Blood in the Streets
According to Investopedia, the original quote from Baron Rothschild read, “Buy when there's blood in the streets, even if the blood is your own.” I highly suspect that’s how gold investors feel right now; the blood is their own. The article goes on to suggest that is the heart of contrarian investing. I happen to agree. I’ve never seen so many great stories selling so cheaply. Gold share investors have given up. That’s a good thing.
There are times I wonder about the stupidity of bureaucrats. I keep thinking there has to be some limit. I keep being proven wrong.
Back in May I wrote an interesting piece about how the “management” at Newport Exploration literally raped their investors. They buried critical information about royalties they were getting so ordinary investors didn’t understand the company was sitting on far more cash than their market cap. The president of the company was buying shares in the open market on what gave every indication of being inside information.
The TSX certainly didn’t care. Insider trading, no problem. Management neglecting to release critical data, no problem. The TSX only leaps into action when some company neglects to cross all the correct Ts. Ten days ago I saw one of the dumbest moves ever by the exchange.
I wrote a piece about NV Gold recently saying they had conducted a new drill program on two untested areas at their Rattlesnake Gold project in Wyoming and we could expect drill results by the middle of September. I didn’t know what the results were, I just knew they weren’t all in and it would take a week or so to write something up.
Rattlesnake is the project that NV Gold optioned from Evolving Gold where they can pick up 100% of the project for $3.5 million and some shares over time. There has been over 70,000 meters of drilling done in the past and over $25 million spent on the project. Compare that with NV Gold’s market cap of under $9.5 million. It’s the same project that Evolving Gold did a deal with Agnico Eagle that valued the project at $108 million with gold trading at $1600 two years ago. Agnico Eagle ran out of money and had to drop the project. Evolving Gold ran out of money and management and was forced to do a give away deal with NV Gold in order to pay the salary of the EVG company president. First things first, after all.
When my piece came out, the share price actually went up on 325,000 shares of trading to $.39. That’s about $125,000 worth of shares. Since no companies in Canada has traded that kind of volume or gone up in the last three years, the TSX had a fit and demanded NV Gold halt the shares until they could release the drill results.
So in the name of protecting investors, the TSX demanded and got NV Gold president John Watson to release incomplete assays. The stock promptly went down on the lack of news. On September 8, NVX released the complete assays and as I had predicted, the company has discovered an entirely new deposit on the project.
NV Gold is entering the quiet period of the year where nothing much can happen in the way of news due to the low temperatures in Wyoming in the winter. John Watson is well aware of the dearth of information so is in the process of compiling a initial 43-101 resource on the 70,000 meters of existing drilling. He expects to complete the resource by the end of the year. I would expect a back of the envelope calculation to be in the 500,000 ounce of gold region.
I went through both sets of assay results and realized the lack of silver assays in the first assay is very important. John talked about 33.5 meters of 1.33 g/t gold in the first assay but adding the silver raised the numbers to gold equivalent results to 1.63 g/t over 33.5 meters.
But the earthshaking news was the .76 g/t gold equivalent over the entire 152 meters of drilling in hole NVJ 001. NV Gold has indeed added an entirely new prospect at Rattlesnake. It’s not the sort of thing ordinary investors understand but it will make technical guys who understand alkaline systems salivate.
Three years ago a major technically competent company figured the project was worth $108 million. They spent an additional $5 million on it adding good results. When gold turns around, this is going to be one of the most desirable projects in the US to any major. The remainder of the 8 holes drilled at Blackjack suggests a continuous zone of mineralization.
Prices in the resource market are totally irrational. Many investors have watched their investment lose 90% or more. That’s what happens at bottoms. I have never seen so many good projects go begging. I’m a buyer. I expect to see a lot of shares up hundreds of percent on small moves higher in gold before gold share buyers dip their toes back into the market. That’s what makes contrarian investing so profitable.
I am an investor in NV Gold. I have participated in three PPs and bought shares in the open market. I am biased. NV Gold is an advertiser. Do your own due diligence.
NV Gold Corporation