Falling price of a stock on dwindling volumes usually indicates that the intensity of selling is coming down. Hopefully, this is the story of the price decline of Pershing Gold during the last few days and the stock will find support around $0.42 odd levels. This is a retracement level zone which should normally hold. The next support below that is $0.39 which is the 200 day moving average. This is very close to $0.35 which is the base on which the stock took off recently. Of course, it all depends on the news flow, especially related to the start of production, and the management commentary emanating from the boardroom. The results of the recent tests regarding the indicated & inferred ounces of gold in their properties do provide hope for turn of fortunes for the company. Value at $1650 per ounce for the 463,000 ounce of indicated and measured ounces comes to $759M. This is astronomical compared with the size of the Pershing balance sheet. Now if the gross profit margins are taken to be around 20%, the impact on the cash flow is easy to estimate. Of course, this will not happen overnight and will take years. The first expected milestone is the start of production in 2014 (as per the management's promise). Once that hurdle is crossed, the calculations and the estimates will get more fine tuned and the real picture will emerge. In any case, if the scientific data is to be believed, if PGCL is able to efficiently mine gold then, it will literally be sitting on a gold mine. So far, the management has delivered what it has promised. Perhaps this trend will continue and the patient investors will get rewarded. In addition to this, the long term bull market of Gold will help cover for increasing mining costs over the years to protect the margins.
THis will stabilize around .45 for a short while then take off again for .60 IMHO. The real returns will not happen until they actually start mining It might break a dollar in the lead up to that event. Now is a time to buy and once the momentum starts the market will notice it and push it to a new high as it gets it into higher price ranges I think it will get more volatile as day traders try to get in and out on a daily basis.