Saturday, June 03, 2017 1:39:52 PM
An Instructive Market Lesson: Arizona Silver Exploration
I am not particularly interested in Arizona Silver Exploration (AZS.V) as a company, but I do find the stock to be instructive from a market psychology standpoint.
To make a long story short AZS was pumped hard during April/May by multiple parties with varying interests and motives for bidding this stock ever higher. AZS is exploring for "high grade" silver at a site in Arizona (Ramsey Silver Project) which has historically produced high grade silver on the order of 40 ounces per tonne!
The pie in the sky is there and talk about an "adjacent geophysical anomaly" stoked the market's flames as investors bid AZS shares up more than 500% from the March low at C$.20 to the recent peak at C$1.23:
AZS.V (Daily)
Unfortunately for those who still owned shares Tuesday morning the company released highly disappointing drill results in its first round of assay results from recent drilling at Ramsey. Holes 1702 and 1703 didn't find silver in any quantity remotely close to economic grade. While there are still 3 other drill cores (1701, 1704, and 1705) at the lab being assayed the market didn't waste any time in dumping AZS shares through the floor during Tuesday's trading session.
From a market psychology standpoint this is an instructive story because the hype went out on a massive scale during a time in which there was very little hard data (no recent drill results, and very little in the way of recent data), there was simply this pie in the sky of the 40 ounces per tonne Ag which was pulled out of the ground many years ago.
"Hype" can carry a junior resource stock for only so long, and then at some valuation the market will require hard data and evidence that the company's valuation is supported by the true potential of an economic resource. For AZS the next few drill holes couldn't be more important. For if there is no silver in those cores they likely have a real dud of a project on their hands.
After an ~80% one day drop one would normally expect at least a 1/3rd retracement of the drop at some point soon after. The fact that AZS can't budge much above the C$.30 level is an indication that investors are firmly in "show me" mode - the hype is gone and it's time for the drilling to prove that there is something in the ground.
This is an instructive example for all resource investors, as Bob Moriarty says "If you don’t take a profit, the only alternative is to take a loss."
https://ceo.ca/@goldfinger/an-instructive-market-lesson-arizona-silver-exploration
I am not particularly interested in Arizona Silver Exploration (AZS.V) as a company, but I do find the stock to be instructive from a market psychology standpoint.
To make a long story short AZS was pumped hard during April/May by multiple parties with varying interests and motives for bidding this stock ever higher. AZS is exploring for "high grade" silver at a site in Arizona (Ramsey Silver Project) which has historically produced high grade silver on the order of 40 ounces per tonne!
The pie in the sky is there and talk about an "adjacent geophysical anomaly" stoked the market's flames as investors bid AZS shares up more than 500% from the March low at C$.20 to the recent peak at C$1.23:
AZS.V (Daily)
Unfortunately for those who still owned shares Tuesday morning the company released highly disappointing drill results in its first round of assay results from recent drilling at Ramsey. Holes 1702 and 1703 didn't find silver in any quantity remotely close to economic grade. While there are still 3 other drill cores (1701, 1704, and 1705) at the lab being assayed the market didn't waste any time in dumping AZS shares through the floor during Tuesday's trading session.
From a market psychology standpoint this is an instructive story because the hype went out on a massive scale during a time in which there was very little hard data (no recent drill results, and very little in the way of recent data), there was simply this pie in the sky of the 40 ounces per tonne Ag which was pulled out of the ground many years ago.
"Hype" can carry a junior resource stock for only so long, and then at some valuation the market will require hard data and evidence that the company's valuation is supported by the true potential of an economic resource. For AZS the next few drill holes couldn't be more important. For if there is no silver in those cores they likely have a real dud of a project on their hands.
After an ~80% one day drop one would normally expect at least a 1/3rd retracement of the drop at some point soon after. The fact that AZS can't budge much above the C$.30 level is an indication that investors are firmly in "show me" mode - the hype is gone and it's time for the drilling to prove that there is something in the ground.
This is an instructive example for all resource investors, as Bob Moriarty says "If you don’t take a profit, the only alternative is to take a loss."
https://ceo.ca/@goldfinger/an-instructive-market-lesson-arizona-silver-exploration
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
