Post Of The Year - Thx. - CoachWaddling through the sea of crap you find an occasional (pardon the pun) GEM.
certainly worthy of a re-post !!!
I made a lot of money last year buying into a junior called Osisko Exploration that had bought up control of low grade gold deposit in Quebec. In the district known as the Cadillac Break, there were dozens of mines that exploited small, high grade gold deposits. And nobody was really interested in a low grade bulk tonnage deposit. So I bought cheap while the market was looking elsewhere. And then, BIG SURPRISE, the total resource for Osisko started climbing, and everybody wanted to own the stock. All the idiots and bashers that tried to claim it was low grade, uneconomic, etc... they got burried when the market figured out the story. I sold too early with OSK.
I will not make the same mistake with GEM. I have held the stock without selling a share since 20-25 cents. And I added more this week.
I dont post here much because the forum is mostly a group of scumbags trying to get over on each other... Lies and creative writing with more than 90% of the content posted here completely a waste of time. But I will state some observations and people can consider for themselves what the upside may be:
1) When Pele first announced the uranium acquisition, the stock did nothing for the next couple of trading sessions. It wasnt until the analysts got on board that the story took off. So now that the resource estimate is in hand, and the company has a documented resource, which makes GEM ridiculously undervalued in the market, I suspect we will get the same delayed reaction before heading much higher.
2) The uranium stocks got ahead of themselves and are correcting as a group, and the energy sector overall is also weak. Investors tend to react in fear under those circumstances and people will be more willing to lock in strong gains. That is why GEM has not reacted to the much stronger fundamental story since the news came out this week. However, there is a buyer for every seller. And with some 8 million shares traded in 2 days, even when you sort out the action of the tourists and traders, and all the short term flakes and lowers that have come out of the woodwork, there is still significant buying absorbing a very large position in this stock. The weak hands that have been shaken loose will regret their haste to book profits, just as I discovered with my OSK mistake last year.
3) The retail schmucks are pretty stupid overall when it comes to evaluating resource potential, but the real mining players out there are very much aware of what Pele has in hand. Pele is a discovery story, not a mining story. The management does not have people in-house with the ability to develop the Elliot Lake assets. So it matters not if the clueless herd do not know what is going on, because the developers and uranium miners are going to be very eager to carry the ball to the next level.
4)The next 3-4 months are going to be the strongest time of the entire year for junior mining plays. Those who are buyers now will be rewarded. The sellers will learn a painfull lesson.
5) Uranium is in a long wave cycle that will probably continue to remain in effect for many years. The noise that comes and goes on a daily basis in the market should be ignored and discounted. There are few deposits of uranium anywhere in the world that make economic sense from a project point-of-view. Some smaller high grade discoveries look attractive on an operating basis, but they have high development expenditures and complicated long term permitting issues to resolve. They will not address the security of supply question that the market is signaling in the spot prices. It is the relatively uncomplicated, large scale deposits that will have a strategic advantage. Just as OSK proved last year, GEM will become relatively more attractive as the circumstances in the sector grow more acute, and with every tick higher in the spot price, the economics will be more complelling for a partner to accelerate development.
Rather than whine and fret that GEM has not been gaining ground, we should be encouraged and confident that the stock is holding up so well, despite the 500% move in just a few months. I think we have built a technical base in a short time with the high trading volume that will support the next move higher. Fear will dissappate quickly, and greed will return. Then the stock is ready to realize a more appropriate value.
cheers!
COACH247