Why did AVR "rally" today? Not sure if I'll call this a rally but at least it stopped falling. A few reasons for the rally:
- The stock is cheap. This stock was cheap at 1 and continues to be cheap at 50 cents.
- The two main resons for the shares to be so cheap are the situation on Mali and the falling price of gold.
- The situation on Mali is temporary: The rebels, Al Qaeda are in the North, do not have the support of the local population and are relatively low numbered. It's in the best interest of neighbouring countries to reach a solution that will bring stability to the country (and this does not necessarily includes removing the junta). Finally, the US will not allow the creation of another Afganistan in the middle of Africa.
- The falling price of gold is temporary: The price is falling because the US dollar has been going up. For how long will the US dollar continue to go up if the printing presses continue to work 24X7? Europe's printing presses will have to work tripple shifts to calm the masses in Spain, Itqaly, Portugal, etc. I do not believe that the EU will try the same austerity methods that have been so inneficient in Greece. With the whole world economy in a downtrend, where will you fit a strong dollar? The only way out for now is to continue printing paper and if this is true commodities and specially gold do not have another way to go other than up.
Based on the above I think this company is extremely cheap and should bring good returns within the next 6 months to a year.