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Deviation from the Mean

Bob Moriarty
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Dec 3, 2012

When a particular commodity or investment deviates from the mean, at some point you can count on it regressing to the mean.

For the past 15-18 months the shares of resource stocks have been getting hammered even while the price of gold and silver have held up. Every commentator has his or her own opinion about what it was that has caused such a deviation. I don’t worry about it. Prices of everything are far more random than most people guess. After all, the primary purpose of commodity exchanges and stock exchanges is to “discover” the correct price.

Prices of shares are like the tide, sometimes it comes in, sometimes it goes out. I look at companies I like, factor in the current price of gold or silver and guess where I think it might go. If the price of a stock that I really like goes down, I buy more.

I think it’s pretty obvious to most 321gold readers that I believe the financial system is doomed and resources serve not only as an insurance policy against chaos but an investment that has a lot of potential for appreciation once the mob realizes that all fiat currencies are doomed.

I wrote about Comstock Mining in June. The price of the stock was $2.21. The stock went to $3.40 in September and has been hammered pretty hard by short sellers since and is back to $2.24; about where it was when I wrote. Since then they have done a minor financing and gone into production. Yet the stock languishes.

Comstock now has five pads being leached and is making progress with the BLM regarding the permitting a disputed section of land. Increased mining will both reduce cost and increase tonnage of production for 2013.

The company announced barn burning drill results on November 7 only to be greeted by a ho-hum market. The results included assays of 1.693 ounces of gold in E12-15 with 1.4 ounces of silver, and 6 ounce silver in a 75-foot intersection in hole E12-10. Of the 20 holes finished and announced, significant mineralization was found in 14 of the holes totaling 150-feet or more.

There have been a number of high grade gold holes in the companies East Side resource and they seem to be connecting “high-grade” dots that should have a significant contribution to the next 43-101 resource due out in January of 2013.

I’ve been a fan of the company for years. With 7 miles of strike in the historic Comstock district, they will be finding and mining gold and silver for the next 100 years. The expansion of ore on the pads will be steady and we can look forward to higher numbers of production.

The company isn’t going to be a ten bagger overnight but it’s like owning a bond, there will be steady and sure income. They are in production and when the next leg of the bull moves higher, LODE will be among the leaders.

Comstock is an advertiser and we are biased. Do your own due diligence.

Comstock Mining Inc
LODE-NYSE-Amex $2.24 (Nov 30, 2012)
44 million shares 106.5 fully diluted
Comstock website

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Bob Moriarty
President: 321gold
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