Penny Gold Stock Touts Itself (w/ help from a man who stares at charts), Pops 32%

Just reporting some facts…

Ladies and Gentlemen, I give you Tanzanian Royalty Exploration, headed by the one and only James Sinclair AKA “Mr. Gold”, seer and truth teller of yore to legions of tin foil hat wearing gold bugs (disclosure: when I was a newbie I briefly bought his shtick as he was presented at the Financial Sense website as a preeminent and distinguished gold analyst).

I got an email a couple days ago from a former victim of adherent to ole’ Jim’s dogma on gold. He forwarded an email that was disseminated to the greater world after being posted at Jim’s website, JS Mineset:

Tanzanian Royalty Exploration Update

Was this update done by a professional mining analyst like Mark at IKN? No. Like my pal, Fred Lacy? No. A real geologist like Brent Cook? No.

It was done by a man who stares at charts, Clive Maund. I am not criticizing Clive because well, I am a man who stares at charts too. We stare at charts and we form conclusions based on those charts.

But I don’t analyze gold stocks. I analyze the sector and chart gold stocks (relying on real mining analysts for fundamental viewpoints). Anyway, Clive likes the stock and says it has “a big commercially viable resource”. Who am I to argue? I wouldn’t know a resource from a reserve from a hole in the ground. Well actually I do, but really, that’s about it.

The stock did not get pumped when Clive originally posted about it on Sunday (it actually declined). But Sinclair popped the update on his Mineset blog on Wednesday and yesterday we had, well… a stock going from .31 to .41, a cool 32% in 2 days.

Sinclair posted at his site at 2:36 PM CST. You can see the market’s reaction on this 5 min. chart.

Maybe there is real news out there somewhere driving the stock. But this is all I could find: A 6-K announcing a meeting of shareholders, an analyst downgrade and surprise, a sale of 3,924,386 shares at these ridiculously cheap prices.*

Read Clive’s update if you’d like. Form your conclusions. Hell, buy TRX if you think he is on to something. He tells us the resource is good and he tells us about “what is suspected to be a potentially world class resource residing beneath the open pit”.

Suspected by whom? A chart guy? For the sake of what’s left of Sinclair’s reputation (has he grown a whole new crop of newbies?) there better be a mother load sitting under that pit. I didn’t see one thing in this update to technically define the resource. I just saw a guy talking about how cheap the stock is, another guy posting it on his heavily attended website, emailing it out to the world and then a 30% stock price increase.

Bottom line is that all Jim did was re-post an analyst’s view. I republish subscriber testimonials of NFTRH all the time. No foul. But a man who stares at charts staring only at the chart while “suspecting” a potentially world class resource?

Maybe one of my gold stock focused pals will weigh in and set me straight. Mark? Fred? Scott? Bueller? Anyone? Am I wrong to criticize the promotion of this update? Is the mining analyst that downgraded TRX at this bargain price per the news graphic above out to lunch? Is it a great resource with blockbuster potential to come? Does anyone really care about Sinclair and TRX anymore? The green volume bars on the chart above say that some still do.

* A final thought; I will be the first to say that I think the gold stock sector as a whole is ridiculously cheap right now based on the macro fundamentals we follow. But one single penny stock? Are you sure it’s not cheap for a reason? Hey, it popped 30%. Maybe that is the start of its journey to find true value.

[edit] Here’s TRX today, with no additional news that I can find.

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