Many pages were read and many hours were spent researching in a desperate attempt to find something that might lead someone to believe that CGLD is a trustworthy investment option. There is no such thing.
They are a gold exploration company and they say that they are devoted at acquiring and exploring mines, finding gold and making money. The problem is, they have not acquired anything, which consequently means that they don't have any money at the moment which, in turn, blows their future acquisition plans to pieces.
In all the desperation they seem to publish optimistic press-releases saying that they have signed an agreement that supposedly gives them the option of buying an unproven and untested mine somewhere near Las Vegas. The pumpers were quick to jump in on the excitement and they have been flooding the inboxes saying that CGLD are currently sitting on a mountain of gold.
There are a couple of things that we're not too sure about. First of all, they are not sitting anywhere. The property that is mentioned in the emails as well as the press-releases will only be explored by CGLD if they pay for it. And will they pay for it? We doubt it. As we wrote in our previous articles, if CGLD want to exercise the option for acquiring the property, they will need to pay at least $500 thousand by March 15. That's just three days away and we still have not seen them going public and saying that they have got themselves their first mine. We also doubt that this will happen at all since, according to their latest financial statement, the sum of their assets amounts to no more than $25.
Theoretically, they could borrow the money so that they can exercise the option. Then again, imagine the scenario - you are asked to lend $500 thousand of your hard earned money to a company that has just $25 in the bank and puts its hopes for a brighter future on nothing but unproven and untested mines. Would you do it?
That's the second problem we have with all the pumpers' emails. You get the feeling that CGLD will start digging out tonnes of gold any moment now, but the truth is that, even if they do manage to start the exploration process (which is unlikely), there is absolutely no guarantee that there will be any precious metals in the ground.
Even though the emails have stopped tormenting CGLD for the time being, the above facts lead us to believe that their price will continue to fall steadily down. Which, by the way, is exactly what happened to another gold mining company that got recently promoted - Ghana Gold Corp (PINK:GGCO). The last email that we received for them is dated February 4 and it was sent by StockCabin, who were also quite active during the CGLD pump. The chart on the right shows pretty clearly what has happened since then.