Borislav Tonev

Pershing Gold Corp (OTCMKTS:PGLC) Is Refusing To Budge

by Borislav Tonev October 3, 2013
19PGLC.pngOn September 19, Pershing Gold Corp (OTCMKTS:PGLC, PGLC message board) came up with a press release in which they talked about the initial results of the testing of the first four holes drilled in their Relief Canyon properties. They furnished the announcement with lots of charts, numbers, diagrams and even a map which was supposed to give investors a better understanding of what's going on. Some of the more technical aspects of the release are a bit hard to fathom for the average Joe, but it's pretty clear, even from the initial lines, that the results are good.

So, once again, PGLC came up with some extremely good news. Traders, however, didn't seem too bothered about it. The trading volume was indeed way above the average and the ticker did gap up at the start. The movement, however, left much to be desired. The open stood at nearly $0.39, the intraday high amounted to a little over $0.40 and the low of the day was just $0.37. When the closing bell rang, PGLC was at $0.3855 which was just 5.6% above its previous value.

Penny stock traders who are used to exciting double-digit moves in the right direction and gut-wrenching drops were rather surprised by PGLC's reluctance to bring in any more potential gains, especially when the news is this good. What's even more astonishing, the very next day saw the ticker sliding back down again despite another press release informing us of the appointment of a new Corporate Vice President. Out of the nine sessions that followed, only three ended in the green and while the percentage movement didn't exceed 5%, the ticker is now pretty much back where it started. So, why aren't investors paying attention to PGLC?

We mentioned numerous times already that there are some virtues to the company. The balance sheet, for example, is decent compared to what other mining penny stocks have to offer. The latest private placements are about to improve their financial position even further and the management team can really give themselves a pat on the back for the fact that they've managed to sell the shares at the right price.

In addition to this, if we are to believe the press releases (and we really don't have any other substantial sources of information to rely on) the results of the testing and exploration seem rather good. That said, they are still in the first stages and have a long way to go before they can be sure that all the expectations will be met.

With that in mind, we also can't understand why some people are so optimistic about PGLC's future. As we wrote in our previous coverages, contributors on Seeking Alpha have been publishing articles for the last couple of months and in them, they explain that, of all the penny stocks working in the mineral exploration business and more specifically, in the gold extraction industry, PGLC is the best place for your money. There are, indeed, some things to suggest long-term potential (mainly the decent financials), but let's not forget that we are talking about a company that has yet to register its first revenues. There can also be no guarantee that the money raised through the private placements will be enough for them to cover all the costs associated with drilling and digging gold out of the ground, not to mention the fact that no one can guarantee profitability once the operations do start.

2WTER.pngPGLC have a definite plus point, however - the lack of promotions. They did get pumped back in March 2012 and we have written about how terrifying the consequences were. Since then, however, apart from a free email here and there, the ticker has been left to stroll along under its own steam. The chart is by no means perfect, but it is a lot better compared to the ones shown by promoted tickers like Alkaline Water Company Inc (OTCBB:WTER) and North American Oil & Gas Corp (OTCBB:NAMG). That's why keeping the stock away from the pumpers will play a crucial role in preserving the company credibility intact.

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