Pumping Stock Series - Buy and Hold Experiment #2
posted Feb 14, 2005 at 09:09PM
Now to be upfront it must be understood by all that this company, on one level, fits that perfect archtype of a gold company being little more than a hole in the ground and some nice color brochures. And to tell you the truth I am not sure about the brochures.
At the same time I think this has a lot of long-term speculative value at these prices. The main reason of course is that some of their holes are being dug on land that lies close by to the properties where SWG blew the lights out a while back.
Sparton, as of yet, have nothing quite so exciting.
My rationale here is quite simple. At some point over the next few years gold is going to take off like a rabbit due to the USD circling the drain. That is my working assumption. Under those circumstances, even if they find nothing, sheer speculative frenzy, should at some point raise the price of these shares enough for a nice profit.
Now if they actually find something comparable, then even in a gold bear market, sheer fundamental value should keep capital reasonably secure.
Of course if the universal tumblers all fall into place in proper sequence....well..then it's "babes, cars, and handguns" time.
Now I am not betting the ranch here..but a couple of loose K worth of stock at these prices can be turned into someting much more life-changing if things go right.
The key is to buy some and put them away. When the neighbours start talking about gold, go check to see if they are still around...and then sell them. That is the general theory.
So Sparton Resources has become part of my "core" holdings...yuk yuk. I know, I know..most people recommend the Gold Corps and the Meridians..or if they are really risque a Desert Sun Mining. But let's face it, it will take some serious stuff happening to get these stocks to triple The Law of Small Numbers does apply here
Of course if nothing is found and the gold sector goes for another dunking then it is not likely that Sparton will swim against the tide. If so then I would pick up more on the hope that there will come another time when anything to do with "China" will be sought after.
From what I understand they have enough money to poke holes for a year or two so debt is not an issue. A research report I found is below.
Spartan Research Report
Also check out their web-site. If memory serves me they also have some irons in the fire in Mexico.
The charts are below. Technicals don't apply as much to stocks like this, and it doesn't have the liquidity or name recognition to serve as a suitable swing trading vehicle. As they are, the charts are not too bad with some bullish divergences and some long-term trend-line support.
Additional Diclaimers. I own this stock. I have not been reunemerated by anybody for writing this. There have been no offers to advertise on this site, and no offers to fly me over to China to inspect current operations. In fact I am quite sure they have never heard of me. I wrote the above so you could tell your friends, who hopefully will convince themselves that they too would like to buy this stock, preferably at higher prices