OK. I get the method... and agree that its roughly valid as far as utility in making a rough, basic value comparison...
It still leaves a couple of issues that include reasons for some of that discrepancy in scale... that mean the "apples and oranges" comparison between gold and REE suffers a bit from the "apples and oranges" issues.
One is... gold isn't hard to sell. It doesn't require explanation... and it isn't hard to find someone to refine it for you... or sell it for you. There actually are well established markets for it... and the liquidity of that market makes a big difference in the ability to get a mine funded and in production... when the markets are moving the right way, at least... (as they probably are now, and will be for a while, again, in gold).
Anyone capable of finding it, proving it, and getting it out of the ground at a low enough cost... can make a go of the rest of the business... when the product is gold.
REE are WAY more complicated... so, there is a much higher barrier to cross before "value in the ground" can be expected to be converted to market value in hand.. There is a big share price discount associated with that. REE producers wannabees are going to have to have customers lined up... to justify funding development.
Also basic "fad" functions in the markets...
Junior gold miners haven't been overly "hot" lately either... after a steep run up two years ago... and I have a good list of junior golds, again, including a few with what appear to be similarly crazy valuation issues.
REE... were hot... now not... with prices coming down, and China working to keep control of that market, which is now putting financial pressure on MCP and the other promo stocks... so, given "not hot" you can add basic neglect discounts to the "market trend" issues here... as even when REE were hot, it looks like there have been only a handful of followers interested in watching this issue. GOMRF are not "promoting" it... which some of the "more well known" REE issues are fond of doing... so, again, a discount relative to peers paying to get noticed.
Still, you're correct that disconnects between price and value shouldn't typically be in the range of several orders of magnitude... as they are here.
And, if you're comparing GOMRF to other REE stocks instead of gold miners ? Then, it gets quite a lot harder to explain why it is that the market is choosing to ignore that the third largest (and growing) REE deposit outside of China... appears it hasn't been noticed by the slew of "analysts" who supposedly know the market ?
However... I'm not complaining about the opportunity to succeed... that comes from being able to buy a few shares, now and then, in those companies I find that I think ARE under-priced that significantly...
That is sort of what I try to do...
Buying value on the cheap always requires patience... it requires DD skills... persistence in the effort, and enough confidence in your DD ability... so that believing that your DD is right about value, rather than thinking that the market must be right about price... makes sense. |
