Thursday, July 10, 2014
True Gold Mining and how to be a kamikaze and destroy your portfolio
Here's the chart for True Gold:
TGM has warrants at a 47 cent strike, due 18 August, i.e. 5 weeks from now. As of this second its last trade was $0.46 (i.e. this chart is a bit old).
I would definitely suggest that you would be an utter maniac to buy at-the-money short-date warrants in any junior miner stock, even if you think gold is going up. I think TGM is a good company that should be worth a lot more money a year from now, but it should also not be worth a lot more money five weeks from now when the warrants come due.
And if it closes Aug 18 below 47 cents your warrants are worth utterly zero.
Nevertheless, if you are really certain that gold's going to pop hard in the next 5 weeks, and that a junior building a mine would definitely pop with it, then if you're also a real psycho who would be happy to lose the entirety of his investment, you might consider TGM warrants to be a fun way to swing for the fences, what with the warrants trading at $0.02 ask (last I checked).
They were a $0.005 bid just a few days ago btw.
Disclosure: I already bought a couple hundred thousand at $0.04 average price, a month or more ago. Just as a casino play. Because unlike you, I am an utter maniac. I guess I should have waited for the time premium to burn off more - I could have bought half a million at one cent just last week.
Point being, if I chicken out, I might even sell them at 4 cents long before maturity, for a wash, and I might puke them in your lap, so don't buy.