase 1 “for sale” for $3,000 when they’ve run a heavily hyped tease, but this time around it’s at “full retail” of $5,000 a year. And they say they’re limiting it to 75 folks, which implies that you’re in a very small list of folks who read about this stock — but, of course, they’ve already told their existing subscribers about it (a couple thousand folks, presumably, few of whom have taken a vow of silence).

So anyway, as a half-hearted effort to impact the price as minimally as we can we’re having a “Wednesday File” this week instead of a Friday File. And the price will probably still spike, even though we have many fewer Irregulars than we do free readers … but at least we can minimize it this time (and the other option, ignoring a heavily hyped little teaser stock that hundreds of readers are asking about … well, that may work out better for your portfolio most of the time, but it goes against our very DNA).

So here goes.

The teaser is intentionally very vague on most of the clues — and they went so far as to say that they’ve changed some of the details to protect their pick. Which, of course, just makes me that much more eager to sniff out the answer.

The ad is from Frank Curzio, who now helms Phase 1 but isn’t really a mining guy — so these Phase 1 picks seem often to be “group projects” lately, Matt Badiali, their geology dude, apparently went and visited the project in question to vet it.

They describe this pick as a replay of their April 2009 pick of a “microscopic” gold stock that they limited to only 100 subscribers — I don’t think I covered that one if it happened to have been teased at the time (that was before Curzio’s time and, I think, after Rob Fannon had left, so I presume it was a Matt Badiali pick). And he makes clear that subscribers had the opportunity to make huge profits on that pick, of course. My suspicion is that he’s talking about Seabridge Gold, but I’m not sure — that was a Stansberry & Co fave for a while, and a big winner for many of their subscribers.

So this time we have a “similar gold stock” — here are a few of the clues Curzio shares:

“It has a market cap of less than $70 million and trades for less than a dollar a share….

“… the man behind the company we recommended in 2009 is also behind the company I’m going to share with you today.

“He’s one of Porter’s most trusted contacts in the resource sector. He’s also one of Canada’s richest and shrewdest investors. In fact, he’s such a disciplined investor that over the past 12 years, he’s only gotten involved in four resource stocks.”

And of course, we get the “look out for the mighty Stock Gumshoe!” warning, which works somewhat like a red flag waved in front of a bull:

“I can’t name his name…or the names of the companies he’s backed…because I can’t risk exposing a single detail about the company he’s backing today. If this gets blasted all over the Internet, the opportunity could quickly be lost for all.

“(In fact, throughout this presentation we’ve had to deliberately obscure some of non–essential details of this current opportunity.)”

Deliberately obscured, eh? I challenge you to a duel, varlet!

Well, OK, not a duel. But I don’t like when folks hide stuff from me, so I’m going to figure this out …

Thanks to that “deliberate obscuring,” we’ve got to read between the lines a bit for this one. Here are a few more excerpts to give you some of the flavor of the pitch:

Badiali says that

“The geology is almost identical to other deposits in the area which hold hundreds of millions of ounces of gold. I think this could be another huge winner in this prolific gold region.”

And it’s in “one of the world’s richest gold regions” … here are a few more clues:

“…the company owns thousands of acres in one of the world’s richest gold regions.

“The fact is, this region has the largest concentration of gold in the earth’s crust.

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“One major daily newspaper, whose name you would instantly recognize, describes this region as a geologic fluke ‘unlike any gold belt in the world’ and continues to amaze geologists as ‘a seemingly bottomless pit of gold.’

“A research paper put out by a well–known un