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goldminingXpert (28.69)

You Can't Cure Stupid (Part 2)



June 17, 2010 – Comments (8) | RELATED TICKERS: AUQ.DL

Gammon Gold fell 9% today and only has 91% left to go. Why anyone still owns shares in the worst gold miner (as opposed to gold share promotions at NG and SA) in the world is beyond me. This stock is going to 0. Today's awful announcement follows strong insider selling, decreasing mine grades, and continuing failures at being profitable. Insiders started just in time, it appears. I quote from IKN who in turn is quoting Brian Christie on todays dreadful news.

"Gammon announces indefinite shutdown of El Cubo operations -- Brian Christie (phone number here) , brian.christie @ (email address here)

Impact: Negative

This morning, Gammon announced that it has indefinitely suspended operations at its El Cubo mine due to the continued labour disruptions and what it calls "untenable financial demands" made by the union workforce. As a result, 397 union workers have been terminated and charges are being filed against union executives..."



8 Comments – Post Your Own

#1) On June 17, 2010 at 4:56 PM, goldminingXpert (28.69) wrote:

Any of you with green thumbs on GRS, may I ask why? They have two mines. Ocampo is seeing grades sharply decline and extensive new drilling has hit almost nothing. (hence the struggles in stock price before today). Now their only other mine is indefinitely closed. Their employees hate them (there was a 45-day strike at El Cubo last year) and Ocampo shuts down due to labour issues from time to time as well. The company couldn't turn a decent profit even before the loss of El Cubo, and insiders are selling at alarming speed. What's the appeal?

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#2) On June 17, 2010 at 5:01 PM, Melaschasm (71.02) wrote:

I may have to red thumb this one.  If a gold mining company can not make a strong profit with current gold prices, it is doomed.


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#3) On June 17, 2010 at 5:10 PM, goldminingXpert (28.69) wrote:

Recent graphs of GRS output, thanks to IKN.
gold production

Graph of recent profits. Same source.

alt="gold production">

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#4) On June 17, 2010 at 9:01 PM, ChrisGraley (28.51) wrote:

Call me a sadist, but I'm thinking about another quick trade. I agree about the problems with this miner, but gold and silver are still shooting up.

If I see another small drop, I'm buying again, and selling once I get a small gain. 

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#5) On June 17, 2010 at 10:40 PM, goldminingXpert (28.69) wrote:

I understand the appeal of a quickie trade, but you have to wonder how much it will correlate to gold and silver when there is so much bad company-specific news. The company (before today) was, what, 25% off its highs with GDX marching ever higher? At some point correlation busts entirely -- you don't buy BP because it is oversold compared with XOM or COP -- you buy it because you think the company will prosper/survive. GRS' management raises such fundamental questions of its ability to survive (they lose one of their only two mines, their insiders are selling as quickly as possible, and what's to stop the other mine from striking as well ... etc... ) that you have to ask is GRS even a viable going concern?

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#6) On June 17, 2010 at 11:26 PM, ChrisGraley (28.51) wrote:

I totally agree with your definition of the company. This isn't a company that I would trade with real money, but in the CAPs world, this has potential, because I still think we are in stagflation and that gold and silver prices will be higher. The insiders are selling because they know how poor the situation is. In the land of the propped up market where CROX isn't yet bankrupt, I still think people will speculate on GRS for a bit.

It could really bite me in the ass, but this is still just a game.

Your call is right, but I think the market stays irrational for a little while longer. 

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#7) On June 22, 2010 at 10:02 PM, ozzfan1317 (72.24) wrote:

Would I be crazy to buy puts I dont like to short directly but a put for 6 Mos or more from now sure feels like easy money although I thought the same thing about palm at 5 bucks lol

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#8) On June 22, 2010 at 10:10 PM, goldminingXpert (28.69) wrote:

wait until it bounces. It's down almost 30% since June 10th. It's a much less bad company at 5.87 than it is in the mid-7s when El Cubo was shut down. I think GRS goes to under $2 eventually, but I don't think it happens all at once. Give the market time to absorb the news and find a few suckers (dip-buyers) before shorting it.

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