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Is The Recent Destruction Of Golden Minerals' Share Price Justified?
Thank you Mr. Vengerov for your fundamental analysis. I was considering to short this stock but now I think maybe I had better not.
To answer your question of how could this meltdown happen, this is only my second close encounter with a small cap mining stock meltdown, so my perspective could be just coincidence. However the other time also, things were humming along nicely until the administration made large institutional sales at somewhat earlier prices. I thought so the price might drop to that value, but also that should reassure shareholders that the stock is at least that value. Wrong. Numerous forum messages were just plain angry. The company's simple-minded loyalists had felt cheated and betrayed. The price went through the floorboards and then out went the trend traders.
Also based on my general experiences, I do not follow the major analysts but do not buck them either. AUMN has been poorly-rated by Jaywalk Consensus at least as far back as September. Of course we cannot trust technical analysis at this late stage of a trend, but the primarily fundamental Ford Equity issued a Strong Sell on Nov. 24. Their report says Earning Strength is "very negative," Relative Valuation "very negative," and price movement "neutral." So your valuation might be better but maybe you need to wait for someone like Ford Equity to agree.
I found AUMN while testing a new technique for defensive short selling against a general uptrend. It certainly looks as if I am late to the party, and I am sure glad I did not sell-in yesterday.
This stock has never been much cheaper. There seems little room for downside from here. But long investors should look at the performance history and see that anything above $7.00 is likely a temporary bubble. I suspect that small cap mining stocks are best for short-term trend traders. Even if you are basically the long-term investor who seriously wants to own small cap mining stocks, I would suggest using a $1 or no-fee account and acting like a trend trader. Just my 2 cents though.
Nov 29 06:28 PM
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