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Buying Stupidity

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gsfl   Thursday, 07/12/12 11:00:51 AM
Re: Smart Stocks post# 571
Post # of 610 
Buying Stupidity

Bob Moriarty
Jul 12, 2012

The easiest way to make money when buying gold juniors is to buy stupidity. When someone is determined to behave in a stupid manner, allow them. And you capitalize on their stupidity.

I wrote about Evolving Gold (EVG-V) and Gold Standard Ventures (GSV-V) in December. Evolving Gold was $.275 and Gold Standard was $.72. I made the comment that “They may have already hit it and won't know it until assays come back.”

Gold Standard Ventures had hit it and none of us knew it at the time. The stock went from $.72 in late December to $1.20 in late February and upon the announcement of a major find, rocketed higher to $3.03 in early May.

On July 11, Evolving Gold announced drill results that are among the highest grade and length intercepts in the Carlin Trend, ever. From the press release it’s a little difficult to determine exactly what they have but I found out the broader intercept is 87 meters at about 6 gpt gold. If you take the 6 high grade intercepts and do a weighted average you come out to an aggregate 31.6 meters at 15.85 gpt gold.

The stock went down on the news. 25% down. From $.27 on the open to $.20. Someone wanted out and was willing to sell at any price.

I love stupidity; I get to deal with so much of it. I went and bought a bunch of shares at $.21. I know a deal when I see it.

In the Carlin Trend, Evolving Gold and Gold Standard Ventures are right next to each other. GSV has good management and a great Carlin GEO in the name of Dave Mathewson. EVG has great technical people; Quinton Hennigh and I were talking about the Carlin when I first met him almost 4 years ago. The Carlin can be a money pit; the holes are deep and expensive. You may have to drill for years before making a major find but the deposits are giant.

GSV has great drill intercepts and a major find; EVG has a better set of intercepts and a major find. GSV has a $160 million dollar market cap and at $.20 EVG has a market cap of $28 million. Go figure.

EVG also has the Rattlesnake project in Wyoming with an implied value of $100 million based on their deal with Agnico Eagle. The deal got dropped recently but it wasn’t a project issue, it was a cash issue on the part of Agnico Eagle. EVG wisely refused to change the terms of the deal and have regained control of the project.

The cancellation of the deal between Agnico Eagle and EVG did create problems for Evolving Gold. EVG was counting on having some money put into the Rattlesnake Project by Agnico Eagle this year. But if GSV’s Carlin project is worth $160 million and EVG’s Rattlesnake project is worth $100 million, the value of a Carlin major discovery and Rattlesnake combined has to be a hell of a lot higher than a market cap of $28 million.

Investing at a profit is a lot simpler than most of the “Gurus” want to admit. Buy low, sell high.

Evolving Gold is low.

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