I peruse the message board for GORO on occasion, and we all know the bickering that has occurred between the shorts and longs. Here are my two cents..
The shorts, obviously, have been correct over the last few years since the stock was around $30. The longs were correct before that time when the stock went on a tear. I see allegations of fraud by management which, admittedly, I have not looked into enough to verify or hold a noteworthy opinion.
However, I can say that GORO has declined the same amount as nearly ALL precious metals mining companies over the last few years. I believe we have been in a cyclical bear market (over the last few years) within a secular bull market for precious metals--and thus PM stocks, all else equal.
I believe we are near the end of the cyclical bear and plan to buy a few mining stocks at these low prices. With that said, all I have seen are allegations of fraud, not proof. To the shorts, do you have anything that proves these allegations, or is it a trust the short spammers vs trust the management situation with the information currently available for GORO?
On a side note, two stocks I am fairly certain I will purchase after the next dip will be EGO and SAND, the latter being a streaming company similar to SLW's business model. Any responses are appreciated, but can we please keep this discussion without ad hominem. Thanks..
Jasc521, I think that highlight of “fraud” issue is unnecessary. It might be that fraud didn’t happen (in criminal sense), but still it doesn’t make this investment solid. In my opinion, GORO management didn’t do much different sharing information with potential investors than many other peer companies in this sector. It made some difference that stock was also pumped excessively by newsletters and/or messageboard con artists and that pump was largely successful, i.e. some “professionals” likely made money leaving bunch of bagholders behind. Is company responsible for this? Probably, not.
At the same time, keep in mind that stock was really over-hyped and past price was hugely inflated. It makes largely irrelevant to refer to old days for the point of today’s analysis.
After all, it is your money and your decision. Check last releases, see/calculate production costs, compare with gold price around. Keep in mind that GORO mineral resource wasn't adequate to market cap (share price) in past.
Your research is the only source of your decision. Frankly, I like your choice of EGO better. See you on EGO message board
"" With that said, all I have seen are allegations of fraud, not proof. To the shorts, do you have anything that proves these allegations ""
We have plenty of proof that management misled shareholders about certain issues. Additionally, we have proof that, during the annual shareholder meeting last year, management deliberately avoided telling shareholders about their disastrous quarter that was just about to end. Their excuse was that they could have found some really good metal in the last few days of the quarter. This management has a history of making excessively optimistic claims that don't come true and then spinning excuses for their failings.
Even the former GORO Longs would admit that management has difficulty providing shareholders with complete transparency, and that shareholders are forced to constantly read between the lines.
Go ahead and assume that GORO is down simply due to its correlation with the sector, but don't be surprised if it fails to stay correlated during any possible sector rally.
"" I believe we are near the end of the cyclical bear ""
What cycle are you talking about? Why do you think metal prices are going to cycle back up? Is it simply because you think worldwide monetary expansion should be causing higher metal prices? Is it because you're disregarding the impact that world GDP has on metal prices?
Thanks for the reply.
I haven't followed or researched GORO closely, so keep that in mind for any comments I make in regards to it. What I have seen, though, are the problems you mentioned. However, to me there is a difference between intentional misleading (fraud) and unintentional misleading (poor/horrible management) of investors. To clarify my first post (written in haste), I should have added that I don't think there is proof whether or not this was intentional. Either way these issues lead me to shy away from GORO and look to other companies in the sector.
GORO is a very risky play among the miners, comparatively. But if management actually does pull through over the next few years this stock could see great gains (if PM prices continue to rise which is not guarantee). And fyi, I try to assume as little as possible when it comes to my investment decisions, which is why I made this thread to get some more insight.
The cycle I am talking about is the secular bear market precious metals have been in since 2000 (in which they have outperformed most major equity markets in that time). I'm short on time, so I'll wrap this up with some basic points. I think PMs will "cycle" back up due to supply/demand issues, weaker global economic data in the near future, and loose monetary policies around the world, the likes of which have never before been seen in the world. The potential for a currency crisis if the USD loses more of its world reserve status, although not likely imo--at least not anytime soon, is still a reasonable possibility and added bonus that could create an onslaught of demand throughout the world.
I didn't want this thread to be about the macroecon views on PM prices, though..