peep2 wrote: There is no net gain in market capital after CRK is changed to NGN in the holding company.
CRK loses 1/5th of its shares in the 134 million shares to be in NGN, the majority CRK shareholders at first. It's just that the price of NGN goes up 5 times for the 1/5th less shares. No net difference in market capital.
Depending if gold is just treading sideways still after the merger to maybe $1.80, and no outlook for a gold bubble rally or turn of direction upwards in gold to a new gold era addition yet, then the market price can slide down again, maybe to $1.30 or so from roughly $1.80 or so. Since NGN is still fundamentally what was CRK.
The ounces production by NGN per year is still the same roughly 220,000 a year from the former CRK.
Sure, NGN can try to buy up more CRK type companies of roughly 500 million shares, each producing roughly 220,000 oz of gold per year. But our shares component of NGN become 1/5th of that, with most likely a proportional consolidation of that to really get the overall shares of those 5 companies of roughly 500 million shares each, down to something NGN wants for going forth to purchase more gold companies in its stable of companies holding company. Or just for trading purposes on the stock market.
Oh whoopie, not!
Right now if one has 100,000 CRK shares that is reduced to 20.000 NGN shares. After 5 more CRK like companies of roughly 500 million shares each, and consolidating that to something reasonable for NGN to go forth trading in the stock market, that 20,000 shares could be down to 5000 shares.
Say a gold era comes back that gradually becomes a bubble and in it NGN goes to $100 which is not impossible in gold bubbles of good gold producing and profitable companies, whether a holding company or regular gold stock company.
5000 times $100 is $500,000. Sounds good doesn't it.
Now see what CRK does with the shareholder's 100,000 shares in tact. In the bubble CRK goes to say 1/5th of $100 or $20 which isn't unreasonable. Let's also say the shareholder doesn't sell any shares on the way up to $20 (where practically speaking most will, as would with 5000 shares of NGN going up to $100 in a bubble). Then that 100,000 times $20 is $2 million dollars.
Which is better in what I think is a reasonable account above. But who is to say NGN can sucker 5 other CRK producing and profitable gold mines at well under $1 into mergers, like it's doing with CRK. Then that 20000 shares of the former 100000 shares CRK times $20 is $400000 and even less compared to the $2 million if CRK stays intact going to the same $20.
A few posts before I showed that adjusted to inflation from 1980's gold peek of $850 the gold metal price of $1200 should be $3400 (actually I should have said $4000 since $850 equals $2400 today and half times that to $1275 gold price, equals $4800 adjusted to inflation.)
All gold stock prices adjusted to inflation should be around 3Xs higher, making CRK really roughly 90 cents. That is before the new gold era addition to eventual bubble starts by the end of the year. And at still the bottom gold lull in the gold era, like 1970s’ gold lull of 1976 to 1979.
Gold's adjusted to inflation price is being sat on by the paper gold metal markets of the COMEX and London metal exchange, because they still have the clout to make fiat gold the determining of real physical gold as their fiat QE money printing financial world of fiat paper money, still dominates the world economy and financial world. That is coming to an end by the end of this year with the BRICS competing IMF and SWIFT financial, systems, based on gold (or gold component to paper basket of currencies) and real physical gold markets.
https://russia-insider.com/en/chinas-swift-alternative-and-engineered-death-dollar/5184