IAMgold vs. GBN.V

In the aftermath of the 2008 crash, gold companies enjoyed the best rally in share prices they've ever seen. The case for share price appreciation comes from the mid-tier gold mining sector, where share prices outperformed their larger peers.

The shares obtained a ~7X ROI from the bottom of the market. The dividend payout is 18¢ per share.

http://finance.yahoo.com/q/ks?s=IAG+Key+Statistics

GBN.V can compete with this company by trumping the dividend payout. GBN.V shareholders might consider that if the payout is the same per share yoy, which can be a real possibility, then you would pay the merest fraction to obtain the same return. But, GBN.V has still to see a major share price appreciation.

If anything should have moved the share price, it should have been the award of the Tailings Impoundment Area license. But nothing of the kind occurred. The fundamentals have been improving radically underneath the share price, but it appears that the intermarket factors are in control for the time being.

Consider though, that the bond market might see price appreciation in the long haul, but most of the price appreciation is now factored in. A brute currency devaluation may interrupt the potential earnings of a bet on U.S. bonds. So too, with the mid-Tier gold producers that might have seen the fullness of their share price appreciation. So any arbitrage that sells GBN.V and buys a rising price trend will have seen its day, thus money will flow back into the stock.

Traders aught to be vying for a lay-up trade in a gold mining company. What they look for is a miniscule float, and boastful claims, disregarding the investment case and patently false exaggerations that sidestep geological considerations.

But this is the gold mining market for you. I would say that the likelihood of GBN.V ever being able to muster interest in the stock has become very remote and that paying a dividend is the remaining avenue for investor returns on the stock.

The case for share price appreciation is weak, at best.

stockcharts.com

-F6